Furie Operating Alaska, LLC v. U.S. Department of Homeland Security et al

Filing 86

ORDER and OPINION denying 75 Motion for Certification. Signed by Judge John W. Sedwick on 7/1/14. (RMC, COURT STAFF)

UNITED STATES DISTRICT COURT
DISTRICT OF ALASKA

FURIE OPERATING ALASKA, LLC,

)
)
Plaintiff,
)
)
vs.
)
)
U.S. DEPARTMENT OF HOMELAND )
SECURITY; SECRETARY OF
)
HOMELAND SECURITY JEH
)
JOHNSON, in his official
)
capacity; U.S. CUSTOMS AND
)
BORDER PROTECTION; and ACTING )
COMMISSIONER DAVID V. AGUILAR, )
in his official capacity,
)
)
)
Defendants.
)
)

3:12-CV-00158 JWS
ORDER AND OPINION

[Re: Motion at docket 75]

I. MOTION PRESENTED
At docket 75, plaintiff Furie Operating Alaska, LLC (“Furie”) moves pursuant to 28
U.S.C. § 1292(b) to certify an interlocutory appeal from this court’s order at docket 71
(“the Order”) denying Furie’s motion to dismiss. Furie’s supporting memorandum is at
docket 76. Defendants’ opposition is at docket 80. Furie’s reply is at docket 84. Oral
argument was not requested and would not assist the court.
II. BACKGROUND
Furie filed this lawsuit to challenge action by U.S. Customs and Border Protection

(“CBP”) which determined that Furie should pay a $15 million penalty for transporting
merchandise from Texas to Alaska via Vancouver, British Columbia using a foreign
vessel for a segment of the trip in violation of the Jones Act requirement that such
transportation be accomplished using American vessels.1 The “merchandise” was the
Spartan, a jack-up drilling rig which is itself a vessel. Furie’s complaint pled six claims
for relief: (1) The penalty imposed was unlawful, because the Spartan was not being
transported as merchandise, (2) the Secretary failed to exercise independent judgment
when she denied a wavier requested by Furie which was arbitrary, capricious and an
abuse of discretion, (3) the Secretary’s refusal to grant a waiver when her predecessor
had done so was an unexplained action which was arbitrary, capricious, and an abuse
of discretion, (4) the Secretary’s refusal to mitigate the $15 million penalty was also an
arbitrary and capricious action which manifests an abuse of discretion, (5) the $15
million penalty violates the Excessive Fines Clause of the Eighth Amendment, and (6)
the Secretary’s treatment of Furie amounted to a denial of due process under the Fifth
Amendment.2 In addition to Furie’s claims, the lawsuit includes a counterclaim by
Defendants alleging that “Furie’s transportation of the Spartan Rig from Texas to
Alaska, in part by a non-coastwise qualified vessel, violated the Jones Act”3 which
entitles the United States to recover a $15 million penalty from Furie (“the
Counterclaim”).

1

46 U.S.C. § 55102(b).

2

Doc. 1.

3

Doc. 38 at 57 ¶ 22.

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The parties are familiar with the many other aspects of their dispute not
summarized above. Readers who are not will find a much fuller recitation of the
background facts in the Order.4
III. DISCUSSION
Generally speaking a party may not appeal any decision by a district court which
is not evidenced by a final judgment.5 In the course of litigation, trial courts may render
decisions on issues of law which do not result in a final judgment. Sometimes those
decisions are erroneous and on rare occasions an appellate court’s correction of the
error without awaiting a final judgment will substantially advance society’s interest in the
prompt resolution of disputes. Recognizing that such circumstances arise from time to
time, Congress enacted a statue authorizing interlocutory appeals in limited situations:
When a district judge [issues an order] not otherwise appealable . . . shall
be of the opinion that such order involves a controlling question of law as
to which there is substantial ground for difference of opinion and that an
immediate appeal may materially advance the ultimate termination of the
litigation, he shall so state . . . . The Court of Appeals . . . may thereupon,
in its discretion, permit an appeal to be taken . . . .6
Furie argues that the Order should be certified for interlocutory review.
Certification depends on whether the court finds that (1) the Order addressed a
controlling question of law, (2) there is a substantial ground for difference of opinion as
to that question, and (3) an immediate appeal would materially advance termination of
this lawsuit.

4

Doc. 71.

5

28 U.S.C. § 1291; Couch v.Telescope, Inc., 611 F.3d 629, 632 (9th Cir. 2010).

6

28 U.S.C. § 1292(b).

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With respect to the controlling question of law, Furie contends that this court
incorrectly answered the following interrelated questions:
1.

