Shandong Huarong MacHinery Co. v. United States ( 2008 )

Slip Op. 08-135
UNITED STATES COURT OF INTERNATIONAL TRADE
_______________________________
:
SHANDONG HUARONG MACHINERY CO.,:
LTD., TIANJIN MACHINERY IMPORT :
& EXPORT CORP., and SHANDONG :
MACHINERY IMPORT & EXPORT CO., :
:
Plaintiffs, :
:
v. : Before: Richard K. Eaton, Judge
:
UNITED STATES, : Court No. 06-00345
:
Defendant, :
and :
:
AMES TRUE TEMPER, :
:
Defendant-Intervenor.:
_______________________________:
OPINION
[Defendant United States Department of Commerce’s motion to
dismiss granted and case dismissed]
Dated: December 10, 2008
Hume & Associates LLC (Robert T. Hume and Marisol Rojo), for
plaintiffs Shandong Huarong Machinery Co., Ltd., Tianjin
Machinery Import & Export Corp., and Shandong Machinery Import &
Export Company.
Gregory G. Katsas, Assistant Attorney General; Jeanne E.
Davidson, Director, Patricia M. McCarthy, Assistant Director,
United States Department of Justice, Civil Division, Commercial
Litigation Branch, (Courtney E. Sheehan), Office of the Chief
Counsel, Import Administration, United States Department of
Commerce (Nithya Nagarajan), of counsel, for defendant.
Wiley Rein LLP (Eileen P. Bradner and Timothy C.
Brightbill), for defendant-intervenor Ames True Temper.
Court No. 06-00345 Page 2
Eaton, Judge: Before the court is the question of whether
plaintiffs’ case, challenging the results in an antidumping
periodic review, should be dismissed as moot. On October 31,
2007, defendant the United States, on behalf of the United States
Department of Commerce (“Commerce” or “the Department”), filed a
motion to dismiss certain counts of plaintiffs’ complaint on the
grounds that the merchandise that was the subject of the counts
had been liquidated. See Def.’s Partial Mot. Dismiss (“Def.’s
Mot.”). In response, plaintiffs Shandong Huarong Machinery Co.,
Ltd., Tianjin Machinery Import & Export Corp., and Shandong
Machinery Import & Export Company replied, and asked the court to
find that all claims in the complaint were moot and to dismiss
the action. See Pls.’ Resp. Def.’s Mot. Dismiss (“Pls.’ Resp.”).
Defendant subsequently agreed that a full dismissal was
appropriate.1 See Def.’s Reply Pls.’ Resp. (“Def.’s Reply”).
After initially supporting defendant’s motion to dismiss
(“Def.-Int.’s Resp.”), defendant-intervenor Ames True Temper
(“Ames” or “defendant-intervenor”) filed a reply brief, opposing
complete dismissal and seeking relief in the form of the
imposition of the duty rates found in the final results of the
periodic review to the already liquidated entries. See Def.-
Int.’s Reply Br. (“Def.-Int.’s Reply”). Accordingly, the only
1
In light of defendant’s position, the court will treat
its motion as one to dismiss the complaint in its entirety.
Court No. 06-00345 Page 3
party that seeks to continue the court’s participation in this
case is Ames. For the reasons that follow, the court grants
defendant’s motion to dismiss.
BACKGROUND
On September 14, 2006, Commerce issued the Final Results of
Antidumping Duty Administrative Reviews and Final Rescission and
Partial Rescission of Antidumping Administrative Reviews, 71 Fed.
Reg. 54,269 (Dep’t of Commerce Sept. 14, 2006) (“Final Results”).
These results addressed the fourteenth administrative review of
the antidumping duty order for heavy forged hand tools, finished
or unfinished, with or without handles from the People’s Republic
of China, entered or withdrawn from the warehouse for consumption
from February 1, 2004, through January 31, 2005 (the “Antidumping
Order”). See Pls.’ Resp. 2. Plaintiffs challenged the Final
Results by filing their complaint in this Court on October 19,
2006. On November 13, 2006, in order to enjoin the liquidation
of the subject merchandise during the pendency of this action,
plaintiffs filed a consent motion for a preliminary injunction.
