General Mills, Inc. v. United States ( 2014 )

Slip Op. 14-
UNITED STATES COURT OF INTERNATIONAL TRADE
________________________________
GENERAL MILLS, INC., :
:
Plaintiff, : Before: Nicholas Tsoucalas,
: Senior Judge
v. :
: Court No.: 14-00096
UNITED STATES, :
:
Defendant.____________:
OPINION
[Defendant’s motion to dismiss for lack of subject matter
jurisdiction is granted.]
Dated:'HFHPEHU
John M. Peterson, Maria E. Celis, and Elyssa R. Emsellem, Neville
Peterson LLP of New York, NY, for the plaintiff.
David S. Silverbrand, Trial Attorney, Commercial Litigation
Branch, Civil Division, U.S. Department of Justice, of Washington,
DC, for defendant. With him on the brief were Stuart F. Delery,
Assistant Attorney General, Jeanne E. Davidson, Director, and
Patricia M. McCarthy, Assistant Director. Of counsel on the brief
was Beth C. Brotman, Attorney, Office of the Assistant Chief
Counsel, U.S. Customs and Border Protection, of Washington, DC.
Tsoucalas, Senior Judge: Defendant, United States (the
“Government” or “Defendant”), moves to dismiss Plaintiff General
Mills, Inc.’s (“General Mills” or “Plaintiff”) complaint for lack
of subject matter jurisdiction. General Mills brought its case
before the court seeking review of Headquarters Ruling Letter
H212286 of January 7, 2014, issued by U.S. Customs and Border
Patrol (“CPB”) concerning its frozen Brussels sprouts. For the
Court No. 14-00096 Page 2
following reasons, Defendant’s motion is granted. See Pl.’s Comp.,
ECF No. 4 (Apr. 9, 2014).
BACKGROUND
General Mills imports frozen Brussels sprouts and frozen
butter sauce chips “packaged together and sold as Green Giant brand
‘baby Brussels sprouts & butter sauce’” (the “Product”). See
Customs Headquarters Ruling Letter H212286 at 92 (January 7,
2014)(“HRL H212286”). General Mills describes production of the
Product in the following manner:
First, General Mills sources sauce chips in the United
States and the supplier qualifies the sauce chips as
NAFTA eligible. The chips are then shipped to Irapuato,
Mexico to be proportionately mixed and combined with
Brussels sprouts. Brussels sprouts, either of Mexican or
Belgian origin, are acquired and frozen to sustain
important vitamins and avoid nutrient loss. The
challenged ruling concerns only the NAFTA eligibility of
products made with Belgian Brussels sprouts.
See Pl.’s Compl. ¶ 11.
General Mills then imports the Product back into the
United States. Id. ¶ 12. If the Brussels sprouts are treated as
originating goods under the North American Free Trade Agreement
(“NAFTA”), the Product is classified as “Special” and receives
duty treatment as a product of Mexico. See HRL H212286 at 95-6.
In December 2011, General Mills requested a ruling
regarding the tariff classification and eligibility of the Product
for NAFTA duty free tariff rates when made using frozen Belgian
Brussels sprouts with the butter sauce chips. See Pl. Compl. ¶
Court No. 14-00096 Page 3
13. General Mills alleges that the Product should be classified
under HTS subheading 2004.90.85, which provides for “Other
vegetables prepared or preserved otherwise than by vinegar or
acetic acid, frozen, other than products of heading 2006: Other
vegetables and mixtures of vegetables; Other, including mixtures.”
Id. In accordance with such classification, General Mills further
maintains that the Product should be “qualified as a NAFTA-
originating product, since the frozen Belgian Brussels sprouts,
classifiable under HTS subheading 0710.80.85, underwent the
qualifying change in tariff classification required for goods of
HTS Heading 2004, to wit, ‘a change to headings 2001 through 2007
from any other chapter,’ as per Note 12(t)/20 to the HTS.” Id. ¶
14.
General Mills alleges that in March 2012, CBP issued New
York Ruling Letter (“NYL”) N202500, in which it found that the
Product would be classified as “put up in sets for retail sale”
and, pursuant to General Rule of Interpretation 3(b) to the HTS,
was classifiable as though it consisted solely of that single
article which imparted the “essential character” to the set. Id.
