Okaya (USA), Inc. v. United States

Slip Op. 03 - 130
UNITED STATES COURT OF INTERNATIONAL TRADE
:
OKAYA (USA), INC. :
:
Plaintiff, :
:
v. : Before: MUSGRAVE, JUDGE
:
UNITED STATES : Court No. 02-00642
:
Defendant. :
:
[On the matter of liquidation instructions from U.S. Department of Commerce to former U.S.
Customs Service allegedly divergent from final changed circumstances and partial revocation of
antidumping order results, plaintiff’s motion for judgment denied, defendant’s motion to dismiss
counts I and II of the complaint and cross-motion for judgment on the agency record granted.]
Decided: October 3, 2003
Willkie Farr & Gallagher LLP, Washington D.C. (Matthew R. Nicely, Carrie L. Owens), for
the plaintiff.
Peter D. Keisler, Assistant Attorney General, David M. Cohen, Director, Patricia M.
McCarthy, Assistant Director, Civil Division, Commercial Litigation Branch, United States
Department of Justice, (Ada E. Bosque); Office of Chief Counsel for Import Administration, U.S.
Department of Commerce (Amanda Blaurock), of counsel, for the defendant.
OPINION
Plaintiff Okaya (USA) Inc. (“Okaya”) moves for judgment by default or on the merits of a
three-count complaint alleging that liquidation instructions from the U.S. Department of Commerce
(“Commerce”) to the U.S. Customs Service1 (“Customs”) regarding partial revocation of the
1
Renamed, effective March 1, 2003, the U.S. Bureau of Customs and Border Protection per
that Homeland Security Act of 2002, Pub. L. 107-296 § 1502, 116 Stat. 2135, 2308-09 (Nov. 25,
2002) and the Reorganization Plan Modification for the Department of Homeland Security, H.R.
Doc. 108-32 at 4 (2003).
Court No. 02-00642 Page 2
antidumping duty order on certain tin mill products from Japan were not in accordance with the
underlying changed circumstances determination. The government moves to dismiss counts I and
II of the complaint and for judgment on the administrative record. For the following reasons, the
Court grants the government’s motions and denies the plaintiff’s.
Background
The United States has a “retrospective” assessment system for antidumping and
countervailing duties: final liability is determined after merchandise is imported. See 19 C.F.R. §§
351.212(a), 351.213(a). During the anniversary month of publication of the antidumping duty order
an affected producer, exporter or importer may request an “administrative” review for assessment
of duties on its subject merchandise entered during the relevant “period of review.” 19 U.S.C. §
1675(a)(1); 19 C.F.R. § 351.213(b)(3). The period of review is typically the 12-month period
beginning on the anniversary of the date of publication of the order.2 See 19 U.S.C. § 1675(a)(1);
2
Under prior law, Commerce generally administered each required automatic review as
including the one-year period preceding and the one-year period succeeding the date of review. See
American Spring Wire Corp. v. United States, 7 CIT 2, 4-5, 578 F.Supp. 1405, 1407 (1984). Cf. 19
U.S.C. § 1675(a)(1) (1982). Congressional amendment was “designed to limit the number of
reviews in cases in which there is little or no interest, thus limiting the burden on petitioners and
respondents, as well as the administering authority.” H.R. Rep. No. 98-1156, 98th Cong., 2d Sess.
at 181 (1984), reprinted in 1984 U.S.C.C.A.N. 5220, 5298. Cf. Trade Agreements Act of 1979, Pub.
L. No. 96-39, § 101, 93 Stat. 175 (1979) with Uruguay Round Agreements Act, Pub. L. No. 98-573,
§ 611(a)(2)(A), 98 Stat. 2948, 3031 (1984). However, it resulted in no change to the singular nature
of each “period of review,” and Commerce continues to administer multiple administrative reviews
in a single proceeding when efficient to do so. See, e.g., Final Results of Antidumping Duty
Administrative Review; Spun Acrylic Yarn From Italy, 55 Fed. Reg. 18925 (May 7, 1990); Television
Receivers, Monochrome and Color, From Japan; Final Results of Antidumping Duty Administrative
Review and Determination Not To Revoke in Part, 54 Fed. Reg. 35517 (Aug. 28, 1989); Drycleaning
Machinery From West Germany; Final Results of Administrative Review of Antidumping Finding,
50 Fed. Reg. 32154 (Aug. 8, 1985). Cf. Rubberflex Sdn. Bhd. v. United States, 23 CIT 461, 472, 59
(continued...)
Court No. 02-00642 Page 3
19 C.F.R. § 351.213(e)(1)(i). The rate determined at such review becomes the cash deposit rate for
future entries. 19 U.S.C. § 1675(a)(2)(C). If Commerce does not receive a timely review request,
or if it receives a timely request for less than all of the entries during the review period, then without
further notice it will issue automatic liquidation instructions to Customs for assessment of
antidumping duties on non-reviewed entries at rates equal to the cash deposit of or bond for
estimated antidumping or countervailing duties required at the time of entry or withdrawal from
warehouse for consumption. 19 C.F.R. §§ 351.212(c)(1)&(2).
