South African Marine Corp., Ltd. v. United States

• Decision Date: 06 June 1986
• Docket Number: Court No. 84-12-01757.
• Citation: 640 F. Supp. 247
• Parties: SOUTH AFRICAN MARINE CORPORATION, LTD., Plaintiff, v. The UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

640 F. Supp. 247

SOUTH AFRICAN MARINE CORPORATION, LTD., Plaintiff, v. The UNITED STATES, Defendant.

Court No. 84-12-01757.

United States Court of International Trade.

June 6, 1986.

O'Connor & Hannan, Myles J. Ambrose and F. Gordon Lee, Washington, D.C., for plaintiff.

Richard K. Willard, Asst. Atty. Gen., Washington, D.C., Joseph I. Liebman, Atty. in Charge, Intern. Trade Field Office, Saul Davis, Civ. Div., U.S. Dept. of Justice, New York City, for defendant.

Opinion and Order

RESTANI, Judge:

Plaintiff, South African Marine Corporation, Ltd. (SAM), a South African corporation engaged in the business of owning and operating ocean-going vessels, seeks to challenge the imposition of import fees on raw sugar it transported from Swaziland to the United States. Defendant moves to dismiss the claim for lack of jurisdiction. Defendant claims that plaintiff does not possess the statutory right to seek judicial review of the relevant administrative action.

The facts of this case are not in dispute. SAM entered into a contract with Swazi Sugar Corporation (Swazi), the exporter of record, to transport the subject sugar to the United States. Under the terms of the agreement, plaintiff guaranteed the arrival of the merchandise at the first sugar port in the United States before September 30, 1981.

Swazi then entered into a contract of sale for the full amount of the sugar with Czarnikow, Ltd. Czarnikow, Ltd., sold some of the sugar to Czarnikow, Inc., which sold the sugar to Philipp Bros., which sold the sugar to Imperial Sugar Co. (Imperial), the importer of record. Czarnikow, Ltd., sold the remainder of the sugar to Christman Trading Corp., which sold the sugar to Refined Syrups, which sold the sugar to Farr Man Co. Farr Man Co. sold some of the sugar to Imperial and the remainder to Coca Cola Co. Coca Cola sold that sugar to Imperial. All of the contracts involved provided that the sugar be sold on a duty-paid basis; consequently, each purchaser could deduct from the contract price any import fee imposed.¹ In this fashion, any import fee imposed on Imperial was to be passed up the chain of sale to Swazi.

Plaintiff's vessel containing the sugar arrived at the first United States port on October 1, 1981. A quarterly adjusted import fee became effective on the same date.² Consequently, the United States Customs Service (Customs) assessed an import fee against Imperial. Imperial paid the total import fee to Customs on October 1, 1981. On April 2, 1982, the entry was liquidated by Customs, resulting in a slight adjustment in the fee.³ This adjusted fee was deducted from the contract price up the line of sellers to Swazi. In turn, pursuant to the contract between Swazi and SAM, SAM ultimately paid Swazi an amount based on the fee as damages for breach of contract.⁴

Plaintiff, Imperial, and Swazi jointly filed a protest challenging the imposition of the fee on June 29, 1982. Customs denied the protest on June 20, 1984. Plaintiff, independent of the other parties, brings this suit challenging the propriety of the imposition of the fee.⁵

Defendant claims that plaintiff does not fall within the statutory classes of parties who may protest an administrative decision and, subsequently, may contest denial of such a protest. Plaintiff counters that the government's failure to object to the propriety of the protest by SAM, at the time the protest was filed, prohibits it from now objecting on that basis to the filing of this action. Plaintiff contends that Customs was obligated to raise this issue when it considered and denied the protest. In addition, plaintiff contends that raising the issue at this stage in the proceedings is unduly prejudicial, presumably because the statute of limitations has run.

Waiver

For plaintiff to bring a suit challenging the imposition of duties or fees, the suit must contest the denial of a valid protest filed by plaintiff. 28 U.S.C. §§ 1581(a), 2631(a) (1982). In Shigoto International Corp. v. United States, 66 Cust.Ct. 252, C.D. 4199 (1971), this court found, in a similar context, that the plaintiff lacked standing to protest a Customs decision because plaintiff was not among the parties listed in the statute as eligible to protest. Id. at 253. The court further found that the fact that the protest was denied on the merits did not affect this result because the Government's agent could not waive the statutory standing requirement for protest (and, consequently, suit), which it deemed jurisdictional.⁶ Id.

