Heartland By-Products, Inc. v. United States ( 2005 )

United States Court of Appeals for the Federal Circuit
04-1515
HEARTLAND BY-PRODUCTS, INC.,
Plaintiff-Appellant,
v.
UNITED STATES,
Defendant-Appellee.
Stanley McDermott III, DLA Piper Rudnick Gray Cary US LLP, of New York, New
York, argued for plaintiff-appellant. With him on the brief were Daniel J. Gluck and
Jerome L. Hanifin, Serko & Simon, of New York, New York.
Aimee Lee, Attorney, International Trade Field Office, Commercial Litigation
Branch, Civil Division, United States Department of Justice, of New York, New York,
argued for defendant-appellee. With her on the brief were Peter D. Keisler, Assistant
Attorney General, David M. Cohen, Director, of Washington, DC, and Barbara S.
Williams, Attorney in Charge, International Trade Field Office, of New York, New York.
Of counsel on the brief were Karen P. Binder, Assistant Chief Counsel, International
Trade Litigation, United States Customs and Border Protection, of New York, New York,
Yelena Slepak, Attorney, and Allan Martin, Associate Chief Counsel, of Washington,
DC; and Ellen Daly, Attorney, Office of Chief Counsel, of Washington, DC.
Appealed from: United States Court of International Trade
Judge Judith M. Barzilay
United States Court of Appeals for the Federal Circuit
04-1515
HEARTLAND BY-PRODUCTS, INC.,
Plaintiff-Appellant,
v.
UNITED STATES,
Defendant-Appellee.
__________________________
DECIDED: September 26, 2005
__________________________
Before MICHEL, Chief Judge, SCHALL and PROST, Circuit Judges.
MICHEL, Chief Judge.
Heartland By-Products, Inc. (“Heartland”) appeals the order of the United States
Court of International Trade dismissing its May 2003 complaint for lack of subject matter
jurisdiction. Heartland By-Prods., Inc. v. United States, 341 F. Supp. 2d 1284 (Ct. Int’l
Trade 2004). This appeal was submitted for decision following oral argument on August
2, 2005. Because we hold that the Court of International Trade has ancillary jurisdiction
to determine the scope and effect of its prior decision in Heartland By-Products, Inc. v.
United States, 74 F. Supp. 2d 1324 (Ct. Int’l Trade 1999), we reverse the order of
dismissal and remand for further proceedings on the merits.
BACKGROUND
This case comes to us by a long and tortuous path. The dispute between
Heartland and the United States Customs Service (“Customs”)1 originated in 1995. At
that time, Heartland, a sugar refiner, requested an advance ruling from Customs
regarding the classification of its prospective sugar syrup imports from Canada. On
May 15, 1995, Customs issued New York Ruling Letter 810328 (“New York Ruling
Letter”), classifying Heartland’s prospective imports under subheading 1702.90.40 of
the Harmonized Tariff Schedule of the United States (“HTSUS”). Under this
classification, Heartland’s sugar syrup was not subject to the significantly higher duty
rates imposed under the Tariff Rate Quota (“TRQ”).2 Having obtained the advance
classification ruling from Customs, Heartland began its import and refining operations in
the United States in mid-1997.
About four years later, in response to a petition under 19 U.S.C. § 1516 by a
number of domestic trade associations, Customs published a notice of its intent to
revoke the New York Ruling Letter and to reclassify Heartland’s sugar syrup imports
under a different HTSUS provision, subject to the TRQ. Proposed Revocation of Ruling
Letter & Treatment Relating to Tariff Classification of Certain Sugar Syrups, 33 Cust.
Bull. No. 22/23, at 56-57 (June 9, 1999). On September 8, 1999, following a comment
period, Customs issued a final notice revoking the New York Ruling Letter and
1
Effective March 1, 2003, the United States Customs Service was renamed
the United States Bureau of Customs and Border Protection. Homeland Security Act of
2002, Pub. L. No. 07-296, § 1502, 116 Stat. 2135, 2308-2309 (2002).
2
According to Heartland, the non-TRQ duty during the relevant period was
0.35 cents per liter compared to the TRQ rate of 35.74 cents per kilogram,
approximately 10,000 percent higher than the non-TRQ rate.
