Court Opinion

ID: 211995
Source: CourtListenerOpinion
Date Created: 2011-03-13 08:33:58+00
Date Added: 2024-06-11T13:01:20.464043
License: Public Domain

United States Court of Appeals for the Federal Circuit

                                       04-1519

                                MICHAEL J. KENNY,

                                                     Plaintiff-Appellant,

                                          v.

                 John W. Snow, SECRETARY OF THE TREASURY,

                                                     Defendant-Appellee,
                                         and

                                  UNITED STATES,

                                                     Defendant-Appellee.

      Michael J. Kenny, of Scranton, Pennsylvania, pro se.

       Barbara S. Williams, Attorney in Charge, International Trade Field Office, Civil
Division, United States Department of Justice, Commercial Litigation Branch, of New
York, New York, for defendants-appellees. With her on the brief were Peter D. Keisler,
Assistant Attorney General and David M. Cohen, Director, Commercial Litigation
Branch, Civil Division, of Washington, DC.

Appealed from: United States Court of International Trade

Judge Richard K. Eaton
United States Court of Appeals for the Federal Circuit

                                       04-1519

                                 MICHAEL J. KENNY,

                                                      Plaintiff-Appellant,

                                           v.

                  John W. Snow, SECRETARY OF THE TREASURY,

                                                      Defendant-Appellee,

                                          and

                                  UNITED STATES,

                                                      Defendant-Appellee.

                              ______________________

                              DECIDED: March 18, 2005
                              ______________________

Before LOURIE, CLEVENGER, and PROST, Circuit Judges.

LOURIE, Circuit Judge.

      Michael J. Kenny appeals from the decision of the United States Court of

International Trade sustaining the denial of credit by the Secretary of the Treasury

(“the Secretary”) for a question on a licensing examination for customs brokers. Kenny

v. Snow, No. 03-00011 (Ct. Int’l Trade June 7, 2004) (“Decision”). We affirm.

                                    BACKGROUND

      On the October 2001 Customs Broker Licensure Examination (“October 2001

Exam”), Kenny missed a passing score by a single incorrect answer. In appealing his
score to the United States Customs Service (“Customs”),1 Kenny requested full credit

for Question 32,2 which pertains to classifications under the 2001 Harmonized Tariff

Schedule of the United States (“HTSUS”), Chapter 22. Question 32 reads as follows:

      Water Street Fishhouses is importing a beer from Mexico to sell at their
      eating establishments in Texas. The beer is made from malt with an
      alcoholic strength by volume of 0.4 percent. It is shipped in 1 liter glass
      bottles. What is the correct classification of the beer?

      (A) 2202.90.9010 [“Waters . . . other nonalcoholic beverages . . .
            Nonalcoholic beer”]
      (B) 2203.00.0060 [“Beer made from malt in containers each holding not
            over 4 liters: Other”]
      (C) 2203.00.0030 [“Beer made from malt in containers each holding not
            over 4 liters: In glass containers”]
      (D) 2203.00.0090 [“Beer made from malt in containers each holding over
            4 liters”]
      (E) 2202.90.9090 [“Waters . . . other nonalcoholic beverages . . . Other”]

October 2001 Exam, Question 32 (emphasis added); HTSUS headings 2202, 2203.

      Kenny’s answer was (C), while the official answer was (A). Insisting that the

specificity of (C) made it the best answer, Kenny claimed that Question 32 was

      1
             Effective March 1, 2003, Customs was renamed the Bureau of Customs
and Border Protection, and is now part of the Department of Homeland Security. See
Homeland Security Act of 2002, Pub. L. No. 107-296 § 1502, 2002 U.S.C.C.A.N. (116
Stat. 2135, 2308); Reorganization Plan Modification for the Department of Homeland
Security, H.R. Doc. No. 108-32, at 4 (2003). The relevant administrative appeal
process for challenging examination scores is as follows:

      If an examinee fails to attain a passing grade on the examination . . . the
      examinee may challenge that result by filing a written appeal with
      [Customs] . . . . Customs will provide to the examinee written notice of the
      decision on the appeal. If the Customs decision on the appeal affirms the
      result of the examination, the examinee may request review of the
      decision on the appeal by writing to the Secretary of the Treasury . . . .

19 C.F.R. § 111.13(f) (2004).
      2
                Kenny had also sought credit for Question 19; however, Customs’ denial
of credit for that question was not subsequently appealed.

04-1519                                    2
ambiguous for failing to state the temperature at which the “alcoholic strength by

volume” was measured, thereby rendering the “0.4 percent” figure inconclusive.

Unpersuaded, Customs confirmed that (A) was the only correct answer, explaining that:

       Chapter 22 Note 3 states: for the purposes of heading 2202 the term
       “nonalcoholic beverages” means beverages of an alcoholic strength by
       volume not exceeding 0.5 percent vol. Alcoholic beverages are classified
       in heading 2203 . . . .

