Gilda Industries, Inc. v. U.S.

• Citation: 446 F.3d 1271
• Decision Date: 01 May 2006
• Docket Number: No. 05-1384.,05-1384.
• Parties: GILDA INDUSTRIES, INC., Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

446 F.3d 1271

GILDA INDUSTRIES, INC., Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee.

No. 05-1384.

United States Court of Appeals, Federal Circuit.

May 1, 2006.

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Peter S. Herrick, of Miami, Florida, argued for plaintiff-appellant.

David S. Silverbrand, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee. With him on the brief were Peter D. Keisler, Assistant Attorney General; David M. Cohen, Director; and Jeanne E. Davidson, Deputy Director. Of counsel was William Busis, Attorney, Office of General Counsel, Executive Office of The President, Office of the United States Trade Representative.

Before NEWMAN, BRYSON, and PROST, Circuit Judges.

BRYSON, Circuit Judge.

Gilda Industries, Inc., appeals from a decision of the Court of International Trade dismissing Gilda's complaint for failure to state a claim upon which relief could be granted. Gilda Indus., Inc. v. United States, 353 F.Supp.2d 1364 (Ct. Int'l Trade 2004). We affirm in part, vacate in part, and remand.

I

A

In December 1985 the European Community prohibited imports of the meat of animals that had been treated with hormones. The United States attempted to negotiate a change in the EC's policy. When those efforts failed, the United States invoked formal dispute settlement proceedings before the World Trade Organization challenging the EC's ban on hormone-treated meat. In 1997 a WTO panel issued a report concluding that the EC's ban was contrary to its WTO obligations because the ban was not based on scientific evidence. The WTO's Dispute Settlement Body subsequently adopted the panel's report. Nevertheless, the EC did not implement the panel's recommendations. As a result, in 1999 the United States requested suspension of the duty concessions that WTO countries are obligated to grant to one another. The EC objected, and the matter was referred for arbitration. On July 12, 1999, the WTO arbitrator determined that the United States had suffered impairment as a result of the EC's ban and therefore authorized the United States to increase its duties on EC products.

Pursuant to section 301 of the Trade Act of 1974, the United States Trade Representative has authority to take certain retaliatory measures when this country's trade rights are violated by another country. In particular, 19 U.S.C. § 2416 authorizes the Trade Representative to create "retaliation lists," which subject certain products of the target countries to increased duties. On March 25, 1999, the Trade Representative published notice of his intention to implement retaliatory measures against the EC pursuant to the WTO dispute settlement agreement. Implementation of WTO Recommendations Concerning EC — Measures Concerning Meat and Meat Products (Hormones), 64 Fed.Reg. 14,486 (Mar. 25, 1999). After a notice and comment period for the proposed retaliatory measures, the Trade Representative adopted a retaliation list and subjected all the products on the list to a 100 percent ad valorem duty. Among the listed products were those falling under HTSUS subheading 9903.02.35, which encompasses "[r]usks, toasted bread and similar products."

Shortly after the Trade Representative issued the retaliation list, Congress enacted the Trade and Development Act of 2000, Pub.L. No. 106-200, 114 Stat. 251. Section 407 of that Act amended 19 U.S.C. § 2416 to require the Trade Representative to modify retaliation lists periodically after their implementation.

B

Gilda imports toasted breads from Spain. Although toasted breads were included on the proposed retaliation list, Gilda did not submit any comments during the notice and comment period. In 2002 and 2003, three of Gilda's entries that were classified under subheading 9903.02.35 were subjected to the 100 percent retaliatory duty. Gilda filed protests with the Customs Service contesting the classification of the entries and the imposition of the retaliatory duty, but Customs denied the protests. In April 2003 Gilda filed a complaint with the Court of International Trade requesting reliquidation of its entries, refund of the duties it had paid as a result of the inclusion of its imports on the retaliation list, and removal of those products from the list. The court granted the government's motion to dismiss the complaint for failure to state a claim upon which relief could be granted. Gilda appeals.¹

II

As a preliminary matter, the government contends that the Court of International Trade invoked the wrong jurisdictional provision in this case. Although the government agrees that the court had subject matter jurisdiction in this case, the government argues that the court had jurisdiction under 28 U.S.C. § 1581(a) and not under 28 U.S.C. § 1581(i). Under section 1581(a), the government argues, the court had no authority to consider the impact of the retaliation list on future entries, because review under section 1581(a) is limited to the three entries for which Gilda filed protests that were denied by Customs.

