No Jurisdiction at CIT in Case Over Seized Imports, Even Without Notice of Seizure, CIT Says

The Court of International Trade doesn't have jurisdiction over cases in which CBP seized goods, Judge Gary Katzmann ruled in an Oct. 7 order. Instead, jurisdiction in these instances lies exclusively with federal district courts, the judge said. Since the seizure of an import does not deem a product excluded, and thus precludes any protestable event, jurisdiction at CIT is barred for seized goods, the court found.

Root Sciences filed the case after CBP seized one of its cannabis crude extract recovery machines as “drug paraphernalia.” The agency didn't notify Root of the seizure but instead sent the importer an automated notice that the goods had been deemed excluded from entry. The U.S. said the email was automated, set off by an import specialist who “mistakenly believed” that merchandise after a seizure could still be deemed excluded. Root eventually learned of the seizure through an email from the Department of Justice eight hours after filing its case at CIT.

During litigation, Root accused DOJ of playing “judicial keep away” with the case, citing the department's history of arguing for improper jurisdiction in cases over seized and excluded merchandise in both CIT and district courts (see 2105030053). DOJ countered that its principle has been clear: CIT doesn't have jurisdiction to hear cases over seized goods but jurisdiction to see cases over excluded goods, as there was a protestable decision (see 2106300034).

Katzmann found this to be consistent with CIT and the district courts' actual jurisdiction. The judge also held that a seizure conducted within 30 days from when the goods were presented to CBP, “even if uncommunicated to the importer within those thirty days,” prevents the goods from being deemed excluded. The underlying CBP protest was not valid as there was no exclusion, the court said. Katzmann agreed, though, with Root's argument that a seizure by itself is not an admissibility determination.

“That said, previous decisions of the court make clear that a seizure of merchandise, if effected within thirty days of that merchandise being presented for examination, prevents the occurrence of a deemed exclusion,” Katzmann said. “[S]eizure of goods prior to an admissibility determination precludes further decision by CBP on the admissibility of the merchandise because the goods then become subject to forfeiture proceedings, in which case the admissibility of the goods becomes irrelevant.”

Root argued that because the notice of seizure was given more than 30 days after the merchandise had been presented for examination, the seizure did not become legally effective until after the goods were deemed excluded. Katzmann, instead, sided with the government to find that due to the actual date of seizure, the merchandise was never deemed excluded, precluding jurisdiction.

“It is idiomatic that every case turns on its own facts,” the judge said. “Faced with the at least seeming divergence in judicial approaches to the legal effectiveness of seizure in relation to notice, the court here concludes that, for the purposes of determining whether the court’s jurisdiction has attached to a deemed exclusion, the date of actual seizure controls.”

John Peterson, counsel for Root, disagreed with the ruling. "Evident from the decision is that there is confusion within the CIT about whether the seizure ousts the court of jurisdiction," he said. The finding "seems to indicate that, while seizure is not an admissibility determination, it somehow terminates the statutory mechanism which requires CBP to make an admissibility determination. No court's ever said that before, and we don't think that's correct. ... It is possible that there may be two different actions before two different courts involving the same merchandise -- an exclusion case in the CIT and a seizure case in District Court. And it's possible conflicting determinations might be rendered. But I don't see how the possibility of a District Court action ousts the CIT of its jurisdiction over an admissibility decision, i.e., a deemed exclusion. Do we conclude that there is never a CBP admissibility decision on these goods, and the entry goes off into the Twilight Zone? That's what today's decision suggests."

(Root Sciences, LLC v. United States, Slip Op. 21-136, CIT #21-00123, dated 10/07/21, Judge Gary Katzmann. Attorneys: John Peterson of Neville Peterson for plaintiff Root Sciences; Guy Eddon for defendant U.S. government)