Aspects Furniture Int'l, Inc. v. United States , 2020 CIT 120 ( 2020 )

Slip Op. 20-
UNITED STATES COURT OF INTERNATIONAL TRADE
ASPECTS FURNITURE
INTERNATIONAL, INC.,
Plaintiff,
Before: Mark A. Barnett, Judge
v. Court No. 18-00222
UNITED STATES,
Defendant.
OPINION AND ORDER
[Granting Plaintiff’s motion for leave to file a first amended complaint. Denying as moot
Defendant’s motion for judgment on the pleadings and Plaintiff’s cross-motion for partial
judgment on the pleadings.]
Dated: August 17, 2020
Robert W. Snyder and Laura A. Moya, Law Offices of Robert W. Snyder, of Irvine, CA,
for Plaintiff.
Marcella Powell, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of Washington, DC, for Defendant. With her on the brief were
Justin R. Miller, Attorney-in-Charge, International Trade Field Office, Jeanne E.
Davidson, Director, and Ethan P. Davis, Acting Assistant Attorney General. Of counsel
on the brief was Paula Smith, Office of the Assistant Chief Counsel, International Trade
Litigation, U.S. Customs and Border Protection.
Barnett, Judge: In this action, Plaintiff Aspects Furniture International, Inc.
(“Plaintiff” or “AFI”) contests the denial of two protests1 challenging U.S. Customs and
Border Protection’s (“CBP” or “Customs”) allegedly untimely liquidation of ten entries
1 AFI contests the denial of Protest No. 5201-18-100098, covering nine entries
(hereinafter, “the nine subject entries”), and Protest No. 5201-18-100100, covering one
entry (hereinafter, “the single subject entry”). Summons, ECF No. 1. All ten entries are
collectively referred to as “the subject entries.”
Court No. 18-00222 Page 2
associated with those protests. See generally Compl., ECF No. 2. The matter is before
the court on Defendant’s (“the Government”) motion for judgment on the pleadings
pursuant to U.S. Court of International Trade (“USCIT”) Rule 12(c), Def.’s Mot. for J. on
the Pleadings and accompanying Def.’s Mem. in Supp. of its Mot. for J. on the
Pleadings (“Def.’s Mot. J.”), ECF No. 35; AFI’s cross-motion for partial judgment on the
pleadings or, alternatively, for partial summary judgment, Pl.’s Cross-Mot. for Partial J.
on the Pleadings or, in the alternative, for Partial Summ. J., and Resp. in Opp’n to Def.’s
Mot. for J. on the Pleadings (“Pl.’s Cross-Mot. J.”), ECF No. 43; and AFI’s motion for
leave to file a first amended complaint, Mot. for Leave to File First Am. Compl. (“Pl.’s
Mot. Am. Compl.”), ECF No. 58. For the reasons discussed herein, AFI’s motion for
leave to file a first amended complaint is granted. Accordingly, the Government’s
motion for judgment on the pleadings and AFI’s cross-motion for partial judgment on the
pleadings is denied as moot. See, e.g., Pac. Bell Tele. Co. v. Linkline Commc’ns, Inc.,
555 U.S. 438, 456 n.4 (2009) (“Normally, an amended complaint supersedes the
original complaint.”).
BACKGROUND
The imported merchandise at issue in this case consists of wooden bedroom
furniture from the People’s Republic of China. Pl.’s Mot. Am. Compl., Ex.1 (“Proposed
Am. Compl.”) ¶ 7. AFI is the importer of record. Id. ¶ 3. On various dates in January,
February, July, and December of 2014, AFI made ten entries of wooden bedroom
furniture. See Summons (schedule of protests).
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On April 11, 2016, the U.S. Department of Commerce (“Commerce”) published
the final results of its tenth administrative review of the antidumping duty order on
wooden bedroom furniture from China. Proposed Am. Compl. ¶ 11 (citing Wooden
Bedroom Furniture From the People’s Republic of China, 81 Fed. Reg. 21,319 (Dep’t
Commerce Apr. 11, 2016) (final results and final determination of no shipments, in part;
2014 admin. review) (“Final Results”)). Publication of the Final Results “lifted the
statutory suspension of liquidation of the [s]ubject [e]ntries.” Id. ¶ 12. Thereafter, CBP
began liquidating subject entries “at the rate of 216.01 [percent].” Id. ¶ 13. 2
On April 27, 2016, the court issued a statutory injunction to enjoin the liquidation
of certain entries during a lawsuit filed to challenge the Final Results. Proposed Am.
Compl. ¶¶ 14–15; see also Am. Furniture Mfrs. Comm. for Legal Trade, et al. v. United
States, Court No. 16-cv-00070 (CIT Apr. 27, 2016) (hereinafter, “the AFMC litigation”).
On February 28, 2017, the court held a hearing in connection with the AFMC litigation.
Proposed Am. Compl. ¶ 17. On March 13, 2017, the court dismissed that lawsuit for
lack of subject matter jurisdiction. Id. ¶ 18.
