United States v. Gateway Import Mgmt., Inc.

• Decision Date: 03 July 2018
• Docket Number: Court No. 17–00232,Slip Op. 18–83
• Citation: 324 F.Supp.3d 1328
• Parties: UNITED STATES, Plaintiff, v. GATEWAY IMPORT MANAGEMENT, INC. et al., Defendants.
• Court: U.S. Court of International Trade

324 F.Supp.3d 1328

UNITED STATES, Plaintiff,

v.GATEWAY IMPORT MANAGEMENT, INC. et al., Defendants.

Slip Op. 18–83

Court No. 17–00232

United States Court of International Trade.

Dated: July 3, 2018

Stephen Carl Tosini, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for plaintiff United States. With him on the brief were Chad A. Readler, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Claudia Burke, Assistant Director.

Barry Marc Boren, Law Offices of Barry Boren, of Miami, FL, and Gerson M. Joseph, Gerson M. Joseph, P.A., of Weston, FL, for defendants Gateway Import Management, Inc. and Good Times USA, LLC.

Jerry P. Wiskin, Simons & Wiskin, of South Amboy, NJ, for defendant Hanover Insurance Company.

OPINION AND ORDER

Kelly, Judge:

This matter is before the court on Gateway Import Management, Inc.'s ("Gateway") and Good Times USA, LLC's ("Good Times") motions to dismiss Plaintiff's complaint pursuant to USCIT Rule 12(b)(6) for failure to state a claim upon which relief can be granted. See Def., [Gateway] Rule 12(b)(6) Mot. Dismiss & Mem. Law at 1–3, Dec. 18, 2017, ECF No. 22 ("Gateway Mot. Dismiss"); Def., [Good Times] Rule 12(b)(6) Mot. Dismiss & Mem. Law at 1–3, Dec. 18, 2017, ECF No. 21 ("Good Times Mot. Dismiss"). Subsequent to Gateway and Good Times filing their motions to dismiss, on March 9, 2018, the court ordered all parties to submit supplemental briefing on the Court's subject-matter jurisdiction. See Mem. & Order at 2, Mar. 9, 2018, ECF No. 36 ("Ct.'s Order to Br. Jurisdiction").

Plaintiff, the United States ("Plaintiff"), on behalf of United States Customs and Border Protection ("CBP" or "Customs"), seeks to recover unpaid Federal Excise Tax ("FET"), in various amounts, and prejudgment interest from Defendants, Gateway, Good Times, and Hanover Insurance Company ("Hanover") (collectively, "Defendants") pursuant to section 592 of the Tariff Act of 1930, as amended 19 U.S.C. § 1592 (2012).¹ See Summons, Sept. 6, 2017, ECF No. 1; Compl. at ¶¶ 1, 26–29, 32–33, Sept. 6, 2017, ECF No. 2. From Hanover, Plaintiff also seeks mandatory statutory interest pursuant to 19 U.S.C. § 580. Compl. at ¶ 31. Plaintiff is also seeking attorney fees, and any further interest, as provided by law, that the court deems just and appropriate from the Defendants. Id. at 6. For the reasons that follow, Gateway's and Good Times' motions to dismiss are denied.

BACKGROUND

Gateway and Good Times argue that Plaintiff's complaint merely recites the elements of a cause of action and alleges no "factual enhancement sufficient to withstand dismissal." Gateway Mot. Dismiss at 2; Good Times Mot. Dismiss at 2; see also Defs. Reply to Pl.'s Resp. to Defs.' Mots. Dismiss at 5–7, 12–20, Feb. 16, 2018, ECF No. 35 ("Joint Reply"). Gateway and Good Times also argue that Plaintiff fails to plead with particularity a claim of fraud or mistake, see Gateway Mot. Dismiss at 4–5, 8; Good Times Mot. Dismiss at 4–5, 8; Joint Reply at 4, and improperly attempts to amend its complaint by adding a previously unpled basis for liability. See Joint Reply at 7–12. Further, Good Times argues that Plaintiff fails to plead sufficient facts demonstrating that Good Times had the requisite control over the customs entry process of the subject merchandise, or even participated in the process at all. See Good Times Mot. Dismiss at 9–14. Plaintiff responds that its complaint has sufficiently alleged that Gateway and Good Times made material false statements and/or omissions when entering the subject merchandise into United States commerce.² See Pl.'s Resp. Defs.' Mot. Dismiss at 7–15, Jan. 19, 2018, ECF No. 32 ("Pl.'s Resp."). Further, Plaintiff contends that the false statements and/or omissions came as a result of a scheme between Gateway and Good Times to underpay the FET on the subject merchandise.³ See id. at 1–2, 7–15. As a result, Plaintiff alleges that Gateway and Good Times violated 19 U.S.C. § 1592(a) and are liable for unpaid taxes under 19 U.S.C. § 1592(d).⁴ See id. at 15.

On March 9, 2018, the court ordered the parties to brief whether the Court has subject-matter jurisdiction to hear Plaintiff's claims against Gateway and Good Times, explaining that it was "incumbent upon the Court to independently assess the jurisdictional basis for each case, regardless of whether any party challenged the Court's jurisdiction." Ct.'s Order to Br. Jurisdiction at 1. The court explained that, although the United States can recover unpaid taxes pursuant to 19 U.S.C. § 1592(d) if a party violates 19 U.S.C. § 1592(a), the relevant jurisdictional statute specifically identifies only suits for penalties, bonds, and customs duties. Id. at 2.