An interested party may also request a determination on whether revocation of the
antidumping order in whole or in part is warranted via a “changed circumstances” review. 19 C.F.R.
§ 351.216(b). See 19 U.S.C. § 1675(d)(1). The request may be made at any time, however a
showing of “good cause” is required if the request is made prior to the second anniversary of
publication of the order. Id. & § 351.216(c). If a changed circumstances or administrative review
is initiated, then liquidation of the affected entries is suspended until Commerce publishes final
review results. See, e.g., Wirth Ltd. v. United States, 22 CIT 285, 288, 5 F.Supp.2d 968, 972 (1998);
American Permac, Inc. v. United States, 16 CIT 672, 800 F.Supp. 952 (1992). See also 19 U.S.C.
§ 1675(a)(1). Reviews are conducted in accordance with the procedures outlined at 19 C.F.R.§
2
(...continued)
F.Supp.2d 1338, 1348 (1999) (observing that “each administrative review is a separate proceeding”).
On the other hand, it is also remains true that Commerce interprets the period of review flexibly to
include more or less than twelve months as circumstances require. See, e.g., Stainless Steel Sheet
and Strip in Coils From Italy: Final Results of Antidumping Duty Administrative Review, 67 Fed.
Reg. 1715 (Jan. 14, 2002) (amended, 68 Fed. Reg. 11521 (Mar. 11, 2003)); Aramid Fiber Formed
of Poly Para-Phenylene Terephthalamide from the Netherlands; Final Results of Antidumping
Administrative Review, 61 Fed. Reg. 51406 (Oct. 2, 1996); Polyethylene Terephthalate Film, Sheet,
and Strip from Japan; Final Results of Antidumping Duty Administrative Review, 60 Fed. Reg.
32133 (June 20, 1995).
Court No. 02-00642 Page 4
351.221 governing, inter alia, notice, comment, verification, and publication of review results. If
Commerce finds changed circumstances sufficient to justify revocation, the effective date of
revocation is within Commerce’s discretion. See 19 U.S.C. § 1675(d)(3). Suspension of liquidation
pending review is considered removed upon publication of the final results in the federal register.
See, e.g., Fujitsu General America, Inc. v. United States, 110 F.Supp.2d 1061, 1077 (2000), aff’d
283 F.3d 1364, 1380 (Fed. Cir. 2002); International Trading Co. v. United States, 110 F.Supp.2d
977, 986 (2002), aff’d 281 F.3d 1286 (Fed. Cir. 2002). See also 19 C.F.R. § 351.222(g)(4) (when
Commerce revokes an order either in whole or in part based upon changed circumstances, it “will
order the suspension of liquidation ended on the effective date of the notice of revocation”).
On December 3, 2001, approximately fifteen months after Commerce imposed Certain Tin
Mill Products From Japan: Notice of Antidumping Duty Order, 65 Fed. Reg. 52067 (Aug. 28, 2000),
Okaya requested revocation in part with respect to a particular type of steel3 pursuant to changed
circumstances in accordance with 19 U.S.C. § 1675(d)(1). See PDoc 1.4 Since the request was made
prior to the second anniversary of the order, in accordance with 19 C.F.R. § 351.216 Okaya argued
that “good cause” existed for revocation. Okaya also requested expedited review and retroactive
revocation. No other administrative review had been requested or initiated at the time.
Commerce published notice of the request on January 25, 2002. See Certain Tin Mill
Products From Japan: Notice of Initiation of Changed Circumstances Review of Antidumping Duty
3
Specifically, “steel coated with metallic chromium layer between 100-200 mg/m2 and a
chromium oxide layer between 5-30 mg/m2; chemical composition of 0.05% maximum carbon,
0.03% maximum silicon; 0.60% maximum manganese, 0.02% maximum sulfur; maximum flux
density of 10kg minimum and a coercive force of 3.8 ore minimum.” 67 Fed. Reg. at 3686.
4
References to the public administrative record herein abbreviated “PDoc.”
Court No. 02-00642 Page 5
Order, 67 Fed. Reg. 3686 (Jan. 25, 2002). The notice acknowledged the request for “partial
revocation . . . retroactively for all unliquidated entries” and the fact that no domestic producer
expressed opposition. Id. at 3686, 3688. On March 8, 2002, Commerce issued Certain Tin Mill
Products From Japan: Preliminary Results of Changed Circumstances Review, 67 Fed. Reg. 10667(Mar. 8, 2002) announcing its preliminary decision to “revoke this order, in part, with respect to
future entries of certain tin-free steel . . . based on the fact that domestic interested parties have
expressed no interest in the continuation of [that part of] the order[.]”5 Id. The preliminary results
did not state an “effective date” for revocation, only that the effective date of the order was March
8, 2002. Id. The established estimated antidumping duties cash deposit rate remained in effect
pending the final results. See id.Because the preliminary results reflected revocation only as to prospective entry, on March
22, 2002, Okaya requested a meeting with Commerce. During the meeting and in its case brief,
Okaya emphasized that 19 C.F.R. § 351,222(g)(4) clearly states that if Commerce’s “Secretary
revokes an order, in whole or in part, . . . the Secretary . . . will instruct the Customs Service to
release any cash deposit or bond[.]”6 Okaya also argued that there were “myriad” examples of the
administrative practice of retroactive revocation which refunded “with interest any estimated
antidumping duties collected for all unliquidated entries entered or withdrawn from warehouses on
5
As part of its request, Okaya submitted evidence that all known U.S. tin producers were
not or were uninterested in producing this product. See PDoc 1 at 5, Att. C (Dec. 3, 2001).
