Chs Industries, LLC v. United States Customs and Border Protection ( 2009 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
CHS INDUSTRIES, LLC, :
:
Plaintiff, :
:
v. : Civil Action No. 06-2205 (GK)
:
UNITED STATES CUSTOMS AND :
BORDER PROTECTION, et al., :
:
Defendants. :
MEMORANDUM OPINION
Plaintiff CHS Industries, LLC (“CHS” or “Plaintiff”) brings
this action against Defendants United States Customs and Border
Protection (“Customs”), United States Environmental Protection
Agency (“EPA”), Unknown Employees of United States Customs and
Border Protection, and Unknown Employees of United States
Environmental Protection Agency (collectively, “Defendants”)
pursuant to Rule 41(g) of the Federal Rules of Criminal Procedure
(Count I) and Bivens v. Six Unknown Federal Agents, 403 U.S. 388(1971) (Count II).
This case is now before the Court on Defendants’ Motion to
Dismiss. Upon consideration of the Motion, Opposition, Reply, the
entire record herein, and for the reasons set forth below,
Defendants’ Motion is granted.
I. Background1
Plaintiff is located and incorporated in Edgewater, Florida.
It purchases stationary generators with nonroad engines2 from Fuan
Lujuan Electrical Machinery Company, Limited (“Fuan”) in Fujian,
China and imports them into the United States. Fuan manufactures
the generators, packs and labels them, and delivers them to
Plaintiff’s Edgewater location. The generators have been sold to
buyers prior to their delivery to Edgewater.
On August 7, 2006, a container of generators destined for
Plaintiff’s facilities arrived in Port of Savannah, Georgia and was
detained by Customs.3 That same day, Plaintiff contacted Customs
to determine why the container was detained and how to procure its
release. On August 21, 2006, while Customs waited for the EPA to
review the shipment, it sent Plaintiff a Notice of Detention
regarding the container. In the Notice, Customs informed Plaintiff
1
For all purposes of ruling on a motion to dismiss, the factual
allegations of the complaint must be presumed to be true and
liberally construed in favor of the plaintiff. Aktieselskabet AF
21. November 2001 v. Fame Jeans Inc., 525 F.3d 8, 17 (D.C. Cir.
2008). Therefore, the facts set forth herein are taken from
Plaintiff’s Complaint unless otherwise noted.
2
Plaintiff does not define this term.
3
CHS uses this August 7, 2006 date in its Complaint but lists
the arrival date as August 4, 2006 in its Opposition to Defendants’
Motion to Dismiss. Pl.’s Opp’n to Def.’s Mot. to Dismiss (“Pl.’s
Opp’n”) at 1. The difference in dates has no significance for
purposes of this Motion.
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that the wood shipping materials used in the container were not
permitted to enter the United States.
On September 21, 2006, Customs seized CHS’ “goods”4 because
they did not comply with 40 C.F.R. § 90.1003(a)(1)(i), which
requires a certificate of conformity with emissions regulations for
nonroad engines. Compl. ¶ 18. On September 27, 2008, Plaintiff
“submitted an application to manipulate and exported [sic] the
noncompliant wood packing materials.”5 Id. ¶ 17.
On October 11, 2006, Plaintiff submitted a petition for relief
to Customs. On November 13, 2006, Defendant Jeffrey A. Kodish
(“Kodish”),6 an Attorney-Advisor for the EPA, recommended to
Customs that it refuse to release the generators because they
failed to comply with 40 C.F.R. §§ 89.1003(a)(1)(ii) and
89.1003(a)(6), both of which also require a certificate of
conformity with emissions regulations for nonroad engines.
4
Plaintiff does not specify what the term “goods” references.
5
Plaintiff does not specify what agency or person received this
application, nor does it define or explain the term “application to
manipulate.”
6
There is a question as to whether Kodish has been effectively
made a Defendant in this case, as he has not been served or
included in the caption. See infra, p. 13.
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On November 14, 2006, Defendant Frank Jaramillo
(“Jaramillo”),7 Area Port Director for Customs in Savannah, or
Defendant Mary C. Bensel Mills (“Mills”),8 a Fines, Penalties and
Forfeitures Officer at Customs’ Savannah location, denied
Plaintiff’s October 11, 2006 petition based on 40 C.F.R. §
90.1003(a)(1)(ii). However, he/she “permit[ted]” Plaintiff to
export the noncompliant wood, and to export the generators to a
non-contiguous country. Compl. ¶ 25, Ex. D. On June 13, 2007,
Customs sold the generators at auction. [Dkt. No. 5-3, filed June
12, 2009.]
