United States District Court, M.D. Florida, Jacksonville Division
MORALES HOWARD United Slates District Judge
CAUSE is before the Court on Qiao Chu's Motion
for Award of Attorney Fees and Expenses pursuant to 18 U.S.C.
3006A and 28 U.S.C. 2414 (Doc. 300; Motion), with exhibits
(Def. Ex.) and Wei Tang Lo's Amended Motion for Award of
Attorney Fees and Expenses Pursuant to 18 U.S.C. 3006A and 28
U.S.C. 2412 (Doc. 325; Amended Motion). Lo has also adopted
Chu's Motion. The Government filed a response,
see United States' Consolidated Response in
Opposition to Defendants' Motions for Award of
Attorney's Fees and Expenses (Doc. 353; Response), with
exhibits (Resp. Ex.). Chu replied. See Reply
Memorandum of Points and Authorities in Support of Motion for
Award of Attorney Fees and Expenses Pursuant to 18 U.S.C.
3006A and 28 U.S.C. 2414 (Doc. 360; Reply). Accordingly, this
matter is ripe for judicial review.
criminal prosecution in this case centered around Qiao Chu,
Wei Tang Lo, and Chin Shih Chou's
(“Defendants”) alleged scheme to import Chinese
honey into the United States by labeling it as a blend of
honey and rice syrup to avoid millions of dollars in
antidumping duties. The purpose of the antidumping duties is
to prevent the importation and sale of honey at what the
United States Government has determined to be less than the
fair market value. At the time of the events giving rise to
the charges in this case, those duties were imposed on
“natural honey, artificial honey containing more
than 50 percent natural honey by weight, preparations of
natural honey containing more than 50 percent
natural honey by weight, and flavored honey.”
Department of Commerce Notice of Amended Final Determination
of Sales at Less Than Fair Value and Antidumping Duty Order,
66 Fed. Reg. 63670-02, 63671 (Dec. 10, 2001) (Antidumping
investigation leading to the charges in this case began on or
about September 29, 2011, when the Department of Homeland
Security, Homeland Security Investigations (HSI), received
information from Customs and Border Protection (CBP) that
Demeter Group, Inc. (Demeter), Fina Food Trading, Inc. (Fina
Food), and other related entities, may have falsely declared
containers of honey imported from China as rice fructose
syrup to evade antidumping duties. Testing performed by CBP
on samples taken from some of the Demeter and Fina Food
containers suggested the substances contained more than 50
percent honey. Through further investigation and
interviews of various warehouse employees, HSI discovered
that Chin Shih Chou owned Fina Foods and Chu was the point of
contact for Demeter. HSI also learned of a third related
entitled called Mega Farms U.S. (Mega Farms), owned by Lo.
for those containers that CBP did not test, HSI believed it
had reason to suspect the substance inside was honey rather
than rice fructose syrup. HSI agents discovered that when
containers imported by Demeter and Fina Food reached a
warehouse for storage and shipping, Lo and Chou, allegedly at
Chu's directions, removed the “rice fructose
syrup” labels from the individual barrels and replaced
them with “amber honey” labels before the barrels
were shipped to buyers. One warehouse manager also reported
to HSI that Chou provided false bills of lading to truck
drivers who transported the barrels from the warehouse.
According to the warehouse manager, the false bill of lading
described the commodity as “drums of honey” and
listed the shipper as Mega Farms, but the warehouse
manager's bills of lading described the commodity as
“rice fructose syrup” and listed the shipper as
April 18, 2012, a grand jury sitting in the Middle District
of Florida returned a Third Superseding Indictment (Doc. 100;
Indictment) against Chou, Chu, and Lo. In the first of
thirteen counts of the Indictment, the government charged
Defendants with conspiring to commit wire fraud in violation
of 18 U.S.C. § 1343, to introduce in commerce
fraudulently imported merchandise in violation of 18 U.S.C.