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reclassifying Heartland’s sugar syrup imports, effective November 8, 1999. Revocation
of Ruling Letter & Treatment Relating to Tariff Classification of Certain Sugar Syrups, 33
Cust. Bull. No. 35/36, at 41 (Sept. 8, 1999) (“Revocation Ruling”).
On September 20, 1999, Heartland filed a complaint in the Court of International
Trade seeking pre-importation review of the Revocation Ruling under 28 U.S.C.
§ 1581(h) and an injunction preventing Customs from enforcing the Revocation Ruling
under 28 U.S.C. § 1581(i). On October 18, 1999, the Court of International Trade
exercised its jurisdiction under § 1581(h)3 to grant Heartland’s motion for judgment on
the agency record. Heartland By-Prods., Inc. v. United States, 74 F. Supp. 2d 1324 (Ct.
Int’l Trade 1999) (“Heartland I”). The court declared Customs’ Revocation Ruling
unlawful and ordered that Heartland’s sugar syrup be classified under subheading
1702.90.40 HTSUS, the classification established by the New York Ruling Letter. Id. at
1345. Relying on Heartland I, Heartland continued to import sugar syrup into the United
States.
The government, joined by the United States Beet Sugar Association, which had
intervened as a defendant below, appealed the Court of International Trade’s decision
3
28 U.S.C. § 1581(h) provides:
The Court of International Trade shall have exclusive jurisdiction of any
civil action commenced to review, prior to the importation of the goods
involved, a ruling issued by the Secretary of the Treasury, or a refusal to
issue or change such a ruling, relating to classification, valuation, rate of
duty, marking, restricted merchandise, entry requirements, drawbacks,
vessel repairs, or similar matters, but only if the party commencing the civil
action demonstrates to the court that he would be irreparably harmed
unless given an opportunity to obtain judicial review prior to such
importation.
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in Heartland I.4 We reversed, reasoning that Customs’ persuasive interpretation of the
relevant HTSUS provisions merited deference under Skidmore v. Swift & Co., 323 U.S.
134 (1944). Heartland By-Prods., Inc. v. United States, 262 F.3d 1126 (Fed. Cir. 2001)
(“Heartland II”). This court’s decision did not specify the date as of which the TRQ rates
would apply to Heartland’s sugar syrup entries. Our decision issued on August 30,
2001, nearly two years after the decision was reviewed. The following day, Heartland
ceased importing sugar syrup into the United States.
After denying Heartland’s petition for rehearing, this court issued its mandate on
December 4, 2001. Customs, however, did not wait for the mandate to issue before
commencing full-scale liquidation and reliquidation of Heartland’s sugar syrup entries at
the TRQ rates. Beginning on October 5, 2001, Customs liquidated some 1,225 entries
prior to the issuance of the mandate. Customs continued to liquidate and reliquidate
Heartland’s entries after the mandate issued.
Heartland responded by filing a motion for entry of judgment on December 13,
2001, asking that the Court of International Trade determine the effective date of its
ruling in Heartland I and thus the propriety of Customs’ actions. Heartland alleged that
§ 1581(h) conferred jurisdiction on the trial court to consider the scope of its ruling in
Heartland I and argued that, under 19 U.S.C. § 1625(c),5 the higher TRQ duties became
applicable no earlier than 60 days after the issuance of the appellate mandate.
4
The government did not seek to stay Heartland I pending appeal.
5
19 U.S.C. § 1625(c) provides, in relevant part:
(c) Modification and revocation. A proposed interpretive ruling or decision
which would--
04-1515 4
In December 2001, Heartland began to file protective protests under 19 U.S.C.
§ 1514, administratively challenging Customs’ allegedly premature liquidations and
reliquidations of its sugar syrup entries at the TRQ rate.
