Petition for Writ of Certiorari — Washington International Insurance v. United States

Supreme Court brief1989

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IN THI

Supreme Court of the United States

OCTOBER TERM, 1988

WASHINGTON INTERNATIONAL INSURANCE CO

Petiti ner

THE UNITED STATES,

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

WAYNE JARVIS

WAYNE JARVIS, LTD

SOS North Lake Shore Drive, #45

Chicago, Illinois 6061 |

(312) 467-6787

Of Counsel

PAUL MCCAMBRIDGI

TRIBLER & MARWEDEI

230 West Monroe Street, #220

( hicago, Illinois 60606

(312) 368-1262

Dated: March 21, 1989

QUESTION PRESENTED

Whether the Federal ¢

ircuit misapplied and improperly

restricted this Court’s recent decision in Juli v. United

States by holding that suits against the government that are

analogous to common law actior

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TABLE OF CONTENTS

PAGE

Ouestions Presented... 6.00s e002 dsens scenes

Table of Autharities .ow650 5 iss 0d eee ill

Opinions Below .... 6.0 0bssns asec eens

JutOUROIO vk coc ode ducnsaeberi eee |

Constitutional Provision and Statutes Involved........... 2

Seotompent of the Coes .... 5 050030 3

Reasons for Granting the Wit 6.5c i655 0c eae ees

In holding that this Court’s decision in Tull v. United

States, 481 U.S. 412 (1987), does not require a jury tral

in an action in debt against the government, the Federal

Circuit has misapplied and improperly restricted Tu// and

denied Washington’s right to a jury trial guaranteed by the

Seventh AmenGeht . .. s+ 50i5 eens eee 6

A. Tull v. Vaio Sigs 3k eee 6

B. Opinion of the CIT Panel Majonty............. 7

C. Opinion of the Federal Circuit................. 9

CORCHIBIOM sc ceveccenand kien eee 15

TABLE OF AUTHORITIES

Cases

Pa t

Beacon Theatres, Inc. v. Westover, 359 U.S. 50}

{ 1959) “yo ae 1()

Boyd v. Bulala, 672 F.Supp. 915 (W.D.Va. 1987) 9

Byrd v. Blue Ridge Rural Electric Cooperative, Inc

356 U.S. 525 (1958)..... | 10

Curtis v. Loether, 415 U.S. 189 (1974) 6,7

Diary Queen, Inc. v. Wood, 369 U.S. 469 (1962) 6

Dimick v. Schiedt, 293 U.S. 474 (1935) 10

Jacob v. New York, 315 U.S. 752 (1942) 10

Lehman v. Nakshian, 453 U.S. 156 (1981). 9,13, 14

Massey v. Whitaker Corp., 661 F.Supp. 1151 (1987) 9

McLaughlin v. Owens Plastering Co., 841 F.2d 299

SS ROME coc cccccccccese .

McMillan v. Lincoln Federal Savings & Loan Ass'n.

678 F.Supp. 89 (D.N.J. 1988)...... u

National City Bank v. Republic of China, 348 U.S

i) Pies as 12

Parklane Hosiery Co. v. Shore, 439 U.S. 322

6) 7 re 10, 11, 12

Pernell v. Southall Realty, 416 U.S. 363 (1974) 6

Ross v. Bernhard, 396 U.S. 531 (1970 6

Simler v. Conner, 372. U.S. 221 (1963

Tull v. United States, 481 U.S. 412

os ee , 3,4, 5,6, 7, 8,9

United States v. State of New Mexico, 642 F.2d 397

(1981)

United States v. Testan, 424 U.S. 392 (1976)

Washington International Insurance Co. v. United

States, 11 CIT ___, 659 F.Supp. 235 (1987) 3. 4

Washington International Insurance Co. vy. ( nited

States, 12 CIT ___, 678 F.Supp. 902 (1988) 4

PAGE

Statutes and Rules

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Other Authorities

Davis, Suing the Government By Falsely Pretending

to Sue at Officer, 29 U. Chi. L. Rev. 435 (1962)... 12

Krist, Administrative Penalties and the Civil Jury:

The Supreme Court's Assault on the Seventh

Amendment, 126 U. Pa. L. Rev. 1281 (1978)..... 14

Scalia, “Sovereign Immunity and Nonstatutory Re-

view of Federal Administrative Action: Some Con-

clusions from the Public-Lands Cases, 68 Mich. L.

Pe ee Cetee vce luskece base eeneens 12, 13, 14

IN THE

Supreme Court of the United States

OCTOBER TERM, 1988

WASHINGTON INTERNATIONAL INSURANCE CO..,

Petitioner.

VS.

THE UNITED STATES,

Respondent.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

Petitioner, Washington International Insurance Co., re-

spectively requests that a writ of certiorari issue to review

the judgment and decision of the Court of Appeals for the

Federal Circuit entered on December 22. 1988.

OPINIONS BELOW

The opinion of the United States Court of Appeals for the

Federal Circuit is unreported. (Appendix A) The two rele-

vant opinions of the United States Court of International

Trade are reported at 659 F.Supp. 235 (1987) (Appendix B)

and 678 F.Supp. 902 (1988). (Appendix C)

JURISDICTION

The judgment of the Court of Appeals (Appendix D) was

entered on December 22, 1988. The Jurisdiction of this

Court is premised upon 28 U.S.C. § 1254(1).

CONSTITUTIONAL PROVISION AND STATUTES

INVOL+ED

The Seventh Amendment to the United States Constitu-

tion provides:

In suits at common law, where the value in controversy

shall exceed twenty dollars, the nght of tnal by jun

shall be preserved

28 U.S.C. § 1581 (a) provides:

§ 1581. Civil actions against the United States and

agencies and officers thereof

(a) The 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 Tanff Act of 1930.

28 U.S.C. § 1876(a) provides:

Trial by jury in the Court of International Trade

(a) In any civil action in the Court of International

Trade which is to be tried before a jury, the jury

shall be selected in accordance with the provisions

of this chapter and under the procedures set forth

in the jury selection plan of the district court for

the judicial district in which the case is to be tned.

STATEMENT OF THE CASE

This petition seeks review of the Federal Circuit's deci-

sion that the Seventh Amendment and this Court’s opinion

in Tull v. United States, 481 U.S. 412 (1987), do not apply

to suits against the government that are analogous to com-

mon law actions in debt

Petitioner, Washington International Insurance Co

(“Washington”), filed a Complaint in the Court of Interna-

tional Trade (“CIT”) on December 13, 1982, challenging

the United States Customs Service's (“Customs”) ap-

praisement of 64 metric tons of cheese that was damaged

prior to its importation into the United States and subse-

quently sold at salvage. Customs appraised and liquidated

the cheese at the full invoice price of $160,000. As the

importer’s surety, Washington paid the liquidated duties and

protested the assessment on ‘he ground that the cheese was

entitled to appraisement at a reduced salvage value because

of its severely deteriorated condition. Customs denied the

protest, and Washington brought suit against the United

States (“the government”) in the CIT under 28 U.S.C

§ 1581 (a). Section 1581(a) grants the CIT exclusive juris-

diction to entertain civil actions against the government

contesting the denial of a protest by Customs pursuant to 19

U.S.C. $1515. Washington satisfied all jurisdictional! pre-

requisites, and there is no dispute: (1) that Section 1581 (a)

provided the proper jurisdictional basis for this action: and

(2) that Section 1581(a) represents a waiver of the govern-

ment’s sovereign immunity to suit in the CIT

Washington’s Complaint included a timely demand that

the case be tned before a jury pursuant to CIT Rule 38(b)

On October 7, 1986, the government filed a Motion to

Strike Demand for Jury Trial. Chief Judge Re then granted

Washington’s motion asking that the government’s motion

to strike be decided by a three-judge panel pursuant to 28

U.S.C. §§ 253(c) and 255(a) and CIT Rule 77(d). Wash-

ington International Insurance Co. v. United States, || CIT

__., 659 F.Supp. 235 (1987) (Appendix B).' The three-

judge panel, with Chief Judge Re dissenting, denied the

government’s motion to strike on the ground that the nght to

a jury trial in a suit that is analogous to a common law

action in debt under Section 1581(a) is guaranteed by the

Seventh Amendment. Washington International Insurance

Co. v. United States, 12 CIT ___, 678 F.Supp. 902 (1988)

(Appendix C). Based upon an extensive analysis of customs

actions in both England and the United States during the

18th and 19th centuries, the panel majority held that “his-

tory and the law, as recently elucidated by the Supreme

Court in Tull v. United States, show that trial by jury

remains a fundamental nght which applies to an action such

as this one... .” 678 F.Supp. at 917 (App. C at 34).

The CIT then granted the government’s motion to amend

the interlocutory order of the three-judge panel to include

‘in granting the motion for a three-judge panel, Chief Judge

Re stated that the night to a jury tral in customs valuation cases

“is a question with significant constitutional implications.” 659

F.Supp. at 237 (App. B at 7). He concluded:

If a three-judge panel of this court were to determine the

availability of a jury trial in import transactions, that decision

would contribute significantly to defining the expanded juris-

diction of the Court of International Trade under the Cus-

tors Courts Act of 1980. In view of the large number of

cases seeking judicial review pursuant to section 1581 (a),

the decision in this action will have “broad or significant

implications in the administration or interpretation of cus-

toms laws.”

Id. at 238 (App. B at 9).

the statement prescribed by 28 U.S.C. 1292(d)(1)*, and the

Federal Circuit granted the government's petition for per-

mission to appeal under 28 U.S.C. § 1292(d)(1)°. In an

opinion yet to be reported (Appendix A), the Federal

Circuit reversed the CIT and rejected the lower court's

holding that Tud/ v. United States requires the right to a jury

tnal in actions against the government under Section

1581(a). Although recognizing that “the right to a jury trial

at least arguably existed” in the common law action in debt

against the customs officer for the recovery of excess duties,

the Federal Circuit held that “[s]overeign immunity shields

the United States from suit unless immunity is waived.”

(App. A at 4). Since “actions against the government are

not analogous to actions by the government,” the court of

appeals declared that “7u// does not require the Court of

International Trade to grant Washington's jury demand.”

(/d.) (Emphasis in original).

* In the memorandum in support of its motion, the government

stated that the decision of the three-judge panel “undoubtedly

will have a profound impact upon the vast majority of actions

commenced in the Court of International Trade” and “an equally

profound impact upon numerous actions commenced against the

Government in the Federal district courts.” Gov’t Memo. at |. It

also declared:

Appellate resolution... is manifestly appropriate in view of

the broad and significant implications ... in the administra-

tion of our customs laws. Prior to implementing a decision

which will have the effect of radically overturning nearly 100

years of customs jurisprudence, it is imperative to the sound

administration and enforcement of our customs laws that no

doubt remain as to whether jury trials are mandated under

the seventh amendment to the United States Constitution in

actions instituted pursuant to 28 U.S.C. § 1581 (a).

Id. at 12-13.

>The government's petition notes that “(t]he significance of

the majority's decision and its impact upon the administration and

enforcement of the custom law is beyond dispute.” Gov't Pet. at 13.

REASON FOR GRANTING THE WRIT

By holding that Tull v. United States, 481 U.S. 412 (1987),

does not require a jury trial in suits against the government

that are analogous to common law actions in debt, the

Federal Circuit has misapplied and improperly restricted

Tull and denied Washington the right to a jury trial

guaranteed by the Seventh Amendment.

A. Tull v. United States

In Tull, this Court clearly stated:

The Seventh Amendment provides that, [i]n Suits

at common law, where the value in controversy shall

exceed twenty dollars, the nght of trial by jury shall be

preserved ....” The Court has construed this language

to require a jury trial on the ments in those actions that

are analogous to “Suits at common law.” Prior to the

Amendment’s adoption, a jury tnal was customary in

suits brought in the English /aw courts. In contrast,

those actions that are analogous to |8th-century cases

tried in courts of equity or admiralty do not require a

jury trial.... This analysis applies not only to com-

mon-law forms of action, but also causes of action

created by congressional enactment. See Curtis v.

Loether, 415 U.S. 189, 193 (1974).

To determine whether a statutory action is more

similar to cases that were tried in courts of law than to

Suits tned in courts of equity or admiralty, the Court

must examine both the nature of the action and of the

remedy sought. First, we compare the statutory action

to 18th-century actions brought in the courts of En-

gland prior to the merger of the courts of law and

equity. See, e.g., Pernell v. Southall Realty, 416 U.S.

363, 378 (1974); Dairy Queen, Inc. v. Wood, 369 U.S.

469, 477 (1962). Second, we examine the remedy

sought and determine whether it is legal or equitable in

nature. See, e.g., Curtis v. Loether, supra, at 196; Ross

v. Bernhard, 396 U.S. 531, 542 (1970).

481 U.S. at 417-18. Applying the first part of the above test

to an action for civil penalties under the Clean Water Acct,

the Court noted that “[p]rior to the enactment of the -

Seventh Amendment, English courts had held that a civil

penalty suit was a particular species of an action in debt that

was within the jurisdiction of the courts of law.” Jd. at 418.

The “essential function of an action in debt was to recover

money owed under a variety of statutes or under the com-

mon law.” Jd. at 421. Since an action for a civil penalty

under the Clean Water Act “is clearly analogous to the 18th

century action in debt..., federal courts have rightly as-

sumed that the Seventh Amendment required a jury trial.”

Id. at 420.

Moving to the second part of the test and quoting Curtis

v. Loether, 415 U.S. 189, 196 (1974), for the proposition

that characterizing the relief sought is ‘more important’ than

finding a precisely analogous common law cause of ac-

tion...,” this Court tucused on “[t]he punitive nature of

the relief sought” and noted that “[{a] civil penalty was a

type of remedy at common law that could only be enforced

in courts of law.” 481 U.S. at 421-23. Since “the nature of

the relief authorized .. . was traditionally available only in a

court of law, petitioner in this present action is entitled to a

jury trial on demand.” /d. at 423.

B. Opinion of the CIT Panel Majority

The opinion of the panel majority in the CIT carefully

considered and correctly applied Tu// in denying the govern-

ment’s motion to strike Washington's jury demand. First,

the panel majority considered whether the right to a jury

trial existed in England prior to the time the Seventh

Amendment was adopted and concluded that “customs

actions in England were at law and thus triable to a jury.”

687 F.Supp. at 906 (App. C at 9). It then analyzed in detail

numerous customs appraisement cases from the time of the

Seventh Amendment through the 19th century and found

that “[1]ittle doubt exists from the foregoing cases that

persons aggrieved by uniawful collections of duties pos-

sessed the right to recover them at law.” /d. at 910 (App. C

at 17). After outlining in equal detail “the history to date of

judicial review of customs decisions” (id. at 913 (App. C at

24)), the panel majority quoted the above two paragraphs

from Tull and properly applied the test stated therein:

If this is the proper method for analyzing the action

at bar, the conclusion it leads to is the nght to a jury

trial, for the nature of this action has remained essen-

tially unchanged since the 18th century. While such

Suits were brought at that time against the king’s

collector, and not against the king, that subsequent

cases in this country were also originally against a

collector but later agairst the United States as titular

defendant does not change the consistent, fundamental

nature of the disagreement between an importer and a

local official over the assessment of merchandise for

imposition of duties. From early times to date, these

disagreements have been resolvable in courts of law.

They have never been tried in either equity or admiralty

courts. Furthermore, if, as the Court in Tull states,

“characterizing the relief sought is *[m]ore important’

than finding a precisely analogous common law cause

of action in determining whether the Seventh Amend-

ment guarantees a jury trial’, the relief sought here

shows this to still be an action in debt. In other words,

the remedy the plaintiff seeks herein is legal, rather

than equitable, in nature.

Id. at 917 (App. C at 33). Finally, the majority concluded

that “history and the law, as recently elucidated by the

Supreme Court in Tull v. United States, show that trial by

jury remains a fundamental nght which applies to an action

such as this one.” /d. (App. C at 34). Accord, McLaughlin

v. Owens Plastering Co., 841 F.2d 299, 301 (9th Cir. 1988)

(jury trial required since “{s]uch cases are analogous to

actions at law, e.g. debt or assumpsit, and on proper de-

mand, are triable before a jury.”) McMillan v. Lincoln

Federal Savings & Loan Ass'n., 678 F.Supp. 89 (D.N.J.

