The year in review: 28 U.S.C. s. 1581(a) decisions in 2007 by the CIT and others.

Author:Sandler, Gilbert Lee
Position:US Court of International Trade
 
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  1. INTRODUCTION

    The United States Court of International Trade ("CIT") is the only court of its kind in the federal judicial system. Like other Article III courts, it is endowed with all of the powers of the United States federal district courts. However unlike the other federal district courts, it has specific, limited, and exclusive jurisdiction to hear certain categories of international trade and customs disputes arising out of the customs and trade laws of the United States. The technical and policy issues arising under United States international trade laws often can only be litigated in the CIT. Similarly, appeals of the CIT decisions are lodged with another one-of-kind federal court with exclusive, nationwide jurisdiction: the United States Court of Appeals for the Federal Circuit ("CAFC" or "Federal Circuit").

    In this commentary, we analyze the substantive, procedural, and jurisdictional issues decided by the CIT in 2007 (and appellate court decisions issued on those cases prior to the writing of this article) in cases arising under the CIT's exclusive jurisdiction as set forth in 28 U.S.C. [section] 1581 (a). (1) Section 1581 (a) grants the court jurisdiction to hear actions brought against the United States to challenge United States Customs and Border Protection ("CBP" or "Customs") decisions to deny administrative protests filed under 19 U.S.C. [section] 1515. (2) A protest contests certain actions by CBP that fall into seven defined categories of decisionmaking affecting imported merchandise. These categories include the appraised value, tariff classification, rate and amount of duty, the assessment of all charges and exactions within the jurisdiction of the Secretary of the Treasury, the liquidation or reliquidation of an entry, the exclusion of merchandise from entry, and the refusal to pay drawback claims. Upon denial of a protest by a CBP officer, an importer (or other party permitted under the Customs regulations) (3) has 180 days to commence an action in the CIT challenging the denial by CBP. (4) To successfully commence an action, the prospective plaintiff must exhaust administrative remedies prior to filing a summons, which requires filing a timely protest, receiving notification that the protest was denied or deemed denied by operation of law, and paying all Customs' duties, taxes and fees assessed upon liquidation of the entry.

  2. 2007 CIT DECISIONS IN PERSPECTIVE

    This article will analyze the substantive decisions by the Court, but it is also instructive to measure the practical concerns of practitioners and litigants about the nature of the court's handling of cases. Is the court's workload primarily in its traditional jurisdictional area of deciding challenges to Customs protest decisions ("[section] 1581 (a) jurisdiction") or are its decisions likely to be reversed on appeal or rehearing? The dominant work of the court in 2007 was not in cases arising under its [section] 1581 (a) jurisdiction. The CIT issued 189 slip opinions in that year, but only twenty-nine of those involved cases falling under the court's [section] 1581(a) jurisdiction. The predominant category of administrative protest decisions challenged in those 29 opinions was the tariff rate classification: seventeen opinions (both dispositive and non-dispositive) involved the classification of imported merchandise. In addition to the classification opinions, the CIT issued [section] 1581 (a) jurisdiction decisions in 2007 on a variety of issues including drawback of import duties, the costs of repairs subject to duty on imported merchandise, applications for attorneys' fees under the Equal Access to Justice Act ("EAJA") and the impact of non-compliance with customs regulations on the court's jurisdiction.

    Issues of importance decided by the court often transcend the classification, appraisement, drawback, or other issue raised by the protestant. (5) Some of the cases selected for discussion in this article clarify the responsibilities of the importer and the agency with respect to certain aspects of the customs laws, shedding light on specific provisions which have not yet been addressed in the court's twenty-eight-year history. (6) Issues addressed by the court in the previous calendar year include the scope of the court's jurisdiction under [section] 1581(a) to review certain claims subject to a protest and the tariff classification of various imported merchandise.

    A statistical review of the decisions issued under the court's [section] 1581 (a) jurisdiction adds some perspective to the individual case analyses. The issues in litigation were largely legal and not factual, and therefore, most cases were decided on motions, with or without oral argument, and without the holding of an evidentiary hearing or trial. Fourteen cases were decided on the basis of motions for summary judgment. The court heard four [section] 1581 (a) cases upon oral argument, with the government as defendant prevailing in all four cases. Three oral arguments dealt with classification issues and one oral argument involved an EAJA application. (7) Two cases were adjudicated after a trial in favor of the government as defendant.

