Blink Design, Inc. v. United States , 986 F. Supp. 2d 1348 ( 2014 )

Slip Op. 14- 56
UNITED STATES COURT OF INTERNATIONAL TRADE
________________________________
:
BLINK DESIGN, INC., :
:
Plaintiff, : Court No. 14-00032
: Before: Mark A. Barnett, Judge
v. :
:
UNITED STATES, :
:
Defendant. :
________________________________ :
OPINION & ORDER
[The court denies Defendant’s motion to dismiss for lack of subject matter jurisdiction;
denies Plaintiff’s motion for a preliminary injunction; denies Plaintiff’s order to show
cause why an expedited litigation schedule should not be issued as moot; denies
Plaintiff’s motion for oral argument as moot; denies Defendant’s motion to strike as
moot; and stays this action pending Plaintiff’s election of remedies pursuant to the
Notices of Seizure and any proceedings resulting from that election.]
Dated: May 21, 2014
John M. Peterson, Richard F. O’Neill, and Elyssa R. Emsellem, Neville Peterson, LLP,
of New York, NY, for Plaintiff.
Jason M. Kenner and Alexander J. Vanderweide, Commercial Litigation Branch – Civil
Division, U.S. Department of Justice, of New York, NY, for Defendant. With them on the
brief were Stuart F. Delery, Assistant Attorney General, and Amy M. Rubin, Acting
Assistant Director. Of counsel on the brief was Paul Smith, Office of the Assistant Chief
Counsel, United States Customs and Border Protection of New York, NY.
Barnett, Judge: Defendant, United States, moves to dismiss this case,
pursuant to USCIT Rule 12(b)(1) for lack of subject matter jurisdiction or, in the
alternative, pursuant to USCIT Rule 12(b)(5) for failure to state a claim upon which relief
Court No. 14-00032 Page 2
can be granted. (See generally Def.’s Mem. Supp. Mot. Dismiss (“Def.’s Mot.”).)
Plaintiff, Blink Design, Inc. (“Blink”), opposes the motion. (See generally Mem. P.&A.
Opp’n Def.’s Mot. Dismiss (“Pl.’s Opp’n”).) For the reasons stated below, the court finds
that it lacks subject matter jurisdiction over Plaintiff’s claims to the extent that they
challenge the seizure of its merchandise and orders this action stayed. Plaintiff has
also moved for a preliminary injunction and, for reasons discussed below, that motion is
denied.
BACKGROUND AND PROCEDURAL HISTORY
In November 2013, Plaintiff sought to import certain wearing apparel into
the United States under cover of eight consumption entries filed at the Port of Los
Angeles/Long Beach, California. 1 (Compl. ¶¶ 5, 12.) Upon examination of the entries
by the Bureau of Customs and Border Protection (“Customs”), Customs inspectors
determined that the quantities of garments in the containers for each of the eight entries
exceeded those reported on their accompanying commercial invoices and packing lists.
While the overage varied somewhat for each entry, overall, the actual quantity
attempted to be entered was more than double the declared quantity. Customs
subsequently detained the entries. (Compl. ¶ 16; Pl.’s Mot. Expedite Ex. B, ECF No. 8.)
After receiving notice of the detentions, (Pl.’s Opp’n Am. Ex. 3, ECF No. 32), Plaintiff
directed the exporter of the merchandise to prepare and forward to it corrected invoices.
1The entry numbers are 682-2164003-7, 682-2164001-1, 682-2164002-9, 682-
2164004-5, 682-2163998-9, 682-2164100-1, 682-2164099-5, and 682-2163970-8.
(Compl. ¶ 12.)
Court No. 14-00032 Page 3
(Compl. ¶¶ 17-18.) Upon receiving the corrected invoices, Plaintiff attempted to file Port
of Entry Amendments (“PEAs”) with Customs and asked that Customs release the
merchandise. (Compl. ¶ 19.) Plaintiff tendered the requisite additional estimated duties
based on the quantities and values in the PEAs, and filed prior disclosures with
Customs, indicating that incorrect values and quantities had been reported on the
entries. (Compl. ¶¶ 19-20.) Customs did not release the merchandise and returned the
PEAs. (Compl. ¶ 21.)
A contested number of the entries were deemed excluded from entry,
pursuant to 19 U.S.C. § 1499(c)(5)(A), on various dates in December 2013 and January
2014. 2 See infra. On December 30, 2013, Plaintiff filed a protest with Customs to
challenge the deemed exclusions. (Compl. ¶ 24.) Customs seized the entries between
December 6, 2013 and January 2, 2014, pursuant to 19 U.S.C. § 1595a(a) and
(c)(1)(A), and issued Notices of Seizure to the Plaintiff between December 20, 2013 and
January 16, 2014. 3 (Compl. ¶¶ 26-27; Pl.’s Mot. Expedite Ex. B.) The Notices of
Seizure stated that the declared quantities in the seized entries “were used to facilitate
the importation of the wearing apparel . . . that was attempted to be clandestinely
introduced” into the country (i.e., the undeclared quantities), in violation of 19 U.S.C.
2 The parties dispute the dates on which the entries were deemed excluded and,
in some cases, whether the entries were deemed excluded at all.
3 Section 1595a(c) states, in relevant part, that “[m]erchandise which is
introduced or attempted to be introduced into the United States contrary to law shall be
treated as follows: (1) The merchandise shall be seized and forfeited if it-- (A) is . . .
clandestinely imported or introduced.” 19 U.S.C. § 1595a(c).
