Court Opinion

ID: 819537
Source: CourtListenerOpinion
Date Created: 2013-02-05 02:39:33.777258+00
Date Added: 2024-06-11T09:02:59.019112
License: Public Domain

Slip Op. 00 - 31

 UNITED STATES COURT OF INTERNATIONAL TRADE
__________________________________________
                                          :
WILLIAM T. CONNOR II, AS TRUSTEE OF       :
THE WILLIAM T. CONNOR II LIVING TRUST, :
                                          :
                  Plaintiff,              :
                                          :
            v.                            :                    Before: MUSGRAVE, JUDGE
                                          :
THE UNITED STATES,                        :                    Court No. 99-02-00094
                                          :
                  Defendant.              :
__________________________________________:

[Defendant’s Motion to Dismiss granted.]

                                                                          Decided: March 27, 2000

       Joel R. Junker, P.C. (Joel R. Junker), for plaintiff.

        David W. Ogden, Acting Assistant Attorney General; Joseph I. Liebman, Attorney in
Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, United
States Department of Justice (James A. Curley); of counsel: Beth C. Brotman, Office of Assistant
Chief Counsel, United States Customs Service, for defendant.

                          MEMORANDUM OPINION AND ORDER

       In this action, Plaintiff William T. Connor, II, Trustee of the William T. Connor II Living

Trust (“the Trust”), seeks judicial review of a pre-importation ruling issued by the United States

Customs Service (“Customs”) concerning the classification of a 1929 Bentley Blower racing car

(“the Bentley” or “the automobile”). Plaintiff alleges jurisdiction and requests that the Court issue

a declaratory judgment pursuant to 28 U.S.C. § 1581(h), which provides that
Court No. 99-02-00094                                                                               Page 2

       [t]he Court of International Trade shall have exclusive jurisdiction of any civil action
       commenced to review, prior to importation of the goods involved, a ruling issued by
       the Secretary of the Treasury, or a refusal to issue or change such a ruling, relating
       to classification, valuation, rate of duty, marking, restricted merchandise, entry
       requirements, drawbacks, vessel repairs, or similar matters, but only if the party
       commencing the civil action demonstrates to the court that he would be irreparably
       harmed unless given an opportunity to obtain judicial review prior to such
       importation.

       Presently before the Court is Defendant’s Motion to Dismiss for lack of subject matter

jurisdiction based, inter alia, on the ground that plaintiff has not demonstrated that he would be

irreparably harmed unless given an opportunity to obtain judicial review prior to importation. For

the reasons set forth herein, Defendant’s motion is granted, and this action is dismissed.

                                             Background

       On December 23, 1997, Plaintiff filed a ruling request with Customs pursuant to 19 C.F.R.

§ 177.1 In this request, Plaintiff asserted that the Bentley should be classified under subheading

9705.00.0090 of the Harmonized Tariff Schedule of the United States (“HTSUS”), which provides

for duty-free entry of “[c]ollections, and collector’s pieces of zoological, botanical, mineralogical,

anatomical, historical, archeological, paleontological, ethnographic, or numismatic interest. Other.”

Plaintiff argued that this classification was appropriate because the Bentley is a collector’s item and,

as such, it will not be used for any utilitarian purpose. The automobile will instead be entered in

       1
           19 C.F.R. § 177.1(a)(1), regarding prospective transactions, states that

       [i]t is in the interest of the sound administration of the Customs and related laws that
       persons engaging in any transaction affected by those laws fully understand the
       consequences of that transaction prior to its consummation. For this reason, the
       Customs Service will give full and careful consideration to written requests from
       importers and other interested parties for rulings or information setting forth, with
       respect to a specifically described transaction, a definitive interpretation of applicable
       law, or other appropriate information.
Court No. 99-02-00094                                                                         Page 3

classic car shows and made available for display in the Peterson Automobile Museum in the Natural

History Museum of Los Angeles County. Pl.’s Resp. to Def.’s Mot. to Dismiss (“Pl.’s Resp. Br.”),

Ex. 1, Pl.’s Ruling Req., at 2.

       On November 5, 1998, Customs ruled that the Bentley did not meet the requirements for

classification under HTSUS 9705.00.0090 because “[t]he guidelines of the [Explanatory Notes]

indicate a narrow interpretation of coverage under [the heading]”, and the Bentley did not fit under

the list of samples. Def.’s Br. in Supp. of Mot. to Dismiss, Ex. 1, HQ 961279, at 3.

       On February 22, 1999, Plaintiff filed the present action seeking judicial review of Customs’

ruling. Defendant, after answering the complaint, filed the Motion to Dismiss which is now before

the Court.

