United States v. Great American Insurance

United States Court of Appeals
for the Federal Circuit
______________________
UNITED STATES,
Plaintiff-Appellant,
v.
GREAT AMERICAN INSURANCE COMPANY OF
NEW YORK (also known as American National Fire
Insurance Company),
Defendant-Cross Appellant,
AND
WASHINGTON INTERNATIONAL INSURANCE
COMPANY,
Defendant-Appellee.
______________________
2012-1462, -1473
______________________
Appeals from the United States Court of International
Trade in No. 09-CV-0187, Senior Judge Richard W. Gold-
berg.
______________________
Decided: December 27, 2013
______________________
JEANNE E. DAVIDSON, Director, Commercial Litigation
Branch, Civil Division, United States Department of
Justice, of Washington, DC, argued for plaintiff-appellant.
With her on the brief was STUART F. DELERY, Acting
2 U.S. v. GREAT AMERICAN INSURANCE
Assistant Attorney General. Of counsel on the brief were
BARBARA S. WILLIAMS, Attorney in Charge, International
Trade Field Office, of New York, New York; AMY M.
RUBIN, Senior Trial Counsel, Commercial Litigation
Branch, Civil Division, United States Department of
Justice, of New York, New York; and ANDREW G. JONES,
JOSEPH M. BARBATO and BRANDON T. ROGERS, Attorneys,
Office of Assistant Chief Counsel, United States Customs
and Border Protection, of Indianapolis, Indiana.
CARTER G. PHILLIPS, Sidley Austin, LLP, of Washing-
ton, DC, argued for defendant-cross appellant. With him
on the brief were MARK D. PLEVIN and ALEXANDER M.
SCHAEFER, Crowell & Moring, LLP, of Washington, DC,
and THEODORE R. POSNER, Weil Gothshal & Manges, LLP,
of Washington, DC.
HERBERT C. SHELLEY, Steptoe & Johnson, LLP, of
Washington, DC, for amicus curiae. With him on the brief
was MARK F. HORNING.
______________________
Before PROST, PLAGER, and TARANTO, Circuit Judges.
TARANTO, Circuit Judge.
The United States sued Great American Insurance
Company of New York (also known as American National
Fire Insurance Company) and Washington International
Insurance Company in the Court of International Trade,
seeking payment of antidumping duties covered by surety
bonds the two companies had issued. The trial court
granted summary judgment in favor of the government on
the bonds now at issue, but denied the government’s
motion to amend the judgment to include post- and pre-
judgment interest. The government appeals the denial of
its motion to amend. Great American cross-appeals the
grant of summary judgment of liability for the bonded
US v. GREAT AMERICAN INSURANCE 3
amounts. For the reasons set forth below, we affirm
except with regard to postjudgment interest.
BACKGROUND
On March 26, 1997, the United States Department of
Commerce made a preliminary determination, pursuant
to 19 U.S.C. § 1673b, that freshwater crawfish tail meat
from the People’s Republic of China (PRC) was being sold
in the United States at less than fair value. Freshwater
Crawfish Tail Meat From the People’s Republic of China,
62 Fed. Reg. 14392-01 (Dep’t Commerce Mar. 26, 1997)
(prelim. determination). As required by 19 U.S.C.
§ 1673b(d)(2), Commerce directed the United States
Customs and Border Protection, until further notice, to
suspend liquidation of (i.e., the final computation of duties
on, 19 C.F.R. § 159.1) all entries of freshwater crawfish
tail meat from the PRC and to require a cash deposit or
bond to cover the antidumping duties estimated upon
entry. 62 Fed. Reg. at 14397. On August 1, 1997, Com-
merce issued a final determination upholding its prelimi-
nary determination and directing Customs, until further
notice, to suspend liquidation and to require cash depos-
its. Freshwater Crawfish Tail Meat From the People’s
Republic of China, 62 Fed. Reg. 41347-02, 41358 (Dep’t
Commerce Aug. 1, 1997), amended by 62 Fed. Reg. 48,218
(Dep’t Commerce Sep. 15, 1997) (final determination).
On seven occasions between October 5, 2000, and May
17, 2001, an importer named New Phoenix International
Trade Corporation made entries of freshwater crawfish
tail meat from the PRC by completing the required pa-
perwork. See 19 U.S.C. § 1484. The exporters that pro-
vided the meat to New Phoenix were subject to a “new
shipper” review being conducted by Commerce, see 19
U.S.C. § 1675(a)(2)(B), which examined whether they
were entitled to antidumping-duty rates distinct from the
rate that applied as a default to exporters from the PRC.
As a result, Commerce permitted New Phoenix to post a
4 U.S. v. GREAT AMERICAN INSURANCE
bond to cover its anticipated antidumping duties. Fresh-
water Crawfish Tail Meat From the People’s Republic of
China, 64 Fed. Reg. 61833-01, 61834 (Dep’t Commerce
Nov. 15, 1999) (new shipper review).
To meet the bonding requirements of 19 U.S.C.
§ 1675(a)(2)(B)(iii) and 19 C.F.R. § 351.214(e), New Phoe-
nix posted eight single-transaction bonds issued by Great
American and one continuous-transaction bond issued by
Washington International to cover the seven entries.
Each of the five Great American bonds relevant to this
appeal was for $1,219,458 and was signed by James C.
Davis, an agent of Great American. Mr. Davis signed the
bonds, and the government accepted them, even though
at least one copy of the power-of-attorney form that Great
American filed with Customs for Mr. Davis—Customs
Form 5297, dated May 21, 1996, filed pursuant to 19
C.F.R. § 113.37(g)—indicated a limit of $1 million on Mr.
Davis’s authority. On November 2, 2001, several months
after New Phoenix obtained its last bond from Mr. Davis
and made the associated entry, Great American filed a
new Form 5297 revoking Mr. Davis’s power of attorney.
On October 26, 2001, Commerce issued a notice that it
was initiating an administrative review of the antidump-
ing-duty order relating to freshwater crawfish tail meat
from the PRC for the period September 1, 2000, to August
31, 2001—the period in which New Phoenix made each of
the entries at issue here. Initiation of Antidumping and
Countervailing Duty Administrative Reviews and Re-
quests for Revocation in Part, 66 Fed. Reg. 54195-02,
54196 (Dep’t Commerce Oct. 26, 2001). Liquidation of
those entries continued to be suspended pending the
outcome of the administrative review. 19 U.S.C.
