Heartland by-Products, Inc. v. U.S.

• Citation: 521 F.Supp.2d 1386
• Decision Date: 30 October 2007
• Docket Number: Court No. 03-00307.,Slip Op. 07-157.
• Parties: HEARTLAND BY-PRODUCTS, INC., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

521 F.Supp.2d 1386

HEARTLAND BY-PRODUCTS, INC., Plaintiff, v. UNITED STATES, Defendant.

Slip Op. 07-157.

Court No. 03-00307.

United States Court of International Trade.

October 30, 2007.

Serko Simon Gluck & Kane LLP, Daniel J. Gluck and (Jerome L. Hanifin); DLA Piper US LLP, (Stanley McDermott) and

Sarah J. Sterken, New York City, for Plaintiff.

Peter D. Keisler, Assistant Attorney General; Barbara S. Williams, Attorney in Charge, International Trade Field Office; (Aimee Lee), Commercial Litigation Branch, Civil Division, United States Department of Justice; Karen P. Binder and Yelena Slepak, Office of Assistant Chief Counsel, International Trade Litigation, United States Customs and Border Protection, of counsel, for Defendant United States.

OPINION

BARZILAY, Judge.

This case returns to the court on remand from the Federal Circuit, and presents a unique opportunity to clarify the scope of the Court's authority with respect to judgments issued pursuant to 28 U.S.C. § 1581(h). This opinion is the court's fourth opinion detailing Plaintiffs troubled dealings with U.S. Customs and Border Protection¹ ("Customs") beginning in 1995 when it sought an advanced ruling regarding its plan to import sugar syrup from Canada for further refining and ultimate sale to its U.S. customers.² Plaintiff Heartland By-Products, Inc. ("Heartland"), has moved for summary judgment to challenge Customs' authority to liquidate the subject entries at the Tariff Rate Quota ("TRQ") rate³ following the reversal of this court's favorable pre-importation judgment under § 1581(h). See Heartland II, 264 F.3d at 1126. For the reasons discussed herein, Heartland's motion for summary judgment is granted.

I. Background

Heartland had plans to operate a plant that refined sugar syrup imported from Canada for sale to its U.S. customers. Before entry of the sugar syrup at issue in this case, Heartland sought an advance ruling from Customs regarding the classification of its prospective imports. See 19 C.F.R. § 177. On May 15, 1995, Customs issued New York Ruling Letter 810328 ("New York Ruling Letter"), which classified the subject entries under subheading 1702.90.40 of the HTSUS, one of the subheadings eligible for non-TRQ treatment. See Heartland I, 23 CIT at 760, 74 F.Supp.2d at 1332. Having obtained a favorable ruling, Heartland began importation and refining operations in 1997.

In response to a petition filed by domestic trade associations pursuant to 19 U.S.C. §§ 1516 and 1625 seeking reclassification of Heartland's entries, Customs published a notice of proposed revocation of the New York Ruling Letter. See Proposed Revocation of Ruling Letter & Treatment Relating to Tariff Classification of Certain Sugar Syrups, 33 Cust. Bull. No. 22/23, at 56-57 (June 9, 1999). On September 8, 1999, Customs issued a final notice that revoked the New York Ruling Letter and reclassified Heartland's sugar syrup imports under 1702.90.10/20 of the HTSUS to which the TRQ rate applied, effective November 8, 1999.⁴ See Revocation of Ruling Letter & Treatment Relating to Tariff Classification of Certain Sugar Syrups, 33 Cust. Bull. No. 35/36, at 41 (Sept. 8, 1999) ("Revocation Ruling").

On September 20, 1999, Heartland filed a complaint in this court seeking pre-importation review of the Revocation Ruling pursuant to § 1581(h).⁵ See Heartland I, 23 CIT at 754, 74 F.2d at 1326; see discussion infra Part A (quoting text of § 1581(h)). One month later, this court granted Heartland's motion for judgment on the agency record. See id. at 777, 74 F.Supp.2d at 1345. The court declared Custom's Revocation Ruling unlawful, and Concluded that Heartland's sugar syrup Was properly classified under subheading 1702.90.40 of the HTSUS, as established by the New York Ruling Letter. See id. at 760, 74 F.Supp.2d at 1331-32. Customs appealed this court's ruling but did not request a stay of its judgment. See USCIT R. 62(d) & (e).

