Volkswagen of America, Inc. v. U.S.

532 F.3d 1365

VOLKSWAGEN OF AMERICA, INC., Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee.

No. 2007-1285.

United States Court of Appeals, Federal Circuit.

July 16, 2008.

Thomas J. Kovarcik, of New York, New York, argued for plaintiff-appellant.

Barbara S. Williams, Attorney in Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, United States Department of Justice, of New York, New York, argued for defendant-appellee. With her on the brief were Peter D. Keisler, Assistant Attorney General, and Jeanne E. Davidson, Director. Of counsel on the brief was Yelena Slepak, Office of Assistant Chief Counsel, International Trade Litigation, United States Customs and Border Protection, of New York, New York.

Before RADER, Circuit Judge, FRIEDMAN, Senior Circuit Judge, and PROST, Circuit Judge.

RADER, Circuit Judge.

Volkswagen of America, Inc. ("VW") seeks an allowance in the appraised value of automobiles entered and liquidated by the U.S. Customs Service ("Customs")¹ in 1994 and 1995, but later determined by VW to be partially defective. VW invokes a Customs regulation, 19 C.F.R. § 158.12, as a cause of action independent from the protest procedures in 19 U.S.C. § 1514 for challenges to appraisals of these allegedly defective imports. Because neither § 1514 nor Customs' regulations create a cause of action for some defective goods, this court affirms the grant of summary judgment for failure to state a claim.

I

In 1994 and 1995, VW imported automobiles from Volkswagen Aktiengesellschaft and Audi Aktiengesellschaft. VW sold the imported automobiles in the United States with consumer warranties. Under those warranties, VW eventually repaired purported hidden defects. VW made some repairs within a few months of liquidation; others years later.

At the relevant time, 19 U.S.C. § 1514 provided:

(a) Finality of decisions; return of papers. Except as provided in subsection (b) of this section, section 501 (relating to voluntary reliquidations), section 516 (relating to petitions by domestic interested parties), section 520 (relating to refunds and errors), and section 521 (relating to reliquidations on account of fraud), decisions of the Customs Service, including the legality of all orders and findings entering into the same, as to —

(1) the appraised value of merchandise

...

(4) the exclusion of merchandise from entry or delivery or a demand for redelivery to customs custody under any provision of the customs laws, except a determination appealable under section 337 of this Act [19 U.S.C. § 1337];

shall be final and conclusive upon all persons (including the United States and any officer thereof) unless a protest is filed in accordance with this section, or unless a civil action contesting the denial of a protest, in whole or in part, is commenced in the United States Court of International Trade....

...

(c) Form, number, and amendment of protest; filing of protest.

(3) A protest of a decision, order, or finding described in subsection (a) shall be filed with the Customs Service within ninety days after but not before —

(A) notice of liquidation or reliquidation,....

19 U.S.C. § 1514 (1995).²

Faced with an apparent 90-day post-liquidation deadline under § 1514, VW put both its feet in the door. It filed protests with Customs challenging the appraised value of the repaired automobiles and other protests against the value of automobiles that it expected would need repair later. VW based these latter requests on statistical models, which suggested that each imported automobile would, on average, have some latent, or hidden, defects. Invoking 19 C.F.R. § 158.12(a), VW sought an allowance in the appraised value for both classes of automobiles:

(a) Allowance in value. Merchandise which is subject to ad valorem or compound duties and found by the port director to be partially damaged at the time of importation shall be appraised in its condition as imported, with an allowance made in the value to the extent of the damage.

19 C.F.R. § 158.12 (2007).

Customs denied many of VW's protests, including all of those for repairs made after the protest filing date. VW appealed Customs' denial by filing an action with the United States Court of International Trade ("CIT") under 28 U.S.C. § 1581(a), the statutory section giving the trade court "exclusive jurisdiction of 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) (2007). The trial court held that it did not have jurisdiction over automobiles repaired after the date VW filed its protests because VW was not aware of the defects at the time of the protests. Volkswagen of Am., Inc. v. United States, 277 F.Supp.2d 1364, 1369 (Ct. Int'l Trade 2003) ("Volkswagen I") (citing Mattel v. United States, 72 Cust.Ct. 257, 377 F.Supp. 955, 959 (1974) ("a protest ... must show fairly that the objection afterwards made at the trial was in the mind of the party at the time the protest was made")); accord Saab Cars USA, Inc. v. United States, 434 F.3d 1359, 1368 (Fed.Cir.2006) (affirming the lower court's dismissal for lack of jurisdiction claims related to certain automobile because Saab provided no evidence that it was aware of defects in the automobiles at the time of protest). The trial court reasoned:

Section 158.12, which provides for a refund of duties if the goods were defective at the time of importation, has no time limit to request the refund. Because VW filed its request as a protest, the Court does not opine at this time on whether VW could have filed a request for reconsideration under § 1520 or directly under § 158.12, and then protest a denial of that request.

