Court Opinion

ID: 818833
Source: CourtListenerOpinion
Date Created: 2013-02-04 05:58:51.138224+00
Date Added: 2024-06-11T11:56:28.534176
License: Public Domain

Slip Op. 03-165

                   UNITED STATES COURT OF INTERNATIONAL TRADE

Before: Judge Judith M. Barzilay
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AMMEX, INC.,                                :

                 Plaintiff,                 :

        v.                                  :             Court No. 02-00361

UNITED STATES,                              :

                 Defendant.                 :

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                              MEMORANDUM DECISION AND ORDER

        Before the court is a Motion for Discovery from Plaintiff Ammex, Inc. (“Ammex”) dated

March 7, 2003. Specifically, Ammex asks this court to grant its request for production of a

number of documents relating to the November 21, 2001 Revocation Ruling by the Bureau of

Customs and Border Protection (formerly United States Customs Service) (“Defendant” or

“Customs”). In addition, Ammex asks this court to grant leave for it to depose the Customs

official(s) responsible for the Revocation Ruling. Defendant opposes the motion.

        The factual and procedural posture of this case is outlined in this court’s opinion in

Ammex, Inc. v. United States, Slip Op. 03-145 (Oct. 30, 2003). A decision on Ammex’s Motion

for Discovery was postponed pending the disposition of Ammex, wherein the court granted

Defendant’s Motion to Dismiss Plaintiff’s Amended Complaint and thereby declined to allow the

case to go forward under 28 U.S.C. § 1581(a). The court, however, took jurisdiction of the case

under 28 U.S.C. § 1581(i). The court also ordered the parties to submit a scheduling order within
Court No. 02-00361                                                                    Page 2

thirty days of the date of the Ammex opinion. Accordingly, parties filed a scheduling order with

the court on December 4, 2003, but made the scheduled dates for submission of documents

conditional upon a ruling on the Motion for Discovery.

       The scope of judicial review in a section 1581(i) case is statutorily provided. In

particular, section 2640 of title 28 of the United States Code dictates that in any action not

specified in that section (a category that includes section 1581(i) cases), “the Court of

International Trade shall review the matter as provided in section 706 of title 5.” 28 U.S.C. §

2640(e). Section 706 of title 5 provides that in making its determination “the court shall review

the whole record or those parts of it cited by a party . . . .” This mandate has been interpreted by

the courts to mean that, except in very limited circumstances, the reviewing court shall not

develop its own record of the case, but must instead rely on the record developed before the

agency. See Camp v. Pitts, 411 U.S. 138, 142 (1973); Bar MK Ranches v. Yuetter, 994 F.2d 735,

739 (10th Cir. 1993); Public Power Council v. Johnson, 674 F.2d 791, 793-94 (9th Cir. 1982);

Amfac Resorts v. United States, 143 F. Supp. 2d 7, 11 (D.C. 2001). As can be gathered from the

aforementioned cases, policy reasons behind such a mandate are to prevent the court from

substituting its judgment for that of the agency and also to prevent the agency from advancing

post hoc rationalizations of its initial determination. Because a motion for discovery is

essentially a motion to supplement the administrative record, the granting of such motions is rare

in section 1581(i) cases.

       Here, this court must decide whether Plaintiff has made a sufficient showing that its case

fits into one of the narrow exceptions permitting discovery. See Amfac Resorts, 143 F. Supp. 2d
Court No. 02-00361                                                                     Page 3

at 12 (requiring a “strong,” “substantial,” or “prima facie” showing). In other words, the issue is

whether Plaintiff has made sufficient showing that the administrative record in the case is

incomplete so as to frustrate judicial review or that explanation or clarification is needed

regarding technical terms in the record. See Pl.’s Mot. for Discovery at 2 (citing Ammex, Inc. v.

United States, 23 CIT 549, 556-57, 62 F. Supp. 2d 1148, 1156-57 (1999)). Here, Plaintiff has

failed to make any showing that the record is incomplete so as to frustrate a meaningful review or

that an explanation or clarification is needed on any technical terms, interpretation of which is

sought by the parties.

