Almond Bros. Lumber Co. v. United States , 33 Ct. Int'l Trade 625 ( 2009 )

Slip Op. 09-48
UNITED STATES COURT OF INTERNATIONAL TRADE
_______________________________
:
ALMOND BROS. LUMBER CO. et al.,:
:
Plaintiffs, : Before: Richard K. Eaton, Judge
:
v. : Court No. 08-00036
:
UNITED STATES, and :
RON KIRK, UNITED STATES :
TRADE REPRESENTATIVE, :
:
Defendants. :
_______________________________:
OPINION
[Defendants’ motion to dismiss granted.]
Dated: May 20, 2009
Saltman & Stevens, P.C. (Alan I. Saltman, Ruth G. Tiger and
Marisol Rojo) for plaintiffs.
Michael F. Hertz, Deputy Assistant Attorney General; Jeanne E.
Davidson, Director, Franklin E. White, Jr., Assistant Director,
United States Department of Justice Commercial Litigation Branch,
Civil Division (David S. Silverbrand); Office of the General
Counsel, United States Trade Representative (J. Daniel Stirk);
United States Customs and Border Protection (Andrew Jones), for
defendants.
Eaton, Judge: This case involves the Softwood Lumber
Agreement between the United States and Canada, which was entered
into in 2006 to resolve the ongoing disputes between those
countries relating to the softwood lumber trade. See Softwood
Lumber Agreement Between the Government of Canada and the
Government of the United States of America, U.S.-Can., Sept. 12,
2006, available at http://www.ustr.gov/assets/World_Regions/
Court No. 08-00036 Page 2
Americas/Canada/asset_upload_file847_9896.pdf (last visited May
7, 2009) (hereinafter “Softwood Lumber Agreement” or “SLA”).1
Plaintiffs, each domestic producers of softwood lumber products,
challenge a provision of the SLA that provides for the government
of Canada to distribute $500 million solely to domestic lumber
producers who are members of the Coalition for Fair Lumber
Imports (“Coalition”).
Before the court is defendants’ motion to dismiss for lack
of subject matter jurisdiction and for failure to state a claim
upon which relief can be granted. See USCIT Rules 12(b)(1) and
(5); Defs.’ Mem. Supp. Mot. Dismiss (“Defs.’ Mem.”); Defs.’ Mem.
Support 2nd Mot. Dismiss (“Defs.’ 2nd Mem.”). Because the court
lacks jurisdiction to hear plaintiffs’ claims, the motion to
dismiss is granted.
BACKGROUND
Both the United States and Canada have significant softwood
lumber industries, and the majority of Canada’s softwood lumber
products are exported to the United States. See Defs.’ Mem. 7.
In May 2002, following investigations by the Department of
Commerce (“Commerce”) and the United States International Trade
Commission (“ITC”), Commerce imposed both antidumping duties and
1
A copy of the Softwood Lumber Agreement is available in
the library of the United States Court of International Trade.
Court No. 08-00036 Page 3
countervailing duties on Canadian softwood lumber. Certain
Softwood Lumber Products From Canada, 67 Fed. Reg. 36,068 (Dep’t
of Commerce May 22, 2002) (notice of amended final determination
of sales at less than fair value and antidumping duty order);
Certain Softwood Lumber Products From Canada, 67 Fed. Reg. 36,070(Dep’t of Commerce May 22, 2002) (notice of amended final
affirmative countervailing duty determination and countervailing
duty order). As a result of Commerce’s imposition of these
unfair trade duties, legal disputes arose in various fora
including this Court, North American Free Trade Agreement
(“NAFTA”) tribunals, and the World Trade Organization. Defs.’
Mem. 7-8.2 One of the parties to many of these disputes was the
Coalition. Defs.’ Mem. 8.
I. The Softwood Lumber Agreement
In 2006, the United States, through the United States Trade
Representative3 (“USTR”), and the Government of Canada began
negotiations to resolve the various disputes. The negotiations
2
A list of these proceedings may be found in the
Softwood Lumber Agreement, Annex 2A.
3
Pursuant to 19 U.S.C. § 2171, the USTR, established
within the Executive Office of the President, has “primary
responsibility for developing, and for coordinating the
implementation of, United States international trade policy . . .
and shall be the chief representative of the United States for,
international trade negotiations . . . .” 19 U.S.C.
§ 2171(c)(1)(A)-(C).
Court No. 08-00036 Page 4
proved successful, and in September of that year the USTR and the
Canadian representative executed the SLA. See generally Softwood
Lumber Agreement. Pursuant to the Agreement, both governments,
as well as all represented parties and participants, agreed to
terminate the legal actions related to softwood lumber to which
they were parties. See Softwood Lumber Agreement, art. II and
Annex 2A; Second Am. Compl. ¶ 71; Defs.’ Mem. 8.
