In a variety of contexts, U.S. government agencies regulating international trade and the cross-border movement of goods and services possess significant civil and criminal penalty authority. For example, the primary agency at the U.S. border and ports of entry, U.S. Customs and Border Protection (CBP), typically relies on a civil penalty statute and its implementing regulations to assess monetary penalties for material false statements or omissions in the importing process, or in some cases, the exporting process for certain origin declarations pursuant to free trade agreements. Congress has authorized CBP to impose civil penalties on any person who, “by fraud, gross negligence, or negligence . . . enter{s}, introduce{s}, or attempt{s} to enter or introduce any merchandise into the commerce of the United States” by means of material false statements or omissions. 19 U.S.C. § 1592(a)(1). The relevant statute requires CBP to initiate the penalty process administratively. The process includes petitioning rights, and the agency is required to provide notice of the proposed penalty amount and the culpability level (i.e., fraud, gross negligence or negligence). Id. § 1592(b)(1)(A) and (c).
At the conclusion of the administrative process, and if the alleged offender disputes the proposed civil penalty, including the alleged culpability level, the government, through CBP and the U.S. Department of Justice, may initiate suit at the U.S. Court of International Trade (CIT) to recover the unpaid penalties and any unpaid duties and interest. 28 U.S.C. § 1582. An alleged violator is not required to pay the proposed penalty and any unpaid duties by opting for a lawsuit. In some cases, defendants in these civil penalty cases request a trial by jury, consistent with CIT Rule 38 and the Seventh Amendment of the Constitution.
In such a dispute where a defendant has invoked its right to a trial by jury, does the presiding judge or a jury get to determine the penalty amount owed to the government?
In United States v. Univar USA Inc., a case pertaining to a § 1592 civil penalty against Univar for unpaid antidumping duties and penalties for alleged transshipment of saccharin, Univar requested a trial by jury “on all issues so triable.” Judge Mark A. Barnett held that neither § 1592 nor the Constitution’s Seventh Amendment provides a right to have the penalty amount determined by a jury. Interestingly, the United States argued that the Constitution required that a jury determine both whether there is a violation and, if so, what the penalty amount should be. Univar argued that a jury should only determine whether there is violation (and the culpability level) – and that the amount of the penalty is a question to be determined by the court. Judge Barnett noted that the position of the United States was in direct conflict with the position it took in prior litigation.
As for § 1592, Judge Barnett started with the statute’s text and held that it did not state “whether the judge or jury must determine the amount of the penalty.” Slip Op. at 3. Turning to the legislative history, he likewise concluded that it did not answer who decides the penalty amount. Id. at 3–5. He also canvassed prior CIT opinions and orders on the issue. Id. at 4–5 & n.4. Although he identified one prior order in which the CIT confronted the same issue and denied the request for a jury to determine the penalty amount, he found the order unpersuasive because the CIT did not provide an explanation for its decision. See id.
Judge Barnett next turned to the Seventh Amendment, which guarantees “the right of trial by jury” in “Suits at common law{} where the value in controversy shall exceed twenty dollars.” U.S. Const., amend. VII. Because the Seventh Amendment applies only to “actions brought to enforce statutory rights that are analogous to common-law causes of action ordinarily decided in English law courts in the late 18th century,” Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 41 (1989), Judge Barnett applied the Supreme Court’s two-part test articulated in Tull v. United States to determine whether § 1592 is analogous to such 18th century suits in law. Slip Op. at 5–6 (discussing 481 U.S. 412 (1987)). The first step required Judge Barnett to “compare the statutory action” at issue, here a claim regarding the appropriate penalty amount under § 1592, to determine whether its “nature” is similar “to the 18th-century actions brought in the courts of England prior to the merger of the courts of law and equity.” Tull, 481 U.S. at 417. The second step required Judge Barnett to “examine the remedy sought and determine whether it is legal or equitable in nature.” Id. at 417–18. Tull provides that a presiding judge “must” undertake both steps in his or her analysis. Id. at 417.
Judge Barnett did not begin his analysis with a straightforward application of Tull. Instead, he distinguished an alleged offender’s liability under § 1592 from any remedy that he may owe under the same provision. Slip Op. at 6. Although an alleged offender undoubtedly may request that a jury determine his liability under § 1592, Judge Barnett concluded that right does not necessarily extend to a guarantee that a jury must also address the remedy owed. Id.
With that distinction settled, Judge Barnett applied Tull to the issue at hand. Under the first step, he analogized § 1592 to statutory causes of action that require highly discretionary calculations traditionally performed by judges. Id. at 6–9. Because § 1592 is similar to causes of actions in the 18th century that were traditionally assigned to a court of law, Judge Barnett reasoned that the Seventh Amendment does not provide a right to have a jury determine the appropriate civil penalty amount. See id. Judge Barnett did not address the second step under Tull, id. at 6–11, despite the Supreme Court’s instruction that he “must” do so, see 481 U.S. at 417.
In reaching his conclusion under the first step of Tull, Judge Barnett rejected two arguments advanced by the government. First, the government argued that juries typically determined damages in civil suits and analogized civil penalties under § 1592 to civil damages. Judge Barnett rejected that contention because the Supreme Court has equated civil penalties to something else entirely—criminal sentencing, a task traditionally left to judges. Slip Op. at 10. Second, the government cited five cases for the proposition that juries determined discretionary civil penalties paid to the government in customs cases at the time the Seventh Amendment was adopted. Judge Barnett found the cases inapposite, distinguishing each on the facts. Id. at 11.
What’s next? More often than in other cases, the government tends to appeal customs issues that it loses before the CIT. However, a few days after Judge Barnett issued his opinion, the parties settled the litigation, and Judge Barnett issued an order dismissing the dispute with prejudice. It therefore seems that a definitive answer on this issue from a higher court will have to wait for another day. If one of Judge Barnett’s colleagues confronts the same issue in future litigation, they may consider his opinion persuasive, but his decision will not bind them or prevent them from charting a different course. See Am. Silicon Techs. v. United States, 261 F.3d 1371, 1381 (Fed. Cir. 2001).
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