Connor v. United States

Slip Op. 00 - 31
UNITED STATES COURT OF INTERNATIONAL TRADE
__________________________________________
:
WILLIAM T. CONNOR II, AS TRUSTEE OF :
THE WILLIAM T. CONNOR II LIVING TRUST, :
:
Plaintiff, :
:
v. : Before: MUSGRAVE, JUDGE
:
THE UNITED STATES, : Court No. 99-02-00094
:
Defendant. :
__________________________________________:
[Defendant’s Motion to Dismiss granted.]
Decided: March 27, 2000
Joel R. Junker, P.C. (Joel R. Junker), for plaintiff.
David W. Ogden, Acting Assistant Attorney General; Joseph I. Liebman, Attorney in
Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, United
States Department of Justice (James A. Curley); of counsel: Beth C. Brotman, Office of Assistant
Chief Counsel, United States Customs Service, for defendant.
MEMORANDUM OPINION AND ORDER
In this action, Plaintiff William T. Connor, II, Trustee of the William T. Connor II Living
Trust (“the Trust”), seeks judicial review of a pre-importation ruling issued by the United States
Customs Service (“Customs”) concerning the classification of a 1929 Bentley Blower racing car
(“the Bentley” or “the automobile”). Plaintiff alleges jurisdiction and requests that the Court issue
a declaratory judgment pursuant to 28 U.S.C. § 1581(h), which provides that
Court No. 99-02-00094 Page 2
[t]he Court of International Trade shall have exclusive jurisdiction of any civil action
commenced to review, prior to 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.
Presently before the Court is Defendant’s Motion to Dismiss for lack of subject matter
jurisdiction based, inter alia, on the ground that plaintiff has not demonstrated that he would be
irreparably harmed unless given an opportunity to obtain judicial review prior to importation. For
the reasons set forth herein, Defendant’s motion is granted, and this action is dismissed.
Background
On December 23, 1997, Plaintiff filed a ruling request with Customs pursuant to 19 C.F.R.
§ 177.1 In this request, Plaintiff asserted that the Bentley should be classified under subheading
9705.00.0090 of the Harmonized Tariff Schedule of the United States (“HTSUS”), which provides
for duty-free entry of “[c]ollections, and collector’s pieces of zoological, botanical, mineralogical,
anatomical, historical, archeological, paleontological, ethnographic, or numismatic interest. Other.”
Plaintiff argued that this classification was appropriate because the Bentley is a collector’s item and,
as such, it will not be used for any utilitarian purpose. The automobile will instead be entered in
1
19 C.F.R. § 177.1(a)(1), regarding prospective transactions, states that
[i]t is in the interest of the sound administration of the Customs and related laws that
persons engaging in any transaction affected by those laws fully understand the
consequences of that transaction prior to its consummation. For this reason, the
Customs Service will give full and careful consideration to written requests from
importers and other interested parties for rulings or information setting forth, with
respect to a specifically described transaction, a definitive interpretation of applicable
law, or other appropriate information.
Court No. 99-02-00094 Page 3
classic car shows and made available for display in the Peterson Automobile Museum in the Natural
History Museum of Los Angeles County. Pl.’s Resp. to Def.’s Mot. to Dismiss (“Pl.’s Resp. Br.”),
Ex. 1, Pl.’s Ruling Req., at 2.
On November 5, 1998, Customs ruled that the Bentley did not meet the requirements for
classification under HTSUS 9705.00.0090 because “[t]he guidelines of the [Explanatory Notes]
indicate a narrow interpretation of coverage under [the heading]”, and the Bentley did not fit under
the list of samples. Def.’s Br. in Supp. of Mot. to Dismiss, Ex. 1, HQ 961279, at 3.
On February 22, 1999, Plaintiff filed the present action seeking judicial review of Customs’
ruling. Defendant, after answering the complaint, filed the Motion to Dismiss which is now before
the Court.