                                             Discussion

       Defendant argues that the Court does not have jurisdiction because Plaintiff has not

demonstrated, as required by 28 U.S.C. § 1581(h), that he would be irreparably harmed unless given

an opportunity to obtain judicial review prior to importation. Generally, “[w]hen a jurisdictional

issue is raised, the burden rests on the plaintiff to prove that jurisdiction exists.” Heartland By-

Products, Inc. v. United States, __CIT__ , 74 F. Supp. 2d 1324, 1330 (1999) (quoting Manufacture

de Machines du Haut-Rhin v. Von Rabb, 6 CIT 60, 62, 569 F. Supp. 877, 880 (1983)) (citation

omitted). Pursuant to 28 U.S.C. § 2639(b), the plaintiff in a § 1581(h) action must prove irreparable

harm by clear and convincing evidence, which means that there must be proof that the harm is highly

probable. See Waits v. Frito-Lay, Inc., 978 F.2d 1093, 1105 (9th Cir. 1992).

       Recently, in Heartland By-Products the Court summarized its jurisprudence regarding the

irreparable harm requirement of § 1581(h):
Court No. 99-02-00094                                                                              Page 4

        Irreparable harm is that which “cannot receive reasonable redress in a court of law.”
        Manufacture de Machines du Haut-Rhin v. Von Rabb, 6 CIT at 64, 569 F. Supp. at
        881-82 (1983) (quoting Black’s Law Dictionary 706-707 (5th ed. 1979)). “In making
        this determination, what is critical is not the magnitude of the injury but rather its
        immediacy and the inadequacy of future corrective relief.” National Juice Products
        v. United States, 10 CIT 48, 53, 628 F. Supp. 978, 984 (1986) (citations omitted).
        To fulfill its burden, Plaintiff must “set forth sufficient documentation to support its
        allegations in establishing the threat of irreparable harm.” Thyssen Steel Co.,
        Southwestern Division of Thyssen, Inc. v. United States, 13 CIT 323, 326, 712 F.
        Supp. 202, 204 (1989) (citing 718 Fifth Avenue Corp. v. United States, 7 CIT 195,
        198 (1984)).

Heartland By-Products, 74 F. Supp. 2d at 1330. Based on this precedent, Plaintiff must show clear

and convincing evidence of an immediate harm for which there will be no adequate future relief in

order to establish jurisdiction in the case at bar.

        Several prior cases of this Court illustrate the requisite standard. In Heartland By-Products,

the Court found a threat of irreparable harm where the plaintiff, an importer of sugar syrup, produced

evidence that a new Customs ruling would destroy its business. 74 F. Supp. 2d at 1330-31.

Specifically, the ruling would have reclassified the plaintiff’s product under a heading with a 7000

percent higher tariff rate, thereby forcing the plaintiff’s customers to seek another supplier. Id. at

1330. Moreover, in American Frozen Food Institute, Inc. v. United States, 18 CIT 565, 855 F. Supp.

388 (1994), the Court found a threat of irreparable harm where the plaintiffs, who were in the

business of packaging and marketing frozen produce, provided evidence that they would incur

tremendous costs in having to destroy old labels and produce new ones to comply with a Treasury

Decision regarding country-of-origin markings. 18 CIT at 570-71, 855 F. Supp. at 393-94. These

costs could not be recovered even if they ultimately prevailed in their case after changing the labels

and importing the goods. Id. In another case involving country-of-origin labeling requirements,

National Juice Products Association v. United States, 10 CIT 48, 628 F. Supp. 978 (1986), the Court
Court No. 99-02-00094                                                                             Page 5

found a threat of irreparable harm where the plaintiffs provided evidence that they would suffer

severe business disruption because they could not comply with the new requirements by the required

deadline. 10 CIT at 53-54, 628 F. Supp. at 984-85. Plaintiffs also proved that they would suffer

significant financial loss from having to destroy old labels and produce new ones to achieve

compliance and could not recover these costs even if they ultimately prevailed in their case after

importing the goods. 10 CIT at 54, 628 F. Supp. at 985.

        In the present case, Plaintiff alleges that if he is not afforded judicial review prior to

importing the Bentley, he will be subject to “an immediate, unnecessary, and unacceptable risk of

irreparable loss by shipping the unique, rare, and irreplaceable Bentley Blower just to ‘exhaust

administrative remedies.’” Pl.’s Resp. Br. at 17. However, Plaintiff has not produced clear and

convincing evidence that the Bentley will be damaged or destroyed in shipment. Plaintiff has argued

that “ships sink and planes crash,” Pl.’s Resp. Br. at 14, but in order to prove jurisdiction under 28

U.S.C. § 1581(h) Plaintiff must show, as in the cases discussed above, that there is an immediate

threat that the harm will occur, not just an immediate threat that the harm could occur. See National

Juice Products Association, 10 CIT at 53, 628 F. Supp. at 984 (“[W]hat is critical is . . . [the injury’s]

immediacy and the inadequacy of future corrective relief.”).

