Global Tropical Imports and Exports LLC v. Zinke

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
GLOBAL TROPICAL IMPORTS AND
EXPORTS LLC,
Plaintiff,
Case No. 1:18-cv-01341 (TNM)
v.
DAVID BERNHARDT, in his official
capacity as Acting United States Secretary
of the Interior 1 et al.,
Defendants.
MEMORANDUM OPINION
In 2015, Global Tropical Imports and Exports (“Global”) imported three-horned
chameleons, black-throated monitors, spiny-tailed lizards, and other reptiles from Tanzania.
Federal regulations require valid permits to import these reptiles. One of Global’s permits was
invalid, so the U.S. Department of the Interior (the “Department”) directed the company to pay a
$15,000 penalty. Global now challenges that fine. Because the Court finds that the decision to
fine Global complied with applicable laws, it will grant the Defendants summary judgment.
I.
A.
The Convention on International Trade in Endangered Species of Wild Fauna and Flora
(“CITES”) is a multilateral treaty that seeks to protect plants and animals at risk of extinction.
1
Mr. Bernhardt assumed the role of Acting Secretary of the Interior upon the resignation of then-
Secretary Ryan Zinke on January 2, 2019. He therefore automatically replaced Mr. Zinke as a named
defendant per Federal Rule of Civil Procedure 25(d).
See 27 U.S.T. 1087 (1973). The United States is a party to the treaty, and Congress has
incorporated it into domestic law through the Endangered Species Act (the “ESA”). See 16
U.S.C. § 1538(c)(1). The ESA makes it unlawful for “any person subject to the jurisdiction of
the United States to engage in any trade in any specimens contrary to the provisions of
the Convention.” 16 U.S.C. § 1538(c).
The ESA also authorizes the imposition of fines for violating its provisions or related
regulations:
Any person who knowingly violates, and any person engaged in business as an
importer or exporter of fish, wildlife, or plants who violates, any provision of this
chapter, or . . . any regulation issued in order to implement [subsections of the
ESA] may be assessed a civil penalty by the Secretary of not more than $25,000
for each violation.
16 U.S.C. § 1540(a)(1). Based on this provision and 16 U.S.C. § 1538(c), the Department may
impose a fine for CITES violations.
The treaty categorizes species into three appendices. Appendix I covers plants and
animals threatened with extinction. CITES Art. II, 27 U.S.T. at 1092. Appendix II includes
species that may soon become threatened with extinction absent strict regulations. Id. Appendix
III covers species that member nations identify as requiring protection from exploitation. Id.
The reptiles Global imported are Appendix II animals. J.A. at 258, ECF No. 24-1. 2
The import of any Appendix II species “require[s] the prior presentation of either an
export permit or a re-export certificate.” CITES Art. IV, 27 U.S.T. at 1096. See also 50 C.F.R.
§ 23.20(e) (incorporating the same requirement). An export permit “is valid only when it
contains . . . [t]he applicant’s signature if the CITES document includes a place for it.” 50
C.F.R. § 23.23(c). See also CITES Art. VI, 27 U.S.T. at 1098 (“An export permit shall contain
2
Citations to the Joint Appendix reference the Bates numbers located on the bottom of each page.
2
the information specified in the model set forth in Appendix IV”); CITES App. IV, 27 U.S.T. at
1144 (model export permit requiring the signature of the applicant for the permit).
B.
In 2015, Global imported nearly 200 reptiles from Majoka Venom Supply (“Majoka”).
J.A. at 257-58; 301. The U.S. Fish and Wildlife Service, an agency within the Department,
declined to clear the shipment of reptiles when it arrived at the airport because “one of the
permits (#28981) was not signed by the exporter, as required by 50 C.F.R. [§] 23.23(c).” J.A. at
258. The agency found that, because of this missing signature, Global had imported the reptiles
“with an invalid permit and in violation of CITES.” Id. It noted that the missing signature
violated 50 C.F.R. § 23.23(c) (requiring an applicant’s signature where a CITES document has a
place for it) and 16 U.S.C. § 1538(c)(1) (making it unlawful to violate the treaty). Id.