Discussion
Defendant argues that the Court does not have jurisdiction because Plaintiff has not
demonstrated, as required by 28 U.S.C. § 1581(h), that he would be irreparably harmed unless given
an opportunity to obtain judicial review prior to importation. Generally, “[w]hen a jurisdictional
issue is raised, the burden rests on the plaintiff to prove that jurisdiction exists.” Heartland By-
Products, Inc. v. United States, __CIT__ , 74 F. Supp. 2d 1324, 1330 (1999) (quoting Manufacture
de Machines du Haut-Rhin v. Von Rabb, 6 CIT 60, 62, 569 F. Supp. 877, 880 (1983)) (citation
omitted). Pursuant to 28 U.S.C. § 2639(b), the plaintiff in a § 1581(h) action must prove irreparable
harm by clear and convincing evidence, which means that there must be proof that the harm is highly
probable. See Waits v. Frito-Lay, Inc., 978 F.2d 1093, 1105 (9th Cir. 1992).
Recently, in Heartland By-Products the Court summarized its jurisprudence regarding the
irreparable harm requirement of § 1581(h):
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Irreparable harm is that which “cannot receive reasonable redress in a court of law.”
Manufacture de Machines du Haut-Rhin v. Von Rabb, 6 CIT at 64, 569 F. Supp. at
881-82 (1983) (quoting Black’s Law Dictionary 706-707 (5th ed. 1979)). “In making
this determination, what is critical is not the magnitude of the injury but rather its
immediacy and the inadequacy of future corrective relief.” National Juice Products
v. United States, 10 CIT 48, 53, 628 F. Supp. 978, 984 (1986) (citations omitted).
To fulfill its burden, Plaintiff must “set forth sufficient documentation to support its
allegations in establishing the threat of irreparable harm.” Thyssen Steel Co.,
Southwestern Division of Thyssen, Inc. v. United States, 13 CIT 323, 326, 712 F.
Supp. 202, 204 (1989) (citing 718 Fifth Avenue Corp. v. United States, 7 CIT 195,
198 (1984)).
Heartland By-Products, 74 F. Supp. 2d at 1330. Based on this precedent, Plaintiff must show clear
and convincing evidence of an immediate harm for which there will be no adequate future relief in
order to establish jurisdiction in the case at bar.
Several prior cases of this Court illustrate the requisite standard. In Heartland By-Products,
the Court found a threat of irreparable harm where the plaintiff, an importer of sugar syrup, produced
evidence that a new Customs ruling would destroy its business. 74 F. Supp. 2d at 1330-31.
Specifically, the ruling would have reclassified the plaintiff’s product under a heading with a 7000
percent higher tariff rate, thereby forcing the plaintiff’s customers to seek another supplier. Id. at
1330. Moreover, in American Frozen Food Institute, Inc. v. United States, 18 CIT 565, 855 F. Supp.
388 (1994), the Court found a threat of irreparable harm where the plaintiffs, who were in the
business of packaging and marketing frozen produce, provided evidence that they would incur
tremendous costs in having to destroy old labels and produce new ones to comply with a Treasury
Decision regarding country-of-origin markings. 18 CIT at 570-71, 855 F. Supp. at 393-94. These
costs could not be recovered even if they ultimately prevailed in their case after changing the labels
and importing the goods. Id. In another case involving country-of-origin labeling requirements,
National Juice Products Association v. United States, 10 CIT 48, 628 F. Supp. 978 (1986), the Court
Court No. 99-02-00094 Page 5
found a threat of irreparable harm where the plaintiffs provided evidence that they would suffer
severe business disruption because they could not comply with the new requirements by the required
deadline. 10 CIT at 53-54, 628 F. Supp. at 984-85. Plaintiffs also proved that they would suffer
significant financial loss from having to destroy old labels and produce new ones to achieve
compliance and could not recover these costs even if they ultimately prevailed in their case after
importing the goods. 10 CIT at 54, 628 F. Supp. at 985.
In the present case, Plaintiff alleges that if he is not afforded judicial review prior to
importing the Bentley, he will be subject to “an immediate, unnecessary, and unacceptable risk of
irreparable loss by shipping the unique, rare, and irreplaceable Bentley Blower just to ‘exhaust
administrative remedies.’” Pl.’s Resp. Br. at 17. However, Plaintiff has not produced clear and
convincing evidence that the Bentley will be damaged or destroyed in shipment. Plaintiff has argued
that “ships sink and planes crash,” Pl.’s Resp. Br. at 14, but in order to prove jurisdiction under 28
U.S.C. § 1581(h) Plaintiff must show, as in the cases discussed above, that there is an immediate
threat that the harm will occur, not just an immediate threat that the harm could occur. See National
Juice Products Association, 10 CIT at 53, 628 F. Supp. at 984 (“[W]hat is critical is . . . [the injury’s]
immediacy and the inadequacy of future corrective relief.”).
