SlipȱOp.ȱ25ȬşŘȱ
UNITEDȱSTATESȱCOURTȱOFȱINTERNATIONALȱTRADEȱ UNITEDȱSTATES,ȱ Plaintiff,ȱ
Before:ȱȱTimothyȱC.ȱStanceu,ȱJudgeȱ v.ȱ
CourtȱNo.ȱ23Ȭ00201ȱ
RAYSONȱGLOBAL,ȱINC.ȱANDȱDORISȱ CHENG,ȱ
Defendants.ȱ
OPINIONȱ
[Grantingȱplaintiff’sȱmotionȱforȱjudgmentȱbyȱdefaultȱonȱplaintiff’sȱclaimsȱforȱ recoveryȱofȱaȱcivilȱpenaltyȱandȱcollectionȱofȱunpaidȱduties]ȱ
Dated:ȱJulyȱ18,ȱ2025ȱ
StephenȱC.ȱTosini,ȱSeniorȱTrialȱCounsel,ȱCommercialȱLitigationȱBranch,ȱCivilȱ Division,ȱU.S.ȱDepartmentȱofȱJustice,ȱWashington,ȱD.C.,ȱforȱplaintiff.ȱȱWithȱhimȱonȱtheȱ briefȱwereȱYaakovȱA.ȱRoth,ȱActingȱAssistantȱAttorneyȱGeneral,ȱPatriciaȱM.ȱMcCarthy,ȱ Director,ȱandȱFranklinȱE.ȱWhite,ȱJr.,ȱAssistantȱDirector.ȱȱOfȱcounselȱonȱtheȱbriefȱwasȱInaȱ Zing,ȱAttorney,ȱU.S.ȱCustomsȱandȱBorderȱProtection,ȱSeattle,ȱWashington.ȱ
HenryȱNg,ȱLawȱOfficeȱofȱHenryȱL.ȱNg,ȱofȱTustin,ȱCalifornia,ȱforȱdefendants.ȱ Stanceu,ȱJudge:ȱPlaintiffȱUnitedȱStatesȱ(theȱ“government”)ȱbroughtȱthisȱactionȱinȱ Septemberȱ2023ȱtoȱrecoverȱaȱcivilȱpenaltyȱandȱunpaidȱdutiesȱunderȱsectionȱ592ȱofȱtheȱ TariffȱActȱofȱ1930,ȱasȱamendedȱ(“TariffȱAct”),ȱ19ȱU.S.C.ȱ§ȱ1592ȱ(“Sectionȱ592”),ȱfromȱ defendantsȱRaysonȱGlobal,ȱInc.ȱ(“RaysonȱGlobal”),ȱaȱCaliforniaȱcorporation,ȱandȱDorisȱ
CourtȱNo.ȱ23Ȭ00201ȱ Pageȱ2ȱ ȱ
Cheng,ȱitsȱchiefȱexecutiveȱofficer.1ȱȱPlaintiffȱallegesȱthatȱRaysonȱGlobalȱandȱDorisȱChengȱ negligentlyȱcausedȱmerchandiseȱ(“uncoveredȱmattressȱinnersprings”ȱorȱ“innersprings”)ȱ toȱbeȱintroducedȱintoȱtheȱcommerceȱofȱtheȱUnitedȱStatesȱunderȱfalseȱdeclarationsȱofȱ countryȱofȱoriginȱandȱtherebyȱdeprivedȱtheȱUnitedȱStatesȱofȱordinaryȱduties,ȱ antidumpingȱduties,ȱandȱ“Sectionȱ301”ȱduties.ȱȱPlaintiffȱallegesȱthatȱentryȱ documentationȱfalselyȱdeclaredȱThailandȱasȱtheȱcountryȱofȱoriginȱofȱtheȱinnersprings,ȱ whichȱplaintiffȱallegesȱtoȱhaveȱbeenȱproductsȱofȱtheȱPeople’sȱRepublicȱofȱChinaȱ (“China”).ȱ Beforeȱtheȱcourtȱisȱtheȱgovernment’sȱsecondȱmotionȱforȱaȱjudgmentȱbyȱdefault,ȱ whichȱseeksȱ“lostȱrevenueȱpursuantȱtoȱ19ȱU.S.C.ȱ§ȱ1592(d),ȱinȱtheȱamountȱofȱ $2,431,225.93,ȱplusȱprejudgmentȱinterest;ȱandȱaȱpenaltyȱpursuantȱtoȱ19ȱU.S.C.ȱ§ȱ1592(c)ȱ inȱtheȱamountȱofȱ$3,381,607.03.”ȱȱSecondȱMot.ȱforȱEntryȱofȱDefaultȱJ.ȱ10ȱ(Mayȱ7,ȱ2025),ȱ ECFȱNos.ȱ25ȱ(conf.),ȱ26ȱ(public)ȱ(“Pl.’sȱMot.”).ȱȱTheȱcourtȱwillȱawardȱaȱcivilȱpenaltyȱinȱ theȱamountȱsoughtȱbyȱplaintiffȱandȱrequireȱtheȱrestorationȱofȱlostȱrevenue,ȱwithȱinterestȱ asȱprovidedȱbyȱlaw.ȱ
ȱ
ȱReferencesȱtoȱtheȱUnitedȱStatesȱCodeȱandȱtoȱtheȱHarmonizedȱTariffȱScheduleȱofȱ 1
theȱUnitedȱStatesȱhereinȱareȱtoȱtheȱ2018ȱeditions.ȱ
CourtȱNo.ȱ23Ȭ00201ȱ Pageȱ3ȱ ȱ
I.ȱȱBACKGROUNDȱ
