Schaeffler Group USA, Inc. v. United States , 808 F. Supp. 2d 1358 ( 2012 )

Slip Op. 12- 8
UNITED STATES COURT OF INTERNATIONAL TRADE
SCHAEFFLER GROUP USA, INC.,
Plaintiff,
v.
UNITED STATES, UNITED STATES
CUSTOMS AND BORDER PROTECTION, Before: Gregory W. Carman, Judge
and UNITED STATES INTERNATIONAL Timothy C. Stanceu, Judge
TRADE COMMISSION, Leo M. Gordon, Judge
Defendants, Consol. Court No. 06-00432
and
THE TIMKEN COMPANY and MPB
CORPORATION,
Defendant Intervenors.
OPINION
[Dismissing the consolidated action for failure to state a claim upon which relief can be
granted]
Dated: January 17, 2012
Max F. Schutzman, and Andrew T. Schutz, Grunfeld, Desiderio, Lebowitz,
Silverman & Klestadt, LLP, of New York, NY, for plaintiff.
David S. Silverbrand, and Courtney S. McNamara, Trial Attorneys, Commercial
Litigation Branch, Civil Division, United States Department of Justice, of Washington,
DC, for defendant United States Customs and Border Protection. With them on the
briefs were Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, Franklin
Consol. Court No. 06-00432 Page 2
E. White, Jr., Assistant Director, and Andrew G. Jones, Office of Assistant Chief Counsel,
United States Customs and Border Protection, of counsel.
Patrick V. Gallagher, Jr., Attorney Advisor, Office of the General Counsel, U.S.
International Trade Commission, of Washington, DC, for defendant, U.S. International
Trade Commission. With him on the briefs were James M. Lyons, General Counsel, and
Neal J. Reynolds, Assistant General Counsel for Litigation.
Geert De Prest, Stewart and Stewart, of Washington, DC, for defendant
intervenors. With him on the brief were Terence P. Stewart, Amy S. Dwyer, and Patrick J.
McDonough.
CARMAN , JUDGE: Plaintiff brought five cases1 challenging the constitutionality of the
Continued Dumping and Subsidy Offset Act of 2000 (“CDSOA” or “Byrd
Amendment”).2 These cases were consolidated by order of the Court under Consol. Ct.
No. 06 00432. (Order (Feb. 15, 2011), ECF No. 37.) Plaintiff claims that it unlawfully
was denied affected domestic producer (“ADP”) status, which would have qualified it
to receive distributions under the CDSOA. The consolidated case is now before the
Court on dispositive motions. Defendants United States Customs and Border
Protection (“CBP”) and the United States International Trade Commission (“ITC”) each
move to dismiss Plaintiff’s complaints for failure to state a claim upon which relief can
1
Compl., Ct. No. 06 00432, Nov. 27, 2006, ECF No. 4 (“Compl. 1“); Compl., Ct.
No. 07 00064, Feb. 26, 2007, ECF No. 2 (“Compl. 2“); Compl., Ct. No. 07 00477, Dec. 20,
2007, ECF No. 2 (“Compl. 3“); Compl., Ct. No. 08 00387, Nov. 3, 2008, ECF No. 4
(“Compl. 4“); Compl., Ct. No. 10 00048, Feb. 16, 2010, ECF No. 2 (“Compl. 5“).
2
Pub. L. No. 106 387, §§ 1001 1003, 114 Stat. 1549, 1549A 72 75 (codified at
19 U.S.C. § 1675c (2000)), repealed by Deficit Reduction Act of 2005, Pub. L. 109 171,
§ 7601(a), 120 Stat. 4, 154 (Feb. 8, 2006; effective Oct. 1, 2007).
Consol. Court No. 06-00432 Page 3
be granted pursuant to USCIT Rule 12(b)(5), and for judgment on the pleadings under
USCIT R. 12(c). (Defs. The United States and United States Customs and Border
Protection’s Mot. to Dismiss for Failure to State a Claim upon Which Relief Can Be
Granted and for Judgment on the Pleadings (“CBP Mot.”), May 4, 2011, ECF No. 60);
(Def. United States International Trade Commission’s Mot. to Dismiss for Failure to
State a Claim and For Judgment on the Pleadings (“ITC Mot.”), May 2, 2011, ECF No.