The SLA also required the United States to revoke its
countervailing and antidumping duty orders on softwood lumber
from Canada, effective retroactively to May 22, 2002. Softwood
Lumber Agreement, art. III, ¶ 1. The United States was thus
required to refund the cash deposits it had collected from May
22, 2002 until the time the Agreement went into effect. Softwood
Lumber Agreement, art. III, ¶ 2. Accordingly, effective October
12, 2006, Commerce instructed United States Customs and Border
Protection to cease collection of cash deposits provided for in
the unfair trade duty orders, liquidate all unliquidated entries,
and “refund all deposits collected on such entries . . . to the
importers of record.”4 Certain Softwood Lumber Products From
Canada, 71 Fed. Reg. 61,714 (Dep’t of Commerce Oct. 19, 2006)
(notice of rescission of countervailing duty reviews and
revocation of countervailing duty order); Certain Softwood
4
During the period from May 22, 2002 to the start of
negotiations in 2006, the United States had collected
approximately $5 billion in cash deposits. Defs.’ Mem. 8.
Court No. 08-00036 Page 5
Lumber Products From Canada, 71 Fed. Reg. 61,714 (Dep’t of
Commerce Oct. 19, 2006) (notice of rescission of antidumping duty
reviews and revocation of antidumping duty order).5
In exchange, Canada agreed to impose certain “Export
Measures”6 on its domestic softwood lumber producers. Softwood
Lumber Agreement, art. VI. Canada also agreed to purchase the
rights to some of the cash deposits7 to be refunded by the United
States and distribute (1) $500 million to United States lumber
producers identified as members of the Coalition; (2) $50
million to a binational industry council; and (3) $450 million
for “meritorious initiatives” in the United States. See Softwood
Lumber Agreement, art. IV and Annex 2C, ¶ 5 (“Canada or its agent
shall distribute . . . $US 500 million to the members of the
Coalition for Fair Lumber Imports . . . .”).
With respect to the intended recipients, the United States
5
In addition, the United States agreed, until at least
the year 2013, not to initiate any antidumping or countervailing
duty investigations under Title VII of the Tariff Act of 1930 or
any successor law, actions under Section 201 to 204, or 301 to
307 of the Trade Act of 1974, or Section 204 of the Agriculture
Act of 1956 with respect to imports of softwood lumber products
from Canada. Softwood Lumber Agreement, art. V, ¶ 1(a)-(d).
6
Export measures are essentially quotas or export taxes.
See Softwood Lumber Agreement, art. XXI, ¶ 23.
7
“Canada or its agent shall purchase the rights to the
amounts of the cash deposits for Covered Entries and accrued
interest from the Escrow Importers and make disbursements in
accordance with Annex 2C.” Softwood Lumber Agreement, art. IV,
¶ 4.
Court No. 08-00036 Page 6
was required to provide Canada with “information identifying . .
. beneficiaries.” Softwood Lumber Agreement, Annex 2C, ¶ 4.
Beneficiaries included “the members of the Coalition for Fair
Lumber Imports.” Id. Plaintiffs, domestic lumber producers,
were not members of the Coalition, and thus, were not designated
as beneficiaries of the distributed funds.
II. Plaintiffs’ Complaint
On March 14, 2008 plaintiffs filed an amended complaint8
containing two counts relating to payments made by Canada
8
Plaintiffs sought voluntary dismissal of Count I of its
Second Amended Complaint on October 10, 2008. Pls.’ Notice of
Dismissal of Count 1. On January 29, 2008, plaintiffs filed a
complaint with this Court alleging that the USTR violated the
Continued Dumping and Subsidy Offset Act (“CDSOA”) by failing to
distribute funds to all affected domestic producers. Compl.
¶ 68. Congress enacted the CDSOA, (commonly referred to as the
“Byrd Amendment”), in October 2000. 19 U.S.C. § 1675c, repealed
by Pub. L. No. 109-171, § 7601, 120 Stat. 4, 154 (2006). Thus,
plaintiffs initially based their case on provisions of the CDSOA
which state that duties assessed pursuant to a countervailing
duty order or an antidumping duty order shall be distributed on
an annual basis “to the affected domestic producers for
qualifying expenditures.” Id. Plaintiffs insisted, in their
initial complaint, that they were entitled to distributions
pursuant to the CDSOA.
