Canadian Reynolds Metals Co. v. United States

Slip Op. 04-155

United States Court of International Trade

CANADIAN REYNOLDS METALS COMPANY,

c/o REYNOLDS METALS COMPANY,

Plaintiff,

Before: Pogue, Judge

v.

Court No. 00-00444

UNITED STATES,

Defendant.

[Defendant’s motion to dismiss granted.]

Decided: December 8, 2004

LeBoeuf, Lamb, Greene & MacRae, LLP (Gary P. Connelly, Melvin S.

Schwechter) for Plaintiff.

Peter D. Keisler, Assistant Attorney General, Barbara S. Williams,

Acting Attorney-in-Charge, International Trade Field Office, James

A. Curley, Attorney, Commercial Litigation Branch, Civil Division,

U.S. Department of Justice, Yelena Slepak, Attorney, Of Counsel,

Office of Assistant Chief Counsel, U.S. Bureau of Customs and

Border Protection, for Defendant.

OPINION

Pogue, Judge: Plaintiff Canadian Reynolds Metals Company

(“CRMC” or “Plaintiff”) seeks to invoke the Court’s jurisdiction to

challenge the denial of its administrative protest. Plaintiff’s

protest sought to challenge the imposition of certain Merchandise

Processing Fees (“MPF”) on Plaintiff’s imports.

Defendant United States Bureau of Customs and Border

Court No. 00-00444 Page 2

Protection1 (“Customs” or “Defendant”) moves for dismissal claiming

lack of subject matter jurisdiction because Plaintiff failed to

properly and timely file its protest. Because Plaintiff’s protest,

which objected to three separate actions by Customs, was untimely

as to two of the actions, and because the third action was not

protestable under 19 U.S.C. § 1514 (2000)2, Defendant’s motion to

dismiss is granted.3

1

Effective March 1, 2003, the United States Customs Service was

renamed the United States Bureau of Customs and Border

Protection. 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).

2

Because Plaintiff filed its summons in 2000, Summons of CRMC at

2, the Court will refer to the 2000 versions of the statutes or

regulations. The Court acknowledges, however, that because the

events related to this action took place over an extended period

of time, various versions of each of the statutes and regulations

involved may apply. Accordingly, the Court has reviewed the

versions from 1994 until the present and found that no amendments

affecting the outcome of this case have occurred. The Court

notes that subsection (c) of 28 U.S.C. § 1491, see infra note 25,

was redesignated from subsection (b) to subsection (c) in 1996.

See Administrative Dispute Resolution Act of 1996, Pub. L. No.

104-320 § 12, 110 Stat. 3870, 3874 (codified as amended at 28

U.S.C. § 1491 (2000)).

3

In Canadian Reynolds Metals Co. v. United States, slip. op. 04-

39 (CIT Apr. 23, 2004), the Court granted Defendant's motion.

However, pursuant to USCIT R. 59(a) ( stating that a "rehearing

may be granted . . . in an action finally determined”), the

Court, on June 8, 2004, and on July 14, 2004, vacated its earlier

judgment and denied Defendant’s motion to dismiss. See Canadian

Reynolds Metals Co. v. United States, slip. op. 04-85 (CIT July

14, 2004). Due to the probable relevance of an issue which had

not been briefed by the parties – the applicability of the

holding in U.S. Shoe Corp. v. United States, 114 F.3d. 1564 (Fed.

Cir. 1997) that passive acceptance of funds does not constitute a

protestable Customs decision – the Court ordered its July 14,

Court No. 00-00444 Page 3

I. Background

Plaintiff’s administrative protest has a twelve-year history,

a review of which is necessary background for the motion at issue

here. On December 15, 1992, CRMC made a voluntary disclosure to

Customs under 19 U.S.C. § 1592(c)(4), admitting that it had failed

to pay certain MPF on unwrought aluminum products imported into the

United States between 1990 and the date of disclosure. Def.’s Mem.

