Sakar International, Inc. v. United States

• Decision Date: 19 February 2008
• Docket Number: No. 2007-1173.,2007-1173.
• Citation: 516 F.3d 1340
• Parties: SAKAR INTERNATIONAL, INC., Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

516 F.3d 1340

SAKAR INTERNATIONAL, INC., Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee.

No. 2007-1173.

United States Court of Appeals, Federal Circuit.

February 19, 2008.

James C. Tuttle, Tuttle Law Offices, of New York, NY, argued for plaintiff-appellant.

DorAenique Kirchner, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee. With her on the brief was Jeanne E. Davidson, Director.

Before LOURIE, SCHALL, and GAJARSA, Circuit Judges.

SCHALL, Circuit Judge.

Sakar International, Inc. ("Sakar") brought suit against the United States ("the government") in the United States Court of International Trade to challenge an administrative decision of the Bureau of Customs and Border Protection, United States Department of Homeland Security ("Customs"), assessing Sakar a civil fine of $67,775 for the importation by Sakar of merchandise that Customs determined was counterfeit. After concluding that it had jurisdiction over Sakar's suit pursuant to 28 U.S.C. § 1581(i)(4) as it relates to 28 U.S.C. § 1581(i)(3), the Court of International Trade ruled that Customs' assessment of the civil fine did not constitute final agency action for purposes of the Administrative Procedure Act ("APA"), 5 U.S.C. § 704 (2000). The court therefore held that Sakar had failed to state a claim upon which relief could be granted and granted the government's motion to dismiss Sakar's complaint pursuant to USCIT Rule 12(b)(5). Sakar Int'l, Inc. v. United States, 466 F.Supp.2d 1333, 1351 (Ct. Int'l Trade 2006).

Because we conclude that section 1581(i)(4) as it relates to section 1581(i)(3) did not provide the Court of International Trade with jurisdiction over Sakar's suit, and because we conclude that none of the other statutory provisions cited by Sakar supported jurisdiction, we vacate the decision of the Court of International' Trade and remand the case to the court with the instruction that it dismiss Sakar's complaint for lack of jurisdiction.

BACKGROUND

I.

On October 7, 2002, Sakar presented for importation into the United States 500 travel chargers for personal digital assistants ("PDAs") and 2,311 mini-keyboards for PDAs, all of which were products of the People's Republic of China. Upon examination, Customs determined that the goods were "counterfeit" in that they made unauthorized use of two registered United States trademarks. Specifically, the travel chargers bore the "UL" trademark registered to. Underwriters Laboratories, whereas the mini-keyboards displayed the "Flying Window" trademark of Microsoft Corporation. Customs seized the goods on December 18, 2002, pursuant to its statutory authority under Section 526(e) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1526(e) (2000). Section 1526(e) provides in relevant part that any "merchandise bearing a counterfeit mark ... imported into the United States ... shall be seized and, in the absence of the written consent of the trademark owner, forfeited for violations of the customs laws." In a letter dated December 30, 2002, Customs notified Sakar of the seizure, and informed Sakar that the goods would be forfeited—and disposed of in accordance with 19 C.F.R. § 133.52¹—unless, within 30 days, the trademark owners consented in writing to the importation of the goods. Consent was not received; consequently, on August 28, 2003, Customs destroyed the goods.

Subsequently, Customs exercised its discretion under 19 U.S.C. 1526(1) to impose a civil fine upon Sakar.² Customs set the amount of the fine at $381,500, which was twice the amount that Customs determined to be the manufacturer's suggested retail price ("MSRP") of the goods.³ In response to a petition filed by Sakar, Customs mitigated the fine by 50% to $190,750. Eventually, in a letter dated December 29, 2005, Customs adjusted the MSRP it had initially used to calculate the fine. This recalculation resulted in a further reduction of the fine to $67,775. In the December 29th letter, Customs stated that the letter constituted the "final administrative review" available to Sakar and that Customs would accept "[n]o further petitions."

II.

Following Customs' action, Sakar filed suit in the Court of International Trade. Sakar's first amended complaint ("complaint") challenged Customs' mitigated fine by alleging, among other things, that Customs had acted contrary to law in calculating the MSRP of the seized goods and in concluding that the goods were counterfeit. Sakar, 466 F.Supp.2d at 1336-37. Customs eventually moved to dismiss the complaint under USCIT Rule 12(b)(1) for lack of subject matter jurisdiction or, alternatively, under USCIT Rule 12(b)(5) for failure to state a claim on which relief could be granted. Id.

