Kenny v. Snow

SLIP OP. 04-60

UNITED STATES COURT OF INTERNATIONAL TRADE

BEFORE: RICHARD K. EATON, JUDGE
__________________________________________
:
MICHAEL J. KENNY, :
:
PLAINTIFF , :
:
V. : COURT NO . 03-00011
:
JOHN W. SNOW , :
SECRETARY OF THE TREASURY, :
U.S. DEPARTMENT OF THE TREASURY :
UNITED STATES OF AMERICA, :
:
DEFENDANT. :
__________________________________________:

[Plaintiff’s motion for judgment upon an agency record denied; Defendant’s motion for judgment
upon an agency record granted.]

Michael J. Kenny, Pro Se, for Plaintiff.

Peter D. Keisler, Assistant Attorney General, Civil Division, United States Department of
Justice; Barbara S. Williams, Attorney In Charge, International Trade Field Office, Commercial
Litigation Branch, United States Department of Justice (Harry A. Valetk), for Defendant United
States.

Dated: June 7, 2004

MEMORANDUM OPINION

EATON , Judge: Before the court is plaintiff Michael J. Kenny’s (“Plaintiff”) motion for judgment

on the pleadings.1 By his motion, Plaintiff challenges the United States Secretary of the

1
Citing both USCIT Rules 12(c) and 56.1, Plaintiff styles his motion as one for
“judgment on the pleadings.” See Pl.’s Br. Supp. Mot. J. Pleadings (“Pl.’s Mem.”) at 3.
However, as this action was brought pursuant to 19 U.S.C. § 1641(e)(1), and since review of the
issues raised herein is based upon an agency record, the court will treat Plaintiff’s motion as one
made solely pursuant to Rule 56.1.
COURT NO . 03-00011 PAGE 2

Treasury’s (“Secretary”) affirmance of the United States Customs Service’s (“Customs”)2

decision to deny Plaintiff credit3 for one question on the October 2001 customs broker’s license

examination.4 Defendant United States (“Defendant”) opposes Plaintiff’s motion and cross-

moves for judgment upon an agency record, pursuant to USCIT Rule 56.1(a). The court has

exclusive jurisdiction to review the denial of a customs broker’s license under 28 U.S.C. §

1581(g)(1) (2000) and 19 U.S.C. § 1641(e)(1) (2000).5 For the reasons discussed below, the

court denies Plaintiff’s motion and grants Defendant’s cross-motion.

2
Effective March 1, 2003, Customs was renamed the Bureau of Customs and
Border Protection of the United States Department of Homeland Security. See Reorganization
Plan Modification for the Dep’t of Homeland Security, H.R. Doc. 108-32, at 4 (2003).
3
While in his complaint, Plaintiff “respectfully requests he be given credit for
Question No. 32,” Compl. ¶ 14, Plaintiff actually seeks review of the Secretary’s decision to deny
him a customs broker’s license. See 19 U.S.C. § 1641(b)(1) (“No person may conduct customs
business . . . unless that person holds a valid customs broker’s license issued by the Secretary . . .
.”).
4
An applicant for a customs broker’s license is required to pass a written
examination, which is “designed to determine the individual’s knowledge of customs and related
laws, regulations and procedures, bookkeeping, accounting, and all other appropriate matters
necessary to render valuable service to importers and exporters.” See 19 C.F.R. § 111.13(a)
(2001).
5
Title 19 U.S.C. § 1641(e)(1) states:

A customs broker, applicant, or other person directly affected may
appeal any decision of the Secretary denying or revoking a
license . . . by filing in the Court of International Trade, within 60
days after the issuance of the decision or order, a written petition
requesting that the decision or order be modified or set aside in
whole or in part.

Id.
COURT NO . 03-00011 PAGE 3

BACKGROUND

In October 2001, Plaintiff sat for the customs broker license examination in New York

City. On November 2, 2001, Customs informed Plaintiff by letter that he had received a score of

73.75%, 1.25 percentage points below the passing score of 75%. See Letter from Customs to

Michael J. Kenny of 11/2/01; 19 C.F.R. § 111.11(a)(4) (2001). Plaintiff timely appealed his

score to Customs, seeking full credit for the answers he provided for Questions 19 and 32. See

Letters from Michael J. Kenny to Customs of 11/12/01, Admin. R. Docs. XI (Question 19) & XII

(Question 32); 19 C.F.R. § 111.13(f). Customs denied Plaintiff’s appeal with respect to both

questions. See Letter from Customs to Michael J. Kenny of 2/8/02.

