Thursday, March 06, 2014

Trek Leather Rehearing

Trek Leather is a really important decision from the Court of Appeals for the Federal Circuit. It held that the duty of reasonable care attaches to the importer of record and not to third parties. That is an important consideration for corporate officers and employees who provide information to Customs and Border Protection and has a major potential impact on how Customs brings penalty cases.

The Federal Circuit has accepted a petition for rehearing en banc in the case. That means the entire Court will review the issue. This does not happen often and indicates that there is disagreement among the judges of the Federal Circuit. So, this will be important to watch.

The Federal Circuit has specified the following questions as central to its review:

A) 19 U.S.C. § 1592(a) imposes liability on any "person" who "enter[s], introduce[s], or attempt[s] to enter or introduce" merchandise into United States commerce by means of fraud, gross negligence, or negligence by the means described in § 1592(a). What is the meaning of "person" within this statutory provision? How do other statutory provisions of Title 19 affect this inquiry?
B) If corporate officers or shareholders qualify as "persons" under § 1592(a), can they be held personally liable for duties and penalties imposed under § 1592(c)(2) and (3) when, while acting within the course and scope of their employment on behalf of the corporation by which they are employed, they provide inaccurate information relating to the entry or introduction of merchandise into the United States by their corporation? If so, under what circumstances?
C) What is the scope of "gross negligence" and "negligence" in 19 U.S.C. § 1592(a) and what is the relevant duty? How do other statutory provisions in Title 19 affect this inquiry?

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