¶ 15. Because the Brussels sprouts imparted the “essential
character” to the Product, and were a product of Belgium, CBP found
that the Product was not NAFTA-originating when made with Belgian
sprouts. Id. ¶ 15.
Court No. 14-00096 Page 4
General Mills requested reconsideration of NYL N202500
and alleged that: the Product was not a “set,” but rather a
“prepared vegetable product” classifiable under 2004.90.85; the
Belgian Brussels sprouts undergo a tariff shift due to the
packaging with ice chips in Mexico; and General Note 12(s) of the
HTSUS does not apply because the Belgian sprouts are not prepared
or preserved “merely by freezing, by packing (including canning)
in water, brine, or natural juices, or by roasting, either dry or
in oil.” Id. ¶ 16.
In January 2014, CBP published Customs Headquarters
Ruling H212296 in the Customs Bulletin. See HRL H212296 at 92.
CBP reclassified the Product as a prepared vegetable product under
2004.90.85. Id. at 97. However, it continued to find that the
Product, when produced using Belgian sprouts, was not eligible for
NAFTA duty free treatment because it was not a NAFTA-originating
product. Id. at 97. Specifically, CBP found that despite the
change in tariff classification, an exception to the NAFTA duty
treatment applied under General Note 12(s)(ii). Id. at 95.
According to the CBP, under General Note 12(s)(ii) the Product
does not undergo a qualifying change in Mexico because the Belgian
Brussels sprouts are already frozen when they arrive in Mexico,
and are prepared by packing in butter, which is “akin to a natural
juice”. Id. at 96.
Court No. 14-00096 Page 5
In April 2014, General Mills filed Court No. 14-00096 to
contest HRL H212296 under 28 U.S.C. § 1581(i), seeking a ruling on
the record of the CBP’s determination. See Pl.’s Compl. ¶ 1–9.
The Government moves to dismiss General Mills’ complaint for lack
of subject matter jurisdiction. See Def.’s Mem. in Supp. of its
Mot. to Dismiss at 1 (“Def.’s Mem.”). According to the Government,
“because section 1581(a) jurisdiction is available to General
Mills, this Court lacks jurisdiction to entertain this action
pursuant to 28 U.S.C. § 1581(i).” Id.
STANDARD OF REVIEW
“Subject matter jurisdiction constitutes a ‘threshold
matter’ in all cases, such that without it, a case must be
dismissed without proceeding to the merits.” Demos v. United
States, 31 CIT 789, 789 (2007) (not reported in the Federal
Supplement) (citing Steel Co. v. Citizens for a Better Env't, 523
U.S. 83, 94 (1998)). “The burden of establishing jurisdiction lies
with the party seeking to invoke th[e] Court's jurisdiction.”
Bhullar v. United States, 27 CIT 532, 535, 259 F. Supp. 2d 1332,
1334 (2003) (citing Old Republic Ins. Co. v. United States, 14 CIT
377, 379, 741 F. Supp. 1570, 1573 (1990)).
“To survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state a claim to
relief that is plausible on its face.’” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S.
Court No. 14-00096 Page 6
544, 570 (2007)). “For the purposes of a motion to dismiss, the
material allegations of a complaint are taken as admitted and are
to be liberally construed in favor of the plaintiff(s).” Humane
Soc’y of the U.S. v. Brown, 19 CIT 1104, 1104, 901 F. Supp. 338,
340 (1995) (citing Jenkins v. McKeithen, 395 U.S. 411, 421–22
(1969)).
DISCUSSION
I. Legal Framework
Plaintiff seeks judicial review of HRL H212286 in
accordance with Section 625(c) of the Tariff Act of 1930, as
amended 19 U.S.C. § 1625(c), and the Administrative Procedure Act.
Pl.’s Comp. at 1. Plaintiff invoked jurisdiction pursuant to 28
U.S.C. § 1581(i)(4). Id. Defendant moves to dismiss for lack of
subject matter jurisdiction. Def.’s Mem. at 1.
