Washington Intern. Ins. Co. v. US

Citation678 F. Supp. 902
Decision Date12 January 1988
Docket NumberCourt No. 81-12-01678.
PartiesWASHINGTON INTERNATIONAL INSURANCE CO., Plaintiff, v. The UNITED STATES of America, Defendant.
CourtU.S. Court of International Trade

Wayne Jarvis, Ltd., Wayne Jarvis, and Tribler & Marwedel, Paul McCambridge, Chicago, Ill., for plaintiff.

Richard K. Willard, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civil Div., J. Kevin Horgan, Washington, D.C. and Joseph I. Liebman, Attorney in Charge, Intern. Trade Field Office, Commercial Litigation Branch, U.S. Dept. of Justice, Nancy E. Reich, New York City, for defendant.

Andrew P. Vance, Michael A. Johnson, Mark Neville, Jr., Norman Schwartz and Sidney N. Weiss, New York City, for Customs and Intern. Trade Bar Ass'n, amicus curiae.

Before RE, C.J., and WATSON and AQUILINO, JJ.

OPINION

AQUILINO, Judge:

Defendant's motion to strike plaintiff's demand for trial of this action by jury has raised issues of uncommon importance, the decision of which, as the Chief Judge pointed out in his memorandum opinion of April 2, 1987, will have "broad or significant implications in the administration or interpretation of customs laws", 11 CIT ___, 659 F.Supp. 235, 238.

Background

The pleadings and pretrial papers indicate purchase in Cypress of some 64 metric tons of cheese for $160,000. This merchandise was delivered to Greece, where it was loaded on a ship for the United States in refrigerated containers. The cargo was landed at Baltimore and transferred to Chicago under an immediate delivery permit. Upon arrival there, the importer suspected that the cheese was in a "deteriorated condition unsuitable for sale to consumers", to quote from the complaint, and so notified the marine underwriters of the shipment, who disposed of the merchandise on an "as is, where is" basis for $7,406.08.

The importer had entered the merchandise as pecorino, duty-free under item A117.67, TSUS. However, the Customs Service tested the cheese and concluded that it derived from cow's, rather than sheep's, milk. As such, it was classifiable under TSUS item 117.85 at a rate of duty of 10 percent ad valorem. Customs appraised and liquidated the merchandise on the basis of an export value of $160,000.

As the importer's surety, Washington International Insurance Co. paid the liquidated duties and protested the Service's appraisal.1 The District Director denied the protest, whereupon this action was commenced.

Plaintiff's complaint alleges, in the alternative, that the cheese should have been appraised at the salvage bid of $7,406.08 or that it should have been entered as damaged merchandise in the same value. The complaint also demands a jury trial.

The defendant interposed a motion to strike the jury demand. The plaintiff countered with a motion to have the issue resolved by a court of three judges pursuant to 28 U.S.C. § 255 and CIT Rule 77(d)(2) (1986). Plaintiff's motion was granted by the Chief Judge in his memorandum opinion, 11 CIT ___, 659 F.Supp. 235 (1987).

Both sides, as well as attorneys for the Customs and International Trade Bar Association, as amicus curiae, have thoroughly briefed the questions raised by defendant's motion to strike, and oral argument has been heard.

I

In support of its motion, the government argues that neither an act of Congress nor the Constitution supports trial of this action to a jury. As to the first point, the plaintiff relies on the Customs Courts Act of 1980 provision for jury trials in the Court of International Trade, 28 U.S.C. § 1876. That statute, however, does not specify either which kinds of actions are entitled to such a trial or which kinds are not, rather what procedures are to be followed for any jury.

At a minimum, the parties and the amicus curiae are in agreement that actions brought by the United States to recover penalties pursuant to section 592 of the Tariff Act are triable to a jury.2 There is support for this viewpoint in practice prior to 19803 as well as in the legislative history of the 1980 act4 and in subsequent practice of this Court. See, e.g., United States v. Priority Products, Inc., 9 CIT 392, 615 F.Supp. 593 (1985). However, even if this were not true, the Supreme Court has held in Tull v. United States, ___ U.S. ___, 107 S.Ct. 1831, 95 L.Ed.2d 365 (1987), that actions brought by the government to determine liability for civil penalties are triable to a jury. Unlike the Customs Courts Act, the statute underlying that case, the Clean Water Act of 1977, 33 U.S.C. § 1251 et seq., was silent on the right to a jury.

