Nufarm America's, Inc. v. United States

Slip Op. 05-133

UNITED STATES COURT OF INTERNATIONAL TRADE

____________________________________
:
NUFARM AMERICA’S, INC., :
:
Plaintiff, : PUBLIC VERSION
:
:
v. :
: Before: Wallach, Judge
UNITED STATES, : Consol. Court No.: 02-00162
:
Defendant. :
____________________________________:

[Plaintiff’s Motion for Class Certification is DENIED, Defendant’s Motion to Dismiss is
GRANTED.]

Decided: October 5, 2005

OPINION

WALLACH, JUDGE:

Joel R. Junker, Joel R. Junker & Associates; David J. Shaffer, Ronald A. Schmidt, Garvey
Schubert Barer, for Plaintiff NuFarm America’s, Inc.;

Robert D. McCallum, Jr., Assistant Attorney General, Barbara S. Williams, Acting Attorney in
Charge, International Trade Field Office, Civil Division, Department of Justice, Commercial
Litigation Branch; Beth C. Brotman, Office of Assistant Chief Counsel, International Trade
Litigation, U.S. Customs and Border Protection, for Defendant United States.

I
INTRODUCTION

The Plaintiff in this case, Nufarm America’s Inc. (“Nufarm”) seeks to create a class of
plaintiffs to join in challenging a duty deferral program administered by the United States Bureau

of Customs and Border Protection (“Customs”). The plaintiff class would comprise all

individuals or entities who paid duties pursuant to 19 C.F.R. § 181.53 (2000) (duty-deferral

programs) at any time during the period within applicable statutes of limitations, and all

individuals or entities who would be subject to such duties in the future. Defendant moves

pursuant to USCIT Rule 12(b)(1) and (5) to dismiss those paragraphs of Plaintiff’s Consolidated

Complaint which claim jurisdiction pursuant 28 U.S.C. § 1581(i) (2000). See Plaintiff NuFarm

America’s Inc. Motion for Class Certification (“Plaintiff’s Motion”); see also Defendant’s

Motion to Dismiss Paragraphs 3, 24, and 25 of Plaintiff’s Consolidated Complaint (“Defendant’s

Motion”). Plaintiff’s failure to satisfy jurisdictional and numerocity requirements mandates that

its Motion for Class Certification be denied, and Defendant’s Partial Motion to Dismiss be

granted.

II
BACKGROUND

NuFarm is a supplier of agricultural chemicals. NuFarm imported certain base chemicals

under the HTS Subheading 9813.00.05 as “articles to be processed into articles manufactured or

produced in the United States.” HTSUS 9813.00.05. NuFarm imported the merchandise under

bond as part of a duty deferral program. The imported merchandise was shipped to Montana for

processing into new products that were subsequently shipped for sale in Canada. Following

export to Canada, Plaintiff filed the subject consumption entry pursuant to 19 C.F.R. § 181.53,

and paid the required duty.

NuFarm, after paying the assessed duties, fees and other charges pursuant to 19 C.F.R.

2
§ 181.53, filed timely protests claiming that § 181.53 is unconstitutional. These protests were

denied. It subsequently filed the instant action to recover those sums and challenge the protest

denial claiming jurisdiction under 28 U.S.C. § 1581(a) (2000) and challenging the

constitutionality of the regulation under 28 U.S.C. § 1581(i). Plaintiff’s Motion at 4 (citing

Thomson Consumer Electronics, Inc. v. United States, 247 F.3d 1210 (Fed. Cir. 2001)), as

controlling authority for claiming concurrent jurisdiction under both §§ 1581(a) and 1581(i)).

Plaintiff filed its original Complaint on February 13, 2002, challenging the imposition of

duties on merchandise originally imported under certain duty deferral programs which were

subsequently exported to Canada or Mexico. Plaintiff claims that these duties violate the Export

Clause of the United States Constitution, Art. I. § 9, U.S. Const. (“Export Clause”). Plaintiff

amended its Complaint alleging a class action as to all duty deferral programs under 19 C.F.R.

§ 181.53. Plaintiff now seeks class certification under United States Court of International Trade

Rule 23(a), 23(b)(2) and (3).1

As discussed below, the court has jurisdiction over this matter pursuant to 28 U.S.C. §

1581(a) (2000).

III
JURISDICTION

Plaintiff originally brought its Complaint under 28 U.S.C. § 1581(a), its protests having

1
USCIT Rule 23 is essentially identical to FRE 23 in that Rule 23(a) requires 1-
numerocity, 2- commonality, 3- typicality, and 4-adequacy of representation, 23(b)(2) requires
that the party opposing the class has acted on grounds generally applicable to the class, justifying
injunctive and declaratory relief, and 23(b)(3) requires that questions of law or fact common to
the class predominate and that a class action device is superior to other available methods of fair
and efficient adjudication of the controversy.

3
been denied by U.S. Customs and Border Protection Agency (“Customs”).2 Plaintiff later filed

an Amended Complaint claiming jurisdiction under 28 U.S.C. § 1581(i), covering residual

jurisdiction. Jurisdiction pursuant to § 1581(a) is limited to those entries which have satisfied all

of the statutory requirements under Title 19 U.S.C. § 1514; that they were validly protested,

those protests were denied and the duties paid. See Koike Aronson, Inc. v. United States, 165

F.3d 906, 908-09 (Fed. Cir. 1999). Section 1581(i) grants exclusive jurisdiction to the Court of

International Trade (“CIT”) over any civil action commenced against the United States, its

agencies, or its officers, that arises out of any law of the United States providing for, inter alia,

tariffs, duties, fees, or other taxes on the importation of merchandise for reasons other than the

raising of revenue. See Miller & Co. v. United States, 824 F.2d 961, 963 (Fed. Cir. 1987); see

also Thomson, 247 F.3d at 1214. However, in order to invoke § 1581(i) jurisdiction, the party

must establish that the case directly relates to the proper administration and enforcement of an

international trade law, and either no other basis for jurisdiction is available, or the basis that is

available cannot yield an adequate remedy. See Miller, at 963.

The jurisdictional issue which the court must decide is whether relief under the other

sections of 28 U.S.C. § 1581 would be inadequate, and therefore a basis for (i) jurisdiction exists.