Supp. Mot. Dismiss at 1-2 (“Def.’s Mot.”); Pl.’s Opp’n to Mot.

Dismiss at 1 (“Pl.’s Opp’n”). On September 19, 1994, Customs

requested that CRMC tender $54,487.69 to perfect the voluntary

disclosure. Complaint of CRMC at para. 5. CRMC paid the requested

amount on October 6, 1994. See Letter from John Barry Donohue,

Jr., Assoc. Gen. Counsel, Reynolds Metals Co., to William D.

Dietzel, Dist. Dir., Customs, Pl.’s Ex. A at 1,4 3 (Oct. 6, 1994)

(“October 6 Letter”).5

Along with its payment, CRMC submitted a letter in which it

2004 judgment stayed pending further briefing. See Order (CIT

Aug. 12, 2004). The Court now withdraws that opinion and order.

4

Documents appended to Pl.’s Opp’n are referred to as “Pl.’s Ex.”

followed by the corresponding letter.

5

The record shows that all correspondence and documentation

referred to in this decision was either addressed to or sent by

Reynolds Metals Company, in its capacity as owner of Canadian

Reynolds Metals Company. Reynolds Metals Company also owns

Aluminerie Becancour, Inc., which is the Plaintiff in a companion

case before the Court. Aluminerie Becancour, Inc. v. United

States, Court No. 00-00445, slip op. 04-156 (CIT December 8,

2004).

Court No. 00-00444 Page 4

advised Customs of its intent to appeal the MPF determination, as

it considered its entries exempt from the MPF rate demanded by

Customs. Id. at 1. CRMC argued that the unwrought aluminum

products were of Canadian origin, and thus qualified for special

treatment pursuant to the United States-Canada Free Trade Agreement

(“USCFTA”). Letter from Rufus E. Jarman, Jr., Barnes, Richardson

& Colburn, to Dist. Dir., Customs, Pl.’s Ex. D at 4, 4-5 (Feb. 1,

1995) (“February 1 Letter”).6 Customs, on the other hand, had

previously concluded that due to a non-Canadian additive, CRMC’s

entries failed to qualify for the reduced MPF rate provided by the

USCFTA. Id. at 5. CRMC, in turn, argued that pursuant to the

doctrine of de minimis non curat lex, the foreign additive in the

Canadian entries should be disregarded for country of origin

purposes. Id. CRMC informed Customs in its payment tender letter

that it expected a full refund of the tender amount along with

accrued interest in the event that subsequent litigation was

successful. October 6 Letter, Pl.’s Ex. A at 1.

Customs responded in a letter dated November 8, 1994, stating

that it had received CRMC’s tender of MPF, but rejected all

conditions imposed by CRMC in connection to this payment. Letter

from Charles J. Reed, Fines, Penalties & Forfeitures Officer, on

behalf of William D. Dietzel, Dist. Dir., Customs, to John Barry

6

Barnes, Richardson & Colburn was Plaintiff’s legal

representative at the time. See February 1 Letter, Pl.’s Ex. D

at 4.

Court No. 00-00444 Page 5

Donohue, Reynolds Metals Co., Pl.’s Ex. B at 1 (Nov. 8, 1994)

(“November 8 Letter”). Subsequently, Customs and CRMC concluded an

escrow agreement on December 20, 1994, in which they agreed to let

the decision in a designated test case7 control whether a full

refund of CRMC’s MPF payment was appropriate. Agreement between

Canadian Reynolds Metals Company and U.S. Customs Service, Pl.’s

Ex. C at 1 (Dec. 20, 1994) (“Escrow Agreement” or “the Agreement”).

In the event that the test case decision was favorable to CRMC,

Customs further agreed to refund the full tendered amount “together

with such interest as may be required by law.” Id. at 1-2.

On February 6, 1995, CRMC filed an administrative protest.