Plaintiff alleges that, as a result of Defendants’ detention
of its container, it lost orders from customers, suffered “manifest
injustice” and “irreparable injury,” and had its business
“effectively shut[] down.” Compl. ¶¶ 29-30. It also alleges that
it lost $2592.50 as a result of needing to export the noncompliant
wood, three wholesale business accounts with potential annual sales
of $201,000 per year, and “all retail accounts which have a
potential net profit of $270,000 with a potential bill of $40,500
in potential service and a potential sales [sic] of $27,000 for
7
There is a question as to whether Jaramillo has been effectively
made a Defendant in this case, as he has not been served or
included in the caption. See infra, p. 13.
8
There is also a question as to whether Mill has been effectively
made a defendant in this case, as she has not been served or
included in the caption. See infra, p. 13.
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replacement parts.” Id. ¶¶ 37-40. It further states that these
losses caused it to decrease its payroll, use credit to purchase
materials, and alter its normal course of business.
On December 26, 2006, Plaintiff filed the instant Complaint,9
alleging that it is entitled to “Return of Property Pursuant to
Rule 41(g)” of the Federal Rules of Criminal Procedure (Count I)
and “Monetary Damages Pursuant [t]o Bivens” (Count II). Id. at 5,
6. Plaintiff cites a violation of its Fifth Amendment rights as
the basis for its Bivens claim. See id. ¶¶ 1, 33, 35, 43.
In September 2007, Plaintiff filed an administrative petition
with Customs seeking the proceeds of the auction of the generators.
The record is not clear as to whether the petition has been
decided.10
On March 24, 2008, in response to a March 10, 2008 Order for
parties to submit praecipes regarding further proceedings,
Plaintiff filed an Amended Motion Opposing Defendants’ Motion to
Dismiss or in the Alternative to Transfer and its Points and
Authorities [Dkt. No. 16]. In this document, Plaintiff stated that
9
In addition to the questions about the named Defendants
discussed supra, notes 6-8, Plaintiff lists the United Stats as a
Defendant in paragraph 4 of its Complaint but also failed to effect
service of process or include the United States in the Complaint’s
caption or as a Defendant on ECF.
10
Defendants wish to proceed with a resolution of their Motion to
Dismiss regardless of the disposition of this petition. Def.’s
Praecipe at 2.
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it seeks damages “as an equitable remedy or under the Federal Tort
Claims Act,” referencing Federal Rule of Criminal Procedure 41(g)
in its request for equitable relief.11 Pl.’s Am. Mot. Opp’ing at
2.
II. Standard of Review
To survive a motion to dismiss, a plaintiff need only plead
“enough facts to state a claim to relief that is plausible on its
face” and to “nudge[] [his or her] claims across the line from
conceivable to plausible.” Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007). “[O]nce a claim has been stated adequately, it
may be supported by showing any set of facts consistent with the
allegations in the complaint.” Id. at 579.
Under the standard set out in Twombly, a “court deciding a
motion to dismiss must not make any judgment about the probability
of the plaintiff's success . . . must assume all the allegations in
the complaint are true (even if doubtful in fact) . . . [and] must
give the plaintiff the benefit of all reasonable inferences derived
from the facts alleged.” Aktieselskabet AF 21.November 2001 v. Fame
Jeans Inc., 525 F.3d 8, 17 (D.C. Cir. 2008) (internal quotation
marks and citations omitted).
11
On March 23, 2009, Plaintiff filed a second suit in this Court.
CHS Indus., LLC v. U.S. Customs & Border Prot., C.A. No. 09-544
(GK). In that case, Plaintiff alleges that Customs and the EPA
violated the Federal Tort Claims Act, 28 U.S.C. § 2671, et seq.
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III. Analysis
A. Count I Is Dismissed for Lack of Subject Matter
Jurisdiction
Our Court of Appeals has explained that “Rule 41(g) [of the
Federal Rules of Criminal Procedure] is applicable only when
property is seized ‘for use in a criminal prosecution.’” United
States v. Price, 914 F.2d 1507, 1511 (D.C. Cir. 1990) (quoting In
re Seizure Warrant, 830 F.2d 372, 374 (D.C. Cir. 1987)). In Price,
the court held that “once the Government initiates an
administrative forfeiture proceeding and the property is not the
subject of an ongoing criminal proceeding, the District Court has
no jurisdiction to resolve the issue of return of property.” Id.
at 1508, 1512.
