Keirton USA, Inc. v. United States

• Decision Date: 20 October 2022
• Docket Number: Slip Op. 22-118,Court No. 21-00452
• Citation: 600 F.Supp.3d 1270
• Parties: KEIRTON USA, INC., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

600 F.Supp.3d 1270

KEIRTON USA, INC., Plaintiff,

v.UNITED STATES, Defendant.

Slip Op. 22-118

Court No. 21-00452

United States Court of International Trade.

October 20, 2022

Bradley Park Thoreson, Buchalter, of Seattle, WA, argued for plaintiff Keirton USA, Inc. Also on the brief was Ann Y. Gong.

Guy R. Eddon, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of New York, NY, argued for defendant United States. Also on the brief were Luke Mathers, Trial Attorney, Aimee Lee, Assistant Director, Brian M. Boynton, Principal Deputy Assistant Attorney General, Patricia M. McCarthy, Director, and Justin R. Miller, Attorney-in-Charge, International Trade Field Office. Of counsel on the brief were Alexandra Khrebtukova and Mathias Rabinovitch, Office of the Assistant Chief Counsel, International Trade Litigation, U.S. Customs and Border Protection of New York, NY.

OPINION

Kelly, Judge:

Before the court is Keirton USA, Inc.’s ("Keirton") Rule 12(c) motion for judgment on the pleadings, Pl.’s Mot. J. Pleadings and accompanying Memo. Points & Authorities Supp. Pl.’s Mot. J. Pleadings, Jan. 15, 2022, ECF No. 17 ("Pl. Br."); see USCIT R. 12(c), challenging the U.S. Customs and Border Protection's ("CBP") denial of Keirton's protest of CBP's exclusion from entry into the United States of "parts and components" (the "subject merchandise") Keirton uses to manufacture its "Twister Trimmer." Keirton sells Twisted Trimmers to companies in the State of Washington that process marijuana plants. Pl. Br. at 2–3; see Compl. ¶¶ 4–7, Aug. 19, 2021, ECF No. 2; Protest 3002-21-103719 at 5, 8–10, Nov. 15, 2021, ECF No. 13-1 ("Protest").¹

Keirton challenges CBP's protest denial arguing possession and importation of the subject merchandise is permissible because Washington State law authorizes the possession and importation of marijuana paraphernalia. Pl. Br. at 2–14. Defendant United States ("Defendant") argues that, although Washington State repealed its laws criminalizing possession of marijuana paraphernalia like the Twisted Trimmer, that repeal does not explicitly authorize Keirton to use the subject merchandise to manufacture, possess, or distribute marijuana paraphernalia under Federal law. Def.’s Cross-Mot. J. Pleadings at 2, 7–8, 10–24, Mar. 28, 2022, ECF No. 21 ("Def. Br.").

JURISDICTION AND STANDARD OF REVIEW

The court exercises jurisdiction pursuant to 28 U.S.C. § 1581(a) (2018) in a challenge to contest the denial of a protest of a deemed exclusion made pursuant to Section 514 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1514(a)(4) (2018).² The standard of review is de novo based upon the record developed before the court. See 28 U.S.C. § 2640(a)(1) (2018). Deemed exclusions are governed by 19 U.S.C. § 1499(c)(5)(A), which states CBP's failure "to make a final determination with respect to the admissibility of detained merchandise within 30 days after the merchandise has been presented for customs examination ... shall be treated as a decision of [CBP] to exclude the merchandise ...." 19 U.S.C. § 1499(c)(5)(A) ; Blink Design, Inc. v. United States, 986 F. Supp. 2d 1348, 1353 (Ct. Int'l Trade 2014). An importer may protest CBP's decision to exclude the merchandise. 19 U.S.C. § 1514(a)(4). Pursuant to 19 U.S.C. § 1499(c)(5)(B), if CBP fails to respond to a protest of an exclusion within thirty days, that protest will be deemed denied. Id. § 1499(c)(5)(B). An "importer may challenge the deemed denial to its deemed exclusion before the court" under 28 U.S.C. § 1581(a). See Root Scis., LLC v. United States, 543 F. Supp. 3d 1358, 1361 (Ct. Int'l Trade 2021), reconsideration denied, 560 F. Supp. 3d 1357 (Ct. Int'l Trade 2022).

The court may grant judgment on the pleadings if there are no material facts in dispute and the moving party is entitled to judgment as a matter of law. N.Z. Lamb Co., Inc. v. United States, 40 F.3d 377, 380 (Fed. Cir. 1994) ; USCIT R. 12(c).³ "A ruling on a motion for judgment on the pleadings is reviewed under the same standard as a motion to dismiss under USCIT R. 12(b) for failure to state a claim." Forest Lab'ys, Inc. v. United States, 29 CIT 1401, 1402–03, 403 F.Supp.2d 1348 (2005), aff'd, 476 F.3d 877 (Fed. Cir. 2007). In reviewing either a motion to dismiss for failure to state a claim or a motion for judgment on the pleadings, the court accepts all well-pleaded facts as true and views them in the light most favorable to the non-moving party. Id.; see C.J. Tower & Sons of Buffalo, Inc. v. United States, 68 Cust. Ct. 377, 379, 343 F.Supp. 1387 (1972) ; see also 5C Charles Alan Wright et al., Federal Practice and Procedure § 1368 (3d ed. 2022).