6
See PDoc 10 (“Okaya Case Br.”) at 4 (Okaya’s emphasis) & PDoc 13 (Memo from
Analyst/IA Re: Meeting with Wilkie Farr dated Apr. 12, 2002).
Court No. 02-00642 Page 6
or after the date of the original order.7 In short, Okaya argued that refund of deposits on “all
unliquidated entries” is “both required by the regulations and is standard practice.”8 On July 1,
2002, Commerce published its final ruling, the relevant portions of which read:
. . . On December 3, 2001, Okaya . . . requested that the Department
revoke in part the antidumping duty order on certain tin mill products from
Japan. Okaya also requested that the partial revocation apply retroactively for
all unliquidated entries.
***
No domestic producers of tin mill products have expressed opposition
to the partial revocation of the tin mill products order following the Initiation
Notice and the Preliminary Results. For these reasons the Department is
partially revoking the order on tin mill products from Japan, effective August
1, 2001, with respect to all unliquidated entries for consumption of tin-free
steel which meets the specifications detailed above . . . . We will instruct
[Customs] . . . to liquidate without regard to antidumping duties, as
applicable, and to refund any estimated antidumping duties collected for all
unliquidated entries of certain tin mill products (i.e., certain tin-free steel)
meeting the specifications indicated above.
Certain Tin Mill Products From Japan: Final Results of Changed Circumstances Review, 67 Fed.
Reg. 44177, 44177, 44179, PDoc 16 (July 1, 2002).
7
Okaya Case Br. at 4 & n.8, referencing the following final results of changed circumstances
reviews: Vector Supercomputers From Japan, 66 Fed. Reg. 22213 (May 3, 2001); Certain Hot-
Rolled Lead and Bismuth Carbon Steel Products from the United Kingdom, 65 Fed. Reg. 13713(Mar. 14, 2000); Certain Fresh Cut Flowers from Ecuador, 64 Fed. Reg. 56327, 56328 (Oct. 19,
1999); Stainless Steel Hollow Products from Sweden, 60 Fed. Reg. 42529 (Aug. 16, 1995); Roller
Chain, Other then Bicycle from Japan, 64 Fed. Reg. 66889 (Nov. 30, 1999); Fresh Kiwifruit from
New Zealand, 64 Fed. Reg. 50486 (Sep. 17, 1999); Replacement Parts for Self-Propelled Bituminous
Paving Equipment from Canada, 60 Fed. Reg. 48691 (Sep. 20, 2000).
8
Id. at 5 & n.10 (Okaya’s emphasis), referencing Certain Corrosion-Resistant Carbon Steel
Flat Products From Japan, 67 Fed. Reg. 7356, 7357 (Feb. 19, 2002), which Okaya characterized as
“retroactively refunding duties for all unliquidated entries without mention of a specific time period”
(Okaya’s emphasis).
Court No. 02-00642 Page 7
On July 31, 2002, automatic liquidation instructions issued to Customs from Commerce
bearing boilerplate wording which explained that Commerce does not automatically conduct
administrative reviews of antidumping duty orders, that such reviews must be requested in
accordance with 19 C.F.R. § 351.213, and that since Commerce had not received a request for an
administrative review of the antidumping duty order for the period “04/12/2000 – 07/31/2001” on
the merchandise listed on the instructions, Customs was instructed to assess antidumping duties on
merchandise entered or withdrawn from warehouse for consumption at the cash deposit or bonding
rate in effect on the date of entry. Msg. No. 2256202 (July 31, 2002).
Thereafter, on September 16, 2002, beyond the statute of limitations for challenging the final
results, Customs posted the following revocation instructions from Commerce, dated September 13,
2002, on its electronic bulletin board:
Customs is directed to terminate the suspension of liquidation for all
shipments of certain tin-free steel entered, or withdrawn for consumption
from warehouse, for consumption on or after 08/01/2001. All entries of
certain tin-free steel that were suspended on or after 08/01/2001 should be
liquidated without regard to antidumping duties (i.e., release all bonds and
refund all cash deposits).
Instructions to Customs Re: Revocation of Dumping Order in Part on Tin-Free Steel from Japan,
Msg. No. 2256202 (Sep. 13, 2002).
