Milecrest Corp. v. United States
2017 CIT 125
| Ct. Intl. Trade | 2017Background
- Duracell applied to U.S. Customs & Border Protection (CBP) for Lever‑Rule protection in Oct. 2016, seeking import restrictions on certain gray‑market Duracell batteries as "physically and materially" different from U.S. products; CBP granted the application and published the grant in the Customs Bulletin (Mar. 2017).
- Milecrest (doing business as XYZ Corp.), a long‑time importer/distributor of such gray‑market batteries, sued CBP and the U.S. under the APA (28 U.S.C. § 1581(h) and § 1581(i)(4)), seeking pre‑importation judicial review and relief from the Lever‑Rule grant.
- The Government moved to dismiss for lack of jurisdiction; the court previously held it has § 1581(h) jurisdiction and ordered Milecrest to amend jurisdictional allegations.
- Duracell intervened and moved to dismiss Milecrest’s amended complaint for lack of subject‑matter jurisdiction (12(b)(1)) and for failure to state a claim (12(b)(6)), arguing the Lever‑Rule grant is not a reviewable “ruling,” irreparable harm was not pleaded or caused by CBP, Milecrest lacks prudential standing, and administrative remedies were not exhausted.
- The court addressed jurisdictional prerequisites for § 1581(h): pre‑importation review, a reviewable ruling, relation to restricted merchandise/imports, and demonstration of irreparable harm; the court found these satisfied on the record (including affidavits, testimony, and held shipments).
- The court denied Duracell’s motion to dismiss in full, concluding (1) the Lever‑Rule grant is a reviewable, final agency ruling under § 1581(h); (2) Milecrest adequately pleaded and demonstrated irreparable harm; (3) Milecrest is within the zone of interests and has prudential standing; (4) exhaustion was not required given § 1581(h)’s pre‑importation remedy; and (5) Milecrest stated plausible APA claims (notice‑and‑comment, arbitrary and capricious, vagueness).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CBP’s Lever‑Rule grant is a "ruling" reviewable under 28 U.S.C. § 1581(h) | Milecrest: CBP’s published Lever‑Rule decision is a written HQ determination directing treatment of future import transactions and is reviewable | Duracell: Lever‑Rule decisions under Part 133 are distinct from Part 177 rulings and are not the type of "rulings" reviewable under § 1581(h) | Court: The Lever‑Rule grant is a reviewable, final ruling under § 1581(h) (regulatory definition and legislative history support reviewability) |
| Whether Milecrest demonstrated irreparable harm to support pre‑importation review | Milecrest: Alleged loss of customers, revenue, contracts, goodwill, shipments held—harm not remediable by money | Duracell: Pleading insufficient; any harm stems from Duracell’s private enforcement, not CBP action | Court: Pleadings and record evidence (affidavit, testimony, held shipments) sufficiently show irreparable harm caused by CBP’s Lever‑Rule grant |
| Prudential standing / zone of interests | Milecrest: As an importer of gray‑market goods affected by Lever‑Rule restrictions, its interests are arguably within the statute’s regulatory zone | Duracell: Milecrest’s interests are not those the Lever‑Rule protects; lacks prudential standing | Court: Milecrest’s interests fall within the zone regulated by 19 U.S.C. § 1526; prudential standing exists |
| Whether the complaint states APA claims (notice‑and‑comment, arbitrary/capricious, vagueness) and is time‑barred | Milecrest: CBP’s 2017 Lever‑Rule grant was final action; failure to follow notice‑and‑comment, unlawful restriction on goods Duracell authorized, and impermissible vagueness plausibly alleged; action timely as it challenges 2017 grant | Duracell: Claims fail as matter of law; challenge actually targets 1999 rulemaking and is time‑barred; merits defeat pleading | Court: Complaint plausibly alleges final agency action with no adequate judicial remedy and states plausible APA claims as pleaded; challenge targets the 2017 Grant, not the 1999 rule; not time‑barred |
Key Cases Cited
- Bell v. Hood, 327 U.S. 678 (jurisdictional dismissal guidance)
- Steel Co. v. Citizens for a Better Environment, 523 U.S. 83 (subject‑matter jurisdiction requirement)
- DaimlerChrysler Corp. v. United States, 442 F.3d 1313 (burden to allege facts establishing jurisdiction)
- Best Key Textiles Co. v. United States, 777 F.3d 1356 (elements of § 1581(h) jurisdiction)
- Am. Air Parcel Forwarding Co. v. United States, 718 F.2d 1546 (distinguishing internal/advice rulings from reviewable prospective rulings)
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standards for plausibility)
- Bennett v. Spear, 520 U.S. 154 (final agency action and prudential standing principles)