Court No. 14-00032 Page 4
§§ 1481, 1484, and 1485. 4 (Compl. ¶¶ 26-27; Pl.’s Mot. Expedite Ex. B.) Customs
denied Plaintiff’s protest on January 15, 2014, citing the seizure of the entries as the
basis for its denial. (Compl. ¶ 25.)
On January 28, 2014, Plaintiff filed suit in this court to contest Customs’
denial of its protest, invoking 28 U.S.C. § 1581(a) as the basis for the court’s subject
matter jurisdiction. (See Summons, ECF No. 1.) Defendant now moves to dismiss this
case, pursuant to USCIT Rule 12(b)(1) for lack of subject matter jurisdiction or, in the
alternative, pursuant to USCIT Rule 12(b)(5) for failure to state a claim upon which relief
can be granted. Defendant argues that Customs seized five of the eight entries at issue
within thirty days of their presentation to Customs for examination. According to
Defendant, these entries were not deemed excluded, and no protestable event
occurred. Consequently, Defendant argues this court has no subject matter jurisdiction
over these entries because 28 U.S.C. § 1356 grants exclusive jurisdiction over most
seizures to the district courts. 5 (Def.’s Mot. 1, 9.) Defendant further contends that
Customs seized the remaining three entries before Plaintiff filed this action and before
the court’s jurisdiction attached to the denied protests. Therefore, the court has no
subject matter jurisdiction over these additional entries either. (Def.’s Mot. 1.)
4 These statutes pertain to an importer’s obligation to file true and accurate entry
documentation. See 19 U.S.C. §§ 1481, 1484, 1485.
5 Section 1356 states that “[t]he district courts shall have original jurisdiction,
exclusive of the courts of the States, of any seizure under any law of the United States
on land or upon waters not within admiralty and maritime jurisdiction, except matters
within the jurisdiction of the Court of International Trade under section 1582 of this title.”
28 U.S.C. § 1356.
Court No. 14-00032 Page 5
Defendant further urges that the court dismiss the action for failure to state a claim upon
which relief can be granted, because Customs seizure of Plaintiff’s entries precludes the
court from providing Plaintiff with the only remedy it seeks: release of the merchandise.
(Def.’s Mot. 2.) Plaintiff opposes Defendant’s motion in full. (See generally Pl.’s Opp’n.)
LEGAL STANDARD
A court has “an independent duty” to assure that it has subject matter
jurisdiction over the matters before it. Suntec Indus. Co. v. United States, 37 CIT __,
__, 951 F. Supp. 2d 1341, 1345 (2013) (citation omitted). When subject matter
jurisdiction is challenged, the plaintiff bears the burden of demonstrating that jurisdiction
exists. E & S Express Inc. v. United States, 37 CIT __, __, 938 F. Supp. 2d 1316, 1320
(2013) (citations omitted) (citing Trusted Integration, Inc. v. United States, 659 F.3d
1159, 1163 (Fed. Cir. 2011)). When reviewing a Rule 12(b)(1) motion, the court sculpts
its approach according to whether the motion “challenges the sufficiency of the
pleadings or controverts the factual allegations made in the pleadings.” H & H
Wholesale Servs., Inc. v. United States, 30 CIT 689, 691, 437 F. Supp. 2d 1335, 1339
(2006) (citation omitted). If the motion challenges the sufficiency of the pleadings, the
court assumes that the allegations within the complaint are true. Id. (citation omitted). If
the motion controverts factual allegations within the complaint, as does Defendant’s
motion, ‘“the allegations in the complaint are not controlling,’ and ‘are subject to fact-
finding’” by the court. Id. at 691-92, 437 F. Supp. 2d at 1339 (quoting Cedars-Sinai
Med. Ctr. v. Watkins, 11 F.3d 1573, 1583-84 (Fed. Cir. 1993)). Moreover, “[w]here, as
here, claims depend upon a waiver of sovereign immunity, a jurisdictional statute is to
Court No. 14-00032 Page 6
be strictly construed.” Celta Agencies, Inc. v. United States, 36 CIT __, __, 865 F.
Supp. 2d 1348, 1352 (2012) (citing United States v. Williams, 514 U.S. 527, 531
(1995)).
DISCUSSION
I. Whether Entries Were Deemed Excluded
a. Defendant’s Contentions
Defendant asserts that the court lacks subject matter jurisdiction over five
of Plaintiff’s entries because Customs seized them before they were deemed excluded.
(Def.’s Mot. 6-9.) Deemed exclusion is governed by 19 U.S.C. § 1499(c)(5)(A), which
states that “[t]he failure by the Customs Service to make a final determination with
respect to the admissibility of detained merchandise within 30 days after the
merchandise has been presented for customs examination . . . shall be treated as a
decision of the Customs Service to exclude the merchandise.” 19 U.S.C.
§ 1499(c)(5)(A). According to Defendant, Plaintiff improperly calculated this thirty-day
period as beginning on the date of entry of its merchandise, rather than the date when
“the merchandise [was] presented for customs examination.” Id. Defendant claims that
this error has led Plaintiff to mistakenly assert that all of its entries were deemed
excluded.