In its supplemental brief on jurisdiction, Plaintiff argues that the Court has jurisdiction over its claim against Gateway and Good Times. See Pl.'s Corrected Suppl. Br. on Jurisdiction at 3–7, June 7, 2018, ECF No. 44 ("Pl.'s Suppl. Br."). Plaintiff argues that the Court possesses jurisdiction pursuant to 28 U.S.C. § 1582(1), because even though a penalty is not sought in this case, the relief that Plaintiff seeks "flows from [the court determining that Gateway and Good Times violated 19 U.S.C. § 1592(a),] separate and apart from any penalty" that could also be sought for such a violation. See id. at 3. Plaintiff also argues that there is jurisdiction pursuant to 28 U.S.C. § 1582(3) because FETs collected on imported tobacco are customs duties for the purposes of jurisdiction. See id. at 3–5. Finally, Plaintiff argues that its claim against Hanover, the surety, is proper under 28 U.S.C. § 1582(2), that the surety's claims are within the Court's "exclusive jurisdiction" under 28 U.S.C. § 1583,⁵ and that splitting the claims between this Court and a United States district court would not be in accord with Congress' intent behind 19 U.S.C. § 1592. See id. at 5–7. Gateway and Good Times argue that jurisdiction is lacking under 28 U.S.C. § 1582(1) because Plaintiff is not seeking a penalty. See Defs. Gateway, Good Times, & Joseph & Helen Franco[']s Resp. Br. on Jurisdiction at 1–2, May 14, 2018, ECF No. 41 ("Gateway & Good Times' Suppl. Resp. Br."). Gateway and Good Times also deny that FETs are a type of customs duty that would give rise to a claim reviewable under this Court's 28 U.S.C. § 1582 jurisdiction, see Defs. Gateway & Good Times, & Joseph & Helen Franco[']s Opening Br. on Jurisdiction at 4–6, Apr. 23, 2018, ECF No. 39 ("Gateway & Good Times' Suppl. Br."), and argue that the claims against Gateway and Good Times should be transferred to a district court.⁶ Id. at 7–8.⁷ Gateway and Good Times also argue that if the Court determines that it does not have jurisdiction over the non-surety defendants, the Court may have ancillary jurisdiction over Gateway,⁸ but not Good Times. Id. at 10–11.⁹ The parties do not contest that the Court has jurisdiction over Hanover, the surety, pursuant to 28 U.S.C. § 1582(2). See Pl.'s Suppl. Br. at 5; Gateway & Good Times' Suppl. Br. at 8.

STANDARD OF REVIEW

"[F]ederal courts ... are courts of limited jurisdiction marked out by Congress." Norcal/Crosetti Foods, Inc. v. United States, 963 F.2d 356, 358 (Fed. Cir. 1992) (quoting Aldinger v. Howard, 427 U.S. 1, 15, 96 S.Ct. 2413, 49 L.Ed.2d 276 (1976), superseded by statute on other grounds, Judicial Improvements Act of 1990, Pub. L. No. 101–650, 104 Stat. 5089, as recognized in Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 557, 125 S.Ct. 2611, 162 L.Ed.2d 502 (2005) ). Therefore, the "court may and should raise the question of its jurisdiction sua sponte at any time it appears in doubt." Arctic Corner, Inc. v. United States, 845 F.2d 999, 1000 (Fed. Cir. 1988) (citations omitted). The Court may dismiss a case for lack of subject-matter jurisdiction on its own motion because the Court must enforce the limits of its jurisdiction. See, e.g., Cabral v. United States, 317 Fed. Appx. 979, 980 n.1 (Fed. Cir. 2008) ; Arctic, 845 F.2d at 1000.

In deciding a motion to dismiss for failure to state a claim upon which relief can be granted, the court assumes all factual allegations in the complaint to be true and draws all reasonable inferences in favor of the plaintiff. Cedars–Sinai Med. Ctr. v. Watkins, 11 F.3d 1573, 1584 n.13 (Fed. Cir. 1993) ; Gould, Inc. v. United States, 935 F.2d 1271, 1274 (Fed. Cir. 1991). However, the "[f]actual allegations must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact)[.]" Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (citations and footnote omitted). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, [will] not suffice." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citation omitted). "[O]nly a complaint that states a plausible claim for relief survives a motion to dismiss." Iqbal, 556 U.S. at 679, 129 S.Ct. 1937 (citation omitted).

DISCUSSION

I. Jurisdiction

Plaintiff argues that this Court has subject-matter jurisdiction pursuant to 28 U.S.C. § 1582(1) because the collection of FET flows from conduct warranting a penalty under 19 U.S.C. § 1592 and pursuant to 28 U.S.C. § 1582(3) because FETs are customs duties for the purposes of jurisdiction. See Pl.'s Suppl. Br. at 3–5. Gateway and Good Times argue that the collection of the FETs is not a penalty. See Gateway & Good Times' Suppl. Resp. Br. at 1–2. Further, they argue that FETs are not customs duties, because 19 U.S.C. § 1528 disallows a tax not explicitly recognized as a customs duty to be a customs duty. See id. at 3; Gateway & Good Times' Suppl. Br. at 4–6; see also 19 U.S.C. § 1528. For the reasons that follow, the Court has subject-matter jurisdiction over Plaintiff's claim against Gateway and Good Times pursuant to 28 U.S.C. § 1582(1) and (3).

Under 28 U.S.C. §...