United States of America v. Colabella et al

MOTION for Summary Judgment

D. AlaskaFebruary 1, 2017

KAREN L. LOEFFLER United States Attorney E. BRYAN WILSON Assistant U.S. Attorney Federal Building & U.S. Courthouse 222 West Seventh Avenue, #9, Room 253 Anchorage, Alaska 99513-7567 Phone: (907) 271-5071 Fax: (907) 271-2344 Email: bryan.wilson@usdoj.gov Florida Bar No. 0604501 Attorneys for Plaintiff IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ALASKA UNITED STATES OF AMERICA, Plaintiff, vs. LOUIS COLABELLA and THERESA COLABELLA d/b/a LOUIS A. COLABELLA, INC. and POSTAL CONNECTIONS, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) No. 3:14-cv-00113-SLG UNITED STATES MOTION FOR SUMMARY JUDGMENT AGAINST DEFENDANT LOUIS A. COLABELLA AND LOUIS A. COLABELLA, INC., AND POSTAL CONNECTIONS COMES NOW the UNITED STATES OF AMERICA and files its Motion for Summary Judgment Against Defendant Louis Colabella and Louis A. Colabella, Inc. and Postal Connections as follows: Case 3:14-cv-00113-SLG Document 55 Filed 02/01/17 Page 1 of 13 2 United States v. Colabella 3:14-cv-00113-SLG United States Motion for Summary Judgment This is an action to recover a civil monetary penalty arising under the Tariff Act of 1930, as amended, at 19 U.S.C. § 1526. The United States is suing the Defendants, claiming that they imported counterfeit merchandise through the Port of Anchorage (ANC) in 2010. FACTS Defendant, Louis Colabella resides in New York. At all times relevant to this case, the business, Louis A. Colabella, Inc. d/b/a Postal Connections had its principal place of business located at 1810 Veterans Highway, Islandia, New York, 11749. Colabella depo. p. 7, 13, 20; Crosby Affidavit, Exhibit A, p. 1-7. Postal Connections is a franchise offering pack and ship services and private mailboxes for rent. Colabella depo. p. 13-19. On or about July 10, 2010, two companies, An Su Trading, Shanghai, China and Onshore Business Co., Shanghai, China, attempted to ship 564 pairs of “Coach sunglasses” and 564 pairs of “Oakley sunglasses” from Shanghai, China to Defendant through ANC. The shipments were addressed to “Colabella, Lou, 1810 Veterans Hwy, Central Islip, NY 11722. Crosby Affidavit Ex. A, p. 8-30. The shipment was examined by U.S. Customs and Border Patrol (“CBP”) officers at ANC. Crosby Affidavit, Ex. A, p. 8-30. The shipment appeared counterfeit, so the CBP officers contacted representatives of both Case 3:14-cv-00113-SLG Document 55 Filed 02/01/17 Page 2 of 13 3 United States v. Colabella 3:14-cv-00113-SLG United States Motion for Summary Judgment Coach and Oakley for assistance in determining whether the sunglasses were genuine. Both Coach and Oakley determined that the sunglasses were counterfeit. Id. Based upon the representations of the Coach and Oakley representatives, CBP determined that the shipment infringed upon a trademark registered by SD-3C, LLC, as registered with the U.S. Patent and Trademark Office (Registration Nos. 2451168 and 1521599) and recorded with CBP (Recordation Nos. TMK 08-00221 (Coach) and TMK 09-00815 (Oakley)). Ex. A, p. 29-30. CBP seized the shipment pursuant to 19 U.S.C. § 1526(e), and 19 C.F.R. § 133.21(b). Id. CBP appraised the manufacturer’s suggested retail price of the shipment to be $132,625.00. Id. CBP administratively forfeited the merchandise in October 2010. Crosby Affidavit, Ex. A, p. 31-42. In November 2010, CBP sent Colabella a Notice of Penalty and Demand for Payment. Crosby Affidavit, Ex. A, p. 43-44. Colabella responded with a letter in which he claimed “[n]either my company, known as Postal Connections, nor I are involved in importing or importing and selling products of any kind.” Crosby Affidavit, Ex. A, p. 45. During the investigation regarding the shipment of sunglasses to Colabella, CBP intercepted two additional shipments of counterfeit goods Case 3:14-cv-00113-SLG Document 55 Filed 02/01/17 Page 3 of 13 4 United States v. Colabella 3:14-cv-00113-SLG United States Motion for Summary Judgment which were being shipped to the 1810 Veterans Highway address; 1) three packages of counterfeit Louis Vuitton handbags which were seized at John F. Kennedy Airport in New York; and 2) a parcel of 7,200 gelcaps of sibutramine (a banned substance marketed as a weight loss drug) which were seized at San Francisco Airport. Crosby Affidavit, Ex. A, p. 46-54. In addition, in January 2011, the Queens District Attorney’s Office, working in conjunction with the United States Postal Inspector and agents from Immigration and Customs Enforcement, Homeland