Defendant notes that § 1499 does not define when merchandise is
presented for customs examination, and Defendant directs the court to Customs
regulation 19 C.F.R. § 151.16(b). (Def.’s Mot. 6-7.) The regulation states:
Decision to detain or release. Within the 5-day period (excluding
weekends and holidays) following the date on which merchandise is
Court No. 14-00032 Page 7
presented for Customs examination, Customs shall decide whether to
release or detain merchandise. Merchandise which is not released within
such 5-day period shall be considered to be detained merchandise. For
purposes of this section, merchandise shall be considered to be presented
for Customs examination when it is in a condition to be viewed and
examined by a Customs officer. Mere presentation to the examining
officer of a cargo van, container or instrument of international traffic in
which the merchandise to be examined is contained will not be considered
to be presentation of merchandise for Customs examination for purposes
of this section. Except when merchandise is examined at the public
stores, the importer shall pay all costs relating to the preparation and
transportation of merchandise for examination.
19 C.F.R. § 151.16(b). In light of this regulation, Defendant contends that Customs
considers merchandise “presented for examination” when “it is in a condition to be
examined by a Customs official.” (Def.’s Mot. 7 (quotation marks omitted).) When
Customs requests that merchandise be delivered to a container examination station
(“CES”) for inspection, as occurred in the present action, Defendant specifies that
“Customs routinely considers the date on which merchandise is presented for
examination as being the date that the last requested container is delivered to the CES,
its contents have been unloaded by the private contractor, and Customs has received
the pertinent documents that it needs to perform the examination.” (Def.’s Mot. 7.)
Turning to the facts of this case, Defendant directs the court to Exhibit 1,
attached to its moving brief, 6 which contains (1) the daily logs of the CES operator,
indicating the date when the relevant containers were unloaded at the CES, and (2)
6Defendant has attached these same documents to the declaration of David
Dodge, which Defendant has appended to its reply. (See generally Def.’s Reply Pl.’s
Opp’n (“Def.’s Reply”) Attach. 1.)
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copies of each entry’s CF 3461 form, which have stamps indicating the date on which
the containers were unloaded at the CES. 7 (Def.’s Mot. 7-8 (citing Def.’s Mot. Ex. 1,
ECF No. 25).) By cross-referencing these documents and the Notices of Seizure, (Pl.’s
Mot. Expedite Ex. B), Defendant contends that the seizures of entries 682-2164003-7,
682-2164002-9, 682-2164004-5, 682-2163998-9, and 682-2163970-8 occurred within
thirty days of their presentation for customs examination. (Def.’s Mot. 9-8; Def.’s Reply
Pl.’s Opp’n (“Def.’s Reply”) 3.) Defendant contends that these five entries, seized within
thirty days, were not deemed excluded, and suffered no protestable event giving rise to
subject matter jurisdiction under 28 U.S.C. § 1581(a). On the contrary, for these five
entries, Defendant concludes that Plaintiff’s protest amounted to a protest against the
seizures – a subject matter over which this court has no jurisdiction, pursuant to 28
U.S.C. § 1356. (Def.’s Mot. 9.)
b. Plaintiff’s Contentions
Plaintiff contests Defendant’s explanation of when merchandise is
presented for customs examination and maintains that all of its entries were deemed
7 In its motion to dismiss, Defendant attached redacted copies of the CES
operator’s logbooks and relevant CF 3461 entries. (Def.’s Mot. Ex. 1, ECF No. 25.)
Plaintiff objected to these documents in its opposition brief, because they were not
accompanied by any affidavit, affirmation, or sworn declaration to sponsor or
authenticate them. (Pl.’s Opp’n 18-20 (citing 28 U.S.C. § 2641 (stating that Federal
Rules of Evidence apply to civil actions before court); Fed. R. Evid. 901 (providing rules
for authenticating evidence).) In its reply, Defendant appended the same documents,
(Def.’s Reply Ex. 1, ECF No. 31), accompanied by the declaration of David Dodge, a
Chief Customs Officer at the Los Angeles/Long Beach Seaport who oversees the
Merchandise Enforcement Team and attested to the authenticity of the copies of the
records attached to his declaration. (Def.’s Reply Attach 1.) The court finds his sworn
declaration sufficient to authenticate the documents attached thereto.
Court No. 14-00032 Page 9
excluded before seizure. (Pl.’s Opp’n 9-21.) According to Plaintiff, presentation occurs
when a CF 3461 entry document is filed. (Pl.’s Opp’n 10.) To support its theory,
Plaintiff also turns to 19 C.F.R. § 151.16(b) and parses the regulation’s language.
Plaintiff avers that the phrase, “merchandise shall be considered to be presented for
Customs examination when it is in a condition to be viewed and examined by a
Customs officer,” demonstrates that the CF 3461’s filing qualifies as the presentation for
customs examination, because the document includes the importer of record, a
description of the merchandise, its quantity, its tariff classification, and “the place where
the merchandise is being held, awaiting Customs’ determination of its admissibility.”
(Pl.’s Opp’n 11-12.) Plaintiff asserts that the phrase, “Mere presentation to the
examining officer of a cargo van, container or instrument of international traffic in which
the merchandise to be examined is contained will not be considered to be presentation
of merchandise for Customs examination for purposes of this section,” buttresses its
argument, because only the submission of the CF 3461 “provides Customs with the
context from which to determine whether the goods [before it] should be detained or
further inspected.” (Pl.’s Opp’n 15.) Finally, Plaintiff argues that the sentence, “Except
when merchandise is examined at the public stores, the importer shall pay all costs
relating to the preparation and transportation of merchandise for examination,”
reinforces “that transportation and arrival of the goods at a privately owned CES is an
act which follows presentment of the goods for examination.” (Pl.’s Opp’n 16-17.)