§§ 1504(a), 1675(a); Wolff Shoe Co. v. United States, 141
F.3d 1116, 1118 (Fed. Cir. 1998) (“During an annual
review by Commerce, ‘liquidation’ of all entries of mer-
chandise subject to the outstanding countervailing duty
order is suspended . . . because the annual review scheme
US v. GREAT AMERICAN INSURANCE 5
established in 19 U.S.C. § 1675(a) would be frustrated
unless the final results of the review applied to the entries
covered by the review.”). Customs gave notice of the
suspension to New Phoenix and Washington Internation-
al, pursuant to 19 U.S.C. § 1504(c), but Customs did not
notify Great American.
On April 21, 2003, Commerce published the final re-
sults of its administrative review for the entries relevant
to this appeal, finding that the exporter for the relevant
entries was not entitled to a rate different from the de-
fault rate for PRC exporters. Freshwater Crawfish Tail
Meat from the People’s Republic of China, 68 Fed. Reg.
19504-01 (Dep’t Commerce Apr. 21, 2003) (final admin.
review). Customs made its final determination of the
duties applicable to (i.e., it liquidated) the entries relevant
to this appeal between July 25, 2003, and August 15,
2003, and then sought payment of the duties from New
Phoenix, Washington International, and Great American,
without success.
On May 8, 2009, the government sued Great Ameri-
can and Washington International in the Court of Inter-
national Trade, pursuant to 28 U.S.C. § 1582(2), seeking
to recover the value of the bonds along with pre- and
postjudgment interest. Complaint, United States v. Great
Am. Ins. Co. of N.Y., Case No. 09-CV-0187 (Ct. Int’l Trade
May 8, 2009), ECF No. 2. It is undisputed that the
amount of duties owed for the entries at issue is greater
than the amounts of the bonds. Id. ¶¶ 11, 15. Each party
moved for summary judgment in September 2010. Of
significance to the present appeal, the government’s
briefing on its motion did not include any heading on,
textual discussion of, evidence relating to, or argument for
prejudgment interest (or, for that matter, postjudgment
interest). The government ended its motion by asking for
“the relief requested in the Complaint,” and it attached a
proposed order awarding it the value of the bonds “plus
interest in accordance with 19 U.S.C. § 580.” Pl.’s Mot.
6 U.S. v. GREAT AMERICAN INSURANCE
Summ. J., United States v. Great Am. Ins. Co. of N.Y.,
Case No. 09-CV-0187 (Ct. Int’l Trade Sep. 17, 2010), ECF
No. 64.
On August 31, 2011, the trial court granted the gov-
ernment’s motion for summary judgment with respect to
five of the Great American bonds and the Washington
International bond, but the court was silent about pre-
and postjudgment interest. United States v. Great Am.
Ins. Co. of N.Y., 791 F. Supp. 2d 1337, 1368 (Ct. Int’l
Trade 2011). The court entered judgment in the amount
of the face value of the bonds, without interest. Judg-
ment, United States v. Great Am. Ins. Co. of N.Y., Case
No. 09-CV-0187 (Ct. Int’l Trade Aug. 31, 2011), ECF No.
101.
The government moved to amend the judgment under
USCIT Rule 59(e) to include postjudgment interest, as
well as both prejudgment interest under 19 U.S.C. § 580
and equitable prejudgment interest. Mot. Am. J., United
States v. Great Am. Ins. Co. of N.Y., Case No. 09-CV-0187
(Ct. Int’l Trade Sep. 21, 2011), ECF No. 102. On April 11,
2012, the court declined to award postjudgment interest
“because the Government did not address this issue in its
motion [to amend].” United States v. Great Am. Ins. Co. of
N.Y., Case No. 09-CV-0187, 34 ITRD 1408, at *3 n.4 (Ct.
Int’l Trade Apr. 11, 2012). The court denied prejudgment
interest on the ground that the government had not
timely developed the issue before judgment. Id. at *2-3.
The government appeals the denial of its motion to
amend, and Great American cross-appeals the grant of
summary judgment in favor of the government. We have
jurisdiction pursuant to 28 U.S.C. § 1295(a)(5).
US v. GREAT AMERICAN INSURANCE 7
DISCUSSION
A
The government seeks postjudgment interest as well
as both statutory and equitable prejudgment interest in
its appeal from the denial of its motion to amend the
judgment. We review the trial court’s denial of the gov-
ernment’s motion to amend for any abuse of discretion.
Hohenberg Bros. Co. v. United States, 301 F.3d 1299, 1303
(Fed. Cir. 2002).
1
With respect to postjudgment interest, 28 U.S.C.
§ 1961(a) provides that such “[i]nterest shall be allowed
on any money judgment in a civil case recovered in a
district court.” Although section 1961 does not directly
apply to judgments rendered by the Court of International
Trade, see 28 U.S.C. § 1961(c)(4), that court has awarded
postjudgment interest at the rate set out in section 1961,
based on the declaration of 28 U.S.C. § 1585 that the
Court of International Trade “shall possess all the powers
in law and equity of, or as conferred by statute upon, a
district court of the United States.” See United States v.
C.H. Robinson Co., 880 F. Supp. 2d 1335, 1348 (Ct. Int’l
Trade 2012); United States v. Ford Motor Co., 31 C.I.T.
1178, 1182 (2007); United States v. Golden Gate Petrole-
um Co., 30 C.I.T. 174, 183 n.9 (2006); United States v.
New-Form Mfg. Co., Ltd., 27 C.I.T. 1597 (2003); Am.
Permac, Inc. v. United States, 116 F. Supp. 2d 1317, 1323
(Ct. Int’l Trade 2000); United States v. Hitachi Am., Ltd.,
101 F. Supp. 2d 830, 838 (Ct. Int’l Trade 2000); United
States v. Monza Automobili, 683 F. Supp. 818, 821 (Ct.