As discussed in detail below, due to the relief the Plaintiff is seeking, jurisdiction is not properly

conferred by section 1581(i).

2
Effective March 1, 2003, the United States Customs Service was renamed the United
States Bureau of Customs and Border Protection. Homeland Security Act of 2002, Pub. L. 107-
296, Sec 1502, 116 Stat. 2135, 2308-2309 (2002).

4
 IV
APPLICABLE LEGAL STANDARD

A
CLASS CERTIFICATION

Plaintiff moves for class certification under USCIT Rule 23. Under USCIT Rule 23(c),

the court is to determine by order whether a class action may be maintained as soon as

practicable.

USCIT Rule 23(a) ennumerates the prerequisites to a class action: (1) numerosity, (2)

commonality, (3) typicality, and (4) adequacy of representation. USCIT Rule 23(b) states that in

addition to these prerequisites, one of three conditions must be met pursuant to Rule 23(b)(1-3).

Plaintiff seeks to proceed under Rule 23(b)(2) and (b)(3). Plaintiff’s Motion at 15. Rule 23(b)(2)

requires that “the party opposing the class has acted or refused to act on grounds generally

applicable to the class, thereby making appropriate final injunctive relief or corresponding

declaratory relief with respect to the class as a whole.” Id. Rule 23(b)(3) requires the court to

find that “the questions of law or fact common to the members of the class predominate over any

questions affecting only individual members, and that a class action is superior to other available

methods for the fair and efficient adjudication of the controversy.” Id. Rule 23(b)(3) then sets

out several matters pertinent to such a finding. These matters are: “(A) the interest of members

of the class in individually controlling the prosecution or defense of separate actions; (B) the

extent and nature of any litigation concerning the controversy already commenced by or against

members of the class; (C) the desirability of concentrating the litigation of the claims in the

particular forum; (D) the difficulties likely to be encountered in the management of a class

action.” USCIT R.23.

5
 B
MOTION TO DISMISS

Defendant moves for dismissal of Paragraphs 3, 24, and 25 of Plaintiff’s Consolidated

Complaint pursuant to USCIT Rules 12(b)(1) and (5). When a plaintiff’s assertion of jurisdiction

is challenged, under USCIT Rule 12(b)(1), it has the burden to establish the basis for jurisdiction.

See Rocovich v. United States, 933 F.2d 991, 993 (Fed. Cir. 1991); Former Emples. of Sonoco

Prods. Co. v. United States Sec'y of Labor, 273 F. Supp. 2d. 1336, 1338 (2003) (citing McNutt v.

Gen. Motors Acceptance Corp., 298 U.S. 178, 189, 56 S. Ct. 780, 80 L. Ed. 1135 (1935)); Elkem

Metals Co. v. United States, 23 CIT 170, 175, 44 F. Supp. 2d 288 (1999). On a motion to

dismiss for failure to state a claim pursuant to USCIT Rule 12(b)(5), the Defendant is entitled to

dismissal where, after accepting Plaintiff's factual allegations in its complaint and drawing all

inferences in favor of Plaintiff, it appears beyond doubt that no set of facts can be proven that

would entitle Plaintiff to relief. See Constant v. Advanced Micro-Devices, Inc., 848 F.2d 1560,

1565 (Fed. Cir. 1988); United States v. Ford Motor Co., Slip Op. 05-24 at 5 (CIT Feb. 18, 2005);

Kemet Electronics Corp. v. Barshefsky, 976 F. Supp. 1012, 1027 (CIT 1997).

V
ARGUMENTS

Two related issues are currently before the court. The first is whether the court has

jurisdiction to hear Plaintiff’s claims, the second is whether the Plaintiff has successfully

established the requisite elements for class certification.

A
The Parties Agree That Jurisdiction Over Plaintiff’s Claims Lies Under 28 U.S.C. § 1581(a)
But Disagree Whether It Lies Under 28 U.S.C. § 1581(i)

Plaintiff challenges Customs’ denial of its protest, claiming jurisdiction under 28 U.S.C.

6
 § 1581(a) and challenges the constitutionality of 19 C.F.R. § 181.53 under 28 U.S.C. § 1581(i).

Plaintiff cites to Thomson Consumer Electronics, Inc. v. United States, 247 F.3d 1210 (Fed. Cir.

2001), as controlling authority for claiming concurrent jurisdiction under both §§1581(a) and

1581(i).

Each potential basis for jurisdiction is addressed in turn. Plaintiff and Defendant agree,

and the court hereby finds, that because the named plaintiff, NuFarm, has met the jurisdictional

prerequisite of exhausting its administrative remedies, jurisdiction exists under § 1581(a) for

NuFarm’s claims.

Plaintiff supports its contention that the court has jurisdiction under § 1581(i), noting that

“the Court of Appeals [in Thomson] allowed HMT [harbor maintenance tax] importer claims to

be brought under 28 U.S.C. § 1581(i), even though 1581(a) jurisdiction was clearly available. It

reasoned that making a purely constitutional claim before Customs as to the validity of the statute

would be futile.” Plaintiff’s Reply to Defendant’s Motion to Dismiss and Reply to Defendant’s

Response Opposition to Plaintiff’s Motion for Class Certification (“Plaintiff’s Reply”) at 6-7

(quoting M.G. Maher & Co, Inc. v. United States, Slip Op. 02-102 at 5, 2002 Ct. Int’l. Trade

LEXIS 104 (2002). Plaintiff argues that § 1581(i) is available here because, as in Thomson, a

protest based on constitutional grounds would be futile. Id. at 3-4. Plaintiff states that Customs

conceded in its August 2001 denial of NuFarm’s protest that Customs “had no authority to

declare an enactment of Congress as unconstitutional. The issue of whether the laws of Congress

are unconstitutional is reserved for the Courts.” Id. at 4 (quoting Exhibit A). Plaintiff states that

Customs’ denial, together with the holdings in Swisher Int’l, Inc. v. United States, 205 F.3d

1358, 1364 (Fed. Cir. 2001), and Thomson, supports its assertion of jurisdiction under §§

7
1581(a) and 1581(i). Id. at 4. NuFarm also argues that the Government’s analysis of the

jurisdictional issues was “simplistic and inaccurate.” Id. at 5. NuFarm states that the CIT has

acknowledged that the law regarding jurisdiction is unsettled. Id. at 4 (citing M.G. Maher & Co.,

Slip Op. 02-102 at 5.)