1988); Massey v. Whitaker Corp., 661 F.Supp. 1151

(N.D.Ohio 1987); cf. Boyd. Bulala, 672 F.Supp. 915

(W.D.Va. 1987).

C. Opinion of the Federal Circuit

Quoting from Lehman v. Nakshian, 453 U.S. 156, 160

(1981), the Federal Circuit began its brief opinion by flatly

Stating that “[a]n action against the government... is not a

Suit at common law within the purview of the Seventh

Amendment.” (App. A at 3) (Emphasis in orginal). It

noted: (1) that in Tu// this Court “held that the nght to a

jury existed because such a suit was ‘clearly analogous to the

18th century action in debt,’ an action which carried the

right to a jury trial”; and (2) that “Washington argues here

that the common law action in debt against the customs

officer individually for recovery of excess customs duties .. .

is the substantial equivalent of an action under Section

1581(a) and therefore gives rise to the jury trial right.”

(Id.) It even conceded that the common law action in debt

against the customs officer was one “wherein the right to a

jury trial at least arguably existed.” (/d.) Then, ignoring the

Tull test, the above concession, the CIT’s extensive histori-

cal and legal analysis, and the remainder of Washington's

arguments and issues, the Federal Circuit tersely ended its

opinion by relying upon the legal fiction of the officer’s suit

and the dectrine of sovereign immunity to conclude:

A section 1581(a) suit against the United States is

quite different from a suit against an individual. Sover-

eign immunity shields the United States from suit

unless immunity is waived. Lehman, 453 U.S. at 160.

When Congress waives immunity, a “plaintiff has a

right to a trial by jury only where that right is one of

‘the terms of [the Government’s] consent to be sued.”

Id. (quoting United States v. Testan, 424 U.S. 392, 399

(1976)). Because actions against the government are

not analogous to actions by the government, Tull does

not require the Court of International Trade to grant

Washington’s jury demand.

Id. at A-4 (Emphasis in original).

This Court has repeatedly emphasized the critical impor-

tance of the right to trial by jury and the need to carefully

scrutinize any attempt at curtailing that nght. In Jacob v.

New York, 315 U.S. 752, 752-53 (1942), the Court

declared:

The right of jury trial in cases at common law is a basic

and fundamental feature of our system of federal juris-

prudence which is protected by the Seventh Amend-

ment. A right so fundamental and sacred to the citizen,

whether guaranteed by the Constitution or provided by

statute, should be jealously guarded by the courts.

Accord, Simler v. Conner, 372 U.S. 221, 222 (1963); Byrd v.

Blue Ridge Rural Electric Cooperative, Inc., 356 U.S. 525,

537-39 (1958). Since “maintenance of the jury as a fact-

finding body is of such importance and occupies so firm a

place in our history and junsprudence .. . any seeming

curtailment of the nght to a jury trial should be scrutinized

with the utmost care.” Dimick v. Schiedt, 293 U.S. 474, 486

(1935), quoted in, Beacon Theatres, Inc. v. Westover, 359

U.S. 500, 501 (1959). As Chief Justice Rehnquist declared

in his dissent in Parklane Hosiery Co. v. Shore, 439 U.S.

322, 337-56 (1979):

The nght of trial by jury in civil cases at common law

is fundamental to our history and jurisprudence.

* * *

The Founders of our Nation considered the right of

trial by jury in civil cases an important bulwark against

tyranny and corruption, a safeguard too precious to be

eee

Ll]

left to the whim of the sovereign, or, it might be added,

to that of the judiciary.

Id. at 338, 343.

In its brief before the Federal Circuit, the government

admitted that “[u]nder English common law in 1791”

actions could be brought for money had and received, and

that “these actions were triable before a jury.” Appellant’s

Brief at 11. The government also admitted that “[i]n the

early years of our nation’s history, jury trials were available

in the United States in actions by importers seeking the

refund of duties,” and that these suits “were common law

actions in assumpsit for money had and received....” /d.

Even the Federal Circuit recognized that “the right to a jury

trial at least arguably existed” in the 18th and 19th century

common law action in debt against the customs officer

individually for the recovery of excess customs duties. App.

A at 3. Yet the Federal Circuit would deny Washington's

fundamental right to a jury tral in this case through a

simplistic distinction which relies entirely upon the “pre-

tense” of the officer’s suit and the fading, judge-made

doctrine of sovereign immunity.* This Court’s decisions

mandate a careful scrutiny of such summary denials and a

clear rejection of such legal fictions and judge-made

doctrines.

It is now beyond question that “[t]he courts are in the

process of unmaking the judicially-made law of sovereign

* The doctrine of sovereign immunity is purely a creature of the

courts not found in the Constitution. As a matter of Constitu-

tional construction, a judge-made doctrine shouid never prevail

over the explicit language of the Constitution. See Parklane

Hosiery Co. v. Shore, 439 U.S. 322, 347 (1979) (dissenting

opinion) (“judge-made doctrine of collateral estoppel’ should not

be permitted to restrict the right to a jury trial under the Seventh

Amendment)

immunity.”° Davis, Suing the Government By Falsely Pre-

tending to Sue an Officer, 29 U. Chi. L. Rev. 435, 436

(1962). As Justice (then Professor) Scalia wrote nearly two

decades ago regarding 18th century customs duty cases,

“the solution devised from the very beginning was the use of

traditional common-law actions against the individual fed-

eral officers, with no concern for the obstacle of sovereign

immunity.”” Scalia, Sovereign Immunity and Nonstatutory

Review of Federal Administrative Action: Some Conclusions

from the Public-Lands Cases, 68 Mich. L. Rev. 867, 916

(1970) (Emphasis added). These officer’s suits were at law

for money had and received, and they were tried before

juries “without a thought that sovereign immunity could be

a bar.” Id. at 913 (Emphasis added).

The Federal Circuit’s decision not only places form over

substance, it totally ignores the test mandated by Tu// and

the detailed historical inquiry critical to any Seventh

Amendment analysis.° In an opinion virtually devoid of

analysis—historical or otherwise—the Federal Circuit dog-

matically concluded that “actions against the government

are not analogous to actions by the government.” (App. A at

> This Court has noted:

[E]ven the immunity enjoyed by the United States as

territorial sovereign is a legal doctrine which has not been

favored by the test of time. It has increasingly been found to

be in conflict with the growing subjection of governmental

action to the moral judgment.

National City Bank v. Republic of China, 348 U.S. 356, 359

(1955).

° As Chief Justice Rehnquist has stated:

Because the Seventh Amendment demands preservation of

the jury trial mght, our cases have uniformly held that: the

content of the right must be judged by historical standards.

Parklane Hosiery Co. v. Shore, 439 U.S. 322, 344 (1979)

(dissenting opinion).

4) (Emphasis is orginal). As the Tenth Circuit aptly

observed in a reverse situation:

We are persuaded that the right of a taxpayer to a

jury trial in refund cases is rooted in the common law

and was preserved by the Seventh Amendment.

a7 * *

[t is anomalous for the federal government to recognize

that nght [to a jury trial] in a case where the United

States is a defendant but not in a case where the United

States is a plaintiff. The right should apply in either

Situation.

United States v. State of New Mexico, 642 F.2d 397, 40!

(1981) (Emphasis added).

Moreover, the Federal Circuit's reliance on Lehman v

Nakshian, 453 U.S. 156 (1981), is misplaced. First, as

Justice Scalia correctly observed, the government long ago

waived sovereign immunity in customs actions against the

collector. See Scalia, Sovereign Immunity and Nonstatutory

Review of Federal Administrative Action: Some Conclusions

from the Public-Lands Cases, 68 Mich. L. Rev. 867 (1970).

“[F]rom the very beginning” these common law actions

against the collector were tried to a jury “without a thought

that sovereign immunity could be a bar” and “with no

concern for the obstacle of sovereign immunity”. /d. at 913.

916. The “type of ‘explicit acknowledgement’ of the exis-

tence of a common-law cause of action which occurred in

the customs cases” is “tantamount to a waiver of sovereign

immunity....” Id. at 916, n. 222. These common law

actions against the collector were thus a “historical-prescrip-

tion exception to sovereign immunity.” /d. Second, Lehman

held that the Seventh Amendment did not apply if the

action at issue lacked a common law analogue. Lehman

involved an action against the United States under Section

I5(c) of the Age Discrimination in Employment Act of

1967. Thus, this Court correctly found that the Seventh

Amendment did not apply, since such an action obviously

did not have a common law analogue. In this case, however,

the CIT panel majority correctly found that there was a

common law analogue, and that the Seventh Amendment

does apply. The Lehman test is therefore completely

inapplicable.

Finally, the Federal Circuit’s opinion failed to acknowl-

edge—let alone discuss—the other points and issues raised

by Washington in its brief before that court. For example,

the Federal Circuit totally ignored Washington’s extensive

historical analysis demonstrating thet one of the principal

reasons for enacting the Seventh Amendment was to guar-

antee the right to trial by jury in suits against the govern-

ment in customs duty cases. See generally Kirst,

Administrative Penalties and the Civil Jury: The Supreme

Court's Assault on the Seventh Amendment, |26 U. Pa. L.

Rev. 1281, 1322-28 (1978). The Founding Fathers, al-

though certainly familiar with the concept of sovereignty,

did not consider sovereign immunity to be a bar to such suits

(see Scalia, supra), and it was their specific intent that the

jury trial guarantee of the Seventh Amendment apply to

customs actions against the government. Cf. Kirst, supra, at

1328 (“the strong evidence that the founders understood

and expected that taxpayers could obtain redress by a

common law action against a tax official must therefore be

taken as establishing that such actions were part of the

common law for which the nght to a jury trial was preserved

by the Seventh Amendment.”)

Washington respectfully submits that this Court should

examine such points and issues and reverse the Federal

Circuit’s simplistic, erroneous decision.

CONCLUSION q

For the foregoing reason, petitioner respectfully requests

that a wnt of certiorari issue to review the judgment and

decision of the Court of Appeals for the Federal Circuit

WAYNE JARVIS

WAYNE JARVIS, LTD.

505 North Lake Shore Drive, #4507

Chicago, [Illinois 6061 |

(312) 467-6787

Of Counsel.

PAUL MCCAMBRIDGE

TRIBLER & MARWEDEL

230 West Monroe Street, #220

Chicago, Illinois 60606

(312) 368-1262

Dated: March 21, i989

APPENDIX A

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DECIDED: December 22, 198%

Before MARKEY. Chief Judge. SMITH, and BISSI!I

Circuit Judges. BISSELL, Circuit Juc

lge

T +) nite tote _

[The interlocutory order of the United States ‘

In ; ; I ; J lw l ‘esse

international Trade sce Washington inti ins. ¢ Vv. UCMMUECa

‘Ate "| . , ( , ‘ ¢*] nade if lanwin thea

States, 678 F. Supp. 902 (Ct. Int rade 1988), denving the

governments motuon t stnike the Gqemand [ W isning

International Insurance Co. (Washington) for a jury tria

MeO laAlLiVildl bOUILAIIVG ¥ ISTILTIRA / } | A y Lichi

revercecd

CVCrIscu

BACKGROUND

CU : ]

<< > ware > " , ) ‘ Te Te TS rar rhe mnar

ms service (Customs) appraised and QUIGALCAU LIC C

sola ff ’ . or T. Ci { ) the mn ar

idise at an export vaiue of $160,000. As the importe

iretvy. Washington paid the

ToT

eee! s

ac ’ tie nm arate

ALCU UULICcs 111 ‘Vo

Talla

IMU

he appraisal, complaining that the cheese should have Deen

ilued at the salvage price of $7,406.08. Customs denie

protest and Washington subsequently brought suit against

he United States in the Court of International Trade unde

® / Ss ( ' SA i) f 19RD )

Washington demanded a jury trial and the governmer

ed to strike. The ¢ irt of International Trade granted

‘ rn VW soatar have the ssue resi qj at ' three

A-2

F. Supp. 235 (Ct. Int'l Trade 1987). The court, with Chief

Judge Re dissenting, denied the motion to strike under the

Seventh Amendment to the United States Constitution.

Washington, 678 F. Supp. at 917. Thereafter, the order was

certified for interlocutory appeal pursuant to 28 U.S.C.

§ 1292(d)(1) (1982).

ISSUES

|. Whether 28 U.S.C. § 1876 (1982) grants the nght to a

jury trial in the Court of International Trade.

2. Whether the Seventh Amendment guarantees the

right to a jury trial in a Court of International Trade action

against the United States under 28 U.S.C. § 1581 (a).

OPINION

A right to a jury tnal in federal court must arise out of the

Seventh Amendment or be granted by a federal statute. See

Fed. R. Civ. P. 38(a). Washington contends that 28 U.S.C.

$1876 grants and the Seventh Amendment guarantees a

night to trai by jury in this case.

[

We agree with the Court of International Trade that

section 1876 does not grant Washington a right to a jury

trial. See Washington, 678 F. Supp. at 905, 917. Section

1876 is an enabling statute which simply “sets forth the

necessary mechanisms for the court to conduct a jury tnal.”

H.R. Rep. No. 1235, 96th Cong., 2d Sess. 63, reprinted in

1980 U.S. Code Cong. & Admin. News 3729, 3775. It does

not specify which actions entitle parties to jury trials, but

rather sets forth the procedures to be followed when a Court

of International Trade action is tried before a jury. See 28

U.S.C. $1876. A party “in an action against the United

States has a nght to trial by jury only where Congress has

A. 3

affirmatively and unambiguously granted that nght by stat-

ute.” Lehman v. Nakshian, 453 U.S. 156, 168 (1981)

Section 1876 does not affirmatively and unambiguously

grant Washington a trial by jury in this action against the

United States.

The Seventh Amendment preserves the nght to a jun

trial in those actions in which the nght existed at common

law when the amendment was adopted in 1791. See Dimick

v. Schiedt, 293 U.S. 474, 476 (1935). An action against the

government, however, is not a suit at common law within

the purview of the Seventh Amendment. “It has long been

settled that the Seventh Amendment nght to tnal by jun

does not apply in actions against the Federal Government.”

Lehman, 453 U.S. at 160 (emphasis supplied); see also

Galloway v. United States, 319 U.S. 372, 388-89 (1943)

(noting that the nght to a jury tnal did not exist at common

law for monetary claims against the United States)

The Court of International Trade held, however, that 7u//

v. United States, 107 S. Ct. 1831 (1987), requires the nght

to a jury tral even in actions against the government under

section 1581(a). Washington, 678 F. Supp. at 917. In Tull.

the Supreme Court considered a suit brought by the govern-

ment seeking civil penalties under the Clean Air Act. Tull,

107 S. Ct. at 1833. The Court held that the mght to a jun

existed because such a suit was “clearly analogous to the

18th-century action in debt,” an action which carried the

right to a jury trial. /d. at 1836. Washington argues here that

the common law action in debt against the customs officer

individually for recovery of excess customs duties—an ac-

tion wherein the mght to a jury tnal at least arguably

existed—is the substantial equivalent of an action under

section 1581(a) and therefore gives rise to the jury tnal

nght

A-4

A section 1581(a) suit against the United States is quite

different from a suit against an individual. Sovereign immu-

nity shields the United States from suit unless immunity is

waived. Lehman, 453 U.S. at 160. When Congress waives

immunity, a “plaintiff has a might to a tnal by jury only

where that nght is one of ‘the terms of [the Government’s ]

consent to be sued.’ Jd. (quoting United States v. Testan,

424 U.S. 392, 399 (1976)). Because actions against the

government are not analogous to actions by the government,

Tull does not require the Court of International Trade to

grant Washington's jury demand.

CONCLUSION

Because neither section 1876 grants nor the Seventh

Amendment guarantees the right to a jury tral, we reverse

and instruct the Court of International Trade to strike

Washington’s demand for a jury.

