Court Opinion

ID: 2713632
Source: CourtListenerOpinion
Date Created: 2014-08-05 20:51:45.05931+00
Date Added: 2024-06-11T09:29:03.957653
License: Public Domain

Slip Op. 14-

                 UNITED STATES COURT OF INTERNATIONAL TRADE

 PUERTO RICO TOWING & BARGE CO.,

                        Plaintiff,

                 .v.                                    Before: Jane A. Restani, Judge

 UNITED STATES,                                         Court No. 11-00438

                        Defendant.

                                             OPINION

[Action dismissed for lack of subject matter jurisdiction for failure to file a timely protest with
Customs.]

                                                                      Dated: July     , 2014

               Peter S. Herrick, Peter S. Herrick, P.A., of St. Petersburg, FL, for plaintiff.

               Jason M. Kenner, Trial Attorney, Civil Division, U.S. Department of Justice, of
New York, NY, for defendant. With him on the brief were Stuart F. Delery, Assistant Attorney
General, Jeanne E. Davidson, Director, and Amy M. Rubin, Assistant Director. Of counsel on
the brief was Michael W. Heydrich, Office of the Assistant Chief Counsel, International Trade
Litigation, U.S. Customs and Border Protection, of New York, NY.

               Restani, Judge: This matter is before the court on Defendant United States’

motion to dismiss for lack of subject matter jurisdiction pursuant to U.S. Court of International

Trade Rule 12(b)(1). Because Plaintiff Puerto Rico Towing & Barge Co. (“PR Towing”) failed

to satisfy the jurisdictional requirement of filing a timely protest with U.S. Customs and Border

Protection (“Customs”) prior to commencing suit, the court grants the motion.
Court No. 11-00438                                                                           Page 2

                                        BACKGROUND

               PR Towing is the owner and operator of tug boats operating under the U.S. flag,

including the tug Punta Borinquen (“the tug”). Compl. ¶¶ 1, 3, ECF No. 13 (Jan. 16, 2013). In

2003, the tug was repaired in the Dominican Republican before being returned to San Juan,

Puerto Rico. Id. ¶¶ 4–5. Upon the return of the tug to the United States, PR Towing submitted

on September 5, 2003, a Record of Vessel Foreign Repair or Equipment Purchase, listing the

work performed on the vessel while in the Dominican Republic. Id. ¶ 6, Ex. A. PR Towing later

submitted an Application for Relief from Foreign Vessel Repair Duties, claiming that under the

Carribean Basin Economic Recovery Act the vessel repairs were exempt from the otherwise

applicable 50 percent ad valorem duty rate. See id. ¶ 7, Exs. A–C. Customs liquidated the entry

on September 28, 2007, granting the application in part and denying it in part. Id. ¶ 8, Ex. C.

Customs denied complete relief because it could not determine based on the invoice submitted by

PR Towing what portion of the materials and equipment used in the repairs was a product of the

beneficiary country, the Dominican Republic.1 See id. at Ex. C.

               PR Towing then sent an email with an attached letter to a vessel repair specialist

at the Port of New Orleans on December 12, 2007, questioning the partial rejection of the

application for relief. See id. at Exs. D–E. The attached letter informed the specialist that PR

Towing was preparing to request a new, more detailed invoice from the shipyard to satisfy

Customs but “before undertaking this time consuming task,” PR Towing requested the specialist

       1
         Customs asserted that repairs qualified for duty free treatment only if the cost or value
of materials produced in one or more beneficiary countries plus direct costs of processing
operations performed in the beneficiary country were equal to or greater than 35 percent of the
appraised value of the repair work. See Compl., Ex. C.
Court No. 11-00438                                                                            Page 3

consider a headquarters ruling (H006055) that it believed obviated the need for such an invoice.

Id. at Ex. D. The specialist replied via email the next day, informing PR Towing that “[e]ach

entry and each ruling stands on its own.” Id. at Ex. E. The specialist reiterated her previous

decision and reasoning before informing PR Towing that its “only option here is to file a

protest.” Id.

