Arbor Foods, Inc. v. United States

• Decision Date: 11 December 1984
• Docket Number: Court No. 84-12-01722.
• Citation: 8 CIT 355,600 F. Supp. 217
• Parties: ARBOR FOODS, INC., Plaintiff, v. UNITED STATES, et al., Defendants.
• Court: U.S. Court of International Trade

600 F. Supp. 217

8 CIT 355

ARBOR FOODS, INC., Plaintiff, v. UNITED STATES, et al., Defendants.

Court No. 84-12-01722.

United States Court of International Trade.

December 11, 1984.

Graubard, Moskovitz & McCauley, Washington, D.C. (Alfred R. McCauley, Washington, D.C., on the motion); Dykema, Gossett, Spencer, Goodnow & Trigg, Washington, D.C. (Norton Cutler, Washington, D.C., on the motion), for plaintiff.

Richard K. Willard, Acting Asst. Atty. Gen., Joseph I. Liebman, Atty. in Charge, Commercial Litigation Branch, Washington, D.C. (Michael P. Maxwell and Veronica A. Perry, New York City, on the cross-motion); (Karen Binder and Beth Brothman, Chief Counsel, Intern. Trade Litigation, United States Customs Service, of counsel on the memorandum), for defendants.

Memorandum Opinion on Plaintiff's Motion for a Preliminary Injunction

CARMAN, Judge.

This matter is before me on plaintiff's motion for a preliminary injunction and defendants' cross-motion to dismiss. The issues presented by these motions include whether this Court has jurisdiction over the subject matter pursuant to 28 U.S.C. § 1581(i)(3), (4) (1982), and, if jurisdiction does exist, whether the elements necessary for a preliminary injunction are present.

Plaintiff, an importer of sugar blends, seeks a preliminary injunction restraining the United States Customs Service (Customs) from requiring the segregation of the contents of blends of sugar containing 65 percent or less sugar by dry weight and subjecting the sugar to quota provisions.

After hearing argument on December 7, 1984, the Court denied plaintiff's application for a temporary restraining order. At the hearing for the preliminary injunction on December 11, 1984, the Court received evidence which was offered to establish irreparable injury. The evidence was relevant to whether the Court should exercise jurisdiction pursuant to 28 U.S.C. § 1581(i) as well as to whether plaintiff was entitled to preliminary injunctive relief. Ruling from the bench, the Court denied the motion for a preliminary injunction and granted defendant's cross-motion to dismiss declining to obviate the usual procedure of administrative protest that would occur by exercising jurisdiction under section 1581(i).

FACTS

Since December, 1981, the President has issued a number of proclamations establishing import fees and quotas on imported sugar.¹ The proclamations implemented a price support system for domestic sugar cane and sugar beets as required by Title IX of the Agriculture and Food Act of 1981, 7 U.S.C. § 1446(h) (1982). Specifically relevant to the current controversy are Proclamation 4941, issued May 5, 1982, and Proclamation 5071, issued June 28, 1983. Proclamation 4941 imposed quotas on imports of sugars classified under TSUS items 155.20 and 155.30, effectively foreclosing all importations of pure sugar. Proclamation 5071 extended the quotas to sirup and sugar blends classifiable under items 183.05, 183.01, 156.45, and 155.75 of the TSUS and containing over 65 percent sugar by dry weight.

During the period in which these proclamations were issued, the plaintiff imported products that were blends of sugar and other ingredients such as flour, dry dextrose, milk powder, and dry corn sirup solids.

To avoid subjection of its products to the quotas, the plaintiff began altering the mixture of certain blends in July of 1983 to ensure that they contained 65 percent or less sugar. Sometime in 1983 the plaintiff had also added a final step to its manufacturing process by screening blends immediately following entry of the merchandise and purveying the sifted sugar as a blend containing approximately 95 percent sugar. Plaintiff brought pure sugar from Canada into a foreign trade zone located within its warehouse in Toledo, Ohio. After mixing sugar and corn sirup solids in the foreign trade zone, the blend was entered into the Customs Territory of the United States. Once across the zone, the merchandise was immediately screened to separate the sugar from the corn sirup solids. The plaintiff has stated that the Customs Port Director was advised of the screening operation and he "subsequently permitted entry of 24,950 tons of blends which he knew Arbor plaintiff would screen and indeed probably saw Arbor screening." Affidavit of Clark Bien, at 3.

Exactly when Customs became aware of the screening practice is unclear. On November 6, 1984, the Office of Regulations and Rulings advised Customs officials by telex of the practice and directed that, henceforth, all "purported sucrose `blends' will be considered commingled merchandise, pursuant to general headnote 7, TSUS," except those blends that "possess a valid commercial identity and which are actually used in commerce in the United States."

Subsequent to the November 6 directive, Customs denied entry of 360 tons of sugar and corn sirup solids blend from the foreign trade zone in plaintiff's Toledo warehouse.² The plaintiff filed no protest, but met with Customs officials on November 16, 1984, and requested a grace period to permit it to change its business practice to conform to the November 6 directive. The request was submitted in letter form on November 21, 1984, and denied by Customs on November 28, 1984. On November 14, 1984, Customs revoked all classification rulings issued prior to November 6, 1984, covering various sugar blends of plaintiff. The specific sugar/corn sirup solids blend at issue here has never been covered by a ruling issued to the plaintiff.

OPINION

The threshold question presented by this action is whether this Court has subject-matter jurisdiction under 28 U.S.C. § 1581(i)(3), (4), notwithstanding that plaintiff has failed to avail itself of the administrative protest mechanism. Generally speaking, the United States Court of International Trade reviews "challenges to classification, valuation and entry of merchandise ... pursuant to 28 U.S.C. § 1581(a) after the administrative remedies under 19 U.S.C. § 1514 and § 1515 have been exhausted." Mast Industries, Inc. v. Regan, 8 CIT ___, at ___, 596 F.Supp. 1567, at 1573 (1984). This Court, however, has on occasion asserted subject matter jurisdiction under 28 U.S.C. § 1581(i) in the absence of a denied protest. For example, in United States Cane Sugar Refiners' Association v. Block, 3 CIT 196, 544 F.Supp. 883, aff'd, 683 F.2d 399, 69 C.C.P.A. 172, (1982), a case involving quantitative restrictions on sugar imports, the Court held that subject matter jurisdiction existed under section 1581(i). There, Judge (now Senior Judge) Newman found that to require the filing and denial of a protest would be tantamount to "insistence on a useless formality," since Customs officials would be powerless to vary from the challenged Presidential Proclamation. 3 CIT at 201, 544 F.Supp. at 887. The Court of Customs and Patent Appeals (now the Court of Appeals for the Federal Circuit) upheld this assertion of jurisdiction, adding:

Respecting jurisdiction under § 1581(i), we note the provision of injunctive powers to the Court of International Trade in the Customs Cou

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