REVERSED

B-|

APPENDIX B

WASHINGTON INTERNATIONAL INSURANCE

COMPANY,

Plaintiff,

THE UNITED STATES,

Defendant.

Court No. 81-12-01678.

United States Court of

International Trade.

April 2, 1987.

In action challenging valuation by United States Customs

Service of white feta cheese imported from Cyprus, im-

porter filed request for jury trial. United States objected and

moved that motion for jury tnal be stncken. Importer

brought motion for reassignment of action to three-judge

panel. The Court of International Trade, Re, Chief Judge,

held that whether importer in Court of International Trade

had right to tral by jury in action challenging valuation of

imported merchandise was question with significant consti-

tutional implications warranting designation of three-judge

panel.

Motion to designate three-judge panel granted.

1. Custoins Duties #84(1)

Decision to designate three-judge panel lies within sound

discretion of chief judge of Court of International Trade. 28

U.S.C.A. §§ 253(c), 255.

B-2

2. Customs Duties #84(1)

Exercising his discretion to designate three-judge panel,

chief judge of Court of International Trade must find that

issues presented satisfy either of two statutory criterion, and

chief judge must also consider whether benefits and advan-

tages of decision by three-judge panel outweigh benefits

derived from more efficient utilization of judicial resources

provided by single judge. 28 U.S.C.A. §§ 253(c), 255.

3. Customs Duties #84(1)

Issue of whether litigant in Court of International Trade

had nght to trial by jury in action challenging valuation of

imported merchandise was question with significant consti-

tutional implications warranting designation of three-judge

panel. 28 U.S.C.A. §§ 253(c), 255, 1581(a); U.S.C.A.

Const.Amend. 7.

Wayne Jarvis, Ltd. (Wayne Jarvis, on the motion),

Tribler & Marwedel (Paui McCambridge, Chicago, IIl., on

the motion), for plaintiff.

Richard K. Willard, Asst. Atty. Gen., Washington, D.C.,

Joseph [. Liebman, Intern. Trade Field Office, Commercial

Litigation Brance (Nancy E. Reich, New York City, on the

Motion), for defendant.

MEMORANDUM OPINION AND ORDER OF

ASSIGNMENT

RE, Chief Judge.

Pursuant to the provisions of 28 U.S.C. §§ 253(c),

255(a) (1982), and Rule 77(d) of the Rules of the Court,

plaintiff moves before the chief judge for the reassignment

of this action, presently assigned to a single judge, io a

three-judge panel.

B-3

Plaintiff, Washington International Insurance Company,

challenges the valuation by the United States Customs

Service of white feta cheese imported from Cyprus. Cus-

toms appraised the merchandise at full invoice value on the

basis of export value, 19 U.S.C. § 1401, and assessed duty of

10 percent ad valorem. Plaintiff contends that since the

merchandise arrived in the Unites States in a “severely

deteriorated condition,” it was entitled to duty-free entry

under item 117.67 of the Tariff Schedules of the United

States (TSUS). In its suit against the Customs Service,

plaintiff has demanded a jury trial.

On this motion for the designation of a three-judge court,

the question presented is whether the contentions and rea-

sons urged by the plaintiff warrant a finding that the action

raises issues which justify the reasignment of this action to a

three-judge panel. Since the chief judge finds that this

action raises issues which will have “broad or significant

implications in the administration or interpretation of the

customs laws,” plaintiffs motion for a three-judge panel is

granted.

In this customs valuation case, the Customs Service has

assessed duties on the imported white feta cheese at 10

percent ad valorem. The importer contended that the mer-

chandise was severly damaged and, therefore, was unsuita-

ble for sale to consumers. Notwithstanding that the

merchandise was sold at salvage, Customs appraised the

merchandise at its full invoice value. Plaintiff paid the duty

assessed, and filed a protest contesting the assessment of

duty by Customs, pursuant to 19 U.S.C. § 1514. Plaintiff's

protest was denied by Customs on the grounds that “no

timely claim was made to Customs authorities by the

importer for a refund of duties paid as required by Customs

regulations and law, based on the claim that the cheese was

spoiled.”

After the denial of its protest, pursuant to 28 U.S.C.

§ 1581 (a), plaintiff commenced this action to challenge the

B-4

valuation of the imported merchandise, and included in its

complaint a demand for a jury trial. The demand for trial by

jury was renewed when plaintiff filed its request for trial.

Contending that plaintiff is not entitled to a jury trial, the

defendant objected, and moved that plaintiff's motion for a

trial by jury be stricken. Upon defendant’s motion to strike,

plaintiff brought the present motion for the reassignment of

the action to a three-judge panel.

Defendant opposes the motion requesting the reassign-

ment of this action to a three-judge panel. Defendant

maintains that the issue raised, that is, whether plaintiff may

demand a jury trial in a protesi action contesting the

dutiable value of imported merchandise, is not a sufficient

reason to reassign this action to a three-judge panel. Defen-

dant maintains that the right to a jury trial is not available in

cases brought pursuant to 28 U.S.C. § 1581(a). It stresses

that, under the doctrine of sovereign immunity, actions

against the United States are not triable by jury unless

permitted by a specific constitutional or legislative provision.

Defendant contends that, since there is no authority for

plaintiff's motion, it should be denied. In addition, defen-

dant maintains that plaintiffs motion should be denied

because the court’s decision on the availablility of jury trials

in section 1581 cases will not have important precedential

impact on the conduct of future cases filed in this court.

The authority of the chief judge to designate a three-

judge panel of the court to hear and determine a case is

found in Title 28 U.S.C. §$§ 253(c), 255(a) (1982).

Section 253(c) of Title 28 provides:

The chief judge, under rules of the court, may desig-

nate any judge or judges of the court to try any case,

and when the circumstances so warrant, reassign the

case to another judge or judges.

28 U.S.C. § 253(c).

Section 255 provides:

(a) Upon application of any party to a civil action or

upon his own initiative, the chief judge of the Court of

[International Trade shall designate any three judges of

the court to hear and determine any civil action which

the chief judge finds: (1) raises an issue of the constitu-

tionality of an Act of Congress, a proclamation of the

President or an Executive order; or (2) has broad or

significant implications in the administration or inter-

pretation of the customs laws.

(b) A majority of the three judges designated may

hear and determine the civil action and al! questions

pending therein.

28 U.S.C. § 255(a), (b) (1982)

[1, 2] It is clear that the decision to designa.e a three-

judge panel lies within the sound discretion of the chief

judge. See Fundicao Tupy S.A. v. United States, ||

CIT——, 652 F.Supp. 1538, 1540 (1987); see also

Goldhofer Fahrzeugwerk GmbH & Co. v. United States, ||

CIT——, Slip Op. 87-36 (Mar. 30, 1987) [Available on

WESTLAW, DCT database]. In exercising this discretion,

the chief judge must find that the issues presented satisfy

either of the two statutory criterion set forth in Title 28

U.S.C. § 255(a). See Fundicao Tupy, 11 CIT——, 652

F.Supp. 1538, 1540. The chief judge must also consider

whether the benefits and advantages of a decision by a

three-judge panel outweigh the benefits derived from the

‘more efficient utilization of judicial resources’ provided

by a single judge. /d. (quoting H.R.Rep. No. 1067, 9lst

Cong., 2d Sess., reprinted in 1970 U.S.Code Cong. &

Admin.News 3188, 3200).

Recently, in Fundicao Tupy S.A. v. United States, || CIT

——, 652 F.Supp. 1538 (1987), the law and policy gov-

erning the designation of a three-judge panel was set forth

with reasonable specificity. In the Fundicao case, the plain-

B-6

tiff challenged a final injury determination of the Interna-

tional Trade Commission as to imports of malleable cast-

iron pipe fittings from Brazil. Plaintiff contended that the

ITC had based its determination on an incorrect and im-

proper interpretation of the cumulation statute, and moved

for assignment of the action to a three-judge panel of the

court. The government opposed the motion on the grounds

that issues pertaining to cumulation have routinely been

decided by a single-judge court, and that to grant plaintiff's

motion would result in an unnecessary and inefficient appli-

cation of judicial resources, See Fundicao Tupy, 11 CIT

——, 652 F.Supp. at 1540.

On the facts and issues presented in Fundicao, the chief

judge granted the motion for the assignment to a three-

judge panel. It was indicated that the legislative history of

sections 254 and 255 “makes clear the intent of Congress to

conserve judicial resources and reduce procedural delays by

limiting three-judge panels to specified, exceptional situa-

tions which raise important issues that would warrant a

collegial and broader judicial consideration.” Fundicao

Tupy, 11 CIT ——, 652 F.Supp. at 1541.

Moreover it was noted that the Customs Courts Act of

1980 reaffirmed the 1970 statutory direction for the assign-

ment of cases to a single judge, except in those cases which

raise important constitutional issues, or which have a broad

or significant impact in the administration of the customs

laws. Fundicao Tupy, 11 CIT ——, 652 F.Supp. at 1541; see

28 U.S.C. $§ 254, 255 (1982). The authority conferred

upon the chief judge in section 255 embodies the congres-

sional policy determination that a decision rendered by a

three- judge panel contributes to the uniform interpretation

and application of the nation’s international trade laws.

Fundicao Tupy, 652 F.Supp. at 1541; see also H.R.Rep. No.

1235, 96th Cong., 2d Sess. 20, reprinted in 1980 U.S. Code

Cong. & Admin.News 3729, 3731.

B-7

The Fundicao opinion also explained that

consideration by a three-judge panel fosters “a fuller

judicial consideration of the case.” National Corn

Growers Ass'n v. Baker, 10 CIT ——, 643 F.Supp. 626,

630 (1986).... The synergistic effect of this more

thorough, judicial consideration would also promote the

national policy of uniformity set forth in Article I,

Section 8, of the United States Constitution, which

mandates that “all Duties, Imposts and Excises shall be

uniform throughout the United States.” U.S. Const.

Art. I, § 8; see Re, Litigation Before the United States

Court of International Trade, \9 U.S.C.A. at vii (West

Supp.1986).

Fundicao Tupy, 11 CIT ——, 652 F.Supp. at 1541-42.

It concluded that the “‘appointment of a three-judge

panel ensures that the decision reached will reflect an

institutional consensus, and thereby serves to further the

statutory and constitutional mandate of uniformity of the

international trade laws.’ Fundicao Tupy, 11 CIT ——.,

652 F.Supp. at 1542 (quoting National Corn Growers, 643

F.Supp. at 630-31); see also Goldhofer Fahrzeugwerk

GmbH & Co. v. United States, || CIT ——, Slip Op. 87-36,

at 9-10 (Mar. 30, 1987) [Available on WESTLAW, DCT

database ].

In this case, whether a litigant in the Court of Interna-

tional Trade has the night to a trial by jury in actions arising

under 28 U.S.C. §$ 1581(a) is a question with significant

constitutional implications. Under section 1581(a), the

Court of International Trade has exclusive jurisdiction of

actions brought by any person whose protest as to the proper

valuation of imported merchandise has been denied by

Customs. Section 1581 contains the major changes made in

the subject-matter jurisdiction of this court by the Customs

Courts Act of 1980. The intent of this section is to grant this

Court exclusive jurisdiction over civil actions instituted

against the United States, or any of its agencies, where the

B-8

action arises out of the federal statutes governing import

transactions. See H.R.Rep. No. 1235, 96th Cong., 2d Sess.

44, reprinted in 1980 U.S. Code Cong. & Admin. News at

3755.

In support of its motion for reassignment to a three-judge

panel, plaintiff stresses the congressional intent behind the

Customs Courts Act of 1980 to grant the Court of Interna-

tional Trade all the powers in law and equity possessed by or

statutorily conferred upon federal district courts. See Cus-

toms Courts Act: Hearing Before the Subcomm. on Im-

provements in Judicial Machinery of the Senate Comm. on

the Judiciary, 95th Cong., 2d Sess. (1978). Furthermore,

plaintiff asserts that section 302(a) of the 1980 Act, 28

U.S.C. § 1876, expressly authorizes the CIT to conduct jury

trials. Plaintiff indicates that, while Senate bill S. 1654 and

House bill H.R. 6394 initially contained provisions authoriz-

ing transfer of actions to the appropriate district court upon

motion by a party desiring a jury trial, after hearings,

Congress determined that the transfer provision would un-

dercut the goal of achieving uniformity in international trade

decisions. Plaintiff further asserts that in Section 1876,

Congress provided the mechanism for conducting jury trials

in this Court. See H.R.Rep. No. 1235, 96th Cong., 2d Sess..,

at 23, reprinted in 1980 U.S.Code Cong. & Admin.News at

3734.

Plaintiff submits that the right to a jury trial is guaranteed

by the seventh amendment to the Constitution, and that a

claim brought pursuant to 28 U.S.C. § 1581(a) is the

statutory equivalent of a preexisting common law form of

action. Therefore, plaintiff contends that this action raises

an issue of the constitutionality of an Act of Congress. In

addition, plaintiff maintains that because changes involving

the “functioning of and practice before this court normally

result from legislative enactments or the promulgation of

rules,” this action will have a profound impact on the

nation’s customs laws.

B-9

As was stated in the defendant’s brief: “Apparently, the

issue in this case is one of first impression.” In the case of

National Corn Growers Ass'n v. Baker, it was noted that the

assertion of “questions of first impression, without more,

would not necessarily warrant consideration by a three-judge

panel.” 10 CIT ——, 643 F.Supp. 626, 631 (1986). If,

however, there are “special factors or exceptional circum-

stances,” and other broad or significant implications in the

administration or interpretation of the customs laws, the

designation of a three-judge panel will further the constitu-

tional and congressional purposes set forth in section

255(a). See Barnhart v. United States, 5 CIT 201, 206, 563

F.Supp. 1387, 1391 (1983).

To date, no judicial decision has reviewed the availability

or entitlement to jury trials in protest cases brought under 28

U.S.C. § 1581 (a). If a three-judge panel of this court were

to determine the availability of a jury trial in import transac-

tions, that decision would contribute significantly to defining

the expanded jurisdiction of the Court of International

Trade under the Customs Courts Act of 1980. In view of the

large number of cases seeking judicial review pursuant to

section 1581(a), the decision in this action will have “broad

Or significant implications in the administration or interpre-

tation of customs laws.”

[3] For the reasons stated, the chief judge finds that this

action raises issues which will have “broad or significant

implications in the administration or interpretation of the

customs laws,” and, therefore, warrants the designation of a

three-judge panel of tiis court.

Accordingly, plaintiff's motion that the chief judge desig-

nate three judges of the court to hear and determine this

action is granted. It is ORDERED that the following judges

of this court serve as members of a three-judge panel:

1. Chief Judge Edward D. Re,

2. Judge James L. Watson, and

3. Judge Thomas J. Aquilino, Jr.

B-10

Pursuant to 28 U.S.C. $§ 253(c) and 255(a), (b), the

three named judges shall hear and determine this action in

accordance with this memorandum opinion and order of

assignment. Nothing in this opinion should be interpreted as

expressing any view as to the merits of this litigation.

APPENDIX C

WASHINGTON INTERNATIONAI

INSURANCE COMPANY,

) st

Plainii

The UNITED STATES of America.

Yat 7

De @ndada ni

Court No. 81-12-01678.

United States Court of

International Trade

Jan. 12, 1988

mporter’s surety brought action contesting customs ser-

vice’ appraisal of imported Greek cheese. Complaint also

demanded jury tnal. The Court of International Trade,

Aquilino, J., held that Seventh Amendment nght to jun

tral applied to action commenced by surety contesting

ippraisal of cheese

Motion to strike jurv demand denied

f=) { r Ta) rr anring Toathek nr

Re. ( J ., 11iI€U CGISSCNLUNY WilTlLiVUl

l. Jury #12(1.1)

> ? r \ } >t} 7 | ‘ . r Pafarts Ts) ls anrit To. an re

Test as to whether party 1s constitutionaliv entitl ed | ury

rm | ' ‘ h >t} 7 mr ry sf ’ } tar ce f- n inc Amor ft ; ry

ai iS whether sucn mgnt existed in ngiand prior to time

Seventh Amendment was adopted. U.S.C.A. Const

4 ~~ '

Amend

2. Jury #12(1.1)

For purpose of determining mght to jury tnal, when

federal statute embodies common-law form of action, that

action does not lose its identity merely because it finds itself

enmeshed in statute. U.S.C.A. Const.Amend. 7.