FollowingȱanȱentryȱofȱdefaultȱbyȱtheȱClerkȱofȱtheȱCourt,ȱEntryȱofȱDefaultȱ(Mayȱ23,ȱ 2024),ȱECFȱNo.ȱ15,ȱplaintiffȱfiledȱitsȱfirstȱmotionȱforȱaȱdefaultȱjudgment,ȱwhichȱtheȱcourtȱ deniedȱbasedȱonȱitsȱrulingȱthatȱplaintiff’sȱcomplaintȱlackedȱaȱwellȬpledȱfactualȱallegationȱ ofȱtheȱdomesticȱvalueȱofȱtheȱmerchandiseȱinvolvedȱinȱthisȱaction,ȱUnitedȱStatesȱv.ȱRaysonȱ Glob.,ȱ49ȱCITȱ__,ȱ__,ȱ747ȱF.ȱSupp.ȱ3dȱ1376,ȱ1378ȱ(2025)ȱ(“RaysonȱGlobalȱI”).ȱȱTheȱcourtȱ subsequentlyȱgrantedȱplaintiff’sȱmotionȱforȱleaveȱtoȱfileȱaȱsecondȱamendedȱcomplaintȱ (“Complaint”),ȱwhichȱmotionȱdefendantsȱdidȱnotȱoppose.ȱȱOrderȱ(Mar.ȱ27,ȱ2025),ȱECFȱ No.ȱ23;ȱSecondȱAm.ȱCompl.ȱ(Mar.ȱ27,ȱ2025),ȱECFȱNo.ȱ24ȱ(“Compl.”).ȱȱDueȱtoȱdefendants’ȱ failureȱtoȱfileȱwithinȱtheȱtimeȱperiodȱpermittedȱbyȱthisȱCourt’sȱrulesȱanȱanswerȱtoȱtheȱ secondȱamendedȱcomplaint,ȱaȱmotionȱforȱanȱenlargementȱofȱtime,ȱorȱaȱdispositiveȱ motion,ȱtheȱClerkȱofȱCourtȱagainȱenteredȱaȱdefault.ȱȱEntryȱofȱDefaultȱ(Mayȱ27,ȱ2025),ȱ ECFȱNo.ȱ28.ȱ Defendantsȱdidȱnotȱfileȱaȱresponseȱtoȱplaintiff’sȱsecondȱmotionȱforȱaȱjudgmentȱbyȱ default,ȱwhichȱwasȱdueȱonȱJuneȱ11,ȱ2025,ȱnorȱhaveȱtheyȱmovedȱforȱanȱenlargementȱofȱ time.ȱ
CourtȱNo.ȱ23Ȭ00201ȱ Pageȱ4ȱ ȱ
II.ȱȱDISCUSSIONȱ
A.ȱȱJurisdiction;ȱScopeȱandȱStandardȱofȱReviewȱ Theȱcourtȱexercisesȱjurisdictionȱoverȱthisȱactionȱaccordingȱtoȱsectionȱ201ȱofȱtheȱ CustomsȱCourtsȱActȱofȱ1980,ȱ28ȱU.S.C.ȱ§ȱ1582.ȱȱThisȱCourtȱhasȱ“exclusiveȱjurisdictionȱofȱ anyȱcivilȱactionȱwhichȱarisesȱoutȱofȱanȱimportȱtransactionȱandȱwhichȱisȱcommencedȱbyȱ theȱUnitedȱStatesȱ.ȱ.ȱ.ȱtoȱrecoverȱaȱcivilȱpenaltyȱunderȱsectionȱ592,”ȱ28ȱU.S.C.ȱ§ȱ1582(1),ȱorȱ “toȱrecoverȱcustomsȱduties,”ȱid.ȱ§ȱ1582(3).ȱȱȱ AsȱSectionȱ592ȱprovides,ȱtheȱcourtȱdeterminesȱallȱissuesȱdeȱnovo,ȱincludingȱtheȱ amountȱofȱanyȱpenalty.ȱȱ19ȱU.S.C.ȱ§ȱ1592(e)(1).ȱ Inȱrulingȱonȱaȱmotionȱforȱjudgmentȱbyȱdefault,ȱtheȱcourtȱacceptsȱasȱtrueȱallȱwellȬ pledȱfactsȱinȱtheȱcomplaintȱbutȱmustȱreachȱitsȱownȱlegalȱconclusions.ȱȱNishimatsuȱConstr.ȱ Co.,ȱLtd.ȱv.ȱHoustonȱNat’lȱBank,ȱ515ȱF.2dȱ1200,ȱ1206ȱ(5thȱCir.ȱ1975)ȱ(citingȱThomsonȱv.ȱ Wooster,ȱ114ȱU.S.ȱ104,ȱ113ȱ(1885));ȱ10AȱWrightȱ&ȱMiller’sȱFederalȱPracticeȱandȱProcedureȱ §ȱ2688.1ȱ(4thȱed.ȱ2025).ȱ
B.ȱȱClaimȱforȱMonetaryȱPenaltyȱunderȱSectionȱ592(c)ȱ ȱ 1.ȱȱFactsȱPledȱinȱtheȱComplaintȱClaimingȱaȱViolationȱofȱSectionȱ592(a)ȱBasedȱonȱaȱ LevelȱofȱCulpabilityȱofȱNegligenceȱ ȱ UnderȱSectionȱ592,ȱitȱisȱunlawfulȱforȱanyȱperson,ȱbyȱfraud,ȱgrossȱnegligence,ȱorȱ
negligence,ȱtoȱenter,ȱintroduce,ȱorȱattemptȱtoȱenterȱorȱintroduceȱanyȱmerchandiseȱintoȱ theȱcommerceȱofȱtheȱUnitedȱStatesȱbyȱmeansȱofȱmaterialȱandȱfalseȱdocuments,ȱ
CourtȱNo.ȱ23Ȭ00201ȱ Pageȱ5ȱ ȱ
