Saab Cars Usa, Inc. v. U.S.
| Decision Date | 17 January 2006 |
| Docket Number | No. 04-1416.,No. 04-1268.,04-1268.,04-1416. |
| Citation | 434 F.3d 1359 |
| Parties | SAAB CARS USA, INC., Plaintiff-Appellant, v. UNITED STATES, Defendant-Cross Appellant. |
| Court | U.S. Court of Appeals — Federal Circuit |
Judith A. Lee, Gibson, Dunn, & Crutcher LLP, of Washington, DC, argued for plaintiff-appellant. Of counsel was Michael K. Stransky.
Barbara S. Williams, Attorney in Charge, International Field Office, Commercial Litigation Branch, Civil Division, United States Department of Justice, of New York, New York, argued for defendant-cross appellant. With her on the brief were Peter D. Keisler, Assistant Attorney General and David M. Cohen, Director, Commercial Litigation Branch, Civil Division, of Washington, DC. Of counsel was Yelena Slepak, Attorney, Office of Assistant Chief Counsel, United States Customs Service, of New York, New York.
Thomas J. Kovarcik, of New York, New York, for amicus curiae Volkswagen of America, Inc.
Before SCHALL, GAJARSA, and PROST, Circuit Judges.
Saab Cars USA, Inc. ("Saab" or "appellant") appeals from two judgments of the Court of International Trade ("CIT") affirming, in part, decisions of the United States Customs Service ("Customs") denying Saab's protest of decisions denying duty allowances for defective imported automobiles. The first, issued July 14, 2003, denied both parties' summary judgment motions. Saab Cars USA, Inc. v. United States, 276 F.Supp.2d 1322 (Ct. Int'l Trade 2003) ("Saab I"). The second, issued January 6, 2004, following a hearing held in lieu of trial, granted Saab partial relief but rejected most of its claims. Saab Cars USA, Inc. v. United States, 306 F.Supp.2d 1279 (Ct. Int'l Trade 2004) ("Saab II"). The CIT entered final judgment on April 30, 2004, and Saab filed its notice of appeal the same day. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(5). For the reasons set forth below, we affirm.
Saab imports and distributes automobiles from its Swedish parent company, Saab Automobile AB ("Saab Sweden"). This action arises from Customs' treatment of automobiles imported by Saab that allegedly contained "latent defects." Saab filed protests with Customs seeking an allowance against import duties for the value of those automobiles pursuant to 19 C.F.R. § 158.12, which permits importers to receive such an allowance for "merchandise . . . found by the port director to be partially damaged at the time of importation." 19 C.F.R. § 158.12 (2005). Customs denied the protests on August 9, 1999, after which Saab filed this action.
Saab purchased the vehicles at issue from Saab Sweden in 1996 and 1997. Upon their importation, the company believed that the cars were "free of defects," and therefore "declared as the transaction value of the automobiles the price it paid" to Saab Sweden. Some defects were identified at the place of importation, and were repaired while still in port. Those repairs are referred to as "port repair expenses." Other defects were allegedly discovered only later, after the cars had been shipped to Saab dealers but before the expiration of the warranty agreement that applied between Saab and Saab Sweden. These defects were repaired at the dealer level, and the costs of those repairs are referred to as "warranty expenses."
At the heart of this matter are Saab's protests, which Saab filed with Customs on June 30, 1998, September 14, 1998, January 12, 1999, and March 26, 1999. The protests involved both port repair expenses and warranty expenses. Each protest included the following text:
We protest the appraised value of automobiles contained in the entries set forth in Attachment A.
The automobiles listed in these entries were purchased by [Saab] from Saab Automobile AB. [Saab] ordered perfect merchandise from Saab Automobile AB. Despite this order, some of the vehicles delivered contained latent manufacturing defects at the time of importation. Section 158.12 of the Customs Regulations, 19 C.F.R. 158.12, provides that `merchandise which is subject to ad valorum or compound duties and found by the port director to be partially damaged at the time of importation shall be appraised in its condition as imported, with an allowance made in the value to the extent of the damage.' See Samsung Electronics America, Inc. v. United States, 106 F.3d 376 (Fed.Cir.1997).
Therefore, pursuant to 19 C.F.R. § 158.12, an allowance in the value of the imported vehicles set forth in the protested entries should have been made to the [sic] reflect the extent of the defects. We hereby request that the protested entries be reliquidated and that the vehicles set forth therein be appraised in the condition as imported. In addition, we request that Customs delay its consideration of this protest until the Court of International Trade . . . has issued its decision on remand in the Samsung case. Based on instructions from the Court of Appeals, the anticipated CIT decision will clarify how the § 158.12 allowance will be implemented.