Plaintiff reasons that because presentment must occur for all merchandise entering
domestic commerce, and Customs only occasionally examines imported merchandise,
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presentment must occur before Customs orders goods to be taken to a CES for
examination, thereby causing the importer to incur costs relating to the preparation and
transportation of the merchandised to be examined. (Pl.’s Opp’n 17.) Thus, according
to Plaintiff, presentment occurs with the filing of a CF 3461, commencing the thirty-day
window before a deemed exclusion occurs. Employing this construction, Plaintiff
reasons that its entries were all deemed excluded prior to seizure.
c. Analysis
The court declines to adopt Plaintiff’s interpretation of when merchandise
is presented for customs examination. The rules of statutory construction apply to the
interpretation of statutes and regulations alike. Roberto v. Dep’t of the Navy, 440 F.3d
1341, 1350 (Fed. Cir. 2006) (citing Wronke v. Marsh, 787 F.2d 1569, 1574 (Fed. Cir.
1986)). “When construing a regulation or statute, it is appropriate first to examine the
regulatory language itself to determine its plain meaning.” Id. (citing Meeks v. West,
216 F.3d 1363, 1366 (Fed. Cir. 2000)). “If regulatory language is clear and
unambiguous, the inquiry ends with the plain meaning”; if a regulation is “silent or
ambiguous,” the court “gives deference to the agency’s own interpretation.” Id. (citing
Meeks, 216 F.3d at 1366 (citing NationsBank of N.C., N.A. v. Variable Annuity Life Ins.
Co., 513 U.S. 251, 256 (1995) (“It is settled that courts should give great weight to any
reasonable construction of a regulatory statute adopted by the agency charged with the
enforcement of that statute.” (citation and quotation marks omitted)))); c.f., Christopher
v. SmithKline Beecham Corp., 567 U.S. __ , 132 S. Ct. 2156 (2012)(cautioning that less
Court No. 14-00032 Page 11
deference is due to newly announced interpretations that may result in an “unfair
surprise” to regulated entities).
The phrase, “the merchandise has been presented for customs
examination,” in 19 U.S.C. § 1499(c)(5) and its counterpart, “presentation of
merchandise for Customs examination,” in 19 C.F.R. § 151.16(b) are ambiguous. Only
the term “merchandise” is statutorily defined. 8 To discern the meaning of “presented,”
“presentation,” and “examination,” the court must turn elsewhere. When a word is
undefined in a statute, “the reviewing court normally give[s] the undefined term its
ordinary meaning.” AK Steel Corp. v. United States, 226 F.3d 1361, 1371 (Fed. Cir.
2000) (citing Perrin v. United States, 444 U.S. 37, 42 (1979)). The dictionary defines
“present” as “to lay or put before a person for acceptance,” Webster’s Third New
International Dictionary 1793 (1986), “presentation” as “the act of presenting,” id.,“examination” as “the act or process of examining or state of being examined,” id. at
790, and “examine” as “to look over : inspect visually or by use of other senses,” id.
The ordinary meaning of presenting merchandise for customs examination therefore
requires that the merchandise itself – not a proxy or summary – be laid out or put before
a Customs official to look at or otherwise visually inspect.
Customs interpretation of the regulation meets this ordinary meaning
interpretation. By treating the date when (1) the last requested container arrives at a
8 “The word ‘merchandise’ means goods, wares, and chattels of every
description, and includes merchandise the importation of which is prohibited, and
monetary instruments as defined in section 5312 of Title 31.” 19 U.S.C. § 1401(c).
Court No. 14-00032 Page 12
CES and is unloaded and (2) Customs has the relevant explanatory documents, as the
date on which merchandise is presented for examination, Customs ensures that the
actual merchandise and relevant accompanying information are before its officials so
that an examination may proceed. Because Customs interpretation of the regulation is
consistent with its ordinary meaning and the record before the court does not suggest
that this is a recent or recently altered interpretation of this regulation (See, e.g., Dodge
Decl. ¶ 15, Apr. 2, 2014), the court’s inquiry need go no further. See Roberto, 440 F.3d
at 1350.
Plaintiff’s interpretation, on the other hand, contravenes the statute and
regulation’s ordinary meaning. The filing of a CF 3461, which contains information
about merchandise, may occur before that merchandise reaches its port of destination.