Apparently, plaintiffs’ voluntary dismissal resulted from
the opinion in Canadian Lumber Trade Alliance v. United States,
517 F.3d 1319 (Fed. Cir. 2008), cert. denied, United States Steel
Corp. v. Canadian Lumber Trade Alliance, 129 S. Ct. 344 (U.S.
Oct. 6, 2008) (No. 07-1470), which held that the CDSOA does not
apply to antidumping and countervailing duties assessed on
imports of goods from NAFTA member countries, such as Canada.
Court No. 08-00036 Page 7
pursuant to the SLA. See First Am. Compl. By these Counts II
and III, plaintiffs challenged the legality of the defendants’
identification as beneficiaries of the Canadian payments “only
members of the Coalition.” See Pls.’ Opp. 1. Specifically, in
Count II, plaintiffs alleged that defendants
did not require the Government of Canada to
distribute any of the money in question on a
pro-rata basis to all 240+ members of the
domestic softwood lumber industry that were
adversely affected by illegal dumping and
subsidies of Canadian softwood lumber.
Instead, defendants required only that Canada
make a distribution to an account whose sole
beneficiaries were the approximately 100
domestic softwood lumber companies that
belonged to a particular organization - the
Coalition for Fair Lumber Imports.
First Am. Compl. ¶ 81. Count II asserts that the identification
of Coalition members as the sole beneficiaries of the Canadian
payments violated the Administrative Procedure Act (“APA”), 5
U.S.C. ¶ 706, by being “‘arbitrary, capricious, an abuse of
discretion or otherwise not in accordance with law . . . .’”
First Am. Compl. ¶ 84.
In addition, the amended complaint contained Count III which
alleges that defendants’ actions in requiring
Canada to make distribution to only those
adversely affected domestic producers who
were also members of the Coalition and not to
all affected domestic producers on its face
violates the Equal Protection component of
the Due Process Clause of the Fifth Amendment
to the Constitution by impermissibly
discriminating between similarly situated
producers and denying a benefit to certain of
those producers.
Court No. 08-00036 Page 8
First Am. Compl. ¶ 88. As to Count III, plaintiffs insisted that
there was “no legitimate governmental purpose for defendants
having discriminated among affected domestic producers. . . .”
First Am. Compl. ¶ 89. On April 17, 2008 defendants filed their
first motion to dismiss (1) for lack of subject matter
jurisdiction based on the political question doctrine,9 or
alternatively (2) for an alleged failure by plaintiffs to state
claims upon which relief can be granted. See Defs.’ Mem.; USCIT
Rules 12(b)(1) and (5).
Thereafter, plaintiffs filed a second amended complaint
which added Count IV by which plaintiffs “challenge[d] actions of
defendants in requiring the Government of Canada to make a
compensatory payment in the amount of $500 million to an account
whose sole beneficiaries were the members of the Coalition.”
Second Am. Compl. ¶ 91 (allegation in support of Count IV).
Plaintiffs asserted that Canada’s payment of $500 million to
affected domestic producers was a “governmental function” of the
United States and that “[t]he determination of exactly how this
compensatory payment by Canada should be divided among all
adversely affected domestic softwood lumber producers was a
9
Based on separation of powers concerns, the political
question doctrine precludes judicial review of subject matter
such as government agreements with foreign powers. The doctrine
prevents the judiciary from stepping into the executive branch’s
political realm. See Sneaker Circus, Inc. v. Carter, 566 F.2d
396, 401-402 (2d Cir. 1977).
Court No. 08-00036 Page 9
governmental function which could not legally be delegated to
non-governmental entities such as the members of the Coalition.”
Second Am. Compl. ¶ 92. In other words, plaintiffs argued that
defendants should not have directed the $500 payment solely to
members of the Coalition and, in addition, should not have
allowed the Coalition to distribute that payment based on “how
much money each member of the Coalition had contributed to the
Coalition’s litigation efforts.” Second Am. Compl. ¶ 94.
Defendants then filed a second motion to dismiss,
reiterating their initial argument under the political question
doctrine, adding a lack of subject matter jurisdiction argument,
and seeking to dismiss all counts for failure to state a claim
upon which relief could be granted. See Defs.’ 2nd Mem. 2.
DEFENDANTS’ MOTION TO DISMISS
I. Establishing Jurisdiction
“A jurisdictional challenge to the court’s consideration of
Plaintiff’s action raises a threshold inquiry.” Hartford Fire
Ins. Co. v. United States, 31 CIT __, __, 507 F. Supp. 2d 1331,
1334 (2007) (citations omitted). Thus, before reaching the
merits of plaintiffs’ complaint, the court must assess
defendants’ motion to dismiss for lack of subject matter
jurisdiction.
