United States v. Sterling Footwear, Inc. (279 F. Supp. 3d 1113, 2017)

OPINION AND ORDER

Barnett, Judge:

The United' States "of America (“Plaintiff’ or the “Government”)' sued Sterling Footwear, Inc. (“Sterling”), Alex Ryan Ng (“Ng”), and Ng Branding, LLC (“Ng Branding”) (collectively, “Defendants”), to recover unpaid duties and a monetary penalty pursuant to section 592 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1592 (2012), and interest pursuant to 19 U.S.C. § 1505, on 337 entries of footwear it contends Sterling " incorrectly classified as “rubber tenuis shoes” pursuant to subheading 6402.91.40 of the Harmonized Tariff Schedule of the United States (“HTSUS”). See generally Compl., ECF No. 2. Ng seeks summary judgment as to his personal liability. Def. Alex Ng’s Mot. for Summ. J. and Def. Alex Ng’s Mem. of Law and Points of Authorities in Supp. of Mot. for Summ. J. (“Ng’s MSJ”), ECF No. 53. The Government cross-moves for summary judgment against all Defendants. Pi’s Cross-Mot. for Summ. J. Against Def. Alex.Ng and Mot. for Summ. J. Against Defs. Sterling Footwear, Inc. and Ng Branding, LLC (“Pl.’s XMSJ”), ECF No, 62. The court has subject matter jurisdiction pursuant to 28 U.S.C. § 1682. For the reasons discussed below, Ng’s motion for summary judgment will be denied; the Government’s cross-motion for summary judgment against Ng will be denied; and the Government’s motion for summary judgment against Sterling and Ng Branding will be granted in part and denied in part.

Background

1. Material Facts Not Genuinely in Dispute

Pursuant to U.S. Court of International Trade (“USCIT”)' Rules 56(c)(1)(A) and 56.3(a), .movants are to present material facts as short and concise. statements, in numbered paragraphs, with citations to “particular parts of materials in the record” as support. See USCIT Rule 56.3(a)(“factual positions described in Rule 56(c)(1)(A) must be annexed to the motion in a separate, short and concise statement, in numbered paragraphs”). In responsive papers, the opponent “must include correspondingly numbered paragraphs responding to the numbered paragraphs in the statement of the movant.” USCIT Rule 56.3(b). “If a party fails to properly .,. address another party’s assertion of fact as required by Rule 56(c), the court may .. ⅛ consider the fact undisputed for purposes of the motion.” USCIT Rule 56(e)(2).

Parties submitted separate statements of undisputed material facts with their respective motions and responses to the opposing party’s statements. See Def. Alex Ng’s Statement of Mat. Facts Not in Dispute. Pursuant to USCIT [Rule] 56.3 (“DSOF”), ECF No, 53-1; ' PL’s Resp. to Def. Alex Ng’s Rule 56.3 Statement (“PL’s Resp. to DSOF”), ECF No. 64; PL’s Rule 56.3 Statement (“PSOF”), ECF No. ,63; Defs. Sterling Footwear, Inc., Alex Ryan Ng and Ng Branding, LLC’s Joint Resp. to PL’s USCIT [Rule] 56.3 Statement (“Defs.’ Resp. to PSOF”), ECF No. 84-3. Upon review of Parties’ facts (and supporting exhibits), the court finds the following material facts not genuinely disputed.

A. Sterling

On April 23, 2007', Ng incorporated Sterling, an importer and wholesaler of footwear, in the State of California. PSOF ¶¶ 1, 5; Defs.’ Resp. to PSOF ¶¶ 1, 5; see also PSOF ¶ 11; Defs.’ Resp. to PSOF ¶ 11 (Ng created and founded Sterling). Sterling began importing footwear on July 17, 2007. PSOF ¶ 50; Defs.’ Resp. to PSOF ¶ 50; PL’s Ex. 1 (Decl. of Benjamin L. Whitney) (“Whitney Decl.”), ECF No. 62-2, Attach. A (Letter from Benjamin Whitney, Import Specialist, to Jonathan Erece, Supervisory Import Specialist, regarding a proposed penalty for Sterling) (Dec. 28, 2009) (“Proposed Penalty Letter”) at 2, ECF No. 62-3 (providing Sterling’s- importer of record number). From July 2007 to October 2009, Sterling made 363 entries of footwear that entered the United States at the Los Angeles/Long Island Beach seaport and the Los Angeles International- Airport. PSOF ¶ 51; Defs.’ Resp. to PSOF ¶ 51.

Sterling imported and sold several types of shoes, including “flip flops, - sandals, heels, boots, and sneakers (high tops and low tops), made from a variety of textiles, leathers, rubber, or combination of materials.” PSOF ¶ 35; Defs.’ Resp. to PSOF ¶ 35; see also Pl.’s Ex. 9, ECF Nos. 93-5, 93-6 (photographs of samples of Sterling’s 2009 footwear); Pl.’s Physical Ex. 1, ECF No. 95 (physical samples of Sterling’s 2009 footwear). Sterling created its own footwear designs, which were manufactured in Vietnam to Sterling’s specifications. PSOF ¶ 36; Defs.’ Resp. to PSOF ¶ 36. Sterling sold its footwear to-Philip Simon Design, Inc. (“Philip Simon”), using the brand name “Ed Hardy.” PSOF ¶ 37; Defs.’ Resp. to PSOF ¶ 37. Philip Simon placed orders with Sterling for “specific footwear style numbers,” which corresponded to specific designs, colors, and material. PSOF ¶ 38; Defs.’ Resp. to PSOF ¶38. Before satisfying purchase orders, Sterling had samples made “to ensure that its footwear was manufactured to its specifications and met its quality control standards.” PSOF ¶ 39; Defs.’ Resp. to PSOF ¶ 39.

Ng was Sterling’s president, chief executive officer, and majority shareholder (owning at least 95% of the shares). PSOF ¶¶ 2, 13; Defs.’ Resp. to PSOF ¶¶2, 13; see also DSOF ¶¶ 1-2; Pl.’s Resp. to DSOF ¶¶ 1-2; Ng’s Ex. D (deposition of Ty V. Ngo) (“Ngo Dep.”) at 38:22-39:14, ECF No. 53-3 (testifying to a five percent ownership interest in Sterling). Ng controlled Sterling’ finances, the distribution of its dividends, and the sale of its assets. PSOF ¶ 15; Defs.’ Resp. to PSOF ¶ 15; see also PSOF ¶¶ 12, 21(1) (Ng determined who owned Sterling’s shares); Defs.’ Resp. to PSOF ¶¶ 12,21(1). Ng was the “ultimate decision-maker” for certain of Sterling’s business decisions, including the creation of its production department, which was responsible for handling entries; hiring and promoting employees, and delegating authority thereto; and the design, development, and manufacture of Sterling’s imported footwear. PSOF ¶ 21(2),(4),(6); Defs.’ Resp. to PSOF ¶¶ 21(2),(4),(6); see also PSOF ¶ 31; Defs.’ Resp. to PSOF ¶ 31 (“Ng actively participated in” the design and manufacture of Sterling’s footwear); DSOF ¶ 88; Pl.’s Resp. to DSOF ¶ 88 (“[ ] Ng set up a production department at Sterling’s offices.”); Ng’s Ex. Y (Decl. of Alex Ng) (“Ng Decl.”) ¶ 7, ECF No. 53-7 (Ng’s “primary responsibilit[ies]” consisted of footwear design, “marketing, sales and establishing relationships with Chinese manufactur[ers]”).