The injunction order, a draft of which was prepared by
plaintiffs, provided that it would affect entries of subject
merchandise that:
remain unliquidated as of 5:00 p.m. on the
fifth business day after which copies of this
Order are personally served on the following
Court No. 06-00345 Page 4
individuals and received by them or their
delegates
Ann Sebastian, APO/Unit Docket Center, Room 1870
Import Administration, International
Trade Administration
U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW
Washington, DC
Hon. Robert C. Bonner, Commissioner of Customs
Attn: Alfonso Robles, Esq., Chief Counsel, U.S. Customs
Service
Room 44B, 1300 Pennsylvania Avenue, NW
Washington[,] DC
Stephen Tosini, Esq., United States Department of
Justice
Civil Division, Commercial Litigation Branch
1100 L Street, NW
Washington[,] DC 20530
Shandong Huarong Machin. Co. v. United States, Court No. 06-
00345, at 2-3 (Nov. 17, 2006) (injunction order).
Although the injunction order was signed and entered,
plaintiffs failed to provide for its proper service on the
officials named therein, including Ann Sebastian at Commerce.
Def.’s Mot. 3. As a result, Ms. Sebastian did not direct United
States Customs and Border Protection (“Customs”) to suspend the
liquidation of entries subject to the challenged administrative
review. See Def.’s Mot. 3, Ex. A.
Subsequently, Commerce learned that the injunction order had
not been served and contacted plaintiffs’ counsel. Def.’s Mot.
3. On May 2, 2007, plaintiffs’ counsel mailed copies of the
injunction order to the intended recipients and on May 8, 2007
Court No. 06-00345 Page 5
served it by hand on Ms. Sebastian. Def.’s Mot. 3.
On October 31, 2007, defendant filed its motion to dismiss
certain counts in the complaint. Defendant argued that these
counts were moot because, as a result of the failure to timely
serve the injunction order, the entries of plaintiffs’ subject
merchandise were deemed liquidated on March 14, 2007 pursuant to
19 U.S.C. § 1504(d). See generally Def.’s Mot.2 Subsequent to
the filing of plaintiffs’ response to defendant’s motion,
defendant and plaintiffs agreed that dismissal of the full
complaint was appropriate.3 Def.’s Reply 1 n.1.
Ames, however, declined to consent to a dismissal4 and asks
2
Defendant stated in its motion to dismiss that a live
case or controversy remained with respect to certain counts
because a judgment in plaintiffs’ favor regarding those counts
“could alter the cash deposit rate upon merchandise related to
those counts.” Def.’s Mot. 8; see Hylsa S.A. de C.V. v. United
States, 31 CIT __, __, 469 F. Supp. 2d 1341, 1345 (2007). As
explained infra, defendant subsequently agreed that the entire
complaint should be dismissed. See Def.’s Reply 3.
3
Defendant noted
although we disagree with plaintiffs’ conclusion
concerning the Court’s jurisdiction over this matter,
the burden remains with plaintiffs who have indicated
that they do not intend to satisfy it. Consequently,
because plaintiffs contend that this court lacks
subject matter jurisdiction and has [sic] evidenced an
intent not to prosecute its claims, the complaint
should be dismissed in its entirety.
Def.’s Reply 3.
4
Upon receipt of plaintiffs’ response,
(continued...)
Court No. 06-00345 Page 6
the court to order reliquidation of plaintiffs’ merchandise at
the rates determined in the Final Results, or to remand the case
to Commerce with instructions to order liquidation at those
rates.
STANDARD OF REVIEW
Pursuant to 28 U.S.C. § 1581(c): “The Court of International
Trade shall have exclusive jurisdiction of any civil action
commenced under section 516A [19 U.S.C. § 1516a] of the Tariff
Act of 1930.”
Because it wishes the court to proceed, it is Ames’ burden
to demonstrate that jurisdiction exists. See Abitibi-Consol.
Inc. v. United States, 30 CIT __, __, 437 F. Supp. 2d 1352, 1355
(2006).