Gilda's complaint facially fits within section 1581(i)(2) because it arises out of a law providing for duties "on the importation of merchandise for reasons other than the raising of revenue" (i.e., the duty at issue was imposed as a retaliatory measure, designed to encourage foreign nations to comply with the WTO settlement agreement rather than to raise revenue). As the government correctly notes, however, section 1581(i) "supplies jurisdiction only for instances when no other subsection of [section 1581] is or could have been available, unless the other subsection provided no more than a manifestly inadequate remedy." Consol. Bearings Co. v. United States, 348 F.3d 997, 1002 (Fed.Cir. 2003) (internal quotation marks omitted). In this case, the government argues, section 1581(i) is unavailable because adequate review of Gilda's claims could be obtained pursuant to section 1581(a). We reject the government's argument.

Section 1581(a) confers jurisdiction on the Court of International Trade in "any civil action commenced to contest the denial of a protest" under the Tariff Act of 1930. The Tariff Act lists seven "decisions of the Customs Service" as to which a protest may be filed. 19 U.S.C. § 1514(a). The principle underlying the limited availability of review under 28 U.S.C. § 1581(i) is that a party should not be allowed to circumvent the protest requirement — and thereby Customs' administrative review — simply by asserting jurisdiction under section 1581(i) and proceeding immediately to court without exhausting administrative remedies through the protest mechanism. However, the fact that Gilda was eligible to file protests, and in fact filed protests regarding the duties collected under the retaliation list, does not bar it from proceeding under section 1581(i) instead of section 1581(a). See, e.g., United States v. U.S. Shoe Corp., 523 U.S. 360, 363, 365, 118 S.Ct. 1290, 140 L.Ed.2d 453 (1998) (although petitioner filed a protest, jurisdiction was available under section 1581(i)). Moreover, although the government assigns critical significance to the fact that Gilda has failed to show "irreparable harm to an industry and a substantial impact on the national economy," U.S. Cane Sugar Refiners' Ass'n v. Block, 69 C.C.P.A. 172, 683 F.2d 399, 402 n. 5 (1982), that is but one of the circumstances in which section 1581(a) might provide a manifestly inadequate remedy. See, e.g., Am. Ass'n of Exps. & Imps. v. United States, 751 F.2d 1239, 1245 (Fed.Cir.1985) ("The objective of the addition of § 1581(i) was to make it clear that . . . prospective importers challenging Customs Service regulations imposing import restrictions need not attempt to import merchandise, file a protest and then contest the administrative denial of the protest in the CIT under § 1581(a).").

There is no reason to require exhaustion of Customs' administrative procedures when a party challenges a decision in which Customs played no part and over which Customs has no control. In U.S. Shoe Corp., for example, the Court held that the petitioner's challenge to the Harbor Maintenance Tax could be brought under section 1581(i) because Customs "protests are not pivotal" when "Customs performs no active role, [but] merely passively collects HMT payments." 523 U.S. at 365, 118 S.Ct. 1290. Similarly, in Mitsubishi Electronics America, Inc. v. United States, 44 F.3d 973, 976-77 (Fed.Cir. 1994), this court held that a challenge to an antidumping duty arises under section 1581(i) because "[t]he actions that [Mitsubishi] challenges ... are not Customs decisions." Because Commerce, not Customs, calculates antidumping duties, the court explained, "Customs has a merely ministerial role in liquidating antidumping duties." Id. at 977.

As in U.S. Shoe and Mitsubishi, Gilda does not challenge any decision by Customs. The duty to which Gilda objects was imposed pursuant to a decision of the Trade Representative. Because Customs has no authority to overturn or disregard the Trade Representative's decision, Customs would have no authority to grant relief in a protest action challenging the imposition of the duty. Moreover, Gilda seeks more than mere review of particular duties imposed on products previously imported; Gilda's complaint seeks termination of the retaliation list or removal of its imports from the list. That portion of Gilda's complaint is beyond the scope of issues that could be protested under 19 U.S.C. § 1514(a). Therefore, limiting the court's review to the scope of the protests that Customs denied, which is what the government seeks to do by urging 28 U.S.C. § 1581(a) as the only proper jurisdictional basis, would provide an inadequate remedy in light of the relief sought in Gilda's complaint. Consequently, we agree with the Court of International Trade that Gilda's complaint invoked section 1581(i) jurisdiction.

III...