CAFC Finds Gross Negligence in Ford's Misrepresentation of Certain Values, Failure to Disclose Certain Costs, Etc. (Ford II)
In U.S. v. Ford Motor Company (Ford II), the Court of Appeals for the Federal Circuit (CAFC) reviewed a case similar to Ford I. In this case, Ford appealed a decision of the Court of International Trade (CIT), where Ford had been determined to have committed "gross negligence" by misrepresenting the value on entries covering tooling and stamping dies, which violated 19 USC 1484 and 1485.
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In Ford I, the due process clause of the Fifth Amendment prevented imposition of a penalty for negligence for the failure to disclose provisional pricing information. But in this later case, the CAFC stated that Ford omitted value information as to the engineering costs in its possession, and that it had done so despite sufficient time to have presented it prior to the date of entry. According to the CAFC, Ford's failure to provide true and correct value information at the time of entry was a violation of the requirements of Section 1484. In determining whether Ford committed "gross negligence" by not providing this value information as required in Section 1484, the CAFC stated that an importer must have acted "willfully, wantonly, or with reckless disregard in its failure to ascertainthe relevant facts"
In reviewing the CIT's findings, the CAFC agreed that Ford was guilty of "gross negligence," because they could have identified the dutiable engineering costs, but failed to so, and failed to offer any explanations as to why it did not.
The CIT had also found Ford guilty of "gross negligence" based on its failure to provide the value information in a "timely" manner, when requested by Customs in its CF 28s, and its failure to disclose information from its own internal audits on the engineering costs. The CAFC agreed that both of these actions by Ford constituted a violation under Section 1485, and their "indifference and utter lack of care" in meeting their obligations to provide this value information constituted "gross negligence."
CAFC 05-1593 (dated 08/30/06) available at http://www.fedcir.gov/opinions/05-1593.pdf