3. Jury #19(1)

Seventh Amendment nght to jury tnal applies to customs

cases involving appraisement issues. U.S.C.A. Const.

Amend. 7.

4. Jury #19(1)

[mporter’s surety was entitled to jury tral of its protest

against customs service's appraisal of imported cheese.

U.S.C.A. Const.Amend. 7.

Wayne Jarvis, Ltd., Wayne Jarvis, and Tnbler &

Marwedel, Paul McCambridge, Chicago, IIl., for plaintiff.

Richard K. Willard, Asst. Atty. Gen., David M. Cohen,

Director, Commercial Litigation Branch, Civil Div., J. Ke-

vin Horgan, Washington, D.C. and Joseph I. Liebman.

Attorney in Charge, Intern. Trade Field Office. Commercial

Litigation Branch, U.S. Dept. of Justice, Nancy E. Reich,

New York City, for defendent.

Andrew P. Vance, Michael A. Johnson, Mark Neville,

Jr.. Norman Schwartz and Sidney N. Weiss, New York

City, for Customs and Intern. Trade Bar Ass'n, amicus

curiae.

Before RE, C.J... and WATSON and AQUILINO, JJ.

meres piers arene

OPINION

AQUILINO, Judge:

Defendent’s motion to strike plaintiff's demand for trial of

this action by jury has raised issues of uncommon impor-

tance, the decision of which, as the Chief Judge pointea out

in his memorandum opinion of April 2, 1987, will have

“broad or significant implications in the administration or

interpretation of customs laws’, 11 CIT—, 659 F.Supp. 235.

Background

The pleadings and pretnal papers indicate purchase in

Cypress of some 64 metric tons of cheese for $160,000. This

merchandise was delivered to Greece, where it was loaded

on a ship for the United States in refrigerated containers.

The cargo was landed at Baltimore and transferred to

Chicago under an immediate delivery permit. Upon arrival

there, the importer suspected that the cheese was in a

“deteriorated condition unsuitable for sale to consumers’, to

quote from the complaint, and so notified the marine under-

writers of the shipment, who diposed of the merchandise on

an “as is, where is” basis for $7,406.08.

The importer had entered the merchandise as pecorino,

duty-free under item Al17.67, TSUS. However, the Cus-

toms Service tested the cheese and concluded that it derived

from cow’s, rather than sheep's, milk. As such, it was

classifiable under TSUS item 117.85 at a rate of duty of 10

percent ad valorem. Customs appraised and liquidated the

merchandise on the basis of an export value of $160,000

As the importer’s surety, Washington International Insur-

ince Co. paid the liquidated duties and protested the Ser-

C-4

vice’s appraisal.’ The District Director denied the protest,

whereupon this action was commenced.

Plaintiff's complaint alleges, in the alternative, that the

cheese should have been appraised at the salvage bid of

$7,406.08 or that it should have been entered as damaged

merchandise in the same value. The complaint also de-

mands a jury trial.

The defendant interposed a motion to strike the jury

demand. The piaintiff countered with a motion to have the

issue resolved by a court of three judges pursuant to 28

U.S.C. § 255 and CIT Rule 77(d)(2) (1986). Plaintiff's

motion was granted by the Chief Judge in his memorandum

opinion, 11 CIT ——, 659 F.Supp. 235 (1987).

Both sides, as well as attorneys for the Customs and

International Trade Bar Association, as amicus curiae, have

thoroughly briefed the questions raised by defendant’s mo-

tion to strike, and oral argument has been heard.

[

In support of its motion, the government argues that

neither an act of Congress nor the Constitution supports trial

of this action to a jury. As to the first point, the plaintiff

relies on the Customs Courts Act of 1980 provision for Jury

trials in the Court of International Trade, 28 U.S.C. § 1876.

That statute, however, does not specify either which kinds of

actions are entitled to such a trial or which kinds are not,

rather what procedures are to be followed for any jury.

At a minimum, the parties and the amicus curiae are in

agreement that actions brought by the United States to

recover penalties pursuant to section 592 of the Tariff Act

' Defendant's proposed pretrial order indicates that the plaintiff

has abandoned the question of the kind of milk from which the

cheese derived.

C-5

are triable to a jury.” There is support for this viewpoint in

practice prior to 1980° as well as in the legislative history of

the 1980 act* and in subsequent practice of this Court. See

e.g., United States v. Priority Products, Inc., 9 CIT 392, 615

F.Supp. 593 (1985). However, even if this were not true, the

Supreme Court has held in Tull v. United States, —— U.S.

——, 107 S.Ct. 1831, 95 L.Ed.2d 365 (1987), that actions

brought by the government to determine liability for civil

penalties are triable to a jury. Unlike the Customs Courts

Act, the statute underlying that case, the Clean Water Act

of 1977, 33 U.S.C. § 1251 et seq., was silent on the right to a

jury.

The plaintiff here urges us to accept the premise that the

1980 statute provides a “comprehensive right of trial by

jury”. Plaintiffs Brief, p. 10. Its written and oral presenta-

tions empnasize the legislative history or enactment of

section 1876, e.g., the testimony in 1980 of defendant’s lead

counsel herein, to wit:

MR. COHEN. I think you have to make a judgment

first as to whether or not this court is going to be

empowered to hold jury trials. If it is not, then I think all

jury trial cases should be transferred to the district court.

* See. e.g. Memorandum in Support of Defendant’s Motion to

Strike Plaintiffs Demand for a Jury Trial [hereinafter cited as

“Defendant's Memorandum” ], p. 8: Brief of Amicus Curiae, p.

36. See also Plaintiffs Opposition to Motion to Strike Demand

for Jury Trial [hereinafter cited as “Plaintiffs Brief"], p. 20.

* See, e.g., United States v. Santini. 266 F. 303 (2d Cir.1920)

(Tariff Act of 1913); Jen Dao Chen v. United States, 385 F.2d

939 (9th Cir.1967) (Tariff Act of 1930).

* See, e.g. H.R.Rep. No. 1235, 96th Cong.. 2d Sess. 34 (1980):

S.Rep. No. 466, 96th Cong., Ist Sess. 12 (1979), U.S.Cede

Cong. & Admin.News 1980, pp. 3729, 3747.

C-6

If it is to be empowered to conduct jury trials, it should

conduct jury trials on all types of cases.”

The definitive congressional report itself refers to the fact

that the act “creates a comprehensive system of judicial

review of civil actions arising from import transactions” to

“ensure greater efficiency in judicial resources and uniform-

ity in the judicial decisionmaking process.” H.R.Rep. No.

1235, 96th Cong., 2d Sess. 20 (1980), U.S. Code Cong. &

Admin.News 1980, p. 3731.

Whatever the import of such statements in regard to the

enactment of section 1876, it is clear that Congress has

consented to suit in an action like this in 28 U.S.C.

§ 1581(a) and § 2631(a) and that trial by jury is deeply

embedded in the jurisprudence of the United States. See

Point II, infra. Indeed, as indicated above, the Supreme

Court has determined that the right to such a trial exists for

recent, statutory actions brought by the government. On the

other hand, in an action against the government based on a

1974 amendment of the Age Discrimination in Employment

Act, the Supreme Court noted the absence of an express

grant of trial by jury and pointed out that a statutory nght

thereto exists “only where Congress has affirmatively and

unambiguously granted that nght”. Lehman v. Nakshian,

453 U.S. 156, 168, 101 S.Ct. 2698, 2705, 69 L.Ed.2d 548

(1981). If this is the standard for analysis of a statute, the

Customs Courts Act of 1980 does not meet it.

[]

The plaintiff also relies, of course, on Amendment VII to

the Constitution which provides that in “Suits at common

law, where the value in controversy shall exceed twenty

> Customs Courts Act of 1980: Hearing on H.R. 6394 Before the

Subcomm. on Monopolies and Commercial Law of the House

Comm. on the Judiciary, 96th Cong., 2d Sess. 76 (1980).

¢2

dollars, the right of trial by jury shall be preserved’’.° The

Supreme Court has concluded that, “by referring to the

‘common law,’ the Framers of the Seventh Amendment

were concerned with preserving the right of trial by jury in

civil cases where it existed at common law”. Colgrove v.

Battin, 413 U.S. 149, 155, 93 S.Ct. 2448, 2452, 37 L,Ed.2d

522 (1973) (emphasis in original). See also Atlas Roofing

Co. v. Occupational Safety & Health Review Comm'n, 430

U.S. 442, 459, 97 S.Ct. 1261, 1271, 51 L.Ed.2d 464 (1977).

The reports of both English and American lawsuits are

replete with customs cases, many decided by juries, before

and after adoption of the Seventh Amendment in 1791.

Indeed, the government and the amicus curiae both admit

the existence of jury trials of cases involving customs at

common law. See, e.g., remarks of defendant’s counsel on

July 31, 1987, Tr. pp 6-7; Defendant’s Supplemental Memo-

randum, pp. 12, 14; and Brief of Amicus Cruiae, p. 5 and p.

10 as follows:

The early history of customs cases reveals that such

cases were tried at common law before a jury. The

defendant was an individual—in the United States,

usually the Collecter of Customs.

Under the British Crown and in America prior to

1791, an individual’s mght at common law to sue a

customs officer for recovery for the wrongful seizure of

goods was well established. Jury trials appear to have

been fairly common.

* In addition, the plaintiff cites CIT Rule 38(a). which provides

that the “right of trial by jury as declared by the Seventh

Amendment to the Constitution or as given by a statute of the

United States shall be preserved to the parties inviolate.” See a/so

Federal Rule of Civil Procedure 38(a), 28 U.S.C. (1987).

C-8

Nevertheless, each argues against trial of this action to a

jury, the defendant essentially based on its perception of the

prerogatives of Congress, whereas the amicus curiae con-

cludes from its review of history that there were essentially

no jury trials in appraisement, as opposed to classification,

cases up until the Customs Administrative Act of 1890, 26

Stat. 131, which then removed them from tnial courts

altogether.

Neither viewpoint warrants grant of the motion to strike

plaintiff's jury demand.

[1] The test as to whether a party such as the plaintiff is

entitled to trial by jury is whether such a right existed in

England prior to the time the Seventh Amendment was

adopted. See United States v. Wonson, 28 F.Cas. 745, 750

(C.C.D.Mass.1812) (No. 16,750); Parsons v. Bedford, 28

U.S. (3 Pet.) 433, 446-47, 7 L.Ed. 732 (1830); Capital

Traction Co. v. Hof, 174 U.S. 1, 22-23, 19 S.Ct. 580, 588-

89, 43 L.Ed. 873 (1899); Slocum v. New York Life Insur-

ance Co., 228 U.S. 364, 377, 33 S.Ct. 523, 528, 57 L.Ed. 879

(1913): Baltimore & Carolina Line, Inc. v. Redman, 295

U.S. 654, 657, 55 S.Ct. 890. 891. 79 L.Ed. 1636 (1935):

Damsky v. Zavatt, 289 F.2d 46 (2d Cir. 1961): Goar v.

Campania Peruana de Vapores, 688 F.2d 417, 424 (5th

Cir.1982).

By that time, it was well-established that the right to sue

to recover excess duties existed in England. For example, in

Campbell v. Hall, 98 Eng.Rep. 848 (1774), an exporter

brought an action in trespass on the case against a custom-

house officer who had imposed certain duties on sugar

exported from Grenada, a British colony. Based upon the

findings set forth in a special verdict returned by the jury for

the plaintiff, the court determined that the “impost of four

and one half percent’ had been unlawfully exacted, as

C-9

conflicting proclamations issued by the king had negated

any such authority. It was held in Stevenson v. Mortimer, 98

Eng.Rep. 1372 (1778), that shipowners could bring an

action in assumpsit for money had and received against a

customhouse officer to recover excess duties which had been

collected from the ship’s master. in Greenway v. Hurd, 100

Eng. Rep. 1171 (1792), the trial judge had nonsuited the

plaintiff's action in assumpsit against a collector of duties no

longer in effect at the time of payment. While affirming the

nonsuit on the ground of inadequate notice to the defendant

collector, who had already submitted the payment to his

superior, the King’s Bench indicated that the plaintiff was

not with out a remedy at law—against the person in posses-

sion of the unlawful collection.

In short, customs actions in England were at law and thus

triable to a jury.

The implication of the fine amicus brief is that customs

Cases involving appraisement issues were not, as a rule,

triable in court or to juries during the time of the adoption of

the Seventy Amendment and thereafter in the United

States. There are, however, reports of sufficient such cases

to indicate that this was not necessarily the rule.

1. Damage Issues

One of the appraisement issues that could be contested in

court was whether goods were damaged pnor to their

importation, an issue which is presented by this action. For

example, Wight v. Curtis, 29 F.Cas. 1170 (C.C.S.D.N.Y.

1845) (No. 17,628), which was tried before a jury, involved

questions as to the extent of the damage done and whether

the importer was required to produce a certificate of the port

wardens before an appraisement and a deduction for that

damage could be claimed. The case involved cargo on a ship

which “grounded in a heavy wind, and filled and sunk” upon

C-10

arrival at New York. The vessel was subsequently raised and

towed into the city, and its cargo was off-loaded and, by

consent of the parties, “ordered by the collector to be

deposited in a public store-house”’. /d. The merchandise had

been damaged by seawater to the extent of 60 percent of

value. The plaintiffs produced certificates of the port war-

dens on ail of their packages, except one, and the collector

allowed an appraisement of the damage to those packages.

At issue in the case was the question of the appraisement of

the remaining package. The plaintiffs had offered the collec-

tor a sworn survey and appraisement conducted by an

individual’ who certified that he found the goods “to have

been damaged on the voyage of importation’’. /d. They also

produced a deposition of the ship’s master proving the injury

to the cargo.

The court determined that this evidence as to damages

was admissible. While noting that the collector in his

argument had made some criticism as to the nature of the

proof of damage and its sufficiency, the court determined

that “the objection in the trial referred essentially to their

admissibility” and, since the “fact and extent of damage was

not made a prominent point”, the court regarded “the

testimony . . . sufficient to have justified the jury in finding

for the plaintiffs”. /d. at 1171. After examining the pertinent

statutes, the court determined that certification by the port

wardens was not required. Therefore, the plaintiffs were

entitled to judgment on their verdict. See id. at 1174.

’The opinion is unclear as to the precise title of this person.

The court indicated that he “represent(ed] himself to be a person

‘selected by the parties interested, to survey, appraise, arbitrate,

and judge of vessels and goods arriving damaged, or becoming

damaged in the port of New York’ ”, 29 F.Cas. at 1170. There is

also some indication that he may have been a marine survevor

appointed by the chamber of commerce and board of underwriters

of the port of New York. See id. at 1171.

C-1]

The issues in the action at bar are similar to those

resolved in Wight. As indicated above, the defendant dis-

putes plaintiff's claim that the cheese was damaged prior to

its importation. In addition, the defendant contends that,

since the plaintiff failed to inform it of the impairment of the

perishable product within 96 hours of unloading, the judicial

relief requested cannot lie. These issues are close to the

questions in Wight concerning the proof of damages and the

failure to notify appropriate officials. Thus, a position that

issues of the kind raised herein were not tried in a court of

law before a jury” is not well-grounded.

2. Waste Issues

Questions involving leakage and waste could also be

resolved by a jury. Lawrence v. Caswell, 54 U.S. (13 How.)

488, 14 L.Ed. 235 (1851), was a suit against a collector of

customs to recover duties paid under protest on imported

brandy that had leaked during shipment. Tried before a jury

in the Circuit Court for the Southern District of New York,

the plaintiff contended that duties had been assessed based

on the quantity stated in the invoices and not the actual

amount imported, as ascertained by gaugers, thus failing to

account for the leakage. Additionally, the plaintiff claimed

entitlement to a statutory deduction for leakage, as that

allowance is made for waste occurring after the liquor has

arrived but prior to its sale.

