Netchem, Inc. v. United States

• Decision Date: 14 February 2014
• Docket Number: Slip Op. 14–16.,Court No. 12–00123.
• Parties: NETCHEM, INC., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

961 F.Supp.2d 1336

NETCHEM, INC., Plaintiff,

v.UNITED STATES, Defendant.

Slip Op. 14–16. Court No. 12–00123.

United States Court of International Trade.

Feb. 14, 2014.

Charles A. Zdebski, Eckert Seamans Cherin & Mellott, LLC, of Washington, DC, for plaintiff. With him on the brief was Candace Lynn Bell.

Saul Davis, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of New York, NY, for defendant. With him on the brief were Stuart F. Delery, Assistant Attorney General, and Amy M. Rubin, Acting Assistant Director, International Trade Field Office.

OPINION

GOLDBERG, Senior Judge:

This suit challenges Customs and Border Protection's decision to apply a 3.7% ad valorem tariff rate to plaintiff Netchem, Inc.'s lanthanum oxide imports. In its complaint, Netchem invoked the court's jurisdiction under 28 U.S.C. § 1581(a) (2006). Defendant the United States (the “Government”) now moves to dismiss the lawsuit for lack of jurisdiction under USCIT Rule 12(b)(1).

“Jurisdiction is ... the authority conferred by Congress to decide a given type of case one way or the other.” Hagans v. Lavine, 415 U.S. 528, 538, 94 S.Ct. 1372, 39 L.Ed.2d 577 (1974). Without jurisdiction a court cannot hear a case, no matter how persuasive the plaintiff's substantive arguments. See Schick v. United States, 31 CIT 2017, 2020, 533 F.Supp.2d 1276, 1281 (2007) (citing McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189, 56 S.Ct. 780, 80 L.Ed. 1135 (1936)).

These rules compel the court to dismiss Netchem's action in its entirety. The court finds that Netchem's lanthanum oxide shipments or “entries” were untimely liquidated, untimely paid, or protested at the wrong port, depriving the court of authority to adjudicate Netchem's claims.

FACTUAL BACKGROUND

The facts that follow are uncontested.

Netchem, Inc., a Canadian corporation, imports chemicals into the United States. Compl., ECF No. 5, ¶ 1. Between June and December 2011, Netchem entered forty-three shipments of lanthanum oxide at three U.S. ports: Detroit, Port Huron, and Newark, NJ/New York, NY. See Summons, ECF No. 1, Schedule 1. Netchem initially classified these shipments under U.S. Harmonized Tariff Schedule (“HTSUS”) subheading 2846.90.2010, which covers “rare-earth oxides except cerium oxide.” Compl. ¶ 9–13. Items imported under this subheading enter the country duty free.

Then, in October 2011, U.S. Customs and Border Protection (“CBP”) reclassified Netchem's lanthanum oxide shipments under HTSUS 2846.90.8000. Pl.'s Supp. Br., ECF No. 43 (“Pl.'s Second Supp. Br.”), Ex. 1 (listing entry number 38 as “Original Tariff Code Correction Entry”). This subheading covers “other” compounds or mixtures of rare-earth metals and levies a 3.7% ad valorem tariff rate. Following CBP's reclassification, eighteen of Netchem's shipments fell subject to the 3.7% rate at entry. Twenty-five shipments that were initially classified as duty free were also charged 3.7% upon liquidation. The company paid $1,539,882.97 in duties for the forty-three entries contested in this case. See id.

Netchem protested CBP's classification decision in a document date-stamped March 19, 2012. Filed at the Port of Buffalo, the document petitioned CBP to reclassify not only the forty-three entries at issue here, but also thirteen lanthanum oxide entries made at Buffalo during the same period. Pl.'s Supp. Br., ECF No. 38 (“Pl.'s First Supp. Br.”), App. A. Of these fifty-six entries, only twenty-six had been liquidated—with final duty liability fully ascertained—when Netchem filed the protest document. Pl.'s Second Supp. Br. Ex. 1; see19 C.F.R. § 159.1 (2013) (defining liquidation). The remaining thirty entries, including all thirteen of Netchem's entries to Buffalo, were liquidated after March 19, 2012. Pl.'s Second Supp. Br. Ex. 1.

Buffalo's port director wholly refused to rule on Netchem's claims. The director instead returned the protest document to Netchem after number-stamping the first page. See Pl.'s First Supp. Br. App. A; Def.'s Reply Br., ECF No. 33 (“Reply”), 3–4. According to CBP officer Elise Morris, the director rejected the document because it included “entries filed at other ports and not at Buffalo.” Reply Ex. A ¶ 5. The director would also have sent Netchem “written advice that [the document] was sent to the wrong port.” Id. ¶ 8.

Netchem nevertheless assumed that its petition was “deemed denied” when CBP failed to decide the document's merits within thirty days. See Compl. ¶ 4; see also19 U.S.C. § 1515(b) (outlining procedure for accelerated disposition of protests). Netchem filed this action with the Court of International Trade on May 4, 2012, listing in the summons its forty-three entries to Detroit, Port Huron, and New York. See Summons 2, Schedule 1. As of May 4, Netchem had paid liquidated duties on eighteen of these forty-three entries. See Pl.'s Second Supp. Br. Ex. 1. The remaining entries were paid sometime between May 9 and July 30, 2012. See id.; Reply 12.