Plaintiff further asserts that courts have held that jurisdiction may lie under both §§

1581(a) and 1581(i) for purposes other than constitutional claims. Id. at 7-9 (citing Hohenberg

Bros. Co. v. United States, 301 F.3d 1299, 1303 ( Fed. Cir. 2002); Sony Elec. Inc. v. United

States, 25 CIT 336, 143 F. Supp. 2d 970 (2001); Swisher Int’l., 178 F. Supp. 2d at 1356).

NuFarm contends that the Government’s argument that concurrent jurisdiction may not lie under

§§ 1581(a) and 1581(i) actually contradicts Congressional intent and the accompanying

legislative history of § 1581. Plaintiff’s Reply at 10. Plaintiff claims that the Government’s

restrictive reading of § 1581 “prevent[s] a properly filed case from being heard on its merits” and

that such a restrictive reading was inconsistent with the legislative history of § 1581(i) as

summarized by the court in Cricket Hosiery v. United States, Slip Op. 04-72 at 15, 2004 Ct. Int’l

Trade LEXIS 68 (June 18, 2004). Id. at 10-11 (emphasizing that the “grant of jurisdiction in

subsection (i) will ensure that these suits will be heard on their merits.”)

Plaintiff claims that the court has jurisdiction over its claim under § 1581(i) even if the

court should find that jurisdiction under § 1581(a) and § 1581(i) are mutually exclusive.

Plaintiff’s Reply at 11-12. More specifically, Plaintiff alleges that the court has jurisdiction in

this case pursuant to § 1581(i)(2) and (4). Id. at 13. Plaintiff reasons that because the claim is

“based solely on constitutional issues,” relief under § 1581(a) is unavailable and [in the

alternative] manifestly inadequate. Id. Plaintiff cites to, inter alia, the Supreme Court’s holding

8
in United States v. U.S. Shoe Corp., 523 U.S. 360, 118 S. Ct. 1290; 140 L. Ed. 2d 453 (1998)

and the Federal Circuit’s holding in Thomson to support its contention that the administrative

protest process is unavailable and manifestly inadequate when the case involves a constitutional

claim because “the agency lack[s] authority to make any decision regarding the constitutionality

of the challenged law.” Id. (citing Koyo Seiko Co., Ltd. v. United States, 186 F. Supp. 2d 1332,

1338 (CIT 2002); Rhone Poulenc, SA v. United States, 7 CIT 133, 583 F.Supp. 607, 610 (1984)

Plaintiff further suggests that it is not required to exhaust its administrative remedies because

recourse to the administrative process would be futile. Plaintiff’s Reply at 13-14.

Plaintiff also takes issue with Customs’ denial of NuFarm’s protest, which stated “[a]s an

administrative agency, [it had] no authority to declare an enactment of the Congress as

unconstitutional.” Id. at 14 (quoting Exhibit A). Plaintiff notes that “it is inherently contradictory

for Defendant to assert that [Customs and Border Protection] cannot rule in a protest decision on

issues of constitutionality, but they argue that Plaintiff’s claims based on such an issue can only

be raised and challenged in a civil action under § 1581(a).” Id.

Plaintiff further contends that the Customs’ acceptance of Plaintiff’s funds is not a

protestable decision within the meaning of 19 U.S.C. § 1514, and therefore Plaintiff cannot

invoke jurisdiction under § 1581(a). Id. at 14-15. Plaintiff states that its compliance with

administrative protest procedures under § 1581(a) does not render § 1581(a) jurisdiction

manifestly adequate because Customs’ denial “was not substantive or conclusive on the merits

of Plaintiff’s constitutional claims.” Id. at 16 (citing George E. Warren Corp., 201 F. Supp. 2d

1366,1369(CIT 2002)).

Plaintiff also maintains that Thomson is applicable to the instant case because similarly

9
the present claim “[did not present] facts at issue, . . . Customs [did not] have any discretion in

assessing the duties on an ‘exported good’ pursuant to 19 C.F.R. § 181.53 . . . [and did not

implicate issues of] judicial efficiency, administrative autonomy, and the weakening of Customs

as an agency. . . .” Id. at 16-17. Plaintiff contends that Customs role was not “pivotal” but

“passive.” Id. at 17 (quoting Thomson 247 F.3d at 1215). Finally, the Plaintiff charges that the

Defendant filed its motion to dismiss with the purpose of obstructing full adjudication on the

merits of its claims. Id. at 18.

Defendant argues that Plaintiff cannot establish jurisdiction under § 1581(i). Defendant’s

Motion at 3. According to Defendant, Plaintiff’s reliance on Thomson to support concurrent

jurisdiction under § 1581(a) and § 1581(i) is incorrect. Id. at 4. The Defendant contends that

because NuFarm failed to address why jurisdiction under § 1581(a) was manifestly inadequate, it

could not establish jurisdiction under § 1581(i). Id. In support of its contentions, Defendant

argues that the statutory provisions pertinent to § 1581(a) jurisdiction demonstrate a clear

legislative intent to limit the United States’ waiver of sovereign immunity. Id. at 5. The

Defendant also argues that Thomson is distinguishable from the instant case because the

Thomson court based its finding of § 1581(i) jurisdiction on the fact that Customs could not rule

as to the constitutionality of the statute in question. Id. at 7-9. Defendant points out that Plaintiff

here is challenging 19 C.F.R. §181.53, a Customs regulation “drafted and promulgated by

Customs, and implemented and administered solely by Customs.” Id. at 9. The Defendant

concludes that unlike the harbor maintenance tax (“HMT”), which was collected pursuant to

Congressional (and not Customs’) regulation, Customs could take an active role in determining

whether 19 C.F.R. § 181.53 was unconstitutional. Id. at 7-8 (quoting U.S. Shoe, 523 U.S. at 360

10
and Thomson, 247 F.3d at 1215.).

