United States v. Ups Customhouse Brokerage Inc.

• Decision Date: 17 June 2010
• Docket Number: Court No. 04-00650.,Slip Op. 10-70.
• Citation: 714 F.Supp.2d 1296
• Parties: UNITED STATES, Plaintiff, v. UPS CUSTOMHOUSE BROKERAGE, INC., Defendant.
• Court: U.S. Court of International Trade

714 F.Supp.2d 1296

UNITED STATES, Plaintiff,

v.UPS CUSTOMHOUSE BROKERAGE, INC., Defendant.

Slip Op. 10-70.

Court No. 04-00650.

United States Court ofInternational Trade.

June 17, 2010.

COPYRIGHT MATERIAL OMITTED.

Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, Patricia M. McCarthy, Assistant Director, U.S. Department of Justice, Civil Division, Commercial Litigation Branch (Jessica R. Toplin, Courtney S. McNamara); Edward Greenwald, of counsel, Department of Homeland Security, U.S. Customs and Border Protection; for Plaintiff.

Akin Gump Strauss Hauer & Feld LLP, Washington, DC (Terence J. Lynam, Lars-Erik A. Hjelm, Natalya Daria Dobrowolsky, Lisa-Marie W. Ross, Thomas James McCarthy), for Defendant.

Opinion & Order

CARMAN, Judge.

The United States has moved under USCIT Rule 59 for reconsideration of the Court's January 28, 2010 Opinion and Order and the accompanying Judgment for Defendant, United States v. UPS Customhouse Brokerage, Inc., 34 CIT ----, 686 F.Supp.2d 1337 (Jan. 28, 2010) (“ Post-Appeal Decision”). The challenged decision followed a decision of the Court of Appeals for the Federal Circuit (“CAFC”), United States v. UPS Customhouse Brokerage, Inc., 575 F.3d 1376 (Fed.Cir.2009) (“ CAFC Decision”), which partially vacated and partially remanded this Court's earlier Judgment for Plaintiff following a bench trial, United States v. UPS Customhouse Brokerage, Inc., 32 CIT ----, 558 F.Supp.2d 1331 (2008) (“Post-Trial Decision”). Familiarity with these prior opinions is assumed.

Parties' Contentions

I. The United States

Plaintiff asserts errors as follows, which it claims require reconsideration:

A. Argument 1: A New Controlling Legal Standard Required Remand or Reopening Trial

This argument consists of two propositions: that (a) the CAFC Decision announced a new controlling legal standard regarding the correct interpretation of 19 C.F.R. § 111.1 (“ § 111.1”), and (b) that this Court erred by not providing Plaintiff a chance to satisfy that new legal standard by either taking further trial evidence from Plaintiff, or by remanding for administrative proceedings consistent with the new standard. (Pl.'s Mot. for Reconsideration, Doc. No. 126 (“Motion”) at 4-7.)

B. Argument 2: The Court Improperly Construed Customs Regulations

The government claims that the Court exceeded its proper role in the Post-Appeal Decision when it interpreted various Customs regulations without the benefit of agency interpretation or briefing, and compounded this error by incorrectly concluding that Plaintiff could not prove its case absent evidence that the Fines, Penalties, and Forfeitures Officer (“FP & F Officer”) Bert Webster personally considered all ten § 111.1 factors. ( Id. at 7-9.)

C. Argument 3: Customs' Error Was Harmless and Correctable at Trial De Novo Absent Proof of Substantial Prejudice

This argument stems from Argument 1-that the CAFC Decision merely announced the correct new legal standard governing the interpretation of § 111.1. According to the United States, this Court erred in holding Customs' prior misinterpretation of the regulation to be a procedural irregularity that nullified the agency's penalty action against Defendant UPS Customhouse Brokerage, Inc. (“UPS”). (Motion at 9-10.) Plaintiff argues (without conceding) that if the agency's failure to consider all of the § 111.1 factors was procedural, that error was harmless, and that the Court should therefore reopen the trial, take new evidence, and consider the § 111.1 factors de novo on the augmented trial record and in light of the “new” legal standard. ( Id. at 10-11; Pl.'s Reply in Supp. of Its Mot. for Reconsideration, Doc. No. 128 (“Reply”) at 6-9) (both citing Empire Energy Mgmt. Systems v. United States, 362 F.3d 1343 (Fed.Cir.2004)). Plaintiff also argues that evidence of substantial prejudice is required to set aside, due to procedural noncompliance, an agency action, but that UPS presented no such evidence. (Motion at 12) ( citing Am. Farm Lines v. Black Ball Freight Serv., 397 U.S. 532, 539, 90 S.Ct. 1288, 25 L.Ed.2d 547 (1970); Dixon Ticonderoga Co. v. United States, 468 F.3d 1353, 1357 (Fed.Cir.2006); PAM, S.p.A. v. United States, 463 F.3d 1345, 1349 (Fed.Cir.2006); Reply at 3, 8-9.)

II. UPSA. Argument 1

UPS claims that Plaintiff's Argument 1 improperly reiterates points already raised and rejected in the Post-Appeal Decision. (Brief of UPS Customhouse Brokerage, Inc. in Opp'n to Pl.'s Mot. for Reconsideration, Doc. No. 127 (“Def.'s Opp.”) at 4-5.) UPS attacks the idea that the CAFC Decision's interpretation of § 111.1 is “new” with citations to two Customs Headquarters Rulings that long ago reached the same conclusion about § 111.1 as the CAFC Decision. ( Id. at 5 ( citing HQ 225010 (July 21, 1994), 1994 U.S. Custom HQ LEXIS 1645, at *7 and HQ 115005 (May 2, 2000), 2000 U.S. Custom HQ LEXIS 906, at *5).)

