Trade court: No pre-importation review; irreparable harm not established

Trade court: No pre-importation review

The U.S. Court of International Trade today granted the government’s motion to dismiss, for lack of subject matter jurisdiction, a challenge of a ruling issued by U.S. Customs and Border Protection (CBP). The importer requested a pre-importation review of CBP’s ruling. The trade court, however, found that the importer had failed to show by clear and convincing evidence that it faced business disruption, irrecoverable financial loss, and reputational harm absent a pre-importation review of CBP’s ruling.

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The case is: Cannakorp, Inc. v. United States, Slip Op. 17-83 (CIT July 11, 2017). Read the trade court’s opinion [PDF 518 KB]

Background

The importer in April 2016 requested a pre-importation ruling from CBP regarding its “single-use, pod-based cannabis vaporizer system.” The importer sought to establish that the product was lawful under an exemption to the U.S. Controlled Substances Act. 

In March 2017, CBP issued a ruling that the product was not exempt from the prohibition on the importation of drug paraphernalia and could not be legally imported into the United States.

The importer filed a complaint with the trade court, asserting (among other claims) that without a pre-importation review, it would experience “irreparable harm” and requested that the court declare CBP’s ruling was unlawful. The government filed a motion to dismiss. The government asserted that the importer had failed to show by clear and convincing evidence that it would suffer irreparable harm absent a pre-importation judicial review.

Trade court’s findings

Today, the trade court granted the government’s motion to dismiss. 

In this opinion, the court set out the legal framework for what constitutes irreparable harm, and acknowledged that as a start-up business, the importer may believe that it was in a “Catch-22” situation (that it was unable to establish the economic harm caused by CBP’s ruling because the ruling prevented the importer from getting off the ground and establishing evidence of its viability).

The trade court examined the elements of the importer’s claims—that it faced actual, imminent harm—but the court concluded that the importer had failed to show the required factors of business disruption, irrecoverable financial loss, and reputational harm necessary to support its claim of irreparable harm beyond “vague, to inconsistent, to contradictory” arguments.

 

For more information, contact a professional with KPMG’s Trade & Customs practice:

Douglas Zuvich | +1 (312) 665-1022 | dzuvich@kpmg.com

Andrew Siciliano | +1 (631) 425-6057 | asiciliano@kpmg.com

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