CAFC Says CIT Wrong to Allow Protest Litigation Under Residual Jurisdiction

The Court of International Trade was mistaken in its decision on whether the CIT could consider a legal challenge before a protest was actually denied, the U.S. Court of Appeals for the Federal Circuit said in a July 22 ruling. The CAFC reversed and remanded the CIT's decision to allow the protest lawsuit to go forward under the residual jurisdiction in 28 USC 1581(i) (see 1711090037). "Importers such as Hymer should not be permitted to rest on artful or creative pleadings to expand the jurisdictional scope of § 1581(i), which Congress limited as a statutory basis for the CIT’s jurisdiction over protests," CAFC said.

The suit involves a protest filed by Erwin Hymer Group North America and whether it is owed a refund of duties paid on U.S. good returned. While the CIT ultimately denied the government’s jurisdictional motion to dismiss, it did rule in favor of CBP. Hymer filed the suit because a CBP import specialist initially checked a box to approve the protest, but later changed the status to pending while CIT litigation was completed.

Hymer argued that it couldn't take other administrative avenues, either waiting for CBP's final action on the protest or requesting an accelerated disposition from the agency. According to the company, the CIT's 28 USC 1581(a) jurisdiction provides for reviewing only protest denials and not allowed protests. "We find Hymer’s argument inventive, but invalid," CAFC said.

CAFC warned that "to permit such expansion of jurisdiction would threaten to swallow § 1581(a) and would be contrary to this court’s precedent." The court said it purposely didn't address "two underlying concerns: ripeness and failure to exhaust administrative remedies, both of which are entrenched in the suspension of the protest proceeding, which itself was caused by Hymer’s hand." While "important and perhaps even dispositive in this action, the court elects not to address those issues given its conclusion that the CIT lacked jurisdiction," CAFC said.

(Erwin Hymer Group N. America, Inc. v. U.S., # 18-1282, dated 07/22/19, Judges Dyk, Reyna and Chen)

(Attorneys: John Peterson of Neville Peterson for plaintiff Erwin Hymer Group North America, Inc.; Marcella Powell for defendant U.S. government)