Sakar's complaint purported to base the Court of International Trade's jurisdiction on several different provisions of 28 U.S.C. § 1581. The court declined to exercise jurisdiction under all but one of those provisions, concluding that jurisdiction was proper only under section 1581(i)(4) as it relates to section 1581(i)(3). Id. at 1337-46. Section 1581(i) provides in pertinent part as follows:

[T]he Court of International Trade shall have exclusive jurisdiction of any civil action commenced against the United States, its agencies, or its officers, that arises out of any law of the United States providing for—

....

(3) embargoes or other quantitative restrictions on the importation of merchandise for reasons other than the protection of the public health or safety; or

(4) administration and enforcement with respect to the matters referred to in paragraphs (1)-(3) of this subsection....

The court concluded that Customs' seizure of Sakar's goods amounted to an "embargo" within the meaning of section 1581(i)(3) and that the fine issued by Customs thus related to the "administration and enforcement" of an embargo within the meaning of section 1581(i)(4). Id. at 1341-46. Based upon that conclusion, the court held that it had jurisdiction over Sakar's claim under section 1581(i)(4) as it relates to section 1581(i)(3). Id.

Next, the Court of International Trade considered whether, under USCIT Rule 12(b)(5), Sakar's first amended complaint stated a claim upon which relief could be granted. The court first explained that none of the statutory provisions actually cited by Sakar created a cause of action. Id. at 1347. Consequently, the court reasoned that, if Sakar was entitled to bring any claim at all, the claim had to be premised upon the APA's "right of review" provision, 5 U.S.C. § 702. Section 702 generally entitles any person "suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute ... to judicial review thereof." Id. However, in the court's view, even if Sakar's first amended complaint had ascribed its cause of action to the APA—which it did not—Sakar would have been unable to satisfy the APA's requirement of a "final agency action" under 5 U.S.C. § 704.⁴ Sakar, 466 F.Supp.2d at 1347. According to the court, that was because the action taken by Customs was neither the "consummation of the agency's decision-making process" nor "one by which rights or obligations have been determined, or from which legal consequences will flow." Id. at 1347-48 (quoting Bennett v. Spear, 520 U.S. 154, 177-78, 117 S.Ct. 1154, 137 L.Ed.2d 281 (1997)).

The court explained that, although the December 29, 2005 letter stated it was the "final administrative review" available to Sakar, the letter did not actually represent the "consummation of the agency's decision-making process" because Customs retained discretion over the ultimate decision of whether or not to sue Sakar in a district court in order to collect the fine. Id. at 1348. Further, the court reasoned, the letter did not determine any legal rights or obligations because the letter expired according to its own terms when Sakar failed to pay the fine within 30 days. Id. at 1347. By the time Sakar initiated its suit in the Court of International Trade, the mitigated fine set forth in the letter no longer had any legal effect. Id. According to the court, any subsequent suit by Customs to collect the fine would be a de novo proceeding in federal district court. Id. at 1347-48. Thus, the court determined that "the findings of fact and conclusions of law Customs made during the administrative proceeding are no longer of any binding legal effect." Id. at 1348.

Because the action taken by. Customs was not "final agency action," the court held that Sakar had failed to plead a cause of action that could entitle it to relief under the APA. Id. at 1350. Moreover, the court found that Sakar had not alleged a non-statutory (i.e., constitutional) cause of action despite Sakar's purported "due process" claim. Id. Therefore, the court granted the government's motion to dismiss Sakar's first amended complaint under USCIT Rule 12(b)(5). Id. at 1351.

DISCUSSION

We have jurisdiction over Sakar's appeal pursuant to 28 U.S.C. § 1295(a)(5). On appeal, Sakar argues that the Court of International Trade erred in dismissing its complaint for failure to state a claim upon which relief could be granted. Sakar contends that the administrative fine set forth in Customs' December 29, 2005 letter was sufficiently final for judicial review by the Court of International Trade. With respect to the merits of the case, Sakar asserts that Customs acted contrary to the law in calculating the MSRP of the seized goods. The government responds that the Court of International Trade erred in ruling that it had jurisdiction over Sakar's suit. At the same time, the government argues that, assuming it had jurisdiction, the Court of International Trade did not err in dismissing Sakar's complaint under USCIT Rule 12(b)(5). For the reasons set forth below, we hold that the Court of International Trade erred in ruling that...