The trial judge, agreeing with this interpretation of the

law, charged the jury accordingly, and it found for the

plaintiff. The Supreme Court, while reversing on the statu-

tory deduction issue on the ground that it had no application

to an ad valorem duty, explained that judicial review was

available because “the duty demanded was paid under

protest, stating specially the ground of objection.” 54 U.S. at

496.

* See. e.g. Defendant's Supplemental Memorandum. pp. 1!2

and 16-17: Brief of Amicus Curiae, pp. 10-11 and 37.

C-12

Marriott v. Brune, 50 U.S. (9 How.) 619, 13 L.Ed. 282

(1850), similarly was an action in assumpsit brought against

the collector of the port of Baltimore to recover excess

duties paid under protest upon importations of sugar and

molasses. The collector had assessed duties based on the

quantities specified in invoices. The quantities which arrived

and were entered, however, were less than those shipped,

due to damage and waste. The importers’ contention that

duty should be paid only on amounts entered was upheld by

the Circuit Court for the District of Maryland, although the

holding applies only to duties that had not been finally

assessed by the collector because the importers’ protest was

found to be insufficient.

The Supreme Court affirmed that decision, concluding

“that revenue should be collected only from the quantity or

weight which arrives here. That is, what is imported’. 50

U.S. at 632 (emphasis in original). The Court compared the

loss of the sugar to loss of merchandise by perils of the sea,

fire or natural decay. See id. at 634.

As to the finality of the appraisers’ estimate, the Court

stated “it could be final only as to the price of the sugar

abroad, and not as to the quantity or weight reaching this

country. The latter is fixed by another class of officers,

authorized by law for that purpose: and if the appraisers

undertake to fix it, their action in that respect is coram non

judice, and a nullity.” /d. at 634.

While Marriott was apparently tried on an agreed state-

ment of facts before a judge, it was brought in assumpsit (as

were classification cases), and therefore could have been

tried to a jury. In fact, Marriott's companion case before the

Supreme Court, involving the same question as to whether

an allowance should be made for leakage and drainage, was

tried before a jury. See United States v. Southmayd, 50 U.S.

(9 How.) 637, 638, 13 L.Ed. 290 (1850). That action,

however, was postured differently, as the government had

C-13

brought it to recover unpaid duties. The Court affirmed the

decision below in favor of the importer.

Other cases involving waste issues included Austin v.

Peaslee, 2 F.Cas. 235 (C.C.D. Mass. 1857) (No. 666),

where hemp imported from Manila had “lost weight during

the voyage”, and Schuchardt v. Lawrence, 2\ F.Cas. 747

(C.C.S.D.N.Y. 1856) (No. 12,484), where gin “had leaked

out of the casks during the voyage.”” Based on the courts’

application of Marriott and Lawrence v. Caswell, the plain-

tiff importers prevailed on clairis that their goods had been

appraised on the basis of invoice quantity as opposed to the

amount actually landed, thus allowing them to recover the

excess of duties exacted by the defendant collectors.

Leakage disputes bear similarity to damage claims, as

both involve a reduction in the value of the merchandise

prior to arrival. See Marriott, 50 U.S. at 634. While the

former entail a loss in quantity, the latter involve a reduction

in quality.

3. Timing- of-Valuation Issues

An importer could bring an action to contest the date

used by an appraiser to determine foreign-market value.

E.g., Maxwell v. Griswold, 51 U.S. (10 How.) 242, 13 L.Ed.

405 (1850), and Greely v. Thompson, 51 U.S. (10 How.)

225, 13 L.Ed. 397 (1850). In each case, this question was

subjected to the review of both a judge and jury. Maxwell

involved an importation of sugar and hemp from Manila.

The goods had been purchased in March and April 1849 but

were not shipped until July 24th of that year. Their value

had appreciated during this period, and the importers pro-

tested the decision to appraise the goods on the basis of their

market value as of the day of shipment. The jury returned a

verdict for the importers, and the Supreme Court affirmed

the judgment.

Likewise, the companion case, Greely, involved an as-

sumpsit action tried before a jury seeking to recover excess

C-14

duties that had been exacted by a collector. The importers

had purchased railway iron and made it ready for shipment

on January 24, 1849. However, loading was completed a

month later, during which period the value of the iron had

increased. The collector determined the duties based on the

increased value of the goods, but the Court affirmed a

judgment that January 24th was the appropriate point of

reference for appraisement purposes.

Maillard v. Lawrence, 16 F.Cas. 501 (C.C.S.D.

N.Y.1855) (No. 8,972), in which a jury found for the

plaintiff, subject to the court’s opinion, also involved a

situation where value had increased greatly between time of

purchase and time of importation. The evidence presented

to the jury at trial established that the goods had been

appraised in accordance with instructions of the Secretary of

the Treasury, at the time of exportation rather than of

purchase. While the defendant agreed that the earlier value

should have been used, it contended that the protest was

insufficient . The court disagreed, thus entitling importers to

recover excess duties paid. See a/so Morlot v. Lawrence, \7

F.Cas. 772 (C.C.S.D.N.Y. 1853) (No. 9,816).

4. Foreign Currency Issues

During the 19th century, an importer could bring an

action in court to contest appraisement based on the valua-

tion of a foreign currency. For example, in Heinemann vy

> Greely also involved the removal and replacement of one of

the merchant appraisers who wanted to obtain more evidence that

might justify the lower estimate. The Court agreed with the trial

judge's instruction to the jury that the appraisal was invalid

because of this irregular conduct.

The defendant attempts at page |4 of its supplemental brief to

make it seem as if such suits were only “permitted when there

was fraud upon the part of the appraisers. or some irregularity in

the selection of the appraiser”, but Gree/y, as well as other cases

discussed above, involved issues related to the action at bar.

C-15

Arthur's Executors, 120 U.S. 82, 7 S.Ct. 446, 30 L.Ed. 605

(1887), the collector had valued Russian wool at an amount

higher than that reflected on the importer’s invoice, based

upon the worth of rubles in U.S. currency. A jury was

presented with the facts surrounding the purchase of the

merchandise in Russia, its date of exportation and how its

value should have been assessed based on the ruble, but the

trial judge directed a verdict for the defendant based on his

interpretation of the statute. The Supreme Court affirmed.

In Alsop v. Maxwell, | F.Cas. 573 (C.C.S.D.N.Y.1853)

(No. 263), the importer proved to a jury that the currency

in question had been debased or depreciated. The collector

was therefore found to owe the excess duties that had been

paid. The same result was reached in Alsop v. Maxwell, |

F.Cas. 574 (C.C.S.D.N.Y.1856) (No. 264), another case

involving a dispute as to the value of a foreign currency.

While the court in Roosevelt v. Maxwell, 20 F.Cas. 1155

(C.C.S.D.N.Y.1856) (No. 12,034), primarily examined the

classification of glass from Germany, it also determined that

the valuation of the merchandise was in error based on the

collector’s incorrect determination of its worth in US.

currency. Judgment was entered for the importers for the

excess of duties they had been required to pay as a result of

that error.

5. Commissions

Another issue raised in valuation cases was the amount

for a commission added to an appraisement by a collector.

In Munsell v. Maxwell, 17 F.Cas. 999 (C.C.S.D.

N.Y.1855) (No. 9,932), a jury, presented with evidence as

to the appropriate value of commissions on goods from

China, found the duties exacted to be beyond the usual rate.

Accordingly, judgment was entered on the verdict for the

plaintiff, subject to the opinion of the court. Likewise, the

plaintiff in Riess v. Redfield, 20 F.Cas. 774

(C.C.S.D.N.Y.1859) (No. 11,821), prevailed on his claim

C-16

that the commissions added to the value of the goods were

excessive. The importer in Norcross v. Greely, 18 F.Cas. 301

(C.C.D.Mass.1852) (No. 10,294), brought an action, tried

before a jury, in which he alleged that he should not have

been charged for a commission, since none had been paid.

He thereafter elected to discontinue the case.

6. Freight Issues -

Often, importers would claim that valuation improperly

included freight charges. This occurred, for example, in

Wilbur v. Lawrence, 29 F.Cas. 1188 (C.C.S.D.N.Y.1851)

(No. 17,635), where a jury returned a verdict for the

plaintiff, subject to the court’s decision. The court held that

transportation costs incurred because of a blockade had

been improperly included in appraising the value of the

goods. Similarly, in Gant v. Peaslee, 9 F.Cas. 1143

(C.C.D.Mass.1855) (No. 5,212), the court directed a ver-

dict for the plaintiff, finding that charges added to the

appraised value of the goods for their passage to an interme-

diate port before reaching the United States were neverthe-

less “freight, and ...not to be included as a dutiable

charge”. /d. at 1145. The same conclusion was reached by

the court in Barnard v. Morton, 2 F.Cas. 840

(C.C.D.Mass.1850) (No. 1,006), as it related to freight

incurred to the intermediate port of Halifax. See also War-

ren v. Peaslee, 29 F.Cas. 280 (C.C.D.Mass.1855) (No.

17,198) (inland freight properly added to appraised value):

Millar v. Millar, 17 F.Cas. 289 (C.C.D.Mass.1855) (No.

9,546) (where a judge directed a verdict for the importer to

recover freight incurred on one leg of a voyage added on by

the collector as dutiable charges but found that other

charges were properly added to market value): Bliss v.

Redfield, 3 F.Cas. 714 (C.C.S.D.N.Y.1860) (No. 1,549)

(where the importer prevailed on his claim that the apprais-

ers had improperly added freight to the valuation of the

merchandise).

7. Packaging Issues

Another issue raised in suits against collectors was ‘je

appropriateness of adding the cost of packaging to the value

of the merchandise. In Badger v. A. Cusimano & Co., 130

U.S. 39, 9 S.Ct. 431, 32 L.Ed. 851 (1889), the Court not

only affirmed the trial judge's decision that the collector had

improperly added to the invoice value certain charges relat-

ing to its packaging, but also affirmatively stated that this

question was subject to judicial review. While the jury in

Wilson v. Maxwell, 30 F.Cas 147 (C.C.S.D.N.Y.1851),

(No. 17,824), returned a verdict for the importer,-subject to

the opinion of the court, the trial judge found that the

appraisers had properly included the actual weight of boxes

of soap, less a fixed rate for tare. The court did allow the

importer to recover the additional duties that had been paid

as a penalty for undervaluation because of the misinterpreta-

tion of the statute. See also Cobb v. Hamlin, 5 F.Cas. 1129

(C.C.D.Mass.1868) (No. 2.922); Saxonville Mills v. Rus-

sell, 21 F.Cas. 595 (C.C.D.Mass.1870) (No. 12,413).

8. Fraud

Another area subject to trial by jury involved issues of

fraud. For example, in Lillie v. Redfield, 15 F.Cas 538

(C.C.S.D.N.Y.1857) (No. 8,351), the trial judge upheld a

jury's finding that fraud had been perpetrated on the import-

ers. That is, the goods shipped did not conform to the

contract and invoice, and the importers were thus entitled to

recover excess duties paid as a result of the collector's

determination to rely on the misleading invoice.

Little doubt exists from the foregoing cases that persons

aggrieved by unlawful collections of duties possessed the

right to recover them in an action at law. Indeed. one

perceptive student of the history of such actions in the 19th

C-18

century, Judge George S. Brown of the Customs Court,

commented:

The original common law remedy for the recovery of

taxes illegally collected was so broad and all inclusive

upon both questions of fact as well as questions of law

that to give a narrower, less inclusive construction to

the present statutory remedies would seem to be inad-

missible as in degradation of the common law.’°

This comment was written in regard to the dissenting

opinion of Justice Story in Cary v. Curtis, 44 U.S. (3 How.)

236, 11 L.Ed. 576 (1845), the outcome of which led to an

immediate congressional! declaration that nothing in earlier

legislation requiring duties to be remitted to the Treasury as

soon as collected''

Law Within Thirty-Six Days, 26 Va.L.Rev. 759, 767 (1940). See

also Michelin Tire Corp. v. United States, 82 Cust.Ct. 308, 323-

28, C.R.D. 79-6, 469 F.Supp. 270, 282-86 (1979) (Watson, J.).

'' See Act of March 3, 1939, ch. 82, § 2, 5 Stat. 339, 348-49.

This enactment can be attrmbuted, in part, to the decision in

Elliott v. Swartwout, 35 U.S. (10 Pet.) 137, 9 L.Ed. 373 (1836).

which held that, if a collector of customs turned over duties to the

Treasury with knowledge that they were disputed by the importer,

the collector remained liable in an action of assumpsit. The

holding derived from the common law governing agents and

principals. particularly reasoning from English cases that if an

agent were paid money by mistake and apprised of the mistake

before paying it over to his principal. he was personally liable.

This rule resulted in collectors’ withholding large sums of money

paid to them as duties which increased the danger of defalcations

and represented a delay in the efficient receipt of revenues by the

government. In response, the Act of March 3, 1839 required that

all money paid to a collector under protest be turned over

promptly to the Treasury and the Secretary would refund any

excess duties.

C-19

shall take away, or be construed to take away or impair,

the might of any person or persons who have paid or

shall hereafter pay money, as and for duties, under

protest, to any collector of customs, or other person

acting as such, in order to obtain goods, wares, or

merchandise imported by him or them, or on his or

their account, which duties are not authorized or paya-

ble in part or in whole by law, to maintain any action at

law against such collector, or other person acting as

such, to ascertain and try the legality and validity of

such demand and payment of duties, and to have a

right to a trial by jury, touching the same, according to

the due course of law.'°

In other words, Congress overruled Cary.

The defendant herein disagrees with this analysis, citing

Arnson v. Murphy, 109 U.S. 238, 3 S.Ct. 184, 27 L.Ed. 920

(1883), and Nichols v. United States, 74 U.S. (7 Wall.)

122, 19 L.Ed. 125 (1869). Those cases, however, stand

simply for congressional authority to require a written pro-

test as a condition precedent for suit and to prescribe (and

thereby preempt a state) period of limitation for commence-

ment thereof. Neither the 1845 act underlying Nichois nor

the Act of June 30, 1864, 13 Stat. 214, involved in Arnson

reflected attempts by Congress to restrict the nght to trial by

jury. Indeed, not only did the earlier statute provide for such

right as quoted above, but the later law continued this nght.

Carey v. Curits, 44 U.S. (3 How.) 236. 11 L.Ed. 576 (1845).

held that, by requiring collectors to pay over duties immediately

to the Treasury, section 2 had removed the agency rationale for

the personal, common-law liability that had existed. That is, “the

action for money had and received... . was barred by the Act of

Congress of 1839." /d. at 252.

'? Declaratory Act of Feb. 26, 1845, ch. 22. 5 Stat. 727.

recited with approval by the Court in Arnson'

C-20

3 as section

3011 of the Revised Statutes as follows:

Any person who shall have made payment, under

protest and in order to obtain possession of merchan-

dise imported for him, to any collector or person acting

as collector of any money as duties, when such amount

of duties was not, or was not wholly, authorized by law,

may maintain an action in the nature of an action at

law, which shall be triable by jury, to ascertain the

validity of such demand and payment of duties, and to

'3 See 109 U.S. at 241, 3 S.Ct. at 186-87. In Arnson, an

importer had complied with the requirement that he take an

appeal to the Secretary of the Treasury, but no decision issued.

The importer brought suit more than seven years later, but it was

dismissed by the lower court because it did not meet New York

State’s six-year statute of limitations for actions upon implied

obligations. The Supreme Court held, in effect, that the action

was premature; it was not governed by the state statute, and the

time for a suit after an adverse decision of the Secretary had not

yet started to run. The Court reasoned:

From this review of the legislation and judicial history of

the subject, it is apparent that the common-law action

recognized as appropriate by the decision in Elliot? v. Swart-

woul, [9 L.Ed. 373], has been converted into an action based

entirely on a different principal—that of a statutory liability,

instead of an implied promise—which., if not originated by

the Act of Congress, yet is regulated, as to all its incidents.

by express statutory provisions. And among them are the

conditions which fix the time when the suit may begin, and

prescribe the period at the end of which the right to sue shall

cease. Congress having undertaken to regulate the whole

subject, its legislation is necessarily exclusive. 109 U.S. at

243, 3 S.Ct. at 188.