Relying on Heartland I, Heartland continued to import sugar syrup into the United States. On August 30, 2001, after the Supreme Court had decided United States v. Mead Corp., 533 U.S. 218, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001), the Federal Circuit reversed Heartland I on the grounds that Customs, while ineligible to receive Chevron deference, was entitled to deference under Skidmore concerning its classification of sugar syrup. See Heartland II, 264 F.3d at 1133; see also Mead Corp., 533 U.S. at 235, 121 S.Ct. 2164; Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 843-44, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984); Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 89 L.Ed. 124 (1944). Heartland stopped importing sugar syrup the following day. After denying Heartland's petition for rehearing, the Federal Circuit issued its mandate on December 4, 2001. "Customs, however, did not wait for the mandate to issue before commencing fullscale liquidation and reliquidation of Heartland's sugar syrup entries at the TRQ rates. Beginning on October 5, 2001, Customs liquidated some 1,225 entries prior to the issuance of the mandate." Heartland V, 424 F.3d at 1247. Shortly thereafter, Customs liquidated or reliquidated an additional 3,874 entries made prior to Heartland II at the TRQ rate. On the basis of Heartland II, Plaintiff then moved for entry of judgment, requesting this court to determine the effective date of the Heartland I ruling and the propriety of Customs' actions.

[The Court] heard oral argument on Heartland's motion for entry of judgment on January 23, 2002. At oral argument, counsel for the government represented that Heartland may establish jurisdiction under 28 U.S.C. § 1581(a) by protesting the liquidation or reliquidation of a single entry and that Customs "would likely" suspend action on Heartland's other entries pending court proceedings. In view of this representation, the trial court advised the parties to work together to settle the jurisdictional issue.... On February 15, 2002, two days after Heartland questioned the necessity of denying three rather than just one entry, Customs resumed liquidating and reliquidating Heartland's entries at the TRQ rate.

Heartland V, 424 F.3d at 1247-48 (footnote omitted).

On February 26, 2002, the court denied Heartland's motion for entry of judgment, explaining that

"[w]hile the jurisdictional predicate for 1581(h) requires that the entries be prospective, this must be distinguished from the effect of a judicial decision which can only be useful if it is applied to real entries." The court thus ruled that it continued to have jurisdiction to adjudicate issues pertaining to the actual entries covered by Heartland I: "To force an importer to seek relief under 1581(h) to establish its rights, and then force it to litigate again when it seeks to enforce those rights with actual entries, would make 1581(h) superfluous as an avenue of relief." The ... court also observed that because its decision in Heartland I remained binding and enforceable until the issuance of the appellate mandate, "[a]ny action by Customs that applies the [Revocation Ruling] prior to the issuance of the mandate directly flouts the authority of this court over rulings under 1581(h)."

Nonetheless, the [court] declined to exercise its jurisdiction under § 1581(h) to determine the temporal effect of its ruling in Heartland I, stating that a "better alternative" was available to Heartland in this case, namely, jurisdiction under 28 U.S.C. § 1581(a). The court reasoned that while it had "the option of ruling on the applicability of § 1625(c) to some of the entries covered by [Heartland's] motion" — specifically, those entered and liquidated prior to December 11, 2001 — it would be unable to consider all of the relief requested by Heartland, given the unclear factual record and the uncertain status of other entries in the liquidation process. The protest process, the court explained, would allow the development of a clear factual record. Hence, the court concluded that "[i]n this case, to maintain jurisdiction under § 1581(h), or extend it under § 1581(i), when another more comprehensive avenue is available is unwise." The [court] thus entered judgment in accordance with the appellate mandate and dismissed the complaint.

Heartland V, 424 F.3d at 1248 (quoting Heartland III, 26 CIT at 280-81, 285, 223 F.Supp.2d at 1330-31, 1334-35) (citations omitted).

Heartland did not appeal the court's dismissal of its complaint, but attempted to work with Customs to effect what had been suggested at oral argument with regard to arranging denied protests which would bring the issue back before the Court pursuant to § 1581(a). Unfortunately for both parties, as it eventually became clear, these arrangements could not be consummated.⁶

Heartland then sought relief from this court once again,

challenging Customs' retroactive imposition of TRQ duties on Heartland's sugar syrup entries imported in reliance on Heartland I. Both counts of the complaint, the first styled under § 1581(h) and the second under § 1625(c), sought declaratory judgment as well as a preliminary and permanent injunction. On July 28, 2003, the government moved to dismiss Heartland's complaint for lack of subject matter jurisdiction or, in the alternative, for failure to state a claim upon which relief can be granted.

Id. at 1248-49.

This court then, in a decision that was reversed,

concluded that it could no longer exercise jurisdiction because it "formally relinquished jurisdiction" under [§ 1581(h)] when it denied Heartland's motion for entry of judgment and dismissed the original case in Heartland II. The present action, the [court] reasoned, "[w]hile involving the same parties, entries and underlying dispute as Heartland III ... is an entirely separate, new cause of action. Therefore, Heartland carries the burden of reestablishing the jurisdiction of this court to survive the government's motion to dismiss." The [court] next determined that no new...