4
(...continued)
defendant sought and plaintiff[s] agreed to
seek a stipulation of dismissal. However,
defendant-intervenor . . . would not consent
to the dismissal of plaintiffs’ case,
indicating that it intended to request
reliquidation of plaintiffs’ entries that had
been deemed liquidated by operation of law.
Def.’s Reply 1 n.1 (citation omitted).
Court No. 06-00345 Page 7
DISCUSSION
I. Suspension, Liquidation and Injunctions
The question of the court’s jurisdiction in this matter
turns on the liquidation5 process for entries of merchandise
subject to a periodic administrative review. As further
explained below, generally, once entries have been liquidated,
any question relating to the amount of duties to be applied to
those entries is rendered moot. Thus, the availability of Ames’
claim for relief turns on the statutory process of liquidation.
In order to ensure that the rate of duty determined in the
final results of a periodic review are applied to subject
merchandise, the statute provides that “[l]iquidation of a
particular class of entries is suspended when Commerce publishes
in the Federal Register an affirmative preliminary or final
determination in an antidumping investigation covering those
entries.” Int’l Trading Co. v. United States, 281 F.3d 1268,
1272 (Fed. Cir. 2002) (“Int’l Trading”) (citations omitted); SKF
USA Inc. v. United States, 28 CIT 170, 181, 316 F. Supp. 2d 1322,
1333 (2004) (“SKF I”) (“If the ITA’s determination is
affirmative, all entries of the subject merchandise are ordered
suspended.”) (citing 19 U.S.C. § 1673b(d)); 19 U.S.C.
5
“Liquidation of a party’s entries is the final
computation or ascertainment of duties accruing on those
entries.” SKF USA Inc. v. United States, 28 CIT 170, 173, 316 F.
Supp. 2d 1322, 1327 (2004) (citations omitted).
Court No. 06-00345 Page 8
§ 1673b(d)(2); 19 U.S.C. § 1673d(c)(1)(C). Thus, following an
affirmative unfair trade finding, liquidation is suspended to
preserve the entries for liquidation at the assessment rate found
in the final determination. Int’l Trading, 281 F.3d at 1272. The
suspension of liquidation is terminated, however, when the final
results are published in the Federal Register so that Customs may
liquidate the merchandise at the finally determined rate. Id.;
see 19 U.S.C. § 1673e(a) (providing that antidumping duty order
should set forth the antidumping duty rate and directing Customs
officers to assess antidumping duties promptly against the
entries subject to the order); 19 U.S.C. § 1675(a)(2)(C)
(providing that the final results of an administrative review
should set forth the determination of antidumping duty rates that
“shall be the basis for the assessment of countervailing or
antidumping duties” on the subject entries).
If Customs does not act, however, another provision comes
into play. By statute, entries of merchandise not liquidated by
Customs within six months of the removal of suspension of
liquidation are deemed liquidated at the entered rate:
Any entry (other than an entry with respect
to which liquidation has been extended under
subsection (b) [relating to an extension of
the six month period by the Secretary of
Commerce] of this section) not liquidated by
the Customs Service within 6 months after
receiving such notice shall be treated as
having been liquidated at the rate of duty,
value, quantity, and amount of duty asserted
Court No. 06-00345 Page 9
by the importer of record or (in the case of
a drawback entry or claim) at the drawback
amount asserted by the drawback claimant.
19 U.S.C. § 1504(d)(2006). Thus, for deemed liquidation to take
place:
(1) the suspension of liquidation that was in
place must have been removed; (2) Customs
must have received notice of the removal of
the suspension; and (3) Customs must not
liquidate the entry at issue within six
months of receiving such notice.
Fujitsu Gen. Am., Inc. v. United States, 283 F.3d 1364, 1376
(Fed. Cir. 2002) (“Fujitsu”).
Deemed liquidation, however, is not the necessary result of
the passage of time. Where a final determination6 is challenged
in this Court, all liquidation, including deemed liquidation, may
be enjoined during the pendency of the action. 19 U.S.C. § 1516a
(c)(2) (“The United States Court of International Trade may
enjoin the liquidation of some or all entries of merchandise
covered by a determination of the . . . administering authority .
