UNITED STATES COURT OF INTERNATIONAL TRADE

Slip Op. 23-47

Before the Court in Kierton USA v. United States, Court No. 21-00452, Slip Op. 23-47 (April 11, 2023) was plaintiff’s application for fees and other expenses pursuant to the Equal Access to Justice Act, alleging it incurred $479,299 in attorney fees and $7,899.31 in expenses, for a total of $487,198.31 as the prevailing party in its action against U.S. Customs and Border Protection. In the court’s previous opinion, it was held that Kierton’s possession and importation of marijuana paraphernalia was lawful and that CBP was wrong in using the Controlled Substances Act of 1970 to seize and exclude from entry fourteen of Kierton’s shipments of merchandise that could be used in the cannabis industry.

In the previous opinion, the court exercised jurisdiction over Kierton’s challenge to CBP denial of its protests pursuant to 28 U.S.C. § 1581(a) and retains jurisdiction to adjudicate on the issue concerning Kierton’s application for fees and expenses. Under the EAJA, an eligible party seeking an award of fees and other expenses must make a proper application to the court within thirty days of final judgment and it must have prevailed in court and allege that the United States’ position was not substantially justified. Under the EAJA, the court has the power to grant attorney fees and other expenses to the prevailing party in an action against the United States unless the government demonstrates, by a preponderance of the evidence, that the position it took in the action was substantially justified or that special circumstances exist making it unjust to grant the prevailing party fees and other expenses. In making its decision, the court is limited by the EAJA to review the record of the civil action for which fees and other expenses are sought and the agency’s action “upon which the civil action is based.” Alternatively, the court may find that special circumstances exist making it unjust to grant fees and other expenses to the prevailing party.

The court disagreed with plaintiff’s position that CBP’s actions were not substantially justified and that special circumstances existed making an award of attorney fees and expenses just. The court found that the government’s actions were substantially justified because its actions concerned a novel issue, of first impression, and the government had a reasonable basis in law and fact to litigate the issue. Both in its protest before the CBP and in this court, Keirton did not dispute that the subject merchandise could be used in the cannabis industry and stipulated that the subject merchandise met the definition of marijuana paraphernalia under federal law.

The parties only disputed whether Washington State’s repeal of its prohibition on marijuana paraphernalia met the exception in 21 U.S.C. § 863(f)(1) authorizing possession of marijuana paraphernalia under federal law. Whether Washington State “authorized” possession of marijuana paraphernalia within the meaning of the federal statute was a matter of first impression, which implicated an important question of federalism. At the time the government took its position in this case, no other court had held that Washington law authorized importation of marijuana paraphernalia under the exception to the federal prohibition on drug paraphernalia.

Although the Court of International Trade ultimately ruled on this issue in Eteros Technologies USA, Inc. v. United States, 592 F. Supp. 3d 1313 (Ct. Int’l Trade 2022), that September 21, 2022 ruling was issued only after the parties filed their motions for judgment.

An issue also concerned the fact that a Supreme Court case, Murphy v. NCAA, 138 S. Ct. 1461 (2018), had already discussed the interpretation of the word “authorized.” Kierton argued that this undermined the nature of the issue as one of first impression here or the reasonableness of the government in litigating the issue. The court, however, found that the issue here was nonetheless one of first impression because even though the Supreme Court discussed the interpretation of “authorized,” it never discussed § 863 nor the Washington statute. As it pertained to the reasonableness of the government, the court determined that though the government’s arguments were not ultimately persuasive when it argued that a repeal of prior law was insufficient “authorization” under § 863 by arguing that authorization under § 863 was limited to a narrow class of actions by local state or federal governments, that the neighboring provisions in § 863 and the Controlled Substances Act require “deliberate, affirmative approval for an individual or entity” to act, they were nevertheless reasonable arguments at the time they were advanced.