56). Defendant Intervenors the Timken Company and MPB Corp. (collectively,
“Timken”) move for judgment on the pleadings pursuant to USCIT Rule 12(c).
(Timken’s Mot. for J. on the Pleadings (“Timken Mot.”), May 2, 2011, ECF No. 58.)
Plaintiff also cross moved for judgment on the pleadings. (Pl.’s Cross Mot. for J. on the
Pleadings (“Pl.’s Mot.”), June 6, 2011, ECF No. 62.) For the reasons set forth below,
Plaintiff’s consolidated action will be dismissed for failure to state a claim upon which
relief can be granted.
BACKGROUND
Plaintiff Schaeffler Group USA, Inc. (“Schaeffler”), a U.S. producer of
antifriction bearings, is the legal successor to two U.S. producers of antifriction
bearings3 who participated in a 1988 investigation conducted by the ITC that
3
The Court accepts Plaintiff’s undisputed representation that it is the legal
successor to INA Bearing Co., Inc. and FAG Bearings Corp., and will refer to these
companies interchangeably as “Schaeffler.”
Consol. Court No. 06-00432 Page 4
culminated in the issuance of antidumping duty orders on antifriction bearings and
parts thereof from Germany, France, Italy, Japan, Sweden, Romania, Thailand,
Singapore, and the United Kingdom. (See Compl. 1 ¶¶ 1, 7.) During those proceedings,
Schaeffler responded to the ITC’s questionnaires but declined to indicate to the ITC that
it supported the antidumping petition. (Id. at ¶ 10.) Consequently, the ITC has never
included Schaeffler on a published list of ADPs, and, as a result, Schaeffler has never
received a CDSOA distribution. (Compl. 1 ¶ 36; Compl. 2 ¶ 36; Compl. 3 ¶¶ 39, 42;
Compl. 4 ¶ 39; Compl. 5 ¶ 39.)
Plaintiff brought a series of cases to challenge the government’s refusal to
provide it CDSOA distributions for fiscal years 2004 through 2009. (Compls. 1 5,
Prayer for Relief.) Shortly after each of Schaeffler’s cases was filed, the Court stayed the
actions pending final resolution of other litigation raising the same or similar issues.4
Following the decision of the U.S. Court of Appeals for the Federal Circuit in SKF USA
Inc. v. U.S. Customs and Border Protection, 556 F.3d 1337 (2009) (“SKF USA II”), the
Court ordered Plaintiff to show cause why its cases should not be dismissed. (Order
(Jan. 3, 2011), ECF No. 31.) After Plaintiff responded to the Court’s order, the Court
lifted the stay in each of Plaintiff’s cases for all purposes. (Order (Feb. 9, 2011), ECF No.
4
The Court’s order stayed the action until final resolution of Pat Huval
Restaurant & Oyster Bar, Inc. v. United States, Consol. Ct. No. 06 0290. (See Order
(Feb. 23, 2007), ECF No. 23.)
Consol. Court No. 06-00432 Page 5
34.) The Court then consolidated Plaintiff’s five cases under Consol. Ct. No. 06 00432.
(Order (Feb 15, 2011)).5
JURISDICTION
The Court exercises subject matter jurisdiction over this action pursuant to
section 201 of the Customs Courts Act of 1980, 28 U.S.C. § 1581(i)(4), which grants the
Court of International Trade exclusive jurisdiction of any civil action commenced
against the United States that arises out of any law providing for administration and
enforcement with respect to, inter alia, the matters referred to in § 1581(i)(2), which are
“tariffs, duties, fees, or other taxes on the importation of merchandise for reasons other
than the raising of revenue.” The CDSOA, under which this action arises, is such a law.
See Furniture Brands Int’l, Inc. v. United States, 35 CIT __, __ __ Ct. No. 07 00026, Slip
Op. 11 132 at 9 15 (Oct. 20, 2011).