§ 542, to fraudulently import merchandise knowing it to
have been imported contrary to law in violation of 18 U.S.C.
§ 545, and to fraudulently introduce misbranded Chinese
honey into interstate commerce in violation of 21 U.S.C.
§§ 331(a), 333(a)(2) and 343(a)(1). See
id. at 1-25. In Counts Two through Seven, the government
charged Defendants with committing wire fraud in violation of
18 U.S.C. §§ 1343 and 2, see id. at 26-27,
and in Counts Eight through Eleven charged Defendants with
importing Chinese honey that was misbranded as rice fructose
syrup to avoid the payment of anti-dumping duties in
violation of 18 U.S.C. §§ 542 and 2, see
id. at 28-31. Lastly, in Counts Twelve and Thirteen, the
government charged Defendants with misbranding honey as rice
fructose syrup with the intent to defraud and mislead in
violation of 21 U.S.C. §§ 331(a), 333(a)(2), and
343(a)(1). See id. at 32.
critical issue in this case was whether the substances
imported contained more than 50 percent honey by weight, thus
making them subject to the significant anti-dumping duties.
The government planned to establish that the rice fructose
syrup imported by Defendants contained more than 50 percent
honey by weight through the expert testimony of Sharon E.
Stricklin, a chemist in the CBP laboratory in Savannah,
Georgia. On July 12, 2012, Defendants Chu and Lo filed a
motion to exclude Ms. Stricklin's expert opinions,
arguing that Ms. Stricklin's methodology for determining
the percentage of honey in a blend of honey and rice syrup
was not sufficiently reliable under Daubert v. Merrell
Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993).
See Motion to Exclude Government's Proposed
Witness Testimony under Fed.R.Evid. 702 at 3-4 (Doc. 122;
Daubert Motion).Defendants claimed “that the
general consensus in the scientific community, and within the
United States government, is that no reliable scientific
method currently exists to quantify the respective amounts of
honey in rice-syrup/honey blends.” Id. Indeed,
they pointed out that as of November 29, 2011, HSI reported
that its laboratory “could not determine the percentage
of honey in” a sample identified as being “Rice
Fructose Blend Syrup.” Exhibit 6 to Daubert
Motion (Doc. No. 122-6) at 2. Specifically, HSI stated,
“The Savannah Lab do[es] not have a quantitative method
at this time to be able to determine the percentage of honey
in a blend such as the one submitted. The Savannah Lab did
determined [sic] that there is honey present, but we cannot
determine the amount.” Id.
also relied on a June 21, 2012 determination from the United
States Department of Commerce (the Department) acknowledging
the current absence of a reliable, accepted method of
determining the ratio of honey and rice-syrup in a mixture of
the two. See Daubert Motion at 4, 6-8. The
Department concluded that importers were circumventing the
antidumping duty by importing blends of honey and rice syrup
from China that had not been commercially available in the
United States at the time the Antidumping Order was issued.
See Honey from the People's Republic of China:
Affirmative Preliminary Determination of Circumvention of the
Antidumping Duty Order, 77 Fed. Reg. 37378, 37381 (June 21,
2012), Exhibit 10 to Daubert Motion (Doc. Nos.
122-10 & 122-11; Preliminary Determination). In doing so,
the Department explained that “the percentage of sugar
in blends of honey and rice syrup is not determinate because
one cannot identify the percentage of C-3 sugars blended with
honey.” See id. In light of this finding, the
Department concluded that “without the ability to test
for the relative amount of honey in a blend of rice syrup and
honey, the ‘50 percent natural honey by weight'
threshold in the scope is without meaning.”
Id. at 37381. Based on this finding, the Department
announced its intention to declare that all blends of honey
and rice syrup that entered or were withdrawn from a
warehouse on or after December 7, 2011, regardless of the
percentage honey, would be subject to the Antidumping Order.
See id. at 37383.