Plaintiff cites to DiBella v. United States, 369 U.S. 121(1962), in arguing that “Rule 41(g) motions may exist apart from
criminal actions.” Pl.’s Mem. in Support of Mot. Opp’ing (“Pl.’s
Mem.”) at 7. However, there is no conflict between DiBella and
Price. DiBella involved the interlocutory appealability of a pre-
trial motion to suppress evidence in a criminal prosecution. The
Supreme Court said nothing about the exercise of jurisdiction in a
civil case brought pursuant to Fed. R. Crim. P. 41(g).12 As our own
12
At the time DiBella was decided, the relevant Criminal Rule
under discussion was Rule 41(e).
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Court of Appeals stated in Price, if the seized property in
question is not the subject of a criminal proceeding in progress,
the court has no jurisdiction pursuant to Rule 41(g).
In this case, the government initiated administrative
forfeiture proceedings, the generators were auctioned, and
Plaintiff itself filed an administrative petition in response to
the sale. Plaintiff has introduced no evidence to show that this
case is a criminal proceeding. Therefore, Count I is dismissed for
lack of subject matter jurisdiction.
B. Count II Is Dismissed Because All Defendants Enjoy
Immunity from Suit
In Saucier v. Katz, 533 U.S. 194, 200-01 (2001), the Supreme
Court emphasized that qualified immunity is a question of law which
the court should decide “at the earliest possible stage in
litigation.” Therefore, although the parties dispute many legal
issues in this case, the Court must first address the immunity
question.
Defendants assert qualified immunity for the three named
individual Defendants and for all unnamed individual Defendants, as
well as sovereign immunity for all Defendants acting in their
official capacities. Plaintiff responds by citing the Second
Circuit opinion in Bivens v. Six Unknown Federal Agents, 456 F.2d
1339, 1341 (2d Cir. 1972), asserting that “[f]ederal employees,
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agents and officers performing their law enforcement functions have
no immunity to protect themselves from damages suits charging
violations of constitutional rights.” Pl.'s Mem. at 6.
However, the Supreme Court reversed the Second Circuit’s
decision in Bivens. See Bivens v. Six Unknown Federal Agents, 403
U.S. 388 (1971). In the wake of the Supreme Court’s decision, it
is now well-settled that qualified immunity is an appropriate
defense in Bivens litigation. See Rasul v. Myers, 512 F.3d 644,
652 n.3 (D.C. Cir 2008); Jones v. Yanta, 610 F. Supp. 2d 34, 43
(D.D.C. 2009).
1. The Agency Defendants and Agency Employees Acting
in Their Official Capacities Enjoy Sovereign
Immunity
Bivens created a cause of action against a federal officer
acting in her individual capacity in which the plaintiff may
collect monetary damages if the officer is found to have violated
plaintiff’s constitutional rights. 403 U.S. at 395-96. Bivens
only provides a cause of action against individuals. See Kauffman
v. Anglo-Am. Sch. of Sofia, 28 F.3d 1223, 1226 (D.C. Cir. 1994).
A Bivens claim may not be brought against the United States
government or its agencies because they have sovereign immunity.
See FDIC v. Meyer, 510 U.S 471, 484-86 (1994) (federal agency
cannot be sued in a Bivens claim). In this case, Plaintiff filed
suit against Customs and the EPA, both of which are federal
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agencies. Therefore, the Bivens claims against Customs and EPA are
dismissed on grounds of sovereign immunity.
2. The Individual Defendants Enjoy Qualified Immunity
In Pearson v. Callahan, ___ U.S. ___, 129 S. Ct. 808, 815
(2009), the Supreme Court gave a succinct overview of the qualified
immunity doctrine:
The doctrine of qualified immunity protects
government officials “from liability for civil
damages insofar as their conduct does not
violate clearly established statutory or
constitutional rights of which a reasonable
person would have known.” Harlow v.
Fitzgerald, 457 U.S. 800, 818 (1982).
Qualified immunity balances two important
interests -- the need to hold public officials
accountable when they exercise power
irresponsibly and the need to shield officials
from harassment, distraction, and liability
when they perform their duties reasonably.
The protection of qualified immunity applies
regardless of whether the government
official's error is “a mistake of law, a
mistake of fact, or a mistake based on mixed
questions of law and fact.” Groh v. Ramirez,
540 U.S. 551 (2004) (Kennedy, J., dissenting)
(citing Butz v. Economou, 438 U.S. 478 (1978)
(noting that qualified immunity covers “mere
mistakes in judgment whether the mistake is
one of fact or one of law”)).