UNDISPUTED FACTS

The following facts are not in dispute. On March 23, 2021, CBP imported the subject merchandise. Compl. ¶ 19; Answer ¶ 19. CBP detained the shipment on March 24, 2021.⁴ Compl. ¶ 19; Answer ¶ 19. On April 15, 2021, CBP requested additional clarifying information on the shipment and whether the subject merchandise would be used to manufacture, produce, or process a product identified under the Controlled Substances Act of 1970, 21 U.S.C. § 801 et seq. Compl. ¶ 20; Answer ¶ 20. On April 20, 2021, Keirton responded to CBP's inquiry confirming that its "Twister Trimmer" product could be used in the cannabis industry. Compl. ¶ 21; Answer ¶ 21. CBP refused entry of the subject merchandise following Keirton's response, and the shipment was deemed excluded by operation of law. Compl. ¶ 22; Answer ¶ 22.

Keirton protested CBP's exclusion of the subject merchandise on June 15, 2021. Compl. ¶ 23; Answer ¶ 23. CBP did not allow or deny Protest No. 3002-21-103719, rendering its denial final as a matter of law. Compl. ¶¶ 23, 31; Answer ¶¶ 23, 31. CBP excluded the subject merchandise in Entry No. SQ4-03475065 from entry into the United States. Compl. ¶¶ 27, 30; Answer ¶¶ 27, 30.

Keirton filed its complaint on August 19, 2021.⁵ Compl. Defendant filed its answer on November 17, 2021. Keirton filed its motion for judgment on the pleadings on January 5, 2022, stipulating that the subject merchandise meets the Federal definition of "drug paraphernalia" for the purposes of this case. Pl. Br. at 1. Defendant filed its cross-motion for judgment on the pleadings on March 28, 2022. Def. Br. The motions were fully briefed on June 6, 2022. Pl.’s Resp. Opp. [Def. Br.] & Reply Supp. [Pl. Br.], May 2, 2022, ECF No. 22; Def.’s Reply Further Supp. [Def. Br.], June 6, 2022, ECF No. 25.

DISCUSSION

Keirton argues CBP's exclusion of the subject merchandise from entry into the United States is unlawful because Washington State law authorizes Keirton to manufacture, possess, and distribute marijuana paraphernalia, exempting the subject merchandise from the Federal Mail Order Drug Paraphernalia Control Act of 1986, 21 U.S.C. § 863(a) , (f)(1). Pl. Br. at 4–14. Defendant argues that Washington State law does not explicitly authorize Keirton to manufacture, possess, or distribute marijuana paraphernalia such that Keirton is exempt pursuant to 21 U.S.C. § 863(f)(1). Def. Br. at 7–24. For the following reasons, Keirton's motion for a judgment on the pleadings is granted.

21 U.S.C. § 863(a) makes it unlawful for a person to, inter alia, import or export drug paraphernalia.⁶ 21 U.S.C. § 863(a). However, the statute exempts from the proscription of § 863(a) "any person authorized by local, State, or Federal law to manufacture, possess, or distribute such items."⁷ Id. § 863(f)(1). Thus, CBP may prevent the importation of drug paraphernalia into the United States by virtue of 19 U.S.C. § 1595a(c)(2)(A) because drug paraphernalia is unlawful under 21 U.S.C. § 863(a), unless the importer has been authorized by local, State, or Federal law to manufacture, possess, or distribute such items. Id. § 863(f)(1).

The phrase "any person authorized" in § 863(f)(1) extends the exemption from the requirements of § 863 to all persons affected by the repeal of prior State prohibitions. See Murphy v. NCAA, ––– U.S. ––––, 138 S. Ct. 1461, 1474, 200 L.Ed.2d 854 (2018) (construing New Jersey's repeal of its gambling prohibition to authorize gambling). Section 863 does not define "authorized;" however, dictionary definitions indicate "authorized" means to empower, approve, sanction, or give legal authority.⁸ Although the range of meanings supplied by dictionary definitions might, in a vacuum, suggest a concomitant range of possible directives for a State to authorize activity, where the State acts against the backdrop of a prior prohibition, there can be no doubt that a repeal of that prohibition satisfies any definition of authorized. Murphy, 138 S. Ct. 1461, 1474. Murphy explained this point:

The concept of state "authorization" makes sense only against a backdrop of prohibition or regulation. A State is not regarded as authorizing everything that it does not prohibit or regulate. No one would use the term in that way. For example, no one would say that a State "authorizes" its residents to brush their teeth or eat apples or sing in the shower. We commonly speak of state authorization only if the activity in question would otherwise be restricted.

Murphy, 138 S. Ct. 1461, 1474.⁹

Here, Washington State law authorizes persons to possess marijuana paraphernalia under the meaning of "authorized" in § 863(f). By referendum, Washington repealed the portions of its law criminalizing the possession of marijuana paraphernalia.¹⁰ See Initiative Measure 502, 2013 Wash. Sess. Laws ch. 3. The Washington Administrative Code provides that "[i]tems for ... processing cannabis ... are not considered [drug] ‘paraphernalia.’ " Wash. Admin. Code § 314-55-010(27). The plain language of the Washington Revised Code excludes marijuana paraphernalia from its prohibition on drug paraphernalia. Wash. Rev. Code §§ 69.50.412(1) – (2), 69.50.4121(1) (2013). Washington State's specific exemption of marijuana paraphernalia from its prohibition on drug paraphernalia reflects the State's intent to authorize...