On October 8, 2002, Okaya filed a summons and a three-count complaint asserting
jurisdiction under 28 U.S.C. § 1581(i). Count I alleges that “Commerce did not properly explain the
basis for its revocation instructions to treat entries before August 1, 2001 differently from those that
entered on or after that date” and that therefore Commerce’s instructions “were arbitrary, capricious,
an abuse of discretion, and were otherwise not in accordance with law.” Compl. ¶ 9. Count II
Court No. 02-00642 Page 8
alleges that “Commerce’s decision to treat identical products differently based solely upon the entry
date is neither supported by any evidence on the record nor Commerce’s prior practice” and that the
decision was therefore “ arbitrary, capricious, an abuse of discretion, and otherwise not in accordance
with law.” Id. ¶ 10. Count III alleges that “Commerce’s instructions to implement revocation
procedures are inconsistent with the plain language of its final results in the changed circumstances
review” and that they were therefore “arbitrary, capricious, an abuse of discretion, and otherwise not
in accordance with law.” Id. ¶ 11.
On December 16, 2002, the government filed a motion to dismiss counts I and II of the
complaint for lack of subject matter jurisdiction under 28 U.S.C. § 1581(i) and it submitted a
proposed order for Okaya to file an amended complaint within 30 days, to which the government
would then respond after 30 more days. The motion was filed untimely.9 However, subject matter
9
CIT Rules 12(a)(1)(A) and 6(a) allow the government 60 days to respond to a complaint
unless the response would be due on a Saturday, Sunday, or legal holiday, in which event the
response is due on the next day which is not such a day. CIT Rule 6(a) states that “the day of the act,
event, or default from which the designated period of time begins to run shall not be included” in
the computation of the period allowed for a responsive pleading. When service upon a party is by
mail, CIT Rule 6(c) adds five days “to the prescribed or allowed period[.]” In this matter, the
summons and complaint were served upon the government on October 8, 2002 by mailing in
accordance with CIT Rule 4(i). See Exhibits to Def.’s Opposition to Pl.’s Mot for Default Judgment
(sic – such a motion had not been filed at the time). The 60th day from that date was Saturday,
December 7, 2002. The government contended that in accordance with CIT Rule 6(a), the
“prescribed or allowed period” for a responsive pleading, assuming hand-delivery of service, was
Monday, December 9, 2002. Including the five-day period for mailing, the fifth day from and
excluding December 9, 2002, was December 14, 2002, another Saturday, and therefore the
government argued that a responsive pleading was due Monday, December 16, 2002, the date it filed
its motion to dismiss counts I and II of the complaint. However, the government’s interpretation is
incorrect and is at odds with the fact of service in this matter. The Court’s Rules contemplate that
the period allowed for mailing is to be added directly to the original “prescribed or allowed period”
and the total is treated as a single period for purposes of computation. Mailing is not treated as a
separate, additional period. Cf. Charles Alan Wright, Arthur R. Miller, Mary Kay Kane, 4B Federal
(continued...)
Court No. 02-00642 Page 9
jurisdiction may be challenged at any time, since a court has a duty to determine whether it has
jurisdiction over matters presented for disposition.10
“Section 1581(i) jurisdiction may not be invoked when jurisdiction under another subsection
of § 1581 is or could have been available, unless the remedy provided under that other subsection
would be manifestly inadequate.” Miller & Co. v. United States, 824 F.2d 961, 963 (Fed. Cir. 1987).
See also JCM, Ltd. v. United States, 210 F.3d 1357, 1359 (Fed. Cir. 2000); Norcal/Crosetti Foods,
Inc. v. United States, 963 F.2d 356, 359 (Fed. Cir. 1992). The government argued that counts I and
II in reality sought to contest the “rejection” of Okaya’s request for retroactive application of partial
revocation and that such a claim is time-barred because Okaya failed to initiate suit within 30 days
9
(...continued)
Practice & Procedure § 1171 (3d ed. 1998) (“Service by Mail,” et cetera) (interpreting Federal Rule
of Civil Procedure (“F.R.C.P.”) 6(e)). In other words, the government’s responsive pleading was
due sixty-five days from October 8, 2002, the date of mailing of the summons and complaint, i.e.,
by Thursday, December 12, 2002.
10
See, e.g., Renesas Technology America Inc. v. United States, Slip Op. 03-106 (CIT Aug.
18, 2003); Shinyei Corp. of America v. United States, Slip Op. 03-19 (CIT Feb. 14, 2003).
