United States v. Robert E. Landweer & Co.

• Decision Date: 08 February 2012
• Docket Number: Slip Op. 12–17.Court No. 09–00060.
• Parties: UNITED STATES, Plaintiff, v. ROBERT E. LANDWEER & CO., Defendant.
• Court: U.S. Court of International Trade

34 ITRD 1181

816 F.Supp.2d 1364

UNITED STATES, Plaintiff,

v.ROBERT E. LANDWEER & CO., Defendant.

Slip Op. 12–17.Court No. 09–00060.

United States Court of International Trade.

Feb. 8, 2012.

Stephen C. Tosini, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for Plaintiff United States. On the briefs were David S. Silverbrand and Michael D. Panzera, Trial Attorneys. With them on the briefs were Tony West, Assistant Attorney General, and Patricia M. McCarthy, Assistant Director. Of counsel on the briefs was Leigh Sellari, Office of Assistant Chief Counsel for U.S. Customs and Border Protection of Seattle, WA.

Joel R. Junker, Joel R. Junker & Associates, of Seattle, WA, for Defendant Robert E. Landweer & Co. With him on the brief was Emily Lawson.

OPINION

GORDON, Judge:

Defendant Robert E. Landweer & Co. (“Landweer”) moves to dismiss this action pursuant to USCIT Rule 12(b)(1) for lack of subject matter jurisdiction and USCIT Rule 12(b)(5) for failure to state a claim upon which relief can be granted. This Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1582(1) and therefore denies Defendant's USCIT Rule 12(b)(1) motion to dismiss. However, Plaintiff has failed to state a claim upon which relief can be granted. Accordingly, Defendant's USCIT Rule 12(b)(5) motion to dismiss is granted.

Background

In its original complaint Plaintiff alleged that Landweer, a customs broker, violated 19 U.S.C. § 1641(b)(4) and 19 C.F.R. § 111.28(a) as well as 19 U.S.C. § 1641(d) and 19 C.F.R. §§ 111.29 and 143.6, and was liable to the United States for a penalty in the amount of $30,000 pursuant to 19 U.S.C. § 1641(d)(1)(C) and (d)(2)(A). Thereafter Plaintiff filed a motion for leave to amend the complaint to remove the allegations that Landweer failed to exercise responsible supervision and control over its customs business, and therefore, violated 19 U.S.C. § 1641(b)(4) and 19 C.F.R. § 111.28(a). Plaintiff did not seek to add any new allegations. Rather, the sole reason offered in Plaintiff's motion was an intervening decision of U.S. Court of Appeals for the Federal Circuit, United States v. UPS Customhouse Brokerage, Inc., 575 F.3d 1376, 1383 (Fed.Cir.2009) (“ UPS I ”), remanded to, 34 CIT ––––, 686 F.Supp.2d 1337 (2010) (“ UPS II ”), which held that U.S. Customs and Border Protection (“Customs”) must consider all ten factors listed in 19 C.F.R. § 111.28(a) to establish a violation of 19 U.S.C. § 1641(b)(4). Plaintiff explained that it would have been unable to make this showing and requested leave to remove from the complaint the allegations that referenced 19 U.S.C. § 1641(b)(4) and 19 C.F.R. § 111.28(a). The court then granted the unopposed motion for leave to file an amended complaint. Order on Pl.'s Mot. for Leave to File Amend. Comp., ECF No. 22 (June 9, 2010). Remaining in the amended complaint were Plaintiff's claims, pursuant to 19 U.S.C. § 1641(d), regarding Defendant's alleged violation of any provision of any law, rule, or regulation enforced by Customs, specifically 19 C.F.R. §§ 111.29 and 143.6. Subsequently, Landweer filed its motion to dismiss.

Standard of Review

In deciding a USCIT Rule 12(b)(1) motion to dismiss that does not challenge the factual basis for the complainant's allegations and a USCIT Rule 12(b)(5) motion to dismiss for failure to state a claim upon which relief can granted, the court assumes all factual allegations to be true and draws all reasonable inferences in plaintiff's favor. Henke v. United States, 60 F.3d 795, 797 (Fed.Cir.1995) (subject matter jurisdiction); Cedars–Sinai Med. Ctr. v. Watkins, 11 F.3d 1573, 1583–84 & n. 13 (Fed.Cir.1993) (failure to state a claim).

Plaintiff's factual 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 Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “[T]o raise a right to relief above the speculative level,” a complaint must allege “enough factual matter (taken as true)” by making allegations “plausibly suggesting (not merely consistent with)” a valid claim. Id. at 556, 127 S.Ct. 1955. The basis of the court's determination is limited to the facts stated on the face of the complaint, documents appended to the complaint, and documents incorporated in the complaint by reference. See Asahi Seiko Co. v. United States, 33 CIT ––––, ––––, (2009), 2009 WL 3824745, at *4 (quoting Allen v. WestPoint–Pepperell, Inc., 945 F.2d 40, 44 (2d Cir.1991)).

