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LKQ Corp. v. United States

United States District Court, District of Columbia

July 23, 2019

LKQ CORPORATION, et al., Plaintiffs,
UNITED STATES, et al., Defendants.



         Plaintiffs LKQ Corporation and Keystone Automotive Industries, Inc. (collectively LKQ) bring these actions under the Fifth Amendment, the Administrative Procedure Act (APA), and the Court's equity jurisdiction against the United States, the U.S. Department of Justice (DOJ), and the U.S. Department of Homeland Security (DHS), as well as several federal officials in their official capacities.[1] They also bring Bivens claims against several named and unnamed federal officials in their personal capacities.[2] Before the Court are the defendants' Motion to Dismiss (First Motion to Dismiss), Dkt. 20, and Motion to Dismiss the Defendants in Their Individual Capacities (Bivens Motion), Dkt. 43. For the following reasons, the Court will grant in part and deny in part the defendants' First Motion to Dismiss and grant the defendants' Bivens Motion.

         I. BACKGROUND

         The plaintiffs import and sell replacement parts for automobiles, including automotive “repair grilles.” Compl. ¶¶ 5, 27, Dkt. 1. In April 2017, Customs and Border Protection (CBP), a component of DHS, began seizing grilles owned and imported by the plaintiffs at ports in Georgia, California, and Minnesota. Id. ¶ 41. CBP justified the seizures based on its conclusion that the grilles were unlawful “counterfeit[s]” of trademarked grille designs recorded and registered by the original auto manufacturers. Id. ¶ 42; see also 19 U.S.C. § 1526(e) (subjecting “merchandise bearing a counterfeit mark” to seizure and forfeiture).

         The plaintiffs dispute CBP's position as a matter of trademark law, but they have been unable to secure judicial review of the seizures in a timely manner. See Compl. ¶¶ 42, 45-48, 53; Pls.' Supp. Br. 3-5. By law, when an importer receives notice of a seizure by CBP, the importer has several options, two of which are relevant here. First, it can file a “petition for remission or mitigation” with CBP. 19 U.S.C. § 1618; 19 C.F.R. § 171.1. Under this option, the importer and CBP work together to resolve the dispute informally, without court intervention. See United Stats v. Von Neumann, 474 U.S. 242, 250 (1986). The petition process assumes the validity of the underlying seizure but allows CBP to remit or mitigate the penalty of forfeiture voluntarily. See 19 U.S.C. § 1618; 19 C.F.R. §§ 171.11-12; see also Ibarra v. United States, 120 F.3d 472, 475 (4th Cir. 1997) (explaining that a petition for remission “does not serve to contest the forfeiture, but rather is a request for an executive pardon of the property based on the petitioner's innocence”).

         At any time, the importer can opt out of this process and elect to challenge the seizure in a judicial forfeiture proceeding instead. 19 U.S.C. § 1608; 19 C.F.R. § 162.47. To exercise this second option, the importer must submit a claim to the seized property, along with a bond, to CBP. 19 U.S.C. § 1608; 19 C.F.R. § 162.47. Once the importer has done so, CBP must transmit the claim and bond to the U.S. Attorney for the district in which the seizure occurred. 19 U.S.C. § 1608. After receiving the claim and bond, the U.S. Attorney must either seek civil judicial forfeiture of the goods in federal court or decline to do so (in which case the goods are returned to the claimant). Id.

         Two statutory provisions govern the timing of the judicial forfeiture process, once requested. 19 U.S.C. § 1603 requires “the appropriate customs officer to report promptly [the] seizure or violation to the United States attorney.” 19 U.S.C. § 1603(b) (emphasis added). And 19 U.S.C. § 1604 requires “the Attorney General of the United States immediately to inquire into the facts of cases [so] reported” and “to cause the proper proceedings to be commenced and prosecuted, without delay.” 19 U.S.C. § 1604 (emphases added).