In August 2007, Ng hired Janet Huynh (“Ms. Huynh”) “to handle production, i.e., to work with Sterling’s customs brokers to enter Sterling’s footwear.” PSOF ¶ 24; Defs.’ Resp. to PSOF ¶ 24. Three months later, Ms. Huynh became Sterling’s general manager; she subsequently hired Nancy Ng “to oversee Sterling’s entries and to work with Sterling’s customs brokers.” PSOF ¶ 41; Defs.’ Resp. to PSOF ¶ 41; DSOF ¶ 111; Pl.’s Resp. to DSOF ¶ 111; see also DSOF ¶ 96; PL’s Resp. to DSOF ¶96 (Ms. Huynh and Ms. Ng “were the only members of Sterling’s production department”). Ms. Ng had prior experience working for a customs broker and filing entries on clients’ behalf. PSOF ¶ 42; Defs.’ Resp. to PSOF ¶ 42.

B. The Subject Entries

Plaintiff asserts that, of Sterling’s 363 footwear entries, 337 entries, which are at issue here, asserted classification pursuant to HTSUS 6402.91.40. PSOF ¶¶ 52, 56. US-CIT Rule 56(c)(1)(A) provides that “[a] party asserting that a fact cannot be ... genuinely disputed must support the assertion by [ ] citing to particular parts of materials in the record .... ” In accordance with Rule 56(c)(1)(A), Plaintiff offers several pieces of evidence supporting its assertion that Sterling asserted classification pursuant to HTSUS 6402.91.40 for the 337 entries. See Whitney Decl. ¶¶ 19-71 (discussing CBP’s examination of certain of Sterling’s entries); Whitney Decl. ¶ 90 (averring that CBP reviewed all of Sterling’s entries); Whitney Decl. ¶¶ 91-94 (discussing CBP’s processing of rate advances for all entries that had not yet liquidated or were within 90 days of liquidation, and CBP’s examination of already-liquidated entries); Whitney Decl. ¶ 112 (averring the amount of unpaid duties stemming from the subject 337 entries); Proposed Penalty Letter at 1; Proposed Penalty Letter, Ex. D, ECF No. 62-3 (detailing a rate advance for one entry); Proposed Penalty Letter, Ex. M, ECF No. 62-4 (detailing rate advances for 186 entries); Proposed Penalty Letter, Ex. S, ECF No. 62-6 (summarizing the 337 subject entries).

Defendants assert, without citing any evidentiary support, that Sterling entered “certain footwear” pursuant to HTSUS 6402.91.40. Defs.’ Resp. to PSOF ¶ 56. “If a party fails to ... properly address another party’s assertion of fact as required by Rule 56(c), the court may: (1) give an opportunity to properly support or address the fact; [or] (2) consider the fact undisputed for purposes of the motion.” USCIT Rule 56(e)(1)-(2).

At oral argument, the court endeavored to ascertain whether there was a genuine dispute about the classification asserted in the subject entry summaries, which were not made part of the summary judgment record. Plaintiff informed the court that the entry summaries had been produced during discovery and Defendants had not disputed their accuracy. Oral Arg. 5:30-6:02. Defendants asserted that “there might be a dispute” about the entry summaries, but that defense counsel had not reviewed them. Oral Arg. 4:26-4:40,18:49-18:56. When pressed for a legal basis for disputing Plaintiffs assertion regarding classification,- Defendants could not provide one. Oral Arg. 21:24-21:44, 37:05-37:43. Because Defendants failed to properly address Plaintiffs factual assertion on paper, and failed again when given the opportunity to do so at oral argument, the court considers it undisputed, for purposes of summary judgment, that the 337 subject entries Asserted classification pursuant to HTSUS 6402.91.40. See USCIT Rule 66(e)(2). '

Plaintiff further asserts -that Sterling described the footwear as “rubber tennis shoes.” PSOF ¶ 55 (citing Whitney Decl. ¶ 79, and Proposed Penalty Letter). Defendants again qualify their response, asserting that Sterling described “some of its footwear as ‘rubber tennis shoes.’ ” Defs.’ Resp. to PSOF ¶ 55, Defendants’ response, which implies that not all entries described the footwear as “rubber tennis shoes,” lacks .'reference to any evidentiary- support. Accordingly, the court considers it undisputed for purposes of summary judgment that Sterling described the- footwear as “rubber tennis shoes.”

In fact, the subject entries consisted of “athletic shoes, slip on shoes, boots, and other styles of shoes that had uppers made up of [ ] canvas, leather, plastic, or combinations of materials, and in most cases had foxing or. foxing-like bands.” PSOF ¶ 57; Pl.’s Physical Ex. 1; Pl.’s Ex. 9. The total entered value of the merchandise in the subject entries was $12,298,695.00. Proposed Penalty Letter, Ex. S; see also PSOF ¶ 53; Defs.’ Resp. to PSOF ¶ 53 (the total entered value exceeded $12,000,000).

C. Customs’ Investigation of Sterling’s Entries

From May to August 2009, Customs import specialists examined samples of footwear from Sterling’s entries. PSOF ¶ 58; Defs.’ Resp. to PSOF ¶58; Whitney Decl. ¶ 19. On June 4, 2009, Customs issued to Sterling a notice of action covering one entry classified pursuant to HTSUS 6402.91.40, but which consisted of “tennis shoe[s]” with a “textile upper, rubber sole and foxing band.” PSOF ¶¶ 65-66; Defs.’ Resp. to PSOF ¶¶ 65-66; Proposed Penalty Letter, Ex. D. On July 9, 2009, Customs issued to Sterling a second notice of action covering four additional entries. PSOF ¶ 69; Defs.’ Resp. to PSOF ¶ 69; Whitney Decl. ¶ 31; Proposed Penalty Letter, Ex. E. Ng signed and tendered a check for the rate-advanced duties for those four entries. PSOF ¶ 70; Defs.’ Resp. to PSOF ¶ 70.

On July 29, 2009, Customs officials met with Sterling representatives, Ms. Huynh and Ms. Ng, and Sterling’s customs broker, Scott Kauffman, of Seattle Logistics, Inc. (“Seattle Logistics”). PSOF ¶¶ 75-76; Defs.’ Resp. to PSOF ¶¶ 75-76. At the meeting, Customs officials “(1) displayed samples obtained from Sterling’s entries; (2) discussed the reasons for the rate advances and the necessity for post-entry amendments to correct all unliquidated entries; and (8) provided informed compliance handouts on reasonable care and the classification of footwear to Sterling’s representatives.” PSOF ¶ 76; Defs.’ Resp. to PSOF ¶ 76; Whitney Decl. ¶ 76; Proposed Penalty Letter at 5; Proposed Penalty Letter, Ex. J at 1, ECF No. 62-4 (July 29, 2009 meeting summary); Pl.’s Ex 2 (Decl. of Dale Scott Kauffman) (“Kauffman Decl'.”) ¶¶ 28, 25, ECF No. 62-7. Upon viewing the samples, Mr. Kauffman determined that Sterling’s entries had been misclassified. PSOF ¶ 77; Defs.’ Resp. to PSOF ¶ 77; Kauffman Decl. ¶ 24. During the' meeting, Sterling agreed that Mr. Kauffman would submit post-entry amendments for all entries. PSOF ¶ 78; Defs.’ Resp. to PSOF ¶ 78; Whitney Decl. ¶¶ 77-78; Kauffman Decl. ¶¶26; see also Proposed Penalty Letter, Ex. J at 1. However, no post-entry -amendments were submitted. PSOF ¶ 79; Defs.’ Resp. to PSOF ¶ 79; Whitney Decl. ¶ 90; Kauffman Decl, ¶¶ 27-28.