See 19 C.F.R. § 142.2(b). Treating the date of filing of the CF 3461 as the date when
merchandise is presented for customs examination would frequently start the thirty-day
period Customs has to examine merchandise long before the merchandise physically
reaches the United States and the agency’s jurisdiction. The presentment of
merchandise for customs examination, which requires the presence of the merchandise
before a Customs official for inspection, thus is not accomplished upon the filing of the
form. When the regulation provides that “[m]ere presentation to the examining officer of
a cargo van, container or instrument of international traffic in which the merchandise to
be examined is contained will not be considered to be presentation of merchandise for
Customs examination,” it defies credulity to suggest that presentation of a mere form,
Court No. 14-00032 Page 13
with even less access to the actual merchandise, must be treated as presentation. 9 To
that end, the court cannot conclude that Congress, or Customs in drafting its own
regulation, intended Customs to inspect merchandise lodged inside of stacked
containers at sea. (See, e.g., Dodge Decl. ¶ 4, Apr. 2, 2014.) 10
Having addressed the legal issues regarding the beginning of the thirty-
day period leading to deemed exclusion, the court now turns to the question of when
Customs effects a seizure. In their briefs, the parties assume that the date of seizure
asserted by Customs in its seizure notices marks the time at which the court considers
the entries seized. However, this Court has held that “an internal agency decision to
proceed with seizure, which did not ripen into a notice to the importer” cannot affect the
9
Buttressing the court’s conclusion, when the House Committee on Ways and
Means reported on the changes to 19 U.S.C. § 1499 accompanying the passage of the
North American Free Trade Agreement Implementation Act, it noted:
In the case of remote filing of paper documentation after January 1, 1999,
Customs shall be responsible for ensuring that the required information —
including CF 3461, packing list, and the invoice — will be available to the
appropriate official in the port of examination. The Committee intends that
the absence of required entry of manifest information in a particular
location shall not preclude or limit in any way the authority of the Customs
Service to conduct examinations.
H.R. Rep. No. 103-361, at 110 (1993), reprinted in 1993 U.S.C.C.A.N. 2552, 2660.
From this statement, it is evident that the absence of a CF 3461 would not hinder
Customs authority to examine imported merchandise pursuant to § 1499. Because
merchandise must be presented to Customs prior to examination, the filing of a CF
3461 cannot constitute presentment.
10 Moreover, the court is not convinced by Plaintiff’s argument that the form must
constitute presentment because every entry must be presented even if it is not
examined. Contrary to the premise of Plaintiff’s argument, Customs regulations provide
that presentation of a CF 3461 is not required in all cases. See 19 C.F.R. § 142.3(b)(1).
Court No. 14-00032 Page 14
Court’s jurisdiction. CBB Grp., Inc. v. United States, 35 CIT __, __, 783 F. Supp. 2d
1248, 1255 n.3 (2011) (citing 19 C.F.R. § 162.31). In that case, the court declined to
rely on the date Customs asserted that seizure occurred and, instead, utilized the date
of the Notice of Seizure. However, case law appears unsettled on whether the court
should consider the date that Customs issued a Notice of Seizure or the date a party
received the Notice of Seizure to determine whether an entry was deemed excluded
prior to seizure. See id. at __, 783 F. Supp. 2d at 1255 & n.3; H & H Wholesale Servs.,
Inc., 30 CIT at 694, 437 F. Supp. 2d at 1342; Tempco Mktg. v. United States, 21 CIT
191, 193, 957 F. Supp. 1276, 1278 (1997). The court need not resolve this issue. As
illustrated below, even using the earlier dates upon which Customs issued the Notices
of Seizure, such dates are uniformly more than thirty days after the date the
merchandise was presented for examination.
After a thorough examination of the record before it, the court determines
that the entries were presented to Customs for examination, and the entries’ respective
Notices of Seizure were issued, on the following dates:
Entry Number Date Merchandise Presented for Examination Notice of Seizure
Issuance Date
682-2164003-7 11/19/2013 1/9/2014
682-2164001-1 11/13/2013 1/9/2014
682-2164002-9 11/20/2013 1/9/2014
682-2164004-5 11/13/2013 12/20/2013
682-2163998-9 11/13/2013 12/20/2013
682-2164100-1 11/21/2013 1/16/2014
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Entry Number Date Merchandise Presented for Examination Notice of Seizure
Issuance Date
682-2164099-5 11/20/2013 1/16/2014
682-2163970-8 12/6/2013 1/16/2014
(See Def.’s Mot. 8-9, Ex. 1; Def.’s Reply Ex. 1; Pl.’s Mot. Expedite Ex. B; see also
Dodge Decl. ¶¶ 6-9 (explaining preparation of CES logs), 10-11 (discussing use of CF
3461), 13 (explaining relationship between CES log sheets and CF 3461).) Appraising
this data under Customs construction of the regulation, the court concludes that
Customs seized each entry more than thirty days after presentation and that, therefore,
each entry was deemed excluded prior to seizure.
II. Seized Entries
a. Defendant’s Contentions
Defendant asserts that the court lacks subject matter jurisdiction over
Plaintiff’s entries pursuant to 28 U.S.C. § 1356, because Customs seized them prior to
the filing of this action. (Def.’s Mot. 9-12.) Section 1356 reads as follows:
The district courts shall have original jurisdiction, exclusive of the courts of
the States, of any seizure under any law of the United States on land or
upon waters not within admiralty and maritime jurisdiction, except matters
within the jurisdiction of the Court of International Trade under section
1582 of this title.
28 U.S.C. § 1356. 11 According to Defendant, once Customs seized the entries, subject
matter jurisdiction over them fell within the exclusive purview of the district courts.
11Section 1582 concerns actions commenced by the United States and,
therefore, is inapplicable to this case. See 28 U.S.C. § 1582.
Court No. 14-00032 Page 16
b. Plaintiff’s Contentions
Plaintiff counters that the court has subject matter jurisdiction over the
seized entries because they were deemed excluded, and “the question of whether
denial of a protest against exclusion is lawful is a matter solely within the jurisdiction of
the CIT.” (Pl.’s Opp’n 24.) Plaintiff stresses that it “only challenges the exclusions,” and
not the seizures, and that “[t]he seizures are relevant only insofar as this Court may
have to construe the law cited in the Seizure Notices to determine whether, and to what
extent, they limit the court’s ability to grant comprehensive relief under its 29 [sic] U.S.C.
