Tuesday, August 30, 2011

Snakes Not on a Plane

As you know, I am a sucker for a story about people with reptiles in their clothing. Here is the latest.

TSA in Miami stops man for a pants-load of snakes and tortoises - South Florida Sun-Sentinel.com

Update: here is a story about smuggled jaguar pelts.


Keep up the good work South Florida Sun-Sentinel.

Friday, August 26, 2011

Gibson Guitars Raided Under Lacey Act (Again)

Someone at Fish & Wildlife must hate rock 'n' roll. Gibson Guitars was raided again this week for alleged violations of the Lacey Act. This time, the violation appears to relate to the interpretation of Indian law relating to whether the wood was harvested correctly.

My prior post on Gibson is here.

Thursday, August 25, 2011

Importer Identity Theft

The Court of International Trade decision in Kairali Decan, Inc. v. United States has been kicking around for a couple weeks and I have struggled with whether comment on it. I have recently decided that purely procedural decisions are of interest to only a small segment of readers of this blog. Also, procedural cases generally do not turn on broadly applicable principles of law (which make for good posts).

But, this case has an interesting fact pattern and I have seen it covered elsewhere (I’m looking at you Adonica Wada). Also, someone recently thanked me for reading these cases so he doesn’t have to. So here are my two cents.

The underlying facts are that someone imported food from Sri Lanka. I say “someone,” because it seems pretty well established that the importer was not the plaintiff in this case. Rather, someone who is regularly in the business of importing food from Sri Lanka stole the identity of the plaintiff and made entry using its information. As a result, when the FDA decided that it wanted the merchandise redelivered to Customs and Border Protection, CBP inquired with the plaintiff and eventually sent the Notice to Redelivery to Kairali, who promptly said “It’s not our stuff.” When Customs did not receive the merchandise, it eventually made a claim for liquidated damages from Kairali, the importer shown on the entry papers.

At some point, the plaintiff paid the liquidated damages to avoid administrative sanctions and filed a suit in the Court of Federal Claims to secure a refund. What the plaintiff did not do was file a protest with Customs and Border Protection challenging the redelivery notice (or the liquidated damages for that matter).

The Court of Federal Claims looked at the case and said, “This seems to be a case for the Court of International Trade” and promptly sent the case to New York. Upon arrival at the CIT, the plaintiff claimed that the Court had so-called residual jurisdiction to review the matter (see 28 U.S.C. § 1581(i)) because it relates to the administration of the customs laws. As is typical in most customs cases invoking (i) jurisdiction, the Department of Justice argued that plaintiff should have filed a protest, which would either have resulted in a favorable decision by the agency or would have given the CIT a denied protest to review to review under 28 U.S.C. § 1581(a). According to this argument, if a plaintiff could have protested and a protest would not have been manifestly inadequate as a means of getting the desired relied, a protest is a prerequisite to getting into the CIT. This, by the way, is a well-established rule of law that is not really subject to much debate anymore (unless you are the Supreme Court and Harbor Maintenance Tax is involved).

This left Kairali with having to argue that it could not file a protest and that a protest would have been manifestly inadequate. On the first point, Kairali argued that it could not file a protest because it was not the importer. Rather, it was the victim of identity theft and should not be required to act like the importer to challenge the redelivery demand. Unfortunately, the law involved says that a protest may be filed by the importer “shown on the entry papers.” Kairali was the importer shown on the entry papers. The Court also found that Kairali had notice of the demand within the 180 day period to file a protest. Thus, the CIT found it could have filed a protest.

Which leads to the question of whether a protest would have been manifestly inadequate. This is usually the case where the outcome of the protest is a foregone conclusion and a mere formality. That was not the case here. According to the Court, the plaintiff could have used the protest mechanism to inform Customs and Border Protection that it was not the legitimate importer and did not have possession of the goods. Given that information, CBP may have granted the protest, meaning the process was not a mere formality.
The CIT, therefore, held that because the plaintiff could have filed a protest, it could not seek judicial review on the basis of the Court’s (i) jurisdiction. Consequently, the CIT does not have jurisdiction. Since the Court of Federal Claims has already held that it lacks jurisdiction, the CIT gave the parties some time to report whether the case should be transferred to any other forum.

All of this raises two questions for me and neither of these are advice to Kairali, just thoughts put down on virtual paper while flying from DC to Chicago and being forced to go via St. Louis due to weather. First, since the CIT has now determined that it actually lacks jurisdiction, is there a legitimate argument that it should go back to the Court of Federal Claims? That court only transferred the case based on its understanding that the CIT had jurisdiction. I think this is a reasonable question.