On March 29, 2017, CBP published the court’s judgment in the AFMC litigation in
its Customs Bulletin and Decisions Official Reporter. Id. ¶ 19. Thereafter, on May 30,
2017, Customs published Message No. 7150306 in its online antidumping and
2 Liquidation of subject entries is suspended by operation of law when Commerce
publishes an affirmative preliminary determination in an antidumping investigation or an
affirmative final determination following a negative preliminary determination. 19 U.S.C.
§§ 1673b(d)(2)(A), 1673d(c)(1)(C). The suspension of liquidation remains in place until
the timeframe for requesting a periodic review has expired, 19 C.F.R. § 351.212(c)(1),
or Commerce issues the final results of any such review, id. § 351.212(b)(1).
Court No. 18-00222 Page 4
countervailing duty search portal, referred to as “ACE Services,” which served to
“inform[] CBP port officials that the suspension of liquidation of the [s]ubject [e]ntries
had been lifted.” Id. ¶ 20.
On November 24, 2017, CBP liquidated the nine subject entries. Id. ¶ 21. On
December 1, 2017, CBP liquidated the single subject entry. Id. ¶ 22. AFI timely
protested the liquidations. Id. ¶ 23. CBP denied AFI’s protests on May 10, 2018. Id.
¶¶ 24, 26.
On October 27, 2018, AFI timely commenced this action challenging the denial of
its protests. See Summons. On June 21, 2019, the court denied the Government’s
partial motion to dismiss for lack of subject matter jurisdiction. Aspects Furn. Int’l, Inc. v.
United States (“AFI”), 43 CIT ___, 392 F. Supp. 3d 1317 (2019). On July 19, 2019, the
Government filed its Answer to Plaintiff’s Complaint. Ans., ECF No. 28.
On July 26, 2019, the court entered a scheduling order, pursuant to which “[a]ny
motions regarding the pleadings or other preliminary matters” were due by August 9,
2019. Scheduling Order (July 26, 2019) (“Scheduling Order”), ECF No. 31. On January
8, 2020, the Government filed its motion for judgment on the pleadings. Def.’s Mot. J.
Shortly thereafter, the court granted the Government’s motion to stay discovery. Order
(Jan. 14, 2020) (“Stay Order”), ECF No. 40. On February 24, 2020, Plaintiff opposed
the Government’s motion and filed a cross-motion for partial judgment on the pleadings
or, alternatively for partial summary judgment. Pl.’s Cross-Mot. J. Those motions have
been fully briefed. See Def.’s Reply in Further Supp. of its Mot. for J. on the Pleadings
and in Opp’n to Pl.’s Cross-Mot. for Partial J. on the Pleadings or, in the alternative, for
Court No. 18-00222 Page 5
Partial Summ. J., ECF No. 55; Pl.’s Reply in Further Supp. of its Cross-Mot. for Partial
J. on the Pleadings or, in the alternative, for Partial Summ. J., ECF No. 56. On June 4,
2020, the court held a telephone conference with the parties in connection with the
pending motions. See Docket Entry, ECF No. 59.
On June 10, 2020, AFI moved for leave to amend its complaint. Pl.’s Mot. Am.
Compl. On July 8, 2020, the Government filed its opposition to AFI’s motion. Def.’s
Mem. in Opp’n to Pl.’s Mot. for Leave to File the First Am. Compl. (“Def.’s Opp’n Am.
Compl.”), ECF No. 63.
JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction pursuant to section 514(a) of the Tariff Act of 1930, as
amended, 19 U.S.C. § 1514(a) (2012), 3 and 28 U.S.C. § 1581(a) (2012).
Pursuant to USCIT Rule 15(a), a plaintiff may amend its complaint more than 21
days after service of a responsive pleading “only with the opposing party’s written
consent or the court’s leave.” USCIT Rule 15(a)(2) (applicable to pleadings); see
also USCIT Rule 7(a)(1) (a complaint is a pleading). Whether to grant leave to amend a
complaint is committed to the court’s discretion. See, e.g., Foman v. Davis, 371 U.S.
178, 182 (1962); Fuwei Films (Shandong) Co. v. United States, 35 CIT 1229, 1229, 791
F. Supp. 2d 1381, 1383 (2011). “The court should freely give leave when justice so
3 All references to the United States Code are to the 2012 edition, which was in effect at
the time of importation, unless otherwise stated. All references to the Code of Federal
Regulations are to the 2014 edition, which was in effect when the last entry at issue
here occurred, unless otherwise stated. The 2013 and 2014 versions are the same in
all relevant respects.
Court No. 18-00222 Page 6
requires.” USCIT Rule 15(a)(2). Leave may be denied when the court finds “undue
delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure
deficiencies by amendments previously allowed, undue prejudice to the opposing party
by virtue of allowance of the amendment, [or] futility of amendment.” Foman, 371 U.S.
at 182.
