Shinyei Corp. Of America v. United States

.
NOTE: This disposition is nonprecedential
United States Court of Appeals
for the Federal Circuit
__________________________
SHINYEI CORPORATION OF AMERICA,
Plaintiff-Appellant,
v.
UNITED STATES,
Defendant-Appellee.
__________________________
2010-1178
__________________________
Appeal from the United States Court of International
Trade in consolidated case No. 00-CV-0130, Chief Judge
Jane Restani.
___________________________
Decided: October 22, 2010
___________________________
CHARLES H. BAYAR, Charles H. Bayar Law Office, of
Scarsdale, New York, argued for plaintiff-appellant.
MICHAEL P. GOODMAN, Trial Attorney, Commercial
Litigation Branch, Civil Division, United States Depart-
ment of Justice, of Washington, DC, argued for defendant-
appellee. With him on the brief were TONY WEST, Assis-
tant Attorney General, JEANNE E. DAVIDSON, Director,
and PATRICIA M. MCCARTHY, Assistant Director. Of
SHINYEI CORP v. US 2
counsel was MICHAEL J. DIERBERG, Trial Attorney. Of
counsel on the brief was EDWARD N. MAURER, Deputy
Assistant Chief Counsel, United States Customs and
Border Protection, of New York, New York.
__________________________
Before NEWMAN, PROST, and MOORE, Circuit Judges.
MOORE, Circuit Judge.
Appellant Shinyei Corporation of America (Shinyei),
appeals the final decision of the United States Court of
International Trade denying an award of fees under the
Equal Access to Justice Act (EAJA). Because the Court of
International Trade abused its discretion by determining
that the government’s position was substantially justified,
we reverse and remand for a determination of fees.
BACKGROUND
This is the third time this case has come to us on ap-
peal. Because this is an EAJA case, the entire course of
the government’s conduct—from the earliest Commerce
decisions through the current appeal—is relevant.
Commerce issued an antidumping order covering ball
bearings from Japan and several other countries in 1989.
Shinyei Corp of Am. v. United States, 524 F.3d 1274,
1277-78 (Fed. Cir. 2008) (Shinyei II). Shinyei imported
ball bearings between May 1, 1990 and April 30, 1991.
Because the bearings were subject to antidumping duties,
Shinyei made a cash deposit of antidumping duties of
45.83% ad val. Id. at 1278. During this time period,
Commerce performed its second administrative review in
which it determined that the 45.83% duty rate was incor-
rect. The final rates determined appropriate by Com-
merce ranged from 1.8% to 16.71%. Antifriction Bearings
(Other Than Tapered Roller Bearings) and Parts Thereof
3 SHINYEI CORP v. US
from France; et al.; Final Results of Antidumping Duty
Administrative Reviews, 57 Fed. Reg. 28,360, 28361 (Dep’t
Commerce June 24, 1992), amended by 57 Fed. Reg.
59,080 (Dep’t Commerce Dec. 14, 1992).
In 1998, following the final rate determination, and a
related judicial action, Commerce issued instructions to
Customs to liquidate all entries during this period at the
lower rates (1.8%-16.71%). The instructions inexplicably
omitted Shinyei. There is no dispute over the merits,
Shinyei was entitled to the lower rate determined by
Commerce in the second administrative review – 1.8%-
16.71%. Commerce admits that it inadvertently left
Shinyei off of the liquidation instructions to Customs.
J.A. 626-27. As a direct result of this error, Shinyei
remained subject to the 45.83% rate.
On March 23, 2000, Shinyei filed suit in the Court of
International Trade challenging Commerce’s 1998 in-
structions. Shinyei argued that Commerce erred by
excluding it from these instructions and thus not properly
implementing the result of the second administrative
review. Shinyei argued it was entitled to the lower rates
and that its merchandise should not be liquidated at the
higher 45.83% rate which was rejected by Commerce in
the second administrative review. On August 1, 2000,
more than four months after Shinyei initiated a suit
pointing out Commerce’s error, Commerce ordered Cus-
toms to actually liquidate the merchandise at issue at the
incorrect 45.83% rate. 1
After this actual liquidation occurred, pursuant to
Commerce’s order, the government argued that the Court
1 Shinyei also sought a writ of mandamus to direct
Customs to liquidate the entries at issue at the rates
determined in the second administrative review, the
Customs-error case.