statements,ȱorȱactsȱorȱmaterialȱomissions,ȱorȱtoȱaidȱorȱabetȱanotherȱtoȱdoȱso.ȱȱ19ȱU.S.C.ȱ §ȱ1592(a)(1)(A),ȱ(B).ȱȱWhenȱtheȱUnitedȱStatesȱseeksȱtoȱrecoverȱaȱSectionȱ592ȱmonetaryȱ penaltyȱbasedȱonȱaȱlevelȱofȱculpabilityȱofȱnegligence,ȱ“theȱUnitedȱStatesȱshallȱhaveȱtheȱ burdenȱofȱproofȱtoȱestablishȱtheȱactȱorȱomissionȱconstitutingȱtheȱviolation,ȱandȱtheȱ allegedȱviolatorȱshallȱhaveȱtheȱburdenȱofȱproofȱthatȱtheȱactȱorȱomissionȱdidȱnotȱoccurȱasȱ aȱresultȱofȱnegligence.”ȱȱId.ȱ§ȱ1592(e)(4).ȱȱAsȱdiscussedȱbelow,ȱtheȱcourtȱdeterminesȱthatȱ theȱwellȬpledȱfactsȱinȱtheȱComplaint,ȱwhenȱacceptedȱasȱtrue,ȱestablishȱtheȱliabilityȱofȱ defendantsȱforȱaȱcivilȱpenaltyȱunderȱSectionȱ592.ȱ Plaintiffȱbasesȱitsȱmotionȱonȱ46ȱconsumptionȱentriesȱmadeȱbetweenȱ Septemberȱ26,ȱ2018ȱandȱNovemberȱ8,ȱ2019ȱinclusive,ȱofȱinnerspringsȱimportedȱfromȱ Thailand.ȱȱPl.’sȱMot.ȱ2;ȱExhibitȱAȱtoȱCompl.ȱ(Mar.ȱ27,ȱ2025),ȱECFȱNo.ȱ24Ȭ1ȱ(“ExhibitȱA”);ȱ seeȱalsoȱCompl.ȱ¶¶ȱ1,ȱ21.ȱȱAsȱactsȱ“constitutingȱtheȱviolation,”ȱ19ȱU.S.C.ȱ§ȱ1592(e)(4),ȱtheȱ Complaintȱallegedȱthatȱdefendants,ȱasȱtoȱeachȱofȱtheȱentriesȱatȱissueȱinȱthisȱaction,ȱ “falselyȱdeclared,ȱorȱcausedȱtoȱbeȱfalselyȱdeclared,ȱthatȱtheȱsubjectȱentriesȱofȱ innerspringsȱwereȱproducedȱinȱThailand,”ȱCompl.ȱ¶ȱ23.ȱ TheȱComplaintȱalleged,ȱfurther,ȱthatȱaȱlossȱofȱrevenueȱtoȱtheȱUnitedȱStatesȱ resultedȱfromȱtheȱviolations.ȱȱId.ȱ¶ȱ22.ȱȱExhibitȱAȱtoȱtheȱComplaintȱlistsȱfourȱentries,ȱ madeȱbetweenȱSeptemberȱ26,ȱ2018ȱandȱOctoberȱ24,ȱ2018ȱinclusive,ȱforȱwhichȱisȱallegedȱ anȱ“ActualȱLossȱofȱRevenue”ȱofȱ$205,723.83,ȱwhichȱitȱcalculatesȱasȱtheȱsumȱofȱordinaryȱ
CourtȱNo.ȱ23Ȭ00201ȱ Pageȱ6ȱ ȱ
dutiesȱatȱ6%ȱadȱvalorem,ȱdutiesȱowedȱunderȱSectionȱ301ȱofȱtheȱTradeȱActȱofȱ1974,ȱ 19ȱU.S.C.ȱ§ȱ2411ȱ(“Sectionȱ301”),ȱatȱ10%ȱadȱvalorem,ȱandȱantidumpingȱdutiesȱatȱ234.51%ȱ adȱvalorem.ȱȱExhibitȱA.ȱȱTheȱdutiesȱareȱcalculatedȱbasedȱonȱanȱallegedȱenteredȱvalueȱofȱ $82,122.00.ȱȱId.ȱ Forȱtheȱremainingȱ42ȱentries,ȱmadeȱbetweenȱNovemberȱ7,ȱ2018ȱandȱNovemberȱ8,ȱ 2019ȱinclusive,ȱwhichȱapparentlyȱremainedȱunliquidatedȱasȱofȱtheȱfilingȱofȱtheȱ Complaint,ȱExhibitȱAȱallegesȱaȱ“PotentialȱLossȱofȱRevenue”ȱofȱ$2,225,502.10,ȱpresentedȱ asȱtheȱsumȱofȱordinaryȱdutiesȱatȱ6%ȱadȱvalorem,ȱdutiesȱowedȱunderȱSectionȱ301ȱatȱ10%ȱ adȱvalorem,ȱandȱantidumpingȱdutiesȱatȱ234.51%ȱadȱvalorem.ȱȱTheȱdutiesȱareȱcalculatedȱ basedȱonȱallegedȱenteredȱvalueȱofȱ$863,800,ȱforȱaȱtotalȱenteredȱvalueȱonȱallȱ46ȱentriesȱ (liquidatedȱandȱunliquidated)ȱofȱ$945,922.00.ȱȱSeeȱid.ȱ TheȱallegationsȱpertainingȱtoȱaȱlossȱofȱrevenueȱtoȱtheȱUnitedȱStatesȱareȱdescribedȱ inȱfurtherȱdetailȱbelow.ȱ a.ȱȱOrdinaryȱDutiesȱ
Subheadingȱ9404.29.90,ȱHarmonizedȱTariffȱScheduleȱofȱtheȱUnitedȱStatesȱ (“HTSUS”)ȱ(2018)ȱcontainsȱtheȱarticleȱdescriptionȱ“.ȱ.ȱ.ȱarticlesȱofȱbeddingȱandȱsimilarȱ furnishingȱ.ȱ.ȱ.ȱfittedȱwithȱspringsȱ.ȱ.ȱ.ȱwhetherȱorȱnotȱcovered:ȱMattresses:ȱOfȱotherȱ materialsȱ[otherȱthanȱcellularȱrubberȱorȱplastics]:ȱOtherȱ[notȱofȱcotton],ȱUncoveredȱ innerspringȱunits.”ȱȱThisȱarticleȱdescriptionȱappliesȱtoȱtheȱmerchandiseȱallegedȱinȱtheȱ
CourtȱNo.ȱ23Ȭ00201ȱ Pageȱ7ȱ ȱ