        The present case is also factually distinguishable from those cases where the Court found

irreparable harm in that Plaintiff is not under any contractual obligation to import the Bentley, and

could decide either to keep the car in its present location, or to move it to a different country. As

John L. Shadek, legal counsel to the Trust, states in his affidavit,

        [p]art of the considerations in possibly selecting the United States as a situs for the
        Trust’s collection includes the treatment by US Customs of the importation of the
        consolidated collection of the Trust. It is not worth the Trust’s taking the risk of
        irreplaceable and non-compensable loss of a rare antique automobile of significant
Court No. 99-02-00094                                                                              Page 6

       historical and commercial value simply for the purposes of determining whether US
       Customs’ treatment of the Trust’s collection is appropriate to siting the Trust’s
       collection in the United States. In other words, it is imprudent for the Trust to
       undertake the risk of irreplaceable and non-compensable harm just to determine
       Customs’ treatment of the importation as a precondition to determining whether the
       United States is an appropriate situs for consolidation of its collection of rare antique
       automobiles.

Pl.’s Resp. Br., Ex. 4, Shadek Aff. ¶ 5. The plaintiffs in Heartland By-Products, American Frozen

Food Institute, and National Juice Products Association, supra, did not have an option such as this

because their business contracts obligated them to import their respective goods into the United

States. Thus, in the present case, even if Plaintiff proved that he would suffer actual harm, as

opposed to the risk of harm, by importing the Bentley to obtain judicial review, the harm would not

be imminent because Plaintiff could elect not to import the automobile.

       As to the inadequacy of future relief, Plaintiff has provided considerable evidence in the form

of book excerpts and magazine and newspaper articles to support his claim that the Bentley is a

unique automobile, which could not be replaced if it were destroyed. However, Plaintiff has not

cited any evidence to support his claim that the automobile would be of less value if its original

elements were damaged and repaired. Nevertheless, even if Plaintiff proved the inadequacy of future

corrective relief, this alone would not defeat Defendant’s motion to dismiss. In order to prevail,

Plaintiff must show both the immediacy of injury and the inadequacy of future corrective relief. As

stated above, Plaintiff has not provided evidence of an imminent injury. Therefore, the Court does

not have subject matter jurisdiction over this case, and it must be dismissed.

       Plaintiff presents two alternative grounds to support the Court’s jurisdiction in the absence

of a showing of irreparable harm. First, Plaintiff argues that the Court has erred as a matter of law

in setting the same requirements for proving irreparable harm in the context of requests for injunctive
Court No. 99-02-00094                                                                            Page 7

relief and § 1581(h) actions. Plaintiff notes that where equitable relief is sought, “the ‘irreparable

harm’ requirement functions as a check on unreasonable use or abuse of the exercise of [the Court’s]

inherent powers unrestricted by statute.” Pl.’s Resp. Br. at 18. Plaintiff contrasts this function of

the irreparable harm requirement with its function in a § 1581(h) case, where it “is an element of an

affirmative statutory grant of jurisdiction.” Id. Plaintiff proposes that the proximity of the harm

should not be a factor in a case brought under § 1581(h) because this consideration “has limited

relevance inasmuch as review of rulings on contemplated importations . . . involves anticipated,

prospective activity and because no one’s interests are impinged by the court’s granting relief on a

finding of ‘irreparable harm’ in advance of hearing the merits.” Id. at 19. Plaintiff argues that the

test for irreparable harm under “§ 1581(h) should be based first and foremost on whether the harm

involves risk injury [sic] for which a monetary reward cannot be adequate compensation and injury

that cannot receive reasonable redress in a court of law.” Id.

        The Court has previously recognized that “[t]he standard for proving irreparable harm [in a

§ 1581(h) case] is essentially identical to that used to determine irreparable injury in cases where

injunctive relief is sought.” 718 Fifth Avenue Corp. v. United States, 7 CIT 195, 196 n. 3 (1984)

(citing Manufacture de Machines du Haut-Rhin v. Von Rabb, 6 CIT 60, 569 F. Supp. 877 (1983)).

Moreover, Congress intended § 1581(h) to provide jurisdiction only under exceptional

circumstances. See Manufacture de Machines du Haut-Rhin, 6 CIT at 63, 569 F. Supp. at 882; H.R.

