Cutter & Buck, Inc. v. United States
| Decision Date | 03 April 2013 |
| Docket Number | Court No. 04-00624,Slip Op. 13-45 |
| Court | U.S. Court of International Trade |
| Parties | CUTTER & BUCK, INC., Plaintiff, v. UNITED STATES, Defendant. |
Before: Richard W. Goldberg, Senior Judge
OPINION AND ORDER[Summary judgment granted for Defendant; summary judgment denied for Plaintiff; case dismissed in part for lack of jurisdiction.]
Taylor Pillsbury, Meeks, Sheppard, Leo & Pillsbury, of Newport Beach, CA, argued for plaintiff.
Amy M. Rubin, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for defendant. With her on the brief were Stuart F. Delery, Acting Assistant Attorney General, and Barbara S. Williams, Attorney in Charge, International Trade Field Office. Of counsel on the brief was Yelena Slepak, Office of Assistant Chief Counsel for International Trade Litigation, U.S. Customs and Border Protection, of Washington, DC.
Goldberg, Senior Judge: Cutter & Buck ("C&B") and the United States have filed cross-motions for summary judgment. C&B contests the U.S. Customs and Border Protection's ("Customs") valuation of 168 entries of apparel. Specifically, C&B asserts that Customs improperly failed to adjust the transaction value of each entry downward by deducting international freight charges. C&B requests that the court enter summary judgment in its favor and direct Customs to reliquidate the subject entries with a duty allowance. The Government claims that the Court lacks jurisdiction over five of the 168 entries and that Customs properlydeclined a duty allowance with respect to the remaining entries. For the following reasons, the court grants the Government's summary judgment motion.
Between July 2002 and March 2003, C&B entered 168 shipments of apparel into the Port of Seattle. Pl.'s Corrected Statement of Material Facts as to Which There is No Genuine Issue to Be Tried ("Pl.'s Facts") ¶ 2. Those particular entries were late shipments and not shipped in the manner C&B and seller had originally contemplated (i.e., free on board ("FOB")).1 See id. ¶ 3. Instead, the shipments were governed by the provisions of a late delivery clause contained in C&B's purchase orders. Id. ¶¶ 4-5. The pertinent portion of the clause shifted freight responsibility from C&B to the seller, but did not otherwise expressly change the terms of sale from FOB to cost and freight ("CFR")2 or provide for a reduction in the price of the goods. See Pl.'s Mot. and Mem. in Supp. of Summ. J. ("Pl.'s Br.") at Ex. A.
Upon importation, C&B paid the original FOB purchase price and claimed a deduction in the transaction value3 of each shipment on the basis that the "price actually paid or payable" included international freight charges. See id. at 2. The applicable statute authorizes the deduction of international freight charges from the "price actually paid or payable" in certain defined circumstances. 19 U.S.C. § 1401a(b)(4) (2006). However, Customs found that a deduction was unwarranted and disallowed C&B's claimed deduction. Pl.'s Br. at 2.
C&B then filed thirteen protests and subsequent requests for review challenging Customs's appraisement of the 168 entries. See Def.'s Statement of Additional Material Facts as to Which There Are No Genuine Issues to Be Tried ("Def.'s Facts") ¶ 3. In response to one of the applications for further review, Customs issued HQ 548432 (May 20, 2004). In that ruling, Customs found that the "evidence did not show there was a change in the terms of sale from FOB to CFR" and denied the protest. Id. According to Customs, such a shift was necessary because Customs treats freight costs as separate from a FOB price, but included in a cost, insurance, freight ("CIF") or CFR price. Therefore, freight deductions are available for CIF and CFR transactions and not for FOB transactions. Because Customs believed the totality of the circumstances did not support a shift in the terms of the sale, a duty allowance was unwarranted.
In the instant action, C&B argues that the undisputed facts demonstrate that C&B and the seller intended to effect a change to the purchase price and create a de facto CFR transaction. The Government avers that the facts support Customs's finding that a deduction was unavailable.
Summary judgment is available when the movant shows "that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." USCIT R. 56(a). A fact is material if it could affect the outcome of the action. See, e.g., Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). A factual dispute is genuine "if the evidence is such that a reasonable [factfinder] could return a verdict for the nonmoving party." Id. at 248.
The Court reviews legal aspects of Customs's protest denials de novo. 28 U.S.C. § 2640(a)(1). On de novo review, the Court accords deference to Customs's rulings "in proportion to their 'power to persuade.'" Michael Simon Design, Inc. v. United States, 501 F.3d 1303, 1305 (Fed. Cir. 2007) (quoting United States v. Mead Corp., 533 U.S. 218, 235 (2001)); see alsoPeerless Clothing Int'l, Inc. v. United States, 33 CIT _, _, 602 F. Supp. 2d 1309, 1315 (2009). The degree of deference accorded "depend[s] upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control." Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944)).