The Defendant further argues that Thomson and U.S. Shoe represent only a “narrow

exception” to the principle that jurisdiction under § 1581(a) is mandatory. Memorandum in

Reply to Plaintiff’s Response to Defendant’s Motion to Dismiss Paragraphs 3, 24, and 25 of

Plaintiff’s Consolidated Complaint (“Defendant’s Reply”) at 3. The Government emphasizes

that Thomson and U.S. Shoe dealt with a regulation where Customs had “nothing . . . to decide,

because all substantive particulars regarding the imposition and amount of HMT are established

by Congress.” Id. at 4 (quoting United States v. U.S. Shoe Corp., 114 F.3d 1564, 1569-70 (Fed.

Cir. 1997), aff’d U.S. Shoe, 523 U.S. at 360. The Defendant states that the distinction between a

regulation enacted by Congress and one promulgated by Customs is dispositive as to § 1581(i)

jurisdiction. Id. at 6 (quoting M.G. Maher, Slip. Op. 02-102 at 1). Therefore, the Defendant

asserts that the court does not have jurisdiction under § 1581(i), and that had the potential class

members wished to challenge 19 C.F.R. § 181.53, they had to do so by filing a protest in

accordance with jurisdiction under § 1581(a).3 Id. at 8. Furthermore, the Defendant disagrees

with Plaintiff that denying Plaintiff § 1581(i) jurisdiction would force Plaintiff to challenge 19

C.F.R. § 181.53 in Federal District Court. Id. at 10-11. The Defendant asserts that Plaintiff may

be heard on the merits at the United States Court of International Trade under § 1581(a), a

“readily available jurisdiction.” Id.

B
The Parties Disagree Over Application of the Elements of Class Certification

As set forth by this Court in Baxter Healthcare Corp. v. United States, 20 CIT 552, 554,

3
The named Plaintiff is the only potential class member to have fulfilled the requirement
of exhausting administrative remedies by having its protests denied.

11
925 F. Supp. 794 (CIT 1996), the first step in determining the appropriateness of class action

treatment is to apply the elements of USCIT Rule 23(a). Rule 23(a) states as follows:

One or more members of a class may sue or be sued as representative parties on
behalf of all only if
(1) the class is so numerous that joinder of all members is impracticable,
(2) there are questions of law or fact common to the class,
(3) the claims or defenses of the representative parties are typical of the claims or
defenses of the class, and
(4) the representative parties will fairly and adequately protect the interest of the class.

USCIT Rule 23(a).

Plaintiff claims that its motion satisfies each of these prerequisites. See Plaintiff’s Motion

10-14. Plaintiff states that there are 161 potential class members. Id. at 11. Plaintiff argues that

because a single issue is the same as to each class member, the question of law and fact is

common. Id. Plaintiff states that “[t]his illegal export duty is typical of every claim possessed by

members of the class. All members of the class have an identical basis for seeking the same

relief.” Id. at 12. This, according to Plaintiff, satisfies the typicality requirement. Plaintiff also

claims that because it suffered substantial injury and because of its highly qualified counsel, it is

distinctly able to represent and adequately protect the interest of the class. Id. at 13-14.

Defendant argues that because only the named Plaintiff, NuFarm, has satisfied the

jurisdictional requirements of § 1581(a), the proposed class “cannot meet the numerosity

requirement of USCIT R.23(a), as well as the other requirements which grow from the principle

of numerosity in class actions. Defendants Motion at 14, n. 8. Defendant goes on to address each

of the other criteria, arguing that Plaintiff fails on each because the potential class members

cannot establish jurisdiction. Id. at 14-18.

12
 VI
ANALYSIS

A
Jurisdiction

Pursuant to 28 U.S.C. § 1581 the Court of International Trade has exclusive subject

matter jurisdiction over certain types of actions. Miller, 824 F.2d at 963. “Each section 1581

subsection delineates particular laws over which the Court of International Trade may assert

jurisdiction.” Nat’l Corn Growers Ass’n v. Baker, 840 F.2d 1547, 1555 (Fed. Cir. 1988). While

subsections (a)-(h) delineate specific areas of exclusive jurisdiction, subsection (i) operates as a

broad residual grant. Miller, 824 F.2d at 963; see also Thomson 247 F.3d at 1214.

Both parties agree and the court finds that jurisdiction lies under § 1581(a) in this case.

The question for determination is whether § 1581(i) is also applicable, and whether jurisdiction

under both sections may exist concurrently.

1
Plaintiff Cannot Establish Jurisdiction Under 28 U.S.C. § 1581(i)

Miller states that 28 U.S.C § 1581(i) jurisdiction may not be invoked when jurisdiction

under §§ 1581(a)-(h) is or even could have been available, unless the remedy they provide can be

shown to be manifestly inadequate. Id. at 963; see also Consol. Bearings Co. v. United States,

348 F.3d 997, 1002 (Fed. Cir. 2003); Thomson, 247 F.3d at 1214; Swisher, 205 F.3d 1358, 1364.

(Fe. Cir 2000).

Section 1581(i) jurisdiction may not be invoked when jurisdiction under another
subsection of § 1581 is or could have been available, unless the remedy provided
under that other subsection would be manifestly inadequate. United States v.
Uniroyal, Inc., 69 C.C.P.A. 179, 687 F.2d 467, 475 (CCPA 1982) (Nies, J.,
concurring); Lowa, Ltd. v. United States, 5 C.I.T. 81, 561 F. Supp. 441, 446-47
(Ct. Int’l Trade 1983), aff’d, 724 F.2d 121 (Fed. Cir. 1984); see American Air

13
 Parcel Forwarding v. United States, 718 F.2d 1546, 1549-51 (Fed. Cir. 1983) (no
§ 1581(i) jurisdiction where importers could have taken steps to qualify under §§
1581(a) or (h), and remedies under those subsections would not have been
inadequate), cert. denied, 466 U.S. 937, 104 S. Ct. 1909, 80 L. Ed. 2d 458 (1984);
United States Cane Sugar Refiners’ Ass’n v. Block, 69 C.C.P.A. 172, 683 F.2d
399, 402 n.5 (CCPA 1982) (“The delay inherent in proceeding under § 1581(a)
makes relief under that provision manifestly inadequate and, accordingly, the
court has jurisdiction in this case under § 1581(i).”); see also Royal Business
Mach., Inc. v. United States, 69 C.C.P.A. 61, 669 F.2d 692, 701-02 (CCPA 1982)
(importers whose § 1581(c) action was untimely could not use § 1581(i) as
alternative jurisdictional basis). Where another remedy is or could have been
available, the party asserting § 1581(i) jurisdiction has the burden to show how
that remedy would be manifestly inadequate. See American Air Parcel Forwarding
Co. v. United States, 718 F.2d 1546, 1550-51 (Fed. Cir. 1983); Pistachio Group of
the Ass’n of Food Indus., Inc. v. United States, 10 C.I.T. 440, 638 F. Supp. 1340,
1342 (Ct. Int’l Trade 1986).

