Trade Court Dismisses Test Taker's Bid to Overturn Customs Broker License Exam Result

The Court of International Trade in a June 6 opinion dismissed test taker Byungmin Chae's lawsuit contesting five questions on the customs broker license exam. Judge Timothy Reif said CBP was right to dismiss Chae's appeal of four of the questions but that the agency wrongly denied the test taker's appeal for the fifth question. The reversal of one question wasn't enough to for a passing grade for Chae, who was two questions shy of the 75% threshold needed to pass the test.

Chae contested his results from the April 2018 customs broker exam (see 2105070050). CBP initially informed Chae that he scored 65%. An appeal to the agency’s Broker Management Branch brought him up to 67.5% in August 2018. Chae then appealed to the CBP executive assistant commissioner, which in May 2019 brought his score up to 71.25%. He still needed CBP to grant him three more correct answers to get his license.

"With respect to the appeal of questions on the [broker exam], the substantial evidence standard does not require that Customs draft perfect questions," the opinion said. "The Court’s standard of review with respect to questions on the CBLE is one of reasonableness." Citing past CIT opinions, Reif said the court must conduct some inquiry into the parties' arguments, but CBP is entitled to certain deference when it comes to scoring the exam. The court has also previously said the "susceptibility of different meanings" doesn't necessarily render a question ambiguous.

The judge then delved into the five contested questions, finding one that was not reasonably rejected. Number 57 asked which of the following shipments does not contain "restricted gray market merchandise as defined in 19 C.F.R. § 133.23?"

CBP said choice E was correct, while Chae defended his selection of choice D. Choice E reads: "A shipment of shirts, bearing a genuine foreign trademark owned by a foreign trademark owner, identical with or substantially indistinguishable from a trademark registered and recorded in the United States. The shipment was imported without the authorization of the U.S. owner who is not related to the foreign owner." D reads: "A shipment of books, bearing a U.S. registered and recorded trademark applied by a foreign subsidiary of the U.S. owner, determined by CBP to be different from the books authorized by the U.S. owner for importation or sale in the United States. The books feature a conspicuous label that they are not authorized by the U.S. owner for importation into the U.S. and are physically and materially different from the authorized ones."

To assess if either answer is correct, the court first looked at the definition of restricted gray market articles, which are defined as foreign-made articles with a genuine trademark or trade name identical with one owned and recorded by a U.S. citizen or corporation or association created within the U.S. and imported without the authorization of the U.S. owner. Reif said the books described in choice D don't constitute restricted gray market merchandise. The judge said the books are "physically and materially different" from books authorized by the U.S. owner for import into the U.S. and bear a label that indicates the books are not authorized by the U.S. owner for import into the U.S.

Reif said that CBP's regulations don't specify that the phrase "subsidiary of the U.S. owner" applies only to a U.S. subsidiary. "Accordingly, it was not reasonable for Customs to reject the conclusion that the labeling requirements of 19 C.F.R. § 133.23(b) apply with respect to a foreign subsidiary of the U.S. owner," the judge said.

However, Reif ruled that choice E was correct as well since the term "foreign" in the phrase "genuine foreign trademark" distinguishes the answer choice from gray market merchandise. As such, both D and E are correct, and CBP was wrong to deny credit for the question for Chae's choice of D, the judge ruled. Matthew Moench, counsel for Chae, said that he will review the opinion with Chae and sort through what the next steps are over the plaintiff's desire to obtain his license.

(Byungmin Chae v. U.S., Slip Op. 22-59, CIT #20-00316, dated 06/06/22, Judge Timothy Reif. Attorneys: Matthew Moench of King Moench for plaintiff Byungmin Chae; Marcella Powell for defendant U.S. government)