§ 1581(a) protest jurisdiction.” (Pl.’s Opp’n 25 n.11; see Pl.’s Opp’n 27.) Plaintiff warns
that if the court permits the seizures to divest it of jurisdiction, the agency could evade
the court’s oversight of exclusion protest denials by issuing Notices of Seizure on any
legal ground. (Pl.’s Opp’n 26.)
Plaintiff also avers that if the court reviews the Notices of Seizure, it will
find that they substantively allege a violation of 19 U.S.C. § 1592 and that the seizures
amount to an impermissible use of Customs seizure power under subsection (c)(14) of
that statute. 12 (Pl.’s Opp’n 28.) Specifically, Plaintiff notes that the Notices of Seizure
12 That subsection states:
If the Secretary has reasonable cause to believe that a person has
violated the provisions of subsection (a) of this section and that such
person is insolvent or beyond the jurisdiction of the United States or that
seizure is otherwise essential to protect the revenue of the United States
or to prevent the introduction of prohibited or restricted merchandise into
the customs territory of the United States, then such merchandise may be
seized and, upon assessment of a monetary penalty, forfeited unless the
Court No. 14-00032 Page 17
assert violations of 19 U.S.C. §§ 1481, 1484, and 1485, statutes which Plaintiff
characterizes as “inextricably tied to” § 1592. (Pl.’s Opp’n 34 (emphasis removed)
(citations and quotation marks omitted).) Plaintiff argues that because subject matter
jurisdiction over § 1592 seizures must lie within this Court’s purview, the court must
exercise jurisdiction over its entries. (Pl.’s Opp’n 29-30 (“The Court has a duty to
construe the Notices of Seizure based on their content and to determine whether the
laws claimed to be violated relate to ‘clandestine introduction’ or simply make out a case
of entry by means of false documents, in violation of 19 U.S.C. § 1592(a).”).) 13
c. Analysis
The court finds that this case is a seizure case at its heart. “It is well
established . . . that the court lacks jurisdiction under § 1581(a) to review a seizure of
monetary penalty is paid within the time specified by law. Within a
reasonable time after any such seizure is made, the Secretary shall issue
to the person concerned a written statement containing the reasons for the
seizure. After seizure of merchandise under this subsection, the Secretary
may, in the case of restricted merchandise, and shall, in the case of any
other merchandise (other than prohibited merchandise), return such
merchandise upon the deposit of security not to exceed the maximum
monetary penalty which may be assessed under subsection (c) of this
section.
19 U.S.C. § 1592(c)(14).
13 As a continuation of its jurisdictional argument, Plaintiff asserts that Customs
improperly seized its entries pursuant to 19 U.S.C. § 1595a(c), because the Notices of
Seizure do not meet the standards for pleading or proving a seizure claim under the
statute. (See Pl.’s Opp’n 30-33 (citing United States v. Davis, 648 F.3d 84, 87, 90 (2d
Cir. 2011); United States v. Broadening-Info. Enters., Inc., 462 F. App’x 93 (2d Cir.
2012)); see also Pl.’s Opp’n 36-39 (examining merits of Customs purported § 1592
seizure).) From context, it also appears that Plaintiff believes that these defects
demonstrate that Customs actually seized the entries under 19 U.S.C. § 1592. Plaintiff
provides no legal support for its contention that Notices of Seizure must meet judicial
standards of pleading or proof.
Court No. 14-00032 Page 18
goods by Customs. If Customs’s treatment of the merchandise was a seizure . . .
jurisdiction would lie with the United States District Court . . . under 28 U.S.C. § 1356.”
H & H Wholesale Servs., Inc., 30 CIT at 692, 437 F. Supp. 2d at 1340 (second and third
ellipses in original) (citation and quotation marks omitted); accord PRP Trading Corp. v.
United States, 36 CIT __, __, 885 F. Supp. 2d 1312, 1314 (2012). In this case,
Customs uniformly seized the imported merchandise, and provided notice of that
seizure, within sixty days of the presentation for examination of that merchandise.
Significantly, these seizures occurred prior to Plaintiff’s effort to invoke this court’s
jurisdiction pursuant to § 1581(a) and, in the case of five of the eight entries, they
occurred prior to the denial of Plaintiff’s protests regarding the deemed exclusions of the
merchandise, pursuant to 19 U.S.C. § 1499(c)(5)(A) and (B).
The facts in this case are distinct in significant ways from the facts
presented to the court in CBB Group, Inc. v. United States, 35 CIT __, 783 F. Supp. 2d
1248. In CBB, the court was presented with a deemed exclusion, followed by a deemed
denial of a protest, in which the imported merchandise was not seized until after the
importer had challenged in this court the denial of the protest. In finding that the court
retained jurisdiction over the case notwithstanding the seizure, the court analyzed how
sections 499(c), 19 U.S.C. § 1499(c), and 596(c), 19 U.S.C. § 1595a(c), of the Tariff Act
of 1930, interact. With regard to 19 U.S.C. § 1499(c), the CBB court said:
Section 499(c) was added to the Tariff Act by the Customs Modernization
Act, which was included as Title VI of the North American Free Trade
Agreement Implementation Act, Pub. L. No. 103-182, 107 Stat. 2057,
2171. As explained in the report of the House Committee on Ways and
Means accompanying the Customs Modernization Act (“House Report”),
the purpose of section 499(c) is to “provide a carefully balanced structure
Court No. 14-00032 Page 19
which allows the Customs Service, in the first instance, a minimum of 60
days in which to determine whether merchandise initially detained shall be
excluded from entry or seized and forfeited if otherwise authorized under
other provisions of law.” H.R. Rep. No. 103-361, pt. 1, at 111-12 (1993),
as reprinted in 1993 U.S.C.C.A.N. 2552, 2659 (“House Rept.”). It is
apparent that the House Report, in mentioning a “minimum” of 60 days,
refers to the period following presentation of the merchandise for
examination as established by paragraph (A) of section 499(c)(5), which is
thirty days “or such longer period if specifically authorized by law,”
together with the thirty-day period following the filing of the protest as
established by paragraph (B) of the provision.