Miller, 824 F.2d at 963.

The Miller court found that (1) the plaintiff-appellant could have sought remedy under

another subsection of § 1581, namely § 1581(c), (2) the plaintiff-appellant did not fulfill the

requirements necessary to have standing under § 1581(c) and (3) the plaintiff-appellant was

unable to meet its burden of showing that remedy under § 1581(c) was manifestly inadequate.

Id. at 964. Having found that the plaintiff-appellant could not establish standing under either

§ 1581(c), nor § 1581(i), the Miller court dismissed the Complaint. Id. Here, NuFarm is seeking

to have its potential class members assert jurisdiction under § 1581(i), while NuFarm itself has

already established jurisdiction under § 1581(a) for identical claims. See Plaintiff’s Motion at 20

(stating “it appears that the great majority of the members of the class have jurisdiction for their

claims under 28 U.S.C. § 1581(i) . . . . ”) Under Miller, the scope of § 1581(i) jurisdiction is

“strictly limited.” Norcal/Crosetti Foods, Inc. v. United States, 963 F. 2d 356, 360 (Fed. Cir.

1992) (holding that the remedy under another subsection of § 1581 is not manifestly inadequate

14
because § 1581’s “built-in safeguards and limitations . . . are not to be dismissed because they are

inconvenient”).

The Court of Appeals in Thomson examined a jurisdictional question in which the

plaintiff sought to recover a HMT, claiming the tax was unconstitutional. Plaintiff in that case

claimed jurisdiction under § 1581(i). Thomson, 247 F.3d at 1211. There, as here, the

government contended that § 1581(a) was the appropriate basis for jurisdiction and § 1581(i) was

unavailable because of the failure to exhaust administrative remedies. Id. at 1213. The

government argued further that because plaintiff had failed to protest Customs’ liquidation

decision pursuant to 19 U.S.C. § 1514(a), a prerequisite to jurisdiction under § 1581(a), the court

could not exercise jurisdiction under that subsection. Id. The Court of International Trade agreed

with the government and dismissed the complaint for lack of jurisdiction, finding that because

§ 1581(a) jurisdiction was available and provided adequate relief, the court could not exercise

jurisdiction under the residual jurisdiction provision, namely § 1581(i). Id. at 1211. Jurisdiction

would have been proper under § 1581(a),4 but was unavailable to plaintiff because it had failed to

exhaust its administrative remedies within the required time period. Id. at 1213. The Court of

Appeals reversed, holding that to require exhaustion of administrative remedies would be futile

because the agency has no discretion to overturn a statute on constitutional grounds. Thomson,

247 F.3d at 1215.

In Thomson, the basis of the Court’s rejection of the exhaustion requirement was that

plaintiff’s complaint concerned neither the valuation of the merchandise nor the regulations

4
The Court cited to 19 U.S.C. § 1514(c) and reasoned that challenges to duties must be
made by filing a protest of the liquidation with Customs or else the liquidation is final.

15
promulgated by Customs. Thomson’s sole challenge was to the constitutionality of the HMT.

See Id. at 1215. Thus, the court reasoned, all the reasons for requiring exhaustion were

irrelevant. Customs could have developed no facts regarding the constitutionality of the HMT,

nor did it have discretion in applying the tax. Id. The court relied upon the Supreme Court’s

reasoning in U.S. Shoe Corp., 523 U.S. at 365, stating that “Customs is powerless to perform any

active role in the determination of the constitutionality of the assessment since it cannot rule on

the validity of an Act of Congress.” Id. The Thomson court distinguished the case from others

such at Nat’l Corn, where a judgment call by Customs was challenged in the guise of a

constitutional challenge. Thomson, 247 F.3d at 1216 (stating that “even though National Corn

asserted a constitutional challenge, i.e., that Customs was acting in excess of its statutory

authority when it failed to collect duties on the entry of certain ethanol blends, the underlying

basis for the challenge was really a challenge to an administrative ‘judgment call’ by Customs as

to why certain ethanol blends did not fall within HTSUS. That ‘judgment call’ by Customs

warranted further factual development within the agency.”(citation omitted)). Accordingly,

Plaintiff here has failed to establish that the court has jurisdiction pursuant to § 1581(i).

2
Because the Exhaustion of Administrative Remedies Would Not Be Futile Plaintiff Cannot
Avail Itself of Jurisdiction Under 28 U.S.C. § 1581(i)

The distinction between a Customs’ regulation and a statute is dispositive as to whether

the exhaustion of administrative remedies under 28 U.S.C. § 1581(a) is futile. Exhaustion in this

case is not futile and hence is required, irrespective of any distinction.

Plaintiff contends that Customs did not have the authority to make a decision regarding

the constitutionality of 19 C.F.R. § 181.53 and any remedy they sought under the administrative

16
protest process pursuant to § 1581(a) would have been unavailable, manifestly inadequate and

futile. Plaintiff’s Reply at 13-14. The Defendant argues that the court does have jurisdiction

under § 1581(a) because the remedy thereunder was not only available but neither futile nor

inadequate. Defendant’s Reply at 8. Although the Plaintiff notes that both the CIT and the

Federal Circuit have previously excused litigants from exhausting administrative remedies in

cases involving constitutional claims, Plaintiff overstates the causal relationship between the

existence of a constitutional claim and the exhaustion requirement.

