Chs Industries, LLC v. United States Customs and Border Protection

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

CHS INDUSTRIES, LLC, :

:

Plaintiff, :

:

v. : Civil Action No. 06-2205 (GK)

:

UNITED STATES CUSTOMS AND :

BORDER PROTECTION, et al., :

:

Defendants. :

MEMORANDUM OPINION

Plaintiff CHS Industries, LLC (“CHS” or “Plaintiff”) brings

this action against Defendants United States Customs and Border

Protection (“Customs”), United States Environmental Protection

Agency (“EPA”), Unknown Employees of United States Customs and

Border Protection, and Unknown Employees of United States

Environmental Protection Agency (collectively, “Defendants”)

pursuant to Rule 41(g) of the Federal Rules of Criminal Procedure

(Count I) and Bivens v. Six Unknown Federal Agents, 403 U.S. 388

(1971) (Count II).

This case is now before the Court on Defendants’ Motion to

Dismiss. Upon consideration of the Motion, Opposition, Reply, the

entire record herein, and for the reasons set forth below,

Defendants’ Motion is granted.

I. Background1

Plaintiff is located and incorporated in Edgewater, Florida.

It purchases stationary generators with nonroad engines2 from Fuan

Lujuan Electrical Machinery Company, Limited (“Fuan”) in Fujian,

China and imports them into the United States. Fuan manufactures

the generators, packs and labels them, and delivers them to

Plaintiff’s Edgewater location. The generators have been sold to

buyers prior to their delivery to Edgewater.

On August 7, 2006, a container of generators destined for

Plaintiff’s facilities arrived in Port of Savannah, Georgia and was

detained by Customs.3 That same day, Plaintiff contacted Customs

to determine why the container was detained and how to procure its

release. On August 21, 2006, while Customs waited for the EPA to

review the shipment, it sent Plaintiff a Notice of Detention

regarding the container. In the Notice, Customs informed Plaintiff

1

For all purposes of ruling on a motion to dismiss, the factual

allegations of the complaint must be presumed to be true and

liberally construed in favor of the plaintiff. Aktieselskabet AF

21. November 2001 v. Fame Jeans Inc., 525 F.3d 8, 17 (D.C. Cir.

2008). Therefore, the facts set forth herein are taken from

Plaintiff’s Complaint unless otherwise noted.

2

Plaintiff does not define this term.

3

CHS uses this August 7, 2006 date in its Complaint but lists

the arrival date as August 4, 2006 in its Opposition to Defendants’

Motion to Dismiss. Pl.’s Opp’n to Def.’s Mot. to Dismiss (“Pl.’s

Opp’n”) at 1. The difference in dates has no significance for

purposes of this Motion.

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that the wood shipping materials used in the container were not

permitted to enter the United States.

On September 21, 2006, Customs seized CHS’ “goods”4 because

they did not comply with 40 C.F.R. § 90.1003(a)(1)(i), which

requires a certificate of conformity with emissions regulations for

nonroad engines. Compl. ¶ 18. On September 27, 2008, Plaintiff

“submitted an application to manipulate and exported [sic] the

noncompliant wood packing materials.”5 Id. ¶ 17.

On October 11, 2006, Plaintiff submitted a petition for relief

to Customs. On November 13, 2006, Defendant Jeffrey A. Kodish

(“Kodish”),6 an Attorney-Advisor for the EPA, recommended to

Customs that it refuse to release the generators because they

failed to comply with 40 C.F.R. §§ 89.1003(a)(1)(ii) and

89.1003(a)(6), both of which also require a certificate of

conformity with emissions regulations for nonroad engines.

4

Plaintiff does not specify what the term “goods” references.

5

Plaintiff does not specify what agency or person received this

application, nor does it define or explain the term “application to

manipulate.”

6

There is a question as to whether Kodish has been effectively

made a Defendant in this case, as he has not been served or

included in the caption. See infra, p. 13.

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On November 14, 2006, Defendant Frank Jaramillo

(“Jaramillo”),7 Area Port Director for Customs in Savannah, or

Defendant Mary C. Bensel Mills (“Mills”),8 a Fines, Penalties and

Forfeitures Officer at Customs’ Savannah location, denied

Plaintiff’s October 11, 2006 petition based on 40 C.F.R. §

90.1003(a)(1)(ii). However, he/she “permit[ted]” Plaintiff to

export the noncompliant wood, and to export the generators to a

non-contiguous country. Compl. ¶ 25, Ex. D. On June 13, 2007,

Customs sold the generators at auction. [Dkt. No. 5-3, filed June

12, 2009.]