Security Investigations (ICE HSI) executed a search warrant at Colabella’s Postal Connections store and seized 750 – 1500 cartons of untaxed cigarettes which had been shipped to the Postal Connections store. Colabella depo. p. 30-32; Mondanaro Affidavit, Ex. A-C. As he did with the counterfeit sunglasses, Colabella disclaimed any knowledge of how the cigarettes happened to arrive at his place of business. Id. Colabella told the agents that an Asian woman named Tracy would periodically come to the Postal Connection store and give Colabella approximately $3,000.00-$5,000.00 to keep her account current. Id. He further told inspectors that he would receive packages at his store and forward those packages to other locations after receiving email instructions from persons in China. Id. A review of Colabella’s bank records showed a number of large deposits in round dollar amounts during this time period. Case 3:14-cv-00113-SLG Document 55 Filed 02/01/17 Page 4 of 13 5 United States v. Colabella 3:14-cv-00113-SLG United States Motion for Summary Judgment Colabella depo. p. 25-26.1 Throughout 2011, Colabella continued to deny involvement in any illegal imports and CBP continued to offer to settle the penalty action without litigation. Crosby Affidavit, Ex. A, p. 55-61. Colabella has not made any payments toward the penalty assessed by CBP. LAW Generally Summary judgment is appropriate when there exists no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. FRCP 56(e); Matsushita Elec. Indus. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass=n, 809 F.2d 626, 630 (9th Cir. 1987). The evidence of the party opposing summary judgment is to be believed, and all reasonable inferences that may be drawn from the facts before the court must be drawn in favor of the opposing party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Matsushita Elec., 475 U.S. at 587. The inquiry is “whether the evidence presents a sufficient disagreement 1 Colabella produced his bank records during discovery. To attach those records here would require extensive redaction and the United States believes that the actual records are not necessary for resolution of this Motion. Case 3:14-cv-00113-SLG Document 55 Filed 02/01/17 Page 5 of 13 6 United States v. Colabella 3:14-cv-00113-SLG United States Motion for Summary Judgment to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Anderson, 477 U.S. at 251-52. “[T]o carry its ultimate burden of persuasion on the motion, the moving party must persuade the court that there is no genuine issue of material fact.” Nissan Fire & Marine Ins. Co. v. Fritz Companies, Inc., 210 F.3d 1099, 1102 (9th Cir. 2000). A fact is “material” if its proof or disproof is essential to an element of a plaintiff's case. Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986). Once a moving party carries its burden of production, the nonmoving party must produce evidence to support its claim or defense. Nissan Fire & Marine, 210 F.3d at 1103. “If the nonmoving party fails to produce enough evidence to create a genuine issue of material fact, the moving party wins the motion for summary judgment.” Id. “The mere existence of a scintilla of evidence in support of the plaintiff=s position will be insufficient.” Anderson, 477 U.S. at 252. Importation Statutes The Tariff Act 19 U.S.C. § 1202 et seq. prohibits the importation of counterfeit goods into the United States. 19 U.S.C. § 1526(a) makes it “unlawful to import into the United States any merchandise of foreign manufacture if such merchandise, or the label, sign, print, package, wrapper, Case 3:14-cv-00113-SLG Document 55 Filed 02/01/17 Page 6 of 13 7 United States v. Colabella 3:14-cv-00113-SLG United States Motion for Summary Judgment or receptacle, bears a trademark owned by a citizen of, or by a corporation or association created or organized within, the United States….” Subsection (f)(1) states “Any person who directs, assists financially or otherwise, or aids and abets the importation of merchandise for sale or public distribution that is seized under subsection (e) of this section shall be subject to a civil fine.” “All that is required to establish liability under § 1526(a) is proof of the nonconsensual importation of foreign manufactured goods bearing a registered mark owned by an American corporation.” Dial Corp. v. Manghnani Corp., 659 F.Supp. 1230, 1235 (D. Conn. 1987) (granting summary judgment). “In order to assess a civil fine, the CBP need only find that a person has directed, assisted financially or otherwise, or aided and abetted the importation of seized merchandise.” United States v. Nguyen, 655 F.Supp.2d 1203, 1213 (S.D. Ala. 2009). The importation language of the Tariff Act is similar to that contained in another importation statute, the Lanham Act, 15 U.S.C. 1051 et seq. Sections 1124 and 1127 of the Lanham Act are incorporated by reference in the Tariff Act. 19 U.S.C. § 1526(e). Courts have recognized that “evidence that proved …illegal importation under the Lanham Act establishes Defendant’s liability [under the Tariff Act].” Philip Morris USA, Inc. v. Liu, 489 F.Supp.2d 1119, 1122-23 (C.D. Calif. 