       The substantive dispute in this case centers on the respective meanings of the terms

“assessment” or “imposition” as they relate to federal taxes, and Customs’ interpretation of these

terms. In particular, Plaintiff alleges that, if there were no federal taxes “assessed” on Plaintiff’s

merchandise, such merchandise would qualify as duty-free under 19 U.S.C. § 1555(b)(8)(E).

Plaintiff further alleges that Customs’ Revocation Ruling is based on faulty reasoning in that

Customs made no determination regarding whether Plaintiff’s merchandise was “assessed” any

federal tax, and instead based its decision to revoke Plaintiff’s duty-free status on an Internal

Revenue Service (“IRS”) letter, which informed Customs that taxes would be “imposed” on

Plaintiff’s merchandise pursuant to section 4081 of the Internal Revenue Code, 26 U.S.C. §

4081. To that end, Plaintiff argues that the court should require further explanation from

Customs about how the agency reached its decision regarding the refusal to allow entry of

Plaintiff’s merchandise into a Class 9 bonded warehouse.

       The court disagrees. First, information relating to whether any federal taxes were
Court No. 02-00361                                                                   Page 4

assessed on Ammex’s merchandise or whether Ammex “paid” any tax on its merchandise is

presumably within Plaintiff’s knowledge, and discovery is accordingly not necessary to answer

these questions. Plaintiff may simply provide the court in subsequent briefing with any facts

relevant to the case. Second, at this point in the proceeding the court needs no further

explanation from Customs regarding its decision-making process. The record in the case

indicates that Customs based its decision to revoke the duty-free status of the merchandise solely

on the IRS letter and did not seek to ascertain whether Plaintiff’s merchandise was assessed any

taxes. In fact, Customs specifically stated that “[r]evocation of the ruling does not prevent

Ammex from showing that no tax was assessed and therefore, it would not be covered by the

revocation.” Notice of Revocation of Ruling Letter, A.R. Doc. No. 22 at 3. Third, underlying

legal questions in the case are not so complex as to require further clarification of any terms

implicated. “Assessment” and “imposition” are terms, the definition of which are readily

available in any dictionary or other source, as well as the statutes themselves, should the court

require. Fourth, any internal agency memorandum is ordinarily privileged and accordingly falls

outside the scope of discovery. See Amfac Resorts, 143 F. Supp. 2d at 13. Fifth, generally “there

must be a strong showing of bad faith or improper behavior before the court may inquire into the

thought processes of administrative decisionmakers.” Public Power, 674 F.2d at 795 (citing

Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402 (1971)). Here, where bad faith on

the part of government officials is not even alleged, depositions of Customs officials are

accordingly not warranted. Finally, a “court assumes [that] the agency properly designated the

[a]dministrative [r]ecord absent clear evidence to the contrary.” Bar MK Ranches, 994 F.2d at
Court No. 02-00361                                                                    Page 5

740 (citation omitted). As Plaintiff here failed to overcome this “presumption of administrative

regularity,” id., the court will not allow the discovery requested by Plaintiff. That is, the agency

need not supplement the record with further memoranda or documents beyond what is contained

in the administrative record, whether such memoranda are internal or relate to the

communications between the IRS and Customs. The court, however, reserves the option to

remand to the agency for further explanation or information after the briefing on substantive

issues is complete and after such issues are thereby fine-tuned and prepared for final review. For

all the foregoing reasons, it is hereby

        ORDERED that Plaintiff’s Motion for Discovery is denied; it is further

        ORDERED that parties confer and resubmit to this court a scheduling order within ten

(10) days of this order; and it is further

        ORDERED that such scheduling order will be in conformance with this Court’s rules and

this chambers’ guidelines outlined on the Court’s webpage.

Dated : _________________                             __________________________
        New York, New York                            Judith M. Barzilay