Broker v. Bureau of Customs and Border Protection, 101711 USCIT, 08-00400

Docket Nº:08-00400
Opinion Judge:RICHARD K. EATON, Judge
Party Name:LIZARRAGA CUSTOMS BROKER, Plaintiff, v. BUREAU OF CUSTOMS AND BORDER PROTECTION, U.S. DEPARTMENT OF HOMELAND SECURITY; and ROSA HERNANDEZ, PORT DIRECTOR, OTAY MESA, CALIFORNIA, Defendants. Slip Opinion No. 11-128
Attorney:Sandler, Travis & Rosenberg, P.A. (Arthur K. Purcell and Kenneth N. Wolf), for plaintiff. Tony West, Assistant Attorney General; Barbara S. Williams, Attorney in Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, United States Department of Justice (Justin R. ...
Judge Panel:Before: RICHARD K. EATON, Judge
Case Date:October 17, 2011
Court:Court of International Trade
 
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LIZARRAGA CUSTOMS BROKER, Plaintiff,

v.

BUREAU OF CUSTOMS AND BORDER PROTECTION, U.S. DEPARTMENT OF HOMELAND SECURITY; and ROSA HERNANDEZ, PORT DIRECTOR, OTAY MESA, CALIFORNIA, Defendants.

No. 08-00400

Slip Opinion No. 11-128

United States Court of International Trade

October 17, 2011

Plaintiff's application for fees and other expenses pursuant to Equal Access to Justice Act is granted.

Sandler, Travis & Rosenberg, P.A. (Arthur K. Purcell and Kenneth N. Wolf), for plaintiff.

Tony West, Assistant Attorney General; Barbara S. Williams, Attorney in Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, United States Department of Justice (Justin R. Miller); Office of Assistant Chief Counsel, International Trade Litigation, U.S. Customs and Border Protection (Nancy Gudel), for defendants.

Before: RICHARD K. EATON, Judge

OPINION AND ORDER

RICHARD K. EATON, Judge

This case is before the court on plaintiff Guillermo Lizarraga's ("plaintiff" or "Lizarraga") application for fees and other expenses pursuant to the Equal Access to Justice Act ("EAJA"), 28 U.S.C. § 2412(d) (2006). The application follows the defendants' Confession of Judgment dated April 30, 2010 (the "Confession of Judgment") and the subsequent entry of judgment in plaintiff's favor. See Lizarraga Customs Broker v. U.S. Customs & Border Protect., 34 CIT ___, Slip Op. 10-113 (Oct. 4, 2010). Defendants, the Bureau of Customs and Border Protection ("Customs"), the U.S. Department of Homeland Security, and Rosa Hernandez, Port Director for the Otay Mesa Port of Entry, San Diego, California (collectively, "defendants"), oppose the application.

For the reasons set forth below, the court grants plaintiff's application for fees.

BACKGROUND

I. Entry Filer Code

An entry filer code is a unique, three character code that Customs assigns to a licensed customs broker. 19 C.F.R. § 142.3a(b)(1) (2011). Filing "entries" means the filing of documentation required to ensure the release of imported merchandise from Customs' custody, or the act of filing that documentation. Id. § 141.0a(a).

Entries can be filed either manually or electronically through the Automated Broker Interface ("ABI") system. Id. §§ 143.34, 143.32(a). Ninety-six percent of all entries are filed electronically, and that figure is likely higher for licensed brokers. See Automated Broker Interface (ABI), CBP.gov, http://www.cbp.gov/xp/cgov/trade/automated/automated_systems/abi/ (last visited Sept. 20, 2011). Each electronically-filed entry is identified by an entry number created by the broker. 19 C.F.R. § 142.3a(a), (b). The first three digits of the entry number are the broker's entry filer code. Id. § 142.3a(b)(1). Accordingly, the entry filer code identifies the broker filing a particular entry. The ABI system is part of Customs' Automated Commercial System that allows entry filers to both submit data electronically and receive messages from Customs. Id. § 143.1. In order to file electronically, the broker must have an active entry filer code and be approved for participation in the ABI system. Id. §§ 143.2, 143.34. The purpose of ABI is "to improve administrative efficiency, enhance enforcement of customs and related laws, lower costs[, ] and expedite the release of cargo." Id. § 143.1.