Court No. 08-00036 Page 10
“The party seeking to invoke this Court’s jurisdiction has
the burden of establishing such jurisdiction.” Autoalliance
Int’l, Inc. v. United States, 29 CIT 1082, 1088, 398 F. Supp. 2d
1326, 1332 (2005) (citations omitted) (“Autoalliance Int’l”). A
“mere recitation of a basis for jurisdiction, by either a party
or a court, cannot be controlling . . . .” Norsk Hydro Can.,
Inc. v. United States, 472 F.3d 1347, 1355 (Fed. Cir. 2006)
(quotation omitted). “To avoid dismissal in whole or in part for
lack of subject matter jurisdiction, [plaintiffs] must plead
facts from which the court may conclude that it has subject
matter jurisdiction with respect to each of their claims.”
Schick v. United States, 31 CIT __, __, 533 F. Supp. 2d 1276,
1281 (2007) (“Schick”) (citing McNutt v. Gen. Motors Acceptance
Corp., 298 U.S. 178, 189 (1936) (explaining that a plaintiff
“must allege in his pleading the facts essential to show
jurisdiction.”)).
II. Parties’ Arguments
As noted, defendants argue in their motion to dismiss that
there are several reasons why the court is barred from
entertaining plaintiffs’ claims. Their primary contention,
however, is that the court does not possess jurisdiction under 28
U.S.C. § 1581. See Defs.’ 2nd Mem. 4. As set forth below, the
Court No. 08-00036 Page 11
court finds that plaintiffs fail to meet their burden of
establishing jurisdiction because they fail to plead sufficient
facts in support of jurisdiction. See Schick, 31 CIT at __, 533
F. Supp. 2d at 1281. Accordingly, the court does not reach the
other arguments in defendants’ motion to dismiss.
Plaintiffs insist that the court has jurisdiction over its
complaint pursuant to both 28 U.S.C. § 1581(i)(2)10 and (i)(4).
In an effort to satisfy the requirement that they plead facts
sufficient for the court to conclude that it has jurisdiction,
plaintiffs allege that jurisdiction exists based on the
10
28 U.S.C. § 1581(i) states:
In addition to the jurisdiction conferred upon the
Court of International Trade by subsections (a)-(h) of
this section and subject to the exception set forth in
subsection (j) of this section, the Court of
International Trade shall have exclusive jurisdiction
of any civil action commenced against the United
States, its agencies, or its officers, that arises out
of any law of the United States providing for –
(1) revenue from imports or tonnage;
(2) tariffs, duties, fees, or other taxes on
the importation of merchandise for reasons
other than the raising of revenue;
(3) embargoes or other quantitative
restrictions on the importation of
merchandise for reasons other than the
protection of the public health or safety; or
(4) administration and enforcement with
respect to the matters referred to in
paragraphs (1)-(3) of this subsection and
subsections (a)-(h) of this section.
Court No. 08-00036 Page 12
negotiation and entry into force of the SLA and the
administration and enforcement by defendants of the agreement.
See Pls.’ 2nd Opp. 4. The law identified by plaintiffs as
providing jurisdiction is section 301 of the Trade Act of 1974,
codified at 19 U.S.C. § 2411(c). Pls.’ 2nd Opp. 4. Thus, the
linchpin for plaintiffs’ jurisdictional claim is that the SLA was
both negotiated and entered into by the USTR pursuant to the
authority given her11 in 19 U.S.C. § 2411(c)(1)(D).12 Under that
11
The USTR at the time of the negotiation and entry into
force of the SLA was Susan Schwab.
12
Under § 2411(c)(1)(D), if the USTR determines that the
rights of the United States under any trade agreement are being
denied, or that an act, policy, or practice of a foreign country
violates a United States trade agreement or burdens or restricts
United States commerce, the USTR is authorized to
enter into binding agreements with such foreign country
that commit such foreign country to—
(i) eliminate, or phase out, the act, policy,
or practice that is the subject of the action
to be taken under subsection (a) or (b) of
this section,
(ii) eliminate any burden or restriction on
United States commerce resulting from such
act, policy, or practice, or
(iii) provide the United States with
compensatory trade benefits that—
(I) are satisfactory to the Trade
Representative, and
(II) meet the requirements of
paragraph (4).
(continued...)
Court No. 08-00036 Page 13
provision, whenever the USTR “determines that any act, policy, or
practice of a foreign country is unjustifiable and burdens or
restricts United States commerce, or is unreasonable or
discriminatory and burdens or restricts United States commerce,”
the trade representative may enter into agreements with such
foreign country committing that country to eliminate the act,
policy or practice or provide the United States with compensatory
trade benefits.13 See Pls.’ 2nd Opp. 4-5 (citing 19 U.S.C.