    Practitioners and their clients receiving unfavorable decisions routinely puzzle over whether a motion for rehearing in the trial court has a reasonable chance of success, or whether the appellate court is likely to reverse a decision of the CIT in its area of traditional expertise. Regarding rehearing motions, 2007 contributed no precedents for losing plaintiffs but provided new examples of the difficulties faced by a losing government party. Three motions for reconsideration were brought by the government as defendant, all of which were denied. In one motion, the government contested the jurisdiction of the court to preside over the disputed subject matter, (8) in another, it protested the court's method of analysis in a classification case, (9) and in the third motion, the government requested that the court reconsider its order directing the parties to prepare for trial on the merits because there was a genuine issue of material fact. (10)

    Slightly more encouragement was given to losing parties by the appellate court, although the only reversal involved a remand to the CIT rather than the substitution of a new appellate decision On the merits in place of that of the CIT. Appeals decisions were issued prior to the writing of this article in four of the CIT 1581 (a) jurisdiction decisions, three of which involved tariff classification. The CAFC affirmed three decisions and reversed and remanded another case back to the CIT. (11)

    Appellate decisions were issued within a year of the CIT decision, a time regarded as very reasonable by the authors of this article. In both Agfa Corp. v. United States (12) and in Deckers Corp v. United States, (13) ten months passed between the issuance of the CIT decision and the issuance of the Federal Circuit's appellate decision. In Airflow Technologies., Inc. v. United States, one year passed after the CIT's decision until the Federal Circuit issued its decision reversing that of the CIT. (14)

    Decision-making was spread among virtually all members of the court. Twelve of the thirteen judges, and all four of the senior judges, issued opinions in [section] 1581 (a) cases. Judge Ridgway issued the greatest number of decisions concerning the court's jurisdiction under [section] 1581(a), with four cases on classification and one on drawback. (15) Judge Wallach issued four decisions in [section] 1581(a) cases concerning classification, a motion for rehearing and an EAJA application for attorneys' fees. (16) Judge Gordon did not issue any decisions concerning [section] 1581(a) cases in 2007.

    Of twenty-three dispositive (a) jurisdiction cases decided in 2007, seven cases were decided in plaintiffs' favor, at least in part. Of sixteen classification cases, five plaintiffs successfully challenged CBP's classification of its imported merchandise. (17)

  3. THE CASES

    1. Challenges to the Court's Jurisdiction Under 28 U.S.C. [section] 1581(a)

      1. Scope of the Court's Jurisdiction Revisited on a Motion for Reconsideration and Rehearing

      The court continued to address the longstanding principle that there must be strict adherence to jurisdictional requirements in order to bring litigation against the government where, as under [section] 1581 (a), there is a waiver of sovereign immunity. The CIT addressed a challenge to that principle in Avecia, Inc. v. United States, (18) in which the United States as defendant moved for reconsideration of the court's earlier decision in the same matter (19) claiming that the underlying administrative protest was not filed at the port required under Customs regulations. The government argued that the court did not possess jurisdiction over three entries subject to a denied protest because the protest was filed with the port director of Philadelphia and Philadelphia was not the port of entry.

      In its earlier opinion, the court held that it did indeed possess jurisdiction since nothing in the relevant statutes or regulations (19 U.S.C. [section][section] 1514(c) (1) and 1515(a), nor 19 C.F.R. [section] 174.12) (20) precluded a port director from deciding a protest with respect to entries from a different port, especially in light of a CBP ruling relaxing the place of filing requirement for a protest. (21) The court held that the place of filing is not a statutory requirement to invoke the court's jurisdiction to review decisions on protests under 19 U.S.C. [section] 1514, and that the regulatory requirements for place-of-filing (19 C.F.R. [section] 174.12(d)) do not control the court's jurisdiction, at least in this case.

      The court's decision on rehearing suggests two possible interpretations affecting future protests filed at an office other than the one required under regulation. Language in the decision suggests that such a place-of-filing requirement for...

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