                On December 17, 2007, less than 90 days after liquidation, PR Towing sent a

second emailed letter, addressed to the same specialist. Id. at Ex. F. Counsel began the letter by

explaining that the letter was “in the hopes that we can avoid the necessity of preparing a very

exhaustive protest.” Id. The letter made the same arguments as the previous letter, relying

heavily on the headquarters ruling that PR Towing believed was controlling. Id. The specialist

replied the same day and explained that the invoice provided by PR Towing was not as detailed

as the one involved in the prior ruling. Email from Glenda Bradley to Peter Herrick (Dec. 17,

2007), Case File, Tab 1. She instructed counsel that “[i]f you believe your argument has merit,

then you may base your protest on those grounds only. I will let the attorneys in Headquarters

decide.” Id.

                On January 10, 2008, more than 90 days after liquidation, PR Towing sent a letter

to Customs stating that “the importer has 180-days from the date of liquidation to file a protest

for the referenced entry pursuant to 19 U.S.C. § 1514(c)(3).” Letter from Peter Herrick to Port

Director (Jan. 10, 2008), Case File, Tab 4. The letter further stated that PR Towing “shall be

filing a protest before the filing deadline expires” and that “[t]he importer is well within the time

limit to file the required protest.” Id. PR Towing filed a protest on January 28, 2008, using

Customs’ standard protest form. CBP Protest No. 2002-08-100071 (Jan. 28, 2008), Case File.
Court No. 11-00438                                                                           Page 4

The protest made no reference to the previous emails exchanged with the vessel repair specialist,

and it did not claim that a protest had been filed previously. Id. The port denied the protest as

untimely the next day. Id.

               On February 8, 2008,2 PR Towing filed a second protest, claiming for the first

time that the prior letters had constituted protests under § 1514. CBP Protest No. 2002-08-

100080 (Feb. 8, 2008), Case File, Tab 1. On February 27, 2008, PR Towing sent the New

Orleans Port Director a letter informing him that PR Towing had filed the second protest and

requesting that Customs take no action against the importer. Letter from Peter Herrick to Port

Director (Feb. 27, 2008), Case File, Tab 4. On May 18, 2011, Customs denied the second protest

as untimely, as it was not filed within 90 days of the contested decision, and the emailed letters

from December 2007 did not constitute protests. See Compl., Ex. G. Customs also denied a new

claim for reliquidation based on inadvertence brought under then-in-force 19 U.S.C. § 1520(c)(1)

(2003). Id.

               After its loss before the agency, PR Towing commenced suit by filing a summons

on November 9, 2011. Summons, ECF No. 1 (Nov. 9, 2011). In its later-filed complaint, PR

Towing alleged three counts: 1) the “letter protest” of December 12, 2007, and the amendment of

December 17, 2007, were timely filed within the 90-day protest period; 2) Customs failed to

consolidate PR Towing’s protest with that of its surety;3 and 3) Customs improperly denied PR

       2
         The court notes that it appears the second protest was backdated to December 12, 2007,
despite being received on February 8, 2008. See CBP Protest No. 2002-08-100080 (Feb. 8,
2008), Case File, Tab 1.
       3
         On February 28, 2008, PR Towing’s surety, Hartford Fire Insurance Co., filed a protest
for the vessel repair entry (Protest No. 2002-08-100086). Compl. ¶¶ 26–27. It remains
                                                                                   (continued...)
Court No. 11-00438                                                                             Page 5

Towing’s claim of inadvertence under 19 U.S.C. § 1520(c)(1) (2003). Compl. ¶¶ 22–31. The

United States moved to dismiss the complaint for lack of subject matter jurisdiction, arguing that

because PR Towing failed to file a timely protest, its complaint fails to invoke the court’s protest

jurisdiction. See Def.’s Mem. in Supp. of Its Mot. to Dismiss, ECF No. 25 (Oct. 30, 2013)

(“Def. Mem.”).