§ 2411(c)(1)(D)). Plaintiffs contend that this is what occurred
here and that by
12
(...continued)
19 U.S.C. § 2411(c)(D).
Paragraph 4 of the statute provides:
(4) Any trade agreement described in
paragraph (1)(D)(iii) shall provide
compensatory trade benefits that benefit the
economic sector which includes the domestic
industry that would benefit from the
elimination of the act, policy, or practice
that is the subject of the action to be taken
under subsection (a) or (b) of this section.
. . .
19 U.S.C. § 2411(c)(4).
13
Examples of the USTR’s published determinations
documenting the exercise of this authority are: Determination
Under Section 304 of the Trade Act of 1974 [19 U.S.C. § 2414]:
Practices of the Government of India Regarding Patent Protection
for Pharmaceuticals and Agricultural Chemicals, 63 Fed. Reg.
29,053 (Office of the USTR May 27, 1998); Notice of Agreement;
Monitoring and Enforcement Pursuant to Sections 301 and 306 [19
U.S.C. § 2416]: Canadian Exports of Softwood Lumber, 61 Fed. Reg.
28,262 (Office of the USTR June 5, 1996).
Court No. 08-00036 Page 14
entering into the SLA and requiring therein
that Canada provide a compensatory trade
benefit in the form of the payment to
domestic softwood lumber producers of a
portion of the estimated duties which the
United States had collected and then refunded
to Canada, the USTR was acting pursuant to
her authority under 19 U.S.C. 2411(c)(1)(D)
in addition to acting in accordance with her
general duties and responsibilities under 19
U.S.C. § 2171.
Pls.’ 2nd Opp. 5 (footnote omitted). Put another way, plaintiffs
maintain that the court has § 1581(i) jurisdiction because the
SLA was negotiated pursuant to 19 U.S.C. § 2411(c)(1)(D), which
provides for the entry into agreements that provide for
compensatory trade benefits.14 Apparently, for plaintiffs, these
compensatory trade benefits are the equivalent of duties. See 28
U.S.C. § 1581(i)(2) (“the Court of International Trade shall have
exclusive jurisdiction of any civil action commenced against the
United States . . . that arises out of any law of the United
States providing for . . . duties . . . on the importation of
merchandise for reasons other than the raising of revenue . . .
.”).
14
Although plaintiffs seem to base a portion of their
argument on the notion that the payments to the Coalition are
compensatory trade benefits, the court does not believe that the
actual existence of compensatory trade benefits under the SLA is
determinative for purposes of jurisdiction. Under 19 U.S.C.
§ 2411(c)(1)(B), the USTR may, under certain circumstances,
impose duties. For the court, if the SLA were indeed the product
of § 2411 then, because the statute provides for the imposition
of duties, the court would have jurisdiction pursuant to the
“arising under” provision of 28 U.S.C. § 1581(i).
Court No. 08-00036 Page 15
Defendants respond that the SLA was simply not negotiated
nor executed pursuant to § 2411(c)(1)(D). Defs.’ Reply 2 (“[N]o
part of the negotiations or entry into force of the SLA entailed
any statutory authority derived from 19 U.S.C. § 2411 . . . .”).
Defendants further argue that plaintiffs have offered no support
for their contention that the USTR negotiated or entered into the
SLA pursuant to § 2411 as is required to establish jurisdiction.
See Schick, 31 CIT at __, 533 F. Supp. 2d at 1281 (stating that
plaintiffs “must plead facts from which the court may conclude
that it has subject matter jurisdiction with respect to each of
their claims.”). Rather, defendants contend that “the overall
authority and functions” of the USTR are found in 19 U.S.C.
§ 2171, which, inter alia, invests the USTR with the duty to
develop and coordinate the implementation of United States
international trade policy. Defs.’ Reply 2; see 19 U.S.C.
§ 2171(c)(1)(A). Defendants thus urge the court to find that
plaintiffs have not satisfied their burden of alleging facts
sufficient to find that it has jurisdiction over plaintiffs’
claims.
III. Plaintiffs Fail to Meet Their Burden of Demonstrating
Jurisdiction
Like all federal courts, the Court of International Trade is
a court of limited jurisdiction. As such, the Court has an
Court No. 08-00036 Page 16
obligation to “determine that the matter brought before it
remains within the metes and bounds of such delimitation.” Agro
Dutch Indus. Ltd. v. United States, 29 CIT __, __, 358 F. Supp.
