Penalty Case Should Not Be Dismissed Due to Error in Service After Court Judgment, DOJ Says
A penalty action against the owner and director of importer Atria, Kevin Ho, should not be dismissed even though the U.S. served his counsel with the wrong summons and complaint, the Department of Justice said in an Aug. 17 reply brief. Rather, the court should grant the DOJ's motion to expand Ho's time of service, allow Ho to stipulate to his liability in line with his guilty plea in a related criminal case, grant DOJ's motion to consolidate the two actions against Ho and stay the consolidated matter until Ho serves his prison sentence, the brief said (United States v. Chu-Chiang "Kevin" Ho, et al., CIT #19-00038).
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The government originally brought its case against Ho for illegally importing HID headlight conversion kits. In May 2020, CIT denied Ho's motion to dismiss the case against him in which he claimed that he never received a final penalty notice, as is required before the government seeks to collect penalties in court (see 2005180027). Although he admitted to receiving the pre-penalty notice from CBP, Ho said he never got the actual penalty notice. The government said it sent the notice to two of Ho's last known addresses, which were marked as delivered.
According to the "mailbox rule," a letter is presumed to have been received if it was "properly directed" and is proved to have been "either put into the post office or delivered to the postman." While agreeing that Ho was not properly served, CIT gave the government an additional 60 days to serve him. The government did so, but attached the wrong summons and complaint to the service. In fact, they were the summons and complaint associated with the other case the government brought against Ho for the same issue. Ho then moved to quash service due to the error.
Service should not be quashed and the case should not be dismissed, since governing case law dictates how to proceed in these circumstances, DOJ said. For starters, Ho's multiple filings in the case show that he received proper notice of the lawsuit, DOJ said. "Mr. Ho cannot contend that he is unaware of the complaint or the substance of the complaint," the brief said. "Indeed, he is so familiar with the administrative process underlying the complaint in this case that on April 29, 2019, he submitted detailed arguments about its purported shortcomings." Second, Ho did not suffer prejudice and could not "conceivably" be later prejudiced by this delay of service since this case has been stayed since the CIT's May 2020 judgment pending resolution of the criminal case. Finally, the government would actually be prejudiced by dismissal since the statute of limitations expired for the claims made in the case.
"Mr. Ho and his counsel acknowledged they are aware of this lawsuit, and have submitted detailed briefings in this case responding to the complaint beginning in April 2019," the brief said. "They cannot credibly contend that they are unaware of the substance of the complaint. Thus, “substantial compliance” with Rule 4’s service requirements has been achieved because Mr. Ho has received actual notice of the complaint."