This Court’s jurisdiction is set forth in 28 U.S.C. §§
1581 (a)–(i). Subsection (a) vests the United States Court of
International Trade (“CIT”) with “exclusive jurisdiction of any
civil action commenced to contest the denial of a protest [by
Customs]”. 28 U.S.C. § 1581 (2012). Subsections (b) through (g)
delineate other specifics grants of jurisdiction. Id. Subsection
1581(h) vests the CIT with “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. . .” Id. Subsection
Court No. 14-00096 Page 7
1581(i) jurisdiction is known as “residual jurisdiction,” and it
is well-settled that “jurisdiction under subsection 1581(i) may
not be invoked if jurisdiction under another subsection of section
1581 is or could have been available, unless the other subsection
is shown to be manifestly inadequate.” Hartford Fire Ins. Co. v.
United States, 544 F.3d 1289, 1292 (Fed. Cir. 2008) (citing Int'l
Custom Prods., Inc. v. United States, 467 F.3d 1324, 1327 (Fed.
Cir. 2006)). “[W]here a litigant has access to [the CIT] under
traditional means, such as 28 U.S.C. § 1581(a), it must avail
itself of this avenue of approach by complying with all the
relevant prerequisites thereto.” Id. The litigant “cannot
circumvent the prerequisites of 1581(a) by invoking jurisdiction
under 1581(i),” unless such traditional means are manifestly
inadequate. Id. Therefore, this Court will not entertain a claim
under § 1581(i) where “another subsection of 1581 is or could have
been available, unless the other subsection is shown to be
manifestly inadequate.” Id.
“A litigant asking the court to exercise jurisdiction
over his or her claim has the burden of establishing that
jurisdiction exists.” Chemsol, LLC v. U.S., 755 F.3d 1345, 1349
(2014)(citations omitted).
II. Relief is Available to Plaintiff Under 28 U.S.C. § 1581(a)
As discussed above, in order to invoke jurisdiction
under § 1581(i) Plaintiff must establish that another subsection
Court No. 14-00096 Page 8
of § 1581 was not, and could not, have been available to the
litigant at the time it filed its claim. See Hartford Fire Ins.
Co., 544 F.3d at 1292. Plaintiff contends that at the time this
case was filed, there were no liquidated entries or pending
protests which could have formed the predicate for bringing an
action pursuant to § 1581(a). Pl.’s Br. at 9. Plaintiff notes
that the availability of a particular form of jurisdiction is
determined by the “time of filing” rule, and seeks to support its
argument by relying on the Court of Appeals for the Federal Circuit
(“CAFC”) decision in Ford Motor Co. v. United States, 688 F.3d
1319, 1328 (Fed. Cir. 2012). Id.
In Ford, the CAFC found jurisdiction under § 1581(i) was
available for a deemed liquidation claim in which Customs’ inaction
was at issue. Ford, 688 F.3d at 1321. The CAFC noted that “it
is undisputed that at the time of filing of Ford’s complaint,
[Customs] had not affirmatively liquidated any of the nine entries.
It is also undisputed that the general one-year time period imposed
by Congress for liquidating such entries had long since expired”.
Ford, 688 F.3d at 1321-2. Under such circumstances, the CAFC
held that § 1581(i) jurisdiction was available because the
“importer could not have asserted jurisdiction under any of the
other enumerated provisions of § 1581”. Id.
The facts presented in Ford are unlike the instant case.
Whereas the importers in Ford were unable to pursue an
Court No. 14-00096 Page 9
administrative appeal because Customs unlawfully failed to make a
decision on any entries held for over one year, here, General Mills
was fully capable of making an entry and pursuing the proper
procedural path in order to obtain jurisdiction under § 1581(a).
See id. at 1327.
Plaintiff also relies heavily on this Court’s decision
in Best Key Textiles Co. v. United States. Best Key Textiles Co.
v. United States, 37 CIT __, __, Slip Op. 13-148 (Dec. 13, 2013)
(“Best Key I”), vacated in part on reconsideration, 38 CIT __,
__, Slip Op. 14-22 (Feb. 25, 2014) (“Best Key II”). In Best Key
I, plaintiff, Best Key Textiles (“Best Key”), a producer of
metallized yarn, brought an action seeking “pre-importation
declaratory judgment” on a product known as the “Johnny Collar”
shirt. Best Key I at 1. Best Key invoked jurisdiction under 28
U.S.C § 1581(h), or in the alternative § 1581(i). Id. at 2.
Ultimately, the Court granted defendant’s motion to dismiss for
lack of subject matter jurisdiction. See id. at 2–8.