2d 1293, 1294 (2005) (citation omitted). A primary source of
federal jurisdiction rests in “arising under” jurisdiction. The
principal federal statute providing for this jurisdiction is 28
U.S.C. § 1331, which grants jurisdiction to the federal district
courts for claims “arising under” federal law.15 28 U.S.C. § 1331(“The district courts shall have original jurisdiction over all
civil actions arising under the Constitution, laws, or treaties
of the United States.”); see Wright, Miller, & Cooper, 13D Fed.
Prac. & Proc. 3d § 3562.
15
The outer limits of the federal courts' subject matter
jurisdiction are set forth in Article III, Section 2 of the
United States Constitution, which states:
The judicial Power shall extend to all Cases,
in Law and Equity, arising under this
Constitution, the Laws of the United States,
and Treaties made, or which shall be made,
under their Authority;-to all Cases affecting
Ambassadors, other public Minister and
Consuls;-to all Cases of admiralty and
maritime Jurisdiction;-to Controversies to
which the United States shall be a Party;-to
Controversies between two or more
States;-between and State and Citizens of
another State;-between Citizens of different
States;-between Citizens of the same State
claiming Lands under Grants of different
States, and between a State, or the Citizens
thereof, and foreign States, Citizens or
Subjects.
U.S. Const. art. III, § 2, cl. 1.
Court No. 08-00036 Page 17
The statute under which plaintiffs claim jurisdiction here,
19 U.S.C. § 1581(i)(4), is also an “arising under” statute. See
28 U.S.C. § 1581(i)(2) (actions arising out of a law providing
for duties on the importation of merchandise other than for
raising revenue) and 28 U.S.C. § 1581(i)(4) (actions arising out
of the administration and enforcement of paragraph (2) of this
subsection); Schick v. United States, 554 F.3d 992 (Fed. Cir.
2009) (finding that the trial court lacked jurisdiction to
consider claim under § 1581(i)(4) where claim did not arise out
of a law providing for the administration and enforcement of
matters referred to in 19 U.S.C. § 1581(g)(2)). As noted, the
sole arising under statute cited by plaintiffs as the basis for
§ 1581(i) jurisdiction is 19 U.S.C § 2411(c)(1)(D). See 19
U.S.C. § 2411(c)(1)(D).
Beyond the bare claim that the SLA was the product of
§ 2411, however, plaintiffs provide no support for their
contention that it was negotiated or executed pursuant to that
statute, despite having ample opportunity to do so. Defendants
filed their motion to dismiss the second amended complaint on
October 24, 2008, contesting, among other things, the court’s
subject matter jurisdiction. See Defs.’ 2nd Mem. 5, citing 28
U.S.C. § 1581(i)(4) (“The Court does not possess jurisdiction in
this case because Almond Brothers has neither alleged a claim
that arises out of any law of the types identified, nor a claim
Court No. 08-00036 Page 18
that arises out of the administration and enforcement with
respect to the matters referred to in paragraphs (1)-(3) of this
subsection and subsections (a)-(h) of this section.’”). Given
the chance to provide supporting jurisdictional facts, on
December 1, 2008, plaintiffs filed their opposition brief,
claiming that this Court does have jurisdiction over Counts II-IV
of plaintiffs’ complaint “pursuant to both 28 U.S.C. § 1581(i)(2)
and § 1581(i)(4) because each count arises out of a law providing
for duties on the importation of merchandise and the
administration and enforcement by defendants with respect to
estimated duties, specifically, section 301 of the Trade Act of
1974, 19 U.S.C. § 2411(c).” Pls.’ 2nd Opp. 4. However, the
opposition brief failed to provide any facts to support this
claim.
Defendants, in their reply brief filed January 12, 2009,
noted, “Almond Bros. has failed to provide any support for its
contention that the SLA was negotiated or entered into pursuant
to section 301 authority. In fact, there is no support for such
an argument.” Defs.’ 2nd Reply 4. Indeed, as defendants point
out, there is no indication that the USTR performed any of the
actions required by the provisions governing § 2411 before she
commenced the negotiations resulting in the entry into force of
the SLA. See Defs.’ 2nd Reply 4.
Plaintiffs received another chance to plead facts
Court No. 08-00036 Page 19
demonstrating that the SLA was negotiated or entered into
pursuant to § 2411 when they requested and received the court’s
permission to file a sur-reply to defendants’ reply in support of
their motion to dismiss. See Pls.’ Sur-reply to Defs.’ Reply
Supp. Mot. Dismiss. In the sur-reply, filed on February 6, 2009,
plaintiffs again failed to assert any of the necessary
jurisdictional facts in support of their argument that the SLA
was negotiated or entered into pursuant to § 2411. In short,
plaintiffs have had their chance to support their argument with
jurisdictional facts and have failed to do so.