Complaintȱtoȱhaveȱbeenȱimportedȱbyȱdefendants.ȱȱItȱwasȱunchangedȱinȱtheȱ2019ȱversionȱ ofȱtheȱHTSUS.ȱ Productsȱclassifiedȱinȱsubheadingȱ9404.29.90,ȱHTSUSȱareȱsubjectȱtoȱaȱgeneralȱ (MFN)ȱdutyȱrateȱofȱ6%ȱadȱvalorem.ȱȱProductsȱofȱThailandȱclassifiableȱunderȱtheȱ subheadingȱandȱqualifyingȱunderȱtheȱGeneralizedȱSystemȱofȱPreferencesȱ(“GSP”)ȱareȱ eligibleȱforȱdutyȬfreeȱtariffȱtreatment.ȱȱSeeȱCompl.ȱ¶¶ȱ26,ȱ27;ȱseeȱalsoȱ19ȱU.S.C.ȱ§ȱ2461.ȱȱ ProductsȱofȱChinaȱareȱnotȱeligibleȱforȱGSPȱdutyȬfreeȱtariffȱtreatment.ȱȱSeeȱGeneralȱ Notesȱ11–14,ȱHTSUSȱ(listingȱcountriesȱeligibleȱforȱGSPȱdutyȬfreeȱtariffȱtreatment).ȱ TheȱComplaintȱallegedȱthatȱdefendantsȱ“falselyȱdeclared,ȱorȱcausedȱtoȱbeȱfalselyȱ declared,ȱthatȱentriesȱofȱinnerspringsȱqualifiedȱforȱdutyȱfreeȱtreatmentȱunderȱtheȱGSPȱ forȱmerchandiseȱmanufacturedȱinȱThailand.”ȱȱCompl.ȱ¶ȱ27.ȱȱItȱallegedȱthatȱtheȱunpaidȱ dutiesȱofȱ6%ȱadȱvaloremȱamountedȱtoȱ$56,755.32.ȱȱExhibitȱA.ȱ
b.ȱȱAntidumpingȱDutiesȱ
ȱ TheȱComplaintȱallegedȱthatȱdefendantsȱ“falselyȱomittedȱfromȱentryȱ
documentation,ȱorȱcausedȱtoȱbeȱfalselyȱomittedȱfromȱentryȱdocumentation,ȱtheȱfactȱthatȱ entriesȱofȱinnerspringsȱwereȱsubjectȱtoȱADDȱ[antidumpingȱduty]ȱorderȱAȬ570Ȭ928,”ȱ referringȱtoȱtheȱidentifyingȱnumberȱofȱanȱantidumpingȱdutyȱinvestigationȱonȱ innerspringsȱfromȱChina.ȱȱCompl.ȱ¶ȱ25;ȱseeȱalsoȱid.ȱ¶¶ȱ19–20.ȱȱTheȱComplaintȱfurtherȱ allegedȱthatȱtheȱimportedȱinnerspringsȱwereȱdescribedȱbyȱtheȱscopeȱlanguageȱofȱanȱ
CourtȱNo.ȱ23Ȭ00201ȱ Pageȱ8ȱ ȱ
antidumpingȱdutyȱorderȱ(“Order”)ȱonȱinnerspringsȱfromȱChinaȱpublishedȱbyȱtheȱ InternationalȱTradeȱAdministration,ȱU.S.ȱDepartmentȱofȱCommerce.ȱȱId.ȱ¶¶ȱ20,ȱ25ȱ(citingȱ UncoveredȱInnerspringȱUnitsȱfromȱtheȱPeople’sȱRepublicȱofȱChina:ȱNoticeȱofȱAntidumpingȱDutyȱ Order,ȱ74ȱFed.ȱReg.ȱ7,661,ȱ7,661ȱ(Int’lȱTradeȱAdmin.ȱFeb.ȱ19,ȱ2009)ȱ(“Order”)).ȱ TheȱscopeȱlanguageȱofȱtheȱOrderȱprovides,ȱinȱpertinentȱpart,ȱthatȱtheȱOrderȱ appliesȱtoȱ“uncoveredȱinnerspringȱunitsȱcomposedȱofȱaȱseriesȱofȱindividualȱmetalȱ springsȱjoinedȱtogetherȱinȱsizesȱcorrespondingȱtoȱtheȱsizesȱofȱadultȱmattressesȱ.ȱ.ȱ.ȱandȱ unitsȱusedȱinȱsmallerȱconstructions,ȱsuchȱasȱcribȱandȱyouthȱmattresses.”ȱȱOrder,ȱ74ȱFed.ȱ Reg.ȱatȱ7,661.ȱȱTheȱgovernmentȱallegedȱthatȱtheȱinnerspringsȱatȱissueȱinȱthisȱcaseȱ conformedȱtoȱtheȱscopeȱlanguageȱofȱtheȱOrder.ȱȱSeeȱCompl.ȱ¶¶ȱ22,ȱ24–25.ȱ AccordingȱtoȱtheȱComplaint,ȱallȱofȱtheȱentriesȱuponȱwhichȱplaintiffȱseeksȱaȱ defaultȱjudgmentȱwereȱsubjectȱtoȱaȱ“ChinaȬwide”ȱantidumpingȱdutyȱcashȱdepositȱrateȱofȱ 234.51%ȱadȱvalorem.ȱȱId.ȱ¶ȱ20;ȱExhibitȱA.ȱȱTheȱ234.51%ȱChinaȬwideȱrateȱwasȱimposedȱbyȱ theȱOrder.ȱȱOrder,ȱ74ȱFed.ȱReg.ȱatȱ7,662.ȱȱTheȱChinaȬwideȱrateȱcontinuedȱthroughȱ administrativeȱreviews.ȱȱSee,ȱe.g.,ȱUncoveredȱInnerspringȱUnitsȱFromȱtheȱPeople’sȱRepublicȱofȱ China:ȱFinalȱResultsȱofȱtheȱAntidumpingȱDutyȱAdministrativeȱReview;ȱ2018–2019,ȱ85ȱFed.ȱ Reg.ȱ6,907,ȱ6,908ȱ(Int’lȱTradeȱAdmin.ȱFeb.ȱ6,ȱ2020);ȱUncoveredȱInnerspringȱUnitsȱFromȱtheȱ People’sȱRepublicȱofȱChina:ȱFinalȱResultsȱofȱAntidumpingȱDutyȱAdministrativeȱReview;ȱ2021– 2022,ȱ88ȱFed.ȱReg.ȱ7,688,ȱ7,688ȱ(Int’lȱTradeȱAdmin.ȱFeb.ȱ6,ȱ2023).ȱȱTheȱComplaintȱallegedȱ