The Court of International Trade heard oral argument on Heartland’s motion for
entry of judgment on January 23, 2002. At oral argument, counsel for the government
represented that Heartland may establish jurisdiction under 28 U.S.C. § 1581(a)6 by
protesting the liquidation or reliquidation of a single entry and that Customs “would
likely” suspend action on Heartland’s other entries pending court proceedings. In view
of this representation, the trial court advised the parties to work together to settle the
jurisdictional issue. Heartland promptly contacted the government, suggesting that it
deny a protest of a single entry, which Heartland would contest under § 1581(a), while
Customs deferred taking any action on all other pending entries. Customs, however,
proposed denying three representative entries, the first reliquidated prior to the issuance
of the mandate, the second reliquidated after the issuance of the mandate, and the third
liquidated after the issuance of the mandate. On February 15, 2002, two days after
(1) modify (other than to correct a clerical error) or revoke a prior
interpretive ruling or decision which has been in effect for at least 60 days;
or
(2) have the effect of modifying the treatment previously accorded
by the Customs Service to substantially identical transactions;
shall be published in the Customs Bulletin. . . . The final ruling or decision
shall become effective 60 days after the date of its publication.
6
28 U.S.C. § 1581(a) provides:
The Court of International Trade shall have exclusive jurisdiction of any
civil action commenced to contest the denial of a protest, in whole or in
part, under section 515 of the Tariff Act of 1930.
04-1515 5
Heartland questioned the necessity of denying three rather than just one entry, Customs
resumed liquidating and reliquidating Heartland’s entries at the TRQ rate.
On February 26, 2002, the Court of International Trade denied Heartland’s
motion for entry of judgment. Heartland By-Prods., Inc. v. United States, 223 F. Supp.
2d 1317 (Ct. Int’l Trade 2002) (“Heartland III”). The court vehemently rejected the
government’s argument that § 1581(h) covers only prospective rather than actual
entries, “even when the actual entry was the prospective entry contemplated by the
court when it took jurisdiction of the case, and by the ruling that was the subject of
[Heartland’s] complaint.” Id. at 1330. The Court of International Trade explained that
“[w]hile the jurisdictional predicate for § 1581(h) requires that the entries be prospective,
this must be distinguished from the effect of a judicial decision which can only be useful
if it is applied to real entries.” Id. The court thus ruled that it continued to have
jurisdiction to adjudicate issues pertaining to the actual entries covered by Heartland I:
“To force an importer to seek relief under § 1581(h) to establish its rights, and then force
it to litigate again when it seeks to enforce those rights with actual entries, would make
§ 1581(h) superfluous as an avenue of relief.” Id. at 1331. The trial court also observed
that because its decision in Heartland I remained binding and enforceable until the
issuance of the appellate mandate, “[a]ny action by Customs that applies the
[Revocation Ruling] prior to the issuance of the mandate directly flouts the authority of
this court over rulings under § 1581(h).” Id.
Nonetheless, the Court of International Trade declined to exercise its jurisdiction
under § 1581(h) to determine the temporal effect of its ruling in Heartland I, stating that
a “better alternative” was available to Heartland in this case, namely, jurisdiction under
04-1515 6
28 U.S.C. § 1581(a). Id. at 1335. The court reasoned that while it had “the option of
ruling on the applicability of § 1625(c) to some of the entries covered by [Heartland’s]
motion” — specifically, those entered and liquidated prior to December 11, 2001 — it
would be unable to consider all of the relief requested by Heartland, given the unclear
factual record and the uncertain status of other entries in the liquidation process. Id. at
1334. The protest process, the court explained, would allow the development of a clear
factual record. Hence, the court concluded that “[i]n this case, to maintain jurisdiction
under § 1581(h), or extend it under § 1581(i), when another more comprehensive
avenue is available is unwise.” Id. at 1335. The Court of International Trade thus
entered judgment in accordance with the appellate mandate and dismissed the
complaint.
Heartland did not appeal Heartland III. Several months later, Heartland renewed
its proposal that Customs deny the protest of a single entry to establish jurisdiction
under § 1581(a). Heartland had filed two such protests, dated March 1 and March 8,
2002, each covering only a single entry. Despite Heartland’s renewed proposal, on
December 3, 2002, Customs denied four pending protests, totaling approximately $10
million in TRQ duties. Customs denied one additional protest worth $26 million in TRQ
duties on February 27, 2003. None of these protests included the single-entry protests
filed by Heartland.