Rep. No. 96-1235 at 47 (1980) reprinted in 1980 U.S.C.C.A.N. 3729, 3758 (pre-importation judicial

review “is exceptional and is authorized only when the requirements of subsection (h) are met.”).

In this regard, review under § 1581(h) is similar to a grant of equitable relief, which is available only

under extraordinary circumstances. See Wolverine Tube (Canada), Inc. v. United States, __CIT __,
Court No. 99-02-00094                                                                         Page 8

36 F. Supp. 2d. 410, 412 (1999). In both instances, irreparable harm is one of the essential factors

for establishing that such exceptional or extraordinary circumstances exist. Compare Wolverine

Tube (Canada), Inc., 36 F. Supp. 2d at 412 with National Juice Products Association, 10 CIT at 51,

628 F. Supp. at 982. Thus, it is appropriate for the Court to use the same standard for proving

irreparable harm in both injunctive relief and § 1581(h) actions.

       Plaintiff also argues that the Court can maintain jurisdiction over this case under 28 U.S.C.

§ 1581(i).2 Under normal circumstances, if jurisdiction does not lie under § 1581(h), a plaintiff must

import the merchandise in question, file a protest with Customs regarding the classification decision,

and fully exhaust its administrative remedies. See H.R. Rep. No. 96-1235 at 46 (1980) reprinted in

1980 U.S.C.C.A.N. 3729, 3758. If an issue still remains, the plaintiff can then seek review by this

       2
           28 U.S.C. § 1581(i) provides, in pertinent part, that

                [i]n addition to the jurisdiction conferred upon the Court of
                International Trade by subsections (a)-(h) of this section and subject
                to the exception set forth in subsection (j) of this section, the Court of
                International Trade shall have exclusive jurisdiction of any 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) revenues 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.
Court No. 99-02-00094                                                                           Page 9

Court pursuant to 28 U.S.C. § 1581(a).3 The Court has previously stated that “section 1581(i) cannot

be used to circumvent the procedures set forth by section 1581(a).” Manufacture de Machines du

Haut-Rhin, 6 CIT 60, 65, 569 F. Supp. 877, 882 (citing United States v. Uniroyal, 69 CCPA 179,

687 F.2d 467 (1982)). Furthermore, in Lowa, Ltd. v. United States, 5 CIT 81, 561 F. Supp. 441

(1983), aff’d, 724 F.2d 121 (Fed. Cir. 1984), the Court stated

       this court has subject matter jurisdiction under section 1581(i) of a cause of action,
       which otherwise would be within section 1581(a), only when the relief available
       under section 1581(a) is manifestly inadequate or when necessary, because of special
       circumstances, to avoid extraordinary and unjustified delays caused by the exhaustion
       of administrative remedies.

5 CIT at 88, 561 F. Supp. at 447. See Manufacture de Machines du Haut-Rhin, 6 CIT at 65, 569 F.

Supp. at 882-83; United States Sugar Cane Refiners’ Association v. Block, 69 CCPA 172, 175, 683

F.2d 399, 402 (1982). In the present case, Plaintiff claims that relief under § 1581(a) is inadequate

because the Trust may wish to import other classic automobiles, and it is likely that the classification

of these automobiles will have to be reviewed on a case by case basis, resulting in “extraordinary and

unjustified delays.” Pl.’s Reply Br. at 19.

       The Court notes that, as a procedural matter, § 1581(h) is the only jurisdictional basis alleged

in the complaint, see Compl. ¶ 2, and Plaintiff has not moved to amend the complaint and include

§ 1581(i) as an alternative basis for jurisdiction. Substantively, the present case involves only one

automobile, the Bentley. See Compl. ¶ 1. Although Plaintiff may import other automobiles in the

future, that possibility is only speculative at this point, and not at issue in this action. Thus, the

prospective importation of other automobiles in Plaintiff’s collection is irrelevant to the

       3
           28 U.S.C. § 1581(a) provides that “[t]he Court of International Trade shall have
exclusive jurisdiction of any civil action commenced to contest the denial of a protest, in whole
or in part, under section 515 of the Tariff Act of 1930.”
Court No. 99-02-00094                                                                       Page 10

determination of whether § 1581(a) provides adequate relief in the matter presently before the Court.

Plaintiff has not presented any evidence which suggests that proceeding under § 1581(a) is

“manifestly inadequate” or will cause “extraordinary and unjustified delays” with regard to

determining the correct classification of the Bentley. Therefore, there is no basis for jurisdiction

under § 1581(i).

                                            Conclusion

       For the foregoing reasons, Defendant’s Motion to Dismiss is granted.

       So ordered.

                                      _____________________________________
                                          R. KENTON MUSGRAVE, JUDGE

Dated: March 27, 2000
       New York, New York