Second, I wonder about the proper construction of the protest statute. The full language is that a protest may be filed by “the importers or consignees shown on the entry papers.” Would someone familiar with English grammar and the next antecedent rule please tell me how we are supposed to know whether the phrase “shown on the entry papers” modifies both “importers” and “consignees” or just “consignees.” Seems like something worth considering. Where are you Grammar Girl, when I need you?

Last thing: Kudos to Judge Carman for breaking out the Robert Frost and proving a citation thereto.

Friday, August 19, 2011

Border Searches and Comic Books

Here is an interesting piece on border searches from the Comic Book Legal Defense Fund. The Fund is focused on border searches of electronic and traditional media where any of various forms of comics, graphic novels, and related literature are involved. That would include anime,  manga, yuri and other genre that might cross the creepy line for some readers. On the other hand, the creepy line is what makes first amendment law important and interesting. Creepy can be a long way from obscene. Plus, many of the arguments raised in this context relate to the protection of children from harm and exploitation, neither of which happens when no live models.

Thursday, August 18, 2011

Surety Not Too Late

The Federal Circuit has reversed a decision of the Court of International Trade involving whether the surety on a customs bond should have filed a protest to challenge Customs' collection efforts. Hartford Fire Insurance Co. v. United States is interesting for a couple reasons. First, the courts don't see a lot of suretyship cases. Second, this one was handled successfully by my partner Rick Van Arnam; so I say it is interesting.

This is one of those cases that is all about whether the Court of International Trade has jurisdiction to review a decision. The underlying issue is whether the surety is liable for the importer's default. Hartford, the surety, filed a suit in the CIT seeking to prove that it was not liable for the debt due to what might have been criminal acts by some employees of the importer. Customs defended that claim by arguing that Hartford should have raised the issue in an administrative protest at Customs rather than in Court. For administrative law students, that is an exhaustion argument. For Customs lawyers, that is the argument that you can't get into the CIT based on its broad grant of residual jurisdiction when you could have gotten into court on the basis of a denied protest.

Hartford, however, argued that it did not know that it might have a defense to the claim until after the  protest period expired. Consequently, no protest was possible and there was no need to exhaust the administrative remedies.

A majority of the Federal Circuit reviewed the facts and agreed with Hartford. The key facts are that during the protest period Hartford had knowledge that there was a criminal indictment relating to the importation of this merchandise. The indictment, however, was of a named individual and the related documents did not implicate the importer or the shipments secured by Hartford. Thus, the question comes down to whether that information was sufficient notice of a claim to require the filing of a protest. Two out of three Federal Circuit judges said it was not. The dissenting judge believes that the information available to Hartford during the protest period was sufficient to find that Hartford should have known of its possible claim.

Obviously, this is a very fact-specific case and the outcome was a close call. All of which means, Rick did a good job. Congratulations.

Goodbye Courtesy Notice

So, I've been busy. It happens.

One of the many things I need to post is that Customs and Border Protection has finalized a rule to eliminate the mailed paper copy of the courtesy notice of liquidation for entries that were filed electronically via the Automated Broker Interface. As it stands, CBP provides an electronic notice of liquidation to the broker via ABI and mails the paper courtesy notice to the importer. Going forward, importers who want to monitor liquidations will have to do so via the Automated Commercial Environment Portal. If you are one of the small percentage of people who file paper entries, you will still get paper courtesy copies.

As a practical matter, this may not make much difference. The official legal notice (which almost no one ever sees) is the posting at the customhouse. Many importers simply assume liquidation happens 314 days after entry. Others get reports from their broker. This state of affairs, together with the estimated $3 million in annual savings, is probably what prompted Customs and Border Protection to reconsider the notice process.

Look for your last paper notice September 30, 2011.

Saturday, August 13, 2011

Here's the Thing

Isaac Industries is an odd little Court of International Trade case that does not really present a discussion of law that is likely to apply generally. It relates to whether a protest was timely filed to challenge Customs and Border Protection's denial of a drawback claim. The issue arose because Customs closed the Miami drawback center and consolidated that operation in Los Angeles. The claim was filed in Miami and denied in Los Angeles but the liquidation notice was posted in Miami where the protest was filed. The question is when responsibility for the claim was transferred from Miami to LA and where the protest should properly have been filed. The Court basically found that the relevant Federal Register notices were clear and that the protest was filed in the wrong port, making it untimely.