Once a scheduling order is established, a motion to amend a pleading is subject
to any deadline established in that scheduling order. See USCIT Rule 16(b)(3)(A).
USCIT Rule 16(b)(4), in conjunction with USCIT Rule 6(b)(1), permits a schedule to be
modified for good cause with the court’s consent. When a motion effectively seeks to
extend a deadline that has already passed, it is properly treated as a motion for an
extension of time, out of time, and USCIT Rule 6(b)(1)(B) also applies. See United
States v. Horizon Prods. Int’l, Inc., 38 CIT ___, ___, 34 F. Supp. 3d 1365, 1367 (2014).
In addition to good cause, a motion filed out of time must show “excusable neglect or
circumstances beyond the control of the party.” USCIT Rule 6(b)(1)(B).
Good cause requires the moving party to show that the deadline for which an
extension is sought cannot reasonably be met despite the movant’s diligent efforts to
comply with the schedule. See High Point Design LLC v. Buyers Direct, Inc., 730 F.3d
1301, 1319 (Fed. Cir. 2013) (discussing “good cause” in the context of Federal Rule of
Civil Procedure 16(b)); Horizon Prods., 34 F. Supp. 3d at 1367.
The court assesses excusable neglect by considering: “(1) the danger of
prejudice to the opposing party, (2) the length of the delay and its potential impact on
judicial proceedings, (3) the reason for the delay, including whether it was within the
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reasonable control of the movant, and (4) whether the movant acted in good faith.”
Horizon Prods., 34 F. Supp. 3d at 1367 (citing Pioneer Inv. Servs. v. Brunswick Assocs.,
507 U.S. 380, 392, 395 (1993)). Furthermore, the court may consider “all relevant
circumstances surrounding the party’s omission.” Home Prods. Int’l, Inc. v. United
States, 31 CIT 1706, 1709, 521 F. Supp. 2d 1382, 1385 (2007) (quoting Pioneer, 507
U.S. at 395).
DISCUSSION
I. Legal Framework
When a statutory or court-ordered suspension of liquidation is lifted, Customs
shall liquidate an entry “within 6 months after receiving notice of the removal from
[Commerce], [an]other agency, or a court with jurisdiction over the entry,” otherwise the
entry will be deemed liquidated “at the rate of duty, value, quantity, and amount of duty
asserted by the importer of record.” 19 U.S.C. § 1504(d). Thus, for an entry to be
deemed liquidated, “(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.” Cemex, S.A. v. United States, 384 F.3d 1314, 1321 (Fed. Cir. 2004) (quoting
Fujitsu Gen. Am., Inc. v. United States, 283 F.3d 1364, 1376 (Fed. Cir. 2002)). The
U.S. Court of Appeals for the Federal Circuit (“Federal Circuit”) has interpreted the
statute to require notice that is unambiguous and public. See id.
An entry that liquidated by operation of law may, however, be voluntarily
reliquidated by CBP pursuant to 19 U.S.C. § 1501 within the time period provided
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therein. The version of section 1501 that was in effect at the time of importation
provided that
[a] liquidation made in accordance with section 1500 [i.e., a manual
liquidation] or 1504 [i.e., a deemed liquidation] . . . may be reliquidated in
any respect by [Customs], notwithstanding the filing of a protest, within
ninety days from the date on which notice of the original liquidation is
given or transmitted to the importer, his consignee or agent. Notice of
such reliquidation shall be given or transmitted in the manner prescribed
with respect to original liquidations under section 1500(e) of this title.
19 U.S.C. § 1501; 4 cf. 19 C.F.R. § 173.3(a) (providing for voluntary reliquidation
“[w]ithin 90 days from the date notice of deemed liquidation . . . is given to the
importer”). 5 Section 1500(e) directs Customs to “give or transmit, pursuant to an
electronic data interchange system, notice of such liquidation to the importer . . .
in such form and manner as [CBP] shall by regulation prescribe.” 19 U.S.C.
§ 1500(e).
Customs’ regulation provides that “[n]otice of liquidation of formal entries
will be made on a bulletin notice of liquidation, CBP Form 4333,” 19 C.F.R.
4 On February 24, 2016, Congress amended section 1501, inter alia, to provide for
reliquidation “within ninety days from the date of the original liquidation.” Trade
Facilitation and Enforcement Act of 2015 (“TFEA”), Pub. L. No. 114–125, § 911, 130
Stat. 122, 240 (2016). Thus, under the current version of the statute, the 90-day clock
begins to run on the date of the manual liquidation or the date on which an entry
deemed liquidated, not the date on which notice of such liquidation was provided.
Compare 19 U.S.C. § 1501 (2012), with 19 U.S.C. § 1501 (2018).
5 Subsection (a) of Customs’ regulation was amended in 2017 to provide for
reliquidation by the “Center director” rather than the “port director,” but otherwise
remains unchanged from the version in effect when the entries were made. See
Regulatory Implementation of the Ctrs. of Excellence and Expertise, 81 Fed. Reg.