On May 29, 2003, Heartland filed a second complaint in the Court of International
Trade, challenging Customs’ retroactive imposition of TRQ duties on Heartland’s sugar
syrup entries imported in reliance on Heartland I. Both counts of the complaint, the first
styled under § 1581(h) and the second under § 1625(c), sought declaratory judgment as
04-1515 7
well as a preliminary and permanent injunction. On July 28, 2003, the government
moved to dismiss Heartland’s complaint for lack of subject matter jurisdiction or, in the
alternative, for failure to state a claim upon which relief can be granted. On July 1,
2004, almost one year later, having heard no oral argument, the Court of International
Trade dismissed Heartland’s complaint. Heartland By-Prods., Inc. v. United States, 341
F. Supp. 2d 1284 (Ct. Int’l Trade 2004) (“Heartland IV”).
The Court of International Trade determined that it lacked jurisdiction under both
§ 1581(h) and § 1581(i).7 With respect to § 1581(h), the court concluded that it could no
longer exercise jurisdiction because it “formally relinquished jurisdiction” under that
provision when it denied Heartland’s motion for entry of judgment and dismissed the
original case in Heartland III. The present action, the trial court reasoned, “[w]hile
7
28 U.S.C. § 1581(i) provides:
(i) In addition to the jurisdiction conferred upon the Court of International
Trade by subsections (a)-(h) of this section and subject to the exception
set forth in subsection (j) of this section, the Court of International Trade
shall have exclusive jurisdiction of any civil action commenced against the
United States, its agencies, or its officers, that arises out of any law of the
United States providing for--
(1) revenue from imports or tonnage;
(2) tariffs, duties, fees, or other taxes on the importation of
merchandise for reasons other than the raising of revenue;
(3) embargoes or other quantitative restrictions on the importation
of merchandise for reasons other than the protection of the public health
or safety; or
4) administration and enforcement with respect to the matters
referred to in paragraphs (1)-(3) of this subsection and subsections (a)-(h)
of this section.
....
04-1515 8
involving the same parties, entries and underlying dispute as Heartland III . . . is an
entirely separate, new cause of action. Therefore, Heartland carries the burden of re-
establishing the jurisdiction of this court to survive the government’s motion to dismiss.”
Id. at 1287. The trial court next determined that no new basis for § 1581(h) jurisdiction
existed. The Court of International Trade found that Heartland could not satisfy the
requirements of § 1581(h) anew, as all of its entries had already been imported, and no
prospective entries were in dispute.
Turning to § 1581(i), the trial court observed that this “catch-all” jurisdictional
provision “may not be invoked when jurisdiction under another subsection of section
1581 is, or could have been available, unless the remedy provided under that other
subsection would be manifestly inadequate.” Id. at 1289. Here, the court explained,
Heartland’s alleged inability to pay “ruinous” duties on the protested entries did not
alone render a remedy under § 1581(a) manifestly inadequate. Id. (citing, inter alia,
Am. Air Parcel Forwarding Co. v. United States, 718 F.2d 1546, 1551 (Fed. Cir. 1983)).
The court thus found jurisdiction under § 1581(i) unavailable. Finding no subject matter
jurisdiction to adjudicate Heartland’s complaint, the Court of International Trade
dismissed the action.
Heartland timely appealed to this court. We have jurisdiction under 28 U.S.C.
§ 1295(a)(5).
DISCUSSION
Heartland makes three main arguments on appeal. First, it contends that the
Court of International Trade erred by not treating Heartland’s complaint as “an
independent action” for relief from the judgment of dismissal in Heartland III under Court
04-1515 9
of International Trade Rule 60(b).8 Such an action, Heartland argues, does not require
an independent basis for jurisdiction. Second, Heartland asserts that the Court of
International Trade had continued to possess jurisdiction under § 1581(h) to determine
the scope of its ruling in Heartland I. This inherent authority, Heartland maintains, did
not terminate upon the court’s dismissal of the original action in Heartland III. Third,
Heartland claims the trial court had jurisdiction under the catch-all provision in § 1581(i).
To that end, Heartland challenges the trial court’s determination that jurisdiction under
§ 1581(a) was not “manifestly inadequate,” rendering § 1581(i) jurisdiction unavailable
as a matter of law.