CourtȱNo.ȱ23Ȭ00201ȱ Pageȱ9ȱ ȱ
thatȱtheȱtotalȱantidumpingȱdutiesȱowedȱonȱtheȱentriesȱatȱissueȱareȱ$2,218,281.68.ȱȱ ExhibitȱA.ȱ
c.ȱȱSectionȱ301ȱDutiesȱ
ȱ TheȱComplaintȱallegedȱthatȱtheȱfirstȱ26ȱentriesȱatȱissue,ȱmadeȱbetweenȱ
Septemberȱ26,ȱ2018ȱandȱMayȱ1,ȱ2019ȱinclusive,ȱwereȱsubjectȱtoȱdutiesȱofȱ10%ȱadȱvaloremȱ imposedȱonȱproductsȱofȱChinaȱaccordingȱtoȱSectionȱ301.ȱȱCompl.ȱ¶¶ȱ31–32;ȱExhibitȱA.ȱȱ Itȱallegedȱthatȱtheȱremainingȱ20ȱentries,ȱmadeȱbetweenȱMayȱ17,ȱ2019ȱandȱNovemberȱ8,ȱ 2019ȱinclusive,ȱwereȱsubjectȱtoȱ25%ȱdutiesȱunderȱSectionȱ301.ȱȱId.ȱȱTheȱComplaintȱallegedȱ aȱtotalȱlossȱofȱrevenueȱ(actualȱandȱpotential)ȱofȱ$156,188.95ȱinȱSectionȱ301ȱduties.ȱȱ ExhibitȱA.ȱ TheȱSectionȱ301ȱdutiesȱbecameȱeffectiveȱonȱSeptemberȱ24,ȱ2018,ȱwhenȱtheȱUnitedȱ Statesȱimposed,ȱthroughȱnewȱsubheadingȱ9903.88.03,ȱHTSUS,ȱaȱ10%ȱadȱvaloremȱdutyȱonȱ productsȱofȱChinaȱspecifiedȱinȱcertainȱotherȱHTSUSȱsubheadings.ȱȱSeeȱNoticeȱofȱ ModificationȱofȱSectionȱ301ȱAction:ȱChina’sȱActs,ȱPolicies,ȱandȱPracticesȱRelatedȱtoȱTechnologyȱ Transfer,ȱIntellectualȱProperty,ȱandȱInnovation,ȱ83ȱFed.ȱReg.ȱ47,974,ȱ47,974,ȱ47,976–48,001ȱ (Off.ȱofȱtheȱU.S.ȱTradeȱRepresentativeȱSept.ȱ21,ȱ2018).ȱȱTheȱnoticeȱincludedȱsubheadingȱ 9404.29.90,ȱHTSUS.ȱȱId.,ȱ83ȱFed.ȱReg.ȱatȱ48,000.ȱȱTheȱComplaintȱallegedȱthatȱtheȱactionȱ “includesȱtheȱHTSUSȱsubheadingȱforȱtheȱmerchandiseȱcoveredȱbyȱtheȱsubjectȱentries.”ȱȱ Compl.ȱ¶ȱ32;ȱseeȱsubheadingȱ9404.29.90,ȱHTSUS.ȱȱEffectiveȱMayȱ10,ȱ2019,ȱtheȱ10%ȱ
CourtȱNo.ȱ23Ȭ00201ȱ Pageȱ10ȱ ȱ
adȱvaloremȱSectionȱ301ȱdutiesȱwereȱincreasedȱtoȱ25%ȱadȱvalorem.ȱȱNoticeȱofȱModificationȱofȱ Sectionȱ301ȱAction:ȱChina’sȱActs,ȱPolicies,ȱandȱPracticesȱRelatedȱtoȱTechnologyȱTransfer,ȱ IntellectualȱProperty,ȱandȱInnovation,ȱ84ȱFed.ȱReg.ȱ20,459,ȱ20,459ȱ(Off.ȱofȱtheȱU.S.ȱTradeȱ RepresentativeȱMayȱ9,ȱ2019);ȱCompl.ȱ¶ȱ31.ȱȱTheȱComplaintȱlistedȱinȱExhibitȱAȱ“9903ȱ DutiesȱthatȱShouldȱHaveȱBeenȱPaid”ȱpursuantȱtoȱaȱ“9903ȱClassificationȱEnteredȱRate”ȱofȱ 10%ȱorȱ25%,ȱdependingȱonȱtheȱdateȱofȱtheȱentry.ȱȱSeeȱExhibitȱA.ȱ
2.ȱȱAgencyȱProceduresȱConductedȱunderȱ19ȱU.S.C.ȱ§ȱ1592(b)ȱ ȱ TheȱComplaintȱallegesȱthatȱU.S.ȱCustomsȱandȱBorderȱProtectionȱ(“Customs”ȱorȱ
“CBP”)ȱissuedȱpreȬpenaltyȱandȱpenaltyȱnoticesȱtoȱdefendantsȱinȱtheȱamountȱofȱ $4,200,081.76,ȱwhichȱtheȱComplaintȱallegedȱasȱtheȱdomesticȱvalueȱofȱtheȱmerchandiseȱonȱ theȱentriesȱidentifiedȱinȱthoseȱnotices.2ȱȱCompl.ȱ¶¶ȱ37–39.ȱȱItȱalleges,ȱfurther,ȱthatȱ defendantsȱdidȱnotȱrespondȱtoȱtheȱpenaltyȱnotice.ȱȱId.ȱ¶ȱ43.ȱ
ȱ
