Essex Mfg., Inc. v. U.S.

• Citation: 264 F.Supp.2d 1285
• Decision Date: 29 April 2003
• Docket Number: Court No. 01-00024.,Slip Op. 03-46.
• Parties: ESSEX MANUFACTURING, INC., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

264 F.Supp.2d 1285

ESSEX MANUFACTURING, INC., Plaintiff, v. UNITED STATES, Defendant.

Slip Op. 03-46.

Court No. 01-00024.

United States Court of International Trade.

April 29, 2003.

Neville Peterson LLP (John M. Peterson and Maria E. Celis), Washington, DC, for Plaintiff.

Robert D. McCallum, Jr., Assistant Attorney General, Atlanta, GA, John J. Mahon, Acting Attorney-in-Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, United States Department of Justice (Jack S. Rockafellow), Sheryl A. French, Office of Assistant Chief Counsel, International Trade Litigation, United States Customs Service, of counsel, New York City, for Defendant.

OPINION

RIDGWAY, Judge.

This action challenging a Notice to Redeliver merchandise is the final chapter in a saga that highlights the risks and dangers that attend the many opportunities inherent in doing business in today's global economy. It is a saga of (in the words of Defendant) "an importation gone wrong," in which (in the words of Plaintiff) "a secret, and still mysterious, documentation arrangement" between customs officials at home and abroad plays a central role; a saga set against a backdrop of international intrigue and events a half world away, revolving around a transaction tainted with the whiff of double-dealing, fraud, forgery and corruption, and yet spiced with exposure to the unique customs and traditions of another culture-in this case, the acclaimed hospitality of Mongolia, where guests are entertained with yak hunting and toasted with airag, the intoxicating national beverage made of fermented mares' milk. See Memorandum of Points and Authorities in Opposition to Defendant's Cross-Motion for Summary Judgment and in Support of Plaintiff's Motion for Summary Judgment ("Pl.'s Reply Brief) at 3; Memorandum in Support of Defendant's Cross-Motion for Summary Judgment and Opposition to Plaintiff's Motion for Summary Judgment ("Def.'s Brief) at 1; Transcript of Oral Argument (Oct. 17, 2002) ("Tr.") at 67-68 (alluding to the experiences of Plaintiffs representatives in the company of Mongolian Customs officials).

Although the setting of this dispute may seem picturesque, the legal issues presented could not be more practical: The timeliness and sufficiency of a Notice to Redeliver challenging the country of origin of a shipment of jackets imported into the United States by plaintiff Essex Manufacturing, Inc. ("Essex"). At the time of the merchandise was represented as made in Mongolia, and thus exempt from textile quotas or other import restrictions. The jackets were conditionally released to Essex by the U.S. Customs Service ("Customs").¹ But Customs soon learned that the Mongolian Certificate of Origin submitted for the goods could not be verified, and-indeed-appeared to be fraudulent. Customs demanded redelivery of the goods; but, unbeknownst to Customs, the merchandise had already been shipped to Essex's customer, and was therefore no longer available for redelivery. After struggling in vain for several months in an attempt to establish the validity of the Certificate of Origin and resolve Customs' concerns, Essex filed a protest disputing the Notice to Redeliver.²

In this action, Essex challenges Customs' decision denying Essex's protest. Jurisdiction lies under 28 U.S.C. § 1581(a) (2000). Denials of protests are subject to de novo review. 19 U.S.C. § 2640(a)(1) (2000). Now pending before the Court are the parties' cross-motions for summary judgment. For the reasons set forth below, Plaintiffs Motion for Summary Judgment is denied, and Defendant's Cross-Motion is granted.

I. Background

Although the conclusion below actually turns on a handful of relatively straightforward facts, a more complete narrative of the history of the parties' dealings sheds light on their many nuanced arguments.

On July 31, 2000, Essex entered a shipment of more than 43,500 ladies' 100% nylon packaway jackets into the United States through the Port of Los Angeles. The entry documents initially filed with Customs did not include a Form A Certificate of Origin. However, the Multiple Country Declaration which was submitted indicated that the jackets were produced in Mongolia by processes of "cutting, sewing, buttoning, ironing, [and] packing," using 100% nylon material which had originated in China. See Plaintiffs Statement of Material Facts As To Which No Genuine Issue Exists ("Pl.'s Statement of Facts") ¶¶ 1-2, Exh. A; Defendant's Response to Plaintiff's Statement of Material Facts ("Def.'s Response to Pl.'s Statement of Facts") ¶¶ 1-2; Defendant's Statement of Undisputed Material Facts ("Def.'s Statement of Facts") ¶ 12; Plaintiff's Response to Defendant's Statement of Material Facts ("Pl.'s Response to Def.'s Statement of Facts") ¶ 12.