The government responds that Heartland’s complaint fails to seek relief from the
judgment in Heartland III under Rule 60(b), as the complaint mentions neither Rule
60(b) nor Heartland III. In reply to Heartland’s argument that the Court of International
Trade continued to have jurisdiction under § 1581(h), the government asserts that the
court forever relinquished jurisdiction over the original action when it dismissed
Heartland III, and that the present action constitutes an entirely new, separate case,
requiring an independent jurisdictional basis. Finally, the government defends the trial
court’s finding that the alleged adequacy of § 1581(a) rendered jurisdiction under
§ 1581(i) unavailable, arguing that financial hardship alone does not make jurisdiction
under § 1581(a) “manifestly inadequate.”
8
Rule 60(b) provides, in relevant part:
This rule does not limit the power of the court to entertain an independent
action to relieve a party from a judgment, order, or proceeding, or to grant
relief to a defendant not actually personally notified as provided in Title 28
U.S.C. § 1655, or to set aside a judgment for fraud upon the court. The
procedure for obtaining relief from a judgment shall be by motion as
prescribed in these rules or by an independent action. (Emphasis added).
04-1515 10
We review decisions of the Court of International Trade dismissing for lack of
subject matter jurisdiction de novo. Xerox Corp. v. United States, 289 F.3d 792, 794
(Fed. Cir. 2002). We begin with Heartland’s argument that the Court of International
Trade continued to have jurisdiction under § 1581(h) to determine the scope and effect
of its decision in Heartland I, an argument that we accept.
The Court of International Trade concluded that because it “formally relinquished
jurisdiction” over the original action in Heartland III, jurisdiction under § 1581(h) was no
longer available. Indeed, in Heartland III, the trial court “declined” to exercise
jurisdiction under § 1581(h) despite correctly finding such jurisdiction did lie. Mindful of
the fact that Heartland IV, not Heartland III, is before us on review, we nonetheless note
that the Court of International Trade did not have the authority to simply decline to
exercise jurisdiction conferred by § 1581(h). Such an exercise is not optional. See New
Orleans Pub. Serv., Inc. v. Council of New Orleans, 491 U.S. 350, 358 (1989) (“federal
courts lack the authority to abstain from the exercise of jurisdiction that has been
conferred”). Having assured itself of § 1581(h) jurisdiction over at least some of the
entries, the trial court should have deferred ruling on the government’s motion to
dismiss pending clarification of the factual record as to other entries or dismissed the
action without prejudice pending such clarification, rather than entering judgment that
finally dismissed the action.
In Heartland IV, despite acknowledging that Heartland’s second action involved
the same parties, the same entries, and the same underlying dispute as Heartland III,
the court nevertheless seemed to treat as legally dispositive the fact that it had “finally
relinquished” jurisdiction over the original case in Heartland III. The central issue in this
04-1515 11
appeal is thus whether the Court of International Trade had jurisdiction to review the
scope of its prior decision in Heartland I, despite its dismissal in Heartland III of the
original action of which the prior decision was part. We have had occasion to examine
the underlying question in United States v. Hanover Insurance Co., 82 F.3d 1052 (Fed.
Cir. 1996). There, the United States commenced an action against Hanover, a surety,
in 1992 to recover unpaid antidumping duties and interest from 1978. The Court of
International Trade granted Hanover’s motion to dismiss the action as barred by the six
year statute of limitations set forth in 28 U.S.C. § 2415(a). Despite the dismissal,
Customs continued to demand payment and threatened Hanover with administrative
sanctions, including directing all district and regional directors not to accept any
merchandise covered by bonds underwritten by Hanover and requesting that the
Treasury Department remove Hanover from the list of approved sureties pursuant to 19
U.S.C. § 1623. Hanover sought redress from the Court of International Trade by filing a
motion for civil contempt, arguing that the threatened administrative actions
contravened the court’s order dismissing the case as time-barred.
Concluding that it had “jurisdiction to determine the effect of, and to enforce its
own judgments,” and therefore power to determine the legal effect of its prior dismissal,
the court enjoined Customs from further administrative attempts to collect the unpaid
duties and interest. This court affirmed, explaining:
Like district courts, see 28 U.S.C. § 1585 (1994), the Court of International
Trade has the inherent power to determine the effect of its judgments and
issue injunctions to protect against attempts to attack or evade those
judgments. The issue before the court on Hanover’s motion for civil
contempt was whether Customs’ attempt to circumvent the limitation
period by resort to administrative actions was contrary to the prior order of
dismissal. Such an inquiry falls squarely within the court’s inherent power
to determine the effect of its prior judgments. Where a party’s conduct is
04-1515 12
in violation, or evasive, of a prior judgment, the Court of International
Trade also has authority to enjoin that conduct regardless of whether the
conduct amounts to civil contempt.