The cases cited by Plaintiff represent a narrow exception to the general rule that litigants

must exhaust their administrative remedies under other subsections of § 1581 before properly

invoking § 1581(i) jurisdiction. See, e.g., M.G. Maher, Slip Op. 2002-102 at 4 (summarizing

the Federal Circuit’s decision in Thomson as based on the finding that “making a purely

constitutional claim before Customs as to the validity of a statute would be futile” and noting that

“[i]t would seem unlikely that the statutory procedures may be avoided except in very similar

circumstances.”) Because the particular circumstances of the instant case do not fall within that

exception, the Plaintiff is unable to support its contention that pursuing the remedy under

§ 1581(a) would be unavailable, manifestly inadequate or futile. The M.G. Maher court drew a

distinction for similar reasons, stating that “the relief sought, rescinding of the regulation, may be

carried out by Customs. This is not the total legal and practical futility observed in Thomson.”

Id. at 5.

The cases to which Plaintiff cites exemplify circumstances under which the futility

doctrine is applicable. See Plaintiff’s Reply at 13-14 (citing, Rhone Poulenc, 583 F.Supp. at

135-36; Koyo, 186 F. Supp. 2d at 1339-40; Pacific Giant, Inc. v. United States, 223 F. Supp. 2d

17
1336 (CIT 2002); Gilda Industries, Inc. v. United States, 353 F. Supp. 2d 1364 (CIT 2004)).

Those cases are distinguishable, however, because the circumstances under which the courts

found the exhaustion of administrative remedies futile are not present here. In each of these

cases the administrative agency lacked the authority to rule on the constitutionality of the

challenged regulation.5

The constitutional claims at issue in Gilda and Pacific Giant do not sufficiently rebut the

Government’s argument that the constitutionality of a Customs’ regulation must first be reviewed

at the agency level. In Gilda, the court found that the plaintiff did not need to exhaust its

administrative remedies to challenge an action by the United States Trade Representative

(“USTR”) because it could not provide the remedy the plaintiffs sought, i.e. removal from a

retaliation list and reimbursement for duties paid pursuant to a USTR policy. Gilda, 353 F. Supp.

2d at 1368. Similarly, in Pacific Giant, the court found that it would be futile for the plaintiff to

exhaust its administrative remedies because “Commerce lacked authority to make any decision

regarding the constitutionality of the Byrd Amendment.” Pacific Giant, 223 F. Supp. 2d at 1348.

In both Gilda and Pacific Giant, the litigants challenged policies and statutes under which the

administrative agencies in question clearly had no authority to grant relief.

The instant case requires the exhaustion of administrative remedies because to do so

would not be a useless formality. See, e.g., Koyo, 186 F. Supp. 2d at 1338. Plaintiff has not

5
In addition, the Plaintiff’s interpretation of the case law minimizes the implications of
other pertinent cases dealing with the exhaustion requirement, and is therefore insufficient to
support their argument. See, e.g., Montana Chapter of Ass'n of Civilian Technicians, 514 F.2d
1165 (9th Cir. 1975); American Air Parcel Forwarding Co. v. United States, 718 F.2d 1546 (Fed.
Cir. 1983); M.G. Maher, Slip Op. 2002-102. Therefore, the Plaintiff’s exhaustion of its
administrative remedies is not futile, and thus, necessary.

18
presented facts to support a need to obviate exhaustion. Id. Customs, having promulgated and

administered 19 C.F.R. § 181.53, has the authority to review, revise, and ultimately to repeal its

own regulation. As a result, exhaustion would not be “inequitable and an insistence of a useless

formality” as in the case where “there is no relief which plaintiff may be granted at the

administrative level.” Id. (citing United States Cane Sugar Refiners’ Ass’n v. Block, 3 C.I.T.196,

201, 544 F. Supp. 883, 887 (1982)).

3
Inclusion of a Constitutional Claim Does Not, In and Of Itself, Alter Jurisdiction

Recognizing a broad constitutional claim exception to the exhaustion requirement might

offer an incentive to litigants to frame claims in terms of a constitutional wrong. American Air

Parcel, 718 F.2d at 1550 (where a litigant claimed that “there is a denial of due process whenever

an agency fails to follow either a statute or a regulation which has the force of law.”) In

American Air Parcel, the court emphasized that the “traditional avenue under 28 U.S.C.

§ 1581(a) was not intended to be so easily circumvented, whereby it would become merely a

matter of election by the litigant.” Id.

Thus, if a constitutional claim may be disposed of on non-constitutional grounds, a

litigant is required to exhaust its administrative remedies. Montana Chapter of Ass’n, 514 F.2d at

1167-68. The existence of a constitutional claim, therefore, does not automatically obviate the

exhaustion requirement. Id. at 1167. As Thomson points out, the “courts may never have to

intervene if the complaining party is successful in vindicating his rights in the pursuit of its

administrative remedies.” Thomson, 247 F.3d at 1214. Therefore, Plaintiff’s obligation to

exhaust its administrative remedies is not excused simply because Plaintiff’s claim is

constitutional in nature.

19
 4
Plaintiff May Not Invoke Jurisdiction Under Both 28 U.S.C.
§ 1581(a) and 28 U.S.C. § 1581(i)

Jurisdiction under § 1581(i), is to be exercised in the event that jurisdiction under another

subsection of §1581 is unavailable or manifestly inadequate. Miller, 824 F.2d at 963. It is meant

as a residual and not an additional or alternate avenue of jurisdiction. Id. The cases that follow

Miller do not disturb this jurisdictional framework. Swisher, Thomson, St. Paul Fire & Marine

Ins. Co. v. United States, 959 F.2d 960, 963 (Fed. Cir. 1992), and JCM, Ltd. v. United States,

210 F.3d 1357, 1359 (Fed. Cir. 2000), support the argument made by the Defendant that the CIT

may not exercise concurrent jurisdiction under §§ 1581(a) and 1581(i). The Federal Circuit’s

holding in Swisher does not challenge the continued applicability of Miller as it pertains to the

mutual exclusivity of § 1581(i) jurisdiction. Indeed, the Swisher court stated that the holdings in

Miller and other decisions “[are] meant merely to prevent a party from asserting residual

(subsection (i)) jurisdiction when jurisdiction under another subsection would be appropriate.”

Swisher, 205 F. 3d at 1364. The Swisher court distinguished its previous decision in U.S. Shoe

by asserting that in that case there was no other basis for jurisdiction available, while in Swisher,

§ 1581(a) was an appropriate basis for jurisdiction. Id. The Swisher court’s characterization of

the jurisdictional issue addressed in U.S. Shoe confirms that a party may invoke § 1581(i)

jurisdiction when no other remedy is available; it thus remains a mutually exclusive grant of

jurisdiction. Id.