DISCUSSION
The CDSOA amended the Tariff Act of 1930 to provide for an annual
distribution (a “continuing dumping and subsidy offset”) of duties assessed pursuant to
an antidumping duty or countervailing duty order to affected domestic producers as
5
CBP has not made any CDSOA distributions affecting this case and indicates
that it will refrain from doing so until January 31, 2012 at the earliest. (Def. U.S.
Customs & Border Protection’s Resp. to the Ct.’s Feb. 14, 2011 Request (Feb. 28, 2011),
ECF No. 43.)
Consol. Court No. 06-00432 Page 6
reimbursements for qualifying expenditures.6 19 U.S.C. § 1675c(a) (d). ADP status is
limited to petitioners, and interested parties in support of petitions, with respect to
which antidumping duty and countervailing duty orders are entered, and who remain
in operation. Id. § 1675c(b)(1). The CDSOA directed the ITC to forward to Customs,
within sixty days after an antidumping or countervailing duty order is issued, lists of
persons with ADP status, i.e., “petitioners and persons with respect to each order and
finding and a list of persons that indicate support of the petition by letter or through
questionnaire response.” Id. § 1675c(d)(1). The CDSOA also provided for distributions
of antidumping and countervailing duties assessed pursuant to existing antidumping
duty and countervailing duty orders and for this purpose directed the ITC to forward to
CBP a list identifying ADPs “within 60 days after the effective date of this section in the
case of orders or findings in effect on January 1, 1999 or thereafter . . . .” Id. The
CDSOA directed CBP to publish in the Federal Register, prior to each distribution, lists
of ADPs potentially eligible for distributions based on the lists obtained from the ITC,
6
Congress repealed the CDSOA in 2006, but the repealing legislation provided
that “[a]ll duties on entries of goods made and filed before October 1, 2007, that would
[but for the legislation repealing the CDSOA], be distributed under [the CDSOA] . . .
shall be distributed as if [the CDSOA] . . . had not been repealed . . . .” Deficit Reduction
Act of 2005, Pub. L. No. 109 171, § 7601(b), 120 Stat. 4, 154 (2006). In 2010, Congress
further limited CDSOA distributions by prohibiting payments with respect to entries of
goods that as of December 8, 2010 were “(1) unliquidated; and (2)(A) not in litigation; or
(B) not under an order of liquidation from the Department of Commerce.” Claims
Resolution Act of 2010, Pub. L. No. 111 291, § 822, 124 Stat. 3064, 3163 (2010).
Consol. Court No. 06-00432 Page 7
id. § 1675c(d)(2), and to distribute annually all funds, including accrued interest, from
antidumping and countervailing duties received in the preceding fiscal year. Id.
§ 1675c(d)(3), (e).
The Court of Appeals, in SKF USA II, upheld the CDSOA against
constitutional challenges brought on First Amendment and equal protection grounds.
556 F.3d at 1360 (“[T]he Byrd Amendment is within the constitutional power of
Congress to enact, furthers the government’s substantial interest in enforcing the trade
laws, and is not overly broad. We hold that the Byrd Amendment is valid under the
First Amendment.”); id. (“Because it serves a substantial government interest, the Byrd
Amendment is also clearly not violative of equal protection under the rational basis
standard.”).7
Plaintiff challenges the constitutionality of Defendants’ application of the
CDSOA to Schaeffler on three grounds. In Count One, Plaintiff challenges the “in
support of the petition” requirement of the CDSOA (“petition support requirement”), as
applied, on First Amendment grounds. (Compl. 1 ¶¶ 41 43, Compl. 2 ¶¶ 41 43, Compl.
3 ¶¶ 44 46, Compl. 4 ¶¶ 41 43, Compl. 5 ¶¶ 41 43.) In Count Two, Plaintiff challenges
the petition support requirement, as applied, on Fifth Amendment Equal Protection
7
SKF USA II reversed the decision of the Court of International Trade in SKF
USA Inc. v. United States, 30 CIT 1433, 451 F. Supp. 2d 1355 (2006) (“SKF USA I”),
which held the petition support requirement of the CDSOA unconstitutional on Fifth
Amendment equal protection grounds.