In the Best Key litigation, Best Key obtained from the
CBP a ruling (the “Yarn Ruling”) on its proprietary “BKMY” yarn.
Id. In order to obtain “duty rate benefits” of the Yarn Ruling,
Best Key “made, or ordered made” a “Johnny Collar” shirt which was
comprised of BKMY yarn, and requested from the CBP a ruling
concerning the classification of the “Johnny Collar” shirt. Id.
at 3. Essentially, Best Key was not seeking a certain rate on its
Court No. 14-00096 Page 10
own product, the BKMY yarn, but rather on the products Best Key’s
customers produced using its BKMY yarn. Id. at 5–6.
Ultimately, in Best Key I, the Court found that Best Key
could not demonstrate that the traditional approach of importing
the goods and filing a protest in accordance with § 1581(a) was
“manifestly inadequate” because it was not importing the goods,
but rather it was trying to obtain a favorable classification for
its customers. Id. at 8. The Court found that Best Key had no
standing to assert the claims of those remote parties under
1581(i). Id. at 6–8.
However, in Best Key II, the Court subsequently granted
Best Key’s motion for reconsideration of its holding on § 1581(i)
jurisdiction. See Best Key II at 1–2. Although the Court’s
analysis of § 1581(i) jurisdiction was sparse, it stated the
following:
The court agrees it is “highly questionable” whether a
Customs’ ruling that lowers the rate of duty on a product
the plaintiff has no expressed intention of importing
can result in aggrievement or adverse effect to the
plaintiff . . . While the court stands by its prior
ruling in general, it is, nonetheless, the plaintiff’s
product that is the subject of the ruling at issue, and
the court has undoubted exclusive jurisdiction over the
general administration and enforcement of this type of
matter in 28 U.S.C. § 1581(i)(4).
Id. at 2.
Plaintiff insists that the Best Key litigation supports
its argument that § 1581(i)(4) jurisdiction is available to
Court No. 14-00096 Page 11
challenge HRL H212286. Pl.’s Br. at 15–18. Plaintiff contends
that the instant case is analogous because as in Best Key II, here,
Plaintiff has “no other means of jurisdiction” available to it
which would “provide General Mills with the relief sought, namely
APA review of the ruling.” Id. at 16.
The court disagrees. Unlike in Best Key II where Best
Key was not the importer of the subject merchandise, here Plaintiff
would be the importer, and therefore, would meet the standing
requirements pursuant to § 1581(a). Thus, whereas the unique
circumstances presented in Best Key II limited jurisdiction to
§ 1581(i), here § 1581(a) jurisdiction could have been available
to Plaintiff had it chosen to pursue the procedural requirements
pursuant to § 1581(a). See Best Key II at 2.
Ultimately, General Mills could have chosen to import
the product and, within one year of importation, file a claim for
NAFTA duty-free treatment pursuant to 19 U.S.C. § 1520(d). 19
U.S.C. § 1520(d) (2012). If Customs were to deny the § 1520(d)
claim, General Mills could then choose to file a protest pursuant
to 19 U.S.C. § 1514. 19 U.S.C. § 1514 (2012). If Customs were to
deny General Mills’ protest, General Mills could then seek judicial
review of the denied protest pursuant to 28 U.S.C. § 1581(a). 28
U.S.C. § 1581(a). Plaintiff’s perceived likelihood of success in
taking this administrative route does not foreclose its ability to
do so. Because General Mills could have secured jurisdiction
Court No. 14-00096 Page 12
pursuant to 28 U.S.C. § 1581(a), the court therefore does not have
jurisdiction pursuant to § 1581(i) unless it is demonstrated that
§ 1581(a) is manifestly inadequate.
III. Relief Under 28 U.S.C. § 1581(a) is Not Manifestly
Inadequate
In order to be manifestly inadequate, a “protest must be
an exercise in futility” or “incapable of producing any result”.
See Hartford, 544 F.3d at 1294. “[A] belief that [a plaintiff]
had no remedy under subsection 1581(a) [does] not make that remedy
inadequate, and [parties] cannot take it upon [themselves] to
determine whether it would be futile to protest or not”. Chemsol,
755 F.3d at 1355 (citations omitted) (internal quotation marks
omitted). “[T]he traditional avenue of approach to the court under
28 U.S.C. § 1581(a) was not intended to be so easily circumvented,
whereby it would become merely a matter of election by the
litigant.” Am. Air Parcel Forwarding Co. v. United States, 718
F.2d 1546, 1550 (Fed. Cir. 1983).