What I think is interesting about this case is that it really turns, for all intents and purposes, on the Federal Register Notice. The Court treats the Notice as if it has the full force and effect of law. If the notice was an amendment to a regulation (rather than an informational notice) it might, I honestly don't know off the top of my head. On the other hand, it seems that the protest got to Customs (in the larger sense) in a timely manner. While the importers (and everyone else) are presumed to know the contents of the Federal Register, can "Customs" be presumed know to that it received a protest at another port? If Customs sent a letter to the main corporate address of a large company, would the Court find that the company's counsel or compliance manager should have known about the letter?

Regardless of the law (which is a funny thing for a lawyer to say), this looks to me to be one of those maddening situations in which someone at Customs might have asked why the agency was litigating this issue. If the drawback claim was valid but for the irregularities of the filing and there was some justifiable confusion surrounding the change in responsible offices, couldn't anyone simply say, "Grant the claim. The company should be able to get the drawback to which it is entitled?" I get that equity basically does not compel the U.S. government to do anything. I am not talking about equity (or law), I am talking about trade facilitation, management, and goodwill.

Just a thought.

On the equity front, in United States v. Canex Int'l, the Court of International Trade did use equity to find that the United States is entitled to prejudgment interest in a penalty case. According to the Court, "It would be inequitable and unfair for the government to make an interest-free loan of this sum" from the date of a demand for liquidated damages. In this case, the Court said that "[E]quity compels the court to grant prejudgment interest."

The Return of Mellorine

The Federal Circuit has affirmed the Court of International Trade decision in Arko Foods Int'l regarding the proper tariff classification of mellorine. As you may recall from this post, mellorine is a dessert product similar to ice cream but made with animal or vegetable fat rather than all or some of the butterfat. Customs and Border Protection classified the mellorine in HTSUS item 2105.00.40 as a dairy product. The importer, seeking to avoid the application of import quotas, argued initially for classification as fruits and nuts (0811) or other edible preparations (2106). The CIT rejected those arguments and addressed where in Heading 2105 the product falls. Eventually, the CIT agreed with the importer that because milk is not the chief or essential ingredient, it does not the preponderant ingredient. That made the mellorine classifiable as 2105.00.50. The United States appealed.

The Federal Circuit decision affirmed the CIT. The government's main argument appears to have been that mellorine is a milk product for purposes of Additional Note 1 to Chapter 4 because the industry treats it as such. Following its down comforter jurisprudence from a called Pillowtex, the Federal Circuit held that the question before it was whether the mellorine has the essential character of milk. As a result, the Court recognized the need for a factual analysis based on "the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the goods." Based on the CIT's analysis, the Federal Circuit held that milk does not provide the essential character to mellorine. Thus, the correct classification is 2105.00.50, I guess. I say I guess because the Court's decision says 9404.90.90, which is the provision for the comforters from Pillowtex. As Homer would say, D'Oh!

Speaking of mellorine, I am now the owner of an ice cream machine and have been working may way through lots of test runs. So far, my favorites have been rum raisin, white chocolate, and roasted banana. All of which come from The Perfect Scoop by David Lebovitz. My advice to would be Ben's and Gerry's: more fat is better than less fat and egg yolks are awesome. This weekend, I plan to try a batch of green tea. This is a dangerous selection because I am the only person in my house who likes green tea ice cream. Branching out from Lebovitz's book, I have found a recipe for margarita sorbet. Sadly lacking from Lebovitz book is a recipe for mellorine. So, if anyone has a recipe they like, feel free to send it on. I will make a batch in the name of legal research.

Friday, August 12, 2011

The Don't Show Me State

Giving away trinkets with a pro-U.S. business message can be hard. We have already discussed whether pens the U.S. Customs and Border Protection gave out at some event were properly marked. Now, with a hat tip to Wayla-guy comes word that the state of Missouri has run into issues with trinkets promoting jobs in Missouri. Based on this article, it seems the state ordered a bunch of novelty carabiners from a Missouri based business. The carabiners were emblazoned with a logo and web address for a state jobs service. Unfortunately, when the carabiners arrived, someone noticed that they were labeled as having been made in China. [Insert annoying sing-song "Awkward" here.]

Being plucky Midwesterners, the state officials in charge asked for volunteers to help remove the labels. Also consistent with the Midwestern setting, volunteers were enticed to give their time with the promise of doughnuts. Eventually, the labels were removed.