The present case is also factually distinguishable from those cases where the Court found
irreparable harm in that Plaintiff is not under any contractual obligation to import the Bentley, and
could decide either to keep the car in its present location, or to move it to a different country. As
John L. Shadek, legal counsel to the Trust, states in his affidavit,
[p]art of the considerations in possibly selecting the United States as a situs for the
Trust’s collection includes the treatment by US Customs of the importation of the
consolidated collection of the Trust. It is not worth the Trust’s taking the risk of
irreplaceable and non-compensable loss of a rare antique automobile of significant
Court No. 99-02-00094 Page 6
historical and commercial value simply for the purposes of determining whether US
Customs’ treatment of the Trust’s collection is appropriate to siting the Trust’s
collection in the United States. In other words, it is imprudent for the Trust to
undertake the risk of irreplaceable and non-compensable harm just to determine
Customs’ treatment of the importation as a precondition to determining whether the
United States is an appropriate situs for consolidation of its collection of rare antique
automobiles.
Pl.’s Resp. Br., Ex. 4, Shadek Aff. ¶ 5. The plaintiffs in Heartland By-Products, American Frozen
Food Institute, and National Juice Products Association, supra, did not have an option such as this
because their business contracts obligated them to import their respective goods into the United
States. Thus, in the present case, even if Plaintiff proved that he would suffer actual harm, as
opposed to the risk of harm, by importing the Bentley to obtain judicial review, the harm would not
be imminent because Plaintiff could elect not to import the automobile.
As to the inadequacy of future relief, Plaintiff has provided considerable evidence in the form
of book excerpts and magazine and newspaper articles to support his claim that the Bentley is a
unique automobile, which could not be replaced if it were destroyed. However, Plaintiff has not
cited any evidence to support his claim that the automobile would be of less value if its original
elements were damaged and repaired. Nevertheless, even if Plaintiff proved the inadequacy of future
corrective relief, this alone would not defeat Defendant’s motion to dismiss. In order to prevail,
Plaintiff must show both the immediacy of injury and the inadequacy of future corrective relief. As
stated above, Plaintiff has not provided evidence of an imminent injury. Therefore, the Court does
not have subject matter jurisdiction over this case, and it must be dismissed.
Plaintiff presents two alternative grounds to support the Court’s jurisdiction in the absence
of a showing of irreparable harm. First, Plaintiff argues that the Court has erred as a matter of law
in setting the same requirements for proving irreparable harm in the context of requests for injunctive
Court No. 99-02-00094 Page 7
relief and § 1581(h) actions. Plaintiff notes that where equitable relief is sought, “the ‘irreparable
harm’ requirement functions as a check on unreasonable use or abuse of the exercise of [the Court’s]
inherent powers unrestricted by statute.” Pl.’s Resp. Br. at 18. Plaintiff contrasts this function of
the irreparable harm requirement with its function in a § 1581(h) case, where it “is an element of an
affirmative statutory grant of jurisdiction.” Id. Plaintiff proposes that the proximity of the harm
should not be a factor in a case brought under § 1581(h) because this consideration “has limited
relevance inasmuch as review of rulings on contemplated importations . . . involves anticipated,
prospective activity and because no one’s interests are impinged by the court’s granting relief on a
finding of ‘irreparable harm’ in advance of hearing the merits.” Id. at 19. Plaintiff argues that the
test for irreparable harm under Ҥ 1581(h) should be based first and foremost on whether the harm
involves risk injury [sic] for which a monetary reward cannot be adequate compensation and injury
that cannot receive reasonable redress in a court of law.” Id.
The Court has previously recognized that “[t]he standard for proving irreparable harm [in a
§ 1581(h) case] is essentially identical to that used to determine irreparable injury in cases where
injunctive relief is sought.” 718 Fifth Avenue Corp. v. United States, 7 CIT 195, 196 n. 3 (1984)
(citing Manufacture de Machines du Haut-Rhin v. Von Rabb, 6 CIT 60, 569 F. Supp. 877 (1983)).
Moreover, Congress intended § 1581(h) to provide jurisdiction only under exceptional
circumstances. See Manufacture de Machines du Haut-Rhin, 6 CIT at 63, 569 F. Supp. at 882; H.R.
