Totes-Isotoner Corp. v. U.S.

• Decision Date: 04 November 2008
• Docket Number: Slip Op. 08-119. Court No. 07-00001.
• Citation: 580 F.Supp.2d 1371
• Parties: TOTES-ISOTONER CORPORATION, Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

580 F.Supp.2d 1371

TOTES-ISOTONER CORPORATION, Plaintiff, v. UNITED STATES, Defendant.

Slip Op. 08-119. Court No. 07-00001.

United States Court of International Trade.

November 4, 2008.

COPYRIGHT MATERIAL OMITTED

Neville Peterson, LLP, New York, NY (John M. Peterson, Maria E. Celis, Matthew G. Shaw, and Michael T. Cone) for the Plaintiff.

Gregory G. Katsas, Acting Assistant Attorney General; Jeanne E. Davidson, Director, Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Reginald T. Blades, Jr.); Aimee Lee and Gardner B. Miller, Attorneys, International Trade Field Office, U.S. Department of Justice, for the Defendant.

MEMORANDUM and ORDER

POGUE, Judge.

Totes-Isotoner Corporation ("Totes") alleged in its complaint in this action that the Harmonized Tariff Schedule of the United States ("HTSUS") illegally discriminates on the basis of gender and/or age by setting out different tariff rates for certain "Men's" gloves as opposed to "other" gloves. The court dismissed Totes's complaint in Totes-Isotoner Corp. v. United States, ___ CIT ___, 569 F.Supp.2d 1315 (2008) (holding that Totes had standing to bring, and the court had jurisdiction to hear, Totes's claim, but dismissing for failure to state a claim because the complaint, as pled, did not "show" or allege facts sufficient to ground an inference of discrimination) (hereinafter "the court's July 3 opinion").¹

Both parties seek reconsideration of the court's July 3 opinion pursuant to USCIT R. 59.² Defendant United States again asks that the court dismiss the matter for lack of jurisdiction, rather than for failure to state a claim. The government alleges that Totes, prior to instituting its action, failed to exhaust its administrative remedies when it failed to file a protest with the United States Customs Service³ ("Customs") as necessary to invoke the Court's jurisdiction under 28 U.S.C. § 1581(a). At the same time, Totes seeks reconsideration of the court's holding that its complaint failed to state a claim. Citing Berkley v. United States, 287 F.3d 1076 (Fed.Cir. 2002), Totes alleges that the challenged tariff provision is facially discriminatory, and thus the court should infer or presume the government's discriminatory intent. Alternatively, Totes asks the court to certify for interlocutory appeal the question of whether the tariff provision at issue is facially discriminatory.

Because neither motion identifies legal error in the court's July 3 opinion, as explained below, the court denies both motions.

Standard of Review

The court will grant a rehearing "only in limited circumstances, including [where there has been] 1) an error or irregularity, 2) a serious evidentiary flaw, 3) the discovery of new evidence which even a diligent party could not have discovered in time, or 4) an accident, unpredictable surprise or unavoidable mistake which impaired a party's ability to adequately present its case." Target Stores v. United States, ___ CIT ___, 471 F.Supp.2d 1344, 1347 (2007) (citing Kerr-McGee Chem. Corp. v. United States, 14 CIT 582, 583 (1990)); Salmon Spawning & Recovery Alliance v. Basham, Slip Op. 07-69, 2007 WL 1362434, at *1 (CIT May 9, 2007), rev'd in part on other grounds, 532 F.3d 1338 (Fed.Cir.2008). The court will not grant such a motion "merely to give a losing party another chance to re-litigate the case or present arguments it previously raised." Basham, 2007 WL 1362434, at *1.

Both motions, by alleging "error" in the court's July 3 opinion, invoke only the first ground for rehearing. Applying this standard, the court will address each motion in turn.

United States' Motion for Reconsideration

The court begins with the government's motion. Although Totes based its claims on the alleged unconstitutionality of the HTSUS, the government, relying on United States v. Clintwood Elkhorn Mining Co., 553 U.S. ___, 128 S.Ct. 1511, 170 L.Ed.2d 392 (2008), argues that Totes was required to exhaust its administrative remedies by filing a protest with Customs pursuant to 19 U.S.C. § 1514(a) prior to filing its complaint. The government claims that Clintwood dictates that Totes's failure to file such a protest divests the court of jurisdiction, and that, as a result, the court erred in its July 3 opinion by exercising jurisdiction and must instead dismiss Totes's claim for lack of jurisdiction.

Clintwood, however, is a tax case, and thus was controlled by the applicable provisions of the United States Tax Code. United States v. Clintwood Elkhorn Mining Co., 553 U.S. ___, 128 S.Ct. 1511, 1516, 170 L.Ed.2d 392 (2008). Title 26 U.S.C. § 7422(a), the Tax Code's jurisdictional provision, states that "[no] suit ... shall be maintained in any court for the recovery ... of any sum alleged to have been excessive or in any manner wrongfully collected, until a claim for refund ... has been duly filed with [the Internal Revenue Service (`IRS')]." Clintwood held that section 7422(a)'s plain language required the plaintiffs to file a refund claim with the IRS, even though the plaintiff's cause of action was based on a purported constitutional violation. Clintwood, 128 S.Ct. at 1516 ("Five `any's' in one sentence and it begins to seem that Congress meant the statute to have expansive reach.").