Generally, a pleading’s allegations of jurisdiction are taken as true unless denied or controverted by
the movant. A Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction serves one of
two purposes: either it challenges the sufficiency of the pleading under Rule 8, or it presents a
defense by way of abatement. On such a motion, the moving party challenges either the sufficiency
of the pleadings or the factual basis underlying the pleadings. In the first instance, all facts alleged
in the non-moving party's pleadings are accepted as true. If the 12(b)(1) motion denies or controverts
the pleader’s allegations of jurisdiction the movant is deemed to be challenging the factual basis for
the court’s subject matter jurisdiction, in which instance only uncontroverted facts are accepted as
true, and the remaining facts are subject to fact-finding by the Court. By contrast, a motion to
dismiss for failure to state a claim for relief under Rule 12(b)(6) goes to the sufficiency of the
pleading under Rule 8(a)(2), and the only information necessary for a decision on the motion is to
be found in the pleading itself; if outside evidence is considered, the motion is converted into one
for summary judgment. See generally 5A Wright et alia, Federal Practice & Procedure § 1363.
See, e.g., Cedars-Sinai Medical Ctr. v. Watkins, 11 F.3d 1573, 1583-84 (Fed. Cir. 1993); Gould, Inc.
v. United States, 935 F.2d 1271, 1274 (Fed. Cir. 1991); Kemet Electronics Corp. v. Barshefsky, 21
CIT 912, 929, 976 F.Supp. 1012, 1027 (1997).
Court No. 02-00642 Page 10
of publication. See 19 U.S.C. § 1516a(a)(2); 28 U.S.C. § 1581(c). The government contended that
if Okaya believed the final results to be ambiguous, then it should have challenged that ambiguity
pursuant to 28 U.S.C. § 1581(c).
Okaya bore the burden of proving its jurisdictional allegations. Gibbs v. Buck, 307 U.S. 66(1939). See, e.g., MBL (USA) Corp. v. United States, 14 CIT 161, 164, 733 F.Supp. 379, 382 (1990);
Smith Corona Group, SCM Corp. v. United States, 8 CIT 100, 102, 593 F.Supp. 414, 417 (1984).
Okaya contended that its complaint contested only the alleged divergence in the liquidation
instructions from the final results that resulted from Commerce’s decision, without explanation, to
treat entries differently depending upon their entry date; therefore, Okaya argued, section 1581(i)
jurisdiction is appropriate to contest such divergence on the authority of Consolidated Bearings Co
v. United States, 25 CIT ___, 166 F.Supp.2d 580 (2001) and Heveafil Sdn. Bhd. v. United States, 23
CIT 447 (1999).11 Pl.’s Opp. to Mot. to Dismiss at 5-9. Okaya further explained that at the time the
final results were issued, it understood Commerce to grant revocation as to “all” entries that were
unliquidated as of the effective date of revocation, as it had requested, and that it was not until the
liquidation instructions were posted on Customs’ web site, beyond the statute of limitations for
challenging the final changed circumstances determination, see 28 U.S.C. § 1581(c), that Okaya
11
Heveafil instructs that the Court’s residual jurisdiction is appropriate when reviewing
Commerce’s instructions to Customs because “Commerce, not Customs, is the agency responsible
for issuing instructions and determining the amount of antidumping duty to be assessed.” 23 CIT
at 449. See also id. at 450 (the Court “reviews Commerce’s liquidation instructions . . . and will find
them unlawful if they are ‘arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with law’”) (quoting Administrative Procedure Act (“APA”) in part, 5 U.S.C. §
706(2)(A)). Consolidated Bearings instructs that liquidation instructions are not reviewable under
28 U.S.C. § 1581(c), since they are not part of the final results, and will be considered arbitrary and
capricious if they diverge from the final results and Commerce fails to explain their basis. Under
such circumstances, subsection (i) provides the appropriate basis for review. 166 F.Supp.2d at 583.
Court No. 02-00642 Page 11
realized Commerce had issued an interpretation that differed from what Okaya considered to be the
“proper” interpretation of the final results.
The parties’ arguments implicated the factual basis of Okaya’s jurisdictional allegations, i.e.,
the proper interpretation of the final results. Since Okaya’s jurisdictional allegations depend upon
the correctness of its interpretation of the final results, and since the government’s motion to dismiss
depends upon the reasonableness of Okaya’s interpretation, the Court determined that the
jurisdictional allegations are intertwined with the merits and that it was appropriate to reserve
decision until final disposition. See Renesas Technology, supra; Nissei Sangyo America v. United
States, Slip Op. 03-105 (CIT Aug. 18, 2003); Takashima U.S.A., Inc. v. United States, 19 CIT 673,
886 F.Supp. 858 (1995); PPG Industries Inc. v. United States, 84 Cust. Ct. 256 (1980). Cf. Martin
By Martin v. Secretary of Health and Human Services, 62 F.3d 1403, 1406 (Fed. Cir. 1995) (“the
distinction between facts necessary to establish jurisdiction and those necessary to prove a claim is
often a close one, carrying significant legal consequences”).