See Letter from Frederic D. Van Arnam, Jr., Barnes, Richardson &

Colburn, to Dist. Dir., Customs, Pl.’s Ex. D. at 1 (Feb. 6, 1995)

(“February 6 Letter”); Protest No. 0712-95-100131, Pl.’s Ex. D at

3 (Feb. 6, 1995) (“Protest Form”).8 In its protest, Plaintiff

7

In subsequent amendments to the escrow agreement, concluded on

October 28, 1996, and July 13, 1998, the parties identified the

designated test case as Alcan Aluminum Corp. v. United States, 21

CIT 1238, 986 F. Supp. 1436 (1997), originally referred to as St.

Albans Protest No. 0201-93-100281 (HQ 955367) and subsequently

appealed to the Federal Circuit Court of Appeals. Letter from

Charles D. Ressin, Chief, Penalties Branch, Int’l Trade

Compliance Div., to Frederic D. Van Arnam, Jr., Barnes,

Richardson & Colburn, Pl.’s Ex. C at 3, 4 (Oct. 30, 1996); Letter

from Charles D. Ressin, Chief, Penalties Branch, Int’l Trade

Compliance Div., to Frederic D. Van Arnam, Jr., Barnes,

Richardson & Colburn, Pl.’s Ex. C at 5, 6 (July 13, 1998); Alcan

Aluminum Corp. v. United States, 165 F.3d 898 (Fed. Cir. 1999).

8

The “protest package” provided as Exhibit D by Plaintiff

contains copies of two letters along with a copy of a completed

Customs Form 19 (Protest No. 0712-95-100131); the first letter is

dated February 1, 1995, and the second letter is dated February

Court No. 00-00444 Page 6

appeared to make three objections to Customs’ actions. First,

Plaintiff stated that it objected to the assessment and payment of

MPF. February 1 Letter, Pl.’s Ex. D at 4. Second, it protested

“contingencies not anticipated in the [escrow] [a]greement[,] or

unanticipated frustration” of the same. Id. at 5-6. Plaintiff

then appears to have made a third objection, referring to Customs’

acceptance of payment. Id. at 4. In support of this third

objection, Plaintiff noted that a copy of Customs’ letter dated

November 8, 1994, as well as a receipt of payment made out by

Customs on November 7, 1994, was enclosed with the protest. Id.;

see also Collection Receipt from U.S. Bureau of Customs & Border

Prot., to Canadian Reynolds Metals Co., Pl.’s Ex. A at 5 (Nov. 7,

1994) (“Receipt”). Plaintiff clarified in its protest that it did

not expect Customs to act in response to its objections until final

6, 1995. See Pl.’s Ex. D. Accordingly, it appears as though

Plaintiff first attempted to forward a protest to Customs on

February 1, 1995, but that for reasons unclear to the Court, the

protest was not filed until February 6, 1995, the date Customs

received and stamped the protest form. Protest Form, Pl.’s Ex. D

at 3. The implementing regulation for filing of protests

confirms that a protest is considered filed on the date it is

received by Customs. 19 C.F.R. § 174.12(f) (“The date on which a

protest is received by the Customs officer with whom it is

required to be filed shall be deemed the date on which it is

filed.”). Additionally, both parties agree that the protest was

filed on February 6, 1995. See Def.’s Mot. at 2; Pl.’s Opp’n at

3. As the February 6 Letter merely serves as a complement to the

original protest attempt on February 1, 1995, however, the Court

will treat the letter dated February 1, 1995, as part of the

protest filed on February 6, 1995. See February 6 Letter, Pl.’s

Ex. D at 1 (“[W]e forwarded protests, dated February 1, 1995, in

which CRMC . . . protested the assessment and payment of

Merchandise Processing Fee (‘MPF’).”).

Court No. 00-00444 Page 7

judgment was rendered in the pending test case. February 1 Letter,

Pl.’s Ex. D at 6.