                                           ANALYSIS

I.     Timeliness of Section 1514 Protest

               The court has jurisdiction over customs matters in “any civil action commenced to

contest the denial of a protest, in whole or in part.” 28 U.S.C. § 1581(a) (2013). Jurisdiction is

contingent on the filing of a timely protest with Customs followed by the filing of a timely

summons in the court challenging denial of the protest. See id.; 28 U.S.C. § 2636(a); Koike

Aronson, Inc. v. United States, 165 F.3d 906, 909 (Fed. Cir. 1999). “The requirements for a

valid protest are contained in section 1514(c)(1) and the implementing regulation . . . [and] are

mandatory.” Koike, 165 F.3d at 909. The statute requires that

       A protest of a decision made under subsection (a) of this section shall be filed in
       writing, or transmitted electronically pursuant to an electronic data interchange
       system, in accordance with regulations prescribed by the Secretary. A protest must
       set forth distinctly and specifically–
               (A) each decision described in subsection (a) of this section as to which
               protest is made;
               (B) each category of merchandise affected by each decision set forth under
               paragraph (1);
               (C) the nature of each objection and the reasons therefor; and
               (D) any other matter required by the Secretary by regulation.

19 U.S.C. § 1514(c)(1). As permitted by the statute, Customs has promulgated regulations

       3
       (...continued)
undecided. Id. ¶ 29.
Court No. 11-00438                                                                                    Page 6

creating additional requirements for the filing of a protest. “Protests against decisions of a port

director shall be filed in quadruplicate on Customs Form 19 or a form of the same size clearly

labeled ‘Protest’ and setting forth the same content in its entirety, in the same order, addressed to

the port director.” 19 C.F.R. § 174.12(b) (2008). Additionally,

       A protest shall contain the following information:
       (1) The name and address of the protestant, i.e., the importer of record or consignee,
       and the name and address of his agent or attorney if signed by one of these;
       (2) The importer number of the protestant. If the protestant is represented by an
       agent having power of attorney, the importer number of the agent shall also be
       shown;
       (3) The number and date of the entry;
       (4) The date of liquidation of the entry, or the date of a decision not involving a
       liquidation or reliquidation;
       (5) A specific description of the merchandise affected by the decision as to which
       protest is made;
       (6) The nature of, and justification for the objection set forth distinctly and
       specifically with respect to each category, payment, claim, decision, or refusal;
       (7) The date of receipt and protest number of any protest previously filed that is the
       subject of a pending application for further review pursuant to subpart C of this part
       and that is alleged to involve the same merchandise and the same issues, if the
       protesting party requests disposition in accordance with the action taken on such
       previously filed protest;
       (8) If another party has not filed a timely protest, the surety’s protest shall certify that
       the protest is not being filed collusively to extend another authorized person’s time
       to protest; and
       (9) A declaration, to the best of the protestant’s knowledge, as to whether the entry
       is the subject of drawback, or whether the entry has been referenced on a certificate
       of delivery or certificate of manufacture and delivery so as to enable a party to make
       such entry the subject of drawback (see §§ 181.50(b) and 191.81(b) of this chapter).

19 C.F.R. § 174.13(a) (2013).

               The courts have construed purported protests generously in the past, noting the

harsh consequences of failing to comply with this jurisdictional prerequisite. See, e.g., Koike,

165 F.3d at 908–09; Eaton Mfg. Co. v. United States, 469 F.2d 1098, 1104 (C.C.P.A. 1972);

Mattel, Inc. v. United States, 72 Cust. Ct. 257, 261–62, 377 F. Supp. 955, 960 (Cust. Ct. 1974).
Court No. 11-00438                                                                               Page 7

Nonetheless, the Court of Appeals for the Federal Circuit also has explained that “protests are not

‘akin to notice pleadings [that] merely have to set forth factual allegations without providing any

underlying reasoning.’” Koike, 165 F.3d at 909 (alteration in original) (quoting Computime, Inc.

