UNITED STATES COURT OF INTERNATIONAL TRADE

Slip Op. 23-90

Before the Court in Maple Leaf Marketing, Inc., v. United States, Court No. 20-03839, Slip Op. 23-90 (June 14, 2023) was Plaintiff Maple Leaf Marketing, Inc.’s (“Maple Leaf”) motion to dismiss Defendant U.S. Customs and Border Protection’s (“CBP”) counterclaim, and to redesignate the counterclaim as a defense pursuant to U.S. Court of International Trade Rule 8(d)(2). Plaintiff argued for the Court to dismiss and redesignate CBP’s counterclaim as a defense because CBP’s claim did not have statutory backing to establish a cause of action.

Defendant argued that a combination of 19 U.S.C. §§ 1202, 1503, 1505(b) & (c), 1514(a) and 28 U.S.C. §§ 1582(3), 1583, 2643(b) & (c) give it authority to assert a counterclaim and seek reliquidation under a different classification. The Court redesignated CBP’s counterclaim as a defense and denied Maple Leaf’s motion to dismiss as moot.

The Court discussed that Congress created remedies for CBP to classify, re-classify, and collect duties on goods imported into the United States. However, Congress has not authorized the United States to assert a counterclaim challenging CBP’s classification. In prior cases, the Court held that Defendant does not have a cause of action to assert a counterclaim against CBP. Defendant cited to 19 U.S.C. § 1202 to support their counterclaim argument, however, nothing in the statute indicated that it creates a cause of action where the United States can challenge CBP’s classification. Instead the statute governs CBP to collect duties “based on the correct classification of merchandise.” The Court noted that 19 U.S.C. § 1503, which does create a cause of action, but focuses on valuation instead of classification of imports and does not discuss authorization of a counterclaim. Next the Court discussed 19 U.S.C. § 1514(a), which states that liquidation is not final when an importer challenges CBP’s determinations and a timely protest suspends the finality of liquidation for all parties. But again, does not discuss the ability for the United States to assert a counterclaim challenging CBP’s classification.

Defendant argued that 28 U.S.C. §§ 1582-83 can be used for its counterclaim. However, the Court found that §1582 points to the CIT exclusive jurisdiction to recover customs duties and not a cause of action. §1583 gives the CIT jurisdiction over counterclaims, but does not create a cause of action. The Court noted that Defendant’s reference to these statutes only empower the court and not Defendant’s position. Defendant cited to 28 U.S.C. § 2643(b) &(c), which provide that the CIT may “order a retrial or rehearing for all purposes, or may order further administrative or adjudicative procedures as the Court considers necessary to enable it to reach the correct decision” and may “order any other form of relief that is appropriate in a civil action. Again, Defendant cited a statute that pointed to the powers of the CIT but not how it creates a cause of action for counterclaims.

The Court held that Defendant failed (1) to assert a valid statutory basis to support its cause of action and (2) failed to state a claim where relief could be granted. However, “the CIT Rule 8(d)(2) provide[d] that “[i]f a party mistakenly designates a defense as a counterclaim, or a counterclaim as a defense, the court must, if justice requires, treat the pleading as though it were correctly designated, and may impose terms for doing so.” Therefore, the Court redesignated Defendant’s counterclaim as a defense and denied Maple Leaf’s motion to dismiss the Defendant’s counterclaim as moot.