Based on this violation, the agency issued a Notice of Assessment, fining Global
$15,000. J.A. at 228. The agency explained that “[c]ommercial respondents, such as [Global],
are held to a strict liability standard under the ESA. Therefore, whether [Global] knew of or
intended to violate the ESA and CITES are immaterial.” J.A. at 226. It added that Global “has
extensive experience in this area,” and that the firm should therefore “know that it is its
responsibility to know the law and properly oversee its import.” J.A. at 229. Global “should
also be well-versed in the CITES and the ESA,” the agency reasoned, “by way of its numerous
(49) prior violations.” Id. These prior violations showed “not only culpability but a refusal to
abide by serious, longstanding wildlife laws.” Id.
Global appealed this decision to the Department’s Office of Hearings and Appeals. See
J.A. at 182. The company noted that it “does not dispute there is a missing ‘applicant’ signature
on CITES permit 28981.” J.A. at 187. Instead, it argued that Majoka was the “applicant,” and
3
that the agency had found Global liable for Majoka’s mistake by relying impermissibly on a
vicarious liability theory. Id.
An Administrative Law Judge (“ALJ”) rejected this argument. He found that the ESA
makes it “quite clear that a commercial violator is held to a strict liability standard for any and all
violations, notwithstanding their source (in this case Majoka).” J.A. at 46. He also found that
Global’s “violation is made clear by another controlling regulation.” Id. This regulation, 50
C.F.R. § 13.50, states that “any person holding a permit under this subchapter B assumes all
liability and responsibility for the conduct of any activity conducted under the authority of such
permit.” The ALJ noted that “[i]t is Global that ‘holds’ the permit. Thus, it is clear that under
this regulation, Global assumes all liability for the invalid permit and for the failure of the
exporter to properly sign the subject permit.” J.A. at 47.
Global appealed again. The Department’s Ad Hoc Board of Appeals upheld the ALJ’s
decision. See J.A. at 7. It found that “the ALJ’s legal conclusion is evident in the applicable
statute and regulations.” J.A. at 6. And it rejected Global’s “vicarious liability” argument,
finding instead that the applicable laws imposed strict liability on Global for the invalid permit.
Id.
Exhausting its administrative remedies, Global filed this suit against the Department’s
Secretary and the U.S. Fish and Wildlife Service. The company argues that “as the importer it
cannot be held liable for the exporter’s error.” Am. Compl. 4, ECF No. 5. Because “there is no
vicarious liability under the [applicable] statute [or] regulation,” it contends, the Department’s
decision to impose a fine violated the Administrative Procedure Act (“APA”) and “Global’s
substantive due process right and privilege.” Id. at 4-6.
4
The Department maintains that the imposition of a fine was proper. Defs.’ Cross-Mot.
for Summ. J. (“Defs.’ Cross-Mot.”) at 1, ECF No. 18. It argues that the ESA “imposes strict
liability on commercial importers and exporters that violate CITES,” that Global is a
“commercial importer,” and that it “presented an invalid permit with its shipment of CITES-
protected species.” Id. Both parties have moved for summary judgment. 3
II.
Courts must “hold unlawful and set aside agency action, findings, and conclusions” that
are “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5
U.S.C. § 706(2). Courts must also set aside final agency actions that are “contrary to a
constitutional right,” “in excess of statutory jurisdiction,” or “unsupported by substantial
evidence.” Id.
The scope of this review is “narrow and a court is not to substitute its judgment for that of
the agency.” Motor Vehicle Mfrs. Ass’n v. State Farm Mutual Auto. Ins. Co., 463 U.S. 29, 43
(1983). Rather, it must determine whether the agency “examine[d] the relevant data and
articulate[d] a satisfactory explanation for its action including a ‘rational connection between the
facts found and the choice made.’” Id. (quoting Burlington Truck Lines v. United States, 371
U.S. 156, 168 (1962)). An agency’s decision is arbitrary and capricious “if the agency has relied
on factors which Congress has not intended it to consider, entirely failed to consider an important
aspect of the problem, offered an explanation for its decision that runs counter to the evidence
before the agency, or is so implausible that it could not be ascribed to a difference in view or the
product of agency expertise.” Id.