Daubert hearing, the parties agreed that current
methods of testing could readily quantify the relative
amounts of honey (a C-3 sugar) and corn and/or cane syrup
(C-4 sugars) based upon the carbon ratios in the sample.
See Daubert Hearing Transcript at 15 (Doc. 158;
Daubert Hearing Tr.). However, rice syrup, like
honey, is a C-3 sugar, and known testing methods, such as
using an isotopic ratio mass spectrometer, cannot distinguish
one C-3 sugar from another C-3 sugar. Id. at 15-16,
101, 143. In response, the government argued that it did not
need to quantify the specific percentage of honey in a blend
of honey and rice syrup, but only needed to determine whether
a blend of rice syrup and honey contains more or less than
50 percent honey, the threshold ratio implicating
the antidumping duties. Id. at 65. The government
submitted that Ms. Stricklin's new methodology, developed
specifically for this case, was sufficiently reliable to
overcome Defendants' Daubert objections.
upon the testimony presented at the Daubert hearing,
the government's methodology for determining whether a
particular sample contained more than 50 percent honey can be
summarized as follows: (1) the government's expert,
following the methods of Melissopalynology,  creates a slide
for microscopic analysis; (2) the government's expert
views the slide under the microscope; (3) the
government's expert makes a subjective assessment as to
whether the amount of pollen observed in the sample
constitutes a “relative abundance” or
“overabundance” of pollen; (4) if the
government's expert finds a “relative
abundance” or an “overabundance, ” the
sample is determined to contain more than 50 percent honey.
Daubert Hearing Tr. at 62. Additionally, as to 19 of
the samples, the government's method included comparison
to one set of reference slides prepared using Vitex honey and
September 28, 2012, the Court held a status conference at
which the Court announced that it would grant the
Daubert Motion and exclude the government's
expert opinions regarding whether a particular syrup sample
contained more than 50 percent honey by weight. See
Transcript of Criminal Status Conference (Doc. 218; September
28, 2012 Status Tr.). At that time, the Court provided the
parties with a summary of its analysis, explaining that
exigent circumstances arising in other cases on the docket
prevented the completion of a thorough written order in
advance of the approaching trial date. Id.
November 11, 2012, the Court entered its written opinion.
See Opinion (Doc. 242). In the Opinion, the Court
initially expressed concern regarding Ms. Stricklin's
qualifications to offer the specific opinions proffered by
the government, as her opinion was based upon her observation
of the relative amount of pollen in a particular sample, but
she is not a pollen expert. Id. at 17. The Court
concluded, however, that even if she was qualified to render
an opinion about the relative amount of honey in the samples
she tested, the government failed to establish that Ms.
Stricklin's methodology was reliable or that her proposed
testimony would assist the trier of fact. Id. at 19.
the Court found, and the government did not dispute, that the
methodology relied upon by the government was not generally
accepted in the relevant scientific community. Id.
at 19-20. The Court further noted that it was
“undisputed that the government's new method has
not been submitted for any peer review or evaluation.”
Id. at 21 (noting that “the fact that this
method has not been subject to peer review and publication
does not significantly undermine its reliability, but neither
does it support its admissibility”). Next, the Court
observed that the fact that “there are no known rates
of error or standards for the application of the
government's method, and that no effort has been made to
test or refute Ms. Stricklin's hypothesis or verify the
accuracy of her opinions, however, does significantly
undermine the government's ability to carry its burden
under Daubert.” Id. In sum, the Court
The critical inquiry with regard to the methodology in this
case is not whether it can discern whether the suspect
samples contain more than 5 percent honey as suggested on the
import documents. It is not whether the methodology can
determine whether a sample contains a little bit or a lot of
pollen. The question is whether the government has shown that
using this methodology, its expert can make a reliable
quantitative determination that a particular sample contains
not some honey, not a lot of honey, not even 50 percent
honey, but more than 50 percent honey by weight. The
government has simply failed to carry this burden.