The Court does not suggest from this that, by “converting”

the common-law action into one governed bv statute, Con-

gress dispensed with the constitutional right to trial by jury in

these actions.

C-21

recover back any excess so paid. But no recovery shall

be allowed in such action unless a protest and appeal

shall have been taken as prescribed in section twenty-

nine hundred and thirty one.

While the government concedes, as indicated above, that

‘an importer could, at one time, obtain a jury trial in an

action contesting classification of imported merchandise”,

it argues that the rule in appraisement cases was quite

different, relying on Hilton v. Merritt, 110 U.S. 97, 3 S.Ct.

548, 28 L.Ed. 83 (1884), and Auffmordt v. Hedden, 137

U.S. 310, 11 S.Ct. 103, 34 L.Ed. 674 (1890)."°

Hilton v. Merritt involved a dispute as to the appraise-

ment of kid gloves imported from France. The case was

tried to a jury, which returned a verdict for the collector at

the direction of the trial judge. The dispute centered on the

value of the gloves. a merchant appraiser had agreed with

the importers that the invoice value was correct, while the

general appraiser determined the gloves to be worth more.

The collector chose to adopt the value contained in the

latter's amended report.

In their appeal, the plaintiffs claimed a might to go to the -

jury on several issues, including whether a full and fair

examination of the goods had occurred; whether the invoice

reflected the actual value of the goods; and whether the facts

'* Defendant's Supplemental Memorandum, p. 12, citing as

examples United States v. Kid & Watson, 8 U.S. (4 Cranch) 1. 2

L.Ed. 531 (1807), and Merritt v. Tiffany, 132 U.S. 167, 10 S.Ct.

52, 33 L.Ed. 299 (1889). See also Pickhardt v. Merritt, 132 U.S.

252, 10 S.Ct. 80, 33 L.Ed. 353 (1889), and Greenleaf v. Good-

rich, 101 U.S. (11 Otto) 278, 25 L.Ed. 845 (1880) (jury charge

in actions to recover excess duties in classification cases held not

in error).

'S It is to be noted in passing that the Customs Courts Act of

1970, 84 Stat. 274, eliminated any differential judicial treatment

for classification and appraisement issues.

iia

C-22

in the protest had been established by the evidence. See 110

U.S. at 101, 3 S.Ct. at 550. After examining the pertinent

Statutes, the Court concluded that Congress intended that

the appraisement of the customs officers should be final,

“but all other questions relating to the rate and amount of

duties may .. . be reviewed in an action at law to recover

duties unlawfully exacted.”'®

The other case relied on by the defendant herein,

Auffmordt v. Hedden, was an appeal by importers from a

jury verdict after trial in their favor. They challenged evi-

dentiary rulings of the trial judge regarding appraisal of their

merchandise which they claimed minimized their recovery

by $42. The Supreme Court sustained the rulings, including

those based on a statutory provision that, once a collector

decided between any differing viewpoints upon reappraise-

ment, that determination was to be final.

Badger v. A. Cusimano & Co., 130 U.S. 39, 9 S.Ct. 431,

32 L.Ed. 851 (1889), one of the cases referred to in

Auffmordt, involved the importation of Valencia oranges.

After appraisal, the collector had increased the invoice value

of the fruit while reducing by an equal amount the invoiced

charges for packing and freight, which were not dutiable,

and the importer protested. The case was tried pursuant to a

stipulation between the parties waiving a jury. Judgment for

the plaintiff was affirmed by the Supreme Court upon a

rationale that there was =

no impeachment of the appraisement, so far as it states

the value of the charges or the value of the goods as

increased by the amount of the reduction made from

the value of the charges. The only inquiry is, whether

the collector acted within the power conferred upon

'© 110 U.S. at 106, 3 S.Ct. at 554. The Court upheld the trial

judge’s decision not to charge the jury on the issue of full and fair

examination, apparently because of a lack of evidence on this

claim. See /d. at 107, 3 S.Ct. at 555.

C-23

him by statute when he required the importers to pay

duties not only upon the actual market value of the

goods, but upon such additional value as was equal to

the reduction made from the value of the cases cover-

ing the goods. These are questions of law simply,

involving the power of the collector under the statute.

They are entirely apart from any inquiry as to fraud in

the appraisement, or as to the values set forth in it, and

may be raised by the importer in an action at law, when

he has taken such steps as entitle him to bring suit for

the recovery of duties illegally exacted from him. This

ruling is entirely consistent with the decision in Hilton

v. Merritt, 130 U.S. at 43, 9 S.Ct. at 433.

McCall v. Lawrence, 15 F.Cas. 1234 (C.C.S.D.N.Y. 1855)

(No. 8,672), took a similar approach that appraisements are

nonreviewable, but pointed out that Treasury instructions to

collectors with regard to valuations were not conclusive

upon the courts.

In their brief, counsel for the amicus curiae claim that

‘Tw ]ith the exception of the report of a jury finding of value

in Rankin v. Hoyt, 45 U.S. (4 How.) 327, 11 L.Ed. 996

(1846) ... we have not found a reported case of merchan-

dise having been tried to a jury after the Act of March 2,

1799”. Amicus Brief, pp. 10-11. In that case, the trial judge

found for the collector despite a jury’s finding that the

imported wool was only worth seven and one-half cents per

pound and a statute dictating that unmanufactured wool

with a value not exceeding eight cents per pound be im-

ported duty free. The plaintiffs argued that they were

entitled to judgment on the basis of the jury's special verdict

and that, since the appraiser was not authorized to appraise

the value of goods in order to determine whether they were

dutiable, his appraisement was a nullity.

The Court disagreed, concluding that the statute permit-

ted the use of the appraiser and that the collector was not

precluded by the jury finding from following the higher

C-24

valuation of the appraiser. The amicus places emphasis

herein on a statement by the Court that

an appraisal, made in a proper case, must be followed,

or the action of the appraisers would be nugatory, and

their appointment and expenses become unnecessary.

Tappan v. The United States, 2 Mason [393], 404. The

propriety of following it cannot in such case be im-

paired by the subsequent verdict of the jury differing

from it in amount... . 45 U.S. at 335.

The Court in Rankin, while questioning a jury’s duty to

value merchandise, upheld the action challenging the collec-

tor’s right under the law to have an appraisement conducted,

and counsel now admit that “questions of whether the

appraiser had acted within the parameters of the law were

properly reviewable by a Court; to the extent that such

matters involved questions of fact, they were presented to a

jury”. Amicus Brief, p. 22, n. 4, referring to Greely's

Administrator v. Burgess, 59 U.S. (18 How.) 413, 15 L.Ed.

455 (1855) (holding that the question of whether the

merchant appraisers examined at least one package out of

every ten packages, as required by law, was one for the

jury); and Heddin v. Iselin, 142 U.S. 676, 12 S.Ct. 330, 35

L.Ed. 1155 (1892) (holding that the question of whether

the merchant appraiser was qualified was properly submitted

to the jury). In other words, the correctness of the position

espoused by the amicus curiae and the defendant, to wit,

that plaintiffs jury demand should be stricken, is not shown

conclusively by the cases they have brought to our attention.

Point II of Defendant's Memorandum correctly outlines

the history to date of judicial review of customs decisions.

That history shows that Congress passed the Customs Ad-

ministrative Act in 1890, 26 Stat. 131, which set up the

Board of General Appraisers under the Department of the

Treasury to review and decide customs matters. Debate on

C-25

this legislation reflects concern by some members of Con-

gress that it denied citizens “the Constitutional right of tral

by jury”.'’ In fact, an earlier proposal to create a special

court for the trial of customs cases had been circulated in

1881 which led the collector of Boston to state in a letter to

the Secretary of the Treasury that he had “serious doubt

whether such legislation would not be unconstitutional, in

that it would seem to abridge the nights of the citizen to tral

by jury.” S.Exec.Doc. No. 48, 47th Cong., Ist Sess. 33

(1881). He noted that “[i]t would also seem to be an

encroachment upon the peculiar privilege of the judiciary to

finally determine the construction of the law”. /d.

Indeed, by 1926 the Board of General Appraisers had

become the United States Customs Court under Article | of

the Constitution.'® Thereafter, Congress declared that court

to be established under Article III. The reports of both

judiciary committees in support of the Act of July 14, 1956,

ch. 589, 70 Stat. 532, recognized that the

Customs Court handles cases which very properly come

within the judicial power of the Untied States as set forth

in article III, which provides that such judicial power

shall extend to controversies to which the United Siates

shall be a party. Thus, there can be no doubt that the

Customs Court should be a constitutional Court.’

Accord, Glidden Company v. Zdanok, 370 U.S. 530, 575. 82

S.Ct. 1459, 1486, 8 L.Ed.2d 671 (1962) (where the Su-

preme Court, in considering the status of judges of the

'7 21 Cong.Rec. 811 (Jan. 23, 1890). For a more complete view

of the legislative history, see the dissent.

'® See Act of May 28, 1926, ch. 411. 44 Stat. 669.

H.R.Rep. No. 2348, 84th Cong.. 2d Sess. 1 (1956). See

S.Rep. No. 1827, 84th Cong., 2d Sess. 2 (1956) (“The committee

is of the opinion that the court more properly should have been so

created, and this bill accomplishes this end”).

ooo

C-26

Court of Customs and Patent Appeals, stated that customs

litigation “conforms to conventional notions of case or

controversy seems no longer open to doubt”).

Notwithstanding this recognition, the government’s pre-

sent view is that the 1890 and subsequent acts are clear

reflections of the omnipotence of Congress over such litiga-

tion, which entails now, of course, statutory waiver of

sovereign immunity. This position has apparently induced

our brother in dissent to posit the issue, erroneously in our

view, as the constitutionality of those acts. Their constitu-

tionality under Article I is not at issue”’, nor, for that matter,

is the proposition that Congress has the power to constitute

tribunals like this Court of International Trade under Article

III. Otherwise, it would be appropriate to refer to Northern

Pipeline Construction Co. v. Marathon Pipe Line Co., 458

U.S. 50, 102 S.Ct. 2858, 73 L.Ed.2d 598 (1982), which held

unconstitutional the provision in the Bankruptcy Act of 1978

which established “in each judicial district, as an adjunct to

the district court ... the United States Bankruptcy Court”.

28 U.S.C. § 151(a) (1976 ed., Supp. IV). In rendering this

landmark decision, the Court’s lead opinion recognized but

“three narrow situations” where “the grant of power to the

Legislative and Executive Branches was historically and

constitutionally so exceptional that the congressional asser-

tion of power to create legislative courts was consistent with,

rather than threatening to, the constitutional mandate of

separation of powers.’~’ Two of those exceptions, namely,

*° For example, the constitutionality of the Customs Adminis-

trative Act of 1890 was essentially disposed of soon thereafter in

Schoenfeld v. Hendricks, 152 U.S. 691, 14 S.Ct. 754, 38 L.Ed.

601 (1894).

1458 U.S. at 64, 102 S.Ct. at 2868. Two justices, while

concurring in the judgment. declined to join the plurality in

deciding whether there is a “general proposition and three tidy

C-27

“territorial courts”’* and “the power to establish and admin-

ister courts-martial””’, on their face, are not even arguably

apposite here. The third encompasses legislative courts and

administrative agencies created by Congress to adjudicate

cases involving “public rights’’, as first referred to in Mur-

ray 's Lessee v. Hoboken Land & Improvement Co., 59 U.S.

(18 How.) 272, 284, 15 L.Ed. 372 (1856), in the following

context:

... [W]e do not consider congress can either withdraw

from judicial cognizance any matter which, from its

nature, is the subject of a suit at the common law, or in

equity, or admiralty; nor, on the other hand, can it bring

under the judicial power a matter which, from its

nature, is not a subject for judicial determination. At

the same time there are matters, involving public

rights, which may be presented in such form that the

judicial power is capable of acting on them, and which

are susceptible of judicial determination, but which

congress may or may not bring within the cognizance of

the courts of the United States, as it may deem proper.

The lead opinion in Northern Pipeline states that this

public-rights

doctrine may be explained in part by reference to the

traditional principle of sovereign immunity, which rec-

ognizes that the Government may attach conditions to

its consent to be sued. See ... also Ex parte Bakelite

Corp., 279 U.S. 438, 452, 49 S.Ct. 411, 413-14, 73

L.Ed. 789 (1929). But the ... doctrine also draws

upon the principle of separation of powers, and a

historical understanding that certain prerogatives were

exceptions.” 458 U.S. at 91, 102 S.Ct. at 2882 (Rehnquist. J.

concurring). |

2 See generally 458 U.S. at 64-65, 102 S.Ct. at 2868 and the

cases cited therein.

> See generally 458 U.S. at 66, 102 S.CT. at 2869 and the

cases cited therein.

C-28

reserved to the political Branches of Government. The

doctrine extends only to matters arising “between the

Government and persons subject to its authority in

connection with the performance of the constitutional

functions of the executive or legislative department,”

Crowell v. Benson, 285 U.S. 22, 50 [52 S.Ct. 285, 292,

76 L.Ed. 598] (1932), and only to matters that histori-

cally could have been determined exclusively by those

departments, see Ex parte Bakelite Corp., supra, [279

U.S.] at 458 [49 S.Ct. at 416]. The understanding of

these cases is that the Framers expected that Congress

would be free to commit such matters completely to

non- judicial executive determination, and that as a

result there can be no constitutional objection to Con-

gress’ employing the less drastic expedient of commit-

ting their determination to a legislative court or an

administrative agency. Crowell v. Benson, supra, [285

U.S.] at 50 [52 S.Ct. at 292].

The public-nghts doctrine is grounded in a histori-

cally recognized distinction between matters that could

be conclusively determined by the Executive and Leg-

islative Branches and matters that are “inherently...

judicial.” 458 U.S. at 67-68, 102 S.Ct. at 2869 (foot-

note omitted).

Whether the 1890 and subsequent acts fall within the

purview of this doctrine is not entirely clear, although

Murray's Lessee involved a challenge to the use of a distress

warrant issued by the Solicitor of the Treasury against a

customs collector to recover revenues withheld by him. The

Supreme Court concluded that this procedure was not in

conflict with either the Constitution, in particular the due

process clause of Amendment V~, or the settled usages and

** The dissent seems to imply that compliance with this clause

obviates adherence to other dictates of the Constitution or Bill of

Rights. Obviously, this cannot be the case.

C-29

modes of proceeding inherited from the common and statute

law of England.

As shown above, one of those modes of proceeding was an

action at law by an aggrieved private party against the

collector, which action was triable to a jury. While Congress

determined in its Act of March 3, 1839 to require the

collector to remit immediately to the Treasury all duties

collected, the essence of such actions has remained the

same to this day. And since 1956, those actions have been

triable in a court constituted by Congress under Article III

of the Constitution. In Northern Pipeline, the Supreme

Court held that, where this article applies, all of the legisla-

tive powers specified in Article I are subject to it.” Of

course, the defendant does not challenge this holding herein

but does attempt to raise the shield of its sovereignty. While

the nature of our government of the people, by the people

and for the people makes its immunity subject to continuous

debate, the role of the political branches as determiner of

Furthermore, the Supreme Court's analysis in Murray's Lessee

as to why the warrant procedure prescnbed by the challenged Act

of May 15, 1820 did not entail a denial of due process of law is

also persuasive with regard to the contention of the plaintiff

herein that trial of penalty actions to a jury under 28 U.S.C.

$ 1876 but not this action would be denial of equal protection. See

Plaintiff's Brief, p. 2. citing Frederickson v. Lueditke Construction

Co., 427 F.Supp. 1309, 1315 (W.D.Mich.1977).