. . upon request by an interested party for such relief and a
proper showing that the requested relief should be granted under
the circumstances.”). The purpose of the injunction is to
suspend liquidation and to preserve merchandise for liquidation
6
Determinations subject to this provision are described
in 19 U.S.C. § 1516a(a)(2). See 19 U.S.C. § 1516a(c)(2).
Court No. 06-00345 Page 10
at the rate finally determined following judicial review.7
II. The Court Lacks Subject Matter Jurisdiction
A. The Subject Entries Are Deemed Liquidated Pursuant to
19 U.S.C. § 1504(d)
The “mootness doctrine” results from the case or controversy
requirement found in Article III of the United States
Constitution. See 13A Charles Alan Wright, Arthur R. Miller &
Edward H. Cooper, Federal Practice and Procedure § 3533 (2d ed.
1987). The Supreme Court has explained that a case becomes moot
when it has “lost its character as a present, live controversy of
the kind that must exist if we are to avoid [advisory] opinions
on abstract propositions of law.” Hall v. Beals, 396 U.S. 45, 48
(1969) (citations omitted). This requirement of an actual
controversy exists at all stages of an action. See, e.g.,
Steffel v. Thompson, 415 U.S. 452, 461 n.10 (1974).
In the context of an unfair trade case, Courts have
generally found that once entries have been liquidated, there is
no case or controversy with respect to the duty rate to be
applied to them. As a result, liquidation moots a court
challenge to the duty rate imposed in an administrative review:
7
In Fujitsu, 283 F.3d at 1379, the Federal Circuit found
that the suspension would end when the court decision in the
action was “final” or conclusive such that it could no longer be
appealed, i.e., when “the time for petitioning the Supreme Court
for certiorari expires without the filing of a petition.” Id.Court No. 06-00345 Page 11
“Once liquidation occurs, it permanently deprives a party of the
opportunity to contest Commerce’s results for the administrative
review by rendering the party’s cause of action moot.” SKF I, 28
CIT at 173, 316 F. Supp. 2d at 1327 (citing Zenith Radio Corp. v.
United States, 710 F.2d 806, 809-810 (Fed. Cir. 1983)
(“Zenith”)); see also Fujitsu, 283 F.3d at 1376. In this
respect, Courts have made no distinction between actual
liquidation made by Customs and deemed liquidation. See Koyo
Corp. v. United States, 497 F.3d 1231, 1237 (Fed. Cir. 2007)
(“Koyo”) (finding that, absent a valid protest, “the rate of duty
that applies to a deemed liquidation under 19 U.S.C. § 1504(d) is
the duty rate claimed on the importer’s entry papers.”)
(citations omitted).
All parties to this action agree that the injunction order
was ineffective because it was not properly served and that the
three conditions for deemed liquidation have been met. Notably,
Ames does not dispute that the merchandise has been liquidated
pursuant to the deemed liquidation statute. See Def.-Int.’s
Reply 6. Thus, it follows that the liquidation of the subject
merchandise has eliminated any case or controversy cognizable by
the court as to the amount of any antidumping duty rate to be
applied to that merchandise. See Zenith, 710 F.2d at 810(stating “liquidation would indeed eliminate the only remedy
available to Zenith for an incorrect review determination by
Court No. 06-00345 Page 12
depriving the trial court of the ability to assess dumping duties
on Zenith’s competitors in accordance with a correct margin on
entries in the . . . review period.”); Cemex, S.A. v. United
States, 384 F.3d 1314 (Fed. Cir. 2004) (“Cemex”) (holding that
domestic producers could not gain relief by way of reliquidation
upon challenging Customs’ erroneous liquidation of entries); see
also Shinyei Corp. v. United States, 524 F.3d 1274, 1283 (Fed.
Cir. 2008) (stating that “when an entry is deemed liquidated, the
duty rate is the deposit rate, and Customs may not recover any
additional duties from the importer thereafter.”) (citations
omitted).