The absence of post-entry amendments prompted CBP to review all of Sterling’s entries. Whitney Decl. ¶ 90; see also PSOF ¶ 83; Defs.’ Resp. to PSOF ¶83 (CBP reviewed Sterling’s. 2007 and 2008 entries after determining that 2009 entries had been misclassified). From September to November 2009, Customs issued, to Sterling several additional notices of action covering 186 entries made in 2008 and 2009 that CBP determined had been incorrectly classified under HTSUS 6402.91.40. Proposed Penalty Letter, Ex. M. Relying on Sterling’s footwear samples, online research-regarding specific style numbers, and information from Sterling about “the method used to create style numbers,” Customs determined that Sterling had misclassified 41 entries in 2007,197 entries in 2008, and 99 entries in 2009, PSOF ¶¶ 83-84; • Defs.’ Resp. to PSOF ¶¶ 83-84; Whitney Decl. ¶¶91, 94-99, 112, Sterling protested 57 reliquidations on the basis of timeliness, PSOF ¶¶ 105-06; Defs.’, Resp. to PSOF ¶¶ 105-Ó6; Proposed Penalty Letter at 9; PL’s Ex. 7, ECF No. 93-3 (protests of some of, Sterling’s entries); see also PL’s Ex, 8 (July 2, 2010 letter from Taylor Pillsbury, .Esq., counsel for Sterling’s surety, to Eton Pollack, Esq., Sterling’s counsel).(noting that Sterling has contested the timeliness of certain reli-quidations but not the substance of Customs’ action). Customs approved 17 protests. Pl.’s Ex. 5, ECF No. 62-10.

In October 2009, CBP contacted Sterling’s nine customs brokers and requested that they respond to a questionnaire asking, in part, who determined the classifications for the imported footwear. PSOF ¶ 88; Defs.’ Résp. to PSOF ¶ 88; Whitney Decl. ¶ 102. Eight brokers responded. Whitney Deck ¶¶ 103,105-06..

Plaintiff asserts that “most of the customs brokers stated that they had entered Sterling’s footwear under the tariff provisions provided by Sterling.” PSOF ¶89 (citing Whitney Deck ¶¶ 102-110; Proposed Penalty Letter at 7-8, 13 & Ex. P). Plaintiff further asserts that “[t]wo of Sterling’s customs brokers replied that classification provisions were given to them by Seattle Logistics,” PSOF ¶ 90 (citing Whitney Deck ¶¶ 102-110; Proposed Penalty Letter at 7-8, 13 & Ex. P; Kauffman Deck ¶ 9, 30), who in turn had received them from Sterling, PSOF ¶ 91 (citing Whitney Deck 11.106). Defendants object to Plaintiffs assertions regarding the brokers’ responses as “statement[s that] contain[] inadmissible hearsay evidence.” Defs.’ Resp. to PSOF ¶¶ 89-91.

Pursuant to USCIT Rule 56(c)(2), “[a] party may object that the material cited to support or dispute a fact cannot be presented in a form that would be admissible in evidence.” Thus, for summary judgment purposes, the inquiry is whether the cited evidence may be reduced to admissible form, not whether it is admissible in the form submitted at the summary judgment stage. USCIT Rule 56(c)(2).

' Pursuant to USCIT Rule 56(c)(4), “[a]n affidavit or declaration used to support or oppose a motion must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated.” The Whitney Declaration is based on the Customs official’s personal knowledge of the emails he received from Sterling’s brokers. See Whitney Decl. ¶¶ 103-107, 109-10 (citing Proposed Penalty Letter, Ex. P). It is also made under “penalty of perjury” and is said to be “true and correct.” Whitney Deck at 25; 28 U.S.C. § 1746 (governing unsworn declarations made under penalty of perjury). There is no indication that the declarant is not “competent” to testify; thus, the issue is whether the affidavit states “facts that would be admissible in evidence.” USCIT Rule 56(c)(4).

Hearsay is an out of court statement offered “to prove the truth of the matter asserted in the statement.” Fed. R. Evid. 801(c). Hearsay is inadmissible at trial unless a federal statute, Federal Rule of Evidence, or other rule “prescribed by the Supreme Court” provides otherwise. Fed. R. Evid. 802. Nonetheless, a court “may consider a hearsay statement in passing on a motion for summary judgment if the statement could be reduced to admissible evidence at trial or reduced to admissible form.” Jones v. UPS Ground Freight, 683 F.3d 1283, 1293-94 (11th Cir. 2012) (citation omitted). Cf. USCIT Rule 56(c)(2).

The statements by Sterling’s customs brokers and freight forwarder as contained in emails to the customs official are hearsay to the extent they are used to prove the truth of the matter asserted, that is, that Sterling (or Seattle Logistics) provided the customs brokers and freight forwarder with the tariff classifications. See Proposed Penalty Letter, Ex. P at ECF pp. 11, 14, 25, 28, 32, 40, 54. However, “[t]he most obvious way that hearsay testimony can be reduced to admissible form is to have the hearsay declarant testify directly to the matter at trial.” Jones, 683 F.3d at 1294 (nevertheless declining to consider a hearsay statement when the declarant’s sworn deposition testimony contradicted the hearsay statement). There is no indication that the declar-ants — the brokers and freight forwarder— would be unable to testify at trial. Cf. J.F. Feeser, Inc. v. Serv-A-Portion, Inc., 909 F.2d 1524, 1542 (3d Cir. 1990) (district court erred in refusing to consider hearsay statements contained in an affidavit for purposes of summary judgment when “there [was] no indication that [the declar-ants of the hearsay statements] would be unavailable to testify at trial”).

Statements by Sterling employees contained in emails to the brokers and freight forwarder and subsequently sent to the customs official are not hearsay, however. The statements, by Ms. Huynh and Ms. Ng, are “offered against [the] opposing party and ... [were] made by the party’s ... employee on a matter within the scope of that relationship and while it existed.” Fed. R. Evid. 801(d)(2)(D). Accordingly, Defendants’ hearsay objections lack merit for purposes of considering the cross-motions for summary judgment.

Defendants also deny Plaintiffs factual assertions on the basis that “Sterling always worked with the customs brokers to make classification determinations.” Defs.’ Resp. to PSOF ¶89 (citing Ng’s Ex. N, ECF No. 53-6; Ng’s Ex. W, ECF No. 53-7; Ng’s Ex. B (Deposition of Janet Huynh) (“Huynh Dep.”) at 7:8-14; 24:9-25:8; 51:15-17; 41:1-11, ECF No. 53-3; Ng’s Ex. A (Deposition of Nancy Ng) (“Nancy Ng Dep.”) at 28:4-6; 33:2-8; 29:6-22; 45:5-47:3; 47:15-22; 57:20-60:4; 61:12-62:17, ECF No. 53-3). The substance of Defendants’ denial goes to the accuracy of the brokers’ statements, not whether they were made. Moreover, Defendants’ cited evidence does not actually rebut Plaintiffs assertion or the accuracy of the brokers’ statements referenced therein; in fact, it mostly supports it. In sum, Defendants have not shown that Plaintiff • relies on evidence that would be inadmissible at trial, and have not shown that Plaintiffs factual assertions are genuinely disputed, Thus, the court considers Plaintiffs factual assertions regarding the brokers’ statements as undisputed for purposes of summary judgment. See PSOF ¶¶ 89-91,

D. Ng Branding

In February 2009, Ng organized Ng Branding as a limited liability company in the State' of California. PSOF ¶ 3; Defs,’ Resp. to PSOF ¶ 3; Ng’s Ex. R (Ng Branding’s Articles of Organization), ECF No. 53-6, Ng was the sole investor in Ng Branding and its managing member, and held the majority of its ownership!. PSOF ¶ 4; Defs.’ Resp. to PSOF ¶4. Like Sterling, Ng Branding imported footwear for wholesale. PSOF ¶ 5; Defs.’ Resp. to PSOF ¶ 5. From February to October 2009, Sterling and Ng Branding had common shareholders, directors/managers, officers, business departments, employees, manufacturers, customers, business address, company suites, equipment, and telephone numbers. PSOF ¶¶ 8 — 9; Defs.’ Resp. to PSOF ¶¶ 8-9; see also Proposed Penalty Letter, Ex. N (emails from Ms. Ng to. a Customs official regarding. Sterling’s footwear wherein Ms. Ng utilized an email address associated with Ng Branding).