On February 20, 2002, Plaintiff appealed Customs’s decision to the Secretary, but only as

to Question 32. See Letter from Michael J. Kenny to Deputy Director, Office of Trade and Tariff

Affairs of 2/20/02; 19 C.F.R. § 111.17(b) (“Upon the decision of the Assistant Commissioner

affirming the denial of an application for a license, the applicant may file with the [Secretary], in

writing, a request for any additional review that the Secretary deems appropriate.”). On

December 11, 2002, the Secretary affirmed Customs’s decision to deny Plaintiff’s appeal. See

Letter from Deputy Assistant Sec’y Skud to Michael J. Kenny of 12/11/02.6 Thereafter, on

January 10, 2003, Plaintiff timely commenced this action pursuant to 19 U.S.C. § 1641(e)(1) and

6
Deputy Assistant Secretary Timothy E. Skud reviewed Plaintiff’s appeal under the
authority delegated to him by the Secretary. See Aff. of Timothy E. Skud, Deputy Assistant
Secretary ¶ D; O’Quinn v. United States, 24 CIT 324, 324 n.1, 100 F. Supp. 2d 1136, 1137 n.1
(2000) (internal citations omitted).
COURT NO . 03-00011 PAGE 4

19 C.F.R. § 111.17(c).7

Plaintiff seeks review of the Secretary’s decision to uphold the denial of his request for

credit with respect to Question 32, and seeks a reversal of the Secretary’s decision, thus giving

him credit for one additional answer and a passing grade on the Exam. See Compl. ¶ 14.

Defendant contends that the Secretary’s denial of Plaintiff’s application for a customs broker’s

license, based on his test score, was “reasonable” and “supported by substantial evidence,” and

thus should be sustained. See Def.’s Mem. Supp. Mot. J. Admin. R. and Opp’n Pl.’s Mot. J.

Pleadings (“Def.’s Mem.”) at 8.

STANDARD OF REVIEW

Title 19 U.S.C. § 1641(e)(3) states that, with respect to an appeal to this Court of the

Secretary’s decision to deny a broker’s license, “[t]he findings of the Secretary as to the facts, if

supported by substantial evidence, shall be conclusive.” Id. Substantial evidence is “more than a

mere scintilla.” Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938). It “is ‘such relevant

evidence as a reasonable mind might accept as adequate to support a conclusion.’” Huaiyin

Foreign Trade Corp. (30) v. United States, 322 F.3d 1369, 1374 (Fed. Cir. 2003) (quoting

7
Title 19 C.F.R. § 111.17(c) states:

Upon a decision of the Secretary of the Treasury affirming the
denial of an application for a license, the applicant may appeal the
decision to the Court of International Trade, provided that the
appeal action is commenced within 60 calendar days after the date
of entry of the Secretary’s decision.

Id.
COURT NO . 03-00011 PAGE 5

Consol. Edison Co., 305 U.S. at 229). “In applying this [substantial evidence] standard, the court

affirms [the agency’s] factual determinations so long as they are reasonable and supported by the

record as a whole, even if there is some evidence that detracts from the agency’s conclusions.”

Olympia Indus., Inc. v. United States, 22 CIT 387, 389, 7 F. Supp. 2d 997, 1000 (1998); see also

Slater Steels Corp. v. United States, 27 CIT __, __, 297 F. Supp. 2d 1351, 1356 (2003) (where

“Commerce’s determination . . . was reasonable [it was] thus supported by substantial evidence

and in accordance with law.”).

DISCUSSION

Question 32 required the examinee to classify a beverage under the correct subheading of

the Harmonized Tariff Schedule of the United States (2001) (“HTSUS”). The question asked:

Water Street Fishhouses is importing a beer from Mexico to sell at
their eating establishments in Texas. The beer is made from malt
with an alcoholic strength by volume of 0.4 percent. It is shipped
in 1 liter glass bottles. What is the correct classification of the
beer?

Oct. 2001 Exam., Question 32. The choices available to answer this question were:

A) HTSUS 2202.90.9010, which provided for “Waters . . . and
other nonalcoholic beverages . . . Other, Other, Nonalcoholic beer,”

B) HTSUS 2203.00.0060, which provided for “Beer made from
malt [i]n containers each holding not over 4 liters: Other,”

C) HTSUS 2203.00.0030, which provided for “Beer made from
malt [i]n containers each holding not over 4 liters: [i]n glass
containters,”

D) HTSUS 2203.00.0090, which provided for “Beer made from
malt [i]n containers each holding over 4 liters,”
COURT NO . 03-00011 PAGE 6

E) HTSUS 2202.90.9090, which provided for “Waters . . . and
other nonalcoholic beverages . . . Other, Other, Other.”

See id.; HTSUS subheadings 2202, 2203.