On the other hand, the government’s untimely motion presented a jurisdictional challenge
only to a part of the complaint. The government agreed, on the authority of Heveafil, that the
allegations of count III appeared sufficient to confer subsection (i) jurisdiction, since the claim
alleges that the liquidation instructions were inconsistent with the final results. See Def.’s Mot. to
Dismiss In Part at 7. Although subject matter jurisdiction may neither be waived nor agreed among
the parties, the Court concurred that count III sounded in 1581(i) jurisdiction. Since the government
had not provided timely substantive responses to any part of the complaint nor timely moved for an
extension of time to answer the complaint, Okaya moved for entry of default and for leave to file a
Court No. 02-00642 Page 12
motion for default judgment. The government opposed Okaya’s motion for entry of default on the
ground that the motion to dismiss had not been untimely. The Court concluded that the motion to
dismiss in part did not alter the time within which to answer the remainder of the complaint not
addressed by such motion. See Gerlach v. Michigan Bell Tel. Co., 448 F.Supp. 1168, 1174 (D.C.
Mich. 1978) (“separate counts are, by definition, independent bases for a lawsuit and the parties are
responsible to proceed with litigation on those counts which are not challenged by a motion under
F.R.C.P. 12(b)”). Cf. CIT Rule 7(a) (“There shall be a complaint and . . . an answer”); CIT Rule
12(a) (“the United States . . . shall serve an answer to the complaint . . . within 60 days of service”);
CIT Rule 12(b) (“Every defense, in law or fact, to a claim for relief in any pleading, . . . shall be
asserted in the responsive pleading thereto”). But see Wright et alia, 5A Federal Practice &
Procedure § 1346 (“[T]his approach also has the disadvantages of requiring duplicative sets of
pleadings in the event that the motion is denied, and of causing confusion over the proper scope of
discovery during the motion's pendency. A more considered solution might be to hold that a partial
Rule 12(b) motion expands the time for answering the entire pleading, relying on the prospect of
Rule 11 sanctions to deter the abusive use of such a motion). See also Brocksopp Engineering, Inc.
v. Bach-Simpson, Ltd., 136 F.R.D. 485 (E.D. Wisc. 1991) (partial motion to dismiss extends
defendant's time to answer all claims). After considering such authority as could be discerned in this
area, the Court concluded that discovery was not an issue in this matter and that any “duplicative”
pleadings rather would be the result of the defendant’s piecemeal approach to pleading, the first of
which was untimely. Therefore, accepting the reasons advanced by Okaya, the Court granted its
motion for entry of default on February 3, 2003. Cf. LaPerla Fashions, Inc. v. United States, 22 CIT
Court No. 02-00642 Page 13
385 (1998) (noting entry of default); Syva v. United States, 12 CIT 199, 681 F. Supp. 885 (1988)
(noting entry of default).
On February 24, 2003, the government moved for reconsideration pursuant to CIT Rule
55(c), which allows setting aside an entry of default for “good cause shown.” The Rule parallels
F.R.C.P. 55(c), which is generally interpreted to require of a defendant seeking to have entry of
default set aside to show: (1) good cause for their default; (2) quick action to correct it; and (3) a
meritorious defense to the plaintiff's complaint. See, e.g., Union Pacific Railroad Co. v. Progress
Rail Services Corp., 256 F.3d 781, 782-83 (8th Cir. 2001) (referencing Pioneer Investment Services
Co. v. Brunswick Associates LP, 507 U.S. 380, 394-95 (1993) and considering (1) the length and
reason for the delay in filing and whether the defendant acted in good faith, (2) the prejudice the
plaintiff incurred by the delay, and (3) whether the defendant has a meritorious defense); Action S.A.
v. Marc Rich & Co., Inc., 951 F.2d 504, 507 (2d Cir.1991) (considering (1) whether the default was
willful, (2) whether setting aside the default would prejudice the adversary, and (3) whether a
meritorious defense is presented), cert. denied, 503 U.S. 1006 (1992). Federal courts have generally
looked for guidance on “good cause” in F.R.C.P. Rule 60(b), which includes “mistake, inadvertence,
surprise, or excusable neglect.” See Medunic v Lederer, 64 F.R.D. 403 (D.C. Pa 1974).
The government essentially reiterated argument presented in its response to Okaya’s motion
for entry of default that its motion to dismiss had not been untimely. On March 5, 2003, Okaya filed
opposition, which contended that the government’s “mistake” was not excusable. Okaya further
noted, among other things: “[e]ven now, almost three months after the deadline [for answering], and
after this Court has issued an entry of default, defendant still refuses to answer the complaint.” Pl.’s
Court No. 02-00642 Page 14
Resp. in Opp. to Mot. for Recon. at 2. That was true as to count III, however the Court had not yet
ruled on the motion to dismiss. Nonetheless, the Court agreed that the government’s “liberal”
interpretation of the Court’s Rules for responsive pleading had not been reasonable and therefore
denied reconsideration on March 27, 2003. The order therefor acceded to Okaya’s demand to
include language requiring the defendant “to answer all counts of the Complaint forthwith” in order
to receive one, complete, responsive pleading from the government.