Id. at 1054. This inherent power, which flows from a federal court’s original authority to
render a judgment in the case, has been termed “ancillary jurisdiction.”9 As the
Supreme Court has explained:
We have reserved the use of ancillary jurisdiction in subsequent
proceedings for the exercise of a federal court’s inherent power to enforce
its judgments. Without jurisdiction to enforce a judgment entered by a
federal court, the judicial power would be incomplete and entirely
inadequate to the purposes for which it was conferred by the Constitution.
Peacock, 516 U.S. at 356 (citation and quotation omitted);10 see also Peter Bay
Homeowners Assoc., Inc. v. Stillman, 294 F.3d 524, 533 (3d Cir. 2002) (“There is no
question . . . that the District Court had jurisdiction to interpret the scope of the
easement ordered by Judge Young in his 1975 decision. It had the jurisdiction pursuant
to its inherent power to interpret, and thereby effect, the District Court’s own decrees.”
(citing Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994))).
As in Hanover, here, the Court of International Trade had ancillary jurisdiction to
determine the effect of Heartland I on the sugar syrup entries made in reliance on that
judgment before its reversal by our court. Like the motion for civil contempt in Hanover,
the complaint at issue in this case alleged that Customs’ liquidations and reliquidations
9
A federal court may exercise ancillary jurisdiction “(1) to permit disposition
by a single court of claims that are, in varying respects and degrees, factually
interdependent; and (2) to enable a court to function successfully, that is, to manage its
proceedings, vindicate its authority, and effectuate its decrees.” Peacock v. Thomas,
516 U.S. 349, 355 (1996) (citation and quotation omitted).
10
Under 28 U.S.C. § 1585, the Court of International Trade possesses “all
the powers in law and equity of, or as conferred by statute upon, a district court of the
United States.”
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of these entries at the TRQ rate prior to the issuance of the appellate mandate
contravened the Court of International Trade’s ruling in Heartland I. The Court of
International Trade, therefore, had jurisdiction to assess the propriety of Customs’
allegedly premature liquidations and reliquidations — purportedly violative of its prior
ruling in Heartland I — despite the dismissal of the original action in Heartland III. In
other words, the dismissal of Heartland III did not deprive the court of its inherent power
to examine the effect of or ensure compliance with its own prior ruling in Heartland I.
While federal courts hold the inherent power to enforce their prior judgments, in
determining the reach of such power, the Supreme Court has “cautioned against the
exercise of jurisdiction over proceedings that are ‘entirely new and original,’ or where
‘the relief [sought is] of a different kind or on a different principle’ than that of the prior
decree.” Peacock, 516 U.S. at 357-59 (finding no jurisdiction because the second suit
involved new theories of liability not asserted in and having little connection with the
original suit) (citations omitted, brackets in original). In this regard, the government
insists that Heartland’s second suit is wholly distinct from the original action, thus
requiring an independent jurisdictional predicate. The original case, the government
alleges, dealt with the validity of Customs’ Revocation Ruling, while this case
challenges the application of that ruling through a separate statutory provision, namely §
1625. The government’s view of the two actions is myopic. Both cases, as the
government implicitly admits, concern Customs’ Revocation Ruling. As the Court of
International Trade correctly reasoned in Heartland III, “[t]here is an obvious link
between the restoration of the [Revocation Ruling] by the Federal Circuit, and
determining the effective date of its application.” 223 F. Supp. 2d at 1334. Like
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Heartland’s motion for entry of judgment in Heartland III, this action asks the Court of
International Trade to determine the reach of its own judgment in Heartland I and
determine the legality of Customs’ liquidations and reliquidations in view of that
judgment, a task that is always within the court’s jurisdiction.11 See Hanover, 82 F.3d at
1054.