Plaintiff alleges that, as a result of Defendants’ detention

of its container, it lost orders from customers, suffered “manifest

injustice” and “irreparable injury,” and had its business

“effectively shut[] down.” Compl. ¶¶ 29-30. It also alleges that

it lost $2592.50 as a result of needing to export the noncompliant

wood, three wholesale business accounts with potential annual sales

of $201,000 per year, and “all retail accounts which have a

potential net profit of $270,000 with a potential bill of $40,500

in potential service and a potential sales [sic] of $27,000 for

7

There is a question as to whether Jaramillo has been effectively

made a Defendant in this case, as he has not been served or

included in the caption. See infra, p. 13.

8

There is also a question as to whether Mill has been effectively

made a defendant in this case, as she has not been served or

included in the caption. See infra, p. 13.

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replacement parts.” Id. ¶¶ 37-40. It further states that these

losses caused it to decrease its payroll, use credit to purchase

materials, and alter its normal course of business.

On December 26, 2006, Plaintiff filed the instant Complaint,9

alleging that it is entitled to “Return of Property Pursuant to

Rule 41(g)” of the Federal Rules of Criminal Procedure (Count I)

and “Monetary Damages Pursuant [t]o Bivens” (Count II). Id. at 5,

6. Plaintiff cites a violation of its Fifth Amendment rights as

the basis for its Bivens claim. See id. ¶¶ 1, 33, 35, 43.

In September 2007, Plaintiff filed an administrative petition

with Customs seeking the proceeds of the auction of the generators.

The record is not clear as to whether the petition has been

decided.10

On March 24, 2008, in response to a March 10, 2008 Order for

parties to submit praecipes regarding further proceedings,

Plaintiff filed an Amended Motion Opposing Defendants’ Motion to

Dismiss or in the Alternative to Transfer and its Points and

Authorities [Dkt. No. 16]. In this document, Plaintiff stated that

9

In addition to the questions about the named Defendants

discussed supra, notes 6-8, Plaintiff lists the United Stats as a

Defendant in paragraph 4 of its Complaint but also failed to effect

service of process or include the United States in the Complaint’s

caption or as a Defendant on ECF.

10

Defendants wish to proceed with a resolution of their Motion to

Dismiss regardless of the disposition of this petition. Def.’s

Praecipe at 2.

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it seeks damages “as an equitable remedy or under the Federal Tort

Claims Act,” referencing Federal Rule of Criminal Procedure 41(g)

in its request for equitable relief.11 Pl.’s Am. Mot. Opp’ing at

2.

II. Standard of Review

To survive a motion to dismiss, a plaintiff need only plead

“enough facts to state a claim to relief that is plausible on its

face” and to “nudge[] [his or her] claims across the line from

conceivable to plausible.” Bell Atl. Corp. v. Twombly, 550 U.S.

544, 570 (2007). “[O]nce a claim has been stated adequately, it

may be supported by showing any set of facts consistent with the

allegations in the complaint.” Id. at 579.

Under the standard set out in Twombly, a “court deciding a

motion to dismiss must not make any judgment about the probability

of the plaintiff's success . . . must assume all the allegations in

the complaint are true (even if doubtful in fact) . . . [and] must

give the plaintiff the benefit of all reasonable inferences derived

from the facts alleged.” Aktieselskabet AF 21.November 2001 v. Fame

Jeans Inc., 525 F.3d 8, 17 (D.C. Cir. 2008) (internal quotation

marks and citations omitted).

11

On March 23, 2009, Plaintiff filed a second suit in this Court.

CHS Indus., LLC v. U.S. Customs & Border Prot., C.A. No. 09-544

(GK). In that case, Plaintiff alleges that Customs and the EPA

violated the Federal Tort Claims Act, 28 U.S.C. § 2671, et seq.

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III. Analysis

A. Count I Is Dismissed for Lack of Subject Matter

Jurisdiction

Our Court of Appeals has explained that “Rule 41(g) [of the

Federal Rules of Criminal Procedure] is applicable only when

property is seized ‘for use in a criminal prosecution.’” United

States v. Price, 914 F.2d 1507, 1511 (D.C. Cir. 1990) (quoting In

re Seizure Warrant, 830 F.2d 372, 374 (D.C. Cir. 1987)). In Price,

the court held that “once the Government initiates an

administrative forfeiture proceeding and the property is not the

subject of an ongoing criminal proceeding, the District Court has

no jurisdiction to resolve the issue of return of property.” Id.

at 1508, 1512.