B. Argument 2

On Argument 2, UPS notes that Plaintiff only contests the Court's method, not the conclusions of its regulatory analysis; and, regardless of the FP & F Officer's proper role, Plaintiff failed to present evidence that anyone considered all of the § 111.1 factors. ( Id. at 8-9.)

C. Argument 3

On Argument 3, UPS contends that Plaintiff's error was procedural since 19 U.S.C. § 1641(d)(2)(A) requires consideration of the § 111.1 factors and, as the CAFC Decision stated, “Customs did not consider all ten factors listed in 19 C.F.R. § 111.1.” ( Id. at 10 ( quoting CAFC Decision, 575 F.3d at 1383).) UPS argues that the precise nature of Plaintiff's error is irrelevant in any case, since “neither Customs nor the government presented evidence ... that the agency considered all of the section 111.1 factors.” ( Id.) As to substantial prejudice, UPS states that prejudice “is what this entire case is about,” and that UPS has argued all along that proper consideration of all ten § 111.1 factors would show UPS not to be liable. ( Id. at 11.)

Standard of Review

Although the Court's rules do not explicitly provide for a motion for “reconsideration,” such motions are ordinarily accepted and analyzed under USCIT R. 59. See, e.g., Peerless Clothing Intern., Inc. v. United States, 33 CIT ----, 637 F.Supp.2d 1253, 1255-1256 (2009). The granting of a motion for reconsideration is within the sound discretion of the Court. See Yuba Natural Res., Inc. v. United States, 904 F.2d 1577, 1583 (Fed.Cir.1990); Canadian Wheat Board v. United States, 33 CIT ----, 637 F.Supp.2d 1329, 1333 (2009). “The major grounds justifying a grant of a motion to reconsider a judgment are an intervening change in the controlling law, the availability of new evidence, the need to correct a clear factual or legal error, or the need to prevent manifest injustice.” Almond Bros. Lumber Co. v. United States, 34 CIT ----, 2010 WL 1409656 at *4 (2010) ( citing NSK Corp. v. United States, 32 CIT ----, 593 F.Supp.2d 1355, 1361 (2008) and USCIT R. 59(a)(2).) A motion for reconsideration is thus a mechanism to correct a significant flaw in the original judgment, but is not a mechanism to “allow a losing party the chance to repeat arguments or to relitigate issues previously before the court.” Peerless Clothing, 637 F.Supp.2d at 1256 (citations omitted).

Discussion

Plaintiff's claim in Argument 1 simply reiterates arguments already elaborated in prior briefs to the Court and rejected in the Post-Appeal Decision. Plaintiff's claim in Argument 2 that the Court erred by interpreting Customs regulations and basing its holding on the role of the FP & F Officer does not merit reconsideration because the Court's analysis of the FP & F Officer's role was not essential to the Post-Appeal Decision. Argument 2 is therefore irrelevant to the core reasoning upon which the Court issued its judgment. Plaintiff's claim in Argument 3 that the Court should have found Custom's administrative error in applying § 111.1 to be harmless, and refused to enter judgment for Defendant absent a showing of substantial prejudice, is based on citations to inapposite case law. Argument 3 also ignores the fact that the Post-Appeal Decision was entirely driven by a careful analysis and application of the specific directives of the CAFC Decision issued in this particular case. Plaintiff's motion for reconsideration is therefore denied.

I. Argument 1: Plaintiff Attempts to Relitigate Issues Already Decided

Plaintiff's contentions in Argument 1 are identical to arguments Plaintiff already made in briefing to the Court before the Court issued the Post-Appeal Decision, and are therefore rejected as improper attempts to relitigate under the guise of a motion for reconsideration.

A. The Court Already Rejected the Argument that the CAFC Decision Announced a Surprising New Interpretation of § 111.1

The Court has already considered and squarely rejected Plaintiff's main contention-that the CAFC Decision constituted a new legal standard controlling § 111.1, which Plaintiff could not have anticipated before trial. Post-Appeal Decision, 686 F.Supp.2d 1337, 1355 (“The Court also rejects Plaintiff's contention that the Court of Appeals' opinion constituted a change in the law regarding 19 C.F.R. § 111.1 and should excuse Plaintiff's failure to prove its case at trial.”) The Court's reasoning on this issue has already been set forth at length, based upon detailed consideration of the record of proceedings from summary judgment through opening statements at trial. Id. at 1355-1356. It is also true, as UPS points out, that the CAFC Decision is consistent with Customs Headquarters Rulings issued long before the trial, undercutting Plaintiff's claim that it could not have anticipated the CAFC Decision's interpretation of § 111.1. See HQ 225010 (July 21, 1994), 1994 U.S. Custom HQ LEXIS 1645, at *7; HQ 115005 (May 2, 2000), 2000 U.S. Custom HQ LEXIS 906, at *5.

B. The Court Already Rejected Plaintiff's Request for Evidentiary Proceedings or Remand to Satisfy the “New” Interpretation of § 111.1

The...