Plaintiff chose (C) as the correct answer; however, the official answer was (A). In the

explanation sheet issued to Plaintiff, Customs explained its reasons for finding (A) to be the

correct answer:

Chapter 22 Note 3 states: for the purposes of heading 2202 the
term “nonalcoholic beverages” means beverages of an alcoholic
strength by volume not exceeding 0.5 percent vol. Alcoholic
beverages are classified in headings 2203 to 2206 or heading 2208
as appropriate.

Chapter 22 Note 2 states: for the purposes of this chapter and of
chapters 20 and 21, the “alcoholic strength by volume” shall be
determined at a temperature of 20 degrees [Celsius]. The question
does not contain a statement that the alcoholic strength by volume
was determined at a temperature other than 20 degrees [Celsius].

Therefore, the beer described in question #32 does not meet the
terms of subheadings 2203.00.0030, 2203.0060 [sic], or
2203.00.0090 (answers C, B, and D, respectively). Answer E is
incorrect because nonalcoholic beer is provided for under
subheading 2202.90.9010.

Explanatory Comments to Question 32 (emphasis in original). Thus, Plaintiff was denied credit

for Question 32.

Plaintiff contends that answer (C) is the best answer to Question 32 because the question

did not state the temperature at which the beverage’s alcoholic strength by volume was

calculated. See Pl.’s Mem. 4–5. In Plaintiff’s view, “[t]he absence of any indication at what
COURT NO . 03-00011 PAGE 7

temperature the beverage was measured can be the difference between an alcoholic and a non-

alcoholic beverage.” Id. at 5. Plaintiff further states that

Question No. 32 indicated the alcohol strength of the malt beer was
0.4%, ostensibly making it non-alcoholic, but without knowing at
what temperature it was measured that 0.4% is meaningless[.] [I]t
may have been measured at 30 degrees Celsius thereby reducing its
strength in order to qualify as a non-alcoholic import.

Id. at 6 (citation omitted). Plaintiff claims that the specificity of choice (C), which deals with

“Beer made from malt [i]n containers each holding not over 4 liters: [i]n glass containers,” makes

it the best of the available choices. Id. at 7.

Defendant argues that “the administrative record reasonably supports Customs’ decision

to deny [Plaintiff’s] application based on his failure to achieve a passing score of 75 on his

broker’s examination.” Def.’s Mem. at 5. As to Plaintiff’s argument that Question 32 lacked

information necessary to answer the question, i.e., the temperature of the beverage being

classified, Defendant reiterates the Secretary’s view that Question 32 “stipulates the alcohol

strength by volume, making it unnecessary to provide additional information about the

temperature at the time of measurement.” Id. at 7; see also Mem. from Anne Shere Wallwork to

Deputy Assistant Sec’y Skud of 12/11/02 at 2 (“Note 3 defines nonalcoholic beverages as having

an alcoholic strength by volume of not greater than 0.5%, so that the beer specified in the

question qualifies as nonalcoholic beer.”).

This Court has considered similar cases brought by customs broker’s license examinees

seeking review of specific exam questions. In DiIorio v. United States, 14 CIT 746 (1990), Mr.
COURT NO . 03-00011 PAGE 8

DiIorio sought review of five questions from the October 1989 exam after failing to achieve a

passing grade of 75%. With respect to Question 38, he claimed that selecting the official answer

required an examinee to rely on assumptions. The question asked what course of action a

Customs District Director would take after a customs broker’s client had written to dispute

certain matters with respect to merchandise detained for possible copyright violations. Mr.

DiIorio contended that choosing the answer that Customs insisted was correct required the

examinees to assume three things: “that whatever his client ‘wrote’ to the director was actually

received; that such letter was received within thirty days after the denial; and that such letter was

an acceptable denial.” DiIorio, 14 CIT at 748. Mr. DiIorio argued that “requiring the examinee

to leap through these assumptions in arriving at the correct answer placed an unreasonable

burden on [the] test-taker.” Id. The court, however, upheld the Secretary’s denial of the appeal,

finding that the Secretary’s decision to deny Mr. DiIorio credit for his answers to the exam

questions was a reasonable decision. Id. at 752. The court stated that Question 38, “[w]hile not

perfect” was adequate, despite its “ambiguities.” Id. at 748. The court specified that judicial

review of agency decisionmaking as to “the formulation and grading of standardized examination

questions should be limited in scope.” Id. at 747 (noting the court “[would] not substitute its

own judgment on the merits of the Customs examination, but [would] examine decisions made in

connection therewith on a reasonableness standard.”).