35 CIT at __, 783 F. Supp. 2d at 1253. The court found that Customs had failed to
make an admissibility or seizure determination within the sixty-day period during which it
could examine the merchandise. Therefore, when Customs issued a notice of seizure
after the sixty-day period had lapsed, and after the court’s jurisdiction had attached to
the plaintiff’s claim, the court had to determine the effect the issuance of the seizure
notice on its ability to grant relief. Id. at __, 783 F. Supp. 2d at 1254-56. The court
concluded that it retained jurisdiction over the claim because Customs lacked the
authority to take action affecting the status of the merchandise once the court had
established its jurisdiction. Id. at __, 783 F. Supp. 2d at 1256. In the present case, the
court faces no such scenario, because Customs seized the entries within the sixty-day
period and before Plaintiff filed suit. Thus, Customs retained the authority to take action
through seizure when it did so with regard to the eight entries at issue here.
Moreover, to determine whether a plaintiff has challenged a seizure, as
opposed to an exclusion, the Court has considered various factors, including whether:
1) the plaintiff’s protest indicated that it was challenging the “seizure” of
the merchandise; 2) the plaintiff received a notice of seizure from
Customs; 3) the government had control over the merchandise; and 4)
Court No. 14-00032 Page 20
upon notice, the plaintiff was required to choose between immediate
forfeiture proceedings or a petition for relief from seizure.
H & H Wholesale Servs., Inc., 30 CIT at 694, 437 F. Supp. 2d at 1341 (citations
omitted); Tempco Mktg., 21 CIT at 193, 957 F. Supp. at 1278 (citation omitted). With
respect to the first factor, Plaintiff’s protest ambiguously challenges Customs alleged
exclusion of Plaintiff’s merchandise, claiming that “there is no basis in law for the
seizure of these goods.” (Pl.’s Mot. Expedite Ex. A at 3.) Next, the record shows that
Plaintiff received Notices of Seizure from Customs for each entry. (Pl.’s Mot. Expedite
Ex. B.) It is also undisputed that Customs has control over the merchandise. Finally,
the Notices of Seizure required Plaintiff to choose between immediate forfeiture
proceedings and a petition for relief from seizure. (See Pl.’s Mot. Expedite Ex. B.)
Three, if not four, of the factors suggest that Plaintiff’s case is really concerned with
seizure rather than exclusion. Bolstering this conclusion, this Court repeatedly has
found subject matter jurisdiction wanting in cases, such as this one, where Customs
seized a plaintiff’s entries prior to the plaintiff’s filing suit in this Court. See, e.g., PRP
Trading Corp., 36 CIT __, 885 F. Supp. 2d 1312; H & H Wholesale Servs., Inc., 30 CIT
689, 437 F. Supp. 2d 1335; Genii Trading Co. v. United States, 21 CIT 195 (1997);
Tempco Mktg., 21 CIT 191, 957 F. Supp. 1276; Int’l Maven, Inc. v. McCauley, 12 CIT
55, 678 F. Supp. 300 (1988). But see CBB Grp., Inc. v. United States, 35 CIT __, 783
F. Supp. 2d 1248 (holding that court had jurisdiction over excluded and seized entries,
because Customs seized entries after plaintiff had filed suit and this Court’s jurisdiction
had attached).
Court No. 14-00032 Page 21
In addition, the court finds Plaintiff’s contention that the court must
exercise subject matter jurisdiction over this case because Customs seized Plaintiff’s
merchandise pursuant to 19 U.S.C. § 1592 unavailing. Plaintiff asks the court to
disregard the Notices of Seizure, which state on their face that Customs seized the
merchandise pursuant to 19 U.S.C. § 1595a(a) and (c)(1)(A), examine the underlying
legality behind the seizures, and find that Customs, in fact, seized the entries under
§ 1592. According to Plaintiff, the grounds upon which Customs justified its seizures
are “inextricably” bound to § 1592, and this court must exercise subject matter
jurisdiction over actions arising from that statute. It is well established that ‘“Congress
did not commit to the Court of International Trade’s exclusive jurisdiction every suit
against the Government challenging customs-related laws and regulations.’” H & H
Wholesale Servs., Inc., 30 CIT at 700, 437 F. Supp. 2d at 1347 (quoting Kmart Corp. v.
Cartier, Inc., 485 U.S. 176, 188 (1988)). The one exception to the jurisdictional bar
precluding this court from hearing seizure cases is inapposite. See 28 U.S.C. §§ 1356,
1582. Plaintiff essentially asks the court to reach the merits of its case and evaluate the
legality of Customs seizure notices in order to discern whether the court has subject
matter jurisdiction to hear the case. This the court cannot do. See Diggs v. Dep’t of
Housing & Urban Dev., 670 F.3d 1353, 1355 (Fed. Cir. 2011) (citations omitted).