Id. at 33.
November 13, 2012, the government filed a notice of appeal of
the Court's Opinion. See Plaintiff United
States' Notice of Interlocutory Appeal and Accompanying
Certification (Doc. 245; Notice of Appeal). The next day the
Court ordered that no further action be taken in the case
until the government's appeal was resolved. See
Endorsed Order (Doc. 246). However, the government
voluntarily dismissed the appeal on February 22, 2013.
See Clerk's Entry of Dismissal (Doc. 257).
March 11, 2013, the Court held a status conference to
determine how the government wished to proceed in light of
the Court's Daubert ruling and the
government's decision to dismiss the appeal. See
Transcript of Criminal Status Conference (Doc. 319; March 11,
2013 Status Tr.). The Assistant United States Attorney (AUSA)
prosecuting the case, Russell Stoddard, informed the Court as
MR. STODDARD: With respect to the current indictment, Your
Honor, if the government does go to trial on the indictment
as it currently exists, then at the present time it would
appear that the Title 21 offenses and the 371 conspiracy
would be -- would still be viable.
I will tell the Court that we are working on the possibility
of a superseding indictment which could significantly alter
the posture of the case in light of the Daubert
ruling, as well as additional evidence that the government is
in the process of getting as a result of a parallel
prosecution in the Northern District of Illinois.
Id. at 6. After defense counsel expressed “a
loss at what the theory of the case is going to be” in
light the Court's ruling on the Daubert motion,
the Court inquired of the AUSA as follows:
THE COURT: . . . Mr. Stoddard, Counts Twelve and Thirteen as
pled are that the defendants, with the intent to defraud,
caused to be introduced into interstate commerce honey that
was misbranded as rice fructose syrup.
How does -- do you not have to prove that it was honey --
MR. STODDARD: I don't have to prove scientifically that
it was honey for purposes of the statute. I can put on end
purchasers who can say, “This is what I bought. This is
who I bought it from, and this is the product that I bought
and subsequently sold as the product that was represented to
me, that is to say, honey.”
. . .
[DEFENSE COUNSEL]: Unfortunately I disagree because that --
that is what I -- in a previous pretrial proceeding I
indicated to the Court that I was afraid would happen, that
the government would try to bring in evidence, opinion
evidence, and try to ply it in under something else that is
excluded by the Daubert ruling. I'd respectfully
submit that that is what was just described.
THE COURT: Well, what he said was that he would intend to
prove that -- prove the intent to defraud by bringing in
evidence that the item that end purchasers bought was labeled
as honey and represented to them to be honey and that -- I
guess he's going to show that that's the same stuff
that was brought into the country labeled as rice fructose
Is that right?
MR. STODDARD: That's correct, Your Honor.
THE COURT: Now, I don't know if that's enough, but
that doesn't have anything to do with the opinion
evidence, Mr. Scroggie [(Chu's counsel)].
. . .
And then as to Count One -- I guess, Mr. Stoddard, what's
the government's position --
. . .
MR. STODDARD: The government's position is that the
defendants intended to smuggle in a product which they
believed to be honey mislabeled as rice fructose syrup or
rice fructose blended syrup in order to avoid the tariffs.
Whether or not they were successful or whether or not it was
actually possible for them to commit or to accomplish the
conspiracy is really irrelevant. It has to do with what their
agreement was and what the intent was and what, if any, overt
acts they may have done in order to accomplish the plan. It
could be bubble gum as far as the government's concerned,
and they could still be criminally liable under Court One.
Id. at 10-14.