This case presents facts similar to the those in DiIorio. There, Mr. DiIorio argued that it

was unreasonable for examinees to answer “ambiguous” questions by relying on assumptions. In

the present case, Plaintiff similarly alleges that Question 32 was ambiguous. See, e.g., Letter
COURT NO . 03-00011 PAGE 9

from Michael J. Kenny to Deputy Assistant Sec’y Skud of 2/20/02 (“The absence of any

indication at what temperature the imported malt beer’s alcoholic strength by volume was

measured can easily be interpreted [in multiple ways] . . . .”). Plaintiff claims that credit should

be granted for his answer as the question did not specify the temperature at which the alcoholic

strength by volume was calculated, and thus to reach the official answer he would have to

assume that the alcoholic strength of the beer was measured at twenty degrees Celsius. See Pl.’s

Mem. at 5.

In another case the court found the Secretary’s denial of an examinee’s appeal to be

unreasonable. In O’Quinn v. United States, 24 CIT 324, 100 F. Supp. 2d 1136 (2000), Plaintiff

challenged one question, alleging that it contained insufficient information to answer correctly.8

The court found that the question required examinees to be familiar with the term “FOB.”9

Moreover, Plaintiff contended, and the court agreed, that since “FOB can refer to both port of

8
The question asked:

The terms of sale stated on the invoice are Freight on Board (FOB).
Which of the following deductions are allowed when determining
the entered value?

A) The freight costs are deductible.
B) The insurance costs are deductible.
C) The freight and insurance costs are both deductible.
D) The inland freight costs are deductible.
E) No deductions are allowed.

O’Quinn, 24 CIT at 326, 100 F. Supp. 2d at 1138. The official answer to the question was (E).
Mr. O’Quinn selected (C) as his answer. Id.
9
The Secretary conceded that FOB was not an industry term. See O’Quinn, 24 CIT
at 327, 100 F. Supp. 2d at 1139.
COURT NO . 03-00011 PAGE 10

embarkation and port of delivery,” the question could not be answered as it did not specify which

port was involved. Id. at 327, 100 F. Supp. 2d at 1139. The court found that all consulted

“lexicographic authorities require a named point to follow the ‘FOB’ term; otherwise, the term in

and of itself is ambiguous.”10 Id. at 328, 100 F. Supp. 2d at 1140. The court held that “[g]iven

the question’s incorrect use of the delivery term ‘FOB,’ it was unreasonable for the Assistant

Secretary to affirm Customs’ denial of Plaintiff’s appeal of this question.” Id. The court

remanded the case to the Secretary, instructing that “Plaintiff’s answer . . . must either be deemed

correct or the question must be voided.” Id. at 332, 100 F. Supp. 2d at 1143.

Unlike O’Quinn, Plaintiff’s disputed exam question was not drafted ambiguously, nor did

it require the examinee to rely on assumptions. Plaintiff insists that he chose answer (C) because

the stated alcoholic strength of the beverage as 0.4% was “meaningless” unless it was known at

what temperature the measurement was made; thus, “answer C was chosen . . . as the best

possible answer considering all facts in the question and Chapter Notes.” Pl.’s Mem. at 4.

However, all the information that Plaintiff needed to answer Question 32 was available. First,

the alcoholic strength of the beverage was supplied as part of the question. Second, Chapter 22

Note 3 states that “‘nonalcoholic beverages’ means beverages of an alcoholic strength by volume

not exceeding 0.5 percent vol.” HTSUS Chapter 22, Note 3 (emphasis in original). Thus,

Plaintiff chose to ignore the stated facts of the question and now labors to find a justification for

doing so. Indeed, Plaintiff’s choice of (C) is all the more remarkable because, rather than relying

10
For instance, Black’s Law Dictionary defined FOB as “Free on board some
location (for example, FOB shipping point; FOB destination).” BLACK’S LAW DICTIONARY 642
(6th ed. 1990).
COURT NO . 03-00011 PAGE 11

on the given fact that the “beer . . . [had] an alcoholic strength by volume of 0.4 percent,” he

chose to invent a fact by assuming that the beer had an alcoholic strength by volume in excess of

0.5%. Therefore, the court agrees with the Secretary that since “the question [itself] stipulate[d]

the alcohol strength by volume . . . [it was] unnecessary to provide additional information about

the temperature at time of measurement.” Mem. from Anne Shere Wallwork to Deputy Assistant

Sec’y Skud of 12/11/02 at 2.

CONCLUSION

For the foregoing reasons, the findings of the Secretary, and the subsequent decision not

to grant a customs broker’s license to Plaintiff, is “supported by substantial evidence.” 19 U.S.C.

§ 1641(e)(3). Accordingly, the court denies Plaintiff’s motion for judgment upon an agency

record and grants Defendant’s cross-motion. Judgment shall be entered accordingly.

/s/ Richard K. Eaton
Richard K. Eaton

Dated: June 7, 2004
New York, New York