The government filed its answer April 2, 2003, denying every fact alleged in the complaint
and setting out the affirmative defense of lack of jurisdiction over counts I and II and failure to
exhaust administrative remedies. Okaya then moved for entry of default judgment or judgment upon
the administrative record under CIT Rules 55(b), 55(e), and 56.1. The government responded by
renewing its motion to dismiss counts I and II and by requesting judgment upon the agency record.
Discussion
I
Entry of default judgment may be appropriate against a party who has failed to plead or
otherwise defend against a claim brought by another party. See Black’s Law Dictionary 417 (6th ed.
1990). On a motion for default judgment, a court should take into account “considerations of social
goals, justice and expediency . . . within the domain of the trial judge’s discretion[,]” Gomes v.
Williams, 420 F.2d 1364, 1366 (10th Cir. 1970), which may include the amount of money involved,
whether material issues of fact or issues of substantial public importance are at issue, whether the
default is largely technical, whether the plaintiff has been substantially prejudiced by the delay
involved, whether the grounds for default are clearly established or are in doubt, the harshness of the
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effect of default judgment, whether default was caused by a good-faith mistake or by excusable or
inexcusable neglect on the part of the defendant, and whether the plaintiff itself engaged in dilatory
behavior. See generally Wright et alia, 10A Federal Practice and Procedure § 2685.
However, the “preferred” resolution of litigation is consideration on the merits. See e.g.,
Brady v. United States, 211 F.3d 499 (9th Cir. 2000); Coon v. Grenier, 867 F.2d 73 (1st Cir. 1989);
Mason v. Lister, 562 F.2d 343, 345 (5th Cir. 1977) Schwab v. Bullock’s Inc., 508 F.2d 353 (9th Cir.
1974); Pulliam v. Pulliam, 478 F.2d 935 (D.C. Cir. 1973); Tolson v. Hodge, 411 F.2d 123 (4th Cir.
1969); Hutton v. Fisher, 359 F.2d 913 (3rd Cir. 1966). Furthermore, CIT Rule 55(e) provides that
“[n]o judgment by default shall be entered against the United States or an officer or agency thereof
unless the claimant establishes a claim or right to relief by evidence satisfactory to the court.” As
with other Rules, CIT Rule 55(e) parallels F.R.C.P. 55(e), which
rests on the rationale that the taxpayers at large should not be subjected to the
cost of a judgment entered as a penalty against a government official which
comes as a windfall to the individual litigant. The private party must first
demonstrate that there is some basis on which he is entitled on the merits of
his claim to receive judgment. A court should accord respect to this policy
beyond the confines of Rule 55(e)’s strict coverage when it can do so without
running against a countervailing consideration.
Campbell v. Eastland, 307 F.2d 478 (5th Cir 1962), cert. denied 371 U.S. 955 (1963). See generally
Wright et alia, 10A Federal Practice and Procedure § 2702.
Apart from Okaya’s right to relief, addressed below, on its motion for entry of default
judgment Okaya contends that it has been prejudiced by the government’s delay of disposition of this
matter by an additional four months and five separate briefings requiring time and effort to address
and that the government’s actions continue to deprive it of monies rightfully owed to it Pl.’s Reply
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in Support of Its Mot. for Judgm. or Judgm. Upon the Agency Record at 10. The Court agrees with
the proposition that unjust delays in litigation would be prejudicial to a plaintiff. Cf. Robinson v.
United States, 734 F.2d 735, 739 (11th Cir. 1984) (“being deprived of this substantial sum of money
for [such a significant period of time] is undoubtedly a significant burden”) (citing United States v.
$23,407.69 in United States Currency, 715 F.2d 162, 166 (5th Cir. 1983). Moreover, “[t]he fact that
a court has allowed a party in default to proceed in the suit and answer the complaint does not
automatically put the defaulting party in the position of one who is making a timely response to a
complaint.” Bavouset v. Shaw’s of San Francisco, 43 F.R.D. 296, 299 (S.D. Tex. 1967). However,
the Court is not persuaded that the government’s motion to dismiss counts I and II, filed on its
assumption that it was timely, was a mere delaying tactic. Moreover, at the time of Okaya’s motion
for entry of default, the Court also acceded to Okaya’s request to seek leave to move for entry of
default judgment since, at the time, the government had not filed an answer to the complaint. At
common law, joinder of issue occurs when “the parties to a cause arrive at that stage of it in their
pleadings, that one asserts a fact to be so, and the other denies it.” Black's Law Dictionary 836. In
this instance, joinder of issue occurred after entry of default as a result of the plaintiff’s request for
joinder. Moving for entry of default judgment at this stage, although permitted by the Order of
March 27, 2003, appears to be a procedural contradiction. On balance, the Court exercises its
discretion to address this matter on its own merits.