Plaintiff cites to DiBella v. United States, 369 U.S. 121

(1962), in arguing that “Rule 41(g) motions may exist apart from

criminal actions.” Pl.’s Mem. in Support of Mot. Opp’ing (“Pl.’s

Mem.”) at 7. However, there is no conflict between DiBella and

Price. DiBella involved the interlocutory appealability of a pre-

trial motion to suppress evidence in a criminal prosecution. The

Supreme Court said nothing about the exercise of jurisdiction in a

civil case brought pursuant to Fed. R. Crim. P. 41(g).12 As our own

12

At the time DiBella was decided, the relevant Criminal Rule

under discussion was Rule 41(e).

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Court of Appeals stated in Price, if the seized property in

question is not the subject of a criminal proceeding in progress,

the court has no jurisdiction pursuant to Rule 41(g).

In this case, the government initiated administrative

forfeiture proceedings, the generators were auctioned, and

Plaintiff itself filed an administrative petition in response to

the sale. Plaintiff has introduced no evidence to show that this

case is a criminal proceeding. Therefore, Count I is dismissed for

lack of subject matter jurisdiction.

B. Count II Is Dismissed Because All Defendants Enjoy

Immunity from Suit

In Saucier v. Katz, 533 U.S. 194, 200-01 (2001), the Supreme

Court emphasized that qualified immunity is a question of law which

the court should decide “at the earliest possible stage in

litigation.” Therefore, although the parties dispute many legal

issues in this case, the Court must first address the immunity

question.

Defendants assert qualified immunity for the three named

individual Defendants and for all unnamed individual Defendants, as

well as sovereign immunity for all Defendants acting in their

official capacities. Plaintiff responds by citing the Second

Circuit opinion in Bivens v. Six Unknown Federal Agents, 456 F.2d

1339, 1341 (2d Cir. 1972), asserting that “[f]ederal employees,

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agents and officers performing their law enforcement functions have

no immunity to protect themselves from damages suits charging

violations of constitutional rights.” Pl.'s Mem. at 6.

However, the Supreme Court reversed the Second Circuit’s

decision in Bivens. See Bivens v. Six Unknown Federal Agents, 403

U.S. 388 (1971). In the wake of the Supreme Court’s decision, it

is now well-settled that qualified immunity is an appropriate

defense in Bivens litigation. See Rasul v. Myers, 512 F.3d 644,

652 n.3 (D.C. Cir 2008); Jones v. Yanta, 610 F. Supp. 2d 34, 43

(D.D.C. 2009).

1. The Agency Defendants and Agency Employees Acting

in Their Official Capacities Enjoy Sovereign

Immunity

Bivens created a cause of action against a federal officer

acting in her individual capacity in which the plaintiff may

collect monetary damages if the officer is found to have violated

plaintiff’s constitutional rights. 403 U.S. at 395-96. Bivens

only provides a cause of action against individuals. See Kauffman

v. Anglo-Am. Sch. of Sofia, 28 F.3d 1223, 1226 (D.C. Cir. 1994).

A Bivens claim may not be brought against the United States

government or its agencies because they have sovereign immunity.

See FDIC v. Meyer, 510 U.S 471, 484-86 (1994) (federal agency

cannot be sued in a Bivens claim). In this case, Plaintiff filed

suit against Customs and the EPA, both of which are federal

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agencies. Therefore, the Bivens claims against Customs and EPA are

dismissed on grounds of sovereign immunity.

2. The Individual Defendants Enjoy Qualified Immunity

In Pearson v. Callahan, ___ U.S. ___, 129 S. Ct. 808, 815

(2009), the Supreme Court gave a succinct overview of the qualified

immunity doctrine:

The doctrine of qualified immunity protects

government officials “from liability for civil

damages insofar as their conduct does not

violate clearly established statutory or

constitutional rights of which a reasonable

person would have known.” Harlow v.

Fitzgerald, 457 U.S. 800, 818 (1982).

Qualified immunity balances two important

interests -- the need to hold public officials

accountable when they exercise power

irresponsibly and the need to shield officials

from harassment, distraction, and liability

when they perform their duties reasonably.

The protection of qualified immunity applies

regardless of whether the government

official's error is “a mistake of law, a

mistake of fact, or a mistake based on mixed

questions of law and fact.” Groh v. Ramirez,

540 U.S. 551 (2004) (Kennedy, J., dissenting)

(citing Butz v. Economou, 438 U.S. 478 (1978)

(noting that qualified immunity covers “mere

mistakes in judgment whether the mistake is

one of fact or one of law”)).