       Chapter 22 Note 2 states: for the purposes of this chapter . . . the
       “alcoholic strength by volume” shall be determined at a temperature of 20
       degrees [Celsius]. The question does not contain a statement that the
       alcoholic strength by volume was determined at a temperature other than
       20 degrees [Celsius].

       Therefore, the beer described in question #32 does not meet the terms of
       [answers B, C, and D] . . . . Answer E is incorrect because nonalcoholic
       beer is provided for under subheading 2202.90.9010.

Addendum to Br. of Appellee, at 4 (first emphasis in original, second emphasis added).

       After Customs affirmed the result of the October 2001 Exam, Kenny petitioned

the Secretary, see 19 C.F.R. § 111.13(f) (2004), who upheld the denial of credit, noting

that Question 32 stipulated the “alcoholic strength by volume,” which obviated the need

to provide additional information about the temperature.        Kenny thereafter sought

reversal of the Secretary’s decision in the Court of International Trade.3 See 19 U.S.C.

§ 1641(e)(1) (2000).     Concluding that the Secretary’s findings were supported by

substantial evidence, the Court of International Trade sustained the denial of credit.

       This appeal followed. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(5).

       3
              Under 19 U.S.C. § 1641(e)(1), the Secretary’s denial of a customs broker
license is appealable exclusively to the Court of International Trade. 28 U.S.C.
§ 1581(g)(1) (2000). Although Kenny’s request for relief is expressed as a desire to
receive credit on an examination, we nevertheless treat it for jurisdictional purposes as
a challenge to the denial of a license, as the denial of a license is a foregone conclusion
for an unsuccessful examinee. See 19 C.F.R. § 111.11(a)(4) (2004).

04-1519                                     3
                                       DISCUSSION

       Consistent with the broad powers vested in the Secretary for licensing customs

brokers under 19 U.S.C. § 1641, the denial of a license can be overturned only if that

decision was arbitrary, capricious, an abuse of discretion, or otherwise not in

accordance with law.     See 5 U.S.C. § 706 (2000).         Among the lawful grounds for

denying a license is the failure to pass the licensing examination. See 19 U.S.C. §

1641(b)(2) (2000) (“the Secretary may conduct an examination to determine the

applicant’s knowledge of customs and related laws”); 19 C.F.R. § 111.11(a)(4) (2004)

(“to obtain a broker’s license, an individual must have [attained] a passing (75 percent

or higher) grade on a written examination”); 19 C.F.R. § 111.16(b)(2) (2004) (“grounds

sufficient to justify denial of an application for a license include . . . the failure to meet

any requirement set forth in [19 C.F.R.] § 111.11”).

       Underpinning a decision to deny a license arising from an applicant’s failure to

pass the licensing examination are factual determinations grounded in examination

administration issues—such as, in the present case, the allowance of credit for answers

other than the official answer—which are subject to limited judicial review because “[t]he

findings of the Secretary as to the facts, if supported by substantial evidence, shall be

conclusive.” 19 U.S.C. § 1641(e)(3) (2000). Substantial evidence is “such relevant

evidence as a reasonable mind might accept as adequate to support a conclusion.”

Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938). On questions of substantial

evidence, we review the decisions of the Court of International Trade “by stepping into

[its] shoes . . . and duplicating its review.”    Taiwan Semiconductor Indus. Ass’n v.

Micron Tech., Inc., 266 F.3d 1339, 1343 (Fed. Cir. 2001).

04-1519                                       4
       Our review of the record reveals no ambiguity in Question 32 surrounding the

phrase “alcoholic strength by volume of 0.4 percent.”        Chapter 22, Note 2, which

expressly states that “alcoholic strength by volume” shall be determined at 20 degrees

Celsius, vitiates any claim of ambiguity arising from the absence of any mention of a

temperature in Question 32. In view of the context provided by the Notes to Chapter 22,

the “0.4 percent” figure dispositively specifies the alcoholic strength based on which the

beer may be properly classified under heading 2202, and not 2203.             Substantial

evidence thus supports Customs’ choice (A) as being the only correct answer to

Question 32.

       As aptly noted by the trial judge, Kenny “chose to ignore the stated facts of the

question and now labors to find a justification for doing so.” Decision, slip op. at 10.

On appeal, Kenny’s laboring continues, in vain, with the invocation of HTSUS General

Rule of Interpretation No. 3, which, aside from being an argument that we decline to

consider as it was not raised below, see Finch v. Hughes Aircraft Co., 926 F.2d 1574,

1576-77 (Fed. Cir. 1991), is unnecessary for resolving an alleged ambiguity in Question

32 that becomes non-existent upon consultation of the Notes to Chapter 22.

       We have considered the parties’ other arguments and conclude that they are

either unpersuasive or unnecessary for resolution of this appeal.

                                     CONCLUSION

       Because the Secretary’s decision to deny credit is supported by substantial

evidence, the decision of the Court of International Trade upholding it is

                                       AFFIRMED.

04-1519                                      5