American Air Parcel Forwarding Co. v. US

• Decision Date: 15 May 1981
• Docket Number: Court No. 81-4-00428.
• Citation: 515 F. Supp. 47,1 CIT 293
• Parties: AMERICAN AIR PARCEL FORWARDING COMPANY, LTD., a Hong Kong Corporation, Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

515 F. Supp. 47

1 CIT 293

AMERICAN AIR PARCEL FORWARDING COMPANY, LTD., a Hong Kong Corporation, Plaintiff, v. UNITED STATES, Defendant.

Court No. 81-4-00428.

United States Court of International Trade.

May 15, 1981.

COPYRIGHT MATERIAL OMITTED

Richard A. Kulics, Detroit, Mich., for plaintiff; Goodman, Miller & Miller, by Jonathan Miller, Southfield, Mich., of counsel.

Thomas S. Martin, Acting Asst. Atty. Gen., Washington, D. C., for defendant; Joseph I. Liebman, Attorney in Charge, International Trade Field Office, Commercial Litigation Branch, New York City, and Susan L. Handler-Menahem, Teaneck, N.J., of counsel.

Memorandum and Order On Plaintiff's Motion for a Preliminary Injunction

RE, Chief Judge:

Plaintiff, a foreign freight forwarder, moves this court for an order enjoining the defendant, through its agent, the United States Customs Service, from (1) continuing the denial, by the District Director of Customs at the Port of Detroit, of plaintiff's "immediate delivery privilege", and (2) refusing to accept, for the benefit of plaintiff, the filing of entry documentation with uncertified checks, during the pendency of this action.

Plaintiff's motion for a preliminary injunction under Rule 65 was brought on by an Order to Show Cause issued on April 20, 1981. The court heard oral argument on the motion by a telephone conference call on April 22, 1981.

On April 27, 1981, the court granted plaintiff's motion for a preliminary injunction. This opinion incorporates that order, and sets forth the facts and reasons upon which the requested relief was granted.

Plaintiff is a freight consolidator with its principal place of business in Hong Kong. Plaintiff consolidates freight owned by various shippers for delivery to specific consignees in the United States. In importing merchandise, plaintiff prepares a consolidated entry, enters the goods, pays the duty, and then, through the use of common carriers such as United Parcel Service, delivers the goods to the ultimate consignee. As a course of business plaintiff posts single entry bonds to indemnify the Customs Service for any loss of revenue.

Plaintiff alleges that while "it must ordinarily pay duties on entered merchandise within ten working days", it does not receive those monies until twenty-nine days later. Plaintiff recoups the monies by shipping the goods C.O.D. to the consignee.

Plaintiff routinely imports merchandise each week through the Port of Detroit and pays duty on the merchandise by uncertified check. Plaintiff received a shipment on March 27 and March 30, 1981, on which duties were due on April 10 and April 13, 1981, respectively. Plaintiff claims that several days prior to April 10, 1981 the import control officer in Detroit stated that, beginning with the April 10 entry, plaintiff would have to pay the duty on that and all future entries by certified check. Plaintiff alleges the reason for the Customs Service's action was that certain uncertified checks issued the prior year had been dishonored. The defendant stated that it erred in continuing to accept uncertified checks and advised plaintiff that it would now require plaintiff's checks to be certified.

Plaintiff questioned the import control officer on the applicability of Customs Regulation 24.1(a)(3). This regulation authorizes an importer to present uncertified checks when the revenue is protected by the posting of a single entry bond for the full value of the duties owing on the shipment. Plaintiff alleges that the import control officer responded by stating that the decision was final, and that plaintiff could challenge the decision by submitting an entry with an uncertified check, having it rejected, and then filing a protest.

Plaintiff filed its entries on April 10 and April 13, 1981, with uncertified checks, both of which were rejected. On April 6, 1981, plaintiff received a letter from the acting District Director stating that certified checks would be required with all plaintiff's entries, and that plaintiff's immediate delivery privileges were suspended.

The parties raise basic questions pertaining to the jurisdiction of the court, the validity of the plaintiff's cause of action, and the "equity jurisdiction" of the court.

The court's authority to grant the requested relief presents the threshold question of whether the action is within its subject matter jurisdiction. Subject matter jurisdiction is the power of a court to hear and determine cases of the general class to which the particular proceeding belongs. See Murrell v. Stock Growers' National Bank, 74 F.2d 827, 831 (10th Cir. 1934), and cases cited therein. The subject matter jurisdiction of the Court of International Trade, as established by the Customs Courts Act of 1980, encompasses all "civil actions arising out of import transactions and the Federal statutes affecting international trade". 126 Cong.Rec. H9340 (daily ed. Sept. 22, 1980) (remarks of Rep. Volkmer). Upon the facts recited, it is clear that plaintiff's case comes within the general class of cases over which this court has subject matter jurisdiction.