v. United States, 772 F.2d 874, 878 (Fed. Cir. 1985)). Protesting on Customs Form 19 has not

always been required, but the court has stated that “[u]nder existing and longstanding case law, a

separate letter containing the information required in the regulations and clearly labeled as a

protest . . . suffice[s] so long as the letter [is] in conformity with the importer’s obligations under

the statutory scheme and ‘sufficient to notify the [duty] collector of [the objection’s] true nature

and character.’” Ammex, Inc. v. United States, 27 CIT 1677, 1685–86 & n.11, 288 F. Supp. 2d

1375, 1382–83 & n.11 (2003) (fifth and sixth alterations in original) (quoting Davies v. Arthur,

96 U.S. 148, 151 (1877)) (rejecting paragraph on entry papers as protest where it “could solely be

viewed as an indication that a protest was about to follow (as opposed to constituting a valid

protest in itself)”). The Federal Circuit has refused to hold that a protest is valid simply because

a court could surmise, from the surrounding circumstances, that Customs was aware of the

substance of the protesting party’s claim when the party failed to comply with the relevant statute

and regulations. Koike, 165 F.3d at 909. Additionally, many of the earlier cases cited by PR

Towing adopting generous views of purported protests predate revisions to the statute clarifying

the authority of the agency to establish additional requirements for protests. See, e.g., Mattel, 72

Cust. Ct. at 259, 377 F. Supp. at 958.

               In addition to apprising the agency of the basis and subject of the protest, the

purported protest must be sufficiently clear as to its purpose in order to put into motion the

administrative process. In this vein, “the sense conveyed by the letter and the circumstances
Court No. 11-00438                                                                               Page 8

attending its delivery by the customshouse broker” must demonstrate that “the letter was

intended as a protest under section 514.” Continental Ore Corp. v. United States, 67 Cust. Ct.

202, 205, 331 F. Supp. 1060, 1063 (1971) (“A customshouse broker experienced in filing

protests, who writes a letter which puts the collector in the equivocal position of guessing how he

should consider the letter under section 514, must do so at the peril that the collector will not

consider the letter as a protest.”). Although the standard for judging a purported protest is an

objective one, the court has dismissed actions “when it appears that the letter was not intended as

a protest.” See id. at 1063 (citing Rosa v. United States, 54 Cust. Ct. 322 (1965)); see also

Mattel, 72 Cust. Ct. at 266, 377 F. Supp. at 963 (“The test for determining the sufficiency of a

protest under section 514 . . . is an objective one and is not dependent upon the district director’s

subjective reaction thereto.”).

                Applying these standards, our predecessor court found a letter to constitute a

protest where it specified the IRS number, entry numbers, date of entry and liquidation, requested

tariff classification, article number, and supporting authority. Mattel, 72 Cust. Ct. at 257–58,

265–66, 377 F. Supp. at 957–58, 962–63 (noting however that “no formal rules have been

devised for the manner in which such objections should be expressed” and that defendant

conceded the sufficiency of letters written by a non-professional employee of the importer). By

contrast, the court rejected a letter indicating that the duties were being paid under protest

pending the filing of a formal protest. Continental Ore, 67 Cust. Ct. at 205, 331 F. Supp. at 1063

(“[W]e cannot find or say that the collector should have considered the letter as a protest. The

letter was not filed in the usual manner that the customhouse broker filed protests with the deputy

collector . . . .”). The court has rejected letter protests in other cases where the letter was not
Court No. 11-00438                                                                             Page 9

designated as a protest and did not reference the term protest. Chrysal USA, Inc. v. United

States, 853 F. Supp. 2d 1314, 1324, 1330 (CIT 2012). The court in Chrysal arrived at its holding

even though Customs allegedly had actual knowledge of the protestant’s grievance. See id. at

1328 (citing Koike, 165 F.3d at 909); see also XL Specialty Ins. Co. v. United States, 28 CIT

858, 870, 341 F. Supp. 2d 1251, 1261 (2004) (explaining that the validity and scope of a protest

is objective and independent of a Customs official’s subjective reaction to it).