II. Suspension of Plaintiff's Entry Filer Code

Mr. Lizarraga is a licensed customs broker, and in 2008 had an assigned entry filer code. Under 19 C.F.R. § 142.3a(d), "[t]he Assistant Commissioner, Office of International Trade, or his designee may refuse to allow use of an assigned entry filer code if it is misused by the importer or broker." On October 21, 2008, the Director of Field Operations at the Otay Mesa Port of Entry in San Diego, California wrote to the Assistant Commissioner of the Office of International Trade and asked that Mr. Lizarraga's entry filer code be deactivated for misuse. Mem. from Dir. Field Operations to Asst. Comm'r, Office of Int'l Trade, Oct. 21, 2008 (C.R. Doc. 152). Although it did not compile a contemporaneous record, 1 Customs has represented that it then conducted an "internal administrative review" of the Director's request. On November 3, 2008, the Assistant Commissioner "made the final determination to indefinitely and immediately suspend Mr. Lizarraga's entry filer code" for misuse (a final determination later memorialized in a letter to Mr. Lizarraga dated November 10, 2008). See Letter from Port Dir. to Lizarraga, Nov. 10, 2008 (C.R. Doc. 156) ("Port Dir. Letter"). The Assistant Commissioner stated that "[t]he suspension is necessary to prevent Mr. Lizarraga from using his individual filer code to facilitate smuggling narcotics into the Customs territory of the United States and allowing the use of his license, permit, and filer code . . . by Mexican nationals." Mem. from Asst. Comm'r, Office of Int'l Trade to Dir. Field Operations (C.R. Doc 155) ("Asst. Comm'r Mem."). Customs did not provide Mr. Lizarraga with notice of its internal administrative review or an opportunity for a hearing, nor did it solicit a written submission from him prior to its final determination.

Instead, by letter dated November 10, 2008, 2 Customs notified plaintiff that, effective November 14, 2008, it would "immediately and indefinitely" suspend his entry filer code. Port Dir. Letter (C.R. Doc. 156). The notice cited 19 C.F.R. § 142.3a(d) as authority for defendants' action, and stated that the action was "necessary to prevent the misuse of [Lizarraga's] filer code in the conducting of customs business." Port Dir. Letter (C.R. Doc. 156). The notice also stated that the suspension was to prevent Mr. Lizarraga from using his individual filer code to "facilitate smuggling narcotics, " and to ensure that plaintiff's "license, permit, name[, ] and filer code are not used by persons who are not employed by [Lizarraga] and authorized to act for [Lizarraga]." Port Dir. Letter (C.R. Doc. 156).

The notice further stated:

By requiring you to use the alternative filing procedures found in 19 CFR § 142.3a(e), [Customs] will be able to effectively review the accuracy of the documentation you are submitting for the entry of merchandise. This will enable you to continue conducting customs business; however, you will be required to file entry/entry summary documentation using customs assigned numbers with estimated duties attached before the merchandise may be released.

Port Dir. Letter (C.R. Doc. 156).

Thus, Customs stated that, even though he could no longer use his entry filer code, Mr. Lizarraga would nonetheless be able to continue to conduct his business as a customs broker.

III. Proceedings in CIT

On November 13, 2008, Mr. Lizarraga sought to halt the suspension of his entry filer code by filing a motion for a temporary restraining order ("TRO") and a preliminary injunction. At the November 14, 2008 hearing, defendants opposed the entry of the TRO, in part, because they claimed the case involved America's national security. As counsel for defendants stated:

The importation of narcotics under an importer's filer code or a broker's filer code is illegal activity and effectively it represents a situation where the balance of hardships once those drugs come into the country would be adverse to the United States and the national security of the United States . . . . [N]arcotics were imported under this filer code. So Customs has every right at this juncture to be concerned about the abuse or misuse of that filer code and every right to take every precaution available to it to insure national security for this country.

Tr. Or. Arg., Nov. 14, 2008, 8:15–9:1.

After the hearing with both sides present, the court granted plaintiff's motion for a TRO, issued an order to show cause why a preliminary injunction should not be granted, and set a hearing date. A briefing schedule was established, which was subsequently modified by the parties. Thereafter, defendants agreed to take no action against plaintiff's entry filer code until the court ruled on the preliminary injunction. See Order at 2, Lizarraga Customs Broker v. U.S. Customs & Border Protect., No. 08-00400 (Dec. 23, 2008) (acknowledging defendants' consent not to suspend plaintiff's entry filer code during the time the preliminary injunction was pending); see also Order at 1, Lizarraga Customs Broker v. U.S. Customs & Border Protect., No. 08-00400 (Mar. 1, 2010) (reiterating that defendants would not suspend plaintiff's entry filer code until the court ruled on the motion for preliminary injunction).

Further, on November 13, 2008, plaintiff filed his verified complaint alleging, among other things, that he was a licensed customs broker and that Customs has "issued a notice . . . that plaintiff's entry filer code will be deactivated effective November 14, 2008." Compl. ¶ 5. Plaintiff's complaint alleged that "Customs' plan to suspend or deactivate plaintiff's entry filer code without any explanation or hearing was effectively a revocation or suspension of plaintiff's broker's license without any showing of good cause, and without the benefit of a hearing or other due process protections." Compl. ¶ 21. In addition to the preliminary injunction, the complaint sought relief in the form of a declaratory judgment and a permanent injunction restraining the defendants "from suspending his entry filer code without a hearing providing for basic due process, in accordance with the letter or spirit of 19 U.S.C. § 1641(d)(2)(B)."3 Compl. ¶ 23(c).

On January 12, 2009, defendants filed their Answer to the Complaint. On January 23, 2009, defendants filed the administrative record, and on March 27, 2009, they filed their motion to dismiss and for judgment on the agency record. Thereafter, on July 13...

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