In evaluating an official’s conduct, the inquiry centers “on the
objective legal reasonableness of [her] acts.” Harlow, 457 U.S. at
819. Immunity, if found, serves as a total immunity from suit, not
just “a mere defense from liability.” Mitchell v. Forsyth, 472
U.S. 511, 526 (1985).
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Under pre-existing precedent, the Court had required the trial
court to first determine whether the facts alleged by a plaintiff
made out a violation of a constitutional right and, if it did, to
then determine whether the asserted right was “clearly established”
at the time of the violation. Saucier, 533 U.S. at 201. In
Pearson, the Supreme Court “ruled that the Saucier sequence is
optional and that lower federal courts have the discretion to
decide only the more narrow ‘clearly established’ issue ‘in light
of the circumstances in the particular case at hand.’” Rasul v.
Myers, 563 F.3d 527, 530 (D.C. Cir. 2009) (quoting Pearson, 129 S.
Ct. at 818).
In this case, the Court will address the first question as to
what, if any, constitutional right has been violated. Plaintiff
alleges the individual Defendants violated the Fifth Amendment by
seizing its goods upon their arrival in the United States. The
Fifth Amendment states that “[n]o person shall be . . . deprived of
life, liberty, or property, without due process of law.” U.S.
Const. Amend. V. A Fifth Amendment violation does not occur unless
there is a “constitutionally protected property or liberty interest
at stake,” Giacobbi v. Biermann, 780 F. Supp. 33, 41 (D.D.C. 1992)
(citing Bd. of Regents of State Colls. v. Roth, 408 U.S. 564(1972)), and the plaintiff must have a “legitimate claim of
entitlement” to the government conduct in question rather than a
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mere “unilateral expectation of it,” Roth, 408 U.S. at 577. The
underpinning of due process is “the opportunity to be heard ‘at a
meaningful time and in a meaningful manner.’” Mathews v. Eldridge,
424 U.S. 319, 333 (1976) (quoting Armstrong v. Manzo, 380 U.S. 545,
552 (1965)). Negligence or “mere lack of due care” resulting in
deprivation of property does not constitute a due process
violation. See Daniels v. Williams, 474 U.S. 327, 330-31 (1986).
Because some discussion of the merits is built into the first
step of the qualified immunity analysis, referring to a 12(b)(6)
framework provides guidance in evaluating whether a constitutional
right has been violated. In Twombly, 550 U.S. at 555, the Supreme
Court stated that, when facing a 12(b)(6) motion, “a plaintiff’s
obligation to provide the ‘grounds’ of his ‘entitl[ment] to relief’
requires more than labels and conclusions.” Some amount of facts
-- “rather than a blanket assertion” -- is necessary to provide
“plausible grounds” for and create a “reasonable expectation that
discovery will reveal evidence” of the alleged wrongdoing. Id. at
556. Furthermore, “courts ‘are not bound to accept as true a legal
conclusion couched as a factual allegation.’” Id. at 555 (quoting
Papasan v. Allain, 478 U.S. 265, 286 (1986)).
a. Named and Unnamed Customs Employees
It is well-established that Customs has the authority to
search and seize goods or merchandise that is noncompliant with
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U.S. law. See, e.g., 19 U.S.C. § 1602 (2006). As in this case,
seizures may be made if the “container” or “wrapping” of imported
goods is noncompliant. 19 U.S.C. § 1595(a)(1)(C) (2006). In
Fourth Amendment challenges to seizures by Customs, the Supreme
Court has held that Customs officials are not required to obtain
probable cause before conducting a search of people or merchandise
entering the United States. See, e.g., United States v. Ramsey,
431 U.S. 606, 616-17 (1977) (“That searches made at the border,
pursuant to the long-standing right of the sovereign to protect
itself by stopping and examining persons and property crossing into
this country, are reasonable simply by virtue of the fact that they
occur at the border, should, by now, require no extended
demonstration.”).
Plaintiff states that “the government violated its Fifth
Amendment Due Process rights because the government would not
permit entry of its seized generators after it had provided
assistance and information regarding the labeling procedure which
was utilized by CHS.” Pl.’s Mem. at 8. Assuming that Plaintiff is
including the individual Defendants in referring to “the
government,” it has failed to set forth any facts showing that
Customs officers acted beyond the bounds of their express statutory
authority, nor suggested any unreasonableness in their actions.