Indeed, requiring Heartland to establish jurisdiction under § 1581(a), including
the payment of TRQ duties on its denied protests, to receive a determination as to the
proper scope of the trial court’s original ruling under § 1581(h) would frustrate the
purpose of the latter provision, which was enacted to provide importers with a means for
obtaining pre-importation relief without having to pay post-importation duties. As the
Court of International Trade correctly explained in Heartland III,
Section 1581(h) is an extraordinary instrument, and a significant exception
to the procedural requirements traditionally placed on those challenging a
decision by Customs. Historically, in order to challenge a decision like the
Revocation [Ruling] at issue in this case, it was necessary for a party to
exhaust remedies available through the administrative agency by filing a
protest with Customs. Exhaustion in such a case also requires plaintiffs to
pay any duties owed on the entries in question before filing with this court.
Section 1581(h) allows for bypassing these procedural and monetary
burdens in specific and narrow circumstances, namely, if the importer can
demonstrate that it would be irreparably harmed unless given an
opportunity to obtain judicial review prior to [an] importation.
223 F. Supp. 2d at 1324 (citations and quotations omitted). It would defy reason for
Congress to permit Heartland to obtain pre-importation relief from the Court of
11
The government also renews an argument rejected by the Court of
International Trade in Heartland III, that jurisdiction under § 1581(h) cannot lie without
prospective rather than actual entries before the court, as required by the statute. This
argument only has force if Heartland were required to establish a new basis for
§ 1581(h) jurisdiction. Because, as we held above, the Court of International Trade has
ancillary jurisdiction to assess the scope and effect of its prior decisions, the fact that no
prospective entries are at issue is of no moment.
04-1515 15
International Trade under § 1581(h), yet require it to invoke an entirely separate and
less favorable jurisdictional basis, § 1581(a), to resolve the scope of that relief. We will
not impute such intent to Congress. Moreover, settled precedent, discussed above,
finds a constitutional basis for ancillary jurisdiction to enforce continually its prior
judgments under the same jurisdictional basis supporting the original ruling.
Finally, the government proposes that any harm to Heartland, including the $10
million duty payment needed to meet the requirements for § 1581(a) jurisdiction, is self-
inflicted. That is, Heartland chose to rely on the non-stayed but also non-final judgment
in Heartland I to continue its sugar syrup imports, the government contends, and failed
to challenge the dismissal of the original case in Heartland III, either by filing a motion to
vacate the judgment or by appealing to this court. While the government’s argument
has no bearing on the question of the trial court’s jurisdiction over Heartland IV, we note
that Heartland had little incentive to pursue a costly appeal from Heartland III, especially
in the face of the trial court’s directive to work out rulings on protests to invoke
jurisdiction under § 1581(a) and the government’s representations that it would agree to
an expedient and affordable means for establishing jurisdiction under that provision.
Heartland’s current predicament, in part a result of the Court of International Trade’s
erroneous dismissal of its motion for entry of judgment in Heartland III and in part a
result of the parties’ inability to agree on a feasible jurisdictional mechanism, in no way
precludes Heartland from having the merits of its complaint heard by the Court of
International Trade.
In sum, the Court of International Trade erred by holding that it lacked jurisdiction
to determine the temporal scope of its ruling in Heartland I and the effect of our decision
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in Heartland II on that ruling. Because we hold that the Court of International Trade had
ancillary jurisdiction to determine the effective date the higher TRQ rates applied to
Heartland’s sugar syrup imports and thus the legality of Customs’ actions with regard to
the disputed imports, we need not reach Heartland’s remaining arguments on appeal,
namely, that the Court of International Trade erred by failing to treat its complaint as an
independent action under Rule 60(b), or that the trial court erred in holding that it had no
jurisdiction to hear Heartland’s complaint under § 1581(i).12
CONCLUSION
For the foregoing reasons, the order of the Court of International Trade
dismissing Heartland’s complaint is reversed, and this case is remanded for further
proceedings on the merits.
REVERSED AND REMANDED
12
Some precedent indicates that the exercise of ancillary jurisdiction might
be committed to the discretion of the trial court. See, e.g., U.S.I. Props. Corp. v. M.D.
Construction Co., 230 F.3d 489, 496 (1st Cir. 2000) (“Ancillary enforcement jurisdiction,
given its origins in the courts of equity, traditionally has an equitable and discretionary
character.”). To the extent that the Court of International Trade may possess such
discretion, declining to exercise ancillary jurisdiction in this case would constitute an
abuse of that discretion.
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