On January 5, 1999, the Federal Circuit Court of Appeals

issued its decision in the test case, Alcan Aluminum Corp. v.

United States, 165 F.3d 898 (Fed. Cir. 1999). The Alcan Aluminum

Corp. Court held that the foreign additive in question was subject

to the principle of de minimis non curat lex, and therefore, the

entries were considered of Canadian origin. 165 F.3d at 902. The

Alcan Aluminum Corp. decision became final on April 5, 1999. Pl.’s

Opp’n at 4.

Because CRMC’s entries qualified for preferential trade status

under the USCFTA as a result of the favorable decision in Alcan

Aluminum Corp., Customs refunded to CRMC the deposited MPF amount

in full “[o]n or about” February 7, 2000.9 Compl. of CRMC at 3.

Customs, however, failed to tender interest pursuant to the

escrow agreement when it made the refund to CRMC. Def.’s Mot. at

2; Pl.’s Opp’n at 4. CRMC then sent, on February 10, 2000, a

request for accelerated disposition of its protest. See Pl.’s

Opp’n at 4; Letter from F. D. “Rick” Van Arnam, Jr., Barnes,

Richardson, & Colburn, to Port Dir., Customs, Pl.’s Supp. Ex. A

(Feb. 9, 2000); Certified Mail Receipt, Pl.’s Supp. Ex. B. (Feb.

10, 2000) Following what CRMC considered a denial of the original

protest by operation of law, it filed a summons with the Court on

9

No supporting exhibit was provided, but Defendant does not deny

this statement. See Def.’s Mem. at 2.

Court No. 00-00444 Page 8

September 7, 2000. Summons of CRMC at 2. Plaintiff subsequently,

on September 30, 2002, filed its complaint seeking relief. Compl.

of CRMC at 6. The thrust of Plaintiff’s complaint is that Customs

failed to pay interest on the refunded MPF. Id. at 3-4. As noted

above, Defendant Customs moves to dismiss for lack of subject

matter jurisdiction.

II. Standard of Review

Because Plaintiff is seeking to invoke the Court’s

jurisdiction, it has the burden to establish the basis for

jurisdiction. See Former Employees of Sonoco Prods. Co. v. United

States Sec’y of Labor, 27 CIT ____, ____, 273 F. Supp. 2d 1336,

1338 (2003) (citing McNutt v. Gen. Motors Acceptance Corp., 298

U.S. 178, 189 (1936)). At the same time, “the Court assumes ‘all

well-pled factual allegations are true,’ construing ‘all reasonable

inferences in favor of the nonmovant.’” United States v. Islip, 22

CIT 852, 854, 18 F. Supp. 2d 1047, 1051 (1998) (quoting Gould, Inc.

v. United States, 935 F.2d 1271, 1274 (Fed. Cir. 1991)).

III. Discussion

Defendant moves to dismiss, alleging that because CRMC failed

to timely protest any Customs decision, subject matter jurisdiction

under 28 U.S.C. § 1581(a) is lacking. See Def.’s Mot at 3-4. That

statute, upon which Plaintiff’s claim relies, provides for the

Court No. 00-00444 Page 9

review of the denial of a protest made under section 515 of the

Tariff Act of 1930, as amended at 19 U.S.C. § 1515. Compl. of CRMC

at 1; 28 U.S.C. § 1581(a). Subsection (a) of § 1515 authorizes

Customs “to review and deny or allow a protest as long as it is

filed in accordance with 19 U.S.C. § 1514. 19 U.S.C. § 1515(a).

A suit attempting to invoke the Court’s jurisdiction under 28

U.S.C. § 1581(a) must therefore be based on a protest which

complies with the requirements of § 1514.

Section 1514 states the requirements for protests, two of

which are at issue here. First, the protest must be of a

“decision” of the Customs service. 19 U.S.C. § 1514(a). Second,

the protest must be timely filed – that is, no more than ninety

days after the protested decision. 19 U.S.C. § 1514(c)(3).10

In its protest, Plaintiff appears to make three objections.