E. Administrative Proceedings

On March 29, 2012, CBP issued to Sterling and Ng pre-penalty notices and a demand for payment of unpaid duties. PSOF ¶ 108; Defs.’ Resp. to PSOF ¶ 108; Pl.’s Ex. 5 at l-26. On April 9, 2012, CBP issued penalty notices and a second payment demand to Sterling and Ng, tentatively determining gross negligence as the level • of culpability. PSOF ¶ 114; Defs.’ Resp. to PSOF ¶ 114; Pl.’s' Ex. 5 at ECF pp. 27-34. On June 20, 2012, CBP issued an amended pre-penalty notice also naming Ng Branding and alleging negligence as an alternative determination of culpability. PSOF ¶ 116; Défs.’ Resp. to PSOF ¶ 116; Pl.’s Ex. 5 at ECF pp. 35-64. On June 27, 2012, CBP issued Ng, Ng Branding, and Sterling an amended penalty notice. PSOF ¶ 118; Defs.’ Resp. to PSOF ¶ 118; PL’s Ex. 5 at ECF pp, 65-88. Sterling’s surety paid $100,000 towards the unpaid duties; no party has paid the remaining amount. PSOF ¶ 110; Defs.’ Resp. to PSOF ¶ 110; see also PL’s Ex. 8 at 1-2 (explaining the surety’s liability in the .matter).

II. Procedural History

Plaintiff commenced this enforcement action on July 16, 2012. Summons, EOF No. 1; Compl. On December-18, 2012⅛ the court denied Ng’s motion to dismiss the complaint. Order (Dec. 18, 2012), EOF No. 22. On January 10, 2013, Defendants answered the complaint. Answer and Jury Demand of Sterling Footwear, Inc., Ng Branding LLQ and Alex Ryan Ng, EOF No. 25.

On November 12, 2015, Ng moved for summary judgment. Ng’s MSJ. On February 22, 2016, Plaintiff cross-moved for summary judgment against Ng and moved for summary judgment against Sterling and Ng Branding. .PL’s XMSJ. The motions are fully briefed, and the court heard oral argument on July 13, 2017. Docket Entry, EOF No. 100.

Discussion

I. Standard of Review

This case is brought by the Government against Defendants to recover unpaid duties and a.monetary penalty owing from allegedly misclassified entries pursuant to 19 U.S.C. § 1592. The Court of International Trade reviews all issues in actions brought for the recovery of a monetary penalty pursuant to 19 U.S.C. § 1592 de novo and on the basis of the record made before the court. 19 U.S.C. § 1592(e)(1); 28 U.S.C. § 2640(a); see also United States v. ITT Indus., Inc., 28 CIT 1028, 1035, 343 F.Supp.2d 1322, 1329 (2004), aff'd, 168 Fed.Appx. 942 (Fed. Cir. 2006).

Summary-judgment is proper when “the movant shows that there is no-.genuine issue as. to any -material fact and the mov-ant is entitled to judgment as a 'matter of law.” USCIT Rule 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The court must view the evidence in the light most favorable to the nonmovant and may not weigh the evidence, assess the credibility' of witnesses, or resolve issues of fact. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Netscape Comm.'s Corp., 295 F.3d at 1319. When both parties move for summary judgment, the court generally must evaluate each party’s motion on its own merits and draw all reasonable inferences against the party whose motion is under consideration. JVC Co. of Am., Div. of US JVC Corp. v. United States, 234 F.3d 1348, 1351 (Fed. Cir. 2000).

II. Legal Framework for Recovery Actions

In relevant part, § 1592 bars the grossly negligent or negligent entry, introduction, or attempt to enter or introduce, merchandise into the commerce of the United States by means of a material false statement or material omission. 19 U.S.C. § 1592(a)(1)(A).

A statement is „ material when it has the “potential to alter .Customs’ appraisement or liability for duty.” Horizon Prods. Int’l, 82 F.Supp.3d at 1356 (citation omitted); see also United States v. Menard, Inc., 16 CIT 410, 417, 795 F.Supp. 1182, 1188 (1992) (materiality for purposes of § 1692 refers to the false statement’s effect on CBP’s. determination of the applicable duty); 19 C.F.R. Pt. 171, App. B(B) (2013) (defining .materiality for purposes of § 1592). The asserted classification of merchandise in entry paperwork “has the tendency to influence Customs’ decision in assessing duties and therefore constitutes a material statement under the statute.” United States v. Optrex Am., Inc., 32 CIT 620, 631, 560 F.Supp.2d 1326, 1336 (2008).

The statute does not define the term “false”; thus, it is defined according to its ordinary meaning. United States v. Rockwell Automation Inc., 30 CIT 1552, 1557, 462 F.Supp.2d 1243, 1248 (2006) (citing Perrin v. United States, 444 U.S. 37, 42, 100 S.Ct. 311, 62 L.Ed.2d 199 (1979)). According to Black’s Law Dictionary, a statement is “false” when it is “untrue” or “[n]ot genuine; inauthentic.” Id. (quoting Black’s Law Dictionary 635 (8th ed. 2004)) (citing Koyo Seiko Co. v. United States, 36 F.3d 1565, 1571 n. 9 (Fed. Cir. 1994) (dictionaries may supply the common meaning of a term)).

Violations of § 1592(a) may be punishable by a civil penalty depending on the degree of culpability. 19 U.S.C. § 1592(c). “Parties must meet their burdens of proof regarding [culpability] by a preponderance of the evidence. The court may determine liability and assess penalties as a matter of law when the uncontro-verted facts support such a determination.” United States v. Matthews, 31 CIT 2075, 2081, 533 F.Supp.2d 1307, 1313 (2007) (citing United States v. New-Form Mfg. Co., Ltd., 27 CIT 905, 918-19, 277 F.Supp.2d 1313 (2003)); cf. Anderson, 477 US at 252, 106 S.Ct. 2505 (in determining whether summary judgment should issue, “[t]he judge’s inquiry ... unavoidably asks whether reasonable jurors could find by a preponderance of the evidence that .the [party bearing the burden of proof at trial] is entitled to a verdict”).

’ To establish gross negligence, Plaintiff must prove “an act or acts (of commission or omission) [by Defendants] done with actual knowledge of or wanton disregard for the relevant facts and with indifference to or disregard for the offender’s obligations under the statute.” 19 C.F.R. Pt. 171, App. B(C)(2); see also United States v. Ford Motor Co., 463 F.3d 1286, 1292 (Fed. Cir. 2006) (“An importer is guilty of gross negligence if it behaved willfully, wantonly, or with reckless disregard in its failure to ascertain both the relevant facts and the statutory obligation, or acted with an utter lack of care”). When a grossly negligent § 1592(a) violation impacts the assessment of duties, the civil penalty may not exceed “the lesser of [ ] the domestic value of the merchandise, or [ ] four times the lawful duties, taxes, and fees of which the United States is or may be deprived.” 19 U.S.C. § 1592(c)(2)(A).