SHINYEI CORP v. US 4
of International Trade did not have jurisdiction because
Commerce actually liquidated the entries. The govern-
ment argued that once entries are liquidated, their duty
rate cannot be challenged in the Court of International
Trade. On February 14, 2003, the Court of International
Trade dismissed the litigation for lack of jurisdiction
because of the actual liquidations. Shinyei appealed. We
determined that because Shinyei challenged Commerce’s
instructions under the APA, rather than its final deter-
mination under section 516A of the Tariff Act, the actual
liquidations did not divest the Court of International
Trade of jurisdiction. We reversed and remanded the case
specifically for further proceedings on the merits of Shin-
yei’s APA claim. Shinyei Corp. of Am. v. United States,
355 F.3d 1297, 1312 (Fed. Cir. 2004) (Shinyei I).
On remand, the Commerce-error case and the Cus-
toms-error case were consolidated. The government
argued that even though we held that the actual liquida-
tion did not divest the Court of International Trade of
jurisdiction, the entries were deemed liquidated 2 in 1998
and that this liquidation divested the Court of Interna-
tional Trade of jurisdiction. The parties filed cross-
motions for summary judgment on the government’s
2 Here, the parties both agree that Shinyei’s entries
were deemed liquidated. An entry is “deemed liquidated”
if Commerce fails to actually liquidate the entry within 6
months of the publication of final review results. 19
U.S.C. § 1504(d). Shinyei received no notice of this
deemed liquidation and it appears that the government
only discovered it much later during litigation. See Shin-
yei II, 524 F.3d at 1284. If the government had been
aware of the deemed liquidation, there would have been
no reason for Commerce to order the actual liquidation in
August 2000. Notice of a deemed liquidation is important
because this notice starts the importer’s clock on the time
to protest the liquidation.
5 SHINYEI CORP v. US
deemed liquidation defense. The Court of International
Trade granted the government’s motion for summary
judgment and again dismissed the case for lack of juris-
diction. Shinyei Corp. of Am. v. United States, 491 F.
Supp. 2d 1209, 1222 (Ct. Int’l Trade 2007).
Again, Shinyei appealed this jurisdiction determina-
tion. The government argued that the deemed liquidation
statute, 19 U.S.C. § 1675(a)(2)(C), forbids judicial review
of Commerce instructions after deemed liquidation occurs.
We held that the deemed liquidation statute is silent as to
reliquidation and judicial review and that we would not
read this as a blanket prohibition. Shinyei II, 524 F.3d at
1283. Further, we relied on Koyo Corp. of U.S.A. v.
United States, 497 F.3d 1231, 1242 (Fed. Cir. 2007). In
Koyo, we determined that a deemed liquidation that does
not comport with final administrative review results is
invalid. 497 F.3d at 1242-43. In other words, “[a]ssuming
that Shinyei’s entries were covered by the [results of the
administrative review], their deemed liquidation at the
deposit rate [of 45.83%] was unlawful.” Shinyei II, 524
F.3d at 1284. Again, we reversed and remanded for the
Court of International Trade to consider the merits of
Shinyei’s claim.
On remand, when finally faced with the merits of its
case, the government agreed to reimburse Shinyei for the
duties which had been incorrectly accessed. The parties
agreed to a stipulated dismissal and a payment to Shinyei
of over $2,000,000. J.A. 781-82.
Following the entry of stipulated judgment, Shinyei
applied for an award of attorney’s fees under EAJA. The
Court of International Trade recognized that it must
consider the government’s entire course of conduct includ-
ing Commerce’s prelitigation conduct as well as the
government’s litigation arguments. The Court of Interna-
SHINYEI CORP v. US 6
tional Trade dismissed Commerce’s prelitigation conduct
as merely a “clerical” error and concluded that it could not
render the government’s position unreasonable. Shinyei
Corp. of Am. v. United States, 31 I.T.R.D. 2381 (Ct. Int’l
Trade 2009) (Shinyei-EAJA). The Court of International
Trade focused almost entirely on the government’s argu-
ments during litigation. Id. It observed that in both
appeals, the government supported its position with
relevant case law. Id. Further, the Court of International
Trade pointed out that in Shinyei II, we relied on inter-
vening precedent. Id.Shinyei appeals the Court of International Trade’s
denial of attorney’s fees under EAJA. We have jurisdic-
tion under 28 U.S.C. § 1295(a)(5).
DISCUSSION
Under EAJA, “a court shall award to a prevailing
party other than the United States fees and other ex-
penses . . . unless the court finds that the position of the
United States was substantially justified or that special
circumstances make an award unjust.” 28 U.S.C.
§ 2412(d)(1)(A). A position is substantially justified if it is
“justified to a degree that could satisfy a reasonable
person” and has a “reasonable basis in law and fact.”
Pierce v. Underwood, 487 U.S. 552, 565 (1988). The
government’s “position” includes the underlying actions of
any administrative agency as well as the government’s
litigation arguments. Smith v. Principi, 343 F.3d 1358,
1361-62 (Fed. Cir. 2003). Although the “position” of the
government involves prelitigation conduct as well as the
litigation itself, “only one threshold determination for the
entire civil action is to be made.” Comm’r, Immigration &
Naturalization Servs. v. Jean, 496 U.S. 154, 159 (1990).