Thomson decided whether the plaintiff had to protest Customs’ decision in order to

20
challenge the constitutionality of the HMT as applied to imports.6 Id. at 1214. The court

enumerated the justifications for requiring that the plaintiff exhaust its administrative remedies

before the court had jurisdiction over the case. Id. at 1214. In particular, the court noted that

requiring the exhaustion of administrative remedies promotes judicial efficiency, affords an

agency the opportunity to correct its own errors, and prevents the effectiveness of an agency from

being undermined by frequent circumvention of its procedures. Id. The complaint in Thomson

dealt with an issue for which Customs could develop no facts nor engage in any analysis or

adjudication, accordingly, the court held that it was unnecessary to require a protest. Id. at 1215

(asserting that “Customs is powerless to perform any active role in the determination of the

constitutionality of the assessment since it cannot rule on the validity of an Act of Congress.”)

Thomson does not state, however, that § 1581(a) jurisdiction was not available, only that it

would be futile to require the plaintiff to file a protest pursuant to 19 U.S.C. § 1514(a). Id.; see

also George E. Warren Corp. v. United States, 341 F.3d 1348, 1351 (Fed. Cir. 2003) (stating that

“[p]arties are not required to perform useless acts to exhaust administrative remedies. See

Thomson 247 F.3dat 1214-15 (explaining generally the purpose of requiring exhaustion of

administrative remedies and holding specifically that a protest is not required for the Court of

6
Administrative protests afford Customs notice of as well as an opportunity to review the
challenges to the validity of its regulations before the court exercises jurisdiction over the
Plaintiff’s claim, regardless of whether such claim centers on a constitutional issue. For
example, the Supreme Court’s decision in United States v. L.A. Tucker Truck Lines, Inc., 344
U.S. 33 (1952) emphasizes the importance of affording the administrative agency an opportunity
to change its policy and of putting the agency on notice that its policy might be reversed pursuant
to judicial review. Id. at 37. Indeed, the exhaustion doctrine exists to ensure that an
administrative agency is given an opportunity to correct its own errors. Thomson, 247 F.3d at
1214. If litigants could systematically deprive an administrative agency of an opportunity to
review its regulations by invoking a broadly drawn constitutionality exception, an administrative
agency might rarely receive adequate notice of or an opportunity to review its alleged errors.

21
International Trade to have jurisdiction over civil refund actions in which a protest to Customs

would be futile because of Customs’ lack of authority over the subject matter.”))

In St. Paul Fire & Marine Ins. Co. the court noted that if jurisdiction under §§ 1581(i) and

1581(a) “were interpreted to overlap,” litigants could systematically circumvent the

administrative remedies established by the jurisdictional statute. Id. at 963. The court further

emphasized that “if a suit could be maintained on a protestable decision under both 28 U.S.C. §§

1581(a) and 1581(i), a party could circumvent the time requirements associated with a

protestable decision and completely evade the administrative review process.” Id. By its very

nature, therefore, jurisdiction under § 1581(i) is mutually exclusive to jurisdiction under other

subsections of § 1581.

The reasoning of M.G. Maher is consistent with both Swisher and Thomson with regard

to the jurisdictional implications of Miller. M.G. Maher, Slip Op. 02-102 at 3 (stating that

“[under Miller], § 1581(i) jurisdiction is not available if another provision of § 1581 sets forth an

available basis of jurisdiction.”) Although the court acknowledges that Thomson allowed the

plaintiff to bring its claim under § 1581(i) when § 1581(a) was “clearly available,” it also notes

that the court “reasoned that making a purely constitutional claim before Customs as to the

validity of the statute would be futile.” Id. at 4. The court in M.G. Maher was careful to note,

however, that “it would seem unlikely that the statutory procedures may be avoided except in

very similar circumstances.” Id. at 3.

Finally, Hohenberg and Sony, the two cases to which NuFarm cites for the proposition

that CIT has jurisdiction under both §§ 1581(a) and 1581(i) for “purposes other than

constitutional claims,” are also HMT cases which do not directly address the jurisdictional

22
implications, if any, of a distinction between a Customs regulation and a Congressional

enactment. Plaintiff’s Reply at 8. While NuFarm cites language from Hohenberg that would

suggest that the Miller principle does not preclude NuFarm from invoking both § 1581(a) and

§ 1581(i) jurisdiction, neither Sony nor Hohenberg goes so far as to find Swisher, Thomson, or

Miller inapposite. Id. (quoting Hohenberg, 301 F.3d at 1303, “the court reasoned that it had

jurisdiction in this matter under either 1581(a) or (i).”)

The court in Hohenberg did not determine whether jurisdiction under §§ 1581(a) and

1581(i) is mutually exclusive. Instead, it considered whether the CIT abused its discretion in

refusing to permit the plaintiff to amend the consent judgment to include jurisdiction under

§ 1581(a) when the parties did not dispute the court’s jurisdiction under § 1581(i). Hohenberg,

301 F.3d at 1303-5. Similarly in Sony, while the court did acknowledge that it had § 1581(a)

jurisdiction to hear one plaintiff’s claim and § 1581(i) jurisdiction to hear another plaintiff’s

claim, its decision concerning the appointment of a three judge panel did not directly address the

issue of concurrent jurisdiction on any one claim. Sony, 143 F. Supp. 2d at 972.

The legislative history of § 1581 demonstrates congressional intent to limit the

availability of jurisdiction under subsection (i). See Nat’l Corn Growers, 840 F.2d at 1557

(recounting the legislative history of § 1581 to show subsection (i) should be construed

narrowly). For example, the Federal Circuit held that Congress did not intend to allow easy

circumvention of the administrative process – “by artful pleading alone, a litigant [should not] be

able to change the entire statutory scheme Congress has established.” JCM, Ltd, 210 F.3d at 1359

(quoting American Air Parcel, 718 F.2d at 1550). Therefore, the Federal Circuit, citing Miller

and its progeny, has held that Congressional intent is not effectuated by an interpretation of the

23
jurisdictional statute that would allow for concurrent jurisdiction under §§ 1581(a) and 1581(i).