See February 1 Letter, Pl.’s Ex. D at 4-6. First, Plaintiff

protests the assessment and payment of MPF. Id. at 4. To the

10

Title 19 U.S.C. § 1514(c)(3) provides as follows:

A protest of a decision, order, or finding described

in subsection (a) of this section shall be filed with

the Customs Service within ninety days after but not

before--

(A) notice of liquidation or reliquidation,

or

(B) in circumstances where subparagraph (A)

is inapplicable, the date of the decision as

to which protest is made.

19 U.S.C. § 1514(c)(3).

Court No. 00-00444 Page 10

extent Plaintiff challenged its own payment of the MPF, the protest

is invalid; Plaintiff’s tender of payment may be the result of its

own decision to do so, but it is not a Customs decision. The

demand for tender, however, appears to be a Customs decision;

Customs actively demanded payment of the owed amount. See

Complaint of CRMC at para. 5; Escrow Agreement, Pl.’s Ex. C at 1.

The demand occurred on September 19, 1994, but Plaintiff did not

file its protest until February 6, 1995. Complaint of CRMC at

para. 5; Protest Form, Pl.’s Ex. D at 3. Because a time period of

more than ninety days elapsed between the demand and the protest,

Plaintiff’s protest fails to present a timely challenge to the

assessment and payment of MPF.

Second, Plaintiff protests unanticipated frustration of, and

contingencies not foreseen in, the escrow agreement. February 1

Letter, Pl.’s Ex. D at 5-6. While Customs’ eventual refusal to pay

interest as required by the escrow agreement may have been a

protestable decision, the February 6, 1995 protest is simply

untimely with regard to Customs’ alleged failure to pay interest as

required by law. Title 19 U.S.C. § 1514(c)(3) states that parties

must file protests “within ninety days after but not before . . .

the date of the decision as to which protest is made.” Id.

(emphasis added). The decision the protesting party objects to

must therefore occur prior to the filing of the protest. As

previously stated, CRMC filed its protest on February 6, 1995.

Court No. 00-00444 Page 11

Protest Form, Pl.’s Ex. D at 3. To the extent that Plaintiff

objects to the unanticipated event of Customs’ decision to refund

MPF without interest in February 2000, that event had not yet

occurred at the time the protest was filed.11 Accordingly, under

a plain reading of 19 U.S.C. § 1514(c)(3), Plaintiff’s protective

protest was untimely and invalid. See A.N. Deringer, Inc. v.

United States, 12 CIT 969, 972, 698 F. Supp. 923, 925 (1988)

(holding that a protest was invalid either because it was filed the

day before Customs denied a previous claim for relief or barred by

the provision allowing only one protest per entry of merchandise).

Third, Plaintiff appears to object to Customs’ acceptance of

its MPF tender. See February 1 Letter, Pl.’s Ex. D at 4. But the

mere passive acceptance of funds does not constitute a Customs

decision under United States Shoe Corp. v. United States, 114, F.3d

1564 (Fed. Cir. 1997). That case found that Customs’ collection of

Harbor Maintenance Tax was not protestable, as Customs merely

passively accepted the taxes paid pursuant to statute. Id. at

11

Plaintiff claims that Customs made the decision not to pay

interest as early as November 8, 1994, the day it sent the

November 8 Letter. See Pl.’s Opp’n at 6. However, the parties

subsequently signed the Agreement, whereby Customs agreed to

refund the MPF amount and “interest as may be required by law” if

related litigation was successful. Escrow Agreement, Pl.’s Ex. C

at 1-2. Thus, even presuming that Customs made the decision to

deprive CRMC of interest at such an early stage, that decision

was later vitiated by the terms of the Agreement before the

filing of the protest. Moreover, the language of the protest –

objecting to unanticipated frustration of the Agreement– clearly

refers to decisions which had not yet been made, and not to the

November 8 Letter.