92,978, 92,999 (CBP Dec. 20, 2016) (interim final rule; eff. Jan. 19, 2017).
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§ 159.9(a), which “will be posted for the information of importers in a conspicuous
place in the customhouse at the port of entry,” id. § 159.9(b). 6
II. Plaintiff’s Original Complaint and Proposed First Amended Complaint
In its original complaint, AFI alleged that Customs untimely liquidated the subject
entries and, moreover, those entries liquidated by operation of law on November 12,
2017, at the latest. Compl. ¶ 43. According to AFI, Customs received notice of the
removal of suspension on or before May 12, 2017, which notice triggered the six-month
timeframe within which Customs is to liquidate the entries to avoid a deemed liquidation.
Id. ¶¶ 25–42. Specifically, AFI alleged that Customs received notice on the following
dates: (1) April 11, 2016, when Commerce published the Final Results in the Federal
Register, id. ¶ 29; (2) March 13, 2017, when the court issued its final judgment in the
AFMC litigation, id. ¶¶ 30, 35–36; (3) March 29, 2017, when Customs published notice
of the court’s opinion in the Customs Bulletin and Decisions Official Reporter, id. ¶ 30;
or (4) May 12, 2017, when the dismissal of the AFMC litigation became final and
conclusive, id. ¶¶ 31, 41. AFI also alleged that, assuming the liquidation period ended
on November 30, 2017, Customs nevertheless untimely liquidated the single subject
entry on December 1, 2017. Id. ¶ 43.
6 Although 19 U.S.C. § 1500(e) was amended in 1993 to provide for electronic notice of
liquidation, see N. Am. Free Trade Agreement Implementation Act, Pub. L. No. 103-
182, § 638, 107 Stat. 2057(1993), it was not until 2017 that Customs made
corresponding amendments to 19 C.F.R. § 159.9. See generally Electronic Notice of
Liquidation, 81 Fed. Reg. 89,375 (CBP Dec. 12, 2016) (final rule; eff. Jan. 14, 2017).
Court No. 18-00222 Page 10
AFI’s proposed amended complaint differs from its original complaint in the
following respects. First, AFI has separated its claims regarding the nine subject entries
(count one) and the single subject entry (count two). Proposed Am. Compl. ¶¶ 28–33,
34–37. With respect to the nine subject entries, AFI alleges that “nothing in” Message
No. 7150306, published by CBP on May 30, 2017, “indicated the source of the
information contained therein or the date on which Customs received such notice of
lifting of suspension of liquidation.” Id. ¶ 32. AFI alleges further that, “to the extent
Customs received notice [of the lifting of suspension of liquidation] pursuant to 19
U.S.C. § 1504(d) prior to May 24, 2017, CBP’s liquidation of the [nine subject entries]
was untimely.” Id. ¶ 31; see also id. ¶ 33. With respect to the single subject entry, AFI
alleges that Customs’ liquidation of the entry on December 1, 2017 was untimely
“because it was done more than six (6) months after receiving the purported notice on
May 30, 2017.” Id. ¶ 35. According to AFI, therefore, the subject entries “deemed
liquidated ‘at the rate of duty, value, quantity, and amount of duty asserted by the
importer of record.’” Id. ¶¶ 33, 37 (quoting 19 U.S.C. § 1504(d)).
Second, AFI no longer alleges that Customs received notice of the lifting of
suspension of liquidation on April 11, 2016, March 13, 2017, March 29, 2017, or on May
12, 2017 solely by virtue of the finality of the judgment issued in the AFMC litigation.
Compare Compl. ¶¶ 25–42, with Proposed Am. Compl. ¶¶ 28–37.
III. Parties’ Contentions
AFI contends that the interests of justice would be served by granting its motion
to amend and that the amendments would not prejudice the Government. Pl.’s Mot.
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Am. at 3–4. In that regard, AFI explains that the amendments are responsive to a
recent Memorandum and Order issued by the court in a related case. Id. at 3 (citing
IMSS, LLC v. United States, Court No. 19-cv-00029 (CIT Apr. 13, 2020), ECF No. 36
(“IMSS Mem.”)). 7 AFI also states that the amendments further narrow the issues in this
case to (1) whether Message No. 7150306 constituted the requisite notice pursuant to
19 U.S.C. § 1504(d), or (2) whether Customs received such notice on an earlier date.
Id. According to AFI, the amendments will not prejudice the Government or cause
undue delay because discovery had been stayed and the “amended claims do not
greatly depart from the general allegations in Plaintiff’s original complaint.” Id. at 4. AFI
further contends that the court should find that any delay in seeking leave to amend
“was due to excusable neglect.” Id. at 5. AFI avers that it has “actively and diligently
pursued this litigation” and “inadvertent[ly]” failed to file this motion “at an earlier stage in
the litigation.” Id.