Discussion

1. Subject Matter Jurisdiction

Subject matter jurisdiction is a threshold inquiry. Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 94–95, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998). Plaintiff carries “the burden of demonstrating that jurisdiction exists.” Techsnabexport, Ltd. v. United States, 16 CIT 420, 422, 795 F.Supp. 428, 432 (1992) (citing McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189, 56 S.Ct. 780, 80 L.Ed. 1135 (1936)).

Pursuant to 28 U.S.C. § 1582, this Court possesses exclusive jurisdiction to entertain “any civil action which arises out of an import transaction and which is commenced by the United States” to recover a civil penalty under the relevant provisions of section 641 of the Tariff Act of 1930.¹ 28 U.S.C. § 1582 (2006). 19 U.S.C. § 1641(d)(1)(C), in turn, provides that Customs “may impose a monetary penalty ... if it is shown that the broker ... has violated any provision of any law enforced by the Customs Service or the rules or regulations issued under any such provision.” Plaintiff's amended complaint alleges that Landweer is liable for a penalty under 19 U.S.C. § 1641(d)(1)(C) and (d)(2)(A) for violating 19 C.F.R. §§ 111.29 and 143.6 by filing 21 entries of Chinese freshwater crawfish with an incorrect dumping duty deposit rate of zero percent ad valorem, and incorrectly identifying the supplier of the merchandise as Yantai Haixing Aquatic Products on nine of those 21 entries. It further alleges that the court possesses jurisdiction to entertain this action pursuant to 28 U.S.C. § 1582, that this is an action to collect civil penalties pursuant to 19 U.S.C. § 1641, and that all notices required by 19 U.S.C. § 1641 were issued to Landweer. Am. Compl. ¶¶ 1–9, ECF No. 36.

Landweer argues that the underlying section 1641 administrative proceeding was legally defective because Customs never provided “any notice, allegations, petitions, adjudication or written determination” that Landweer violated 19 C.F.R. §§ 111.29 and 143.6, which Landweer argues is required by 19 U.S.C. § 1641(d)(2)(A) (“The notice shall advise the customs broker of the allegations or complaints against him.... [After any 19 U.S.C. § 1618 proceeding], the appropriate customs officer shall provide to the customs broker a written statement which sets forth the final determination and the findings of fact and conclusions of law on which such determination is based.”). Mem. in Supp. of Def.'s Mot. to Dismiss at 11–13, ECF No. 28 (“Def.'s Mem.”). Plaintiff responds that Customs sufficiently satisfied its obligations under section 1641 by notifying Landweer that by filing 21 entries of Chinese freshwater crawfish with an incorrect deposit rate of zero percent ad valorem, and by incorrectly identifying the supplier of the merchandise as Yantai Haixing Aquatic Products on nine of those 21 entries, Landweer was liable for a penalty under 19 U.S.C. § 1641(d)(1)(C) (for violating “any provision of any law enforced by the Customs Service or the rules or regulations issued under any such provision”). Pl.'s Resp. to Def.'s Mot. to Dismiss at 4, ECF No. 36 (“Pl.'s Resp.”).

In support of the motion to dismiss, Defendant primarily relies on UPS II and United States v. Optrex Am., Inc., 29 CIT 1494, 2005 WL 3447611 (2005), arguing that Customs failed to properly exhaust the statutory procedures of 19 U.S.C. § 1641. Defendant's exhaustion argument implicates a question of the framework to properly analyze whether section 1641 is jurisdictional (a USCIT Rule 12(b)(1) analysis) or non-jurisdictional (a USCIT Rule 12(b)(5) analysis of the sufficiency of Customs' claim).

When reviewing whether the exhaustion of statutory requirements is jurisdictional or non-jurisdictional, the court presumes that exhaustion is non-jurisdictional unless Congress has stated in sweeping and direct language (i.e., in clear and unequivocal terms) that there is no subject matter jurisdiction prior to exhaustion. Avocados Plus Inc. v. Veneman, 370 F.3d 1243, 1248 (D.C.Cir.2004) (internal citations and footnotes omitted). If non-jurisdictional, the exhaustion requirement is treated as an element of the underlying claim. Id. To help determine whether statutory prerequisites, such as exhaustion, are jurisdictional limitations or elements of a cause of action, the U.S. Court of Appeals for the Federal Circuit recently explained that

[a] statutory condition that requires a party to take some action before filing a lawsuit is not automatically “a jurisdictional perquisite to suit.” Rather, the jurisdictional analysis must focus on the “legal character” of the requirement, which we discern[ ] by looking to the condition's text, context, and relevant historical treatment. We similarly have treated as nonjurisdictional other types of threshold requirements that claimants must complete, or exhaust, before filing a lawsuit.

Ford Motor Co. v. United States, 635 F.3d 550, 555 (Fed.Cir.2011) (quoting Reed Elsevier, Inc. v. Muchnick, ––– U.S. ––––, 130 S.Ct. 1237, 1246–47, 176 L.Ed.2d 18 (2010)).

Turning to an analysis of the “text, context, and relevant historical treatment” of Section 1641(d)(2)(A), that provision sets forth the predicate requirements for obtaining a civil penalty against a customs broker. It provides that Customs first shall serve a customs broker with written notice (...