Consol. Court No. 06-00432 Page 8
grounds. (Compl 1 ¶¶ 44 47, Compl. 2 ¶¶ 44 47, Compl. 3 ¶¶ 47 50, Compl. 4
¶¶ 44 47, Compl. 5 ¶¶ 44 47.) In Count Three, Plaintiff claims that the petition support
requirement violates the Fifth Amendment Due Process guarantee, in basing
Schaeffler’s eligibility for disbursements on past conduct, i.e., support for a petition.
(Compl. 1 ¶¶ 48 50, Compl. 2 ¶¶ 48 50, Compl. 3 ¶¶ 51 53, Compl. 4 ¶¶ 48 50, Compl.
5 ¶¶ 48 50.)
In ruling on motions to dismiss made under USCIT Rule 12(b)(5), we dismiss
complaints that do not “contain sufficient factual matter, accepted as true, to ‘state a
claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009)
(quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). For the reasons set
forth below, we conclude that each of the claims in Plaintiff’s complaints in this
consolidated action must be dismissed for failure to state a claim upon which relief can
be granted.
I. Plaintiff’s Challenges Under the First Amendment and the Equal Protection
Clause Are Foreclosed by Binding Precedent
Plaintiff fails to plead facts allowing the Court to conclude that its as applied
First Amendment and Equal Protection challenges to the CDSOA are distinguishable
from claims brought, and rejected, in SKF USA II. The complaints contain no assertions
that the CDSOA was applied to Schaeffler in a different manner than the statute was
applied to other parties who did not support a petition. Plaintiff acknowledges that to
Consol. Court No. 06-00432 Page 9
qualify as an ADP, it “must have been a petitioner or supported a petition that led to an
antidumping or countervailing duty order (which Schaeffler did not.)” (See, e.g.,
Compl. 1 ¶ 10.) The facts as pled place Schaeffler on the same footing as other potential
claimants who did not support the petition, such as SKF. See SKF USA II, 556 F.3d at
1343 (“Since it was a domestic producer, SKF also responded to the ITC’s questionnaire,
but stated that it opposed the antidumping petition.”). Consequently, because Plaintiff
does not allege that there was anything unique about the way the CDSOA was applied
to it, Plaintiff’s as applied First Amendment and Equal Protection challenges in Counts
One and Two are foreclosed by the holding in SKF USA II, and must be dismissed
pursuant to USCIT Rule 12(b)(5) for failure to state a claim upon which relief can be
granted.
Plaintiff’s argument that the recent Supreme Court cases Snyder v. Phelps, 131
S. Ct. 1207 (2011), and Citizens United v. Federal Election Commission, 130 S. Ct. 876(2010) effectively overturn SKF USA II is wholly unpersuasive. While it is conceivable
that intervening Supreme Court precedent could “effectively overrule” a previous
circuit court decision, we are not convinced that such is the case here.
In Snyder, the Supreme Court held that the First Amendment provided a valid
defense to certain tort liability, because the defendant’s speech, while “hurtful,” was
made in “a public place on a matter of public concern,” and was therefore “entitled to
Consol. Court No. 06-00432 Page 10
‘special protection’ under the First Amendment.” Snyder, 131 S. Ct. at 1218 20. We
conclude that Snyder has no bearing on the constitutionality of the CDSOA. To
conclude otherwise is to ignore the Supreme Court’s disclaimer that
[o]ur holding today is narrow. We are required in First Amendment cases
to carefully review the record, and the reach of our opinion here is limited
by the particular facts before us. As we have noted, “the sensitivity and
significance of the interests presented in clashes between First Amendment
and [state law] rights counsel relying on limited principles that sweep no
more broadly than the appropriate context of the instant case.”
Snyder, 131 S. Ct. at 1220 (quoting Florida Star v. B.J.F., 491 U.S. 524, 533 (1989))
(emphasis added). Plaintiff is incorrect in asserting that the Supreme Court intended in
Snyder, “for the first time, [to identify] a discrete set of guiding principles to determine
whether the speech at issue [in this case] constitutes ‘public speech’ subject to strict
scrutiny.” (Pl.’s Mot. 11.) Because this case does not involve the First Amendment as a
defense to tort liability for inflammatory speech, nor a question regarding the clash of
First Amendment and state law rights, the Court finds Snyder inapplicable.