Pursuant to USCIT Rule 8(a), “[a] pleading that states a
claim for relief must contain . . . a short and plain statement
of the grounds for the court’s jurisdiction . . . .” Further,
while jurisdictional facts are normally found in the complaint,
it is well settled that in considering a Rule 12(b)(1) motion
contesting jurisdiction, the court may consider matters outside
the pleadings. See, e.g., Land v. Dollar, 330 U.S. 731, 735 n.4
(1947); Cedars-Sinai Med. Center v. Watkins, 11 F.3d 1573, 1584
(Fed. Cir. 1993). Specifically,
When reviewing a motion to dismiss pursuant
to USCIT Rule 12(b)(1), the court must
determine whether the moving party is
attacking the sufficiency of the
jurisdictional pleadings or the factual basis
for the court’s jurisdiction. If a motion to
dismiss refutes or contradicts the
plaintiff's jurisdictional allegations, the
court treats the motion as questioning the
factual basis for the court’s subject matter
Court No. 08-00036 Page 20
jurisdiction. “In such a case, the
allegations in the complaint are not
controlling, and only uncontroverted factual
allegations are accepted as true for purposes
of the motion.” Cedars-Sinai Med. Center v.
Watkins, 11 F.3d 1573, 1583 (Fed. Cir. 1993)
(internal citations omitted). All other
facts underlying the jurisdictional claims
are in dispute and are subject to
fact-finding by this Court. Thus, a court
may review evidence outside the pleadings to
determine facts necessary to rule on the
jurisdictional issue.
Autoalliance Int’l, 29 CIT at 1088-89, 398 F. Supp. 2d at 1332(internal citations omitted).
Accordingly, in light of the dearth of jurisdictional facts
in the pleadings, the court has looked to the public record,
i.e., the Federal Register, to determine if the SLA was
negotiated or executed pursuant to § 2411.
First, it should be noted that the SLA itself does not state
the authority that authorized its negotiation or entry into
force. See Softwood Lumber Agreement, art. II. Second, an
examination of the public record reveals no basis to believe that
19 U.S.C. § 2411 provided the authority used by the USTR to
negotiate or execute the SLA.
In accordance with the codified statute, prior to taking the
16 17
retaliatory actions authorized by § 2411(c)(1)(D), the USTR
16
If the United States Trade Representative
determines under section 2414(a)(1) of this
title that—
(continued...)
Court No. 08-00036 Page 21
16
(...continued)
(A) the rights of the United States under any
trade agreement are being denied; or
(B) an act, policy, or practice of a foreign
country—
(i) violates, or is inconsistent
with, the provisions of, or
otherwise denies benefits to the
United States under, any trade
agreement, or
(ii) is unjustifiable and burdens
or restricts United States
commerce;
the Trade Representative shall take action
authorized in subsection (c) of this section,
subject to the specific direction, if any, of
the President regarding any such action, and
shall take all other appropriate and feasible
action within the power of the President that
the President may direct the Trade
Representative to take under this subsection,
to enforce such rights or to obtain the
elimination of such act, policy, or practice.
Actions may be taken that are within the
power of the President with respect to trade
in any goods or services, or with respect to
any other area of pertinent relations with
the foreign country.
19 U.S.C. § 2411(a)(1).
17
If the Trade Representative determines under
section 2414(a)(1) of this title that—
(1) an act, policy, or practice of a foreign
country is unreasonable or discriminatory and
burdens or restricts United States commerce,
and
(2) action by the United States is
appropriate, the Trade Representative shall
(continued...)
Court No. 08-00036 Page 22
must conduct an investigation and make a determination. See 19
U.S.C. § § 2412, 2414. Thus, the sections succeeding 19 U.S.C.
§ 2411 set out the steps that the USTR must perform before action
can be taken under § 2411. Here, the published public record
demonstrates that none of these steps was taken prior to the
negotiation of the SLA. Specifically, the USTR did not initiate
any type of investigation pursuant to § 2412 or make a
determination pursuant to § 2414 before negotiating the
Agreement. See 19 U.S.C. § 2411(a) and (b).
That no investigation was commenced can be shown by the
publication requirement. “If the Trade Representative determines
that an investigation should be initiated under this subchapter
with respect to any matter in order to determine whether the
matter is actionable under section 2411 of this title, the Trade
Representative shall publish such determination in the Federal
Register and shall initiate such investigation.” 19 U.S.C.