This court has used the term "standing" to characterize this statutory issue in other cases as well. See, e.g., Mohawk Recreation Products, Inc. v. United States, 77 Cust.Ct. 180, 423 F.Supp. 932 (1976). Standing, however, is normally thought of as a judicially, rather than a statutorily, created precept. The standing requirement involves both considerations under the case and controversy provision of Article III of the Constitution and prudential questions as to whether plaintiff's interests fall within the zone of interests regulated or benefited by the statute or regulation being applied. See Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 471-76, 102 S.Ct. 752, 757-60, 70 L.Ed.2d 700 (1982) (defines and distinguishes constitutional and prudential tests of standing); Florsheim Shoe Co. v. United States, 744 F.2d 787, 790 & n. 4 (Fed.Cir.1984) (same). When the proper party plaintiffs are defined in specific terms by statute, characterizing disputes over who may sue as "standing" problems may lead to confusion.⁷ However one characterizes the problem here, it remains one involving the statutory limits on who may sue and, consequently, what suits may be heard by the court. Shigoto clearly supports the principle that such statutory proscriptions may not be waived by acts of omission of government agents, such as failure to reject a protest.

Statutory Eligibility to Sue

The administrative protest, which is a prerequisite for suit under 28 U.S.C. § 1581(a), may challenge only certain actions by Customs, 19 U.S.C. § 1514(a) (1982 & Supp. II 1984), and may be filed only by certain classes of people. Id. § 1514(c)(1). The parties agree that the transaction at issue falls within one of two categorized subjects of protest: 1) the classification and rate and amount of duties chargeable, or 2) all charges or exactions of whatever character within the jurisdiction of the Secretary of the Treasury. Id. § 1514(a)(2) & (3). The parties disagree, however, as to whether plaintiff fits within any of the specified classes of persons who may file a protest. The parties do agree that the relevant classes of protestants are the importers or consignees shown on the entry papers, their sureties, any person paying any charge or exaction, or any authorized agent of any of the above persons. Id. § 1514(c)(1)(A), (B), & (E). Defendant contends that plaintiff is not within any of the specified classes. Plaintiff contends that it is a "person paying any charge or exaction."⁸ Id. § 1514(c)(1)(B) (emphasis added). Therefore, at the outset, the court will determine whether or not plaintiff paid the fee within the meaning of the statute. If plaintiff did not pay, the court need not decide whether the fee is a charge or exaction or is a duty which is not a charge or exaction.⁹

The statute at issue, 19 U.S.C. § 1514(c) (1982), if described generally, permits persons who have a close relationship to an import transaction to protest, and thus, to sue. Therefore, it is important to determine exactly the nature of plaintiff's relationship to the transaction which is the subject of the challenged determination.

Plaintiff here was a carrier. It was not a seller in a chain of sales on a duty-paid basis and it was not directly involved in the entry or import process. Plaintiff paid an amount equivalent to 97.5% of the amount of the fee to a seller in the chain of sale, in satisfaction of a claim for late delivery of the goods; it did not pay anything directly to Customs. Certainly, plaintiff's status as a carrier did not render it legally or contractually obligated to pay the fee; it was only when its own conduct contributed to the imposition of the new fee on the goods that plaintiff's potential interest in the fee issue arose. Plaintiff's closest connection to the customs transaction is that it became obligated to pay an amount almost equivalent to the amount of the fee paid, as consequential damages for a breach of a contract term.

This court has stated that to contest the denial of a protest and to obtain a refund of customs duties, a party must have "some direct connection to the customs transaction at issue." Parksmith Corp. v. United States, 77 Cust.Ct. 102, 103, 428 F.Supp. 1094, 1095 (1976). Although one might argue that Parksmith is distinguishable from the case at hand in that it dealt with a voluntary purchaser of a chose-in-action of the entity entitled to protest, it is nonetheless instructive. Parksmith addressed the issue of the applicability of the Anti-Assignment Act, 31 U.S.C. § 203.¹⁰ One purpose of the Anti-Assignment Act is to prevent a multiplicity of parties with whom the government must deal and to enable the government to know with whom it is dealing until the transaction is closed. Hobbs v. McLean, 117 U.S. 567, 576, 6 S.Ct. 870, 874, 29 L.Ed. 940 (1886); Patterson v. United States, 173 Ct.Cl. 819, 354 F.2d 327, 329 (1965). Section 1514(c) similarly operates to limit the number of parties who may bring suit, and presumably it has some of the same purposes as the Anti-Assignment Act. Conceivably, without the limitations of section 1514(c), the government might have been faced with protests from six or seven parties in this case. (Indeed, three parties protested.) Obviously, this could create administrative problems, as well as the problems associated with multiple-party litigation or successive suits.

Plaintiff argues that it is the...