Int’l Trade 1988). And other circuits have held that
postjudgment interest under section 1961 is mandatory
and may not be denied for failure to raise the issue until
judgment. See, e.g., Travelers Prop. Cas. Ins. Co. of Am. v.
Nat’l Union Ins. Co. of Pittsburgh, 735 F.3d 993, 1007-08
(8th Cir. 2013); Vazquez-Filippetti v. Cooperativa de
8 U.S. v. GREAT AMERICAN INSURANCE
Seguros Multiples de Puerto Rico, 723 F.3d 24, 28 (1st Cir.
2013).
In its briefing in this court, Great American did not
argue that section 1585’s incorporation of district-court
“powers” excluded or moderated section 1961’s “shall”
command to district courts; nor did it seek to distinguish
the ground for denial of postjudgment interest here from
the grounds held inadequate in section 1961 cases like
those just cited. Indeed, Great American made no argu-
ment at all contesting the government’s entitlement to
postjudgment interest here, if the underlying liability is
affirmed. It did not contest postjudgment interest at oral
argument either. In these circumstances, and because we
affirm on liability, we remand for the trial court to amend
the judgment to include postjudgment interest.
2
With respect to prejudgment interest, our conclusion
is different. We find no abuse of discretion in the trial
court’s conclusion that the government forfeited its right
to prejudgment interest by failing to present a developed
and supported case for that relief before judgment, i.e., in
its case for the compensation it was due on the merits,
presented here through a motion for summary judgment.
Unlike postjudgment interest, which is collateral to
the judgment itself, prejudgment interest “traditionally
has been considered part of the compensation due plain-
tiff” and raises “matters encompassed within the merits of
the underlying action,” such as (at least for equitable
prejudgment interest) “the degree of personal wrongdoing
on the part of the defendant, the availability of alterna-
tive investment opportunities to the plaintiff, whether the
plaintiff delayed in bringing or prosecuting the action,
and other fundamental considerations of fairness.” Os-
terneck v. Ernst & Whinney, 489 U.S. 169, 175-76 (1989).
As the Seventh Circuit held in another setting, because
prejudgment interest is “an element of the judgment
US v. GREAT AMERICAN INSURANCE 9
itself,” it generally must be sought before judgment, with
the support and development needed for other elements of
the requested judgment. Uphoff v. Elegant Bath, Ltd.,
176 F.3d 399, 410 (7th Cir. 1999) (quotation marks omit-
ted). The logic of that general requirement applies re-
gardless of whether the source of the prejudgment
interest claim is section 580 or a background “equitable”
principle.
Practical considerations reinforce application of that
requirement here. The equitable considerations that
affect equitable prejudgment interest raise obvious issues
for development through evidence and argument. An
award under section 580, at least under current law,
raises issues requiring development as well. In United
States v. Federal Insurance Co., 857 F.2d 1457 (Fed. Cir.
1988), we described section 580 interest as mandatory in
holding simply that, where this court had reversed a
Court of International Trade rejection of a government
suit for payment of certain import duties (by the importer
or the surety), this court’s failure to mention section 580
in its mandate did not bar the Court of International
Trade from ordering such interest on remand. But that
decision leaves open a number of questions that called for
substantial attention in this case.
Federal Insurance had no occasion to consider what
range of equitable considerations might affect the applica-
tion of section 580 where it applies. And Federal Insur-
ance did not involve antidumping duties at all. In fact,
this court has never considered whether section 580
applies to antidumping or countervailing duties. The
government has informed us that only recently did it even
begin to invoke section 580 in cases involving antidump-
ing (or, apparently, countervailing) duties—a seemingly
major change in the government’s asserted position on the
10 U.S. v. GREAT AMERICAN INSURANCE
scope and relationship of old laws. 1 In at least one other
context, based on widely applicable doctrines about the
relationship between specific statutory schemes and more
general statutory language, the Court of International
Trade has relied on the detailed statutory regime for
antidumping and countervailing duties to distinguish
them from general “duties” covered under other provisions
of Title 19, saying: “It seems that antidumping and coun-
tervailing duties were never intended to be regular or
general duties.” Dynacraft Indus., Inc. v. United States,
118 F. Supp. 2d 1286, 1291 (Ct. Int’l Trade 2000); id. at
1291-92. In several respects, then, the government’s
invocation of section 580 here presented anything but a
ministerial matter; it raised significant issues that the
trial court could properly view as calling for development
before judgment.
In seeking to apply section 580 here, the government
contends that, unlike equitable prejudgment interest,
interest under section 580 is not compensatory, but rather
is a “statutory exaction” in the nature of a penalty—and,
for that reason, applies in addition to equitable prejudg-
ment interest. On the question of failure to preserve the
point, that characterization, whatever its merits, does not
help the government, which identifies no precedent or
principle suggesting that a penalty characterization
1 The government stated at oral argument that it
has only lately asserted entitlement to section 580 inter-
est in the antidumping context and that no court has ever
considered this issue. Oral Argument at 00:41-01:11.
Section 580 has its origins in a 1799 law, whose language
was revised slightly in the 1870s. Act of March 2, 1799,
ch. 22, § 65, 1 Stat. 677; 1 Rev. Stat. 181, § 963 (1875).
Antidumping duties have been authorized for more than
ninety years. See Koyo Seiko Co. v. United States, 36 F.3d
1565, 1571-72 (Fed. Cir. 1994).
US v. GREAT AMERICAN INSURANCE 11
would license waiting until after judgment to develop the
claim under section 580 (let alone as a part of claim for
dual-source interest). Penalties are commonly part of the
merits relief sought, not something collateral to a judg-
ment. See, e.g., Uphoff, 176 F.3d at 410 (request for
penalty under state minimum-wage law had to be raised
before judgment). Moreover, the characterization of
section 580 as a penalty hardly makes it a ministerial
matter—and not just because the correctness of the
characterization is a substantial issue. The characteriza-
tion leaves, rather than disposes of, questions about
whether section 580 applies to antidumping duties at all
and whether, if so, case-specific equitable considerations
are relevant to its application, as is common under other,
variously worded authorizations to apply penalties.2
Thus, it remains the case that the novelty of the govern-
ment’s theory, which presents significant issues warrant-
ing substantial legal and possibly factual development,
makes it appropriate to require prejudgment develop-
ment. Uphoff, 176 F.3d at 410 (“Rule 59(e) may not be
2 See, e.g., Safeco Ins. Co. of Am. v. Burr, 551 U.S.
47, 53 (2007) (punitive damages available under 15 U.S.C.