Jurisdiction, the power of this court to determine the case presented for decision, exists by virtue of the statutory provisions of the Customs Courts Act of 1980. More specifically, this case comes within the broad "residual grant of jurisdictional authority" of this court as described in 28 U.S.C. § 1581(i). H.R.Rep.No.1235, 96th Cong. 2d Sess. 47, U.S.Code Cong. & Admin. News 1980, 7088 (1980). In particular, paragraphs (i)(1) and (4) confer jurisdiction over any civil action

"that arises out of any law of the United States providing for —

"(1) revenue from imports or tonnage;

* * * * * *

"(4) administration and enforcement with respect to matters referred to in paragraphs (1)-(3) of this subsection ..."

This court's jurisdiction over plaintiff's cause of action "arises out of a law of the United States", namely, 19 U.S.C. § 1648, and the Customs Service's administration and enforcement of its regulations. See 19 C.F.R. §§ 24.1(a)(3) and 142.13(a). These regulations authorize customs officers to receive uncertified checks in payment of duties upon the filing of an entry bond, and to require the deposit of estimated duties and the filing of entry summary documentation before release of the goods if the importer "has failed repeatedly to file entry summary documentation without justification".

In several cases since November 1, 1980, the effective date of the Customs Courts Act of 1980, this court has found subject matter jurisdiction to exist within the statutory language embodied in 28 U.S.C. §§ 1581(i)(1) and (4). See generally, Heraeus-Amersil, Inc. v. United States, 1 CIT ___, 515 F.Supp. 770 (1981); DiJub Leasing Corp. v. United States, 1 CIT ___, 505 F.Supp. 1113 (1980); Zenith Radio Corp. v. United States, 1 CIT ___, 505 F.Supp. 216 (1980).

Section 1581(i) was apparently drawn from 28 U.S.C. § 1331, the federal question jurisdictional provision with respect to United States district courts. Section 1581(i) may be said to accomplish, as to the Court of International Trade, the purpose served by § 1331 for the district courts.

Although the United States Court of International Trade may have subject matter jurisdiction, there remains the possibility that a particular complaint may not state a cause of action upon which relief may be granted.

This point is illustrated by the case of Bell v. Hood, 327 U.S. 678, 66 S.Ct. 773, 90 L.Ed. 939 (1945). In Bell v. Hood, the Supreme Court of the United States, holding that the subject matter jurisdiction of a court cannot be defeated by the "possibility" that plaintiff's allegations may fail to state grounds upon which the requested relief may be granted, observed:

"Failure to state a proper cause of action calls for a judgment on the merits and not a dismissal for want of subject matter jurisdiction. Whether the complaint states a cause of action on which relief could be granted is a question of law and just as issues of fact it must be decided after and not before the court has assumed jurisdiction over the controversy. If the court does later exercise its jurisdiction to determine that the allegations in the complaint do not state a ground for relief, then dismissal of the case would be on the merits, not for want of jurisdiction." Id., at 682, 66 S.Ct. at 776, citing Swafford v. Templeton, 185 U.S. 487, 493, 494, 22 S.Ct. 783, 785, 786, 46 L.Ed. 1005; and Binderup v. Pathe Exchange, 263 U.S. 291, 305-8, 44 S.Ct. 96, 98-99, 68 L.Ed. 308.

As was made clear in Bush v. State Industries, Inc., 599 F.2d 780, 784 (6th Cir. 1979), in determining the existence of subject matter jurisdiction, a court must examine the alleged claim to see if it "actually `arises under' the Constitution or federal statutes and is not made solely for the purpose of obtaining jurisdiction". If the case "arises under" the Constitution or the federal statutes, the existence of subject matter jurisdiction is not to be confused with ultimate success on the merits after trial.

The crucial question that the court must decide in each case is whether plaintiff's complaint has "any legal substance", in coming within the subject matter jurisdiction of the court. Bush, at 784-785. The failure to state a cause of action upon which relief can be granted is not relevant to the court's determination of the existence of its subject matter jurisdiction. Bush, at 785. The court must assume or exercise its jurisdiction in order to determine whether or not the complaint states a cause of action on which it may grant relief. Bell, at 682, 66 S.Ct. at 776.

Jurisdiction, the power to decide a case presented for adjudication, should not be confused with a court's so-called "equity jurisdiction". When a court has jurisdiction over the subject matter and the parties, it has the power to decide the case, and "equity jurisdiction" can only refer to its authority and discretion to grant equitable...