A Defendant is negligent when they “fail[.] to exercise the degree of reasonable care and competence expected from a person in the same circumstances either: (a) in ascertaining the facts or in drawing inferences therefrom, in ascertaining the offender’s obligations under the statute; or (b) in communicating information in a manner so that it may be understood by the recipient.” 19 C.F.R. Pt. 171, App. B(C)(1). Plaintiff bears the initial burden of proving the act or omission constituting the violation; the burden then shifts to the alleged -violator to “affirmatively demonstrate that it exercised reasonable care under the circumstances.” Ford Motor Co., 463 F.3d at 1279 (Fed. Cir. 2006); 19 U.S.C. § 1592(e)(4). When a negligent § 1592(a) violation impacts the assessment of duties, the civil penalty may not exceed “the lesser of [ ] the domestic value of the merchandise, or [ ] two times the lawful duties, taxes, and fees of which the United States is or may be deprived.” 19 U.S.C. § 1592(c)(3)(A).

Regardless of whether a civil penalty is assessed, when “the United States has been deprived of lawful duties, taxes, or fees as a result of a violation of subsection (a) of this section, the Customs Service shall require that such lawful duties, taxes, and fees be restored.” Id. § 1592(d).

III. Ng’s Liability

A. Parties’ Contentions

Ng contends that he is entitled to summary judgment because he did not personally enter or introduce the subject merchandise into the United States as provided in the U.S. Court of Appeals for the Federal Circuit’s (“Federal Circuit”) opinion in United States v. Trek Leather, Inc., 767 F.3d 1288 (Fed. Cir. 2014). Ng’s MSJ at 7-12, 24-30; Def. Alex Ng’s Reply in Supp. of Mot. to for [sic] Summ. J. (“Ng’s Reply”) at 2-12, ECF No. 85. Plaintiff contends that Ng is liable pursuant to Trek Leather because of his “control, supervision, direct involvement in, and knowledge of and failure to correct Sterling’s erroneous importing activities.” Pl.’s XMSJ at 31-33. In particular, Plaintiff contends that Ng instructed Ms. Huynh to use classification forms with the classification number pre-printed on the forms, and because he told his employees to continue entering footwear under HTSUS 6402.91.40 after CBP had informed him that was the incorrect tariff provision. PL’s XMSJ at 33-35; Reply to Defs.’ “Joint” Opp’n to Pl.’s Cross-Mot. for Summ. J. Against Alex Ng and Mot. for Summ. J. Against Sterling Footwear, Inc. and Ng Branding, LLC (“PL’s Reply”) at 15-19, EOF No. 93. Ng disputes the Government’s factual assertions regarding his role in classification, Ng’s Reply at' 6-10, and contends that, in any event, making classification decisions “does not fulfill the requirements of Trek [Leather],” Ng’s Reply at 10. The inquiry, thus, is two-fold. First, the court must ascertain the scope of the term “introduce” pursuant to Trek Leather, which is a legal question, Second, armed with that understanding, the court must determine whether the undisputed material facts entitle either Party to summary judgment,

B. Individual Liability Pursuant to Trek Leather

Trek Leather stands for the proposition that an individual may be held liable for violating § 1592(a)(1)(A) when that individual engages in conduct proscribed by the statutory provision. Trek Leather, 767 F.3d at 1296-97 (“person” for purposes of § 1592(a)(1) includes individuals and is not limited to the importer of record); id. at 1297-99 (individual defendant/shareholder of importer-of-record corporation, whose conduct came within the scope of the term “introduce” in § 1592(a)(1)(A), was jointly liable for unpaid duties and penalties). The appellant (“Mr. Shadadpuri”), was the president and sole shareholder of Trek Leather, Inc. (“Trek”), the importer of record. Id. at 129L Mr. Shadadpuri imported men’s suits through several companies, including Trek. Id. While the shipments at issue were in transit, Mr. Shadadpuri “caused the shipments ... to be transferred from [one of his companies]/ to Trek.” Id. at 1292 (noting that Mr. Sha-dadpuri directed his broker to make the transfer). The broker prepared and submitted the entry summaries “based on papers he received from Mr. Shadadpuri and his aides.” Id. at 1293 (“When the' suit manufacturer was ready to ship completed suits, it sent Mr. Shadadpuri an invoice [ ], and he ... would fax, or [his] person who [] helpfed him] would send a fax.to the broker and the broker would file the entry.”) (internal quotation marks and citation omitted). To determine whether Mr. Shadadpuri’s conduct constituted “introducing” merchandise, the Federal Circuit looked to the U.S. Supreme Court’s decision in Panama Hats, which had “established the breadth of ‘introduce.’ ” Id. at 1297-99 (citing United States v. 25 Packages of Panama Hats, 231 U.S. 358, 34 S.Ct. 63, 58 L.Ed. 267 (1913)).

In Panama Hats, foreign consignors (merchants) delivered to the U.S. consular agent, at the point of shipment, three sets of invoices that falsely and fraudulently undervalued the merchandise intended for delivery to a domestic consignee. 231 U.S. at 359, 34 S.Ct. 63. Thereafter, the merchandise was “not technically entered at the New York customs house, but was unloaded from the ship and stored in general order.” Id. The goods were forfeited on the basis of the fraudulent'invoices, and the consignee asserted a claim to the merchandise on the basis that they had not been entered or introduced into U.S. commerce. Id. at 359-60, 34 S.Ct. 63. Resolving this claim required the Panama Hats Court to interpret the forfeiture provision of the Tariff Act of 1890, as amended in 1909. Id. at 359-60, 34 S.Ct. 63.

Prior to 1909, the Tariff Act of. 1890 provided for the forfeiture of goods “if any owner, importer, consignee, agent, or other person shall make or attempt to make any entry of imported merchandise by means of any fraudulent or false invoice.” Id. at 360, 34 S.Ct. 63 (quoting Tariff Act of 1890, § 9, 26 Stat. 131, 135). In 1909, the Tariff Act was amended to permit forfeiture “if any consignor, seller, owner, importer, consignee, agent, or other person or persons, shall enter or introduce, or attempt to enter or introduce, into the commerce of the United States, any imported merchandise by means of - any fraudulent or false invoice.” Id. at 359-60, 34 S.Ct. 63) (quoting. Tariff Act of 1909, § 28, 36 Stat. 11, 97) (emphasis added).

According to the Supreme Court, the amendment’s purpose was to “enlarge[] the" scope of conduct for which the goods should be forfeited” beyond that which constituted the entry of merchandise. Id. at 361, 34 S.Ct. 63. Only then could the statute reach the consignor of the goods who did not “make the declaration, sign the documents, or take any steps in enterr ing or attempting to enter the goods,” but who had prepared the false and fraudulent invoice in the exporting country. Id. at 361, 34 S.Ct. 63 (“Under the [prior] statute, .., there was no penalty for the grossest fraud on the part of the consignor, notwithstanding the fact that his invoice valuation was of great importance in determining true value, as a basis for- collecting the duty.”). The Court explained that, “when the goods, fraudulently undervalued and consigned to a person in New York, arrived at the port of entry, there was ah attempt to introduce them into the commerce of the United States, When they were unloaded and placed in general order, they were actually introduced into that commerce within the meaning of the statute intended to prevent frauds on the customs.” Id. at 362, 34 S.Ct. 63.

