RJF Fabrics, Inc. v. United States

• Decision Date: 01 December 1986
• Docket Number: Court No. 86-11-01376.
• Citation: 10 CIT 735,651 F. Supp. 1431
• Parties: R.J.F. FABRICS, INC., Plaintiff, v. The UNITED STATES, the United States Customs Service, Regional Commissioner of Customs at New York, and the Area Director of Customs at Newark, Defendants.
• Court: U.S. Court of International Trade

651 F. Supp. 1431

10 CIT 735

R.J.F. FABRICS, INC., Plaintiff, v. The UNITED STATES, the United States Customs Service, Regional Commissioner of Customs at New York, and the Area Director of Customs at Newark, Defendants.

Court No. 86-11-01376.

United States Court of International Trade.

December 1, 1986.

Soller, Singer & Horn (Melvin E. Lazar, Gerald B. Horn, Margaret H. Sachter and Carl R. Soller), New York City, for plaintiff.

Richard K. Willard, Asst. Atty. Gen., Washington, D.C., Joseph I. Liebman, Atty. in Charge, International Trade Field Office, Commercial Litigation Branch, U.S. Dept. of Justice (Florence M. Peterson), New York City, for defendants.

OPINION

TSOUCALAS, Judge:

Plaintiff, R.J.F. Fabrics, Inc., commenced an action in this Court on November 4, 1986 against the above-captioned defendants (hereinafter referred to as "defendant" or "United States"). At that time, plaintiff moved for a temporary restraining order and a preliminary injunction releasing its textiles which had been first excluded, and later seized, by Customs. The Court scheduled a hearing on plaintiffs motion for injunctive relief on November 6, 1986. Despite telephone conferences with the Court on Nov. 4 and Nov. 5, defendant initially advanced its jurisdictional objections in a brief submitted the morning of that hearing. The parties presented the question of jurisdiction as turning largely on the distinction between "seizure" and "exclusion" of merchandise. According to defendant, this action involved a seizure and should be heard in district court, pursuant to 28 U.S.C. § 1356 (1982). Plaintiff devoted the bulk of its jurisdictional argument to demonstrating the proposition that "the vehicle through which the merchandise has been excluded has been a seizure." Tr. of Oral Argument, Nov. 6, 1986 at 7. In effect, seizure could be treated as equivalent to exclusion, and could be validly protested. The parties indicated that they welcomed prompt decision on the motion and at the hearing's close, they expressed no desire to submit post-hearing briefs. In a ruling from the bench, the undersigned dismissed plaintiffs action due to a lack of subject matter jurisdiction over a seizure of the goods by Customs. The Court also held that even if plaintiff could establish that jurisdiction properly rests in this Court, a preliminary injunction would be denied since such relief was not warranted under the relevant criteria and would amount to granting the final relief requested by plaintiff: the return of its merchandise. Subsequently, plaintiff moved for a rehearing claiming that it had not sufficient time at the original hearing to adequately prepare an argument in support of its position. In an effort to ensure comprehensive treatment of the jurisdictional issues raised by the parties, and to rectify any significant flaws made in the conduct of the original proceeding, W.J. Byrnes & Co. v. United States, 68 Cust.Ct. 358, C.R.D. 72-5 (1972), the Court, in exercise of its discretion, Commonwealth Oil Refining Co. v. United States, 60 CCPA 162, 166, C.A.D. 1105, 480 F.2d 1352, 1355 (1973), granted a rehearing on the question of jurisdiction which was held on November 17, 1986. After consideration of the arguments presented, and in light of authority uncovered by the Court's own research, the judgment of November 6, 1986 is vacated.

Background

Entry of the shipment of plaintiff's textiles was denied by Customs on July 2, and July 11, 1986 as part of an ongoing investigation into the transshipment¹ of goods. The goods were suspected of originating from Korea, and not from Japan as indicated on the accompanying entry papers. Customs seized the textiles on August 15, 1986. On August 21, 1986, Customs sent plaintiff a document entitled "Notice of Seizure Under 19 USC 1592" explaining that seizure had been necessary to prevent the introduction of restricted merchandise, under allegedly fraudulent documents, into the commerce of the United States in an attempt to by-pass quota/visa requirements. Plaintiffs Verified Complaint, Exhibit F. An attachment to the document also made mention of an alleged violation of 18 U.S.C. § 545. Id., Attachment "A." On September 10, plaintiff protested "the exclusion of the merchandise ... by the seizure of said merchandise by the U.S. Customs Service." Plaintiffs Verified Complaint, Exhibit G. It claimed the relevant documentation demonstrated that Japan was the country of origin of the textiles. Id. The protest was denied on October 3, 1986. As stated earlier, an action was commenced in this Court on November 4, 1986, by the filing of a summons and verified complaint.