The Government contends that AFI has not shown excusable neglect for failing
to seek leave to amend sooner, Def.’s Opp’n Am. Compl. at 8, and, thus, the court need
not consider the requirements of USCIT Rule 15(a)(2), id. at 10. With respect to
excusable neglect, the Government argues that AFI has failed to address the relevant
criteria. Id. at 8–10. The Government further contends that AFI’s claim that Customs
may have received notice of the lifting of suspension before May 24, 2017 is
7 IMSS concerns a single entry that was likewise subject to the tenth administrative
review of the antidumping duty order on wooden bedroom furniture from China. IMSS
Mem. at 2. At issue in that case is the timeliness of Customs’ reliquidation of an entry
that the plaintiff and defendant agree liquidated by operation of law. Id. at 7.
Court No. 18-00222 Page 12
speculative, lacking any connection to Message No. 7150306, and would permit AFI “to
embark on a ‘fishing expedition’ in an effort to discover information that is non-public
and unrelated to the public [Message No. 7150306].” Id. at 9. The Government
suggests it would be prejudiced by the expenditure of resources necessary to address
AFI’s “purposeless discovery,” id., and the need for another responsive pleading and
dispositive motion, id. at 11.
The Government also contends that AFI’s amendment would be futile because
the proposed claims would not survive a motion to dismiss for failure to state a claim
pursuant to USCIT Rule 12(b)(6). Id. at 10–17. The Government advances three
arguments in that regard: (1) AFI has failed to allege facts regarding the public and
unambiguous notice necessary for a deemed liquidation to occur, id. at 12–14; (2) any
non-public notice received before May 30, 2017 cannot, as a matter of law, trigger the
six-month deemed liquidation period, id. at 14–16; and (3) any entries that liquidated by
operation of law were timely reliquidated by Customs within 90 days of the date of
deemed liquidation, id. at 16–17 (citing 19 U.S.C. § 1501 (2018)).
IV. Analysis
The court first addresses whether AFI has made the requisite showings of good
cause and excusable neglect pursuant to USCIT Rules 6(b)(1)(B) and 16(b)(4) before
turning to the requirements of USCIT Rule 15(a)(2). 8
8At least one court has recognized the “tension” that exists between the permissive
Federal Rule of Civil Procedure 15(a)(2) standard applicable to a motion for leave to
amend a complaint and the need to demonstrate good cause and excusable neglect
before the court will consider the merits of such a motion. Adams v. City of
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Diligence is the “primary consideration” under the general good cause standard
applicable to USCIT Rules 6(b) and 16(b)). Horizon Prods., 34 F. Supp. 3d at 1367.
When the amendment “‘rests on information that the party knew, or should have known’
before the deadline,” good cause may not be found. Rienzi and Son, Inc. v. United
States, 40 CIT ___, ___. 180 F. Supp. 3d 1349, 1353 (2016) (quoting Perfect Pearl Co.,
Inc. v. Majestic Pearl & Stone, Inc., 889 F. Supp. 2d 453, 457 (S.D.N.Y. 2003)).
Since the inception of this case, AFI has sought to challenge Customs’ allegedly
untimely liquidations of the subject entries. See Compl. ¶ 43. AFI initially alleged
several theories regarding the way in which CBP received public and unambiguous
notice of the lifting of suspension of liquidation following the conclusion of the AFMC
litigation sufficient to trigger the six-month deemed liquidation period. See id. ¶¶ 25–42.
In IMSS, however, the court held that those events could not, as a matter of law,
constitute adequate notice pursuant to 19 U.S.C. § 1504(d). See IMSS Mem. at 5 n.3,
7. The court’s holding in IMSS, in conjunction with briefing on the cross-motions for
judgment on the pleadings filed in this case, see, e.g., Def.’s Mot. J. at 10–12 (arguing
that AFI’s claims of deemed liquidation must fail), revealed the deficiencies in AFI’s
allegations. While, to some extent, AFI’s proposed amendments rest on a new factual
Indianapolis, 742 F.3d 720, 733–34 (7th Cir. 2014); see also United States
v. Univar USA, Inc., 40 CIT ___, ___, 195 F. Supp. 3d 1312, 1317 (2016) (noting that
the court may refer to cases interpreting the analogous Federal Rule of Civil Procedure
for guidance). There, as here, the parties had agreed to a scheduling order that
contained a deadline relevant to motions to amend the pleadings. See id. at 726;
Scheduling Order. Accordingly, the court will consider whether AFI has met the
requirements of good cause and excusable neglect before considering the requirements
of USCIT Rule 15(a)(2). Adams, 742 F.3d at 734; Rienzi, 180 F. Supp. 3d at 1351–52.
Court No. 18-00222 Page 14
allegation regarding Customs’ potential receipt of notice of the lifting of suspension of
liquidation before May 24, 2017, Proposed Am. Compl. ¶ 31, that allegation is the
product of AFI’s altered legal theory following the court’s ruling in IMSS regarding the
sufficiency of notice for purposes of 19 U.S.C. § 1504(d), see Pl.’s Mot. Am. at 3. Thus,
this case is distinguishable from others where the court has found that the plaintiff was
not diligent in raising factual allegations, the relevance of which the plaintiff had long
been aware. Cf. Rienzi, 180 F. Supp. 3d at 1353 (denying leave to amend when the
plaintiff sought to revise “its description of the imported merchandise at issue, the
details of which” had been available to the plaintiff for “more than a decade”); Perfect
Pearl, 899 F. Supp. 2d at 458–59 (denying leave to amend to add facts the plaintiff had
been aware of for one year).
