Volkswagen of America, Inc. v. U.S.

• Decision Date: 21 February 2007
• Docket Number: Court No. 06-00222.,Slip Op. 07-26.
• Citation: 475 F.Supp.2d 1385
• Parties: VOLKSWAGEN OF AMERICA, INC., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

475 F.Supp.2d 1385

VOLKSWAGEN OF AMERICA, INC., Plaintiff, v. UNITED STATES, Defendant.

Slip Op. 07-26.

Court No. 06-00222.

United States Court of International Trade.

February 21, 2007.

Law Offices of Thomas J. Kovarcik (Thomas J. Kovarcik), New York City, for Plaintiff Volkswagen of America, Inc.

Peter D. Keisler, Assistant Attorney General; Barbara S. Williams, Attorney in Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, U.S. Department of Justice; Yelena Slepak, Office of Assistant Chief Counsel, International Trade Litigation, U.S. Customs

and Border Protection, of Counsel, for Defendant United States.

OPINION

GOLDBERG, Senior Judge.

This matter is before the Court on the defendant's motion to dismiss for lack of subject matter jurisdiction pursuant to USCIT Rule 12(b)(1) and for failure to state a claim upon which relief can be granted pursuant to USCIT Rule 12(b)(5). The plaintiff Volkswagen of America, Inc., ("Volkswagen") alleges in its complaint that U.S. Customs and Border Protection ("Customs") failed to grant Volkswagen an allowance in value for imported merchandise that was later found to be defective. Volkswagen asserts jurisdiction under 28 U.S.C. § 1581(i). Volkswagen has also filed a cross-motion to consolidate this case with the test case Volkswagen of America, Inc. v. United States, Court No. 96-132 (CIT filed Jan. 17, 1996).

I. BACKGROUND

In this action, Volkswagen seeks an allowance in the appraised value of automobiles entered in 1994 and 1995. Customs liquidated those entries in 1994 and 1995. After importation, Volkswagen discovered that some of the automobiles were defective. Volkswagen filed protests with Customs arguing that under 19 C.F.R. § 158.12, it was entitled to an allowance in the appraised value of the automobiles because they were "damaged at the time of importation." 19 C.F.R. § 158.12 (2006). Customs denied these protests, and Volkswagen brought an action before this Court under 28 U.S.C. § 1581(a). The parties filed cross-motions for summary judgment. In deciding these motions, this Court held that it did not have jurisdiction over automobiles repaired after the date Volkswagen filed its protests because Volkswagen was not aware of the defects at the time the protests were made. See Volkswagen of Am., Inc. v. United States, 27 CIT 1201, 1206, 277 F.Supp.2d 1364, 1369 (2003) ("Volkswagen I"); accord Saab Cars USA, Inc. v. United States, 434 F.3d 1359, 1368 (Fed.Cir.2006) (affirming the lower court's dismissal because Saab provided no evidence that it was aware of defects at the time of protest). The Court found § 1581(a) jurisdiction over the automobiles that were repaired before the date of protest. See Volkswagen I, 27 CIT at 1203-06, 277 F.Supp.2d at 1367-69.

On January 31, 2006, Volkswagen sent letters to Customs requesting an allowance in the value of the automobiles whose repairs occurred after the date of protest. As mentioned above, these claims had been dismissed in Volkswagen I. Customs did not respond to these letters, and indicated that it would never issue a decision concerning the letters. Volkswagen subsequently filed this action.

II. STANDARDS OF REVIEW

Once a defendant moves to dismiss for lack of subject matter jurisdiction under USCIT Rule 12(b)(1), the plaintiff has the burden of establishing the basis for jurisdiction. See Duferco Steel, Inc. v. United States, 29 CIT ___, ___, 403 F.Supp.2d 1281, 1284 (2005); NuFarm America's, Inc. v. United States, 29 CIT ___, ___, 398 F.Supp.2d 1338, 1342 (2005). On a motion to dismiss for failure to state a claim pursuant to USCIT Rule 12(b)(5), the defendant is entitled to dismissal where it appears beyond doubt that no set of facts can be proven that would entitle the plaintiff to relief. See NuFarm America's, 29 CIT at ___, 398 F.Supp.2d at 1342.

III. DISCUSSION

A. Jurisdiction under 28 U.S.C. § 1581(i)

In its complaint, Volkswagen alleges that it "was affected and aggrieved by" Customs' failure to recognize Volkswagen's claims for a § 158.12 allowance, and "accordingly, has standing to prosecute this action." Pl.'s Compl. ¶ 4. For the purposes of considering Customs' motion to dismiss, the Court will construe this language as alleging a cause of action under § 702 of the Administrative Procedure Act ("APA"). See Tokyo Kikai Seisakusho, Ltd. v. United States, 29 CIT ___, ___, 403 F.Supp.2d 1287, 1292 (2005) (construing complaint as bringing an APA cause of action when complaint did not expressly state that plaintiffs were suing under the APA, but relied on the APA in its allegation of standing).