II
Normally, the Court is asked to consider whether there is ambiguity in the authorizing statute
upon which a clear agency determination rests. In this instance, the Court is asked to consider the
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reverse. The antidumping statute provides that “[a] determination under this section to revoke an
order or finding or terminate a suspended investigation shall apply with respect to unliquidated
entries of the subject merchandise which are entered, or withdrawn from warehouse, for
consumption on or after the date determined by the administering authority.” 19 U.S.C. §
1675(d)(3) (highlighting added). The meaning of this provision is plain: merchandise which entered
prior to the effective date of revocation decided by Commerce, a matter within its discretion, does
not receive the benefit of revocation. In this matter, however, it is the meaning of the operative
language of the final results that is implicated, if not contested, the allegation being liquidation
instructions not in conformity therewith.
Although the parties apparently disagree over the extent of suspended liquidations included
within the ambit of Commerce’s revocation policy, at least one aspect of the briefing is abundantly
clear: except for the instant matter, the effect of the date chosen by Commerce as the effective date
of revocation is prospective in application.12 This comes as no surprise, in light of the plain meaning
of section 1675(d)(3). The final results underlying the instant matter are therefore defective to the
extent that they make revocation “effective August 1, 2001, with respect to all unliquidated entries.”
They do not use the words “entered on or after,” which would have clearly signaled the usual
prospective effect of revocation from the effective date.
In the absence of such language, and since the final results further stated, e.g., that Commerce
will instruct Customs to “refund any estimated antidumping duties collected for all unliquidated
entries of certain tin mill products (i.e., certain tin-free steel) meeting the specifications indicated[,]”
12
See, e.g., Pl.’s Reply in Support of Its Mot. for Judgm. or Judgm. Upon the Agency Record
at 18 (table and footnotes). See also footnote 7, supra, and cases cited.
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67 Fed. Reg. at 44,179 (highlighting added), Okaya argues it was reasonable to conclude that refunds
would be issued, as long as the entries were unliquidated as of August 1, 2001. Okaya does not (and
cannot) argue that the final results were ambiguous: it argues that their meaning was plain, or at least
as it interpreted them. That is, Okaya argues it was reasonable to interpret the final results to mean
that Commerce had granted its retroactive revocation request in full and that it applied revocation
“to any entries that remained unliquidated as of that date[.]” Pl.’s Opp. to Mot. to Dismiss at 3
(highlighting added). However, the Court must conclude that the absence of “entered on or after”
in the final results does not result in the “unambiguous” interpretation Okaya advocates. In light of
section 1675(d)(3), Okaya’s interpretation is inherently contradictory since it renders “effective
August 1, 2001” superfluous as well as the significance of any antidumping duties that attached at
entry prior to such effective revocation date. Further, it does not logically follow from the fact that
the final results omitted “entered on or after” that Commerce granted Okaya’s request for retroactive
revocation as to all dumping duty deposits regardless of the date of entry. For the argument to have
merit, Okaya would have to demonstrate in accordance with section 1675(d)(3) not only that
“effective August 1, 2001” was not intended as the date of revocation but it must also demonstrate
which date was intended for revocation, which can only have prospective effect in accordance with
section 1675(d)(3). Okaya has not done so. Furthermore, Okaya agrees that Commerce announced
an effective date of revocation in the final results, i.e. August 1, 2001. Consequently, the argument
that the final results literally (and therefore unambiguously) made revocation effective as to “all
unliquidated entries” regardless of entry, due to the absence of “entered on or after,” is argument for
enforcement of a determination that is not in accordance with 19 U.S.C. § 1675(d)(3) and is therefore
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unlawful, because that provision is clear as to its “prospective” application. Such a determination
would therefore be unenforceable, as would literal liquidation instructions emanating from it.
Accordingly, to give effect to the final results, the Court must construe the defects in
operative language in accordance with law to the extent possible. The Court finds that although the
final results omit the words “entered on or after,” Commerce nonetheless announced August 1, 2001
as the effective date of revocation, and that revocation was to have prospective effect from such date,
in accordance with section 1675(d)(3). Also in accordance with that provision, “all unliquidated
entries” as used in the final results must be construed as all unliquidated entries that obtain the
benefit of revocation, i.e., those that entered on or after such effective date of revocation. The
liquidation instructions, based thereon, describe subject merchandise “entered, or withdrawn from
a warehouse, for consumption on or after 08/01/2001.” Okaya is correct in alleging that they appear
facially inconsistent with the final results as issued; however, based upon the foregoing, the Court
must find the liquidation instructions in accordance with the effective date of revocation determined
in the final results and in accordance with law, since they are in accordance with section 1675(d)(3).
They are therefore not legally inconsistent with the final results.
Conclusion
Based upon the foregoing, the Court must conclude that Okaya’s proper remedy lay in
challenging the final results within 30 days of issuance pursuant to 28 U.S.C. § 1581(c). The Court
concludes that it lacks jurisdiction over counts I and II and therefore grants the defendant’s motion
to dismiss these counts. Since the liquidation instructions are not inconsistent with the final results
and are in accordance with law, judgment will enter for the defendant.
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________________________________________
R. KENTON MUSGRAVE, JUDGE
Dated: October 3, 2003
New York, New York