         In this case, the plaintiffs initially pursued the administrative petition process for 162 out of 175 seizures, beginning on May 26, 2017. Compl. ¶ 43. But when months went by without a ruling from CBP, the plaintiffs withdrew some of their petitions and elected to pursue the judicial forfeiture option instead. Id. ¶¶ 44-45. In August 2017, they filed claims and cash bonds with CBP and requested that 16 seizures be referred to DOJ for judicial forfeiture proceedings in California and Georgia. Id. ¶ 45. In October 2017, CBP issued an internal memorandum outlining its legal position on the petitions that remained pending in the administrative process. Id. ¶ 52-53. In January 2018, roughly five months after the first seizures occurred, CBP began denying some of the plaintiffs' administrative petitions based on the analysis contained in its October 2017 memo. Id. ¶ 50-52. In March 2018, the plaintiffs submitted claims, cash bonds, and requests for judicial forfeiture proceedings for 31 additional seizures for which the plaintiffs' petitions had been denied. Id. ¶ 55. In May 2018, CBP referred the plaintiffs' earliest claims, the 16 claims from August 2017-but not the 31 additional claims filed in March 2018-to DOJ. Id. ¶ 57. The oldest of those claims had been pending with CBP for over six months before being referred. Id.

         The plaintiffs filed this action in June 2018, challenging CBP's delay in referring the plaintiffs' claims to DOJ and DOJ's delay in initiating forfeiture proceedings for the claims that had been referred. See generally Id. ¶¶ 78-109. Simultaneously, the plaintiffs filed an equitable Motion to Trigger Rapid Filing of Forfeiture Proceedings, Dkt. 3, seeking an injunction compelling the government to return the plaintiffs' property or initiate forfeiture proceedings within a specified time.[3] At the time the plaintiffs filed their complaint and motion, CBP had not yet referred the 31 cases for which the plaintiffs had filed claims three months earlier in March 2018, and DOJ had not yet initiated forfeiture proceedings for any of the plaintiffs' claims, including 16 claims that the plaintiffs had filed in August 2017, which had been pending for nearly 10 months. See Id. ¶¶ 70, 67. According to the complaint, these delays-which spanned three separate ports and U.S. Attorneys Offices-occurred at the express instruction or direction of one or more of the individual defendants. See Id. ¶¶ 49, 58, 63, 66, 71, 82.

         The government responded to the plaintiffs' complaint and motion by filing a Motion to Dismiss or, in the Alternative, Motion to Transfer, Dkt. 20. In that motion and related filings, the government informed the Court that it had acted on at least some of the plaintiffs' claims after this suit began. See Defs.' Br. at 19-20; Defs.' Reply at 5-6, Dkt. 28; Defs.' Nov. 30, 2018 Status Report. In response to this new information, the Court ordered supplemental briefing on the status of the plaintiffs' claims to ensure that it had an accurate and up-do-date picture of the plaintiffs' claims before ruling on the defendants' motion to dismiss and the plaintiffs' motion to trigger rapid filing. See Jan. 31, 2019 Hr'g Tr. at 7-8, Dkt. 39.[4]

         As reflected in the briefs submitted in connection with the pending motions, the parties agree that CBP has now referred to DOJ (or remitted to the plaintiffs) all but one of the claims that were pending at the time the plaintiffs filed their complaint. See Defs.' Supp. Reply at 2, Dkt. 40. And DOJ has initiated (or declined to initiate) forfeiture actions for all but twenty-one of those claims. See Pls.' Supp. Br. at 4-5, Dkt. 38; see also Defs.' Supp. Reply (no objection to the updated figures provided by the plaintiffs).[5]

         The plaintiffs' complaint includes one count under the Due Process Clause of the Fifth Amendment (count 1), two counts under the APA (counts 2 and 3), and one count under the Court's equitable jurisdiction (count 4). See Compl. at 19-24. For relief, the plaintiffs seek a declaration that DHS violated the plaintiffs' Fifth Amendment rights, an injunction compelling the return of the plaintiffs' property in every case in which their Due Process rights have been violated, and a series of injunctions (1) compelling DHS to direct CBP to refer the plaintiffs' claims to DOJ and (2) compelling DOJ to immediately inquire into the plaintiffs' claims and direct the local U.S. Attorneys in each district where the seizures occurred to either return the plaintiffs' property or file forfeiture proceedings. Id. at 24-25. The plaintiffs also seek compensatory damages from the individual defendants sued in their personal capacities under Bivens v. Six Unknown Named Agents, 403 U.S. 388 (1971), for violating their constitutional rights under the Fifth Amendment. Id. at 24.

