CIT Sends Customs Spat on Seized Tires to Mediation Over US Objections
The Court of International Trade on May 19 granted importer Inspired Ventures' motion to refer its customs suit to court-annexed mediation. Judge Lisa Wang disagreed with the government's reasons for opposing mediation, which included claims that the controversy in the case is "legal in nature" and thus "not amenable to mediation" (Inspired Ventures v. United States, CIT # 24-00062).
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Inspired brought the suit to challenge CBP's detention of its tire entries, which the agency held on the suspicion that the goods were in violation of Transportation Department safety standards. After the importer filed suit to contest the detention of its products, the trade court rejected the government's motion to dismiss the case on jurisdictional grounds (see 2410300016).
Inspired then filed for court-led mediation in the suit after the U.S. said the importer will be a "prevailing party" but that CBP will detain the tires "no matter the Court's decision" (see 2505050002). Over a year after the entries were filed, the U.S. now says the importer must file "live entries" and deposit around three times the applicable ordinary and antidumping and countervailing duties to secure the release of the goods.
The U.S. opposed the importer's bid for mediation, arguing that the dispute is "legal in nature" (see 2505120065).
Wang rejected this claim, though she first set the record straight on the court's standard of review in cases where mediation is requested. The judge said the court's consideration isn't limited solely to whether the dispute turns on a legal issue but instead rests on "whether a decision on the merits is necessary because of a high likelihood that the legal issue will continue to come before the court, rendering the impact of the court’s holding precedential."
In Inspired's case, the issue is how the company's tires may be released. Both Inspired and the U.S. agree that the original basis for detaining the tires was incorrect, and it's now undisputed that the tires are admissible, Wang noted. It wasn't until the government lost its motion to dismiss and the merchandise was found to be admissible "that the government determined that additional duties, taxes, and fees are owed," the decision said.
As a result, the "issue here is a direct result of the facts and law of this case," unlike a previous CIT case in which mediation was found to be improper, since it was a "straightforward classification" case with precedential value.
Wang also found that two additional factors, "procedural fairness" and the "time and resources" involved in mediation vs. litigation, weigh in favor of Inspired. Regarding procedural fairness, Wang noted that mediation is "procedurally fair if the issue can be addressed in the event that the mediation is unsuccessful." Here, the issue of whether Inspired can bypass the goods' entry requirements "can be addressed by the parties and the court in subsequent motions should mediation be unsuccessful," the judge said.
The court then said time and resources will be saved by engaging in court-led mediation in light of the fact that both sides will engage in extensive briefing should the case proceed as planned. Wang held that since the "benefits of resolving the remaining issues through a neutral, confidential mediation process outweigh the risks of a lack of precedential impact and a delay in litigation, the court finds mediation to be appropriate."