2007); see also Philip Morris v. Lin, Case 3:14-cv-00113-SLG Document 55 Filed 02/01/17 Page 7 of 13 8 United States v. Colabella 3:14-cv-00113-SLG United States Motion for Summary Judgment 2004 WL 5582505, *4 (C.D. Calif. 2004) (same facts that establish violation of Lanham Act establish violation of Tariff Act). “Offenses under the Lanham Act are strict liability offenses.” Liu, 489 F.Supp.2d at 1122; Hard Rock Café Licensing Corp. v. Concession Svcs, Inc., 955 F.2d 1143, 1152, n. 6 (7th Cir. 1992); see also United States v. Able Time, Inc., 545 F.3d 824, 832-33 (9th Cir. 2008) (explaining differences in language allowing private enforcement under the Lanham Act and government enforcement under the Tariff Act – “Congress may have wanted to apply a more restrictive definition in the context of criminal suits and civil actions by self-interested private plaintiffs [Lanham Act] than in penalty suits brought by the government [Tariff Act].”) ARGUMENT Here, Colabella does not challenge the lawfulness of CBP’s seizure of the goods, its determination that the sunglasses were counterfeit or CBP’s methods for calculating the penalty imposed. Colabella’s only argument for avoiding the penalty is his contention that he did not import the goods within the meaning of the statue. As discussed below, this argument must fail. Colabella does not dispute that in July 2010, CBP intercepted two shipments of counterfeit sunglasses which were addressed to him. Colabella depo. p. 19-24. He claims he did not order the goods, but has no explanation Case 3:14-cv-00113-SLG Document 55 Filed 02/01/17 Page 8 of 13 9 United States v. Colabella 3:14-cv-00113-SLG United States Motion for Summary Judgment for how the packages came to be addressed to him. Id. In the weeks following, no one came into the Postal Connections store inquiring about a shipment which had not arrived. Id. In his deposition, Colabella claimed that he has never received any other packages addressed to him for which he has not placed an order. Id. However, Colabella does not dispute that, several months after it intercepted the shipments of sunglasses, CBP intercepted shipments of counterfeit handbags and banned diet pills which were also addressed to him. Colabella depo., p. 20-25, 31-33, 37; Crosby Affidavit. In addition, Colabella admits that he received a large shipment of untaxed cigarettes which were seized during execution of a search warrant at his store. Colabella depo. p. 30-34; Mondanaro Affidavit. As he did with the counterfeit sunglasses, Colabella simply disclaimed any knowledge of how the cigarettes these goods happened to be addressed to his place of business. Id. Colabella told agents that an Asian woman would periodically come to the Postal Connection store and give him $3,000.00-$5,000.00 to keep her account current. Id. He further told inspectors that he would regularly receive packages and forward them on to other locations per email instructions from persons in China. Id. Case 3:14-cv-00113-SLG Document 55 Filed 02/01/17 Page 9 of 13 10 United States v. Colabella 3:14-cv-00113-SLG United States Motion for Summary Judgment As discussed above, courts have interpreted importation statutes as strict liability offenses. Liu, 489 F.Supp.2d at 1122; Hard Rock Café, 955 F.2d at 1152, n. 6. A penalty may be imposed even when the alleged importer disclaims an interest in the merchandise. See United States v. Marco Leather Goods, Ltd, 2013 WL 53506322, *2 (E.D. N.Y. 2013) (goods seized at JFK before delivery to defendant); Philip Morris USA, Inc. v. U.S. Sun Star Trading, Inc., 2010 WL 2133937, *5 (E.D. N.Y. 2010) (plaintiff proved defendants imported cigarettes by showing cigarettes were “designated for delivery” to defendants); Philip Morris USA, Inc. v. Lin, 2004 WL 5582505, *1 (C.D. Calif. 