§ 1681n(a) if violation of Fair Credit Reporting Act is
willful, as opposed to negligent); Kolstad v. Am. Dental
Ass’n, 527 U.S. 526, 534 (1999) (42 U.S.C. § 1981a author-
izes punitive awards in only a subset of intentional dis-
crimination cases, where defendant acted with malice or
reckless indifference); BMW of N. Am., Inc. v. Gore, 517
U.S. 559, 565 (1996) (Alabama law permits punitive
damages in tort actions where defendant’s conduct was
deliberately oppressive, fraudulent, wanton, or malicious);
Hazen Paper Co. v. Biggins, 507 U.S. 604, 606 (1993)
(liquidated damages available under 29 U.S.C. § 626(b)
for willful violations of the Age Discrimination in Em-
ployment Act of 1967).
12 U.S. v. GREAT AMERICAN INSURANCE
used to raise novel legal theories that a party had the
ability to address in the first instance.”).
The trial court could reasonably find that the govern-
ment did not sufficiently develop, or therefore preserve, a
claim for prejudgment interest. In its summary-judgment
filings, the government did no more than end its brief
with a prayer for the relief requested in the complaint and
attach a proposed order that included interest calculated
under section 580. It is well established that arguments
that are not appropriately developed in a party’s briefing
may be deemed waived. See, e.g., SmithKline Beecham
Corp. v. Apotex Corp., 439 F.3d 1312, 1320 (Fed. Cir.
2006) (collecting cases); United States v. Charles, 469 F.3d
402, 408 (5th Cir. 2006) (“Inadequately briefed issues are
deemed abandoned.”). That principle makes particular
sense where the claim at issue raises substantial issues.
That is the case here, because the government’s request
for prejudgment interest raises significant questions
about, for example, the equitable considerations attending
equitable interest and/or section 580 interest, the novelty
of application of section 580 to antidumping duties, and
the soundness of the theory that both types of interest
should be awarded.
It may be (we need not say) that the government
could have preserved its claim by making a short affirma-
tive presentation in its initial brief requesting summary
judgment; doing so would have given Great American
clear notice of its obligation to present its legal and evi-
dentiary responses to the government’s novel claim, and
the government then would have presented its full an-
swers in reply. But the government did not do even that.
We know of no general rule that, as a matter of law,
excuses a movant from presenting a claim in its merits
discussion, just because an opening presentation could be
short. Here it was reasonable for the trial court to con-
clude that the argument for prejudgment interest should
US v. GREAT AMERICAN INSURANCE 13
have been, but was not, actually developed before judg-
ment.
A Rule 59(e) motion “cannot be used to raise argu-
ments which could, and should, have been made before
the judgment issued.” Simon v. United States, 891 F.2d
1154, 1159 (5th Cir. 1990). Thus, the court acted within
its discretion in concluding that the government’s argu-
ments in support of prejudgment interest, briefed for the
first time in its motion to amend, came too late. See First
State Bank of Monticello v. Ohio Cas. Ins. Co., 555 F.3d
564, 572 (7th Cir. 2009). Preservation principles are
important to a well-functioning litigation system, particu-
larly, perhaps, for regular litigants like the government.
The trial court did not abuse its discretion in invoking
those principles here to deny prejudgment interest.
B
In its cross-appeal, Great American argues that the
trial court erred in granting summary judgment enforcing
the bonds. Great American argues that the government’s
failure to notify Great American of the suspension of
liquidation of the entries at issue bars its recovery on two
separate grounds. It also argues that the bonds are
unenforceable because they exceed Mr. Davis’s $1 million
authority. We review the grant of summary judgment de
novo. Int’l Trading Co. v. United States, 412 F.3d 1303,
1307 (Fed. Cir. 2005).
1
Great American raises two defenses based on the gov-
ernment’s failure to notify it that liquidation of the en-
tries at issue had been suspended. First, it contends that
the failure to notify it as required by 19 U.S.C. § 1504(c)
invalidated the suspension as a matter of law, that liqui-
dation therefore occurred and the government’s claim
accrued by May 17, 2002, and that the government suit,
brought more than six years after that date, is accordingly
14 U.S. v. GREAT AMERICAN INSURANCE
time-barred under the six-year statute of limitations, 28
U.S.C. § 2415(a). Second, Great American argues that the
lack of notice impaired its suretyship by altering its risk
of loss and that it is therefore discharged from its obliga-
tion under the bond. We consider each argument in turn.
a
When liquidation of an entry has been suspended, 19
U.S.C. § 1504(c) requires that “notice of the suspension be
provided . . . to the importer of record . . . and to any
authorized agent and surety of such importer of record
. . . .” (Emphases added.) Section 1504(c) therefore “im-
poses a duty on Customs to notify the [surety] if liquida-
tion is suspended.” Wolff Shoe, 141 F.3d at 1118. It is
undisputed on appeal that Customs erred by not notifying
Great American (it did notify New Phoenix and Washing-
ton International) that liquidation of the entries at issue
had been suspended.
Although section 1504(c) does not set out any specific
remedy for its violation, the absence of a specified remedy
does not itself mean that the notice requirement is merely
advisory or that failure to provide the required notice is
without consequence, as the government contends. The
Supreme Court has indicated that, in at least some cir-
cumstances, it “presume[s] the availability of all appro-
priate remedies unless Congress has expressly indicated
otherwise.” Franklin v. Gwinnett Cnty. Pub. Schs., 503
U.S. 60, 66 (1992). We need not explore the remedial
issue broadly, though, because the only issue presented
here is whether the trial court properly rejected (on
summary judgment) the particular remedy Great Ameri-
can seeks—invalidation of the suspension, with certain
alleged consequences for the bonds’ enforceability.
We have held that “[a]n agency’s violation of a statu-
tory procedural requirement does not necessarily invali-
date the agency action, especially where Congress has not
expressed any consequences for such a procedural viola-
US v. GREAT AMERICAN INSURANCE 15
tion.” Diaz v. Dep’t of Air Force, 63 F.3d 1107, 1109 (Fed.