B. The Court is Without Jurisdiction to Hear Ames’
Underlying Claims Which Were Rendered Moot by
Liquidation
Although Ames concedes that plaintiffs’ entries have been
liquidated, it contends that the court should not dismiss this
case because a live case or controversy remains:
the vast majority of subject merchandise was
entered at inappropriately low rates,
including some rates that were obtained
through fraudulent means. During the course
of recent administrative reviews, Commerce
has determined that certain respondents had
engaged in agent sales schemes, a finding
that this Court subsequently affirmed. Using
these schemes, certain low-margin producers
“rented out” their antidumping duty margin to
high-margin producers in exchange for a
nominal commission fee. As a result, due to
the overlap in administrative reviews and the
Court No. 06-00345 Page 13
existence of the agent sales, a large
percentage of the entries in the current
proceeding appear to have been entered at the
low duty rates from prior reviews, before the
agent sales schemes were discovered and fully
addressed by Commerce and this Court.
Def.-Int.’s Reply 3 (citations omitted). Put another way, Ames’
argument is that, because plaintiffs’ merchandise was liquidated
at “inappropriately low” duty rates, the court should order
reliquidation at the rates found in the Final Results. Ames
acknowledges that these “inappropriately low” duty rates were the
product of prior administrative reviews, but insists that they
have become “intertwined with the claims in this action.” Def.-
Int.’s Reply 4. Ames apparently believes that the claimed
illegitimacy of the entered duty rates provides a basis for
jurisdiction. See Def.-Int.’s Reply 2.
Ames’ arguments are unpersuasive. As noted, the general
rule is that liquidation renders moot an action brought under 19
U.S.C. § 1516a(a)(2)(A)(i)(I) challenging the amount of the
dumping duties assessed on subject merchandise following a final
determination. See SKF I, 28 CIT at 173, 316 F. Supp. 2d at 1327
(citing Zenith, 710 F.2d at 809-810) (“Once liquidation occurs,
it permanently deprives a party of the opportunity to contest
Commerce’s results for the administrative review by rendering the
party’s cause of action moot.”).
While the Court of Appeals for the Federal Circuit and this
Court No. 06-00345 Page 14
Court have recognized exceptions8 to the general rule, these
exceptions are inapplicable here. That is, no Court has found
that it has jurisdiction to order reliquidation, at an increased
rate, because merchandise was deemed liquidated at an
inappropriately low entered rate determined in a previous review.
As defendant points out, those cases where reliquidation has been
ordered all involve errors made by government agencies in
contravention of a statute or in violation of a court ordered
8
For example, there are circumstances where, following
liquidation, this Court may retain jurisdiction to decide matters
relating to the dumping margins found in the final determination.
See AK Steel Corp. v. United States, 27 CIT 1382, 281 F. Supp. 2d
1318 (2003) (holding Customs’ liquidation, despite the presence
of a valid injunction, void ab initio); Hylsa S.A. de C.V. v.
United States, 31 CIT __, __, 469 F. Supp. 2d 1341, 1345
(2007)(holding that although liquidation mooted any claim for
reliquidation, it did not moot challenge to the dumping margin
determined in an administrative review where a finding of a non-
de-minimis margin could have consequences in the ability to seek
the revocation of the underlying order); Koyo, 497 F.3d at 1231(holding that importer may protest the failure of Customs to
liquidate entries at the rate contained in Commerce’s
instructions, even though such failure had resulted in the
passage of time necessary for deemed liquidation to take place);
Gerdau Ameristeel Corp. v. United States, 519 F.3d 1336, 1340-
1343 (Fed. Cir. 2008) (holding that liquidation did not moot
challenge to dumping margins themselves because “there remains an
issue having ongoing legal consequences” relating to the possible
revocation of the underlying antidumping order, but that
liquidation ended plaintiff’s right to challenge the duty
assessed on liquidated merchandise); Shinyei Corp. v. United
States, 524 F.3d 1274 (Fed. Cir. 2008) (holding that deemed
liquidated entries may be reliquidated where Commerce issues
erroneous liquidation instructions); but see SKF USA, Inc. v.