** 458 U.S. at 73, 102 S.Ct. at 2872. Apparently. Congress may

not “create courts free of Art. III's requirements whenever it finds

that course expedient.” /d. The Court's lead opinion thus rejected

the proposition that it

replace the principles delineated in [its] precedents, rooted

in history and the Constitution, with a rule of broad legisla-

tive discretion that could effectively eviscerate the constitu-

tional guarantee of an independent Judicial Branch of the

Federal Government. /d. at 74, 102 S.Ct. at 2873 (footnote

omitted).

C-30

the parameters thereof’ is not open to discussion other than

what the Constitution permits or prohibits.

[2] The nature of the action at bar, as it has “emerged

from its historical permutations, is still the statutory substi-

tute for the common law action for recovery of duty.”””

When a federal statute embraces a common-law form of

action,

that action does not lose its identity merely because it

finds itself enmeshed in a statute. The right of trial by

jury in action for debt still prevails whatever modern

name may be applied to the action. To hold otherwise

would be to open the way for Congress tu nullify the

Constitutional right of trial by jury by mere statutory

enactments. It is by such methods that courts lose their

power to enforce the Bill of Rights.

Stated another way, since the statutory action “merely

codifies” a mght that was “known at a common law, the

right to trial by jury must be preserved.” Murphy, Article [I]

Implications for the Applicability of the Seventh Amend-

°° We note in passing that the Foeign Sovereign Immunities

Act, 28 U.S.C. §§ 1330, 1602-11. reflects the recent intent of

Congress “to incorporate into United States law the ‘restrictive’

theroy of sovereign immunity in accordance with internation|

law”. Amerada Hess Shippine-Corp. v. Argentine Republic, 830

F.2d 421, 427 (2nd Cir.1987).

>” Micheline Tire Corporation v. United States, 82 Cust.Ct. 308.

327, C.R.D. 79-6, 469 F.Supp. 270, 285 (1979) (Watson. J.).

Duties have long been supplanted by taxes as the primary source

of federal revenues under Article I. Since the federal income tax.

unlike customs duties, did not exist in 1791, it became necessary

for Congress, ultimately, to provide for jury trials of actions

against the government for recovery of that tax, 28 U.S.C. § 2402.

28 United States v. Jepson, 90 F.Supp. 983, 986 (D.N.J.1950)

(emphasis added).

C-3]

ment to Federal Statutory Actions, 95 Yale L.J. 1459, 1473

(1986).

In Murray's Lessee v. Hoboken Land & Improvement Co.,

59 U.S. (18 How.) 272, 280, 15 L.Ed. 372 (1856), the

Court sustained the warrant procedure in view of the nonex-

istence of “some other provision” in the Constitution “which

restrains congress”. The contention in this action is, of

course, that the Seventh Amendment is such a provision.

For its part, the defendant relies on the following dictum

in Lehman v. Nakshian, 435 U.S. 156, 160, 101 S.Ct. 2698,

2701, 69 L.Ed.2d 548 (1981):

It has long been settled that the Seventh Amend-

ment right to trial by jury does not apply in actions

against the Federal Government. In Galloway v. United

States, 319 U.S. 372, 388-389 [63 S.Ct. 1077, 1086, 87

L.Ed. 1458], the Court observed (footnotes omitted):

“The suit is one to enforce a monetary claim

against the United States. It hardly can be main-

tained that under the common law in 1791 jury

trial was a matter of mght for persons asserting

claims against the sovereign. Whatever force the

Amendment has therefore is derived because Con-

gress, in the legislation cited, has made it

applicable.”

As indicated in Point I supra, the issue in Lehman was

whether a plaintiff against the federal government under the

Age Discrimination in Employment Act was entitled to a

jury in the absence of any provision therefor in that statute.

Since such an action clearly did not exist at common law,

the Court concluded that the Seventh Amendment did not

apply. Galloway involved a claim for benefits under an

insurance policy issued pursuant to the War Risk Insurance

Act. The trial judge had granted the government's motion

C-32

for a directed verdict at the close of the plaintiff's case, and

the Court of Appeals affirmed that decision. The plaintiff

contended that he had presented sufficient evidence to have

his case go to the jury and, thus, the directed verdict

deprived him of his nght to have the jury decide. On review,

the Supreme Court disagreed that the plaintiff had

presented sufficient evidence, and it also explained that the

Seventh Amendment was inapplicable to cases that were

unknown under the common law and that, in any event, trial

judges can direct verdicts.

Recently, in Tull v. United States, —— U.S. ——, 107

S.Ct. 1831, 95 L.Ed.2d 365 (1987), the purview of this

amendment was discussed as follows:

. . The Court has construed [its] language to

require a jury trial on the ments in those actions that

are analogous to “Suits at common law.” Prior to the

Amendment’s adoption, a jury tnal was customary in

suits brought in the English /aw courts. In contrast,

those actions that are analogous to |8th-century cases

tried in courts of equity or admiralty do not require a

jury trial. See Parsons v. Bedford, [7 L.Ed. 732]

(1830). This analysis applies not only to common law

forms of action, but also to causes of action created by

congressional enactment. See Curtis v. Loether, 415

U.S. 189, 193 [94 S.Ct. 1005, 1008, 39 L.Ed.2d 260]

(1974).

To determine whether a statutory action is more

similar to cases that were tried in courts of law than to

suits tried in courts of equity or admiralty, the Court

must examine both the nature of the action and of the

remedy sought. First, we compare the statutory action

to 18th-century actions brought in the courts of En-

gland prior to the merger of the courts of law and

equity. See, e.g. Pernell v. Southall Realty, 416 U.S.

363, 378 [94 S.Ct. 1723, 1731, 40 L.Ed.2d 198]

(1974): Dairy Queen, Inc. v. Wood, 369 U.S. 469, 477

(82 S.Ct. 894, 899, 8 L.Ed. 2d 44] (1962). Second, we

C-33

examine the remedy sought and determine whether it is

legal or equitable in nature. See, e.g., Curtis v. Loether,

415 US., at 196 [94 S.Ct. at 1009]; Ross v. Bernhard,

396 U.S. 531, 542 [90 S.Ct. 733, 740, 24 L.Ed. 2d 729]

(1970).”

[3, 4] If this is the proper method for analyzing the action

at bar, the conclusion it leads to is the right to a jury trial,

for the nature of this action has remained essentially un-

changed since the 18th century. While such suits were

brought at that time against the king’s collector, and not

against the king, that subsequent cases in this country were

also originally against a collector but later against the

United States as titular defendant does not change the

consistent, fundamental nature of the disagreement between

an importer and a local official over the assessment of

merchandise for impostion of duties. From early times to

date, these disagreements have been resolvable in courts of

law. They have never been tried in either equity or admiralty

courts. Furthermore, if, as the Court in Tu// state, “charac-

terizing the relief sought is ‘[m]ore important’ than finding

a precisely analogous common law cause of action in deter-

mining whether the Seventh Amendment guarantees a jury

trial’*°, the relief sought here shows this to still be an action

in debt?'. In other words, the remedy the plaintiff seeks

herein is legal, rather than equitable, in nature.

7107 S.Ct. at 1835 (emphasis in original, footnote omitted).

107 S.Ct. at 1837, quotaing from Curtis v. Loether, 415 U.S.

189, 196, 94 S.Ct. 1005, 1009, 39 L.Ed.2d 260 (1974).

31 In Tull the Court concluded that that action under the

Clean Water Act was “clearly analogous to the 1|8th-century

action in debt’. 107 S.Ct. at 1836.

C-34

CONCLUSION

To summarize, history and the law, as recently elucidated

by the Supreme Court in Tull v. United States, show that

trial by jury remains a fundamental nght which applies to an

action such as this one, and defendant’s motion to strike

plaintiff's demand for a jury trial must therefore be denied.

RE, Chief Judge, dissenting.

Fully cognizant of the importance of the right to a trial by

jury, and the responsibility of the courts in preserving nghts

enshrined in the Constitution, I am, nevertheless, con-

strained to dissent. See E.E.0.C. v. Corry Jamestown Corp.,

719 F.2d 1219, 1224 (3d Cir. 1983). In sum, I disagree that

there is a mght to a tmal by jury, under the seventh

amendment to the Constitution, in an action against the

United States for the recovery of customs duties.

Little need be said as to the claim that the nght to trial by

jury in this aetion is conferred by the Customs Courts Act of

1980, specifically Title 28 U.S.C. § 1876 (1982). Section

1876 is merely an enabling statute necessary because of the

plenary jurisdiction acquired by the court, and the penalty

cases arising under 28 U.S.C. § 1582 (1982 & Supp. I]

1984) in which the United States is a plaintiff. Section

1876, therefore, simply “sets forth the necessary mecha-

nisms for the court to conduct a jury tral.”” H.R.Rep. No.

1235, 96th Cong., 2d Sess. 63 (1980), U.S. Code Cong. &

Admin. News 1980, pp. 3729, 3775. It neither grants nor

confirms any might to a trial by jury in cases against the

United States to recover customs duties.

The discussion as to whether there is a mght to a jury trial

under the seventh amendment to the Constitution appropri-

ately may begin with a reference to the general principle

restated by the Supreme Court in the case of Lehman v.

Nakshian, 453 U.S. 156, 101 S.Ct. 2698, 69 L.Ed.2d 548

(1981). “It has long been settled that the Seventh Amend-

ment right to trial by jury does not apply in actions against

C-35

the Federal Government.” 453 U.S. at 160, 101 S.Ct. at

2701. Hence, when Congress waives the immunity of the

United States, a plaintiff has a right to trial by jury only if

Congress “has affirmatively and unambiguously granted that

right by stature.” Jd. at 1€8, 101 S.Ct. at 2705.

Significantly, unlike an action for the recovery of customs

duties, Congress expressly has provided, “affirmatively and

unambiguously,” for trial by jury in an action against the

United States for the recovery of internal revenue taxes. See

28 U.S.C. § 2402 (1982).

Furthermore, as in this action, to enforce a monetary

claim against the United States, the Supreme Court in-

dicted, in Galloway v. United States, 319 U.S. 372, 63 S.Ct.

1077, 87 L.Ed. 1458 (1943):

The suit is one to enforce a monetary claim against the

United States. It hardly can be maintained that under

the common law in 1791 jury trial was a matter of nght

for persons asserting claims against the sovereign.

Whatever force the Amendment has therefore is de-

rived because Congress, in the legislation cited, has

made it applicable.

Id. at 388-89, 63 S.Ct. at 1086 (footnotes omitted).

More specifically, in suits against the United States in-

volving the collection of taxes, such as customs duties, the

Supreme Court has emphasized that the taxpayer does not

have a right to trial by jury under the seventh amendment.

For a unanimous Supreme Court in Wickwire v. Reinecke,

275 U.S. 101, 48 S.Ct. 43, 72 L.Ed. 184 (1927), Chief

Justice Taft wrote:

It was suggested, in the brief for the United States in

resisting the application for certiorari, that the assign-

ment of error made on behalf of the petitioner was

inadequate in that it was not based on a reference to the

Seventh Amendment to the Constitution requiring a

jury trial in a civil case involving more than twenty

C-36

dollars. This objection has not been renewed in the

brief on the merits, doubtless because the right of the

petitioner to a jury in such a case is not to be found in

the Seventh Amendment to the Constitution but merely

arises by implication from the provisions of § 3226,

Revised Statutes, which has reference to a suit at law.

It is within the undoubted power of Congress to provide

any reasonable system for the collection of taxes and

the recovery of them when illegal, without a jury trial—

if only the injunction against the taking of property

without due process of law in the method of collection

and protection of the taxpayer is satisfied. Murray's

Lessee v. Hoboken Land and Improvement Co., 18

How. 272, 281, 282, 284 [15 L.Ed. 372]; Nichols v.

United States, 7 Wall. 122, 127 [19 L.Ed. 125]:

Cheatham v. United States, 92 U.S. [(2 Otto) ] 85, 88,

89 [23 L.Ed. 561].

Id. at 105-06, 48 S.Ct. at 44-45 (emphasis added).

Reliance upon the case of Tull v. United States, ___. US.

___, 107 S.Ct. 1831, 95 L.Ed.2d 365 (1987) to support the

demand for a jury trial in this action against the United

States is misplace. The Tu// case was an action brought by

the United States to recover potential civil penalties of

about $23 million. The case did not arise from the laws

enacted by Congress for the collection of taxes, but was

brought by the United States seeking civil penalties against

an individual for the alleged violation of the Clean Air Act.

Tull, 107 S.Ct. at 1833-34. In Tull, the court noted that a

civil penalty at common law was recoverable in courts of

law, and stated that “[r]emedies intended to punish culpa-

ble individuals, as opposed to those intended simply to

extract compensation or restore the status quo, were issued

by courts of law, not courts of equity.” /d. at 1838. Apart

from the helpful discussion of the importance of the remedy

sought, Tu// does not support a claim for a jury trial in a

monetary action against the United States to recover cus-

toms duties allegedly illegally exacted.

C-37

The claimed seventh amendment right to a jury trial in

this action apparently is predicated upon the fact that, in the

early years of our nation, there existed a common law right

of action against a collector of customs, with a concomitant

right to a trial by jury, to recover excessive customs duties.

Starting in 1839, Congress enacted a series of statutes in

which the common law cause of action was eliminated, and

various statutory remedies were substituted in its place,

culminating, in 1890, with a statutory remedy that had no

provision for jury trials.

Accordingly, the question presented is whether the legis-

lation of Congress, which did not provide for trial by jury in

actions against the United States to recover customs duties

alleged to be illegally exacted, is constitutional. In my

opinion, that legislation is constitutional and valid.

The early tariff laws provided no statutory system for

judicial review of determinations made by the collectors of

customs. However, when a collector of customs exacted

excessive or illega! duties, by application of common law

principles, the collector was personally liable to the importer

for the amount illegally exacted.

Although, at that time, the federal courts did not have

jurisdiction over those common law actions, it was possible

for a collector, sued at common law in a state court, to set

up a defense of federal authority, and remove the case into a

federal court. See Act of Mar. 3, 1817, ch. 109, 3 Stat. 396.

The determinations of the collectors of customs as to the

rate and amount of duties (classification issues) were judi-

cially reviewed on common law principles. See Elliott v.

Swartwout, 35 U.S. (10 Pet.) 137, 150, 9 L.Ed. 373 (1836).

These common law actions, preferably brought in assumpsit,

were the only remedies available to a person who sought to

challenge administrative interpretations and applications of

the tariff laws.

C-38

The personal liability of a collector of customs in an

action in assumpsit was based upon the implied promise of

the collector to repay the excessive amount collected.

Hence, the practice developed that the collectors of customs

retained large sums of money to indemnify themselves from

any liability for duties paid under protest, and thus did not

pay over to the Treasurer of the United States the disputed

amounts until the litigation was terminated.

In 1839, Congress passed the first statute regulating

disputes involving the classification of imports. See Act of

Mar. 3, 1839, ch. 82, § 2, 5 Stat. 339, 348-49. The law

required the collectors of customs immediately to place all

moneys collected by them to the credit of the Treasurer.

That law also made the Secretary of the Treasury the final

arbiter for examining and determining claims for refunds of

duties paid under protest to the collectors. The 1839 law

made no provision for judicial review of the Secretary's

determinations.

In 1845, the Supreme Court, in the case of Cary v. Curtis,

44 U.S. (3 How.) 236, 11 L.Ed. 576 (1845), sustained the

constitutionality of the Act of Mar. 3, 1839, and heid that,

by removing the ground or basis for the collector's implied

promise to repay, Congress took away from the importer the

previously existing common law right of action against the

collector. 44 U.S. (3 How.) at 251-52, 11 L.Ed. 576. In

separate dissents, Justices Story and McLean expressed

their views that the law, as interpreted by the majority, was

unconstitutional.

Soon after the Cary decision, Congress passed the explan-

atory Act of Feb. 26, 1845, ch. 22, 5 Stat. 727, “which, by

legislative construction of the Act of 1839, restored to the

claimant his right of action against the collector. ... Arn-

son v. Murphy, 109 U.S. 238, 241, 3 S.Ct. 184, 186, 27

L.Ed. 920 (1883).

