CIT Nixes Test Case in Customs Suit, Eyeing Ruling That Government Can't File Counterclaim

The Court of International Trade in a July 27 order denied plaintiff Second Nature Designs' bid for a test case and suspension of another action at the trade court. Judge Gary Katzmann said that the U.S.'s opposition to the motion was denied as moot in light of the court's recent ruling in Cyber Power v. U.S., which found that the government does not have the legal authority to file a counterclaim in a customs case. Following the order, the two cases will continue separately (see 2207200052) (Second Nature Designs v. U.S., CIT #17-00271).

Second Nature filed its two cases to seek a different classification for its dried botanical items used in home decor imported in 2017. The goods were originally liquidated by CBP under subheading 0604.90.60 as "other" botanicals, dutiable at 7%. Second Nature protested the liquidation, seeking reclassification under the duty-free subheading of 0604.90.60 as "dried or bleached" botanicals. CBP denied the protest and Second Nature brought suit at CIT. The U.S. filed a counterclaim, seeking a different classification of its own.

Based on the Cyber Power decision, the court then redenominated the government's counterclaim as a defense (see 2207250040). This move led to the court denying Second Nature's bid for a test case designation and suspension of another action. The plaintiff initially moved for a test case since it did not want to deal with a counterclaim, John Peterson, counsel for Second Nature, said. However, now that the issue of the counterclaim is settled after Katzmann adopted the Cyber Power decision, Peterson said he suspects the motion for test case designation and suspension will be renewed. "It doesn't make sense to be doing two lawsuits addressed 98% to the same issues," Peterson told Trade Law Daily.