Keirton U.S. Inc. v. U.S. Customs & Border Prot.
| Decision Date | 16 April 2021 |
| Docket Number | C21-224 TSZ |
| Court | U.S. District Court — Western District of Washington |
| Parties | KEIRTON USA INC., Plaintiff, v. UNITED STATES CUSTOMS AND BORDER PROTECTION, Defendant. |
THIS MATTER comes before the Court on a Motion for a Temporary Restraining Order, docket no. 8, brought by Plaintiff Keirton USA Inc. ("Keirton"). At a telephone status conference on March 3, 2021, the parties agreed to treat the motion as a motion for a preliminary injunction ("Motion"). Minute Entry (docket no. 16). The Court has reviewed all papers filed in support of, and in opposition to, the Motion and held oral argument on March 26, 2021. At oral argument, Keirton stated that it was seeking injunctive relief only for future shipments and not for the January 2021 shipment that Defendant United States Customs and Border Protection ("CBP") excluded. At the conclusion of the hearing on March 26, 2021, the Court denied the Motion and deferred the issue of the Court's subject matter jurisdiction. The Court now enters this Order explaining its oral ruling and addressing the deferred issue of jurisdiction.
Keirton manufactures and imports parts and components used for agricultural purposes, as well as finished agricultural equipment, from British Columbia, Canada, China, Taiwan, and Japan. Fluckiger Decl. at ¶ 3 (docket no. 12). Keirton's primary finished product is the Twister Trimmer, a machine that separates branches from the leaves and crop heads. Id. To the best of Keirton's knowledge, and pursuant to its contractual agreements with buyers, its buyers use the Twister Trimmer for legal purposes. Id. at ¶ 5.
In the fall of 2020, CBP seized a number of Keirton's shipments as illegal drug paraphernalia.1 Hickman Decl. at ¶ 4 (docket no. 21); Ex. A to Complaint (docket no. 1-1 at 2). In response, Keirton filed a complaint in this District, seeking a temporary restraining order ("TRO"). Keirton USA, Inc. v. U.S. Customs and Border Prot., Case No. 20-1734-RSM, 2020 WL 6887871, at *1 (W.D. Wash. Nov. 24, 2020). The court in that prior case denied Keirton's motion, concluding that Keirton had failed to demonstrate a likelihood of irreparable harm in the absence of emergency relief. Id. at *2. To support its motion for a TRO in that prior case, Keirton submitted declarations from its President and CEO, Jay Evans, and its Director of Manufacturing, JasonFluckiger. Id. The court concluded that the declarations, submitted by Keirton's own management, offered conclusory assertions and were thus insufficient, standing alone, to establish that Keirton would close without emergency relief. Id.
After the court denied Keirton's motion for a TRO in case number 20-1734-RSM, the parties reached a settlement agreement in which Keirton agreed to pay a remission fee in exchange for CBP releasing the seized merchandise ("2020 Settlement"). See Ex. A to Complaint (docket no. 1-1 at 3).
On January 19, 2021, CBP again detained one of Keirton's shipments containing $34,936.24 worth of agricultural equipment. Hickman Decl. at ¶ 18; Ex. F to Hickman Decl. (docket no. 21-6). CBP requested additional information relating to the legality and admissibility of the detained equipment. Ex. G to Hickman Decl. (docket no. 21-7). In response to CBP's request to "[i]dentify and explain the intended end product," Keirton stated "[a]gricultural leaves separated from branches and stems." Ex. H to Hickman Decl. (docket no. 21-8). When asked to "[i]dentify and explain the materials the imported item will use to manufacture, produce, or process," Keirton responded "[a]gricultural crop branches and leaves." Id. Most of Keirton's responses to the other questions repeated variations of these answers. Id. Keirton also responded to questions by referring CBP to the Twister Trimmer User Manual. Id. Finding Keirton's responses to be "vague and unclear," CBP "was unable to make an admissibility determination." Hickman Decl. at ¶¶ 23-24.
Accordingly, on February 11, 2021, CBP notified Keirton that it was excluding the merchandise at issue pursuant to 19 U.S.C. § 1499(c)(5) and 19 C.F.R. §§ 151.16(f), (j).Ex. I to Hickman Decl. (docket no. 21-9). CBP also notified Keirton of its right to protest the decision pursuant to 19 U.S.C. § 1514. Id. Keirton did not file a protest pursuant to 19 U.S.C. § 1514(a); rather, it filed this Motion seeking prospective relief to prevent CBP from excluding future shipments.
CBP argues that the Court of International Trade ("CIT") has exclusive jurisdiction over this action. The Court agrees.