Court No. 00-00444 Page 12

1569. Customs was not involved in calculation of the tax; in

fact, the burden of calculation and payment was entirely on the

taxed party. Id. Customs’ function of collection involved no

independent thought process on its part, and its collection of

funds therefore gave rise to no protestable decision. Id.

The facts here are somewhat different than those in United

States Shoe Corp. Here, Customs actively demanded the payment of

the owed MPF. See Escrow Agreement, Pl.’s Ex. C at 1. While

acceptance of that demanded payment might be considered passive,

and therefore not a “decision” under the rule in United States Shoe

Corp., Customs did not merely accept Plaintiff’s tender. Rather,

Customs rejected the contingencies which Plaintiff placed on its

tender. See October 6 Letter, Pl.’s Ex. A at 1; November 8 Letter,

Pl.’s Ex. B at 1. This rejection required some independent thought

on Customs’ part; the Court is therefore persuaded that the

rejection of contingencies could be regarded as a protestable

decision, and thus the acceptance of Plaintiff’s tender could have

been protestable.

But the fact remains that on February 6, 1995, when Plaintiff

protested the acceptance of tender and the rejection of Plaintiff’s

contingencies, the parties’ relationship to one another had been

changed by the conclusion of the Agreement. In the Agreement,

Customs appears to have changed its position on payment of

interest, and agreed that it would pay such interest “as may be

Court No. 00-00444 Page 13

required by law.” See Escrow Agreement, Pl.’s Ex. C at 2. The

complained-of decision, then, would appear to be moot, being void

as a matter of law. Plaintiff, however, argues that the Agreement

does not moot the November 8 decision not to pay interest. See

Pl.’s Supp. Letter Br. at 3-4 (Nov. 30, 2004). Plaintiff avers

that the contingency it placed on its tender was not the

requirement to pay “such interest as may be required by law,” but

rather, simply to pay “interest.” Id. at 4-5. Because the tender

flatly demanded the payment of interest, with or without legal

authorization, and the Escrow Agreement only required payment of

interest as required by law, Plaintiff argues that there remains a

non-mooted, protestable element to the November 8 rejection of

contingencies.

The Court is not persuaded. Plaintiff’s escrow agreement was

a contract with an arm of the federal government. Federal agencies

cannot contract as they choose; their authority to contract is

necessarily constrained by the statutes under which the agency

operates, by regulations, and by applicable case law. When

Plaintiff demanded the payment of interest on its tender, it was,

or should have been, well aware that all it could demand of Customs

was that Customs pay back such interest as might be required by

law. This is precisely what Customs bound itself to in the

Agreement.12, 13

12

The Court is hard pressed to understand why Plaintiff would

have entered into the Agreement were the refund of its money

Court No. 00-00444 Page 14

Therefore, the mere acceptance of Plaintiff’s funds was not

protestable pursuant to the rule stated in United States Shoe

Corp., and the rejection of contingencies, which had constituted an

active and protestable decision, was void as a matter of law as a

result of the Agreement.

Accordingly, the protest upon which this case was brought was

untimely filed as to two of the decisions to which Plaintiff

objected, and the third objected decision was void as a matter of

law and therefore not protestable. Accordingly, Customs’ motion to

dismiss is hereby granted, and the Court enters judgment for

Defendant.

/s/Donald C. Pogue

Donald C. Pogue,

Judge

Dated: December 8, 2004

New York, New York

along with “such interest as may be required by law” manifestly

disagreeable to it. The Agreement moots the November 8 letter

either because it represents Customs’ acceptance of

contingencies, or because it represents Plaintiff’s negotiated

determination to abandon its claim to forms of interest other

than those “required by law.”

13

Because the Court finds that the protestable portion of the

November 8 letter was rendered legally void by the escrow

agreement, the Court need not reach the question of whether the

protest was timely filed as to this issue.