Pursuant to Panama Hats, the term “introduce” in § 1592(a)(1)(A) “is a flexible and broad term that ... coverts], among other things, actions completed before any formal entry filings made to effectuate release of imported goods.” Trek Leather, 767 F.3d at 1298, The Federal Circuit did not define the full reach of-the term “introduce,” but. concluded that it covered “actions that bring goods to the threshold of the -process of entry by moving goods -into CBP custody in the United States and providing critical documents (such as invoices indicating value) for use in the filing of papers for a contemplated release into United States commerce even if no-release ever occurs.” Id. at 1299. Mr. Shadadpuri’s conduct came within that understanding of the term “introduce.” Id. at 1299 (“[Mr. Shadadpuri] did everything short" of the final’step of preparing the [entry forms] and submitting them and other required papers to make formal entry.”). ’ ’

Ng interprets Trek Leather as requiring an act “at the threshold of entry,” or, in other words, an act “intended tq immediately enter the goods.” Ng’s MSJ at 26 (arguing, the Trek Leather court “restricted its holding ... to instances where the personal acts ‘bring goods to the threshold of the process of entry (quoting Trek Leather, 767 F.3d at 1299). According to Ng, “[ajnything less” than doing “everything short of. the final- step” in entering goods does not come within the term “introduce” for purposes of § 1592(a)(1)(A). Id. at 26-27; see also id. at 27 (the Trek Leather court “obviously wanted to limit the [Government’s] reach under [§ ] 1592(a)(1)(A) to exclude outlying, non-critical acts”). Plaintiff contends Ng has misunderstood Trek Leather, wherein the court simply “discussed what the term ‘introduce’ covered in connection with Mr. Sha-dadpuri’s actions.” Pl.’s XMSJ at 25, 29.

Contrary to Ng’s assertion, Trek Leather did not set the outer bounds of what constitutes the introduction of merchandise for the purpose of § 1592(a)(1)(A). Trek Leather, 767 F.3d at 1298 (expressly declining to “define the reach of the term [introduce]”). Instead, Trek Leather looked to Panama Hats for guidance as to whether Mr. Shadadpuri’s conduct was covered by the term. Trek Leather, 767 F.3d at 1299. Ng’s narrow reading of Trek Leather is inconsistent with Panama Hats’ broad interpretation of the term “introduce” as covering the foreign consignor that made a false and fraudulent statement on invoices prepared in connection with goods the consignor shipped to a U.S. port. Panama Hats, 231 U.S. at 361, 34 S.Ct. 63. Moreover, the Federal Circuit’s reference to “actions that bring goods to the threshold of the process of entry by moving goods into CBP custody,” Trek Leather, 767 F.3d at 1299, includes such actions as ordering goods to be shipped to a U.S. port for the purpose of entering those goods into U.S. commerce, because by so doing, the goods are ultimately moved into CBP’s custody, cf. Panama Hats, 231 U.S. at 361, 34 S.Ct. 63 (“But whén the consignor made the fraudulent undervaluation in the foreign country, and on such false invoice the goods were shipped, and arrived consigned to a merchant in New York, the merchandise was within the protection and subject to the penalties of the commercial regulations of this country ....”) (emphasis added). The tariff classification stated in an entry document is no less material to CBP’s assessment of duties than is the stated value of the merchandise. Cf. Panama Hats, 231 U.S. at 361, 34 S.Ct. 63. Read together, Panama Hats and Trek Leather demonstrate that one who misclassifies merchandise (or causes merchandise to be misclassified) in a document prepared for the purpose of entering goods which that person causes to be shipped to, and unloaded at, a U.S. port, falls within the ambit of the term “introduce;”

C. The Presence of Disputed Facts Precludes Summary Judgment

There is undisputed evidence that Ng played a role in causing Sterling’s footwear to be shipped to the United States. See PSOF ¶ 21(2),(4),(6); Defs.’ Resp. to PSOF ¶¶ 21(2),(4),(6) (Ng handled the design, development, and manufacture of Sterling’s imported footwear); Ng Decl. 117 (Ng’s “primary responsibilities]” consisted of footwear design, “marketing, sales and establishing relationships with Chinese manufactur[ers]”) (emphasis added). Summary judgment is inappropriate, however, because there is conflicting evidence regarding Ng’s role in determining the tariff provision pursuant to which Sterling’s footwear would be entered.

Ng testified in his deposition and averred in his declaration that he played no role in determining Sterling’s footwear classification,’ and never instructed Ms. Huynh on preparing paperwork for Sterling’s customs brokers. Ng’s Ex. E (Deposition of Alex Ng)) (“Ng Dep.”) at 147:3-11, 203:8-206:19, ECF No, 53-4; Ng Decl. ¶¶ 4-5. Ng further testified that he told his employees to work with the customs brokers to determine the correct classification. Ng. Dep. at 118:19-119:4; Ng Decl. ¶ 4. Ng also asserts that Ms. Huynh testified that Ng “never spoke to her about customs classifications [and] never instructed her to use any classification [number] Ng’s Reply at 7 (citing Huynh Dep. generally); see also Ng’s MSJ at 14 (asserting that “Ms. Huynh did not testify that she ever spoke to Mr. Ng about Sterling's] ... HTS classification determinations [or] that Mr. Ng ever instructed her to use any HTS classification .... ” (citing same).

In fact, as Plaintiff points out, Ms. Huynh testified that Ng showed her how to submit entry documentation to Sterling’s customs brokers, that the documents had tariff provisions preprinted on them, that Ng said to use those tariff provisions, which most entries did, and when she hired Ms. Ng, Ms. Huynh showed her how to prepare the entry documents and instructed her to use the same tariff provisions Ng had told Ms. Huynh to use. Huynh Dep. at 36:8^10:9; see also Pl.’s XMSJ at 33-35. Ms. Ng testified that Ng and Ms. Huynh had made decisions on classifying footwear. Nancy Ng Dep. at 47:8-14. Further, after meeting with CBP in July 2009, Ms. Huynh told Ms. Ng that Ng wanted to continue entering the footwear under HTSUS 6402.91.40. Nancy Ng Dep. at 51:4-54:2, 56:9-57:4; 63:13-65:4.

According to Ng, “the evidence produced by the Government only establishes that Ms. Ng relied on the [] customs broker to make classification decisions.” Ng’s Reply at 7 (citing Ng’s Ex. N); see also Ng’s MSJ at 22-23. Ng further contends that “Ms. Ng and Ms. Huynh confirmed in a 2009 interview .with Customs that they were instructed by Mr. Ng to work with the customs brokers to determine the correct classification number.” Ng’s Reply at 10 (citing Proposed Penalty Letter at 8). Ng’s argument, and reliance on the cited documents, is unavailing.

Defendants’ Exhibit N consists of an email from Ms. Ng to Mr. Kauffman, Sterling’s customs broker. Ng’s characterization of the exhibit neglects to mention that, in the email, Ms. Ng provided Mr. Kauff-man with tariff provisions for 10 styles, and asked for assistance classifying just one style. See Ng’s Ex. N. Additionally, the email is dated July 27, 2009, see id., more than two years after Sterling began entering footwear, and thus is unsupportive of Sterling’s general practice, see Defs.’ Resp. to PSOF ¶ 89 (averring that “Sterling always worked with the customs brokers to make classification determinations”) (citing, inter alia, Ng’s Ex. N); supra note 18. There is also nothing in Ng’s Exhibit N to suggest, as Ng contends, that “Sterling ... only provided [ ] classification numbers to customs brokers for entry after it had been prior determined correct [sic] by a licensed customs broker.” Ng’s MSJ at 23 (citing Ng’s Ex. N).

Page 8 of the Proposed Penalty Letter describes an October 2009 meeting between Ms. Huynh, Ms. Ng, and customs officials. Proposed Penalty Letter at 8. The meeting was held to discuss the establishment of an Account Management Program for Ng Branding as a result of “misclassi-fication and value issues discovered” by CBP. Id. During the meeting, Ms. Huynh and Ms. Ng stated that they relied on customs brokers to classify Ng Branding’s footwear. Id. Ms. Ng and Ms. Huynh did not “confirm[]” anything in regards to Sterling’s entries. See id.; Ng’s Reply at 10.

In sum, Ng’s testimony concerning his role in Sterling’s entries conflicts with Ms. Huynh’s and Ms. Ng’s testimony, and other record evidence. The conflicting testimony precludes the entry of summary judgment for either Party. See Anderson, 477 U.S. at 249, 255, 106 S.Ct. 2605 (credibility determinations are for the fact-finder). For that reason, Ng’s motion for summary judgment, and the Government’s cross-motion for summary judgment as to Ng, will be denied.