Although the United States attempts to analogize the Tax Code's section 7422(a) to this Court's jurisdictional statutes, the statutes are clearly distinguishable. Section 7422(a)'s language explicitly and plainly requires administrative exhaustion in all circumstances. In contrast, the statutory provisions which the government invokes here `do not affirmatively deny the Court jurisdiction when a plaintiff, that cannot effectively protest its action under 19 U.S.C. § 1514(a) and 28 U.S.C. § 1581(a), fails to exhaust administrative remedies.

Indeed, neither section 1514(a) nor section 1581(a) prevent Totes from proceeding in this case. To begin with, section 1514(a) only applies to "decisions of the Customs Service." Although section 1514(a) states that Customs'"decisions" regarding the "classification and rate and amount of duties chargeable" are "final," unless a protest is filed in accordance with the provisions of other sections of 19 U.S.C. § 1514, there is no Customs "decision" at issue here. Totes challenges the constitutionality of the provisions of the HTSUS itself, and Customs makes no decision in this respect other than to routinely apply the HTSUS categories to imported goods. See Forest Labs., Inc. v. United States, 476 F.3d 877, 883 (Fed.Cir.2007) (citing Jewelpak Corp. v. United States, 20 CIT 1402, 1409-10, 950 F.Supp. 343, 350 (1996), aff'd, 297 F.3d 1326 (Fed.Cir.2002)) ("Customs has no authority to alter or amend the duty rates of the tariff schedule because the duty rates are part of the tariff statute enacted by Congress"); Mitsubishi Elec. Am., Inc. v. United States, 44 F.3d 973, 977 (Fed.Cir.1994) (holding that Customs does not make antidumping "decisions" for section 1514(a) to apply, as Customs simply follows the Department of Commerce's instructions in assessing and collecting certain duties, and thus the court held it lacked section 1581(a) jurisdiction).

This circuit's section 1514(a) case law generally exempts, from otherwise required administrative exhaustion, constitutional challenges to statutory provisions from which Customs has no discretion to deviate. See, e.g., Thomson Consumer Elecs., Inc. v. United States, 247 F.3d 1210, 1215 (Fed.Cir.2001) (holding constitutional challenges to the Harbor Maintenance Tax ("HMT") exempt from administrative exhaustion requirements); U.S. Shoe Corp. v. United States, 114 F.3d 1564, 1569-71 (Fed.Cir.1997), aff'd, 523 U.S. 360, 118 S.Ct. 1290, 140 L.Ed.2d 453 (1998) (same). When seeking to challenge a provision over which Customs has no authority or discretion, a plaintiff need not file a protest and then invoke jurisdiction under section 1581(a); such a plaintiff may instead rely upon section 1581(i). Orleans Int'l, Inc. v. United States, 334 F.3d 1375, 1380 (Fed.Cir.2003) (holding that the Court of International Trade had section 1581(i) jurisdiction over Orleans' constitutional challenge of import assessments mandated by the Beef Promotion and Research Act); Pat Huval Rest. & Oyster Bar, Inc. v. United States, ___ CIT ___, 547 F.Supp.2d 1352, 1362-63 (2008) (per curiam) (constitutional challenge to "Byrd Amendment" allowed under 1581(i)). This follows from the recognition that, in applying a statute over which Customs has no authority or discretion, Customs does not make a "decision" that a plaintiff such as Totes can protest. See U.S. Shoe, 114 F.3d at 1569 ("Typically, `decisions' of Customs are substantive determinations involving the application of pertinent law and precedent to a set of facts, such as tariff classification and applicable rate of duty. Indeed, prior case law indicates that Customs must engage in some sort of decision-making process in order for there to be a protestable decision."). When there is no Customs "decision" subject to protest, sections 1514(a) and 1581(a) do not apply, and the Court has jurisdiction under section 1581(i).⁴ See id. at 1569-71.

While 28 U.S.C. § 1581(a) vests the Court with exclusive jurisdiction in "any civil action commenced to contest [Customs'] denial of a protest," at the same time, 28 U.S.C. § 1581(i) vests the Court with "residual jurisdiction." See Thomson Consumer Elecs., 247 F.3d at 1213 (Section 1581(i) is "the court's residual jurisdiction provision"). Generally, the residual jurisdictional provision "may not be invoked when jurisdiction under another subsection of § 1581 is or could have been available, unless the remedy provided under that other subsection would be manifestly inadequate." Miller & Co. v. United States, 824 F.2d 961, 963 (Fed.Cir.1987); see also Nufarm America's, Inc. v. United States, 29 CIT 1317, 1319, 1325, 398 F.Supp.2d 1338, 1341 (2005). Because...