2004) (cigarettes found in storage unit rented in defendant’s name). The instant case is similar to United States v. Nguyen, 655 F.Supp.2d 1203 (S.D. Ala. 2009). There, the Government instituted a civil penalty action against Nguyen for illegal importation of counterfeit purses and wallets. 655 F.Supp.2d at 1205. Nguyen attempted to defeat summary judgment by executing an affidavit which stated that “he never asked any third party to ship these goods to him and his testimony that he does not know the person whose name was listed as the shipper.” Id. at 1213. The court held that, “assuming, without deciding” that Nguyen’s statements were enough to create a question of fact, in light of other evidence Case 3:14-cv-00113-SLG Document 55 Filed 02/01/17 Page 10 of 13 11 United States v. Colabella 3:14-cv-00113-SLG United States Motion for Summary Judgment indicating that Nguyen intended to import the goods, his disclaimer of interest was insufficient to defeat summary judgment. Id. Here, there is ample evidence that Defendant either imported the goods or, at the very least, assisted with the importation. 19 U.S.C. § 1526(f)(1). CBP intercepted not one, but two separate packages of sunglasses, each addressed to Defendant at his store. Crosby Affidavit. In addition, the shipments were from two different companies in China, Onshore Business, Ltd. and Shanghai An Su Trading, Ltd. Id. Each shipment contained 564 sunglasses. Id. Separate shipments from separate companies in large quantities clearly shows that these shipments were not a mistake, but instead part of a scheme by Colabella to import or assist in the importation of counterfeit merchandise for resale in the United States. See e.g., Potato Sales Co., Inc. v. Dept. of Agriculture, 92 F.3d 800, 805 (9th Cir. 1996) (affirming administrative finding of willful misbranding in part because fruit was transported in three separate shipments) The United States contends that summary judgment is proper on the above evidence alone. However, there is more. During the same time period, CBP intercepted two other shipments of banned products coming to the same address. Crosby Affidavit. In addition, agents seized over 750 cartons of untaxed cigarettes which were also sent to the Postal Connections store. Case 3:14-cv-00113-SLG Document 55 Filed 02/01/17 Page 11 of 13 12 United States v. Colabella 3:14-cv-00113-SLG United States Motion for Summary Judgment Mondanaro Affidavit. These shipments, all occurring within six months of one another, cannot be coincidental, but instead show that Colabella was deep into a scheme to import or assist with the importation of a large number of counterfeit goods into the United States. In addition, during the search of his store, Colabella admitted to agents that an Asian woman regularly paid him to receive shipments of items and forward them based upon email instructions from persons in China. This admission, coupled with the fact that both shipments of sunglasses originated in China, makes the shipments of sunglasses to Colabella far more than a mere coincidence. Colabella has in essence admitted to assisting in the importation of counterfeit goods. The shipments at issue here did not accidentally get addressed to Colabella. Instead, these sunglasses were only a small piece of what undoubtedly was a large scheme to import counterfeit goods into the United States. Colabella willingly put himself into the middle of this scheme and was paid well to do so. He cannot avoid liability here by claiming ignorance of what was in the boxes. There is no dispute that the goods were counterfeit or that CBP improperly calculated the value of the goods or the penalty imposed. There are no genuine issues of material fact and the United States is entitled to Case 3:14-cv-00113-SLG Document 55 Filed 02/01/17 Page 12 of 13 13 United States v. Colabella 3:14-cv-00113-SLG United States Motion for Summary Judgment judgment as a matter of law. WHEREFORE, the UNITED STATES OF AMERICA requests that this Court enter judgment against Defendant Louis Colabella and Louis A. Colabella, Inc. and Postal Connections in the amount of $132,625.00, plus applicable interest and costs. RESPECTFULLY SUBMITTED this February 1, 2017, in Anchorage, Alaska. KAREN L. LOEFFLER United States Attorney s/ E. Bryan Wilson E. BRYAN WILSON Assistant U.S. Attorney United States of America CERTIFICATE OF SERVICE I hereby certify that on February 1, 2017 a true and correct copy of the foregoing was served via ECF on the following: Ronald A. Offret s/ E. Bryan Wilson Office of the U.S. Attorney Case 3:14-cv-00113-SLG Document 55 Filed 02/01/17 Page 13 of 13