Rep. No. 96-1235 at 47 (1980) reprinted in 1980 U.S.C.C.A.N. 3729, 3758 (pre-importation judicial
review “is exceptional and is authorized only when the requirements of subsection (h) are met.”).
In this regard, review under § 1581(h) is similar to a grant of equitable relief, which is available only
under extraordinary circumstances. See Wolverine Tube (Canada), Inc. v. United States, __CIT __,
Court No. 99-02-00094 Page 8
36 F. Supp. 2d. 410, 412 (1999). In both instances, irreparable harm is one of the essential factors
for establishing that such exceptional or extraordinary circumstances exist. Compare Wolverine
Tube (Canada), Inc., 36 F. Supp. 2d at 412 with National Juice Products Association, 10 CIT at 51,
628 F. Supp. at 982. Thus, it is appropriate for the Court to use the same standard for proving
irreparable harm in both injunctive relief and § 1581(h) actions.
Plaintiff also argues that the Court can maintain jurisdiction over this case under 28 U.S.C.
§ 1581(i).2 Under normal circumstances, if jurisdiction does not lie under § 1581(h), a plaintiff must
import the merchandise in question, file a protest with Customs regarding the classification decision,
and fully exhaust its administrative remedies. See H.R. Rep. No. 96-1235 at 46 (1980) reprinted in
1980 U.S.C.C.A.N. 3729, 3758. If an issue still remains, the plaintiff can then seek review by this
2
28 U.S.C. § 1581(i) provides, in pertinent part, that
[i]n 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) revenues 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.
Court No. 99-02-00094 Page 9
Court pursuant to 28 U.S.C. § 1581(a).3 The Court has previously stated that “section 1581(i) cannot
be used to circumvent the procedures set forth by section 1581(a).” Manufacture de Machines du
Haut-Rhin, 6 CIT 60, 65, 569 F. Supp. 877, 882 (citing United States v. Uniroyal, 69 CCPA 179,
687 F.2d 467 (1982)). Furthermore, in Lowa, Ltd. v. United States, 5 CIT 81, 561 F. Supp. 441(1983), aff’d, 724 F.2d 121 (Fed. Cir. 1984), the Court stated
this court has subject matter jurisdiction under section 1581(i) of a cause of action,
which otherwise would be within section 1581(a), only when the relief available
under section 1581(a) is manifestly inadequate or when necessary, because of special
circumstances, to avoid extraordinary and unjustified delays caused by the exhaustion
of administrative remedies.
5 CIT at 88, 561 F. Supp. at 447. See Manufacture de Machines du Haut-Rhin, 6 CIT at 65, 569 F.
Supp. at 882-83; United States Sugar Cane Refiners’ Association v. Block, 69 CCPA 172, 175, 683
F.2d 399, 402 (1982). In the present case, Plaintiff claims that relief under § 1581(a) is inadequate
because the Trust may wish to import other classic automobiles, and it is likely that the classification
of these automobiles will have to be reviewed on a case by case basis, resulting in “extraordinary and
unjustified delays.” Pl.’s Reply Br. at 19.
The Court notes that, as a procedural matter, § 1581(h) is the only jurisdictional basis alleged
in the complaint, see Compl. ¶ 2, and Plaintiff has not moved to amend the complaint and include
§ 1581(i) as an alternative basis for jurisdiction. Substantively, the present case involves only one
automobile, the Bentley. See Compl. ¶ 1. Although Plaintiff may import other automobiles in the
future, that possibility is only speculative at this point, and not at issue in this action. Thus, the
prospective importation of other automobiles in Plaintiff’s collection is irrelevant to the
3
28 U.S.C. § 1581(a) provides that “[t]he 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.”
Court No. 99-02-00094 Page 10
determination of whether § 1581(a) provides adequate relief in the matter presently before the Court.
Plaintiff has not presented any evidence which suggests that proceeding under § 1581(a) is
“manifestly inadequate” or will cause “extraordinary and unjustified delays” with regard to
determining the correct classification of the Bentley. Therefore, there is no basis for jurisdiction
under § 1581(i).
Conclusion
For the foregoing reasons, Defendant’s Motion to Dismiss is granted.
So ordered.
_____________________________________
R. KENTON MUSGRAVE, JUDGE
Dated: March 27, 2000
New York, New York