United States, 512 F.3d 1326, 1332 (Fed. Cir. 2008) (“SKF II”)
(holding that, where no injunction was entered, deemed
liquidation rendered moot importer’s challenge to correctness of
antidumping duty determined by Commerce).
Court No. 06-00345 Page 15
injunction. See Def.’s Reply 4. Those cases are far removed
from deemed liquidation resulting from a law office failure.
Thus, there is nothing in defendant’s case that would take
it out of the rule laid down in SKF I. See SKF I, 28 CIT at 174,
316 F. Supp. 2d at 1327 (“After an antidumping review
determination, if a party’s entries are liquidated prior to
judicial review of the determination and antidumping duties are
assessed, any outstanding challenges as to those entries are
rendered moot because liquidation, absent errors by Commerce or
Customs, places the entries outside the jurisdiction of the
court.”) (footnote and citation omitted). Defendant makes no
claim that it seeks the court’s assistance through a finding that
would correct an agency mistake. Therefore, the only remedy Ames
seeks – reliquidation – is one the court cannot order as a
consequence of the application of the mootness doctrine.
III. Ames’ Claims Are Beyond the Scope of The Action Before This
Court
Even if the court had jurisdiction, Ames’ action would be
dismissed. Under the theory proposed by Ames, the court is asked
to find that the entered rate was “inappropriately low.” In
order to do so, the court would be required to reopen the
thirteenth administrative review, or additional prior reviews,
Court No. 06-00345 Page 16
which provided the basis for the entered rate. This the court
may not do. See Norsk Hydro Can., Inc. v. United States, 472
F.3d 1347, 1361 (Fed. Cir. 2006) (finding that administrative
reviews are limited to entries made during the period of review
in issue and that “issues relating to entries from a prior year
that were not raised for Commerce review during the appropriate
POR” would “impair the finality of any one annual review,
potentially prolonging a [countervailing duty] dispute far beyond
the year to which it relates”). Here, this Court has previously
upheld Commerce’s final results in prior administrative reviews
and defendant-intervenor may not seek to relitigate the issues
raised in the context of those cases. See, e.g., Ames True
Temper v. United States, 32 CIT __, Slip Op. 08-8 (Jan. 18, 2008)
(not reported in Federal Supplement) (thirteenth administrative
review); Shandong Huarong Machin. Co. v. United States, 31 CIT
__, Slip Op. 07-169 (Nov. 20, 2007) (not reported in the Federal
Supplement) (twelfth administrative review); Shandong Huarong
Machin. Co. v. United States, 31 CIT __, Slip Op. 07-3 (Jan. 9,
2007) (not reported in the Federal Supplement) (eleventh
administrative review).
Finally, the validity of the entered rate is not a subject
of this action. That is, it was not raised in plaintiffs’
complaint, defendant’s answer, or defendant-intervenor’s motion
to intervene. In addition, the evidence upon which Ames hopes to
Court No. 06-00345 Page 17
rely is not found in the record of the fourteenth administrative
review, but rather in that of the thirteenth or prior reviews.
That being the case, defendant-intervenor cannot now seek to
begin what is essentially a new lawsuit in the context of one
that both plaintiffs and defendant wish dismissed. See Parkdale
Int’l v. United States, 30 CIT __, __, 429 F. Supp. 2d 1324, 1337
(2006) (“Intervenor is limited to the field of litigation open to
the original parties, and cannot enlarge the issues tendered by
or arising out of plaintiff’s bill.”) (citing Torrington Co. v.
United States, 14 CIT 56, 57, 731 F. Supp. 1073, 1075 (1990)).
As defendant points out, “[t]o the extent that defendant-
intervenor desires to bring an action in its own right to protect
whatever its own interests may be, it may do so.” Def.’s Resp.
Ct.’s Aug. 25, 2008 Letter 4. What defendant-intervenor may not
do, however, is append a new cause of action, based on a record
not before the court, to plaintiffs’ existing suit.
Court No. 06-00345 Page 18
CONCLUSION
For the foregoing reasons, the court grants the defendant’s
motion to dismiss. Judgment shall be entered accordingly.
/s/ Richard K. Eaton
Richard K. Eaton
Dated: December 10, 2008
New York, New York