IV. Sterling’s Liability

A. Entry of Merchandise

•Parties do. not dispute that Sterling, as the importer of record, made the subject entries. See PSOF ¶ 51; Defs.’ Resp. to PSOF ¶ 51 (Sterling made 363 entries from July 2007 to October 2009, inclusive of the subject entries); see also Proposed Penalty Letter at 2 (stating Sterling’s importer identification number). Accordingly, there is no dispute that Sterling “entered]” merchandise for purposes of § 1592(a). See 19 U.S.C. §§ 1484, 1485.

B., Material False Statement

1. Parties’ Contentions

Plaintiff contends Sterling’s entry documents falsely identified the subject merchandise as “rubber tennis shoes,” and falsely classified the subject merchandise under the corresponding tariff provision for rubber tennis shoes, HTSUS 6402.91.40. Pl.’s XMSJ at 18-19. Plaintiff asserts that “[s]amples, photographs, and descriptions of the footwear conclusively demonstrate that the footwear [is] not ‘rubber tennis shoes.’” Pl.’s XMSJ at 18 (citations omitted). Plaintiff contends the false statements were material because they caused CBP to assess duties at six percent ad valorem, which is less than the applicable rates had the footwear been correctly classified. Pl.’s XMSJ at 19.

Defendants contend that Plaintiff has failed to carry its burden of proving that the subject merchandise was misclassified. Defs.’ Alex Ng, Sterling Footwear, Inc. and Ng Branding, LLO’s Joint Mem. of Law & P. [&] A, in Opp’n to PL’s Mot. for Summ. J.. Against Alex Ng, Sterling Footwear, Inc. and Ng Branding, LLC (“Defs.’ Resp.”) at 6, ECF No. 84. Defendants assert that testing of sample footwear involved in this lawsuit by HTS .“indicated that the subject footwear was in fact ‘rubber tennis shoes’ or ‘rubber shoes’ and that all the entries were in fact properly classified.” Defs.’ Resp. at 7. Defendants further assert that they “have always denied” any misclassification, and the quality of certain photographs relied upon by the Government was too poor to establish mis-classification. Defs.’ Resp. at 7-8.

2. Plaintiff has Demonstrated that Sterling Misclassified its Footwear

There is no genuine dispute that the classification asserted by Sterling for the subject entries is HTSUS 6402.91.40. See supra Background Section I.B; Defs.’ Resp. at 6-8 (challenging the falsity of the statements, not whether they were made). Accordingly, the court must determine whether the undisputed facts demonstrate the falsity of the asserted classification pursuant to HTSUS 6402.91.40.

Plaintiff proffers several pieces of evidence demonstrating that Sterling’s footwear was misclassified. This evidence includes a declaration by the customs official responsible for examining Sterling’s entries, associated notices of action, and a declaration by Sterling’s primary customs broker. See Whitney Decl. ¶¶ 24-26, 33-71, 90-91, 94, 112 (describing the official’s review of Sterling’s entries and footwear based on entered samples and online research about specific style numbers); Proposed. Penalty'Letter, Exs. D, E, M (notices of action detailing, rate-advances for 191 entries); Kauffman Decl. ¶¶ 6, 9, 24, 25 (averring that from 2008 to 2009 the broker made , “hundreds of entries” under HTSUS 6402.91.40 for Sterling, and, upon seeing samples of Sterling’s footwear at the July 29,2009 meeting with CBP, determined that Sterling’s footwear had been misclassified).

Plaintiff also proffers physical samples of several of Sterling’s styles and .photographs thereof. See PL’s Physical Ex. 1; Pl.’s Ex. 9. As discussed above, HTSUS 6402.91.40 covers, in pertinent part, footwear with 90% rubber or plastic uppers and excludes footwear with “a foxing or a foxing-like band applied or molded at the sole and overlapping the upper.” In camera inspection of the submitted samples demonstrates that none of the styles are proper candidates for classification under HTSUS 6402.91.40 because they either lack the requisite plastic or rubber upper, have a foxing or foxing-like band, or both. See Pl.’s Physical Ex. 1; Pl.’s Ex. 9.

The sole evidence Defendants proffer to support their contention that lío entries were misclassified is the HTS Lab Report. See, e.g., Defs.’s Resp. at 7; Defs.’ Resp. to PSOF ¶ 52. Defendants assert that they “ordered professional laboratory tests from Harmonized Tariff Services, LLC for the sample footwear, which formed the basis of this lawsuit and was alleged to be misclassified by Customs.” Defs.’ Resp. at 7 (emphasis added); id. at 10 (“Defendants hired [HTS] to evaluate whether such entries were in fact misclassified.... The professional tests determined that they were properly classified.”) (citations omitted).

There are two problems with Defendants’ contention. First, the HTS Lab Report was obtained in connection with CBP’s classification of entries by Ng Branding, not by Sterling. See Pl.’s Reply, Ex. 6, ECF No. 93-2 (Ng Branding’s protest- and application for further review, in which counsel discusses Ng Branding’s solicitation of laboratory testing by HTS to determine the components of the tested footwear’s outsoles, and to which the HTS Lab Report was appended). Second, the HTS Lab Report describes the tested samples as having textile uppers and a foxing. See HTS Lab Report at DEF00169, DEF00171. The HTS Lab Report, therefore,is irrelevant to the instant case; and to the extent that it is relevant, it damages, • rather than supports, Defendants’ position that Sterling’s entries were correctly classified. Although the court must credit the nonmovant’s evidence, Netscape Comm.’s Corp., 295 F.3d at 1319, it is not required to credit that party’s blatant mis-characterization of the evidence, see Scott v. Harris, 550 U.S. 372, 380, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007) (“[w]hen opposing parties tell two different stories, one of which is blatantly contradicted by the record, so that no reasonable jury could believe it, a court should not adopt that version of the facts” when ruling on the motion).

■Defendants also assert, without explanation, that the “terrible” photographs of Sterling’s footwear appended to the Proposed Penalty Letter “establish that the subject footwear was ‘Rubber Tennis Shoes’ or ‘Tennis Shoes’ pursuant to the HTS and properly classified,” and thereby create a genuine issue of material fact as to whether Sterling misclassified its footwear. Defs.’ Resp. at 8. Plaintiff concedes that the quality of the photographs appended to the Proposed Penalty Letter is “less than ideal,” and instead relies on the actual samples and more recent photographs of the samples. PL’s Reply at 8-9; PL’s Physical Ex. 1; PL’s Ex. 9. Even accounting for the quality of the photographs, however, Defendants’ conclusory assertion is difficult to fathom and impossible to credit. Several of the photographs depict boots, one with tassels, that clearly are not tennis shoes, rubber or otherwise. See Proposed Penalty Letter, Ex. I, ECP No. 62-4. And although the composition of the upper of each shoe is not ascertainable from the photographs, the presence of a foxing, or foxing-like band, is. See Proposed Penalty Letter, Exs. G-H, EOF No. 62-4.

Accordingly, the unrebutted evidence demonstrates the existence of a false statement; i.e., that the subject entries were misclassified. The false statement was material because it had the “potential to alter Customs’ appraisement or liability for duty.” Horizon Prods. Int’l, 82 F.Supp.3d at 1356 (citation omitted).