The court therefore concludes that, at its heart, this case challenges
Customs seizures of Plaintiff’s merchandise. It is the court’s understanding that, to
date, Plaintiff has not yet elected a remedy as provided in the Notices of Seizure and,
among its options, pursuant to 28 U.S.C. § 1356, Plaintiff may choose to contest the
Court No. 14-00032 Page 22
seizures in district court. While this finding clearly dictates that Plaintiff must find its
judicial remedy for the seizure, if any, in district court, it does not completely dispose of
the matter before the court. As already discussed, the eight entries in question were
deemed excluded prior to being seized by Customs. While the seizures were not
implicated by Plaintiff’s invocation of this court’s jurisdiction, c.f. CBB, 35 CIT __, 783 F.
Supp. 2d 1248, it is not clear that the seizures negate the deemed exclusion.
Defendant has suggested that, if Plaintiff prevails on its arguments against
the seizures and obtains release of its seized merchandise, Plaintiff will have the
opportunity to file new documents if it wishes to enter the merchandise into the United
States for consumption. See Def.’s Mot. Ex. 2 (Customs Public Bulletin regarding
submission and processing of entries for seized merchandise at Port of Los
Angeles/Long Beach). While such an opportunity to file new entry documents may exist
when Customs has administratively resolved a seizure prior to an exclusion, Defendant
has not provided any argument that such administrative practices can trump the finality
of a deemed exclusion or denied protest pursuant to 19 U.S.C § 1514(a), in the
absence of judicial intervention by this court.
For these reasons, the court finds that only this Court can provide judicial
relief to Plaintiff from the denial of the protest; however, only the district court can
provide judicial relief to Plaintiff from the seizure of the merchandise. Because the court
finds that this case is, at its heart, a seizure case, the court finds that it is in the sound
interest of judicial economy to stay this proceeding, pending Plaintiff’s election of
Court No. 14-00032 Page 23
remedies pursuant to the Notices of Seizure and any administrative and/or judicial
proceedings resulting from that election. 14
III. Plaintiff’s Motion for a Preliminary Injunction
Pending before the court is Plaintiff’s motion for a preliminary injunction.
(ECF No. 17.) Plaintiff moves the court to issue an order enjoining Defendant “from
initiating or conducting, during the pendency of this action, administrative summary
forfeiture proceedings with respect to the merchandise which is the subject matter of
this action.” (Mem. P.&A. Supp. Pl.’s Mot. Prelim. Inj. (“Pl.’s PI Mot.”) 1.)
To prevail on a motion for a preliminary injunction, a movant must
establish that “(1) the movant is likely to succeed on the merits, (2) the movant is likely
to suffer irreparable harm in the absence of preliminary relief, (3) the balance of equities
tips [in] movant's favor, and (4) an injunction is in the public interest.” Wind Tower
Trade Coalition v. United States, 37 CIT __, __, 904 F. Supp. 2d 1349, 1352 (2013)
(citing Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008); Am. Signature, Inc.
v. United States, 598 F.3d 816, 823 (Fed. Cir. 2010)), aff’d, 741 F.3d 89 (Fed. Cir.
2014).
Plaintiff does not meet these criteria. The court has found that it lacks
subject matter jurisdiction over Plaintiff’s claims as they relate to Customs seizure of its
merchandise. Any relief that Plaintiff may seek with respect to its seized merchandise
must begin with Plaintiff’s election of remedies provided in the Notices of Seizure. As
14
Because the court is staying this proceeding, Defendant’s Rule 12(b)(5)
arguments are moot.
Court No. 14-00032 Page 24
such, the court cannot find that Plaintiff is likely to suffer irreparable harm in the
absence of an order enjoining Customs from commencing or conducting administrative
forfeiture proceedings during the pendency of this action. It is, in fact, these very
proceedings which may provide Plaintiff with the relief it seeks. Plaintiff therefore has
not established the elements needed to secure a preliminary injunction, see id., and its
motion is denied.
CONCLUSION AND ORDER
For the reasons provided above, the court hereby DENIES Defendant’s
motion to dismiss. It finds that it has subject matter jurisdiction over Plaintiff’s challenge
to the denial of its protest; however, because this case is a seizure case at heart, the
court STAYS further proceedings pending Plaintiff’s election of remedies pursuant to
the Notice of Seizure and any administrative and/or judicial proceedings resulting from
that election. Parties are ORDERED to file a status report within thirty days of the
completion of any administrative proceeding pursuant to the election of remedies or any
subsequent or alternate judicial proceeding resulting from the election of remedies. In
addition, the court DENIES Plaintiff’s motion for a preliminary injunction; DENIES
Plaintiff’s order to show cause why an expedited litigation schedule should not be
issued as moot; DENIES Plaintiff’s motion for oral argument as moot; and DENIES
Defendant’s motion to strike as moot.
/s/ Mark A. Barnett
Mark A. Barnett
May 21, 2014
Dated:__________________ Judge
New York, New York
ERRATA
Blink Design, Inc. v. United States, Court No. 14-00032, Slip Op. 14-56, dated May 21, 2014.
Page 1: In the list of Defendant’s counsel, “Paul Smith” should be “Paula Smith.”
May 27, 2014