Plaintiff argues that even if jurisdiction under
§ 1581(a) is available, it is “manifestly inadequate” because it
would require General Mills to file a future entry of the Product,
pay duties, sue for recovery based on CBP’s classification, and
“incur mandatory changes in marking and administrative costs,
which would not be recouped even if it were successful.” Pl.’s
Br. at 12. Furthermore, Plaintiff insists that § 1581(a) is
Court No. 14-00096 Page 13
inadequate because “it does not lead to judicial review under the
APA standard of HRL H212286—rather, it would lead to some future
review of a different agency determination, on the basis of a
different record, and subject to a different standard of review.”
Pl.’s Br. at 9 (footnotes omitted).
The court is not persuaded by Plaintiff’s arguments.
First, Plaintiff alleges various forms of financial hardship which
it contends would eliminate its ability to be “made whole” from
proceeding under § 1581(a). Pl.’s Br. at 12. Plaintiff insists
that “on several prior occasions, this Court has held that the
irrevocable cost of sourcing differently or creating new packaging
makes protest remedies inadequate and justifies, either as
aggrievement or even ‘irreparable harm’, the direct review of
Customs rulings on the record before the Court”. Id. at 13 (citing
CPC Int’l Corp. v. United States, 19 CIT 978, 979-80 (1995); Ross
Cosmetics Distrib. Ctrs. V. United States, 18 CIT 979 (1994); Am.
Frozen Food Inst. v. United States, 18 CIT 565, 570-71 (1994)).
Plaintiff fails to call to the court’s attention the fact that all
of the cases it relies on in support of its “irreparable harm”
argument confer jurisdiction on the basis of § 1581(h) and not on
§ 1581(i). Furthermore, it is well settled that “mere allegations
of financial harm, or assertions that an agency failed to follow
a statute, do not make the remedy established by Congress
Court No. 14-00096 Page 14
manifestly inadequate”. See Int'l Custom Products, Inc. v. United
States, 467 F.3d 1324, 1327 (Fed. Cir. 2006) (citations omitted).
Furthermore, the court does not agree with Plaintiff
that because § 1581(a) jurisdiction does “not lead to judicial
review under the APA”, it renders the remedy manifestly inadequate.
Pl.’s Br. at 9. “[C]lear precedent exists that the APA is not a
jurisdictional statute . . . Thus the APA does not give an
independent basis for finding jurisdiction in the Court of
International Trade.” Am. Air Parcel Forwarding Co., 718 F.2d at
1552.
Ultimately, this court finds that neither the procedural
and administrative costs inherent in § 1581(a), nor General Mill’s
desire to obtain APA review, render the remedy manifestly
inadequate.
IV. Transfer to U.S. District Court for the District of
Columbia
Lastly, Plaintiff contends that if it is determined that
subject matter jurisdiction does not exist before this Court, the
case should be transferred to the U.S. District Court for the
District of Columbia (“USDCDC”) pursuant to 28 U.S.C. § 1631. See
Pl.’s Br. at 22-25. Because this Court finds that § 1581(a)
jurisdiction could have been available to Plaintiff it would be
inappropriate to transfer this case to the USDCDC. See Conoco,
Inc. v. United States Foreign-Trade Zones Bd., 18 F.3d 1581, 1586
Court No. 14-00096 Page 15
(Fed. Cir. 1994) (“If jurisdiction can be found to lie under the
provisions of § 1581, such jurisdiction would place exclusive
judicial review of the issues raised by the appellants in the Court
of International Trade. Only if no jurisdictional grant can be
found in the Court of International Trade would it be appropriate
to invoke the general administrative review function of the
district courts in such cases.”).
Conclusion
For the reasons stated above, this court finds that
jurisdiction under § 1581(a) was available and was not manifestly
inadequate, rendering jurisdiction under § 1581(i) improper.
Defendant’s motion to dismiss is GRANTED. Plaintiff’s complaint
is dismissed. Judgment will be entered accordingly.
/s/ Nicholas Tsoucalas
Nicholas Tsoucalas
Senior Judge
Dated: %FDFNCFS



New York, New York