               Here, PR Towing’s letters failed to comply with several provisions of both the

statute and regulations, and therefore PR Towing has failed to invoke properly the jurisdiction of

the court. Read together the letters of December 12 and December 17 “distinctly and

specifically” mention the entry number, date of Customs’ decision letter, and name of the tug.

See Compl., Exs. D, F. The letters also identify the general category of merchandise as “repairs”

performed on the subject tug in the Dominican Republic. See id. They point to a headquarters

ruling (H006055) that PR Towing believed was controlling and argue that the ruling did not

require a more detailed invoice than the one submitted in order to obtain duty-free treatment. See

id. The only information provided in the second letter not contained in the first is a copy of the

ship repair invoice referred to in the cited headquarters ruling. Id. at Ex. F. Noticeably absent

from both letters are the name and address of the importer of record (except by reference to the

invoice from another customs ruling attached to the second letter, which contains the name only),

the date of entry, and a specific description of the various repairs that were made along with

support for claiming each as exempt from duty. See id. at Exs. D, F. Accordingly, the letters

failed to meet the specific statutory requirements of a valid protest, as well as the regulations

expressly authorized by the statute, even reading the letters generously. Although in the context
Court No. 11-00438                                                                              Page 10

of prior communications with Customs, the vessel repair specialist appears to have understood

the gist of the complaint, it is not at all clear that without this information or labeling the letters

as protests, that the official was on notice as to the bases of the specific objections of PR Towing

as well as the fact that these were intended as protests within the definition of § 1514. At all

relevant times, PR Towing was represented by experienced customs counsel who demonstrated

knowledge of the protest statute and regulations by later filing a sufficiently detailed, albeit

untimely, protest with Customs.

                Perhaps most importantly, the language of the letters makes it clear that PR

Towing never intended them to serve as protests within the meaning of § 1514. The December

12 letter indicated that PR Towing was planning on obtaining a more detailed invoice to submit

to Customs if its legal argument was not accepted, indicating to Customs that the letter was not

meant to be the single protest permitted by statute. See 19 U.S.C. § 1514(c)(1). Likewise, the

letter of December 17 went so far as to say that PR Towing hoped to “avoid the necessity of

preparing a very exhaustive protest.” Compl., Ex. F. Neither document was labeled as a protest,

despite such a requirement in 19 C.F.R. § 174.12(b), and the first letter does not even include the

term. In response to the vessel repair specialist’s instructions to file a protest on both December

13 and December 17, 2007, PR Towing did not reply with a clarification that its letters were

intended to serve as a protest. Instead, it waited until January 10, 2008, after the 90-day protest

period, to send the port director a letter indicating that PR Towing “shall be filing a protest

before the deadline expires.” Letter from Peter Herrick to Port Director (Jan. 10, 2008), Case

File, Tab 4. Even when the initial protest was filed after the permitted period, PR Towing failed

to raise any argument that its previous letters constituted formal protests of Customs’ actions.
Court No. 11-00438                                                                           Page 11

See CBP Protest No. 2002-08-100071 (Jan. 28, 2010), Case File. PR Towing’s post hoc

attempts to reconstrue its emails as protests after its discovery of the statutory deadline4 cannot

save its complaint. By filing letters that were at best ambiguous as to their intent, counsel did “so

at the peril that the collector [would] not consider the letter[s] as a protest.” Continental Ore, 67

Cust. Ct. at 205, 331 F. Supp. at 1063.