Readers of this blog are likely to know where I am headed. That is 19 U.S.C. § 1304(l), which reads:

(l) Penalties Any person who, with intent to conceal the information given thereby or contained therein, defaces, destroys, removes, alters, covers, obscures, or obliterates any mark required under the provisions of this chapter shall—
(1) upon conviction for the first violation of this subsection, be fined not more than $100,000, or imprisoned for not more than 1 year, or both; and  
(2) upon conviction for the second or any subsequent violation of this subsection, be fined not more than $250,000, or imprisoned for not more than 1 year, or both.
Normally, I would not point this out. It is not my intent to get anyone into trouble. On the other hand, the story is already in the local paper. Also, I think this shows some of the craziness that surrounds the marking laws. On the one hand, the recipient of this item is not purchaser and likely does not care in the least where it comes from. If the recipient does care, he or she would not have been able to influence the purchase decision, so the marking is irrelevant. But, it is clearly not irrelevant, because the Missouri officials were so worried about being embarrassed that they removed the marking.

In the real world, where people vote with their wallets and make personal purchasing decisions, cost weighs far more on the decision than does origin. And, very few reasonable Americans would expect an inexpensive, low-tech trinket to be made in America. So, even absent the marking penalty noted above, it seems like the folks in Missouri over reacted to the "political optics" of the situation without thinking about the real world. All of which makes me wonder whether Missouri isn't much closer to Washington, D.C. than I had thought.

Thursday, August 11, 2011

Show Some Love

I know you are all holding your breath waiting for my review of the Federal Circuit's decision in Ark Foods. I promise to get to it soon. In the meantime, if I may make a shameless plug for myself, please support my blog in the ABA's quest for the Blawg 100. Here are the details:

Dear Blawgger:
We're working on our list of the 100 best legal blogs, and we'd like your advice on which blawgs you think we should include and/or what practice areas you'd like to see represented in the Blawg 100.
Use the Blawg 100 Amici form to tell us about a blawg——not your own——that you read regularly that you think other lawyers should know about. If there is more than one blawg you want to support, please send us additional amici through the form. We may include some of the best comments in our Blawg 100 coverage. But keep your remarks pithy——you have a 500-character limit.
Editors make the final decisions about what's included in the Blawg 100; this isn't a scenario in which the blawgs that receive the most amici are the ones that make the list. A blawg with no amici support at all can still make our list. See the amici form page for additional information about amici and Blawg 100 criteria. 
Friend-of-the-blawg briefs are due no later than Friday, Sept. 9.

Friday, August 05, 2011

Operation Flying Turtle

Yes, my fascination with animal smuggling continues. Here is a press release from the Department of Justice. In this case, a Japanese national pleaded (n.b. not "pled") guilty to turtle and tortoise smuggling when Customs and Border Protection found 55 live animals packaged as snack food in his luggage. Of course, they may well have been snack food. But, once you violate the Convention on International Traffic in Endangered Species, it does not matter what you planned to do with the creatures.

On the issue of the past tense of plead, Bryan Garner notes that both pled and plead have gained some credence as proper usage in American English (which is what I speak). But, Garner states that pleaded is the predominant form, and that is good enough for me. I know that because Garner quotes me as a usage example in A Dictionary of Modern Legal Usage, 667 (2d. ed):

"No case was to be pleaded at Superior Court for less than a three pounds fee . . . ." Lawrence M. Friedman, A History of American Law 100-01 (2d ed. 1985).

OK, in reality, that not me; it is one of the other L. M. Friedmans out there. In this case, it is Stanford's Marion Rice Kirkwood Professor of Law Lawrence M. Friedman. Still, it is nice to see one's name in print when it is unexpected.

On the expected front, for those of you teaching in this areas, the book is coming along and should be available in the Spring semester. It is not clear whether a teaching guide will be available. More on that later.

Thursday, August 04, 2011

99 44/100% Pure Smuggling

Do people still want to buy ivory art? A while back, we covered an arrest for scrimshaw-related smuggling. Now, I see that a Philadelphia shop owner has been arrested for smuggling elephant ivory. The investigation resulted in about a ton of ivory being seized by authorities. Here is the press release. I understand that people all have different tastes in art and artifacts. And, I can kind of see the attraction of antique ivory pieces as a specimen of craft work from a time when the mores surrounding the killing of elephants was different. But I am surprised there remains a market for this in the West and particularly in the U.S.