Cir. 1995). The Supreme Court has said: “We would be
most reluctant to conclude that every failure of an agency
to observe a procedural requirement voids subsequent
agency action, especially when important public rights are
at stake.” Brock v. Pierce Cnty., 476 U.S. 253, 259-60
(1986). No more should Customs’s procedural error, in
failing to provide a statutorily required notification,
necessarily invalidate a suspension of liquidation that,
like the suspension here, occurred automatically by
operation of law.
Rather, in accordance with the Administrative Proce-
dure Act, which governs the trial court’s review as well as
our own, we must take “due account . . . of the rule of
prejudicial error” in reviewing Customs’s failure to notify
Great American that liquidation had been suspended. 5
U.S.C. § 706. Because section 706 establishes a harmless-
error rule, Shinseki v. Sanders, 556 U.S. 396, 406 (2009),
the suspension in this case could be invalidated only if
Great American showed that the agency’s procedural
error caused it substantial prejudice, Intercargo Ins. Co. v.
United States, 83 F.3d 391, 394 (Fed. Cir. 1996); PAM
S.p.A. v. United States, 463 F.3d 1345, 1348-49 (Fed. Cir.
2006). This approach, required by the APA, is hardly
idiosyncratic: in other areas of law, a showing of prejudice
is often required when a party seeks discharge from a
substantive obligation based on another’s procedural
error. 3
3 See, e.g., Hanson Prod. Co. v. Americas Ins. Co.,
108 F.3d 627, 629 (5th Cir. 1997) (under Texas law,
insurers must show prejudice in order to prevail on late-
notice defense); O’Connor v. UNUM Life Ins. Co. of Am.,
146 F.3d 959, 961-62 (D.C. Cir. 1998) (California’s “notice-
prejudice” rule requires insurer to prove actual, substan-
tial prejudice, which is not presumed from delayed notice
16 U.S. v. GREAT AMERICAN INSURANCE
In this case, the trial court correctly concluded that
Great American did not present sufficient evidence of
prejudice to create a triable issue of fact regarding preju-
dice from the government’s procedural error. Great
American argues that the government’s failure to send it
a separate notice of suspension injured it because, had it
gotten such a notice, it could have sought reinsurance,
ceased doing business with the importer to limit its future
risk, or attempted to minimize its loss on these bonds by
participating in the administrative review of the duties at
issue and arguing for a lower rate for the entries covered
by the bonds. But the trial court correctly recognized that
certain of the identified possible actions are irrelevant to
the single-transaction bonds at issue here, because alter-
ing future business policies could not limit the risk Great
American had already incurred under the bonds in ques-
tion. Great Am. Ins., 791 F. Supp. 2d at 1356-57. In any
event, and decisively, each of Great American’s general-
ized suggestions of potential action is insufficient to
create a genuine issue of material fact on the record here,
which included Great American’s admissions that it had
received other suspension notices and simply forwarded
them to the agents without taking any additional action,
and that it has never participated in an administrative
review. J.A. 330a-32a.
While those admissions would not themselves auto-
matically preclude Great American from showing that it
would have acted in this case, it was incumbent upon
alone); cf. United States v. Concha, 294 F.3d 1248, 1256
(10th Cir. 2002) (insufficient notice that court could rely
on foreign conviction was harmless where defendant
failed to show prejudice); Blaney v. West, 209 F.3d 1027,
1032 (7th Cir. 2000) (district court’s failure to give actual
notice before dismissing case was harmless error where
the plaintiff was not prejudiced by the lack of notice).
US v. GREAT AMERICAN INSURANCE 17
Great American to come forward with evidence that in
this case—unlike prior cases—notification would likely
have led it to take action, with some relevant probability
of averting the alleged harm. Sanders, 556 U.S. at 408
(conclusion as to harmless error must rest “on the facts
and circumstances of the particular case”); id. at 409
(“[T]he burden of showing that an error is harmful nor-
mally falls upon the party attacking the agency’s deter-
mination.”). Great American did not do so. It claimed
generally that it could have minimized its risk by partici-
pating in the rate review (which it has never done before),
but it did not identify any evidence or arguments that
were missing from the administrative record or show how
they could have altered the outcome of the review. Great
Am. Ins., 791 F. Supp. 2d at 1358. 4 Although counsel for
Great American suggested at oral argument before this
court that this case was different because the amount in
controversy was much greater than in any prior case, Oral
Argument 23:53-24:56, Great American did not present
that argument in the trial court with supporting facts. Its
summary-judgment opposition suggested only that the
government should have considered “whether Great
American . . . had ever received suspension notices for
entries with dollar amounts as large as the amounts at
issue in this case.” Great Am.’s Opp. to Pl.’s Mot. Summ.
J. at 9, United States v. Great Am. Ins. Co. of N.Y., Case
No. 09-CV-0187 (Ct. Int’l Trade Oct. 22, 2010), ECF No.
82. That suggestion about what the government might
consider is no substitute, on summary judgment, for
4 Cf. City of Arlington, Tex. v. FCC, 668 F.3d 229,
244-45 (5th Cir. 2012) (failure of the Federal Communica-
tions Commission to comply with notice-and-comment
procedures was harmless where party asserting error
could not show prejudice and did not identify “a single
argument . . . that was not considered by the FCC in the
agency proceedings below”).
18 U.S. v. GREAT AMERICAN INSURANCE
presentation of evidence—here, evidence of other actual
bonds and how their amounts compare to those of the
present bonds. Thus, Great American did not present the
trial court with any supported reason that notice would
likely have spurred it, in a departure from its historical
practice, to take harm-avoiding action in this case.
The trial court’s conclusion is reinforced by the fact
that Great American was not without any notice of the
suspension in this case. Great American recognizes that
suspension of liquidation began when Commerce made its
preliminary determination of dumping, see 19 U.S.C.