C&B challenges the denial of its thirteen protests covering the 168 disputed entries in this case. Neither the Government nor C&B contest the Court's jurisdiction over 163 of the entries. Accordingly, as to those 163 entries, jurisdiction is proper pursuant to 28 U.S.C. § 1581(a).
As to the remaining five entries, further analysis is necessary. The Government avers that C&B's alleged failure to timely protest Entry Numbers WC4-5003386-3, WC4-5003406-9, WC4-5003501-7, WC4-5003502-5, and WC4-5003503-3 deprives this Court of jurisdiction over those appeals. Def.'s Cross-Mot. for Summ. J. ("Def.'s Br.") at 5-8. C&B submits that Protest Number 3001-03-100211 was timely filed, and in support offers a FedEx overnight airbill dated one day before expiration of the ninety-day protest period. See Pl.'s Resp. Br. in Opp'n to Def.'s Cross-Mot. for Summ. J. ( ) at Ex. B. C&B asserts that it lacks more proof because Customs did not notify C&B of a timeliness problem as required by 19 C.F.R. § 174.30. Id. at 3. Due to this procedural irregularity, C&B requests that the court disregard the jurisdictional argument. Id. at 3-4.
This court has previously found that it may set aside government action violative of 19 C.F.R. § 174.30 when the party complaining of the errors is prejudiced. See Sea-Land Serv., Inc. v. United States, 14 CIT 253, 257, 735 F. Supp. 1059, 1063 (1990). Thus, addressing C&B'sarguments involves inquiry into (1) whether C&B received adequate notice of the reasons for the protest denial, and (2) if not, whether Customs's notification deficiencies prejudiced C&B.
C&B did not receive the notice mandated by law. 19 C.F.R. § 174.30 and its statutory counterpart, 19 U.S.C. § 1515, require that a protest denial include "a statement of the reasons for the denial, as well as a statement informing the protesting party of the right to a civil action contesting the denial of the protest." The protest denial at issue referred C&B to its previous ruling in HQ 548432, but did not state that the protest was untimely. See Pl.'s Resp. Br. at Ex. C. Further, Customs did not check the box on the protest form reserved for untimely filed protests. Id. The law requires that Customs identify the reasons for the denial, and by merely identifying a reason, Customs fell short of its notification burden.
Nonetheless, Customs's procedural shortcomings did not prejudice C&B. When C&B filed its summons in December 2004, it needed to establish this Court's jurisdiction over each protest. See Global Sourcing Grp., Inc. v. United States, 33 CIT _______, _______, 611 F. Supp. 2d 1367, 1372 (2009); VWP of Am., Inc. v. United States, 30 CIT 1580, 1584 (2006). Customs indicated that it received the protest in question on October 17, 2003—one day after the expiration of the ninety-day protest window. Pl.'s Resp. Br. at Ex. C; see also 19 C.F.R. § 174.12(e). Since the Customs receipt date is considered the protest file date, C&B should have noted any discrepancy when it filed its summons. See 19 C.F.R. § 174.12(f). At that point, it still could have pulled shipping records to establish the protest's timeliness. In sum, although Customs did not fulfill its duty in this case, Customs's failure did not relieve C&B of its own duty to verify the jurisdictional basis for its action.
C&B has not met its burden of proving jurisdiction over the five contested entries. Customs officials enjoy a presumption of correctness when performing their duties. SeeProsegur, Inc. v. United States, 25 CIT 364, 367, 140 F. Supp. 2d 1370, 1375 (2001). The sole document C&B offers to rebut that presumption is a FedEx airbill, but there is no guarantee that the protest was mailed on the date specified on the airbill or that Protest No. 3001-03-100211 accompanied the airbill. Thus, the Court is without jurisdiction over five of the entries covered by that protest.
Turning to the substantive issue in this case, C&B argues that Customs erred by imposing a "heightened standard" on C&B when C&B attempted to claim a duty allowance. Pl.'s Br. at 9. According to C&B, Customs based its denial of the duty allowance on the fact that the terms of trade did not expressly change from FOB to CFR. Id. C&B asserts that isolated reliance on those Incoterms was improper since the totality of the circumstances otherwise demonstrated an intent to deduct air freight from the price actually paid or payable. Id. at 12. The Government...
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