Other documents included with the entry papers—the Entry Summary, the Invoice, the Packing List, and the Combined Transport Bill of Lading—also identified Mongolia as the merchandise's country of origin. But the Multiple Country Declaration was signed by a shipping clerk at a company in Hong Kong (a special administrative region of China); the Invoice was signed on behalf of and on the letterhead of the same Hong Kong company; and the Packing List was on the company's letterhead as well. No company with a Mongolian address was identified as the manufacturer of the jackets. Similarly, the Combined Transport Bill of Lading indicated, inter alia, that the place of receipt and the port of loading for the jackets was a city in China, and that the port of discharge was Long Beach, California; but it did not identify any place in Mongolia where the shipment was said to have originated. See Def.'s Statement of Facts ¶¶ 7-10; Pl.'s Response to Def.'s Statement of Facts ¶¶ 7-10; Declaration of Bernice J. Conley ("Conley Decl."), Exh. 1.

At the time, the types of nylon jackets here at issue were not subject to textile quotas or other import restrictions if they were assembled in Mongolia. But quota restraints did apply to such merchandise of Chinese origin, providing an incentive to transship Chinese goods through Mongolia and submit false documents claiming that the goods were of Mongolian origin. See Pl.'s Statement of Facts ¶¶ 1-2; Def.'s Response to Pl.'s Statement of Facts .¶¶ 1-2; Def.'s Statement of Facts ¶ 5; Pl.'s Response to Def.'s Statement of Facts ¶ 5. While an importer may be faultless in such situations, its suppliers may not.³

To combat fraud, Mongolian Customs requires that all exports of apparel from that country be covered by a Certificate of Origin, which is issued by the Mongolian Chamber of Commerce and Industry ("MCCI"), and then registered and cleared by Mongolian Customs prior to exportation. Given the ease with which a wide variety of official-looking forms can be generated from any home computer, it would be a relatively simple matter for an unscrupulous overseas supplier to generate a Certificate of Origin and other business forms to give the appearance of Mongolian origin. To guard against such counterfeiting, Mongolian Customs inserts secret marks in the Certificates of Origin that are properly registered and cleared. Those secret marks—the location of which is changed from time to time—enable customs officials in Mongolia and the U.S. to identify false Certificates, protecting a wide range of business and public interests.⁴ Pursuant to a standing arrangement with authorities in that country, U.S. Customs now relies on Certificates of Origin as the primary and most reliable means of verifying the country of origin of textiles purporting to be from Mongolia. See Conley Decl. ¶¶ 8-9; Declaration of Susan Thomas ("Thomas Decl.") ¶¶ 5-6; Def.'s Statement of Facts ¶¶ 11; Pl.'s Response to Def.'s Statement of Facts ¶ 11.

Immediately after Essex filed the entry papers on July 31, 2000, Customs released the goods here at issue.⁵ Essex then moved the merchandise to a warehouse, and inspected it. See Pl.'s Statement of Facts ¶ 3; Def.'s Response to Pl.'s Statement of Facts ¶ 3; Def.'s Statement of Facts ¶ 2; Pl.'s Response to Def.'s Statement of Facts ¶ 2.

In the course of a routine "post entry" review of the entry papers conducted on August 16, 2000, Customs realized that the documents that Essex had submitted did not include a Mongolian Certificate of Origin. Customs therefore phoned Essex's broker. In that conversation:

Customs advised Essex that there was no Certificate of Origin with the entry papers, that Customs was requesting one, and that a redelivery notice (Customs Form CF 4647) was being issued. Essex was also advised that the importer should hold the shipment pending receipt and verification of the Certificate of Origin from Mongolia.

Def.'s Statement of Facts ¶¶ 3-4, 14. See also Pl.'s Response to Def.'s Statement of Facts ¶¶ 13-4, 14.

That same day—August 16, 2000—Customs issued to Essex a Customs Form 4647 Notice to Mark and/or Notice to Redeliver (the "Initial Notice to Redeliver" or "Initial Notice"). In the space on the form provided for "Statute(s)/Regulation(s) Violated" (Block 9), Customs did not cite a particular statute or regulation, but instead checked the box marked "Other, Namely" and inserted the words "Certificate of origin for Mongolia." Elsewhere on the form, in the space reserved for "Remarks/Instructions/Other Action Required of Importer" (Block 15), Customs wrote: "Please submit the original Mongolian Certificate of Origin and a sample of Jacket s/no. 217W. If you are unable to obtain the Certificate of Origin, please redeliver the merchandise into Customs Custody within 30 days." See Pl.'s Statement of Facts ¶ 4, Exh. B; Def.'s Response to Pl.'s Statement of Facts ¶ 4.

On August 22, 2000, in response to the Initial Notice to Redeliver, Essex (through its broker) faxed to Customs a document which appeared to be a Mongolian Certificate of Origin. The document was numbered No. MN U.S.1917 A0002400, and represented that the merchandise at issue had been...