2ȱPlaintiffȱallegesȱthatȱ“[w]eȱhaveȱnotȱincludedȱentriesȱmadeȱbetweenȱMayȱ26,ȱ 2018,ȱandȱSeptemberȱ6,ȱ2018,ȱinȱtheȱsecondȱamendedȱcomplaint,ȱalthoughȱtheȱpenaltyȱ noticeȱcoveredȱentriesȱmadeȱduringȱthatȱtimeframe.”ȱȱSecondȱAm.ȱCompl.ȱ¶ȱ44ȱ(Mar.ȱ27,ȱ 2025),ȱECFȱNo.ȱ24ȱ(“Complaint”).ȱȱPlaintiffȱexplainedȱthatȱ“[b]ecauseȱtheȱstatuteȱofȱ limitationsȱhadȱexpiredȱforȱcertainȱentries,ȱinȱourȱoriginalȱandȱamendedȱcomplaints,ȱweȱ soughtȱreducedȱlostȱrevenueȱpursuantȱtoȱ19ȱU.S.C.ȱ§ȱ1592(d),ȱinȱtheȱamountȱofȱ $2,431,225.93,ȱplusȱprejudgmentȱinterest;ȱandȱaȱpenaltyȱpursuantȱtoȱ19ȱU.S.C.ȱ§ȱ1592(c)ȱ inȱtheȱamountȱofȱ$3,381,607.03.”ȱȱSecondȱMot.ȱforȱEntryȱofȱDefaultȱJ.ȱ4ȱ(Mayȱ7,ȱ2025),ȱ ECFȱNos.ȱ25ȱ(conf.),ȱ26ȱ(public)ȱ(citationȱomitted).ȱ
CourtȱNo.ȱ23Ȭ00201ȱ Pageȱ11ȱ ȱ
3.ȱȱTheȱBasisȱofȱPlaintiff’sȱClaimȱforȱaȱMonetaryȱPenaltyȱofȱ$3,381,607.03ȱinȱtheȱ StatutoryȱMaximumȱAmountȱAllowedȱunderȱSectionȱ592ȱ ȱ Forȱaȱviolationȱthatȱisȱbasedȱonȱaȱlevelȱofȱculpabilityȱofȱnegligenceȱandȱthatȱ
resultsȱinȱaȱlossȱofȱrevenueȱtoȱtheȱUnitedȱStates,ȱsectionȱ592ȱprovidesȱforȱ“aȱcivilȱpenaltyȱ inȱanȱamountȱnotȱtoȱexceedȱ.ȱ.ȱ.ȱtheȱlesserȱofȱ.ȱ.ȱ.ȱtheȱdomesticȱvalueȱofȱtheȱmerchandise,ȱ orȱ.ȱ.ȱ.ȱtwoȱtimesȱtheȱlawfulȱduties,ȱtaxes,ȱandȱfeesȱofȱwhichȱtheȱUnitedȱStatesȱisȱorȱmayȱ beȱdeprived.”ȱȱ19ȱU.S.C.ȱ§ȱ1592(c)(3)(A).ȱ Theȱgovernmentȱallegesȱthatȱtheȱentriesȱonȱwhichȱitȱseeksȱaȱcivilȱpenaltyȱresultedȱ inȱanȱactualȱlossȱofȱrevenueȱofȱ$205,723.83,ȱandȱaȱ“potential”ȱlossȱofȱrevenueȱofȱ $2,225,502.10,ȱtoȱtheȱUnitedȱStates,ȱforȱaȱtotalȱlossȱofȱrevenueȱofȱ$2,431,225.93.ȱȱExhibitȱA.ȱȱ Thisȱamountȱisȱtheȱsumȱofȱtheȱallegedȱactualȱandȱpotentialȱlossȱofȱordinaryȱdutiesȱ ($56,755.32),ȱSectionȱ301ȱdutiesȱ($156,188.95),ȱandȱantidumpingȱdutiesȱ($2,218,281.68).3ȱ Twoȱtimesȱtheȱallegedȱlossȱofȱrevenueȱexceedsȱtheȱ$3,381,607.03ȱdomesticȱvalueȱ ofȱtheȱmerchandiseȱonȱtheȱ46ȱentries,ȱasȱallegedȱinȱtheȱComplaint,ȱ¶¶ȱ44,ȱ47,ȱandȱinȱ
ȱ
3ȱTheȱComplaintȱallegesȱthatȱtheȱtotalȱamountȱofȱantidumpingȱdutiesȱowedȱonȱtheȱ entriesȱatȱissueȱisȱ$2,218,281.68.ȱȱExhibitȱAȱtoȱCompl.ȱ(Mar.ȱ27,ȱ2025),ȱECFȱNo.ȱ24Ȭ1ȱ (“ExhibitȱA”).ȱȱButȱtheȱsumȱofȱtheȱantidumpingȱdutiesȱspecifiedȱwithȱrespectȱtoȱeachȱofȱ theȱentriesȱlistedȱinȱExhibitȱAȱfromȱSeptemberȱ26,ȱ2018ȱthroughȱNovemberȱ8,ȱ2019ȱ inclusiveȱisȱ$2,218,281.66,ȱwhichȱisȱ$.02ȱlessȱthanȱtheȱtotalȱamountȱshownȱinȱExhibitȱA.ȱȱ Combiningȱthisȱtotalȱ($2,218,281.66)ȱwithȱtheȱordinaryȱdutiesȱ($56,755.32)ȱandȱtheȱ Sectionȱ301ȱdutiesȱ($156,188.95)ȱresultsȱinȱtheȱgovernment’sȱclaimedȱtotalȱlossȱofȱ revenueȱofȱ$2,431,225.93.ȱȱ
CourtȱNo.ȱ23Ȭ00201ȱ Pageȱ12ȱ ȱ
plaintiff’sȱmotionȱforȱaȱjudgmentȱbyȱdefault,ȱPl.’sȱMot.ȱ3.ȱȱTheȱgovernmentȱseeksȱaȱcivilȱ penaltyȱinȱtheȱamountȱofȱtheȱtotalȱdomesticȱvalueȱofȱtheȱmerchandise,ȱwhich,ȱbasedȱonȱ theȱallegationsȱinȱtheȱComplaint,ȱwouldȱbeȱtheȱmaximumȱpenaltyȱprovidedȱforȱunderȱ 19ȱU.S.C.ȱ§ȱ1592(c)(3)(A).ȱ