Saab I, 276 F.Supp.2d at 1325-26.
Each protest attached a list of the entry numbers that were being protested and identified the decision with respect to which the protest was made. Id. at 1328. Each attachment listed entry numbers "for entries of both defective and non-defective vehicles." Id. The attachments listed the following information for each vehicle: protest number, entry number, ship number, Vehicle Identification Number ("VIN"), dealer, claim number, repair date, object code, description of the repair, and total amount paid. Each entry took the following form:
Repair Object Total
Protest # Entry # VIN Dealer Claim # Date Code Description Paid
0502-989- 9801057-7 T1028095 7997 5199072 960613 35183 Door light, 11
100041 front door
Customs denied Saab's protests on August 9, 1999, upon which Saab appealed to the CIT.
In the CIT, Saab moved for summary judgment on its claim for a partial refund of duties on the allegedly defective automobiles. The United States filed a cross-motion for summary judgment seeking dismissal of the action for lack of jurisdiction, on the ground that Saab's protests were insufficiently detailed and therefore invalid. Id. at 1324. In an opinion dated July 14, 2003, the trial court denied both motions, concluding that (a) Saab's protests provided sufficient details about its claim to render the protests valid under 19 U.S.C. § 1514(c) (2000), thereby vesting the CIT with jurisdiction, and (b) Saab had not provided adequate evidence to overcome Customs' denials of its protests, such that "factual questions remain[ed] regarding whether the defects existed at the time of importation." Id. at 1326-30. With respect to Saab's claims, the trial court indicated that "[w]hat remains for trial is to develop the factual record to independently confirm the validity of the repair records in order to establish that the defects did indeed exist at the time of importation." Id. at 1333 (internal quotations omitted). The court also ruled that it lacked jurisdiction over any cars "that were repaired after the date [Saab] filed its protest with Customs." Id. at 1329.
Following the CIT's summary judgment ruling, "[t]he parties agreed, in lieu of trial, to submit a factual stipulation to the Court." Saab II, 306 F.Supp.2d at 1280. The trial court then held a hearing at which both parties presented arguments based upon the stipulated facts. Id. On January 6, 2004, the CIT issued an opinion rejecting all of Saab's claims except the claims for an allowance for port repair expenses and a single claim for an allowance for warranty expenses. Id.
In rejecting all but a fraction of Saab's allowance claims, the CIT applied the analysis used by this court and by the CIT in a series of cases involving Samsung Electronics. See Samsung Elecs. Am. v. United States, 106 F.3d 376 (Fed.Cir.1997) ("Samsung II"); Samsung Elecs. Am. v. United States, 35 F.Supp.2d 942 (Ct. Int'l Trade 1999) ("Samsung III"); and Samsung Elecs. Am. v. United States, 195 F.3d 1367 (Fed.Cir.1999) ("Samsung IV"). Those cases set forth three requirements for an importer successfully to claim an allowance under 19 C.F.R. § 158.12. Such an importer must: (1) show that it contracted for "defect-free" merchandise; (2) link the defective merchandise to specific entries; and (3) prove the amount of the allowance for each entry.1 Samsung II, 106 F.3d at 379-80; Samsung IV, 195 F.3d at 1368-69.
In its summary judgment opinion, the CIT found that Saab easily satisfied the first requirement and raised questions of material fact with respect to the latter two. Saab I, 276 F.Supp.2d at 1332-33. In its opinion following the hearing in lieu of trial, the CIT characterized the remaining question before it as "[w]hat type of evidence is sufficient to satisfy Samsung's instruction that, to prevail on a § 158.12 claim, an importer must proffer `objective and verifiable evidence with some semblance of specificity?'" Saab II, 306 F.Supp.2d at 1283 (quoting Samsung III, 35 F.Supp.2d at 947).
In addressing that question, the CIT reviewed in detail the evidence proffered by Saab, which included: (1) the attachments described above, which included entry numbers, claim numbers, repair descriptions, and VINs; (2) documentation of the warranty agreement between Saab and Saab Sweden, which allegedly specified that Saab Sweden would pay Saab only for vehicles that were defective at importation; and (3) sample "computer claim forms" for ten vehicles that included additional information, such as vehicle mileage as of the date of repair, the repair date, and additional details about the nature of the defect. See Saab II, 306 F.Supp.2d at 1283-84. Saab declined to provide similar forms for all vehicles because of the "prohibitive cost" of doing so. Id. at 1284.
Based upon the evidence presented, the CIT concluded that, with respect to the claim for warranty...
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