The plaintiff here urges us to accept the premise that the 1980 statute provides a "comprehensive right of trial by jury". Plaintiff's Brief, p. 10. Its written and oral presentations emphasize the legislative history of enactment of section 1876, e.g., the testimony in 1980 of defendant's lead counsel herein, to wit:

MR. COHEN. I think you have to make a judgment first as to whether or not this court is going to be empowered to hold jury trials. If it is not, then I think all jury trial cases should be transferred to the district court. If it is to be empowered to conduct jury trials, it should conduct jury trials on all types of cases.5

The definitive congressional report itself refers to the fact that the act "creates a comprehensive system of judicial review of civil actions arising from import transactions" to "ensure greater efficiency in judicial resources and uniformity in the judicial decisionmaking process." H.R.Rep. No. 1235, 96th Cong., 2d Sess. 20 (1980), U.S. Code Cong. & Admin.News 1980, p. 3731.

Whatever the import of such statements in regard to the enactment of section 1876, it is clear that Congress has consented to suit in an action like this in 28 U.S.C. § 1581(a) and § 2631(a) and that trial by jury is deeply embedded in the jurisprudence of the United States. See Point II, infra. Indeed, as indicated above, the Supreme Court has determined that the right to such a trial exists for recent, statutory actions brought by the government. On the other hand, in an action against the government based on a 1974 amendment of the Age Discrimination in Employment Act, the Supreme Court noted the absence of an express grant of trial by jury and pointed out that a statutory right thereto exists "only where Congress has affirmatively and unambiguously granted that right". Lehman v. Nakshian, 453 U.S. 156, 168, 101 S.Ct. 2698, 2705, 69 L.Ed.2d 548 (1981). If this is the standard for analysis of a statute, the Customs Courts Act of 1980 does not meet it.

II

The plaintiff also relies, of course, on Amendment VII to the Constitution which provides that in "Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved".6 The Supreme Court has concluded that, "by referring to the `common law,' the Framers of the Seventh Amendment were concerned with preserving the right of trial by jury in civil cases where it existed at common law". Colgrove v. Battin, 413 U.S. 149, 155, 93 S.Ct. 2448, 2452, 37 L.Ed.2d 522 (1973) (emphasis in original). See also Atlas Roofing Co. v. Occupational Safety & Health Review Comm'n, 430 U.S. 442, 459, 97 S.Ct. 1261, 1271, 51 L.Ed.2d 464 (1977).

The reports of both English and American lawsuits are replete with customs cases, many decided by juries, before and after adoption of the Seventh Amendment in 1791. Indeed, the government and the amicus curiae both admit the existence of jury trials of cases involving customs at common law. See, e.g., remarks of defendant's counsel on July 31, 1987, Tr. pp. 6-7; Defendant's Supplemental Memorandum, pp. 12, 14; and Brief of Amicus Curiae, p. 5 and p. 10 as follows:

The early history of customs cases reveals that such cases were tried at common law before a jury. The defendant was an individual—in the United States, usually the Collector of Customs.
* * * * * *
Under the British Crown and in America prior to 1791, an individual's right at common law to sue a customs officer for recovery for the wrongful seizure of goods was well established. Jury trials appear to have been fairly common.

Nevertheless, each argues against trial of this action to a jury, the defendant essentially based on its perception of the prerogatives of Congress, whereas the amicus curiae concludes from its review of history that there were essentially no jury trials in appraisement, as opposed to classification, cases up until the Customs Administrative Act of 1890, 26 Stat. 131, which then removed them from trial courts altogether.

Neither viewpoint warrants grant of the motion to strike plaintiff's jury demand.

A

The test as to whether a party such as the plaintiff is entitled to trial by jury is whether such a right existed in England prior to the time the Seventh Amendment was adopted. See United States v. Wonson, 28 F.Cas. 745, 750 (C.C.D.Mass.1812) (No. 16,750); Parsons v. Bedford, 28 U.S. (3 Pet.) 433, 446-47, 7 L.Ed. 732 (1830); Capital Traction Co. v. Hof, 174 U.S. 1, 22-23, 19 S.Ct. 580, 588-89, 43 L.Ed. 873 (1899); Slocum v. New York Life Insurance Co., 228 U.S. 364, 377, 33 S.Ct. 523, 528, 57 L.Ed. 879 (1913); Baltimore & Carolina Line, Inc. v. Redman, 295 U.S. 654, 657, 55 S.Ct. 890, 891, 79 L.Ed. 1636 (1935); Damsky v. Zavatt, 289 F.2d 46 (2d Cir. 1961); Goar v. Campania Peruana de Vapores, 688 F.2d 417, 424 (5th Cir.1982).

By that time, it was well-established that the right to sue to recover excess duties existed in England. For example, in Campbell v. Hall, 98 Eng.Rep. 848 (1774), an exporter brought an action in trespass on the case against a customhouse officer who had imposed certain duties on sugar exported from Grenada, a British colony. Based upon the findings set forth in a special verdict returned by the jury for the plaintiff, the court determined that the "impost of four and one half percent" had been unlawfully exacted, as conflicting proclamations issued by the king had...

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