17
(...continued)
take all appropriate and feasible action
authorized under subsection (c) [referring to
the scope of authority under § 2411] of this
section, subject to the specific direction,
if any, of the President regarding any such
action, and all other appropriate and
feasible action within the power of the
President that the President may direct the
Trade Representative to take under this
subsection, to obtain the elimination of that
act, policy, or practice. . . .
19 U.S.C. § 2411(b).
Court No. 08-00036 Page 23
§ 2412(b)(1)(A).18
Neither is there any indication that the USTR made the
necessary determination pursuant to § 2414 before the SLA was
negotiated:
On the basis of the investigation initiated
under section 2412 of this title and the
consultations (and the proceedings, if
applicable) under section 2413 of this title,
the Trade Representative shall—
(A) determine whether—
(i) the rights to which the United
States is entitled under any trade
agreement are being denied, or
(ii) any act, policy, or practice
described in subsection (a)(1)(B)
or (b)(1) of section 2411 of this
title exists, and
(B) if the determination made under
subparagraph (A) is affirmative, determine
what action, if any, the Trade Representative
should take under subsection (a) or (b) of
section 2411 of this title.
19 U.S.C. § 2414(a).
Had the USTR made any determination pursuant to § 2414(a),
18
See, e.g., Initiation of Section 302 [19 U.S.C. § 2412]
Investigation and Request for Public Comment: Wheat Trading
Practices of the Canadian Wheat Board, 65 Fed. Reg. 69,362(Office of the USTR November 16, 2000) (notice announcing the
initiation of an “investigation to determine whether certain
acts, policies or practices of the Government of Canada and the
Canadian Wheat Board with respect to wheat trading are
unreasonable and burden or restrict U.S. commerce and are,
therefore, actionable under section 301.”). No equivalent
publication relating to an investigation undertaken pursuant to
§ 2411 prior to the SLA’s negotiation could be found.
Court No. 08-00036 Page 24
that determination, too, would have been published in the Federal
Register pursuant to 19 U.S.C. § 2414(c). 19 U.S.C. § 2414(c)
(“The Trade Representative shall publish in the Federal Register
any determination made under subsection (a)(1) of this section,
together with a description of the facts on which such
determination is based.”).19 No publication relating to a
determination undertaken pursuant to § 2411 could be found with
respect to the negotiation or entry into force of the SLA.
Consequently, there can be no argument that the SLA was the
product of § 2411 because there is no evidence that the USTR
performed any of the required acts that could result in action
thereunder.
As stated previously, plaintiffs’ sole basis for invoking
the jurisdiction of the court is that the SLA was negotiated and
entered into pursuant to 19 U.S.C. § 2411(c)(1)(D). Because they
have failed to meet their burden of pleading facts from which the
court could conclude that the SLA was indeed the product of
19
It is worth noting that the USTR has sought to comply
with the provisions relating to investigations and determinations
when seeking to enforce the SLA. See Initiation of Section 302
[19 U.S.C. § 2412] Investigation, Determination of Action Under
301, and Request for Comments: Canada -– Compliance with Softwood
Lumber Agreement, 74 Fed. Reg. 16,436 (Office of the USTR Apr.
10, 2009) (notice of initiation of investigation of and
determination that Canada “is denying U.S. rights under the
SLA”). The notice of initiation of investigation pursuant to a
violation under the SLA further underscores the plaintiffs’
failure to submit evidence that the negotiation and entry into
force of the SLA itself was the product of USTR action under
section 301.
Court No. 08-00036 Page 25
§ 2411, the court cannot accept plaintiffs’ argument that it has
jurisdiction under the arising under provisions of § 1581(i).
See Autoalliance Int’l, 29 CIT at 1088, 398 F. Supp. 2d at 1332.
That being the case, the court finds that it does not have
jurisdiction to hear the claims made in plaintiffs’ complaint.20
CONCLUSION
Based on the Court’s lack of subject matter jurisdiction,
defendants’ motion to dismiss is granted and plaintiffs’
complaint is dismissed.
/s/ Richard K. Eaton
Richard K. Eaton
Dated: May 20, 2009
New York, New York
20
The court does not reach defendants’ arguments for
dismissal pursuant to the political question doctrine or for
failure to state a claim. However, it should be noted that
plaintiffs’ claims cannot succeed if a court is asked to review
the substance of an executive agreement, rather than to review a
claim that the agreement violates a specific statute or
Constitutional right. See, e.g., Sneaker Circus, Inc. v. Carter,
566 F.2d 396, 402 (2d Cir. 1977).