In evaluating an official’s conduct, the inquiry centers “on the

objective legal reasonableness of [her] acts.” Harlow, 457 U.S. at

819. Immunity, if found, serves as a total immunity from suit, not

just “a mere defense from liability.” Mitchell v. Forsyth, 472

U.S. 511, 526 (1985).

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Under pre-existing precedent, the Court had required the trial

court to first determine whether the facts alleged by a plaintiff

made out a violation of a constitutional right and, if it did, to

then determine whether the asserted right was “clearly established”

at the time of the violation. Saucier, 533 U.S. at 201. In

Pearson, the Supreme Court “ruled that the Saucier sequence is

optional and that lower federal courts have the discretion to

decide only the more narrow ‘clearly established’ issue ‘in light

of the circumstances in the particular case at hand.’” Rasul v.

Myers, 563 F.3d 527, 530 (D.C. Cir. 2009) (quoting Pearson, 129 S.

Ct. at 818).

In this case, the Court will address the first question as to

what, if any, constitutional right has been violated. Plaintiff

alleges the individual Defendants violated the Fifth Amendment by

seizing its goods upon their arrival in the United States. The

Fifth Amendment states that “[n]o person shall be . . . deprived of

life, liberty, or property, without due process of law.” U.S.

Const. Amend. V. A Fifth Amendment violation does not occur unless

there is a “constitutionally protected property or liberty interest

at stake,” Giacobbi v. Biermann, 780 F. Supp. 33, 41 (D.D.C. 1992)

(citing Bd. of Regents of State Colls. v. Roth, 408 U.S. 564

(1972)), and the plaintiff must have a “legitimate claim of

entitlement” to the government conduct in question rather than a

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mere “unilateral expectation of it,” Roth, 408 U.S. at 577. The

underpinning of due process is “the opportunity to be heard ‘at a

meaningful time and in a meaningful manner.’” Mathews v. Eldridge,

424 U.S. 319, 333 (1976) (quoting Armstrong v. Manzo, 380 U.S. 545,

552 (1965)). Negligence or “mere lack of due care” resulting in

deprivation of property does not constitute a due process

violation. See Daniels v. Williams, 474 U.S. 327, 330-31 (1986).

Because some discussion of the merits is built into the first

step of the qualified immunity analysis, referring to a 12(b)(6)

framework provides guidance in evaluating whether a constitutional

right has been violated. In Twombly, 550 U.S. at 555, the Supreme

Court stated that, when facing a 12(b)(6) motion, “a plaintiff’s

obligation to provide the ‘grounds’ of his ‘entitl[ment] to relief’

requires more than labels and conclusions.” Some amount of facts

-- “rather than a blanket assertion” -- is necessary to provide

“plausible grounds” for and create a “reasonable expectation that

discovery will reveal evidence” of the alleged wrongdoing. Id. at

556. Furthermore, “courts ‘are not bound to accept as true a legal

conclusion couched as a factual allegation.’” Id. at 555 (quoting

Papasan v. Allain, 478 U.S. 265, 286 (1986)).

a. Named and Unnamed Customs Employees

It is well-established that Customs has the authority to

search and seize goods or merchandise that is noncompliant with

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U.S. law. See, e.g., 19 U.S.C. § 1602 (2006). As in this case,

seizures may be made if the “container” or “wrapping” of imported

goods is noncompliant. 19 U.S.C. § 1595(a)(1)(C) (2006). In

Fourth Amendment challenges to seizures by Customs, the Supreme

Court has held that Customs officials are not required to obtain

probable cause before conducting a search of people or merchandise

entering the United States. See, e.g., United States v. Ramsey,

431 U.S. 606, 616-17 (1977) (“That searches made at the border,

pursuant to the long-standing right of the sovereign to protect

itself by stopping and examining persons and property crossing into

this country, are reasonable simply by virtue of the fact that they

occur at the border, should, by now, require no extended

demonstration.”).

Plaintiff states that “the government violated its Fifth

Amendment Due Process rights because the government would not

permit entry of its seized generators after it had provided

assistance and information regarding the labeling procedure which

was utilized by CHS.” Pl.’s Mem. at 8. Assuming that Plaintiff is

including the individual Defendants in referring to “the

government,” it has failed to set forth any facts showing that

Customs officers acted beyond the bounds of their express statutory

authority, nor suggested any unreasonableness in their actions.