C-39

In an 1864 law, Congress continued to allow a right of

action against the collector, but conditioned that nght upon

an appeal from the collector’s determination to the Secre-

tary of the Treasury, and further provided that the action

against the collector could not be brought until after the

appeal to the Secretary was decided, or not acted upon,

within a specified time. See Act of June 30, 1864, ch. 171,

§§ 14, 15, 13 Stat. 214-15.

In Arnson v. Murphy, the Supreme Court recognized that

the effect of the 1864 Act was to repeal the Act of Feb. 26,

1845, and that the action against the collector of customs,

after 1864, was, “converted into an action based entirely on

a different principle—that of a statutory liability, instead of

an implied promise—which if not originated bv the Act of

Congress, yet is regulated, as to all its incidents, by express

statutory provisions.” Arnson, 109 U.S. at 243, 3 S.Ct. at

188. The Supreme Court stressed that “Congress having

undertaken to regulate the whole subject, its legislation is

necessarily exclusive.” /d.; see also De Lima v. Bidwell, \82

U.S. 1, 178, 21 S.Ct. 743, 746, 45 L.Ed. 1041 (1901).

The statutory right of action against a collector, including

the statutory right to trial by jury, continued until 1890. In

that year, by the Customs Administrative Act of 1890, ch.

407, 26 Stat. 131, Congress consciously, deliberately, and

with full awareness of its constitutional implications, re-

pealed the statute allowing an action against a collector,

with its concomitant statutory right to trial by jury before

the courts. In 1890, as explained below, Congress substi-

tuted a “radically” mew statutory system for an action

against the United States before a newly established Board

of General Appraisers. The new system intentionally re-

moved the right to a jury trial before the courts, and

“substituted” a trial before the general appraisers.

The Board of General Appraisers and the new statutory

system were intended to provide better administrative con-

trol necessary to implement the complete overhaul of the

C-40

tariff system brought about by the McKinley Tariff Act, ch.

1244, 26 Stat. 567, also enacted in 1890. Congress recog-

nized that the prior system resulted in differing and conflict-

ing tariff law interpretations by courts and juries throughout

the country which created undue delay, doubts and difficul-

ties in the collection of the country’s revenues. By the

Customs Administrative Act of 1890, after 100 vears of

experience with other methods, Congress removed from the

ordinary courts litigation over tariff law interpretation. To

achieve uniformity, Congress expanded the power of the

general appraisers to decide the technical problems inherent

in the classification and valuation of imported merchandise.

See generally F. Frankfurter & J. Landis, The Business of

the Supreme Court 149 (1928).

The statutory antecedents and applicable Supreme Court

decisions, including Cary v. Curtis, were, of course, well

known to the Congress in the deliberations and debates

which led to the enactment of the 1890 law.

This Congressional awareness is made clear by the follow-

ing excerpt from the Report of the House Committee on

Ways and Means, which quoted the Senate Committee

Report:

It will be seen that the proposed sections are a radical

departure from the existing law. They substitute for the

decision of the Secretary of the Treasury, in all cases of

appeal upon questions of classification and rate of duty

and upon questions as to fees, charges, and exactions.

the decision of the board of appraisers provided for in

the preceding section, and confer upon said board in

the first instance exclusive jurisdiction of all said ques-

tions. They confer upon the several circuit courts of the

United States appellate jurisdiction upon all questions

of law as respects classification and rate of duty, with a

final determination by the Supreme Court of the

United States in difficult cases, or in cases where the

Attorney-General shall be of opinion that the matter in

controversy should be appealed thereto.

Previous to 1839 a person paying duties claimed by

him to have been illegally exacted had a common-law

right of action against the collector to whom the pay-

ment had been made, provided the person making such

payment gave notice at the time of payment that the

duties charged were too high, and that the party paying

so paid in order to secure possession of his merchan-

dise, and that he intended to sue to recover back the

amount so erroneously paid, and provided that he also

gave notice to the collector not to pay over the amount

into the Treasury. Collectors of customs being thus

personally liable, it was their practice to retain large

sums of money in their possession on the ground that it

had been paid under protest, and that they must indem-

nify themselves against liability. This evil of retention

of moneys by collectors became so marked that by the

second section of the act of March, 1839, all moneys

were required to be paid into the Treasury.

I; was held by the Supreme Court in the case of

Carey [sic] vs. Curtis (3 Howard, page 236) that this

act deprived the importer of all right of action in the

courts for duty erroneously or illegally exacted from

him. This decision of the court, therefore, left him no

remedy but an appeai to the Secretary of the Treasury,

who was authorized, whenever it was shown to his

satisfaction in any case of unascertained duties, etc., to

refund such overpayment. It thus being held that the

importer was excluded by this act from commencing

suit at common law, Congress, on the 26th of February.

1845 (vol. 5, Stat. at Large, page 727), provided that

nothing in the act should be construed to take away or

impair the right of any person or persons to maintain a

suit at common law.

And this provision continued in force until June 30,

1864, when the sections, 2931 and 2932, were enacted.

since which time importers have been compelled to

resort to the statutory remedy therein provided, and by

————™

C-42

Said 5. tions the common law remedy which existed up

to that time was taken away .

[It is believed that the proposed sections will afford

claimants a speedy, just, and efficacious remedy. The

tribunal in the first instance will be composed of officers

selected with a view to their peculiar fitness and qualifi-

cations for the duties devolving upon them. Their time

and attention will be given exclusively to a study of the

tariff laws and to their practical application, and they

could readily hear and dispose of the cases as they

might arise in an intelligent and satisfactory manner.

but if they shall make a mistake as respects the true

construction of the statutes re|&ting to classification and

rate of duty. a speedy and efficacious remedy is pro-

vided for a review of their decisions as respects the law

of the case, their finding of facts being conclusive upon

the Government and the importer

H.R.rep. No. 6, 5lst Cong., Ist Sess. 7-8 (1980) (emphasis

added).

One of the principal features of the 1890 legislation. as

proposed by its leading congressional sponsor. Congressman

(later President) William McKinley, then Chairman of the

House Committee on Ways and Means. was the provision

for the appointment of a beard of nine general appraisers.

before whom tnals would be conducted

When the House convened as a Committee of the Whole

to consider the bill, there was vigorous opposition to the

McKinley proposal, much of which focused upon the fact

that the new system would take away from the importer. in a

Classification case, the mght to a tnal by jury against a

collector of customs. 21 Cong. Rec. 825 (1890). Although

acknowledging that the nght of tral by jury as to questions

“there is a substitute for the jury in the nine appraisers

ld.

C-43

During the debate in the House, the focus shifted to the

act of Mar. 3, 1839, Cary v. Curtis, and the explanatory Act

of Feb. 26, 1845. the proponents, relying upon the Supreme

Court opinion in Cary, maintained that the proposed new

system was not constitutionally defective in that:

Congress, [as] the legislative branch of the Govern-

ment, was supreme in its power of levying and collect-

ing taxes, and that if they allowed a suit in any case it

was only an act of clemency and beneficence on the

part of the Government; that they need not allow any

claim for redress, but they might make the Secretary of

the Treasury the supreme tribunal in the case, both as

to the law and as to the facts, and take away entirely

the right of trial by jury.

Id. at 818-19 (emphasis added).

After three days of extensive consideration by the House,

Chairman McKinley summarized the position of the propo-

nents as it pertained to the right to trial by jury:

Mr. McKINLEY. Mr. Chairman, I had intended to

cite some authorities on the constitutional question

raised on the fifteenth section; but I understand from

the discussion this morning that that position has been

abandoned and that no gentiemer. now seriously ques-

tions the constitutional right of Congress to enact the

legislation proposed in the bill under consideration. The

question, therefore, has rather drifted to one of public

policv—whether is is fair, just, and necessary to create

a board of general appraisers. with the powers granted

in the section under debate, and to deprive, as it is said,

the importer of the right of trial by jury

/d. at 833 (emphasis added).

Congress, in the 1890 law, specifically repealed section

3011 of the Revised Statutes of the United States (i878).

which authorized trial by jury, in actions against a collector

of customs. See Customs Administrative Act of 1890. ch.

407, § 29, 26 Stat. 131, 141-42. Furthermore, Congress

C-44

relieved the collectors of any personal liability resulting from

a determination as to the classification or rate of duty of

imported merchandise. See Customs Administrative Act of

1890, ch. 407, § 25, 26 Stat. 131, 141; see also H.R.Rep. No.

6, Sist Cong., Ist Sess. 10.

In repealing section 3011 of the Revised Statutes, Con-

gress removed the jurisdiction from the federal courts, to

hear suits against the collectors, and conferred jurisdiction

upon the Board of General Appraisers to review determina-

tions of the collectors, with a further review in the circuit

courts. See Glidden Co. v. Zdanok, 370 U.S. 530, 575, 82

S.Ct. 1459, 1485-86, 8 L.Ed.2d 671 (1962).

The legislative history of the Customs Administrative Act

of 1890 leads me to the inescapable conclusion that the

Congress carefully considered the question of the importer’s

night to a jury trial in an action for the refund of customs

duties, and that it examined fully and completely the consti-

tutional and policy arguments against elminating that nght.

It is beyond doubt that Congress concluded that there was

no constitutional bar to removing the nght to tral by jury. In

clear and unambiguous terms, Congress intentionally and

deliberately chose to eliminate jury tnals in actions against

the United States to recover excessive or illegal customs

duties.

The Customs Administrative Act of 1890 was interpreted

and applied by the Supreme Court in the case of Schoenfeld

v. Hendricks, 152 U.S. 691, 14 S.Ct. 754, 38 L.Ed. 601

(1894). The Supreme Court held that after the 1890 law no

action could be maintained against a collector of customs

either at common law or under the statutes of the United

States, since the remedy given by the 1890 statute through

the Board of General Appraisers was exclusive. Shoenfeld,

152 U.S. at 692-93, 14 S.Ct. at 755. Also, it was clear to the

Supreme Court, in United States v. Ranlett & Stone, |72

U.S. 133, 19 S.Ct. 114, 43 L.Ed. 393 (1898) that: “[t]he

remedies provided by the Act of June 10, 1890, furnish the

ee |

C-45

equivalent for the action against the collector which was

originally the remedy for all illegal exaction of duties ....”

172 U.S. at 145-46, 19 S.Ct. at 118.

[t is not necessary here to trace the subsequent statutory

evolution of the Board of General Appraisers to today’s

Article III United States Court of International Trade. See

Re, Litigation Before the United States Court of Interna-

tional Trade, 19 U.S.C.A. §§ | to 1300 (West Supp. 1988).

Nevertheless, it is important to note that this court possesses

“all the powers in law and equity of, or as conferred by

Statute upon, a district court of the United States,” 28

U.S.C. § 1585 (1982); and, the court will make its determi-

nation in this action de novo, “upon the basis of the record

made before the court,” 28 U.S.C. § 2640 (1982).

[t is crystal clear, therefore, that Congress removed one

form of statutory remedy and substituted another with

procedures which today fully meet the requirements of due

process. The fact that the existing remedy does not include,

and has not included since 1890, a provision for trial by jury,

does not render the existing remedy and its precedures

unconstitutional.

Of course, this action does not present a claim that

Congress has withdrawn from any judicial review a cause of

action which was the subject of a suit at common law. There

is a vast difference between the total denial of any remedy.

and the substitution of another statutory remedy for one that

previously existed. As Professor Hart concluded: “It must

be plain that Congress necessarily has a wide choice in the

selection of remedies, and that a complaint about action of

this kind can rarely be of constitutional dimension.” See.

Hart, The Power of Congress to Limit the Jurisdiction of

Federal Courts: An Exercise in Dialetic, 66 Harv.L.Rev.

1362, 1366 (1953). Furthermore, the power of Congress to

regulate the jurisdiction of the federal courts, and to

detemine the remedies they may afford, has long been

C-46

recognized by the Supreme Court. see Ex parte McCardle,

74 U.S. (7 Wall.) 506, 513, 19 L.Ed. 264 (1869).

On this question, the Supreme Court’s opinion in Annis-

ton Mfg. Co. v. Davis, 301 U.S. 337, 57 S.Ct. 816, 81 L.Ed.

1143 (1937) is particularly instructive. In that case, plaintiff

alleged the unconstitutionality of a statute which took away

a statutory right of action against the collector of internal

revenue and substituted a different statutory action directly

against the United States. Anniston, 301 U.S. at 341-42, 57

S.Ct. at 818. The Supreme Court agreed with the govern-

ment’s statement that the Court was not presented with the

question of “‘the power of Congress to withdraw suit

entirely, both against the Collector and against the Govern-

ment... .'” /d. at 342, 57 S.Ct. at 818. In upholding the

constitutionality of the new statutory remedy, Chief Justice

Hughes wrote:

The Government has not denied its obligation to refund

the amounts found in the authorized proceeding to be

recoverabie, but has recognized that obligation. /n such

a case, the substitution of an exclusive remedy directly

against the Government is not an invasion of constitu-

tional right. Nor does the requirement of recourse to

administrative procedure establish invalidity if legal

rights are still suitably protected. The immediate ques-

tion is whether the authorized proceeding affords a fair

and adequate remedy. We accordingly inquire whether

the prescribed procedure gives an opportunity for a full

and fair hearing and determination of all questions of

fact and adequately provides for the protection of the

legal rights of the claimant, embracing whatever right

of refund the claimant is entitled to assert under the

Federal Constitution.

Id. at 343, 57 S.Ct. at 819 (emphasis added).

The teaching of Anniston applies pertorce to this case.

Congress has not denied any obligation by the Government

to refund excessive or illegally exacted customs duties.

C-47

Instead, Congress established an exclusive and effective

remedy against the United States, in place of a previous

common law, and later statutory, right of action against the

collectors of customs. Accordingly, the question here, as in

Anniston, is not the power of Congress to remove a cause of

action entirely, but rather “whether the authorized proceed-

ing affords a fair and adequate remedy.” See id. As in

Anniston, in this case, the existing procedures, established

by Congress, before this court provide a claimant against the

United States with “an opportunity for a full and fair

hearing and determination” of all questions of fact and

issues of law. In these sutis against the United States,

Congress has authorized a statutory remedy which is more

effective and complete than any which existed at common

law.

To conclude that the plaintiff in this action against the

United States is entitled to a jury trial under the seventh

amendment, this court must hold that the Customs Admin-

istrative Act of 1890 was unconstitutional solely because

Congress did not provide for trial by jury. The court would

have to conclude that the Supreme Court was wrong in

Cary, and that the Act of Mar. 3, 1839 was unconstitutional.

The court would also have to question the constitutionality

of the Customs Courts Act of 1970, and the Customs Courts

Act of 1980, neither of which provided for trial by jury in

these actions. For the reasons stated. | am not persuaded

that those determinations should be made.

Since [ am of the opinion that plaintiff, in this action

against the United States, does not have a right to a jury

trial under the seventh amendment, or applicable statutes, |

would grant the defendant’s motion to strike plaintiff's

demand for a jury trial.

Pursuant to 28 U.S.C. § 1292(d)(1) (1982), since I

believe that a controlling question of law is involved, with

respect to which there is substantial ground for difference of

opinion, and that an immediate appeal from this order may

C-48

materially advance the ultimate termination of this litiga-

tion, I would also certify the question for immediate appeal

to the United States Court of Appeals for the Federal

Circuit.

APPENDIX D

United States Court of Appeals

for the Federal Circuit

88-1334

WASHINGTON INTERNATIONAL INSURANCE CO.,

- Plaintiff-Appellee,

VS.

THE UNITED STATES,

Defendant-Appellant.

Judgment

ON APPEAL from the U.S. COURT OF INTERNA-

TIONAL TRADE in CASE NO(S). 81-12-01678

This CAUSE having been heard and considered, it is

ORDERED and ADJUDGED: REVERSED

ENTERED BY ORDER OF THE COURT

FRANCIS X. GINDHART

Francis X. Gindhart, Clerk

DATED December 22, 1988

ISSUED AS A MANDATE: January 19, 1989

Costs: Against; Appellee

i re $492.24

SARE eprent nen $492.24

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.