§ 1673b(d)(2), before the bonds at issue here were even
issued, and it acknowledged in discovery that each of the
bonds in question includes on its face a code indicating
that the covered entries were subject to an antidumping
duty order. In addition, notice of the initial and continued
suspension of liquidation of entries covered by the order
was repeatedly published in the Federal Register, years
before the publication of the final results of the adminis-
trative review. Freshwater Crawfish Tail Meat from the
People’s Republic of China, 62 Fed. Reg. at 14,397 (pre-
lim. determination); 62 Fed. Reg. at 41,358, amended by
62 Fed. Reg. 48,218 (final determination); 64 Fed. Reg. at
61,834 (new shipper review); 19 C.F.R. § 351.214(e)
(suspension based on new shipper review); 66 Fed. Reg. at
54,196 (initiation of admin. review). In general, publica-
tion in the Federal Register is legally sufficient to provide
notice to interested parties. See, e.g., 44 U.S.C. § 1507
(filing of a document with the Office of Federal Register is
sufficient to give notice of the contents of the document to
a person subject to or affected by it); Fed. Crop Ins. Corp.
v. Merrill, 332 U.S. 380, 384-85 (1947) (“Congress has
provided that the appearance of rules and regulations in
the Federal Register gives legal notice of their contents.”);
Jones v. United States, 121 F.3d 1327, 1330 (9th Cir.
1997) (publication in the Federal Register constitutes
legally sufficient notice). Thus, although section 1504(c)
US v. GREAT AMERICAN INSURANCE 19
requires an additional notice to the surety, Great Ameri-
can cannot claim that it received no notice.
In short, the record is devoid of sufficient evidence
that omitting the additional notice required by section
1504(c) robbed Great American of the opportunity to take
loss-mitigating actions it otherwise would have been
likely to take in this case. Because Great American did
not present evidence that created a triable issue of fact
regarding prejudice, we affirm the trial court’s conclusion
that the suspension of liquidation was valid. As is undis-
puted, it follows that the government’s cause of action
accrued when Customs liquidated the relevant entries
starting in late July 2003 and the government’s suit was
not time-barred.
b
Great American also argues that Customs, by failing
to provide notice pursuant to section 1504(c), impaired
Great American’s suretyship, i.e., fundamentally altered
its risk of loss, with the result that it is discharged from
liability under the bonds. For reasons similar to those
just discussed, we affirm the trial court’s conclusion that
Great American did not present sufficient evidence to
create a triable issue of fact on its defense of impairment
of suretyship.
Offered no reason to do otherwise, we rely on the Re-
statement (Third) of Suretyship & Guaranty § 37(1)
(1996) in considering this defense. Section 37(1) provides:
If the obligee acts to increase the secondary obli-
gor’s risk of loss by increasing its potential cost of
performance or decreasing its potential ability to
cause the principal obligor to bear the cost of per-
formance, the secondary obligor is discharged as
described in subsections (2) and (3), and the sec-
ondary obligor has a claim against the obligee as
described in subsection (4). An act that increases
20 U.S. v. GREAT AMERICAN INSURANCE
the secondary obligor’s risk of loss by increasing
its potential cost of performance or decreasing its
potential ability to cause the principal obligor to
bear the cost of performance is an “impairment of
suretyship status.”
Under that standard, in order for Great American to be
discharged from its bond obligations, the government
must have fundamentally altered the risks imposed on
Great American, as detailed in section 37(2), or impaired
Great American’s recourse against New Phoenix, as
detailed in section 37(3). Because there is no claim that
the government impaired Great American’s recourse
against New Phoenix, Great American’s defense depends
on whether the government’s failure of notice fundamen-
tally altered its risk. For the reasons discussed above
with respect to lack of prejudice, we conclude that the
trial court properly determined that Great American
failed to show that the record created a genuine issue of
material fact precluding summary judgment.
In order to be discharged from its obligations under
the bond, Great American would have to show that the
lack of section 1504(c) notice materially modified the
contract to which it originally agreed by substantially
increasing its risk. See, e.g, Lumbermens Mut. Cas. Co. v.
United States, 654 F.3d 1305, 1313-14 (Fed. Cir. 2011);
United States v. King, 349 F.3d 964, 967 (7th Cir. 2003)
(material modification is one that “significantly augments
the [surety’s] risk”). But because, as just discussed, Great
American did not allege facts sufficient to show that
either its own conduct or the ultimate outcome would
have been different had it received the required notice,
there is no evidence that its risk was increased by the
government’s error—let alone substantially increased.
See King, 349 F.3d at 968 (surety not discharged where it
failed to demonstrate that liability was attributable to
“the incremental risk associated with the change in
conditions, as opposed to the original risk associated with
US v. GREAT AMERICAN INSURANCE 21
posting bond”). Accordingly, we affirm the trial court’s
conclusion that the facts supporting Great American’s
impairment-of-suretyship defense, even when viewed in
the light most favorable to Great American, are insuffi-
cient to preclude summary judgment in favor of the
government.
2
Great American challenges the summary judgment in
favor of the government on one additional ground. It
argues that the bonds in question are unenforceable
because each bond was for an amount that exceeded the
issuing agent’s alleged $1 million authority by $219,458.
Great American advanced this argument in the trial court
as an affirmative defense to the government’s recovery,
both in response to the government’s motion for summary
judgment and in its own cross-motion for summary judg-
ment. Great Am.’s Mot. Summ. J. at 24-40, Great Am.
Ins., Case No. 09-CV-0187 (Ct. Int’l Trade Sep. 24, 2010),
ECF No. 72-1; Great Am.’s Opp. to Pl.’s Mot. Summ. J. at
15-27. 5
5 Great American did not argue in the alternative,
either in its own motion or in response to the govern-
ment’s motion for summary judgment to enforce the
bonds, that its liability should be limited to $1 million.
Cf. Restatement (Third) Of Agency § 6.05(1) (2006) (where
amount of contract exceeds actual or apparent authority,
liability may be imposed for authorized amount in speci-
fied circumstances). Without citation to any legal author-
ity, the government invoked the possibility of such limited
liability in a one-sentence footnote in its response to Great
American’s motion for summary judgment. Pl.’s Opp. to
Great Am.’s Mot. Summ. J. at 12 n.13, Great Am. Ins.,
Case No. 09-CV-0187 (Ct. Int’l Trade Oct. 21, 2010), ECF
No. 78.