The APA is not a jurisdictional statute. See Califano v. Sanders, 430 U.S. 99, 107, 97 S.Ct. 980, 51 L.Ed.2d 192 (1977) ("[T]he APA does not afford an implied grant of subject-matter jurisdiction permitting federal judicial review of agency action."). In order for Volkswagen's case to proceed, this Court must have an independent basis for jurisdiction under 28 U.S.C. § 1581. Volkswagen claims subject matter jurisdiction over its APA cause of action pursuant to 28 U.S.C. § 1581(i), which is this Court's "residual" jurisdictional grant. See Motions Sys. Corp. v. Bush, 437 F.3d 1356, 1370 (Fed.Cir.2006) (en banc) (per curiam) (quoting H.R.Rep. No. 96-1235, at 47 (1980), reprinted in 1980 U.S.C.C.A.N. 3729, 3745). Section 1581(i) states that this Court has exclusive jurisdiction over

[A]ny civil action commenced against the United States, its agencies, or its officers, that arises out of any law of the United States providing for —

(1) revenue from imports or tonnage;

(2) tariffs, duties, fees, or other taxes on the importation of merchandise for reasons other than the raising of revenue;

(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 and subsections (a)-(h) of this section.

28 U.S.C. § 1581(i) (2000). Because Volkswagen's action challenges the administration and enforcement of the collection of import duties, it falls under the language in paragraphs (1) and (4) of § 1581(i).¹

Customs argues that there is no jurisdiction under § 1581(i) because Congress specifically intended that an importer may only challenge the appraised value of merchandise in accordance with the procedures set forth in 19 U.S.C. § 1514. Here, Customs conflates its jurisdictional argument with its claim that Volkswagen did not state a valid cause of action. Section 1514 is not a jurisdiction-granting statute; it defines the types of actions that are potentially reviewable under § 1581(a). Cf. Trs. in Bankr.of N. Am. Rubber Thread Co. v. United States, 464 F.Supp.2d 1350, 1358-59 (CIT 2006) ("NART Co.") (preclusion of a cause of action due to an amendment of § 1516a does not divest the CIT of subject matter jurisdiction). The fact that a cause of action is not specified in § 1514 does not completely strip this Court of subject matter jurisdiction because jurisdiction under § 1581(i) could still be available. Rather, it simply means there is no § 1581(a) jurisdiction. Volkswagen's claim falls within the plain language of § 1581(i), which supports the existence of jurisdiction. See Conoco, Inc. v. United States Foreign-Trade Zones Board, 18 F.3d 1581, 1590 (Fed.Cir.1994) (exercising jurisdiction when action is "facially embraced" by § 1581(i)).

There is one more obstacle that Volkswagen must overcome to establish jurisdiction under § 1581(i). Jurisdiction is not appropriate under § 1581(i) when "another subsection of § 1581 is or could have been available, unless the remedy provided under that other subsection would be manifestly inadequate." Miller & Co. v. United States, 824 F.2d 961, 963 (Fed.Cir.1987). In the present case, no other proceedings under other subsections of § 1581 could have provided effective review of Volkswagen's APA claim. Section 1581(a) is the traditional route for challenging a Customs decision concerning the appraisement of goods. In order to invoke jurisdiction under subsection (a), Volkswagen would have had to file a valid protest within ninety days of liquidation and Customs would have to deny the protest. See 19 U.S.C. §§ 1514(c)(3) & 1515(a) (2000). Volkswagen could not have protested the liquidation within ninety days of liquidation, because the defects were not discovered until after this time limit had passed. In fact, Volkswagen already attempted to bring this action under § 1581(a) in Volkswagen I, but this Court dismissed the case for lack of jurisdiction. See 27 CIT at 1206, 277 F.Supp.2d at 1369.

In light of the above, the Court has subject matter jurisdiction over Volkswagen's claim pursuant to § 1581(i). Congress has not foreclosed judicial review of Volkswagen's claim by divesting this Court of jurisdiction, but it can preclude judicial review of a specific cause of action. See NART Co., at 1358 (citing Whitman v. DOT, ___ U.S. ___, ___, 126 S.Ct. 2014, 2015, 164 L.Ed.2d 771 (2006)). We now turn to the question of whether Congress has precluded judicial review of this particular cause of action.²

B. Failure to State a Claim upon which Relief Can Be Granted

The APA grants a right of review to "[a] person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action...." 5 U.S.C. § 702 (2000). This right of review is not available if judicial review is precluded by another statute. See id. § 701(a). There is a general presumption in favor of judicial review that can be overcome by congressional intent to preclude that is "fairly discernable" from the legislative scheme. See Block v. Cmty Nutrition Inst., 467 U.S. at 351, 104 S.Ct. 2450. The Supreme Court has stated that "[w]hether and to what extent a particular statute precludes judicial review is determined not only from its express...