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J. C. Penney Co. v. United States Treasury Department

decided: March 1, 1971.

J. C. PENNEY COMPANY, INC., PLAINTIFF-APPELLANT,
v.
THE UNITED STATES TREASURY DEPARTMENT, THE BUREAU OF CUSTOMS, DAVID M. KENNEDY, SECRETARY OF THE TREASURY, EUGENE T. ROSSIDES, ASSISTANT SECRETARY OF THE TREASURY, MATTHEW J. MARKS, DEPUTY TO THE ASSISTANT SECRETARY OF THE TREASURY, AND MYLES AMBROSE, COMMISSIONER OF CUSTOMS, INDIVIDUALLY AND AS OFFICERS AND/OR EMPLOYEES OF THE UNITED STATES TREASURY DEPARTMENT, OR BUREAU OF CUSTOMS, DEFENDANTS-APPELLEES



Lumbard, Chief Judge, and Moore and Smith, Circuit Judges.

Author: Smith

J. JOSEPH SMITH, Circuit Judge:

This is an appeal from a judgment entered in the United States District Court for the Southern District of New York, Edward Weinfeld, Judge, dismissing plaintiff's complaint for lack of subject matter jurisdiction. Plaintiff [hereinafter "Penney"], who is, inter alia, an importer of television sets from Japan, sought declaratory and injunctive relief preventing the Treasury Department from conducting an investigation under the Antidumping Act, 19 U.S.C. § 160 et seq. into whether or not the imported television sets were being sold for "less than fair value" [hereinafter LTFV].

On December 4, 1970, Penney noticed its appeal to this court from Judge Weinfeld's decision (handed down the previous day) and immediately applied for an injunction pending appeal (which was denied) and for an expedited appeal (which was granted). We find no error and affirm the judgment.

On the same day that Penney noticed its appeal Treasury issued its LTFV determination, noticed in the Federal Register of December 5 (35 Fed.Reg. 18549).

The Antidumping Act is designed to prevent actual or threatened harm to a domestic industry caused by the sale of merchandise in the United States at prices lower than in the country of origin. Cf. Note, "The Antidumping Act: Problems of Administration and Proposals for Change," 17 Stan.L.Rev. 730, 731 (1965). The procedure employed in making this determination, discussed thoroughly by the court below, is basically as follows: The Customs Bureau issues a "Withholding of Appraisement Notice" when the Commissioner of Customs has reason to suspect that imported goods are being sold at prices lower than in the exporter's home market. Within three months the Secretary of the Treasury must render an LTFV decision if he concludes that "a class or kind of foreign merchandise is being, or is likely to be, sold in the United States or elsewhere at less than its fair value." 19 U.S.C. § 160(a). After the Treasury's decision, the Tariff Commission renders a decision as to whether or not there has been a real or threatened injury to a domestic industry. If it is found that such injury exists, the proceeding is returned to the Treasury Department for the publication of a dumping "finding." This step entails the imposition of a special dumping duty based on the pricing margins the Treasury has previously found. At this point the importer may file a protest with the Bureau of Customs and contest its denial in the Customs Court.

The determination of less than fair value is a complex one, since it must make adjustments for varying levels of trade and differing combinations of merchandise, services and conditions between sales in the United States and sales in the country of origin. 19 U.S.C. § 161. It is Penney's contention that the Japanese television manufacturers provide numerous services for dealers and distributors that are borne by wholesalers and retailers in the United States. Therefore, the conditions of sale are different, justifying a higher price in the country of origin. On appeal, Penney is not directly challenging the substantive basis for the LTFV determination made by the Treasury Department. Rather it attacks what it considers the lack of due process in the methods employed by Treasury in making its LTFV determination. According to Penney, Treasury does not disclose either the facts upon which its determination is based or the criteria it applies in reaching its decision. It is alleged that Treasury regularly receives confidential information from parties having an interest in the outcome of the proceeding and that it relies on this information without disclosure to the parties adversely affected thereby.

We do not reach on this appeal the question of whether or not the procedures employed by the Treasury Department violate the Due Process Clause of the Fifth Amendment. The question for decision is, rather, whether this constitutional issue is to be determined initially by the District Court or the Customs Court. Since this case is claimed to arise under the "Constitution, laws, or treaties of the United States," Penney contends that jurisdiction derives from 28 U.S.C. § 1331(a), general federal question jurisdiction. It is further claimed that more than $10,000 is in controversy, so no problem is presented in regard to the statutory minimum amount in controversy. We agree with the District Court, however, that Penney must seek its relief against the government in the Customs Court.