4.ȱȱTheȱCourtȱDeemsȱAdmittedȱtheȱAllegedȱFactsȱPertainingȱtoȱtheȱMaterialȱFalseȱ Statements,ȱtheȱRevenueȱLoss,ȱtheȱDefendants’ȱNegligence,ȱandȱtheȱDomesticȱValueȱ ofȱtheȱImportedȱMerchandiseȱ ȱ Theȱcourtȱacceptsȱasȱ“wellȬpledȱfacts,”ȱand,ȱtherefore,ȱadmittedȱfacts,ȱthatȱ
defendantsȱimportedȱChineseȬoriginȱinnerspringsȱfromȱThailandȱandȱthatȱtheȱcountryȱofȱ originȱofȱtheȱinnerspringsȱfalselyȱwasȱdeclaredȱasȱThailandȱonȱtheȱentryȱdocumentationȱ forȱeachȱofȱtheȱ46ȱentriesȱuponȱwhichȱplaintiffȱbasesȱitsȱmotionȱforȱaȱjudgmentȱbyȱ default.ȱȱTheȱcourtȱaccepts,ȱfurther,ȱtheȱdetailedȱallegationsȱthatȱtheȱfalseȱdeclarationsȱofȱ originȱresultedȱinȱaȱlossȱofȱrevenueȱtoȱtheȱUnitedȱStatesȱ(actualȱandȱpotential)ȱofȱ $2,431,225.93ȱandȱwere,ȱtherefore,ȱ“material”ȱwithinȱtheȱmeaningȱofȱ19ȱU.S.C.ȱ §ȱ1592(a)(1)(A).ȱȱTheȱactualȱrevenueȱlossȱclaimedȱbyȱplaintiffȱpertainsȱtoȱtheȱdutiesȱ allegedȱtoȱbeȱowedȱuponȱliquidation.ȱȱTheȱpotentialȱrevenueȱloss,ȱdeterminedȱfromȱtheȱ unliquidatedȱentries,ȱisȱaȱdeprivationȱofȱrevenueȱowingȱtoȱtheȱallegedȱfailureȱofȱ plaintiffsȱtoȱmakeȱcashȱdepositsȱforȱestimatedȱduties.ȱ Plaintiffȱallegesȱthatȱtheȱfalseȱstatementsȱofȱcountryȱofȱoriginȱoccurredȱasȱaȱresultȱ ofȱdefendants’ȱnegligenceȱwhenȱcausingȱtheȱimportationsȱatȱissueȱinȱthisȱcase.ȱȱCompl.ȱ
CourtȱNo.ȱ23Ȭ00201ȱ Pageȱ13ȱ
¶ȱ34ȱ(allegingȱthatȱtheȱmaterialȱfalseȱstatementsȱofȱcountryȱofȱoriginȱresultedȱfromȱ defendants’ȱ“failureȱtoȱexerciseȱreasonableȱcareȱandȱcompetenceȱtoȱensureȱthatȱ statementsȱmadeȱandȱinformationȱprovidedȱinȱconnectionȱwithȱtheȱimportationȱofȱ merchandiseȱwereȱcompleteȱandȱaccurate”).ȱȱTheȱallegationȱofȱnegligenceȱisȱunrebuttedȱ dueȱtoȱtheȱdefendants’ȱdefault,ȱandȱtheȱcourt,ȱtherefore,ȱacceptsȱasȱaȱfactȱthatȱtheȱ materialȱfalseȱstatementsȱuponȱwhichȱplaintiffȱbasesȱitsȱComplaintȱandȱmotionȱforȱ judgmentȱbyȱdefaultȱoccurredȱasȱaȱresultȱofȱnegligenceȱonȱtheȱpartȱofȱdefendants.ȱȱSeeȱ 19ȱU.S.C.ȱ§ȱ1592(e)(4).ȱ TheȱComplaintȱincludesȱanȱallegationȱofȱtheȱdomesticȱvalueȱofȱtheȱmerchandise.ȱȱ Plaintiffȱallegesȱaȱdomesticȱvalueȱofȱ$3,381,607.03,ȱwhichȱitȱdescribesȱasȱequalȱtoȱ“theȱ sumȱofȱtheȱmerchandise’sȱdeclaredȱenteredȱvalue,ȱduties,ȱtaxes,ȱandȱfees.”ȱȱCompl.ȱ¶ȱ44ȱ (citingȱExhibitȱAȱ&ȱExhibitȱBȱtoȱCompl.,ȱCBPȱDirectiveȱNo.ȱ5240Ȭ001A,ȱAppraisingȱ SeizedȱPropertyȱ§ȱ5.10ȱ(U.S.ȱCust.ȱ&ȱBorderȱProt.ȱNov.ȱ13,ȱ2005)).ȱȱTheȱcourtȱconcludesȱ thatȱthisȱallegationȱofȱdomesticȱvalueȱisȱsufficientȱforȱpurposeȱofȱdeterminingȱtheȱ amountȱofȱaȱpenaltyȱsetȱatȱtheȱdomesticȱvalueȱofȱtheȱimportedȱmerchandise.ȱȱAsȱshownȱ onȱExhibitȱA,ȱtheȱgovernmentȱcalculatedȱtheȱdomesticȱvalueȱofȱ$3,381,607.03ȱasȱtheȱsumȱ ofȱtheȱallegedȱdeclaredȱenteredȱvalueȱ($945,922.00),ȱtheȱallegedȱlostȱrevenueȱ(actualȱandȱ potential)ȱfromȱunpaidȱliquidatedȱdutiesȱandȱcashȱdepositsȱ($2,431,225.93),ȱandȱallegedȱ