         The defendants' First Motion to Dismiss was initially brought under Rules 12(b)(1), (2), (3), (4), (5), and (6) of the Federal Rules of Civil Procedure. However, the defendants have now conceded that individual defendants Sessions, Nielsen, Duke, and McAleen have been properly served in their personal capacities, making Rules 12(b)(4) and (5) inapplicable. See Dkt. 41 at 1. And the First Motion to Dismiss does not advance any arguments for dismissal under Rule 12(b)(6); it merely recites the Rule 12(b)(6) standard. The Court will therefore treat the defendants' First Motion to Dismiss as a motion to dismiss under Rules 12(b)(1), (2), and (3), and will deny the motion to the extent it seeks dismissal under Rules 12(b)(4), (5), and (6). In addition, although the defendants initially requested a venue transfer in the alternative, they have now withdrawn that request and seek only dismissal. See Dkt. 48.

         After the government conceded service of the individual defendants sued in their personal capacities, it filed a second motion to dismiss focused exclusively on the plaintiffs' Bivens claims (the Bivens Motion). That motion was filed under 12(b)(6) and will be evaluated accordingly.


         A. 12(b)(1)

         Under Rule 12(b)(1) of the Federal Rules of Civil Procedure, a party may move to dismiss an action or claim when the court lacks subject-matter jurisdiction. Fed.R.Civ.P. 12(b)(1). A motion for dismissal under Rule 12(b)(1) “presents a threshold challenge to the court's jurisdiction.” Haase v. Sessions, 835 F.2d 902, 906 (D.C. Cir. 1987). Federal district courts are courts of limited jurisdiction, and it is “presumed that a cause lies outside this limited jurisdiction.” Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994). Thus, “the plaintiff bears the burden of establishing jurisdiction by a preponderance of the evidence.” Moran v. U.S. Capitol Police Bd., 820 F.Supp.2d 48, 53 (D.D.C. 2011) (citing Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992)).

         “When ruling on a Rule 12(b)(1) motion, the court must treat the plaintiff's factual allegations as true and afford the plaintiff the benefit of all inferences that can be derived from the facts alleged.” Jeong Seon Han v. Lynch, 223 F.Supp.3d 95, 103 (D.D.C. 2016) (internal quotation marks omitted). Those factual allegations, however, receive “closer scrutiny” than they would if the court were considering a Rule 12(b)(6) motion for failure to state a claim. Id. Also, unlike in the Rule 12(b)(6) context, a court may consider documents outside the pleadings to evaluate whether it has jurisdiction. See Jerome Stevens Pharm., Inc. v. FDA, 402 F.3d 1249, 1253 (D.C. Cir. 2005). If, at any point, the court determines that it lacks jurisdiction, the court must dismiss the claim or action, whether on the defendant's motion or sua sponte. Fed.R.Civ.P. 12(b)(1), 12(h)(3).

         B. 12(b)(2)

         Under Rule 12(b)(2) of the Federal Rules of Civil Procedure, a party may move to dismiss an action or claim when the court lacks personal jurisdiction. Fed.R.Civ.P. 12(b)(2). “On such a motion, the plaintiff bears the burden of ‘establishing a factual basis for the exercise of personal jurisdiction' over each defendant.” Triple Up Ltd. v. Youku Tudou Inc., 235 F.Supp.3d 15, 20-21 (D.D.C. 2017) (quoting Crane v. N.Y. Zoological Soc., 894 F.2d 454, 456 (D.C. Cir. 1990)). To meet this burden, a plaintiff cannot rely on conclusory allegations, id., but rather “must allege specific facts connecting the defendant with the forum, ” Shibeshi v. United States, 932 F.Supp.2d 1, 2-3 (D.D.C. 2013) (citing Second Amendment Foundation v. U.S. Conference of Mayors, 274 F.3d 521, 524 (D.C. Cir. 2001)).

         When ruling on a 12(b)(2) motion, the court “may receive and weigh affidavits and any other relevant matter to assist it in determining the jurisdictional facts.” Triple Up Ltd., 235 F.Supp.3d at 20 (internal quotation marks omitted). “Ultimately, the [c]ourt must satisfy itself that it has jurisdiction to hear the suit.” Id. at 20-21 (internal quotation marks omitted).

         C. 12(b)(3)

         Under Rule 12(b)(3) of the Federal Rules of Civil Procedure, a party may move to dismiss an action or claim when venue is improper. Fed.R.Civ.P. 12(b)(3). Similarly, the federal venue statute, 28 U.S.C. § 1406(a), requires a court to “dismiss, or if it be in the interest of justice, transfer” a case that has been filed “in the wrong division or district.” 28 U.S.C. § 1406(a). On a Rule 12(b)(3) motion, the moving party “must provide sufficient specificity to put the plaintiff on notice” of the potential defect, but “the burden remains on the plaintiff to establish that venue is proper.” McCa ...

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