22 U.S. v. GREAT AMERICAN INSURANCE
Great American relies for this contention almost ex-
clusively on a Customs regulation. For context, we note
first a regulation that Great American does not invoke:
19 C.F.R. § 113.37(a) provides that “Treasury Department
Circular 570 contains a list of corporations authorized to
act as sureties on bonds” and that, in the absence of
certain measures to limit risk, “no bond shall be for a
greater amount than the respective limit stated in the
Circular.” That provision, which addresses the surety
corporation’s own stated limitation on its bonds, is not
applicable here, because Great American does not claim
that the bonds at issue exceeded the amount stated in its
Circular 570 filing.
Rather, the provision invoked by Great American is
one concerning a surety corporation’s grant of a power of
attorney to an agent acting on its behalf in posting bonds.
Section 113.37(g) provides that corporate sureties “may
execute powers of attorney to act in their behalf” by filing
Customs Form 5297. 19 C.F.R. § 113.37(g). It requires
that the form include a “[d]ollar amount of authorization,”
id. § 113.37(g)(1)(vii), and forbids changes to that authori-
zation unless the surety submits one Form 5297 revoking
the existing power of attorney and a second Form 5297
containing a new grant of authority, id. § 113.37(g)(5).
Unlike section 113.37(a), however, section 113.37(g) does
not state that no bond shall exceed an agent’s authority as
stated on Form 5297.
The government’s records conflict with Great Ameri-
can’s as to the authorization amount on file with Customs
for Mr. Davis, the agent who signed the bonds in question.
The government’s records listed Mr. Davis as having
authority up to the surety’s own limit as published in the
annual circular ($2,694,000 at the time Mr. Davis’s au-
thority was revoked). J.A. 257-58. Great American, on
the other hand, produced a partial copy of a Form 5297
listing Mr. Davis’s authority as $1 million, which it con-
tends was filed with Customs in 1996. J.A. 256. Given
US v. GREAT AMERICAN INSURANCE 23
the dispute, the trial court assumed for purposes of sum-
mary judgment that Great American filed a Form 5297
with Customs limiting Mr. Davis’s authority to $1 million.
Great Am. Ins., 791 F. Supp. 2d at 1348. Even on that
assumption, however, the court concluded that the gov-
ernment was entitled to a summary judgment, on the
record here, that Great American’s actions provided
apparent authority that bound it to amounts in excess of
$1 million, and that the bonds were therefore valid and
enforceable. Id. at 1347-49.
As defined in Restatement (Third) Of Agency § 2.03
(2006),
[a]pparent authority is the power held by an agent
or other actor to affect a principal’s legal relations
with third parties when a third party reasonably
believes the actor has authority to act on behalf of
the principal and that belief is traceable to the
principal’s manifestations.
The principal’s manifestations need not be conveyed
through words or actions. Rather, “[s]ilence may consti-
tute a manifestation when, in light of all the circumstanc-
es, a reasonable person would express dissent to the
inference that other persons will draw from silence.
Failure then to express dissent will be taken as a mani-
festation of affirmance.” Id. § 1.03 cmt. b. The trial court
here considered the issue of apparent authority from the
perspectives of both New Phoenix and the government,
and it determined that each reasonably believed that Mr.
Davis had authority to issue the bonds. Great Am. Ins.,
791 F. Supp. 2d at 1347-49. Great American does not
challenge the finding with respect to New Phoenix, but it
argues that, given the provisions of section 113.37(g)(5),
the government could not reasonably believe that Mr.
Davis’s $1 million authority could be increased by any
means other than the filing of a new Form 5297.
24 U.S. v. GREAT AMERICAN INSURANCE
Great American’s position rests on an unwarranted
view of the regulation’s effect on apparent authority. The
central premise of apparent authority is that legally
effective authority can in fact go beyond an expressly
stated grant of actual authority. Whether the govern-
ment should have known that Mr. Davis’s previously
stated actual authority was limited to $1 million is not
dispositive. Although, as a general matter, “[a]n agent
does not act with apparent authority when a third party
has reason to know that the agent acts without actual
authority,” Restatement (Third) Of Agency § 6.11 cmt. b
(2006), the course of dealing between the parties may
naturally alter what the third party has reason to know,
and a manifestation that gives rise to apparent authority
“may be made by conduct alone or by conduct that carries
meaning at odds with words expressed previously . . . ,”
id. § 1.03 cmt. e. Accordingly, a principal’s manifestations
may lead a third party reasonably to believe that an agent
has authority to act, even where the principal’s previous
written statement indicated that the agent’s authority
was more limited. See, e.g., Linkage Corp. v. Trustees of
Boston Univ., 425 Mass. 1, 17 (1997) (holding that it was
reasonable for a third party to believe that an agent had
authority to sign an agreement, despite the third party’s
having received a directive that the principal’s approval
was required for such expenditures, because other pay-
ments had been authorized without the required approval
even after the directive was issued).
Against that background, 19 C.F.R. § 113.37(g)(5), on
which Great American relies for almost the entirety of
this defense, cannot be read as protecting Great American
against a finding of apparent authority. The regulation is
not even written as a directive to Customs to reject cer-
tain bonds. Rather, in providing an amount of authoriza-
tion, it protects Customs against any later denial of actual
authority by the corporate surety, unless that surety
revokes a Form 5297 that is on file. But that protection
US v. GREAT AMERICAN INSURANCE 25
for Customs does not deprive Customs of the right to rely
on apparent authority that otherwise exists.
The question, then, is not whether Great American
told the government that Mr. Davis’s authority was
limited to $1 million—we assume, as the trial court did,
that the disputed Form 5297 was filed—but whether a
reasonable person in the government’s position would
nevertheless believe that Great American’s subsequent
conduct gave Mr. Davis apparent authority to issue bonds
in excess of $1 million. Although the existence of appar-
ent authority is normally a question of fact, Restatement
(Third) Of Agency § 2.03 cmt. d (2006), summary judg-
ment on this issue is appropriate if, viewed in the light
most favorable to the non-moving party, the facts estab-
lish that the principal acted in a manner that gave its
agent the appearance of authority. See, e.g., Ophthalmic
Surgeons, Ltd. v. Paychex, Inc., 632 F.3d 31, 37 n.5 (1st
Cir. 2011) (affirming summary judgment that apparent
authority existed as a matter of law); Am. Nat. Fire Ins.