3
The Court has federal question jurisdiction over this case under 28 U.S.C. § 1331.
5
As the “party challenging an agency’s action as arbitrary and capricious,” Global “bears
the burden of proof.” Lomak Petroleum, Inc. v. Fed. Energy Reg. Comm’n, 206 F.3d 1193, 1198
(D.C. Cir. 2000). The arbitrary and capricious review standard is a “[h]ighly deferential” one
that “presumes the validity of agency action.” Hagelin v. Fed. Election Comm’n, 411 F.3d 237,
242 (D.C. Cir. 2005). It is “not enough for the agency decision to be incorrect; so long as it has
some rational basis, the court is bound to uphold the decision.” New Life Evangelistic Ctr. v.
Sebelius, 753 F. Supp. 2d 103, 113 (D.D.C. 2010).
In “their application to the requirement of factual support[,] the substantial evidence test
and the arbitrary or capricious test are one and the same.” Butte County v. Hogen, 613 F.3d 190,
194 (D.C. Cir. 2010). So an agency decision “may be supported by substantial evidence even
though a plausible alternative interpretation of the evidence would support a contrary view.”
Morall v. DEA, 412 F.3d 165, 176 (D.C. Cir. 2005) (citation omitted). Courts may reverse an
agency action only “when the record is so compelling that no reasonable factfinder could fail to
find the contrary.” Orion Reserves Ltd. P’ship v. Salazar, 553 F.3d 697, 704 (D.C. Cir. 2009).
Summary judgment “serves as the mechanism for deciding, as a matter of law, whether
the agency action is supported by the administrative record and [is] otherwise consistent with the
APA standard of review.” Alston v. Lew, 950 F. Supp. 2d 140, 143 (D.D.C. 2013).
III.
This case turns on a single question: does the law impose strict liability on Global for its
failure to present a valid permit for the lizards and chameleons it imported? Unfortunately for
Global, the answer—yes—is hidden in plain sight.
Consider again the ESA. The Court’s inquiry “begins with the statutory text” and “ends
there as well if the text is unambiguous.” BedRoc Ltd., LLC v. United States, 541 U.S. 176, 183
6
(2004). The ESA states that “[a]ny person who knowingly violates, and any person engaged in
business as an importer or exporter of fish, wildlife, or plants who violates, any provision of this
chapter . . . may be assessed a civil penalty.” 16 U.S.C. § 1540(a)(1) (emphasis added). By its
plain terms, the ESA authorizes fines for two types of transgressors: (1) anyone who knowingly
violates the law, and (2) commercial importers and exporters who violate the law, regardless of
their intent. 4 So while others may slither out of liability for violations due to ignorance or
inadvertence, commercial importers and exporters may not.
Global concedes that it is a commercial importer. See, e.g., Pl.’s Mot. for Summ. J.
(“Pl.’s Mot.”) at 4, ECF No. 17-2 (“Global’s legal position is that being the importer, at arm’s
length in the business transaction . . .); Pl.’s Opp. to Defs.’ Cross-Mot. (“Pl.’s Opp.”) at 2, ECF
No. 21 (“There is no dispute that Global is the importer and Majoka is the exporter; significantly,
these are two (2) distinct business entities.”). So if the firm violated the ESA, it was strictly
liable for the violation, and the Department’s decision to impose a fine was appropriate.