CourtȱNo.ȱ23Ȭ00201ȱ Pageȱ14ȱ ȱ
unpaidȱimportȱfeesȱ($4,459.10).ȱȱPlaintiffȱdidȱnotȱincludeȱanyȱfreightȱorȱotherȱincidentalȱ charges,ȱorȱanyȱprofit,ȱinȱtheȱcalculationȱofȱdomesticȱvalue.ȱȱSeeȱPl.’sȱMot.ȱ4,ȱ9–10.ȱ
5.ȱȱTheȱCourtȱGrantsȱNoȱReliefȱfromȱPenaltyȱforȱMitigationȱ ȱ Theȱcourtȱmayȱexerciseȱdiscretionȱinȱdeterminingȱtheȱamountȱofȱaȱpenaltyȱunderȱ
Sectionȱ592.ȱȱSeeȱ19ȱU.S.C.ȱ§1592(e)(1)ȱ(“[I]nȱanyȱproceedingȱcommencedȱbyȱtheȱUnitedȱ Statesȱ.ȱ.ȱ.ȱforȱtheȱrecoveryȱofȱanyȱmonetaryȱpenaltyȱclaimedȱunderȱthisȱsectionȱ.ȱ.ȱ.ȱallȱ issues,ȱincludingȱtheȱamountȱofȱtheȱpenalty,ȱshallȱbeȱtriedȱdeȱnovo.”)ȱ(emphasisȱadded).ȱȱȱ Defendantsȱhaveȱnotȱrespondedȱtoȱtheȱinstantȱmotionȱforȱjudgmentȱbyȱdefault,ȱ norȱdoesȱanyȱotherȱsubmissionȱbeforeȱtheȱcourtȱestablishȱanȱadequateȱbasisȱforȱ mitigationȱfromȱaȱpenaltyȱsetȱatȱtheȱdomesticȱvalueȱofȱtheȱimportedȱmerchandise,ȱasȱ allegedȱbyȱtheȱgovernment.ȱȱInȱaddition,ȱtheȱComplaintȱallegesȱfacts,ȱunrebuttedȱbyȱ defendants,ȱthatȱDorisȱCheng,ȱtheȱonlyȱpaidȱofficerȱofȱRaysonȱGlobal,ȱCompl.ȱ¶ȱ8,ȱ “directedȱtheȱimportationȱofȱinnersprings,”ȱid.ȱ¶ȱ5.ȱȱItȱfurtherȱallegesȱthatȱMs.ȱChengȱhasȱ beenȱinvolvedȱinȱtheȱimportationȱofȱinnerspringsȱfromȱChinaȱsinceȱ2004,ȱid.ȱ¶¶ȱ9–12,ȱ indicatingȱthatȱsheȱisȱanȱexperiencedȱimporter.ȱȱMoreover,ȱtheȱComplaintȱallegesȱthatȱ Ms.ȱCheng,ȱasȱaȱprincipalȱandȱcoȬownerȱofȱanȱimportingȱcompanyȱknownȱasȱTowerȱ Grow,ȱadmittedȱpastȱviolationsȱofȱcustomsȱlaws.ȱȱId.ȱ¶¶ȱ11,ȱ14.ȱ
CourtȱNo.ȱ23Ȭ00201ȱ Pageȱ15ȱ
C. ClaimȱforȱUnpaidȱDutiesȱPursuantȱtoȱSectionȱ592(d)
Regardlessȱofȱwhetherȱaȱmonetaryȱpenaltyȱunderȱ19ȱU.S.C.ȱ§ȱ1592(a)ȱisȱassessed,ȱ Customsȱisȱdirectedȱtoȱrequireȱpaymentȱofȱanyȱ“lawfulȱduties,ȱtaxes,ȱorȱfees”ȱresultingȱ fromȱaȱviolationȱofȱ§ȱ1592(a).ȱȱ19ȱU.S.C.ȱ§ȱ1592(d).ȱȱTheȱcourtȱwillȱorder,ȱtherefore,ȱthatȱ defendantsȱpayȱallȱduties,ȱtaxes,ȱandȱfeesȱthatȱremainȱunpaidȱonȱtheȱliquidatedȱentriesȱatȱ issueȱinȱthisȱcase,ȱwithȱinterestȱasȱrequiredȱbyȱlaw.ȱȱTheȱcourtȱwillȱorder,ȱfurther,ȱthatȱ defendantsȱmakeȱtheȱrequiredȱcashȱdepositsȱthatȱhaveȱnotȱyetȱbeenȱtendered,ȱforȱallȱ entriesȱatȱissueȱinȱthisȱcaseȱthatȱremainȱunliquidated,ȱwithȱinterestȱasȱrequiredȱbyȱlaw.ȱ III. CONCLUSION
Forȱtheȱreasonsȱdiscussedȱinȱtheȱforegoing,ȱtheȱcourtȱawardsȱplaintiffȱaȱcivilȱ penaltyȱinȱtheȱamountȱofȱ$3,381,607.03ȱandȱwillȱorderȱdefendantsȱtoȱpayȱallȱduties,ȱ taxes,ȱandȱfeesȱthatȱremainȱunpaidȱonȱtheȱliquidatedȱentriesȱatȱissueȱinȱthisȱcase,ȱwithȱ interestȱasȱrequiredȱbyȱlaw,ȱandȱmakeȱtheȱrequiredȱcashȱdepositsȱthatȱhaveȱnotȱyetȱbeenȱ tendered,ȱforȱallȱentriesȱatȱissueȱinȱthisȱcaseȱthatȱremainȱunliquidated,ȱwithȱinterestȱasȱ requiredȱbyȱlaw.ȱȱTheȱcourtȱwillȱenterȱjudgmentȱaccordingly.ȱ
/s/ȱTimothyȱC.ȱStanceu
TimothyȱC.ȱStanceu,ȱJudgeȱ
Dated:ȱȱJulyȱ18,ȱ2025ȱ ȱ ȱNewȱYork,ȱNewȱYorkȱ