C. Culpability

1. Parties’ Contentions

Plaintiff contends that Sterling knew the nature of the footwear it imported and could have correctly described the footwear on its entry papers. Pl.’s XMSJ at 21-22. Plaintiff further contends that Sterling “instructed,” rather than “consult[ed],” its customs brokers regarding the classification of its footwear entries.” Pl.’s XMSJ at 21. And although, according to Plaintiff, Sterling is “presumed to [have] had knowledge of information published by CBP ... to assist the trade with compliance obligations,” it failed to “consult the HTSUS, customs regulations, or CBP’s informed compliance publications to assist in describing its merchandise.” Pl.’s XMSJ at 21. Plaintiff finally contends that the notices of action issued to Sterling provided it with notice of the correct classification of its footwear, as did Customs officials when they met with Sterling in July 2009, to explain the misclassifications, yet “Sterling blatantly disregarded its obligation to correct its erroneous classifications of entries and continued misclassifying its entries.” PL’s XMSJ at 22. Plaintiff likens Sterling’s conduct to that of the defendant in New-Form Mfg. Co., 27 CIT 905, 277 F.Supp.2d 1313, and United States v. Ford Motor Co., 29 CIT 793, 387 F.Supp.2d 1305 (2005), aff'd in part, rev’d in part on other grounds, 463 F.3.d 1286 (Fed. Cir. 2006).

Defendants contend that (1) .at “all times” they relied on Mr. Pollack’s legal opinion “that the entries were properly classified,” (2) they relied on Ms. Huynh to hire “experienced employees,” including Ms. Ng, and “competent customs brokers” to determine classifications, (3) Ng “always instructed his employees ... to work with the customs brokers to .determine the proper .classification,” (4) Ng created the production department to determine correct classifications, and (5) they hired HTS to determine whether entries had been misclassified. Defs.’ Resp. at 9.

2. Sterling Acted with Gross Negligence

As discussed above, establishing gross negligence requires Plaintiff to prove that Sterling acted “with actual knowledge of or wanton disregard for the relevant facts and with indifference to or disregard for the offender’s obligations under the statute.” 19 C.F.R. Pt. 171, App. B(C)(2).

The undisputed facts demonstrate that Sterling knew the style and composition of its. footwear. Sterling imported several types of flip flops, sandals, heels, boots, and sneakers made from a variety of materials that included textiles, leather, and rubber. PSOF ¶ 35; Defs.’ Resp. to PSOF ¶ 35. The purchaser of Sterling’s imported footwear, Philip Simon, ordered specific styles corresponding to specific designs, colors, and ■materials. PSOF ¶¶ 37, 38; Defs.’ Resp. to PSOF ¶¶ 37, 38, Sterling designed that footwear and set manufacturing specifications, which were, confirmed by .samples Sterling had produced before it satisfied any purchase orders. PSOF ¶¶ 36, 39; Defs.’ Resp. to PSOF ¶¶ 36, 39. In short, Sterling knew the characteristics of the footwear it imported. .

The undisputed facts also establish Sterling’s indifference to or disregard for its statutory obligations. Sterling knew that it was responsible for correctly classifying its entries and complying with customs’laws regarding its footwear entries. PSOF ¶34; Defs.’ Resp. to PSOF ¶34. Yet, Sterling consistently instructed its brokers to enter footwear pursuant to HTSUS 6402.91.40, without regard to the styles of footwear being imported and, thus, without regard for whether that was the correct tariff provision. See Whitney Decl. ¶¶ 102-110; Proposed Penalty Letter, Ex. P. Even after Customs issued two notices of action to Sterling on June 4, 2009 and July 9, 2009, on July 27, 2009, Sterling instructed its broker to enterrthe same style pursuant to HTSUS 6402.91.40. See Ng’s Ex. N (instructing Seattle . Logistics to enter 19FLR103M/104M/108M/1HM under HTSUS 6402.91.40);' Proposed Penalty Letter, Ex. D (issuing a rate-advance on Entry No. CEB 00042295 for incorrect classification under HTSUS 6402.91.40); Whitney Decl. ¶ 24 (explaining that Entry No. CEB 00042295 consisted of 1900 cartons of Style No. 19FLR121W). Additionally, following the July -29, 2009, meeting with customs officials, Sterling failed to submit any post-entry amendments despite its agreement to provide them. PSOF ¶¶ 78-79; Defs.’ Resp. to PSOF ¶¶ 78-79; Whitney Decl. ¶¶ 77-78, 90; Kauffman Decl. ¶¶ 26-28; see also Proposed Penalty Letter, Ex. J at 2.

Defendants’ contrary contentions are unavailing. First,' Defendants could not have relied on Mr. Pollack’s opinion “at all times” because Sterling did not hire Mr. Pollack until after it learned that CBP had determined that its footwear was being misclassified. See Ng. Decl. ¶ 9. At oral argument, counsel even conceded that Sterling could not have relied on Mr. Pollack’s opinion to classify its entries.. Oral Arg. 58:44-54:09. Second, Defendants’ purported reliancé oh Ms. Huynh to hire competent employees and brokers, or Sterling’s establishment of a “production department,” does not negate Sterling’s responsibility to correctly classify its footwear and, in any event, the overwhelming evidence demonstrates that Sterling did not rely on its brokers for classification advice, but rather provided classification information to them. Proposed Penalty Letter, Ex. P. Cf. Optrex Am., Inc., 32 CIT at 635, 560 E.Supp.2d at 1339 (2008) (rejecting the. defendant’s “attempt to shift responsibility for classification to -its customs broker, as it is well settled that the importer bears responsibility 'for classification of its merchandise”) (citing 19 U.S.C. § 1484(a)). See supra note 18 (discussing Defendants’ evidence cited in support of its argument that Sterling relied on its customs brokers for classification advice). Moreover,' even when CBP alerted Sterling to the misclassificatión, Defendants failed to correct their errors and," in fact, compounded those errors by continuing to misclassify their entries of the same goods. Finally, for reasons already amply stated, Defendants’ attempt to rely on the HTS Lab Report lacks merit.'See supra Discussion Section TV.B.2; supra note 31.

In sum, Sterling had knowledge of the footwear it imported, because it had designed it. It knew that it was responsible for correctly classifying its footwear. Yet, Sterling repeatedly described the footwear as “rubber tennis shoes” and instructed its brokers to enter the footwear pursuant to the corresponding — incorrect—tariff provision. Sterling failed to correct its errors when pointed out by CBP and, instead, continued to make entries using the incorrect classification. Plaintiff has demonstrated Sterling’s gross negligence by a preponderance of the evidence. See Matthews, 31 CIT at 2081, 533 F.Supp.2d at 1313; cf. New-Form Mfg. Co., 27 CIT 919, 277 F.Supp.2d at 1327. Accordingly, Plaintiff is entitled to summary judgment as to Sterling’s liability for gross negligence pursuant to 19 U.S.C. § 1592(a).

Y. Ng Branding’s Liability

A. Parties’ Contentions

Plaintiff contends that Ng Branding may be held liable because it “was a ‘mere continuation’ of Sterling.” Pl.’s XMSJ at 24-25. In particular, Plaintiff contends that Ng Branding “had the same corporate officer(s), location, employees, scope of business, and telephone numbers, ..., and it imported and sold the same footwear that is the subject of this civil. action.” Pl.’s XMSJ at 25. Plaintiff further contends that Ng Branding should be held liable “because it is, for all practical purposes and intents, Sterling”; in other words, “Sterling and Ng Branding ... essentially constitute a single enterprise.” PL’s XMSJ at 24. Defendants’ filings did not respond to Plaintiffs assertion of Ng Branding’s successor liability or single enterprise theory of liability.

B. Legal Framework and Choice of Law

1. Successor Liability

A successor entity is generally not liable for its predecessor’s debts. See Bud Antle, Inc. v. Eastern Foods, Inc., 758 F.2d 1451, 1456 (11th Cir. 1985) (“As a general rule, a corporation that purchases or otherwise acquires the assets of a second corporation does not assume the debts and liabilities of the second co