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To survive a motion to dismiss, a plaintiff must provide a
“‘showing’ rather than a blanket assertion of entitlement to
relief.” Twombly, 550 U.S. at 556 (quoting 5 Wright & Miller §
1202, at 94, 95). To make this showing, Plaintiff must offer
enough facts to establish the “plausibility” of the alleged
wrongdoing. Id. Like the Fourth Amendment cases, Plaintiff does
not make out a Fifth Amendment constitutional violation when it
alleges that Customs seized its goods and that the seizure was
conducted pursuant to its statutory authority. For these reasons,
Plaintiff fails to present a set of facts that plausibly allege a
constitutional violation.
b. Named and Unnamed EPA Employees
Under 40 C.F.R. § 89.1003, EPA has authority to enforce
regulations regarding emissions from nonroad engines. 40 C.F.R. §
89.1003 (2008). These regulations include, amongst other things,
compliance with certain labeling standards. See Indep. Equip.
Dealers Ass’n v. EPA, 372 F.3d 420, 422 (D.C. Cir. 2004). Because
many different types of engines are imported from abroad, importers
must also comply with EPA regulations in order to be allowed entry.
Id. For this reason, Customs and EPA may collaborate where both
agencies’ regulations are at issue. In addition, our Court of
Appeals has held that “we lack[] authority to review claims where
‘[the EPA] merely expresses its view of what the law requires of a
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party.’” Id. at 427 (quoting AT&T v. EEOC, 270 F.3d 973, 975 (D.C.
Cir. 2001)).
In its Complaint, Plaintiff includes only two factual
assertions regarding EPA and its employees: (1) that Plaintiff had
consulted EPA prior to purchasing the generators, and (2) that EPA
had recommended to Customs that the generators not be released.
Compl. ¶¶ 22, 24. Neither of these allegations reveals any
possible conduct which falls outside EPA’s statutory authority or
is in violation of the Constitution. Even if Plaintiff had
demonstrated a violation of its constitutional rights, EPA has done
nothing more than express its view of the law. Therefore, this
Court does not have jurisdiction to review Plaintiff’s challenge to
EPA’s recommendations. Indep. Equip. Dealers Ass’n, 372 F.3d at
427.
For these reasons, Plaintiff fails to pass the first step of
the Saucier test, and it is unnecessary to address the second step.
The individual Defendants from Customs and EPA must be dismissed
because they enjoy qualified immunity.
C. No Viable Bivens Claim Exists Because 19 U.S.C. § 1608,
et seq. Provides a Comprehensive Statutory and Regulatory
Remedy for Customs Seizures
The Tariff Act of 1930 provides that
[a]ny person claiming such . . . merchandise
. . . may at any time within twenty days from
the date of the first publication of the
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notice of seizure file with the appropriate
customs officer a claim stating his interest
therein. Upon the filing of such claim, and
the giving of a bond to the United States
. . . such customs officer shall transmit such
claim and bond, with a duplicate list and
description of the articles seized, to the
United States attorney for the district in
which seizure was made.
19 U.S.C. § 1608 (2006).
As Defendants point out, the Supreme Court has resisted
creating a remedy under Bivens where “an elaborate remedial system
that has been constructed step by step, with careful attention to
conflicting policy considerations” already exists. Def.’s Reply at
5 (quoting Bush v. Lucas, 462 U.S. 367, 388 (1983)).
Our Court of Appeals has concluded that, based on Bush, “the
more Congress has dealt in detail and over years with a class of
cases, the less free are the courts to imply such causes of action
without direct statutory support.” Siaca v. United States, 754
F.2d 988, 991 (D.C. Cir. 1985). In the case of Customs seizures,
that Court found that “[e]xisting law contains elaborate and
carefully articulated provisions dealing with the rights of persons
whose property has been seized, possibly illegally.” Id. at 992.
Plaintiff states that it cannot pursue forfeiture proceedings
but has failed to coherently set forth its argument or cogently
express why the remedies available under the Tariff Act are
insufficient. Because Congress has regulated Customs regulations
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since 1789 and provided a remedy for allegedly improper seizures
via statute, Siaca, 754 F.2d at 922, it is inappropriate to create
a Bivens cause of action in this case.
It is telling that in Plaintiff’s last court filing, it fails
to even mention its Bivens claim. Rather, it states that “[t]his
court mus [sic] now determine whether defendants’ conduct renders
them liable for damages either as an equitable remedy or under the
FTCA.” Pl.’s Am. Mot. Opp’ing at 4.
IV. Conclusion
For the reasons set forth above, Defendants’ Motion to Dismiss
is granted. An Order shall accompany this Memorandum Opinion.
September 10, 2009 /s/
Gladys Kessler
United States District Judge
Copies via ECF to all counsel of record
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