No Extension for Service Given Government Errors, Lack of Prejudice in Penalty Case, Importer Says

An extension of the time of service in a penalty action against the owner and director of importer Atria, Kevin Ho, should not be granted, counsel for Ho argued in an Aug. 25 reply brief at the Court of International Trade, also pushing for the case to be dismissed. The U.S. served Ho's counsel with the wrong summons and complaint and cannot prove excusable neglect in its service, Ho argued (United States v. Chu-Chiang "Kevin" Ho, et al., CIT #19-00038).

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, especially since his counsel refused to accept service on his behalf at the time. The government said it sent the notice to two of Ho's last known addresses, and it was 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, this time with Ho's counsel agreeing to accept service on his behalf. 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.

The government responded with a request for an extension, arguing that due to the "defect" of service and Ho's "prior conduct evading service," the U.S. should be given more time to effect service again.

Ho's counsel took exception, declaring that the U.S. misrepresented that Ho evaded service. "In reality, the Plaintiff did not ask Defendant’s counsel to accept service until after its process server failed to properly serve Mr. Ho; moreover Defendant’s counsel was not authorized to accept service on behalf of Mr. Ho at that time," the brief said. "It is well established that an attorney acting generally for a client cannot accept service of process which commences an action without any authority to do so from the client."

Ho's counsel said that the U.S. spent "an inordinate amount of time" discussing the case's underlying facts in an attempt to prejudice the court against Ho and "deflect from the singular procedural issue at hand -- its failure to effect proper service." Elsewhere in its motion to extend, the U.S. argued that it would be prejudiced if proper service is not given. But, the HID conversion kits in dispute were already seized and forfeited and Ho was ordered to pay $1.7 million as part of the criminal case concurrent with the CIT action, Ho's counsel said. "In other words, the Plaintiff is hard pressed to argue that it will be prejudiced if this action is dismissed," the brief argued.

The U.S. also argued that Ho's counsel concealed the error in the service by not alerting the government that it sent the wrong summons and complaint. But the defendant found it "dishonest and inflammatory to assert Defendant’s counsel 'concealed' anything when the error is plainly visible to Plaintiff’s counsel," the brief said. The case should be dismissed since there was no excusable neglect in giving the faulty service, the U.S. would not be prejudiced if the proceedings were dropped, and a reprieve was already given to the U.S. the first time the court gave it a second chance at effecting service, Ho argued.