United States v. Maverick Mktg., LLC

• Decision Date: 03 July 2018
• Docket Number: Court No. 17–00174,Slip Op. 18–84
• Parties: UNITED STATES, Plaintiff, v. MAVERICK MARKETING, LLC et al., Defendants.
• Court: U.S. Court of International Trade

322 F.Supp.3d 1373

UNITED STATES, Plaintiff,

v.MAVERICK MARKETING, LLC et al., Defendants.

Slip Op. 18–84

Court No. 17–00174

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 Maverick Marketing, LLC and Good Times USA, LLC.

Thomas Randolph Ferguson, Sandler, Travis & Rosenberg, PA, of San Francisco, CA, for defendant American Alternative Insurance Company.

OPINION AND ORDER

Kelly, Judge:

The United States ("Plaintiff"), on behalf of United States Customs and Border Protection ("Customs"), seeks to recover unpaid Federal Excise Tax ("FET"), in various amounts, and prejudgment interest from Maverick Marketing, LLC ("Maverick"), Good Times USA, LLC ("Good Times"), and American Alternative Insurance Company ("AAIC") (collectively, "Defendants"), pursuant to section 592 of the Tariff Act of 1930, as amended 19 U.S.C. § 1592 (2012).¹ See Summons, July 10, 2017, ECF No. 1; Compl. at ¶¶ 1, 26–33, July 10, 2017, ECF No. 2. For the reasons that follow, the Court has subject-matter jurisdiction over this action.

BACKGROUND

The court assumes familiarity with the facts of this case as discussed in United States v. Maverick Marketing, LLC, 42 CIT ––––, ––––, 295 F.Supp.3d 1349 (2018) (" Maverick I"), and here recounts the facts relevant to the issue of the Court's subject-matter jurisdiction over the claims alleged by Plaintiff. In its complaint, Plaintiff alleges that Maverick and Good Times violated 19 U.S.C. § 1592(a) and are liable for unpaid FET pursuant to 19 U.S.C. § 1592(d). See Compl. at ¶¶ 12–27. Specifically, Plaintiff alleges that Maverick and Good Times made material false statements and/or omissions when entering the subject merchandise into United States commerce, the result of which was underpayment of FET on the subject merchandise.² See id. at ¶¶ 15–25. Defendants Maverick and Good Times sought to dismiss Plaintiff's complaint pursuant to USCIT Rule 12(b)(6), claiming that Plaintiff failed to state a claim upon which relief could be granted. See Def., [Maverick]'s Rule 12(b)(6) Mot. Dismiss & Mem. Law, Nov. 13, 2017, ECF No. 29; Def., [Good Times]'s Rule 12(b)(6) Mot. Dismiss & Mem. Law, Nov. 13, 2017, ECF No. 30; USCIT R. 12(b)(6). Defendants did not challenge the Court's subject-matter jurisdiction. On March 7, 2018, the Court issued Maverick I, denying the motions filed by Maverick and Good Times to dismiss the complaint for failure to state a claim upon which relief can be granted. Maverick I, 42 CIT at ––––, 295 F.Supp.3d 1349.

On March 9, 2018, the court requested supplemental briefing on the Court's subject-matter jurisdiction, 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. See Letter [Requesting Briefing on Jurisdiction], Mar. 9, 2018, ECF No. 46 ("Letter Requesting Jurisdiction Briefing"); see also Am. Scheduling Order, Mar. 9, 2018, ECF No. 47. 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. Letter Requesting Jurisdiction Briefing at 2 (citing 28 U.S.C. § 1582 ).

In its supplemental brief on jurisdiction, Plaintiff argues that the Court has jurisdiction over its claim against Maverick and Good Times. See Pl.'s Suppl. Br. on Jurisdiction at 3–7, Apr. 13, 2018, ECF No. 51 ("Pl.'s 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 Maverick 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 4–5. Finally, Plaintiff argues that its claim against AAIC, 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, 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. § 1592.³ See id. at 5–7. Maverick and Good Times argue that jurisdiction is lacking under 28 U.S.C. § 1582(1) because Plaintiff is not seeking a penalty. Defs. Maverick & Good Times Resp. Br. on Jurisdiction at 1, May 2, 2018, ECF No. 54 ("Maverick & Good Times' Resp. Br."). Maverick and Good Times 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. Maverick & Good Times Opening Br. on Jurisdiction at 4–8, Apr. 16, 2018, ECF No. 53 ("Maverick & Good Times' Br."), and argue that the claims against Maverick and Good Times should be transferred to a district court.⁴ Id. at 8. Maverick 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 Maverick,⁵ but not Good Times.⁶ Id. at 10–11. The parties do not contest that the Court has jurisdiction over the surety, AAIC, pursuant to 28 U.S.C. § 1582(2). See Pl.'s Br. at 5; Maverick & Good Times' Br. at 3.

DISCUSSION

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 Br. at 3–5. Maverick and Good Times argue that the collection of FET is not a penalty and that Plaintiff has not brought a claim seeking to recover a civil penalty. See Maverick & Good Times' 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 2–3; Maverick & Good Times' 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 Maverick and Good Times pursuant to 28 U.S.C. § 1582(1) and (3).

"[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.

Under 28 U.S.C. § 1582, the Court has jurisdiction to hear "any civil action which arises out of an import transaction and which is commenced by the United States—(1) to recover a civil penalty under[, inter alia, 19 U.S.C. § 1592 ];" or "(2) to recover upon a bond relating to the importation of merchandise required by the laws of the United States or by the Secretary of the Treasury; or (3) to recover customs duties." Here, Plaintiff seeks to recover the unpaid FET pursuant to 19 U.S.C. § 1592(d) which Plaintiff alleges result from Maverick's and Good Times' violations of 19 U.S.C. § 1592(a), but does not seek to recover a penalty pursuant to 19 U.S.C. § 1592(b) for these alleged violations. See Compl. at ¶¶ 27, 29.

This Court has jurisdiction to hear claims to collect unpaid FET under 19 U.S.C. § 1592(d) for conduct warranting a penalty under 19 U.S.C. § 1592(a), whether or not a separate penalty is sought pursuant to 19 U.S.C. § 1592(b). Pursuant to 28 U.S.C. § 1582(1), the Court shall have exclusive jurisdiction over "any civil action which arises out of an import transaction and which is commenced by the United States ... to recover a civil penalty under Section 592 ... of the Tariff Act of 1930." 28 U.S.C. § 1582(1). As amended, section 592 of the Tariff Act of 1930 prohibits material false statements in connection with the entry of goods into the United States. See 19 U.S.C. § 1592(a). Section 1592(b) allows for penalties to be assessed where an importer makes a material false statement. 19 U.S.C. § 1592(b). Furthermore, section 1592(d) provides that the United States may seek to collect any duties, taxes, or fees it was deprived of as a result of conduct giving rise to a violation of 19 U.S.C. § 1592(a), regardless of whether any penalty is sought. 19 U.S.C. § 1592(d). This Court has exclusive jurisdiction over penalty actions arising under 19 U.S.C. § 1592. See 28 U.S.C. § 1582(1). If the government sought both penalties and lost taxes under 19 U.S.C. § 1592 together in one civil action, this Court would have jurisdiction over both the claim for penalties and any claim for lost duties, fees, or taxes, as the latter would be part...