Whether CBP’s interpretation of the term “merchandise” under the Jones
Act as including vessels transported in the normal course of their maritime
operations versus those transported in connection with their sale is
permissible and entitled to Chevron deference or is reasonable and
entitled to deference under Skidmore.

2.

Whether CBP’s interpretation of the Jones Act is applicable to the
movement of vessels via dry-towing and the Coastwise Towing Statute as
applicable to the movement of vessels via wet-towing is sufficiently
persuasive to warrant deference under either Chevron or Skidmore.

Respecting the first question, the Order held that CBP’s interpretation of the term
“merchandise” as being applicable to the Spartan while it was being hauled on the deck
of another vessel was entitled to Chevron deference, and that if it were not, the
interpretation was entitled to Skidmore deference. Furie correctly maintains that
deference to CBP’s interpretation led the court to conclude that the Spartan was
properly considered “merchandise” for purposes of the Jones Act. The second question
is bound together with the first by Furie’s argument that the Towing Statute governs the
movement of vessels regardless of whether they are towed in the water (wet-towed), or
moved as cargo aboard another vessel (dry-towed), and so a dry-towed vessel cannot
be subject to treatment as merchandise under the Jones Act. The Order found that
argument lacked merit and did not vitiate the deference owed to CBP’s interpretation
that the Spartan was transported as merchandise for purposes of the Jones Act.
Defendants contend that the Order does not reflect a decision on a controlling
question of law. First, defendants urge that only one of Furie’s six claims for relief was
addressed by the Order. Technically, that is correct. However, had the court ruled that
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the Spartan was not transported as merchandise that would have meant no penalty
could be imposed, a decision which would moot not only Furie’s other claims, but also
the Counterclaim.
Defendants also advance a more refined reason why the Order does not reflect a
controlling question of law. They point out if the court of appeals found deference were
not due, this court would still have to determine de novo whether the penalty was
properly imposed. In response, Furie suggests that if the Court of Appeals ruled that no
deference were due, the appellate court could proceed on the existing record to
determine that the Spartan was not transported in violation of the Jones Act. It is
unnecessary to forecast exactly what the Court of Appeals might determine if it rejects
deference, for even if after rejecting deference the appellate court returned the case to
this court to conduct a de novo review, the appellate decision would establish that this
court had rested a decision controlling the outcome of Furie’s primary claim (and with it
the subsidiary claims and the Counterclaim) on an erroneous view of the law. In sum,
the Order does decide a controlling question of law.
Defendants also argue that allowing an interlocutory review of the Order’s
disposition of the deference issue would be inconsistent with the very narrow exception
to the final judgment requirement of § 1291. Defendants contend that allowing
interlocutory review here would turn the narrow exception created by § 1292(b) into the
norm.7 This argument is too vague to address directly, but to the extent it is meant to
underscore the need to find the presence of all three elements identified in § 1292(b), it

7

Doc. 80 at 4.

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may be addressed by considering the other elements.
The parties disagree over whether there is a substantial ground for difference of
opinion with respect to this court’s conclusion that deference is owed to CBP’s decision
to treat the transportation of the Spartan as a transportation of “merchandise.” The
Ninth Circuit instructs that the substantial ground for difference of opinion arises when,
“the circuits are in dispute as to the question and the court of appeals of the circuit has
not spoken on the point (or) complicated questions arise under foreign law, or . . . novel
and difficult questions of first impression are presented.”8 It is easily seen that the first
two circumstances are not present here. Moreover, in this court’s view the questions of
deference decided in the Order is neither novel, nor unusually difficult.9 What is
unusual about this case is the creative argument advanced by Furie to tie interpretation
of the Jones Act to interpretation of the Towing Act. Yet, a creative argument does not
necessarily produce substantial grounds for difference of opinion. In the Order, the
court distinguished the case law on which Furie attempted to rely. Having done that,
this court is unaware of a single decision which conflicts with the Order. This is a
significant consideration.10 The ground for difference of opinion here is not substantial.
The third element that is generally to be considered is whether an immediate
appeal would materially advance the termination of this lawsuit. However, having found
that there is no substantial ground for difference of opinion, the court need not consider

8

Couch, 611 F.3d at 633.

9

See Order, doc. 71.

10

Couch, 611 F.3d at 633.

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the third element.
IV. CONCLUSION
For the reasons set out above, the motion at docket 75 is DENIED.
DATED this 1st day of July 2014.

/S/
JOHN W. SEDWICK
UNITED STATES DISTRICT JUDGE

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