To the extent that “diligence” also requires timely action, AFI filed its motion less
than 60 days after the court issued the referenced ruling in IMSS and about one week
after a telephone conference concerning the pending cross-motions for judgment on the
pleadings. See supra pp. 5, 11. While AFI likely could have filed its motion sooner,
there is no indication that AFI sought to delay the case. Accordingly, good cause exists
to permit AFI the opportunity to replead its claims.9
9 In its ruling on the Government’s partial motion to dismiss for lack of subject matter
jurisdiction, the court discussed “the concept of ‘informed compliance,’” which concept
was introduced as part of the Customs Modernization Act of 1993 (“the Mod Act”). AFI,
392 F. Supp. 3d at 1324 & n.11 (explaining that “[t]he Mod Act was enacted as Title VI
to the North American Free Trade Agreement Implementation Act, Pub. L. No. 103-182,
107 Stat. 2057 (1993)”). Informed compliance “represents the idea ‘that importers have
a right to be informed about customs rules and regulations, as well as interpretive
rulings, and to expect certainty that [CBP] will not unilaterally change the rules without
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Examining whether excusable neglect has been demonstrated pursuant to Rule
6(b)(1)(B) requires the court to consider such factors as prejudice to the Government,
the length and reason for the delay, and whether AFI acted in good faith. Horizon
Prods., 34 F. Supp. 3d at 1367 (citation omitted). For the following reasons, the court
finds that AFI has made this showing.
The court first finds that AFI’s amendments would not unduly prejudice the
Government. The Government argues that Customs’ Message No. 7150306 “is the
only public notice of the removal of suspension of liquidation” and AFI’s claim that
Customs may have received earlier notice is speculative and unrelated to that message.
Def.’s Opp’n Am. Compl. at 9. In IMSS, the court rejected the Government’s argument
that the date of publication necessarily controls the inquiry, explaining in the context of
analogous facts:
providing importers proper notice and an opportunity for comment.’” Id. at 1324
(quoting S. Rep. No. 103–189 at 63–64 (1993)). The legislative history of the Mod Act
indicates that the concept of informed compliance also relates to the notion of “‘shared
responsibility’ between Customs and the trade community.” Id. at 1324 n.12 (quoting
Precision Specialty Metals, Inc. v. United States, 25 CIT 1375, 1388, 182 F. Supp. 2d
1314, 1328 (2001)); see also Customs Modernization and Informed Compliance Act:
Hearing on H.R. 3935 Before the Subcomm. on Trade of the H. Comm. on Ways and
Means, 102d Cong. 91 (1992) (statement of Commissioner Carol Hallett, United States
Customs Service). “Shared responsibility means that ‘Customs must do a better job of
informing the trade community of how Customs does business; and the trade
community must do a better job to assure compliance with U.S. trade rules.’” AFI, 392
F. Supp. 3d at 1324 n.12 (quoting Precision Specialty Metals, 25 CIT at 1388, 182 F.
Supp. 2d at 1328). It appears to the court that a more efficient and expeditious
resolution of this case may be achieved if both Parties devote greater attention to the
principles of informed compliance and shared responsibility; in particular, with respect to
the sharing of information about the manner in which Customs receives liquidation
instructions from Commerce and the incorporation of that information into an
assessment of the viability of certain claims.
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While the Federal Circuit has referred to a publication requirement, see,
e.g., Cemex, 384 F.3d at 1321 & n.5, it has done so in the context of
cases evincing Commerce’s publication in the Federal Register of a
“Timken notice” or the amended final results of an administrative review,
see Fujitsu Gen. Am., 283 F.3d at 1369, 1380; Int’l Trading Co. v. United
States, 281 F.3d 1268, 1270, 1275–76 (Fed. Cir. 2002) (selecting the date
of Federal Register publication because it would not afford “the
government the ability to postpone indefinitely the removal of suspension
of liquidation (and thus the date by which liquidation must be completed)
as would be the case if the six-month liquidation period did not begin to
run until Commerce sent a message to Customs advising of the removal
of suspension of liquidation”). There is no such Federal Register notice
implicated in the court’s disposition of this case. Thus, at a minimum, to
the extent discovery reveals that Customs received unambiguous notice of
the lifting of suspension of liquidation on a date other than May 30, 2017,
the court will need to determine when the six-month period for deemed
liquidation began to run. Cf. Am. Int’l Chem., Inc. v. United States, 29 CIT
735, 748, 387 F. Supp. 2d 1258, 1269 (2005) (the six-month period began
on date Customs received notice even though it was published the
following day).