Only one entry—UPS 3811755–6 from the Port of Detroit—was protested following liquidation and fully paid when the case began. See Reply 5, 11; Pl.'s Second Supp. Br. Ex. 1.

STANDARD OF REVIEW

The court reviews the Government's jurisdictional arguments in two steps.

To begin, the court must decide whether the statutory provisions invoked to dismiss Netchem's entries are indeed jurisdictional. The Supreme Court calls a statutory precondition to a suit “jurisdictional” only if “the Legislature clearly states that [the] threshold limitation on a statute's scope shall count as jurisdictional.” Arbaugh v. Y & H Corp., 546 U.S. 500, 515, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006). A statutory limitation is not jurisdictional, however, “when Congress does not rank [the] statutory limitation ... as jurisdictional.” Id. at 516, 126 S.Ct. 1235. The court may consider a provision's text, context, and historical treatment in this inquiry. See Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154, 166, 130 S.Ct. 1237, 176 L.Ed.2d 18 (2010); Ford Motor Co. v. United States, 635 F.3d 550, 555 (Fed.Cir.2011); Baroque Timber Indus. (Zhongshan) Co. v. United States, 36 CIT ––––, ––––, 865 F.Supp.2d 1300, 1305 (2012).

The court must then decide whether the facts satisfy these jurisdictional prerequisites. In its analysis, the court may look beyond the facts alleged in the complaint and consider evidence extrinsic to the pleadings. Shoshone Indian Tribe of Wind River Reservation v. United States, 672 F.3d 1021, 1030 (Fed.Cir.2012). Only uncontroverted factual allegations are accepted as true for the purposes of the motion. Id. If the court finds these uncontested facts do not establish jurisdiction over a given claim, the court must dismiss that claim. See Schick, 31 CIT at 2020, 533 F.Supp.2d at 1281. Plaintiff bears the burden to prove jurisdictional facts by a preponderance of the evidence. See McNutt, 298 U.S. at 189, 56 S.Ct. 780.

The court finally observes, as a legal matter, that statutory provisions granting jurisdiction over denied protests “operate[ ] as a waiver of [the government's] sovereign immunity.” AutoAlliance Int'l, Inc. v. United States, 357 F.3d 1290, 1293 (Fed.Cir.2004). As such, jurisdictional conditions “must be strictly observed and are not subject to implied exceptions.” NEC Corp. v. United States, 806 F.2d 247, 249 (Fed.Cir.1986). The court will thus construe any ambiguity in the statute's jurisdictional language in favor of the Government. Int'l Custom Prods., Inc. v. United States, 37 CIT ––––, ––––, 931 F.Supp.2d 1338, 1341 (2013).

DISCUSSION

The court now confronts the central question posed in the Government's motion to dismiss: Does the court have jurisdiction to determine the classification of the forty-three entries listed in Netchem's summons? The court holds, for all forty-three of the entries, that the answer is “no.” Seventeen of Netchem's entries were not liquidated before being protested, divesting the court of authority to decide them. Another twenty-five entries were unpaid when Netchem filed this action, again depriving the court of jurisdiction. And although one entry—UPS 3811755–6—was timely liquidated and paid, the court cannot adjudicate it because it was protested at the wrong port. The court thus dismisses Netchem's case in its entirety.

I. Seventeen of Netchem's Entries Were Not Timely Liquidated

The Government argues the court lacks jurisdiction over seventeen entries that were untimely liquidated. Def.'s Supp. Resp. Pursuant to Order of Nov. 18, 2013, ECF No. 42 (“Def.'s Second Supp. Br.”), 3–4. Under the statute, importers must lodge protests with CBP within 180 days following the liquidation of contested entries. 19 U.S.C. § 1514(c)(3)(A) (the “timeliness rule”). An importer must not file a protest before the entries disputed in that protest are liquidated. Here, the Government alleges a number of entries were liquidated after Netchem protested CBP's classification decision, thus violating the statute's timeliness rule.

The court first finds that this rule is jurisdictional. Congress granted the Court exclusive jurisdiction over a number of trade-related cases—including actions “to contest the denial of a protest ... under section 515 of the Tariff Act of 1930”—in 28 U.S.C. § 1581. 28 U.S.C. § 1581(a). Section 515 of the Tariff Act of 1930, now codified at 19 U.S.C. § 1515, permits CBP to review protests “filed in accordance with” section 19 U.S.C. § 1514. 19 U.S.C. § 1515(a)-(b). Section 1514(c)(3)(A), in turn, says protests “shall be filed with [CBP] within 180 days after but not before ... [the] date of liquidation.” Through this stream of authority—flowing from the jurisdictional wellspring at 28 U.S.C. § 1581(a) to the timeliness rule at 19 U.S.C. § 1514(c)(3)(A)—Congress “clearly stat[ed] that [this] threshold limitation on [the] statute's scope [is] jurisdictional.” Arbaugh, 546 U.S. at 515, 126 S.Ct. 1235;see also Reed Elsevier, 559 U.S. at 163–65, 130...