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United States Court of Appeals for the Ninth Circuit
November 16, 2005, Argued and Submitted, Pasadena, California ; June 2, 2006, Filed
No. 04-55354, No. 04-55356, No. 04-56350
[*1172] WARDLAW, Circuit Judge:
This appeal and cross-appeal arise from the search and seizure by the United States Customs Service of over 44 million cigarettes, contained in 4,432 mastercases, [**2] for nonpayment of California cigarette taxes. The appeals require us to determine the extent of immunity from state and federal regulatory and taxing power that businesses can expect when they operate in foreign trade zones. We hold that ] an importer of goods destined for domestic consumption is not exempt from state excise taxes and administrative searches by federal Customs officials simply because it stores its merchandise in a foreign trade zone.
I. FACTS AND PROCEDURAL HISTORY
Between 1998 and 2000, Intrigue Trading, Inc. ("Intrigue"), a California corporation, was licensed by the Bureau of Alcohol, Tobacco, and Firearms to import gray market cigarettes into the United States for domestic sale. The term "gray market [*1173] cigarettes" refers to both American-made exported cigarettes that are re-imported into the United States, as well as American brands of cigarettes manufactured abroad for sale in foreign markets but then imported into the United States. 2 Until the year 2000, importing gray market cigarettes was legal, as was their sale in California. See Tariff Suspension and Trade Act of 2000, Pub. L. No. 106-476, tit. IV, § 4002 (effective as amended Nov. 9, 2000, at [**3] 26 U.S.C. § 5754) (banning importation of previously exported tobacco products); Act of May 5, 2000, S.B. 1038, § 1, Cal. Legis. Serv. 18 (codified as amended at Cal. Rev. & Tax. Code § 30163) (making illegal in California the importation of cigarettes in violation of 26 U.S.C. § 5754, and the importation by third parties of American-branded cigarettes manufactured abroad). Throughout most of the period of Intrigue's operations, however, California law required cigarette distributors either to obtain a state distributor's license or to pay use taxes on cigarettes placed into storage.
Intrigue is ninety percent owned by Andy Lee, who is also the majority shareholder of two other corporations that dealt [**4] in gray market cigarettes, National Trade Industry, Inc. ("NTI") and Ampac, Inc. ("Ampac"). The companies were similarly structured and shared storage facilities, but each company served a particular purpose. For instance, only NTI was licensed to sell cigarettes in California. The companies are separately incorporated.
Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.
448 F.3d 1168 *; 2006 U.S. App. LEXIS 13749 **; 28 Int'l Trade Rep. (BNA) 1611
UNITED STATES OF AMERICA, Plaintiff-Appellant, INTRIGUE TRADING, INC., Claimant-Appellee, v. 4,432 MASTERCASES OF CIGARETTES, More or Less, Defendant. UNITED STATES OF AMERICA, Plaintiff-Appellee, INTRIGUE TRADING, INC., Claimant-Appellant, v. 4,432 MASTERCASES OF CIGARETTES, More or Less, Defendant. UNITED STATES OF AMERICA, Plaintiff-Appellant, INTRIGUE TRADING, INC., Claimant-Appellee, v. 4,432 MASTERCASES OF CIGARETTES, More or Less, Defendant.
Prior History: [**1] Appeal from the United States District Court for the Central District of California. D.C. No. CV-01-10113-FMC, D.C. No. CV-01-10113-FMC, D.C. No. CV-01-10113-FMC. Florence Marie Cooper, District Judge, Presiding.
United States v. 4,432 Mastercases of Cigarettes, 322 F. Supp. 2d 1075, 2004 U.S. Dist. LEXIS 12119 (C.D. Cal., 2004)
cigarettes, Customs, regulations, distributors, probable cause, domestic, stored, imported, taxes, merchandise, inspection, consumption, seizure, seized, counterfeit, licensed, storage, mastercases, searches, foreign trade zone, excise tax, preemption, unlicensed, taxation, cigarette tax, ad valorem tax, closely regulated, FTZ Act, warehouse, zone
Business & Corporate Compliance, International Trade Law, Forfeitures & Penalties, Seizures, Constitutional Law, Fundamental Rights, Search & Seizure, General Overview, International Trade Law, State Legislation, Foreign Trade Zones, Tax Law, Federal Excise Taxes, Criminal Law & Procedure, Standards of Review, De Novo Review, Motions to Suppress, Civil Procedure, Remedies, Forfeitures, Scope of Protection, Administrative Law, Agency Investigations, Constitutional Rights, Search & Seizure, International Commerce & Trade, Exports & Imports, Scope of Authority, Methods of Investigation, Inspections, Governments, Legislation, Interpretation, Probable Cause, Criminal Offenses, Miscellaneous Offenses, Alcohol, Firearm & Tobacco Taxes, Tobacco & Tobacco Products, State Taxes, Definition of Excise Tax, Supremacy Clause, Federal Preemption