IMSS Mem. at 8–9 (emphasis added) (footnote omitted). So too here, the court is
unable to conclude, as a matter of law, that the date on which Customs published
Message No. 7150306 triggered the six-month deemed liquidation period.
Moreover, the possibility that Customs received non-public notice of the lifting of
suspension of liquidation before publishing Message No. 7150306 is precisely why AFI
was unable to allege the date of receipt with greater specificity. Discerning those facts
through discovery would not necessarily lead to a “fishing expedition,” Def.’s Opp’n Am.
Compl. at 9, and there are procedural remedies available to the Government in the
event any discovery request is overly broad, see USCIT Rule 26(b)(2)(C) (permitting the
court to limit the extent of proposed discovery if it “is outside the scope permitted by
Rule 26(b)(1)”); USCIT Rule 26(b)(1) (providing for the discovery of information
Court No. 18-00222 Page 17
“relevant to any party’s claim or defense”); Fed. R. Civ. P. 26(b) adv. comm. note to
1983 am. (noting the court’s authority to limit discovery “directed to matters that are
otherwise proper subjects of inquiry” when it is “redundant or disproportionate”). The
court’s stay of discovery during the pendency of the cross-motions for judgment on the
pleadings further minimizes any prejudice to the Government. See Stay Order.
With respect to the reason for and extent of the delay, as discussed above in the
context of good cause, AFI’s motion was prompted by the court’s ruling in IMSS and
developments in this case. See supra pp. 13–14. Moreover, AFI filed its motion
reasonably soon thereafter so as not to delay the proceeding. Given the minimal
prejudice to the Government, the length of the delay does not merit denial of AFI’s
motion. See Rockwell Automation, Inc. v. United States, 38 CIT ___, ___, 7 F. Supp.
3d 1278, 1292 (2014) (stating that the length of the delay is “typically accord[ed]
relatively little weight, because (for a variety of reasons) the length of the delay in most
cases is minimal, both in absolute and relative terms”). Thus, based on the foregoing,
the court finds that AFI has demonstrated excusable neglect for its untimely motion.
Turning to the requirements of USCIT Rule 15(a)(2), leave to amend should be
granted unless the court finds “undue delay, bad faith or dilatory motive on the part of
the movant, repeated failure to cure deficiencies by amendments previously allowed,
undue prejudice to the opposing party by virtue of allowance of the amendment, [or]
futility of amendment.” Foman, 371 U.S. at 182. For the reasons already discussed,
the court does not find that undue delay, bad faith, dilatory motive, or undue prejudice to
the Government merit denial of AFI’s motion. See supra pp. 13–17. Additionally,
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because this is AFI’s first motion for leave to amend its complaint, AFI “should be
offered at least one opportunity to replead in order to correct the defects in the original
complaint” unless the proposed amendments would be futile. Wallace v. Conroy, 945 F.
Supp. 628, 639 (S.D.N.Y. 1996) (citing, inter alia, Foman, 371 U.S. at 182). As
discussed below, the Government’s arguments regarding futility of amendment are not
persuasive.
With respect to the nine subject entries, the Government first argues that AFI has
“fail[ed] to allege any date or event to qualify for the removal of suspension of
liquidation” and has failed to allege any form of public notice. Def.’s Opp’n Am. Compl.
at 13. Thus, according to the Government, AFI has not alleged facts demonstrating that
the nine subject entries liquidated by operation of law. Id. at 14. The Government’s
argument lacks merit.
For a deemed liquidation to occur, the statute requires, inter alia, Customs to
receive notice of the removal of suspension from Commerce, another agency, or a court
of competent jurisdiction. 19 U.S.C. § 1504(d). According to the Federal Circuit, that
notice must be both unambiguous and public. Cemex, 384 F.3d at 1321.
However, as discussed, this case does not involve a public communication from
Commerce to Customs, for example, in the form of a Federal Register notice. See
supra pp. 15–16. The Government does not dispute AFI’s allegations that Customs
rendered Message No. 7150306 publicly accessible, Proposed Am. Compl. ¶ 20, or that
the contents of Message No. 7150306 do not reveal the source of the contents or the
date on which Customs received the information that formed the basis for liquidation, id.
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¶ 32. Instead, the Government points to a declaration it submitted in connection with its
motion for judgment on the pleadings that purports to demonstrate that Commerce
issued the liquidation instructions constituting Message No. 7150306 to CBP on May
30, 2017. Def.’s Opp’n Am. Compl. at 13 (citing Decl. of Bradley Dauble, ECF No. 55-
1).