By failing to present a valid permit, Global did violate the ESA. Once more, the plain
terms of the applicable laws are instructive. The ESA makes a violation of a CITES provision a
violation of federal law. 16 U.S.C. § 1538(c). CITES mandates that importing an Appendix II
animal “require[s] the prior presentation” of an export permit. CITES Art. IV, 27 U.S.T. at
1096; 50 C.F.R. § 23.20(e). A permit is “valid only when it contains . . . [t]he applicant’s
signature if the CITES document includes a place for it.” 50 C.F.R. § 23.23(c). And “any
person holding a permit under this subchapter B assumes all liability and responsibility for the
4
Because the text of the statute is clear, the Court need not consider other indicia of Congress’s intent.
See Lamie v. U.S. Trustee, 540 U.S. 526, 534 (2004) (“When the statute’s language is plain, the sole
function of the courts—at least where the disposition required by the text is not absurd—is to enforce it
according to its terms.”) (cleaned up).
7
conduct of any activity conducted under the authority of such permit.” 50 C.F.R. § 13.50. 5
Global does not argue that Permit #28981 was valid. See, e.g., Pl.’s Mot. at 4 (admitting
that “one (1) CITES form [was] unsigned”). When it tried to import the reptiles without a valid
permit, the company violated the law. And because Global was strictly liable for this violation,
the Department’s decision to impose a fine was permissible.
Global’s arguments to the contrary fail to tip the scales in its favor. 6 Common to each of
these contentions is Global’s mistaken belief that the Department held the company liable for
Majoka’s failure to sign the permit. It did not. Rather, the Department found that Global
violated the law when it presented an invalid permit while seeking to import reptiles.
The company asserts, for example, that it “was not the party responsible to sign the
CITES form” and “was not responsible for reviewing or approving the exporting from
Tanzania.” Pl.’s Mot. at 4. True, Majoka was supposed to sign the permit and failed to do so.
See J.A. at 239. But, per the unambiguous dictates of 50 C.F.R. § 13.50, Global bore the
ultimate responsibility of ensuring that it presented a valid permit for importing the reptiles.
Global’s claims are analogous to an argument heard and rejected in traffic courts across
the country. In many states, speeding is a strict liability offense. See, e.g., State v. Brown, 318
N.W.2d 370 (Wis. 1982); People v. Caddy, 540 P.2d 1089 (Colo. 1975). When caught speeding,
drivers often blame unintended acceleration caused by their cruise control devices, suggesting
that the law should not hold them responsible for a design flaw by the car manufacturer. See,
5
Subchapter B includes the Department’s regulations that govern, among other things, permit procedures
for the “exportation and importation of wildlife and plants.” See 50 C.F.R. §§ 10.1 – 24.12.
6
The Court rejects Global’s argument that the Department’s briefing violated Local Civil Rule 7.
Global suggests that the Department failed to file a statement of material facts. Pl.’s Opp. at 1-2. But no
such statement is required in cases, like this one, in which judicial review is based solely on the
administrative record. LCvR 7(h)(2).
8
e.g., State v. Baker 571 P.2d 65, (Kan. 1977); State v. Packin, 257 A.2d 120 (N.J. Super. Ct.
App. Div. 1969). But as one court observed, a driver “who entrusts his car to the control of an
automatic device is ‘driving’ the vehicle and is no less responsible for its operation if the device
fails to perform a function which under the law he is required to perform.” Packin, 257 A.2d at
121.
As the importer, Global was “driving” the business transaction. And it was strictly liable
for any resulting legal violations. Because it sought to import animals covered by CITES into
the United States, the company was required by law to present a valid permit. See 50 C.F.R.
§ 23.20(e). That it was Majoka’s action that rendered the permit invalid is irrelevant. Global
was no less responsible for the permit than if the company had itself made an error on the form.
See 50 C.F.R. § 13.50.
Global also argues that the Department inappropriately relied on a vicarious liability
theory to hold the company liable for Majoka’s actions. Pl.’s Mot. at 6. Not so. As Global
notes, vicarious liability is liability that a “supervisory party bears for actionable conduct of a
subordinate or associate because of the relationship between the two parties.” Pl.’s Opp. at 5
(quoting Black’s Law Dictionary 927 (7th ed. 1999)). Vicarious liability rules ordinarily require
a principal-agent or employer-employee relationship. See Meyer v. Holley, 537 U.S. 280, 285
(2003).