Co. v. Kenealy, 72 F.3d 264, 267 (2d Cir. 1995) (same).
Here, the dispositive facts are not in dispute, and
without Great American’s mistaken view of the effect of
the regulation, the facts properly support summary
judgment of apparent authority. According to Great
American’s admissions, on more than one occasion be-
tween the years 1996 and 2001, Great American received
reports listing bonds issued by Mr. Davis’s agency with
face values in excess of $1 million, and in at least one
instance it specifically approved a request by the agency
to issue a bond in excess of $1 million. J.A. 332h-j. The
record also includes a report received by Great American
that listed thirty-one “excessive bonds” (bonds exceeding
the agent’s authority) issued by Mr. Davis’s agency be-
tween June 1996 and October 2000, along with copies of
thirteen such bonds, nine of which bear Mr. Davis’s
signature. Great American has not disputed the accuracy
of the report or the bonds, but argues that before 2003 it
26 U.S. v. GREAT AMERICAN INSURANCE
was unaware that some of the bonds existed and it is
unclear how many were actually presented to Customs.
At least two of the bonds for which copies were produced,
however, include bond numbers assigned by Customs,
indicating that they were filed with Customs. There is no
evidence that Great American ever objected to the gov-
ernment’s acceptance of bonds in excess of $1 million from
Mr. Davis’s agency, or that Great American gave Customs
any other indication that such bonds were not authorized.
As explained in the Restatement (Third) Of Agency
§ 3.03 cmt. b (2006),
[a] principal’s inaction creates apparent authority
when it provides a basis for a third party reasona-
bly to believe the principal intentionally acquiesc-
es in the agent’s representations or actions. . . . If
the third party has observed prior interactions be-
tween the agent and the principal, the third party
may reasonably believe that a subsequent act or
representation by the agent is authorized because
it conforms to the prior pattern observed by the
third party. The belief is thus traceable to the
principal’s participation in the pattern and failure
to inform the third party that no inferences about
the agent’s authority should be based upon it.
It is undisputed that, before issuing the New Phoenix
bonds at issue in this appeal, Mr. Davis and his agency
issued multiple Great American bonds that exceeded the
issuing agent’s authority, with no objection from Great
American. Thus, even if the government should have
known that Mr. Davis’s power of attorney listed his
authority as capped at $1 million, the pattern of agents
exceeding their authority with no objection from Great
American would lead a reasonable person in the govern-
ment’s position to believe that such acts were authorized.
Because its admissions as to the pattern of excessive
bonds issued by Mr. Davis’s agency are indisputable, the
US v. GREAT AMERICAN INSURANCE 27
best that Great American can do is contend that there is
only “equivocal” evidence that it had any notice of exces-
sive bonds issued by Mr. Davis specifically. But that
contention is beside the point, under the governing stand-
ard. Because Great American was admittedly on notice
that agents at Mr. Davis’s company were exceeding their
authority, it is immaterial whether Great American had
notice as to Mr. Davis specifically, because Great Ameri-
can has not pointed to any evidence whatever that a
reasonable person in the government’s position would
think that Mr. Davis’s actions were less likely to be au-
thorized than the actions of any other agent. On this
record, therefore, the evidence based on bonds filed by
Great American’s agents generally, indeed by those from
Mr. Davis’s company, is controlling on the question of
apparent authority. Id. § 2.03 cmt. d (“Custom supports
the presence of apparent authority when an agent’s act is
within the limit of authority standard for agents in simi-
lar position and endeavors.”).
Despite its clear admissions, Great American con-
tends that the trial court erred by finding that Great
American was on notice that its agents (including Mr.
Davis) were issuing bonds in excess of $1 million, and
that its silence was therefore not indicative that it ap-
proved Mr. Davis’s excessive bonds. But Great American
cites only testimony concerning what individual execu-
tives actually knew, confusing notice with knowledge. Id.
§ 1.04(4) (“A person has notice of a fact if the person
knows the fact, has reason to know the fact, has received
an effective notification of the fact, or should know the fact
to fulfill a duty owed to another person.”) (emphasis
added). Moreover, it does not matter whether Great
American was silent because it actually acquiesced in the
bonds’ issuance (as it admits it did in at least one in-
stance) or because it remained ignorant of their existence
due to oversight deficiencies that the government reason-
ably need not account for. In either event, the evidence
28 U.S. v. GREAT AMERICAN INSURANCE
can support only one finding on the legally relevant
question: it was reasonable for the government to inter-
pret the pattern of bond postings as conferring the requi-
site authority on Mr. Davis. See Kenealy, 72 F.3d at 268-
69 (rejecting Great American’s contention that “a con-
sumer who deals with a putative agent has the duty to
determine the scope of the agent’s authority, and that the
alleged principal can be liable only if it had knowledge of
the agent’s representation and failed to repudiate it” and
concluding that Great American “should bear the burden
of monitoring the apparent authority of a putative
agent”).
Based on the undisputed facts regarding Great Amer-
ican’s conduct, a reasonable person in the government’s
position would believe that Mr. Davis had the authority to
issue the bonds at issue in this appeal. Thus, the trial
court did not err in holding that there was no material
factual dispute that “Great American’s conduct demon-
strated that [Mr.] Davis had authority to enter into these
bonds.” Great Am. Ins., 791 F. Supp. 2d at 1349. See
Deere & Co. v. Int’l Trade Comm’n, 605 F.3d 1350, 1357
(Fed. Cir. 2010) (principal may silently act in a manner
that gives an agent a reasonable appearance of authority).
For the foregoing reasons, we affirm the trial court’s
determination that the bonds at issue were not unen-
forceable as exceeding Mr. Davis’s alleged $1 million
authority.
CONCLUSION
We affirm the Court of International Trade’s grant of
summary judgment in favor of the government, affirm its
denial of the government’s motion to amend the judgment
to include prejudgment interest, reverse the denial of
postjudgment interest, and remand.
No costs.
US v. GREAT AMERICAN INSURANCE 29
AFFIRMED IN PART, REVERSED IN PART, AND
REMANDED