Typically, “a motion to amend is adjudicated without resort to any outside
evidence,” DiPace v. Goord, 308 F. Supp. 2d 274, 278 (S.D.N.Y. 2004), because the
test of futility is whether “the proposed new claim cannot withstand a 12(b)(6) motion to
dismiss for failure to state a claim,” Milanese v. Rust-Oleum Corp., 244 F.3d 104, 110
(2nd Cir. 2001). While the court may consider extrinsic evidence when the parties have
conducted discovery and the motion to amend is filed in response to a motion for
summary judgment, see id., that is not the case here. It would therefore be
inappropriate for the court to consider outside evidence. See Rose v. Hartford
Underwriters Ins. Co., 203 F.3d 417, 420–21 (6th Cir. 2000) (district court abused its
discretion in denying leave to amend prior to briefing on summary judgment motions
even though evidence subsequently indicated the claim would be futile). Thus, the
court finds that AFI’s claim that the nine subject entries liquidated by operation of law
prior to CBP’s manual liquidation if Customs received notice before May 24, 2017 states
a sufficient claim for relief. Proposed Am. Compl. ¶¶ 31, 33. 10
10The court’s conclusion is without prejudice to further briefing on the operative date of
notice if discovery reveals that Customs received non-public notice before the notice
was made public.
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The Government next argues that, assuming AFI’s allegations are true and CBP
received non-public notice of the lifting of suspension of liquidation, “as a matter of law,
notice that is never made available to the public cannot trigger the” six-month deemed
liquidation period. Def.’s Opp’n Am. Compl. at 14. The Government relies on Cemex,
384 F.3d at 1320–21, 1325 n.5, and FYH Bearing Units USA, Inc. v. United States, 35
CIT 77, 81–82 & n.6, 753 F. Supp. 2d 1348, 1353 & n.6 (2011), but those cases do not
support the Government’s arguments here. See id. at 14–16.
In Cemex, the court held that a non-public email from Commerce to Customs
announcing the lifting of suspension of liquidation that CBP posted on a non-public
bulletin board failed to trigger the six-month deemed liquidation period. 384 F.3d at
1321. 11 The court did not address whether a non-public communication that is
subsequently made public—or forms the basis of a public notification—could commence
the deemed liquidation period.
In FYH Bearing, the court concluded that a Federal Register notice publishing
Commerce’s amended final results of an administrative review—and not an earlier non-
public email from Commerce to Customs regarding forthcoming liquidation
instructions—triggered the six-month deemed liquidation period because there was no
indication that the email was ever made public. 35 CIT at 80, 82, 753 F. Supp. 2d at
1351–52, 1354. As with Cemex, FYH Bearing does not foreclose the possibility that a
11The Cemex court also concluded that the email was not unambiguous because
Commerce sent the email before the suspension of liquidation had actually lifted. 384
F.3d at 1321.
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non-public communication that is subsequently made public, in whole or in part,
constitutes adequate notice pursuant to 19 U.S.C. § 1504(d). Accordingly, the
Government fails to persuade the court that AFI’s allegations fall short to the extent they
allege CBP’s receipt of non-public notice prior to CBP’s publication of Message No.
7150306.
The Government’s final argument for futility implicates Customs’ ability to
reliquidate entries that liquidated by operation of law pursuant to 19 U.S.C. § 1501.
Def.’s Opp’n Am. Compl. at 16–17. According to the Government, if the subject entries
liquidated by operation of law, Customs properly reliquidated the nine subject entries on
November 24, 2017 and the single subject entry on December 1, 2017 because those
reliquidations occurred within 90 days from the date on which the entries deemed
liquidated. Id. In so doing, however, the Government relies on the post-TFEA version
of Section 1501, which differs from the version in effect when the entries were made.
See id. at 17; supra p. 8 and accompanying note 4. This court previously held that the
amendments to Section 1501 are not retroactive, United States v. Great Am. Ins. Co. of
New York, 41 CIT ___, ___, 229 F. Supp. 3d 1306, 1323–26 (2017); cf. Perfectus
Aluminum, Inc. v. United States, 43 CIT ___, ___ 391 F. Supp. 3d 1341, 1358 & n.18
(2019) (applying the pre-TFEA version of Section 1501 to conclude that Customs is
time-barred from reliquidating entries that were made from 2011 through 2015), and the
Government does not address that authority, see Def.’s Opp’n Am. Compl. at 17. Thus,
the Government has failed to persuade the court that AFI’s claim is futile based on
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Customs’ authority to voluntarily reliquidate AFI’s entries. 12 Accordingly, AFI’s motion
for leave to file a first amended complaint will be granted.
CONCLUSION AND ORDER
In accordance with the foregoing, it is hereby:
ORDERED that Plaintiff’s motion for leave to file a first amended complaint (ECF
No. 58) is granted; and it is further
ORDERED that Defendant’s motion for judgment on the pleadings (ECF No. 35)
and Plaintiff’s cross-motion for partial judgment on the pleadings or, alternatively, for
partial summary judgment (ECF No. 43) are denied as moot.
The court will contact the parties to discuss further proceedings in this case.
/s/ Mark A. Barnett
Mark A. Barnett, Judge
Dated: August 17, 2020
New York, New York
12The Government is not precluded from raising Customs’ authority to reliquidate
pursuant to 19 U.S.C. § 1501 as a defense to AFI’s claims. However, should the
Government choose to do so, it must address this authority.