Monday, May 6, 2013, at what was supposed to be a sentencing
hearing for Defendant Chin Shih Chou, who had previously
entered a guilty plea, Mr. Stoddard requested a continuance
as the government had received new testing results that
concluded the substances imported by Lo, Chu, and Chou
contained little to no honey. See Transcript of
Sentencing Hearing (Doc. 279; Sentencing Tr.). Mr. Stoddard
explained the disconcerting turn of events as follows:
Last week we received -- well, to back up, in preparation for
a superseding indictment against the remaining defendants, we
became aware of a laboratory in Germany by the name of
Intertek that is being used by a lot of food distributors in
the United States, as well as almost all of the food
distributors in the European Union, to do tests for
adulteration and contaminants of food products.
Once we became aware of this, I sought funding to send the
samples of the suspected honey to this laboratory for
testing. That funding was granted in April. Samples were sent
from the CBP and Border Protection lab in Savannah, Georgia,
to Intertek in Bonn, Germany.
We received initial reports of their testing on Wednesday
with a final summary report on Friday at about 11:45. The
results from the German testing are in stark contrast to the
testing that was conducted by CBP and Border Protection in
that their tests concluded that the substance in question was
predominantly syrups, either corn syrup or rice fructose
syrup, with little if any honey contained in the samples that
were presented to them.
As a result of that, we are not prepared to go forward [with
the sentencing] because [Chou], quite frankly, is not guilty
of the crime to which he has pled guilty, at least based upon
the scientific evidence that we have at this point in time.
I have sought permission to dismiss the indictment. I have
not received that permission. I have not received permission
to ask for this continuance. However, given the nature and
circumstances of the case, I don't feel that I have any
I sent the information that I received Friday to Ms. Irvin
[(Chou's counsel)], and I also spoke with her. She did
not have an opportunity to talk with her client because [the
translator] was out of the country. But I requested from Ms.
Irvin at that time if we could file a joint motion for
continuance, and she said she was not in a position to be
able to do so. This was late Friday afternoon.
But I am asking for a continuance of one week with the idea
being that between now and a week from today, I will receive
permission to dismiss the indictment against Mr. Chou, and
we'll make arrangements to get him home as quickly as
Id. at 4-5.
Stoddard went on to state that he believed a crime had been
committed, but that it was “not the crime that is
charged and not the crime that [Chou] pled guilty to.”
Id. at 6-7. When the Court asked how the Intertek
lab results could be so different, Mr. Stoddard responded,
“I have no answer for that. I don't know. I mean,
obviously the people at [CBP] took serious issue with the
results that we received from Germany on Friday.”
Id. at 9. Mr. Stoddard assured the Court that he
would “waste no time” in filing a motion for
leave to dismiss the charges against the Defendants once he
received permission from his supervisors. Id. at 11.
Ultimately, the parties agreed to a one week continuance of
the sentencing hearing to give the government time to dismiss
the charges and to allow defense counsel time to look into
Chou's immigration status.
the week-long continuance, Mr. Stoddard moved to voluntarily
dismiss the Indictment and all charges against all three
Defendants the next day. See Request for Leave to
Dismiss Indictment (Doc. 281; Voluntary Dismissal). The Court
sua sponte scheduled a status hearing that same day
to discuss the best way to handle the dismissal given Chou
and Chu's immigration status and the Court's concern
that if the Court granted the dismissal, Chu and Chou would
be taken into immigration custody immediately upon their
release from prison. See Transcript of Telephonic
Status Conference (Doc. 291; May 7, 2013 Status Tr.). The
parties agreed that the best course of action would be to
delay granting the voluntary dismissal by one day so that
defense counsel could work out the immigration issues.
Id. at 22-23.
hearing the next day on May 8, 2013, after being advised that
the immigration detainers had been lifted, the Court granted
the request for leave to dismiss the charges against the
Defendants in open court and entered a written order as well.
See Transcript of Telephonic Status Conference at 4
(Doc. 292; May 8, 2013 Status Tr.); Order (Doc. 287).
Subsequently, Chu and Lo filed the instant motions for an
award of attorney's fees and other litigation expenses
pursuant to the Hyde Amendment, arguing the Government's
prosecution was vexatious, frivolous, and in bad faith.