[Federal Register Volume 64, Number 149 (Wednesday, August 4, 1999)]
[Notices]
[Pages 42412-42414]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-20044]


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INTERNATIONAL TRADE COMMISSION

[Investigation No. 337-TA-380; Enforcement Proceeding]


Certain Agricultural Tractors Under 50 Power Take-off Horsepower; 
Commission Determination Concerning Violation of Cease and Desist 
Orders and Civil Penalty

AGENCY: International Trade Commission.

ACTION: Notice.

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SUMMARY: Notice is hereby given that the U.S. International Trade 
Commission determined that the respondents in the above-captioned 
formal enforcement proceeding have violated the Commission cease and 
desist orders issued to them on February 25, 1997, and determined to 
impose a civil penalty for the amount of $2,320,000.

FOR FURTHER INFORMATION CONTACT: Shara L. Aranoff, Esq., Office of the 
General Counsel, U.S. International Trade Commission, telephone 202-
205-3090.

SUPPLEMENTARY INFORMATION: The trademark-based section 337 
investigation that preceded this enforcement proceeding was instituted 
on February 14, 1996, based on a complaint filed by Kubota Corporation, 
Kubota Tractor Corporation, and Kubota Manufacturing of America, Inc. 
(collectively ``Kubota''). On February 25, 1997, at the conclusion of 
the original investigation, the Commission issued cease and desist 
orders directed, inter alia, to Gamut Trading Co., Inc. (``Gamut 
Trading'') and Gamut Imports. The cease and desist orders provide that 
Gamut Trading and Gamut Imports, as well as their ``principals, 
stockholders, officers, directors, employees, agents, licensees, 
distributors, controlled (whether by stock ownership or otherwise) and/
or majority-owned business entities, successors and assigns,'' shall 
not ``import or sell for importation into the United States'' or ``sell 
market, distribute, offer for sale, or otherwise transfer (except for 
exportation) in the United States'' covered product, defined as 
``agricultural tractors under 50 power take-off horsepower manufactured 
by Kubota Corporation of Japan that infringe federally-registered U.S.

[[Page 42413]]

