CAFC Can 'Bring Order' to Jurisdictional 'Chaos' in Seized Imports Case, Importer Argues

Only an admissibility decision from CBP can stop a deemed exclusion from happening according to the law, importer Root Sciences argued at the U.S. Court of Appeals for the Federal Circuit in a bid to establish subject-matter jurisdiction in its case over seized imports. The Court of International Trade previously ruled that it doesn't have jurisdiction over cases in which CBP seized the subject goods, finding that a seizure does not constitute an admissibility determination (see 2110070022). Root argued that this decision throws it into a "jurisdictional wilderness" and calls into question the validity of past decisions the trade court relied on for the notion that seizure before the expiration of the 30-day deemed exclusion window stops the running of the statutory deemed exclusion period (Root Sciences v. United States, Fed. Cir. #22-1795).

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 DOJ eight hours after filing its case at CIT.

Throughout the case, DOJ argued 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). The trade court found this to be consistent with CIT and the district courts' actual jurisdiction. CIT 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. The court agreed, though, with Root's argument that a seizure by itself is not an admissibility determination.

The importer now finds itself before the Federal Circuit, seeking to establish that it has jurisdiction under Section 1581(a) at the trade court. Root argues the import was deemed excluded since a seizure is not an admissibility determination and only an admissibility determination can stop a deemed exclusion, per Section 499 (c)(5)(A) of the Tariff Act of 1930. Since it's deemed excluded, the exclusion can be protested, establishing jurisdiction at CIT.

"Here, however, the CIT has created a paradox: it has ruled, on the one hand, that CBP’s seizure of the goods at bar is not an admissibility determination for purposes of 19 U.S.C. § 1499 (c)(5); yet at the same time, it has ruled that, in some unspecified manner, the seizure prevents a deemed exclusion from occurring," the brief said. "While § 1499 notes that CBP may affect a seizure during the detention period -- thereby opening up a potential 'second front' in a fight to secure admission of its goods -- it does not state that seizure stops or tolls the running of the 30-day exclusion period. As the seizure is not a determination of admissibility, it does not stop the running of the 30-day period pursuant to 19 U.S.C. § 1499 (c)(5)(A), leaving Root Sciences to wonder, what does?"

Root told the Federal Circuit that even the trade court recognized that a forfeiture case in a district court could fail to address issues of due process and the admissibility of the importer's goods -- points raised in the CIT case by Root. The result of this decision is that CBP can go "forum-shopping" to preclude the judicial review of certain elements of the seizure, the importer said. Further, the trade court "may still have work to do" on the case even if a seizure is not an admissibility decision, Root argued.

"[T]he CIT must maintain jurisdiction over the subject merchandise and entry at issue even if it ultimately determines to exercise comity and stay the action pending a possible (but unlikely) judicial forfeiture action in California District Court," the brief said. "The fact of seizure does not foreclose the possibility that the CIT may need to take action with respect to the goods excluded from entry." Root pointed to three scenarios which would disadvantage it if the exclusion protest action is tossed outright: CBP releases the good after dismissal of the case, DOJ declines to institute forfeiture proceedings, and the district court tosses the forfeiture proceedings on procedural grounds.

The brief concluded by declaring that "clarification is needed to bring order to potential chaos." The importer argued that the Federal Circuit could amend the trade court's decision in two discernable ways: it finds that a seizure merely gives the CIT issues of comity when it exercises Section 1581(a) jurisdiction or it orders CIT to amend the decision to find that a seizure constitutes an actual exclusion, whereby the trade court could assert jurisdiction over a protest timely filed after the actual exclusion.

"Either determination would ensure that CBP could not obtain a procedural or judicial advantage by subjecting an importer to the shabby treatment it accorded Root Sciences here -- lack of actual or constructive notice of seizure, failure to respond to counsel’s incessant attempts to communicate, CBP confirming the existence of a denied exclusion protest and formally inviting litigation under," the brief said. "Either decision would prevent forum-shopping or gamesmanship by CBP. Either determination would prevent importers from being cast into jurisdictional and procedural limbo if judicial forfeiture proceedings fail to materialize or fail to decide the issue which prompted the exclusion."