Congress may preclude district court jurisdiction by enacting an alternative statutory scheme for administrative and judicial review. Axon Enter., Inc. v. Fed. Trade Comm'n, 986 F.3d 1173, 1177-78 (9th Cir. 2021). Courts use a two-step inquiry to determine whether Congress has impliedly precluded jurisdiction. Id. at 1178. "First, a court asks 'whether Congress's intent to preclude district-court jurisdiction is fairly discernable in the statutory scheme.'" Id. (quoting Bennett v. U.S. Sec. and Exch. Comm'n, 844 F.3d 174, 181 (4th Cir. 2016)). "Second, a court considers 'whether plaintiffs' claims are of the type Congress intended to be reviewed within this statutory structure.'" Id.
To determine whether it is "fairly discernible" that Congress precluded district court jurisdiction, courts examine the statutory text, structure, and purpose. See Elgin v. Dep't of Treasury, 567 U.S. 1, 10 (2012) (citing Thunder Basin Coal Co. v. Reich, 510U.S. 200, 207 (1994)). A "comprehensive review process" demonstrates an intent to preclude district court review. See Thunder Basin Coal Co., 510 U.S. at 208.
The Tariff Act of 1930 ("Act") establishes a detailed structure for reviewing CBP's decisions to exclude merchandise. Wirtgen Am., Inc. v. United States, 443 F. Supp. 3d 198, 215 (D.D.C. 2020) (citing Thunder Basin Coal Co., 510 U.S. at 207). Under the Act, an importer may file a protest with Custom Service within 180 days of CBP excluding a shipment from entry into the United States. 19 U.S.C. §§ 1514(a), (c)(3). Importers may also request an accelerated disposition, in which case a protest will be deemed denied if, after 30 days, Custom Service has not resolved the protest. Id. § 1515(b). If Custom Service denies a protest, the importer may file a civil action to contest that denial in the CIT. See id. § 1514(a). The CIT has exclusive jurisdiction over any civil action contesting the denial of a protest. 28 U.S.C. § 1581(a). An importer may appeal a final decision from the CIT to the Federal Circuit, which has exclusive jurisdiction over appeals from the CIT. Id. § 1295(a)(5). Courts have found such "exclusive" grants of jurisdiction to preclude district court jurisdiction over claims relating to the relevant statutory scheme. See, e.g., Thunder Basin Coal Co., 510 U.S. at 208; Jarkesy v. S.E.C., 803 F.3d 9, 16 (D.C. Cir. 2015); Wirtgen Am., Inc., 443 F. Supp. 3d at 211.
The detailed structure of the Act demonstrates Congress's intent to preclude this challenge. See Thunder Basin Coal Co., 510 U.S. at 207-09. Nothing in the text of the Act suggests that an importer may avoid its review structure by declining to file a protestand instead filing a district court action challenging future enforcement proceedings.2 The Court concludes that the Act reflects a fairly discernible intent to preclude district court jurisdiction over CBP's exclusion decisions.
When inquiring whether a party's claims are of the type Congress intended to be reviewed within the statutory structure, courts "must consider: (1) whether the plaintiff can obtain meaningful judicial review in the statutory scheme, (2) whether the claim is 'wholly collateral' to the statutory scheme, and (3) whether the claim is outside the agency's expertise." Axon Enter., Inc., 986 F.3d at 1181 (citing Elgin, 567 U.S. at 15). These factors are "general guideposts useful for channeling the inquiry into whether the particular claims at issue fall outside an overarching congressional design." Id. (quoting Jarkesy, 803 F.3d at 17). Further, the presence of meaningful judicial review is sufficient to decide that Congress precluded district court jurisdiction over a type of claim. Id.
In considering these factors, Keirton's claim regarding possible future action by CBP is of the type over which Congress precluded district court jurisdiction. First, Keirton fails to argue that it could not obtain meaningful judicial review in the CIT. Indeed, the CIT could grant Keirton's claim for injunctive relief. USCIT R. 65; 28 U.S.C. § 2643(c)(1). For example, in One World Technologies, Inc. v. United States, 380 F. Supp. 3d 1300 (Ct. Int'l Trade 2019), an importer sought an injunction from theCIT to allow future imports of its merchandise into the United States after CBP excluded four of its shipments. Id. at 1308. The CIT considered the preliminary injunction under the same four factors used by this Court, see Section B infra, and granted the preliminary injunction. Id. at 1321-24. As One World Technologies demonstrates, Keirton would not be precluded from all meaningful judicial review if this Court lacks jurisdiction over its claims. This factor favors jurisdiction preclusion.
Turning to the second factor, a claim is "wholly collateral" if a party does not raise it in response to an administrative proceeding. Axon Enter., Inc., 986 F.3d at 1185. If, however, the claim is the procedural vehicle by which the party is using to reverse the agency action, then the party must seek relief through the statutory scheme. Id. at 1185-86. Here, Keirton's claim for injunctive relief is raised in response to CBP's exclusion decision and is the vehicle by which it seeks to prevent CBP from excluding future shipments. This constitutes a challenge to CBP's decision to...
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