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To survive a motion to dismiss, a plaintiff must provide a

“‘showing’ rather than a blanket assertion of entitlement to

relief.” Twombly, 550 U.S. at 556 (quoting 5 Wright & Miller §

1202, at 94, 95). To make this showing, Plaintiff must offer

enough facts to establish the “plausibility” of the alleged

wrongdoing. Id. Like the Fourth Amendment cases, Plaintiff does

not make out a Fifth Amendment constitutional violation when it

alleges that Customs seized its goods and that the seizure was

conducted pursuant to its statutory authority. For these reasons,

Plaintiff fails to present a set of facts that plausibly allege a

constitutional violation.

b. Named and Unnamed EPA Employees

Under 40 C.F.R. § 89.1003, EPA has authority to enforce

regulations regarding emissions from nonroad engines. 40 C.F.R. §

89.1003 (2008). These regulations include, amongst other things,

compliance with certain labeling standards. See Indep. Equip.

Dealers Ass’n v. EPA, 372 F.3d 420, 422 (D.C. Cir. 2004). Because

many different types of engines are imported from abroad, importers

must also comply with EPA regulations in order to be allowed entry.

Id. For this reason, Customs and EPA may collaborate where both

agencies’ regulations are at issue. In addition, our Court of

Appeals has held that “we lack[] authority to review claims where

‘[the EPA] merely expresses its view of what the law requires of a

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party.’” Id. at 427 (quoting AT&T v. EEOC, 270 F.3d 973, 975 (D.C.

Cir. 2001)).

In its Complaint, Plaintiff includes only two factual

assertions regarding EPA and its employees: (1) that Plaintiff had

consulted EPA prior to purchasing the generators, and (2) that EPA

had recommended to Customs that the generators not be released.

Compl. ¶¶ 22, 24. Neither of these allegations reveals any

possible conduct which falls outside EPA’s statutory authority or

is in violation of the Constitution. Even if Plaintiff had

demonstrated a violation of its constitutional rights, EPA has done

nothing more than express its view of the law. Therefore, this

Court does not have jurisdiction to review Plaintiff’s challenge to

EPA’s recommendations. Indep. Equip. Dealers Ass’n, 372 F.3d at

427.

For these reasons, Plaintiff fails to pass the first step of

the Saucier test, and it is unnecessary to address the second step.

The individual Defendants from Customs and EPA must be dismissed

because they enjoy qualified immunity.

C. No Viable Bivens Claim Exists Because 19 U.S.C. § 1608,

et seq. Provides a Comprehensive Statutory and Regulatory

Remedy for Customs Seizures

The Tariff Act of 1930 provides that

[a]ny person claiming such . . . merchandise

. . . may at any time within twenty days from

the date of the first publication of the

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notice of seizure file with the appropriate

customs officer a claim stating his interest

therein. Upon the filing of such claim, and

the giving of a bond to the United States

. . . such customs officer shall transmit such

claim and bond, with a duplicate list and

description of the articles seized, to the

United States attorney for the district in

which seizure was made.

19 U.S.C. § 1608 (2006).

As Defendants point out, the Supreme Court has resisted

creating a remedy under Bivens where “an elaborate remedial system

that has been constructed step by step, with careful attention to

conflicting policy considerations” already exists. Def.’s Reply at

5 (quoting Bush v. Lucas, 462 U.S. 367, 388 (1983)).

Our Court of Appeals has concluded that, based on Bush, “the

more Congress has dealt in detail and over years with a class of

cases, the less free are the courts to imply such causes of action

without direct statutory support.” Siaca v. United States, 754

F.2d 988, 991 (D.C. Cir. 1985). In the case of Customs seizures,

that Court found that “[e]xisting law contains elaborate and

carefully articulated provisions dealing with the rights of persons

whose property has been seized, possibly illegally.” Id. at 992.

Plaintiff states that it cannot pursue forfeiture proceedings

but has failed to coherently set forth its argument or cogently

express why the remedies available under the Tariff Act are

insufficient. Because Congress has regulated Customs regulations

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since 1789 and provided a remedy for allegedly improper seizures

via statute, Siaca, 754 F.2d at 922, it is inappropriate to create

a Bivens cause of action in this case.

It is telling that in Plaintiff’s last court filing, it fails

to even mention its Bivens claim. Rather, it states that “[t]his

court mus [sic] now determine whether defendants’ conduct renders

them liable for damages either as an equitable remedy or under the

FTCA.” Pl.’s Am. Mot. Opp’ing at 4.

IV. Conclusion

For the reasons set forth above, Defendants’ Motion to Dismiss

is granted. An Order shall accompany this Memorandum Opinion.

September 10, 2009 /s/

Gladys Kessler

United States District Judge

Copies via ECF to all counsel of record

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