Citizens United is similarly inapplicable. In that case, the Supreme Court
invalidated a law that imposed “an outright ban, backed by criminal sanctions” on
corporate spending on “electioneering communication,” which the Supreme Court
regarded as a ban on political speech. Citizens United, 130 S. Ct. at 897 (stating that the
prohibitions at issue were “classic examples of censorship.”). While “it might be
maintained that political speech simply cannot be banned or restricted as a categorical
Consol. Court No. 06-00432 Page 11
matter,” the Supreme Court noted that at a minimum,“[l]aws that burden political
speech are ‘subject to strict scrutiny,’” and evaluated the challenged law under that
framework. Id. at 898 (quoting Federal Election Comm’n v. Wisconsin Right to Life,
Inc., 551 U.S. 449, 464 (2007)). The statute in Citizens United thus contrasts sharply with
the CDSOA, which “does not prohibit particular speech.” SKF USA II, 556 F.3d at 1350.
This is a critical distinction. As SKF USA II noted, “[s]tatutes that are prohibitory in
nature are rarely sustained, and cases addressing the constitutionality of such statutes
are of little assistance in determining the constitutionality of the far more limited
provisions of the Byrd Amendment.” Id. (emphasis added). This Court agrees;
Citizens United is of little assistance.
Therefore, the Court will dismiss Plaintiff’s First Amendment and Equal
Protection claims in Counts One and Two of its complaints for failure to state a claim
upon which relief can be granted.
II. The Petition Support Requirement Does Not Violate the Due Process Guarantee
Due to Retroactivity
Count Three of each of Plaintiff’s complaints claims that the CDSOA is
impermissibly retroactive, in violation of the Due Process guarantee of the Fifth
Amendment, in basing Schaeffler’s eligibility for disbursements on past conduct, i.e.,
support for a petition. In New Hampshire Ball Bearing v. United States, 36 CIT __, __
__, Slip Op. 12 2, at 8 14 (Jan. 3, 2012), we recently considered a claim essentially
Consol. Court No. 06-00432 Page 12
identical to Plaintiff’s retroactivity claims. We concluded then that “the retroactive
reach of the petition support requirement in the CDSOA is justified by a rational
legislative purpose and therefore is not vulnerable to attack on constitutional due
process grounds.” 36 CIT at __, Slip Op. at 14. We reasoned that “it would not be
arbitrary or irrational for Congress to conclude that the legislative purpose of
rewarding domestic producers who supported antidumping petitions . . . would be
‘more fully effectuated’ if the petition support requirement were applied both
prospectively and retroactively.” 36 CIT at __, Slip Op. at 13 (quoting Pension Benefit
Guaranty Corp. v. R.A. Gray & Co., 467 U.S. 717, 730 31 (1984)). We conclude,
therefore, that Congress did not violate Schaeffler’s Fifth Amendment due process
rights in basing potential eligibility for CDSOA disbursements on a decision on whether
to support the petition that Schaeffler made prior to the enactment of the CDSOA.
Based on this conclusion, we will dismiss the Due Process claims in Count Three of the
complaints for failure to state a claim upon which relief can be granted.
CONCLUSION
For the foregoing reasons, all claims in the complaints in this consolidated
action must be dismissed for failure to state a claim upon which relief can be granted.8
8
Because the Court is granting Defendants’ motions to dismiss, the Court does
not need to reach Defendants’ and Defendant Intervenors’ motions for judgment on the
pleadings. Moreover, since the Court finds no merit in any of Plaintiff’s claims, the
Court has no reason to entertain Defendant Intervenors’ arguments regarding the
Consol. Court No. 06-00432 Page 13
Accordingly, we deny Plaintiff’s motion for judgment on the pleadings. Plaintiff has
not indicated, either in responding to the Court’s order to show cause or in opposing
the motions to dismiss, that there is a plausible basis for Plaintiff to seek leave to amend
the complaints, and we see no such basis. Therefore, the Court shall enter judgment
dismissing this action.
Gregory W. Carman
Gregory W. Carman, Judge
Dated: January 17, 2012
New York, New York
statute of limitations or failure to exhaust administrative remedies.