We review a trial court’s determination of substantial
justification for abuse of discretion. Chiu v. United
7 SHINYEI CORP v. US
States, 948 F.2d 711, 713 (Fed. Cir. 1991). “Only if the
trial court erred in interpreting the law or exercised its
judgment on clearly erroneous findings of material fact, or
its decision represents an irrational judgment in weighing
the relevant factors can its decision be overturned.” Id.Shinyei argues that the Court of International Trade
abused its discretion by not properly considering Com-
merce’s pre-litigation conduct as part of the government’s
“position.” We agree. Regarding Commerce’s conduct, the
Court of International Trade stated:
Unless bad faith is established, a mere clerical er-
ror at the agency level does not automatically
render the United States’ position unreasonable.
Here, the record indicates that the United States
attributed its mistake to inadvertence and ne-
glect. Thus, this “negligence is but one part of the
agency’s conduct” and is a nondeterminative fac-
tor.
Shinyei-EAJA, 31 I.T.R.D. 2381 (citations omitted). The
Court of International Trade failed to consider that the
government, once notified of its error, chose not to remedy
the error and provide a refund, until after more than nine
years of litigation. The government was on notice of its
error no later than March of 2000 when Shinyei initially
filed suit. After being notified of this clear error, the
government ordered the actual liquidation of the entries
in August of 2000 at the incorrect rate. 3 Then, the gov-
ernment argued that by actually liquidating at the incor-
3 During oral argument, Shinyei argued that it had
also notified the government repeatedly by letter and
otherwise prior to the actual liquidation that Commerce’s
1998 instructions to Customs to liquidate at the reduced
rate should include Shinyei. It appears, however, that
this evidence is not a part of the record before us, and
therefore we do not consider it.
SHINYEI CORP v. US 8
rect rate, it divested the Court of International Trade of
jurisdiction.
While Commerce’s 1998 instructions to Customs may
have inadvertently omitted Shinyei and while this may
have been “clerical” or “negligent” in nature, this must be
viewed in combination with the government’s unwilling-
ness to remedy the clear error after it was notified. Worse
yet, the government ordered the actual liquidation at the
higher 45.83% rate, several months after being notified of
the error. This is unreasonable behavior and cannot be
dismissed as merely a clerical error. In this case, there
was not merely the clerical error, but the subsequent
unwillingness to remedy that error even after notification.
The Court of International Trade erred when it failed to
consider this governmental conduct. The government
does not, in this litigation which spans nearly ten years,
argue that Shinyei’s entries were properly assessed at the
duty rate of 45.83%. Rather the government’s litigation
position amounts to the following: we erred when we
inadvertently left Shinyei off the orders to liquidate at the
reduced rate and then after being notified of this error by
the filing of this lawsuit, we nonetheless ordered the
liquidation of the entries at the incorrect much higher
rate, and this liquidation deprives the court of jurisdiction
over this case.
In Shinyei I, we held that the court did have jurisdic-
tion, that the actual liquidation did not deprive the court
of jurisdiction over an APA challenge, and remanded the
case for “proceedings on the merits.” 355 F.3d at 1312.
On remand, the government again challenged jurisdic-
tion, this time based on a deemed liquidation which it
alleged had occurred. This jurisdictional argument paral-
leled its actual liquidation argument which had already
been rejected. In Shinyei II, we held that this position
was without merit. The government is correct that we
9 SHINYEI CORP v. US
cited our intervening decision in Koyo. However, even
after Koyo, which held that a deemed liquidation that
does not comport with final administrative review results
is invalid, the government did not acquiesce in the court’s
jurisdiction.
In Shinyei II, the government did ask for a remand in
light of Koyo, because it was intervening precedent not
considered by the Court of International Trade. The
government requested remand to argue to the Court of
International Trade that Koyo did not apply and that
despite our decision in Koyo, the Court of International
Trade still lacked jurisdiction following the deemed liqui-
dation. Oral Arg. at 13:34-14:08, 16:18-26, Shinyei II, No.
2007-1291 (Fed. Cir. Feb. 5, 2008). We concluded that
remand was unnecessary and that Koyo’s core holding
was equally applicable to Shinyei’s claim. 4
All of this conduct amounts to the government’s “posi-
tion.” Smith, 343 F.3d at 1361-62. Viewing the govern-
ment’s conduct in its entirety, we are convinced that the
Court of International Trade abused its discretion when it
concluded that the government’s conduct was substan-
tially justified. We reverse and remand solely for a de-
termination of the amount of fees Shinyei is entitled to
under EAJA.
4 We likewise rejected the government’s arguments
with regard to the Customs-error cases including its
peculiar ripeness argument. The government argued that
Shinyei cannot protest until Customs gives it notice of the
deemed liquidation. The government then argued that
because Customs has never given such bulletin notice,
even now more than ten years after the deemed liquida-
tion, Shinyei was without the ability to protest – its claim
was not ripe. Under this logic, the government could
simply decline to ever provide the notice, and then the
importer would never have a right to protest.
SHINYEI CORP v. US 10
REVERSED and REMANDED