               Because PR Towing failed to meet the statutory and regulatory requirements of

filing a protest with Customs and did not distinctly and specifically communicate its intent to

protest, PR Towing has failed to satisfy a jurisdictional prerequisite to suit, and the court must

dismiss the action.5

       4
         PR Towing’s failure to timely protest Customs’ liquidation of its entry likely stems from
the change in the protest period caused by the Miscellaneous Trade and Technical Corrections
Act of 2004, Pub. L. No. 108-429, §§ 2104, 2105, 2108, 118 Stat. 2434, 2598. The law repealed
19 U.S.C. § 1520(c), which permitted a claim for reliquidation within one year based on clerical
error, mistake of fact, or inadvertence, requiring these claims instead be brought as protests under
§ 1514. The law also extended the period for filing protests under § 1514 from 90 to 180 days,
but only for entries on or after December 18, 2004. See id. The entry here occurred on
September 5, 2003, and therefore the shorter 90-day period applied. Compl. ¶ 6. Nonetheless,
PR Towing’s letter to Customs on January 10, 2008, incorrectly asserted that the company had
180 days to protest Customs’ decision.
       5
          Because the court concludes that PR Towing failed to file a timely protest, there is no
basis for PR Towing’s claim in Count II that its “letter protest” should have been consolidated
with the protest of its surety. Therefore, this count also is dismissed.

        Furthermore, even under PR Towing’s theory, its present action before the court would be
timebarred. Pursuant to 28 U.S.C. § 2636(a), a civil action contesting the denial of a protest
must be brought within 180 days of the date of mailing of a notice of denial of a protest. “There
is no precise form that a denial of a protest must take.” Labay Int’l, Inc. v. United States, 83
Cust. Ct. 152, 156 (1979). Assuming arguendo that either the December 12 or December 17,
2007 letters could amount to a protest, both received definitive, negative responses on the merits
on December 13 and December 17, 2007, respectively. See Email from Glenda Bradley to Peter
Herrick (Dec. 13, 2007), Case File, Tab 1; Email from Glenda Bradley to Peter Herrick (Dec. 17,
2007), Case File, Tab 1. Therefore, PR Towing would have been required to file a summons
                                                                                       (continued...)
Court No. 11-00438                                                                          Page 12

II.    Claim under 19 U.S.C. § 1520(c)

               PR Towing also alleges that Customs’ failure to afford its vessel repairs duty-free

treatment amounted to inadvertence by failing to properly consider the shipyard invoices

submitted with PR Towing’s application for relief. Compl. ¶¶ 30–31. The government contends

that PR Towing failed to protest the denial of this claim raised within the second protest and

rejected by Customs, and therefore, the court lacks jurisdiction to consider it. Def. Mem. 13–14.

The denial of a request for reliquidation under 19 U.S.C. § 1520(c) (2003) was a protestable

decision at the time. See 19 U.S.C. § 1514(a)(7) (2003). PR Towing fails to address this

argument in its opposition to the motion to dismiss, even though, as the plaintiff, PR Towing

bears the burden of establishing jurisdiction. See Norsk Hydro Can., Inc. v. United States, 472

F.3d 1347, 1355 (Fed. Cir. 2006). Because PR Towing has not submitted any argument as to

why its failure to protest6 the denial of its § 1520(c) claim should not preclude the court from

exercising jurisdiction over this claim, the court must dismiss this count of the complaint as well.

       5
         (...continued)
with the court no later than June 16, 2008, years before the summons in this case was actually
filed on November 9, 2011. See Summons.
       6
          Although the request for reliquidation pursuant to 19 U.S.C. § 1520(c) was contained in
a document labeled as a protest, this cannot constitute a protest within the meaning of 19 U.S.C.
§ 1514, as the document presented the issue to Customs for the first time and no subsequent
protest of that adverse decision was made. See 19 U.S.C. § 1514(c)(3) (requiring a protest be
filed “after but not before” a protestable decision).
Court No. 11-00438                                                                        Page 13

                                         CONCLUSION

               Because PR Towing failed to meet the jurisdictional prerequisite of filing a timely

protest with Customs with respect to any of the counts in its complaint, the court must dismiss

the case for lack of subject matter jurisdiction. Judgment will enter accordingly.

                                                             /s/ Jane A. Restani
                                                                  Jane A. Restani
                                                                     Judge

Dated: July , 2014
       New York, New York