Plaintiff sought a judgment sustaining its protests and declaring Japan as the country of origin of its merchandise. Plaintiff also sought return of its merchandise pending final decision, alleging that failure to recover its goods for the purpose of sale into the commerce of the United States would result in its demise as a going concern by December, 1986. Defendant asserted that this Court did not have jurisdiction over the action and that in any event plaintiff had failed, under the appropriate criteria, to make a sufficient showing to warrant the issuance of an injunction. Defendant also expressed concern that the exercise of jurisdiction by this Court might interfere with a continuing criminal investigation conducted by the U.S. Attorney's Office. To date, no criminal proceedings, nor any forfeiture proceedings, have commenced.

Jurisdiction

Customs seized the goods pursuant to 19 U.S.C. § 1592 (1982) and 18 U.S.C. § 545 (1982). It is settled that jurisdiction over claims brought pursuant to § 545 usually does not lie in this Court. 28 U.S.C. § 1355 (1982); United States v. Gold Mountain Coffee, Ltd., 8 CIT 247, 249, 597 F.Supp. 510, 513, reh'g denied, 8 CIT 336, 601 F.Supp. 212 (1984) (declining to assert ancillary jurisdiction over § 545 claim where plaintiff instituted a penalty action under § 1592). Defendant urges that, pursuant to 28 U.S.C. § 1356 (1982), jurisdiction over the seizure in this action is fixed in the district courts. Section 1356 provides:

The district courts shall have original jurisdiction, exclusive of the courts of the States, of any seizure under any law of the United States on land or upon waters not within admiralty and maritime jurisdiction, except matters within the jurisdiction of the Court of International Trade under section 1582 of this title.²

Against this background, plaintiff attempts to prove that this Court has properly acquired subject matter jurisdiction. See United States v. Biehl & Co., 3 CIT 158, 160, 539 F.Supp. 1218, 1220 (1982). Plaintiff contends that jurisdiction exists pursuant to 28 U.S.C. § 1581(a) (1982) because its protest against the exclusion of the merchandise was denied. See 19 U.S.C. § 1514(a)(4) (1982 & Supp. II 1984). Alternatively, plaintiff premises jurisdiction on 28 U.S.C. § 1581(i)(3) or (i)(4) (1982). It argues that the underlying subject matter of this dispute concerns the quantitative restriction that its goods may be subject to if, in fact, their country of origin is Korea.

Section 1581(a)

Defendant focuses on the distinction between seizure and exclusion. It argues that when § 1514(a)(4) refers to "exclusion" as a protestable decision, it actually means "exclusion and not seizure." In effect, defendant views 19 U.S.C. § 1514(a)(4) and 28 U.S.C. § 1356 as operating together to allow judicial review of an exclusion in the CIT but to require that private parties commence suit in district court once a seizure is made by Customs. Plaintiff responds that the exclusion was effected through seizure and that seizure "simply restrains the merchandise until Customs concludes its inquiry into its country of origin." Plaintiffs Memorandum of Law in Support of Motion for Rehearing at 8. "The seizure in the present case is a provisional remedy only, a declaration of status, not an action against the merchandise per se." Id. at 11.

Contrary to defendant's assertion, a finding of § 1581(a) jurisdiction does not require that "this Court determine, as a matter of fact, that an exclusion is synonymous with a seizure." Defendant's Opposition to Motion for Rehearing at 5. Indeed, the Court agrees that the act of exclusion differs from that of seizure. The practical effect of the former act is to deny entry into the customs territory of the United States. The importer may then dispose of the goods as he chooses. In the case of seizure, however, the government often takes control of the merchandise, and may ultimately institute forfeiture proceedings. This distinction notwithstanding, it is clear that plaintiff protested the exclusion of its merchandise, and § 1514(a)(4), by its terms, allows this Court to review the denial of the protest. There is no doubt that plaintiff could have protested Customs' action after denial of entry on July 2 and July 11. The Court is unwilling, therefore, to adopt a rule that would divest the Court of International Trade of jurisdiction simply because plaintiff filed its protest after Customs chose, on August 15, to formally seize the subject goods.

Defendant's cited authority provides no basis for a contrary result. The decision in Seaside Realty Corp. v. United States, 9 CIT 178, 607 F.Supp. 1481 (1985) involved an attempt to interfere with district court forfeiture proceedings commenced under 18 U.S.C. § 545. In Seaside, the defendant had voluntarily dismissed its 19 U.S.C. § 1592 claim. In contrast, no forfeiture proceedings have begun in the instant case and there is no indication that the United States has abandoned its § 1592 claim. Moreover, it is significant that the authority relied upon by the Seaside Court, Jones v. American Guild of Variety Artists, 199 F.Supp. 840 (E.D.Pa.1961), stands only for the proposition that it is within the discretion of the trial court to dismiss a subsequent action where a prior filed action involving the...