The Department did not find or even allege such a relationship. Nor did it suggest that
Global was vicariously liable for another party’s violation of the applicable laws. For instance,
the Notice of Assessment states that “[c]ommercial respondents, such as Respondent, are held to
a strict liability standard under the ESA. . . . Therefore, Respondent is liable.” J.A. 226
(emphasis added). Similarly, the ALJ noted that it is “Global that ‘holds’ the permit” and
9
“[c]onsequently, by regulatory imputation, the violator for this failure is not Majorca [sic];
rather, the legal violator is Global.” J.A. 47. In other words, because it held the export permit,
“Global became strictly liable for the ensuing violation.” J.A. 47.
Next, the company argues that the Court should not use “judicial gap-findings” to read
into the ESA a vicarious liability provision. Pl.’s Mot. at 9. While the ESA does not specifically
address the Department’s ability to impose fines based on vicarious liability, it is unambiguous
on strict liability. Thus, the Court need not read any language into the statute to confirm that the
Department’s decision was permissible and sufficiently justified.
The rest of Global’s arguments fail for the same reasons. It claims that the Department
violated the company’s “substantive due process right and privilege by imputing a legal wrong
committed by Majoka and assessing a civil penalty upon Global.” Compl. 5 (alleging violations
of the Constitution and of 5 U.S.C. § 706(2)(B)). It also suggests that the fine was “unsupported
by substantial evidence” and “unwarranted by the facts.” Compl. 6 (alleging violations of 5
U.S.C. § 706(2)(E-F).
But again, nothing in the record supports the contention that the Department imposed
vicarious liability on the firm. Instead, the evidence shows that the Department faulted Global
for its own act—trying to import the reptiles without a valid form. The ESA and the
Department’s regulations authorized this finding. And in assessing the fine, the Department
considered the CITES permit, the applicable law, and Global’s arguments. See, e.g., J.A. 224-
240. Its decision was appropriate.
Finally, Global “requests joinder of Majoka under Fed. R. Civ. P. 19(a)(1)(B)(ii).” Pl.’s
Mot. at 12. The company believes that since Majoka was the “applicant” of the permit, and since
it was the party that failed to sign the form, it is a required party in the litigation. Id. at 12-13.
10
This argument misunderstands Rule 19. That rule would require adding Majoka to the
case only if Majoka’s absence would create a “substantial risk” that Global would incur
“inconsistent obligations” because of Majoka’s interest in the case. Fed. R. Civ. P. 19(a). But
Majoka has no interest at stake. As explained above, the Department did not fine Global because
of Majoka’s failure to sign the permit. It imposed the penalty because of Global’s failure to
present a valid permit at the airport. More, Global is the plaintiff. As the master of its
Complaint, Global could have named Majoka as a co-defendant if it so wished. Rule 19 is not
the appropriate tool for arguing that the Department ought to have assessed its penalty against
Majoka.
IV.
In sum, the Department’s decision to impose a fine on Global was reasonable,
sufficiently explained, and permissible under applicable law. For all these reasons, the
Defendants’ Cross-Motion for Summary Judgment will be granted. 7 A separate order will issue.
2019.02.15
17:48:10 -05'00'
Dated: February 15, 2019 TREVOR N. McFADDEN, U.S.D.J.
7
Although they filed no counterclaims, the Defendants ask the Court to order Global to pay the civil
penalty and any applicable interest. See Defs.’ Cross-Mot. at 13. The Court declines to do so. The
Department’s procedures for assessing civil penalties are set forth in 50 C.F.R §§ 11.11-11.17. These
regulations provide that if Global fails to pay the penalty within 20 days after the Department’s decision
becomes effective, “the Solicitor of the Department may request the Attorney General to institute a civil
action in the U.S. District Court to collect the penalty.” 50 C.F.R. § 11.17. An order from this Court
before such a civil action is instituted would circumvent the Department’s regulations.
11