trademark ``KUBOTA'' (Reg. No. 922,330) and that are not imported by, 
under license from, or with the permission of the trademark owner.'' 
The orders further provide that Gamut Trading and Gamut Imports ``shall 
report to the Commission'' on an annual basis ``the quantity in units 
and the value in dollars of foreign-produced covered product'' that 
they have ``imported or sold in the United States during the reporting 
period or that remains in inventory at the end of the period.'' 
Finally, the orders provide that they ``shall retain any and all 
records relating to the importation, sale, offer for sale, marketing, 
distribution, or otherwise transferring in the United States of 
imported covered product made and received in the usual and ordinary 
course of business, whether in detail or in summary form, for a period 
of two (2) years from the close of the fiscal year to which they 
pertain.''
    On July 16, 1998, Kubota filed a complaint seeking institution of a 
formal enforcement proceeding against Gamut Trading, Gamut Imports, 
Ronald A. DePue (Chief Executive Officer and Chairman of the Board of 
Directors of Gamut Trading), and Darrell J. DuPuy (Chief Financial 
Officer, President, and member of the Board of Directors of Gamut 
Trading) (collectively ``the Gamut respondents''), alleging that they 
are violating the cease and desist orders directed to them. Kubota 
supplemented its complaint on August 26, 1998. On September 28, 1998, 
the Commission issued an order instituting a formal enforcement 
proceeding and instructing the Secretary to transmit the enforcement 
proceeding complaint to the Gamut respondents and their counsel for a 
response. The following were named as parties to the formal enforcement 
proceeding: (1) Kubota Corporation, 2-47 Shikitsuhigashi 1-chome, 
Naniwa-ku, Osaka 556-8601, Japan; Kubota Tractor Corporation, 3401 Del 
Amo Boulevard, Torrance, California 90503; and Kubota Manufacturing of 
America Corporation, Industrial Park North, 2715 Ramsey Road, 
Gainesville, Georgia 30501; (2) Gamut Trading Co., Inc., 13450 Nomwaket 
Road, Apple Valley, California 92308; (3) Gamut Imports, 14354 Cronese 
Road, Apple Valley, California, 92037; (4) Ronald A. DePue, Chief 
Executive Officer and Chairman of the Board of Directors of Gamut 
Trading Co., Inc.; (5) Darrell J. DuPuy, Chief Financial Officer, 
President, and member of the Board of Directors of Gamut Trading Co., 
Inc.; and (6) a Commission investigative attorney to be designated by 
the Director of the Commission's Office of Unfair Import 
Investigations. On October 19, 1998, the Gamut respondents filed a 
joint response to the enforcement complaint denying violation of any of 
the Commission's remedial orders and infringement of the ``KUBOTA'' 
trademark, and asserting that the Commission lacks jurisdiction to 
address the enforcement complaint.
    On October 28, 1998, the Commission issued an order referring the 
formal enforcement proceeding to an administrative law judge (ALJ) for 
issuance of an initial determination (ID) regarding whether respondents 
violated the cease and desist orders and for a recommended 
determination (RD) regarding what enforcement measures, if any, are 
appropriate in light of the nature and significance of such violations.
    On November 13, 1998, the Gamut respondents filed a motion to 
dismiss the enforcement complaint contending that the Commission lacked 
jurisdiction over the subject matter. On November 18, 1998, the Gamut 
respondents filed a further motion seeking sanctions against 
complainants under Commission rule 210.4(d)(1) for filing an allegedly 
frivolous enforcement complaint over which the Commission has no 
jurisdiction. The ALJ denied both motions by orders dated December 8, 
1998 (Orders Nos. 62 and 63). On December 11, 1998, complainants moved 
for sanctions against the Gamut respondents for filing the two 
foregoing motions. On January 21, 1999, the ALJ issued Order No. 69, 
granting complainants' motion for monetary sanctions against the Gamut 
respondents and their attorney, Lloyd J. Walker, on the grounds that 
respondents' two motions were ``not objectively reasonable under the 
circumstances when they were filed.'' Order No. 73, issued March 2, 
1999, denied the Gamut respondents' motion for interlocutory appeal of 
Order No. 69.
    Order No. 72, issued March 2, 1999, denied the Gamut respondents' 
motion to suppress the use of certain information acquired by recording 
telephone conversations between agents of complainants and certain 
employees of the Gamut respondents. Order No. 76, issued April 28, 
1999, granted in part complainants' motion for adverse inferences based 
on the Gamut respondents' destruction of certain documents. 
Specifically, the ALJ found that respondents had destroyed all records 
showing the profits they made on sales of certain accused tractors and 
that an adverse inference as to their margin of profit on such sales 
was therefore warranted.
    By agreement of the parties, no evidentiary hearing was held before 
the ALJ. The parties did submit position statements, proposed findings 
of fact, documentary exhibits, and certain joint stipulated facts, as 
well as rebuttal statements, findings of fact, and exhibits. On April 
28, 1999, the ALJ issued his 72-page ``Final Initial and Recommended 
Determinations'' (ID and RD), finding that the Gamut respondents 
violated the cease and desist orders directed to them and recommending 
that the Commission assess a civil penalty against them in the amount 
of $652,476.
    In order to allow the parties to express their views to the 
Commission prior to final disposition of this enforcement proceeding, 
the Commission provided the parties with the opportunity to file 
petitions for review of the ID and/or comments on the appropriate 
remedy, if any. The Commission also provided an opportunity for public 
comment on the appropriate remedy. Petitions for review of the ID, 
comments on remedy, and replies thereto were filed by all parties. The 
Commission received no public comments.
    Having considered the ID and RD, the submissions of the parties, as 
well as the entire record in this proceeding, the Commission determined 
that the Gamut respondents had violated the Commission's cease and 
desist orders by importing and selling infringing tractors on fifty-
eight (58) days between February 27, 1997, and October 13, 1998. The 
Commission adopted the ID with respect to the ALJ's determinations that 
(1) the Commission has jurisdiction over the subject matter of this 
enforcement proceeding; (2) respondents violated the cease and desist 
orders by selling in the United States 172 accused ``L'' series 
tractors on 56 days; and (3) respondents violated the reporting and 
recordkeeping provisions of the cease and desist orders by making false 
reports to the Commission and destroying certain records. The 
Commission also determined to adopt ALJ Orders Nos. 62, 63, and 69.
    The Commission declined to adopt the ID with respect to the ALJ's 
determinations that (1) respondents did not violate the cease and 
desist orders by selling in the United States accused ``B'' series 
tractors because those tractors are not ``covered product'' within the 
meaning of the orders; and (2) consequently, respondents did not 
violate the reporting and recordkeeping requirements of the cease and 
desist orders with respect to accused ``B'' series tractors. The 
Commission determined that respondents violated

[[Page 42414]]

the cease and desist orders by (1) selling in the United States 16 
accused ``B'' series tractors on seven days, for a combined total of 58 
violation days; and (2) failing to comply with the reporting and 
recordkeeping requirements of the cease and desist orders with respect 
to such sales. The Commission further determined to impose a civil 
penalty in the amount of $2,320,000 on the Gamut respondents and 
determined that respondents should have joint and several liability for 
the payment of this civil penalty.1 A Commission opinion 
concerning the Commission's violation and remedy determinations will be 
issued shortly.
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    \1\ Commissioner Crawford determined to impose a civil penalty 
in a different amount.
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    This action is taken under the authority of section 337 of the 
Tariff Act of 1930, as amended (19 U.S.C. 1337), and Sec. 210.75 of the 
Commission's Rules of Practice and Procedure (19 CFR 210.75).

    Issued: July 28, 1999.

    By order of the Commission.
Donna R. Koehnke,
Secretary.
[FR Doc. 99-20044 Filed 8-3-99; 8:45 am]
BILLING CODE 7020-02-P