Volkswagen I, 277 F.Supp.2d at 1369 n. 2.

At the same time, the trial court took jurisdiction over the automobiles that were repaired before the date of protest. See Volkswagen I, 277 F.Supp.2d at 1367-69. However, the trial court found that VW did not show that many defects existed in its automobiles at the time of importation. Volkswagen of Am., Inc. v. United States, 484 F.Supp.2d 1314 (Ct. Int'l Trade 2007). This decision is the subject of a separate appeal.

In early 2006, VW sent letters to Customs requesting an allowance in the value of the automobiles whose repairs occurred after the date of protest, again citing a claim for allowance under § 158.12. Customs stated at a pretrial conference that it would not issue a decision concerning the letters.

VW filed another appeal with the Court of International Trade under the Administrative Procedure Act ("APA"), alleging jurisdiction under 28 U.S.C. § 1581(i), the trade court's "residual" jurisdictional grant. The United States moved to dismiss for lack of subject matter jurisdiction under CIT Rule 12(b)(1); for failure to state a claim upon which relief can be granted under CIT Rule 12(b)(5); and because the claims were time barred by the statute of limitations applicable to 28 U.S.C. § 2636(i). The trial court denied the United States' motion to dismiss for lack of subject matter jurisdiction, holding that VW's action falls under the language of paragraphs (1) and (4) of § 1581(i), and that jurisdiction was not available under any other subsection of § 1581. Volkswagen v. of Am., Inc. v. United States, 475 F.Supp.2d 1385 (Ct. Int'l Trade 2007) ("Volkswagen II"). The trial court noted that VW could not have filed a valid protest under § 1581(a) because VW had not discovered the defects until after the 90-day time limit had passed. Id. at 1389.

Thus, the trade court granted the Government's motion to dismiss for failure to state a claim. The trial court reasoned that § 1514 precludes judicial review of VW's cause of action under the APA, which otherwise grants a right of review to "[a] person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action...." 5 U.S.C. § 702. Volkswagen II, 475 F.Supp.2d at 1390. It further explained that § 1514 sets forth the procedures governing protests against Customs decisions. Thus, all of Customs' appraisals merge into the liquidation. As a result, the trial court held that any VW protests under § 158.12 had to comply with the procedures applicable to 19 U.S.C. § 1514. Id. at 1390-91. Thus, VW could not avoid the time limits imposed by § 1514 by bringing a separate cause of action under § 158.12. Id. at 1390. In essence, this decision meant that VW had no way to challenge the appraisal of goods with latent defects discovered after the expiration of the protest period.

The trial court did not reach the United States' motion to dismiss based on the statute of limitations applicable to 28 U.S.C. § 2636(i). Id. at 1392. VW appeals the dismissal. This court has jurisdiction under 28 U.S.C. § 1295(a)(5).

DISCUSSION

This court reviews grants of summary judgment as a matter of law. Gen. Elec. Co.-Med. Sys. Group v. United States, 247 F.3d 1231, 1234 (Fed.Cir.2001) (citation omitted). Thus, legal determinations receive no deference, Home Depot USA, Inc. v. United States, 491 F.3d 1334, 1335 (Fed.Cir.2007) (citations omitted). The same is true for statutory interpretations. Superior Fireplace Co. v. Majestic Prods. Co., 270 F.3d 1358, 1369 (Fed.Cir. 2001).

If § 158.12 provides an independent cause of action for appraisal of imports that were partially damaged at time of importation, then VW need not comply with the procedures and deadlines for a protest under § 1514. On its face § 158.12 does not impose a time limit on an allowance for the partial damage. Nor does the regulation refer to § 1514 or its procedures. VW builds its argument on this ambiguity.

As a threshold matter, this court agrees with the Court of International Trade that VW's claim for an allowance under § 158.12 is really an action based on the APA. See Volkswagen II, 475 F.Supp.2d at 1387-88. The APA provides a cause of action for persons "adversely affected or...