In 28 U.S.C. § 1582(a), as amended by section 110 of the Customs Courts Act of 1970, Pub.L. No. 91-271, 84 Stat. 274 (June 2, 1970), Congress has provided that the Customs Court shall have "exclusive jurisdiction" of all civil actions challenging an administrative decision, "including the legality of all orders and findings entering into the same," when that decision involves, inter alia, the appraised value of merchandise, the classification and rate and amount of duties chargeable, all charges or exactions within the jurisdiction of the Secretary of the Treasury, or the exclusion of merchandise from entry or delivery under any provision of the customs laws. Also relevant is 28 U.S.C. § 1340, which provides:

The district courts shall have original jurisdiction of any civil action arising under any Act of Congress providing for internal revenue or revenue from imports or tonnage, except matters within the jurisdiction of the Customs Court.

Penney contends that neither provision bars its suit in the District Court, since its claim in no way concerns the substantive issues which require the expertise possessed by members of the Customs Court. It is therefore contended that the policy behind the grant of exclusive jurisdiction is absent in this case and that constitutional issues can and should be tried in the district courts. To be sure, the nature and extent of procedural due process that must be employed in an administrative proceeding is a question with which federal courts of general jurisdiction frequently deal. However, the procedural issues here arise directly from controversies over issues of substantive customs laws. Although it is conceivable that separate courts could deal with the separate procedural and substantive issues involved, such a result would significantly undermine Congress' "complete system of corrective justice with respect to matters arising under the customs laws." Cottman Co. v. Dailey, 94 F.2d 85, 88 (4 Cir. 1938).

In interpreting legislation such as that involved in this case, "courts must * * * look to the logic of Congress and to the broad national policy which prompted the legislation." Argosy Ltd. v. Hennigan, 404 F.2d 14, 20 (5 Cir. 1968). The precursor to the Customs Court, the Board of General Appraisers, was established by the Customs Administrative Act of 1890, ch. 407, §§ 12-14, 26 Stat. 137. The court itself was created by the Act of May 28, 1926, ch. 411, 44 Stat. 669, and was given all the powers of the Board of General Appraisers. Metzger & Musrey, "Judicial Review of Tariff Commission Actions and Proceedings," 56 Cornell L.Rev. 285 (1971). See generally, Johnson, "The United States Customs Court -- Its History, Jurisdiction, and Procedure," 7 Oklahoma L.Rev. 393 (1954). Even in the early days of its existence, the Customs Court was recognized as having a broad jurisdiction to deal with matters related to questions of customs law. See Brown, "The United States Customs Court," at 15 (1933).

In 1948, Congress inserted into the United States Code two sections providing for the "exclusive jurisdiction" of the Customs Court. 28 U.S.C. §§ 1582, 1583. The legislative history of these enactments makes plain that the word "exclusive" was inserted on the basis of and in agreement with the decisions in Patchogue-Plymouth Mills Corp. v. Durning, 101 F.2d 41 (2d Cir. 1939), and David L. Moss Co., Inc. v. United States, 26 C.C.P.A. 381, 103 F.2d 395 (1939), "and cases cited therein." See 28 U.S.C. §§ 1582, 1583, Legislative History: Reviser's Note. These cases made clear their view that not only did the Customs Court have jurisdiction over customs matters, but that if that jurisdiction was to be exercised effectively in accordance with a complete, integral system of customs adjudication, it must be exclusive. In Moss, for example, the Court of Customs and Patent Appeals concluded that the Customs Court "is the tribunal established by Congress in the provision of a complete system of corrective justice for the administration of the customs laws, and questions involving the validity of official action in the imposition and collection of duties are properly cognizable before it to the exclusion of other courts." 103 F.2d at 397. This court in Patchogue expressed the view that the provisions of 28 U.S.C. §§ 307-310, which provided for exclusive appellate jurisdiction in the Court of Customs Appeals over decisions of the Customs Court, manifested an intention on the part of Congress to have litigation regarding customs matters conducted exclusively in the customs courts. 101 F.2d at 43.

The courts in both Moss and Patchogue cited Cottman Co. v. Dailey, supra, which reached a similar conclusion. Significantly, another case "cited therein" (in both decisions) was Riccomini v. United States, 69 F.2d 480 (9 Cir. 1934), which specifically held that the Customs Court possessed exclusive jurisdiction over a ...


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