Nat’l Corn Growers, 840 at 1556-1558.

Even though a litigant may sometimes avoid the requirement that it exhaust its available

administrative remedies the CIT may not necessarily exercise both §§ 1581(a) and 1581(i)

jurisdiction over any one claim. A litigant’s claim need not be subject to the administrative

review process under § 1581(a) if the exhaustion of administrative remedies would be futile. See

also Consol. Bearings Co. v. United States, 348 F.3d 997, 1003 (Fed. Cir. 2003); George E.

Warren Corp., 341 F.3d at 1351 (holding that a litigant is not required to perform useless acts).

If futility is sufficiently shown, § 1581(i) jurisdiction may be exercised over the claim.

Power-One Inc. v. United States, 23 CIT 959, 965, 83 F.Supp.2d 1300 (1999), (finding that

because Customs was able to demonstrate that it would not have been futile for the litigant to

pursue its administrative remedies pursuant to § 1581(a) the court could not exercise jurisdiction

over the litigant’s claim). Thus, although the court has recognized that a showing of futility may

obviate the exhaustion requirement under an otherwise available jurisdiction, the court has not

rejected the mutual exclusivity of jurisdiction under § 1581. Id.

Plaintiff’s contention that the CIT may exercise both §§ 1581(a) and 1581(i) jurisdiction

over its claim is unsupported. The CIT’s jurisdiction under § 1581(i) is specifically

circumscribed by and is mutually exclusive to jurisdiction under other subsections of § 1581 in

accordance with Congress’ intent under the relevant case law.

24
 B
The Elements of Class Certification Can Not Be Satisfied by Plaintiff

1
Plaintiff’s Motion Fails to Satisfy the Numerocity Requirement For Class Certification

28 U.S.C. § 1581(a) applies to “any civil action commenced to contest the denial of a

protest, in whole or in part, under section 515 of the Tariff Act of 1930.” 28 U.S.C. § 1581(a).

NuFarm has completed the administrative process in a timely fashion and satisfies the

jurisdictional requirements of § 1581(a). Because Plaintiff has presented no other potential class

members who have completed the administrative process, only the named plaintiff may avail

itself of jurisdiction under this section. See Miller, 824 F.2d at 964 (“[b]ecause Miller did not

participate as a party in the ITA proceeding, it lacked standing to invoke the jurisdiction granted

the Court of International Trade under § 1581(c).”) Thus, because the potential class includes

only one member, Plaintiff’s motion fails to meet the first requirement of USCITR 23(a), and

must be denied.

2
Failure To Satisfy the Jurisdictional Requirements Under 28 U.S.C. § 1581(a) In a Timely
Fashion May Not Be Excused

There are several legal mechanisms which allow for otherwise time barred claims to

proceed. Because the potential class members have failed to meet the jurisdictional requirement

of exhausting their administrative remedies, none of these doctrines apply to the instant case.

In certain circumstances the statute of limitations may be tolled for class members. The

Court of Appeals for the Federal Circuit in Stone Container Corp., held that:

under present Rule 23, . . . the filing of a timely class action complaint
commences the action for all members of the class as subsequently determined.”
American Pipe & Constr. Co., Inc. v. U.S., 414 U.S. 538, 550 (1974). The Court
then held that the class action suspended the statute of limitations for all asserted

25
 class members because the contrary approach “would frustrate the principal
function of a class suit” by forcing putative class members to file suit to protect
their rights. Id. at 551. Similarly, in Crown, Cork & Seal Co., Inc. v. Parker, 462
U.S. 345, 351(1983), the Court recognized that unless the statute of limitations
were tolled by the filing of a class action, “the result would be a needless
multiplicity of actions -- precisely the situation that Federal Rule of Civil
Procedure 23 and the tolling rule of American Pipe were designed to avoid.

Stone Container Corp. v. United States, 229 F.3d 1345, 1354 (Fed. Cir. 2000). In contrast, as

discussed above, the potential class members in the instant case have not taken the preliminary

step of exhausting their administrative remedy. The court, therefore, may not exercise

jurisdiction over their claims under § 1581(a). Thus the denial of class certification is based on

jurisdiction, not the statute of limitations.7

Vicarious exhaustion is a doctrine under which a plaintiff who has failed to satisfy the

requirement of exhausting its administrative remedies may nonetheless intervene with other

plaintiffs who have in an ongoing action. See, e.g., Cook v. Boorstin, 246 U.S. App. D.C.

201(1985); Mayfield v. Meese, 669 F.Supp. 1123 (1987); Foster v. Gueory, 655 F.2d 1319 (D.C.

Cir. 1981). The primary consideration in these cases is that the claims be identical and that there

be no reasonable possibility that the outcomes would be different at the administrative level.

Foster, 655 F.2d at 1322. To the extent that its reasoning is analogous to the instant case,

Plaintiff would have to demonstrate that the denial of one, single party’s administrative claim

would establish the futility of similar protests. As discussed above, no such showing has been

made.

Under USCIT Rule 15(c) “[a]n amended pleading relates back to the date of the original

7
Nothing in this opinion should be interpreted to reach the merits of potential class
members’ individual claims.

26
pleading when [inter alia] (2) the claim or defense asserted in the amendment arose out of the

conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading .

. . .” This rule, however, does not provide for the inclusion of plaintiffs who have not met

jurisdictional prerequisites notwithstanding otherwise similar claims. USCITR 15(c). Similarly,

the “single filing rule,” which can excuse class members from individually having to exhaust

their administrative remedies, has only been found to apply when the exhaustion requirement was

not jurisdictional. See Founding Church of Scientology, Inc. v. FBI, 459 F. Supp. 748 (D.D.C.

1978); Marcus v. Sullivan, 926 F.2d 604 (7th Cir. 1991). Thus, neither of these doctrines may

excuse a failure to satisfy the jurisdictional requirements under 28 U.S.C. § 1581(a) in the instant

case.

VII
CONCLUSION

For the above stated reasons, Plaintiff’s Motion is DENIED, and Defendant’s Motion is

GRANTED.

______/s/ Evan J. Wallach_____
Evan J. Wallach, Judge

Dated: October 5, 2005
New York, New York

27