Vanderhoof Specialty Wood Products, Inc. v. United States

Slip Op 04-23
UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE: NICHOLAS TSOUCALAS, SENIOR JUDGE
__________________________________________
:
VANDERHOOF SPECIALTY WOOD PRODUCTS, INC., :
:
Plaintiff, :
: Court No.
v. : 02-00793
:
UNITED STATES, :
:
Defendant. :
__________________________________________:
The United States moves to dismiss the action brought by
plaintiff, Vanderhoof Specialty Wood Products, Inc., pursuant to
USCIT R. 12(b)(5) for failure to state a claim upon which relief
may be granted. The government argues that there is no justiciable
case or controversy in this matter because the merchandise at issue
was entered duty free. Vanderhoof opposes the motion and argues
that it suffered actual injury since reclassification of the
subject entries obligated plaintiff to expend valuable Canadian
export permits on such entries.
Held: For the reasons stated below, Government’s motion to
dismiss this case is granted. Case dismissed.
March 11, 2004
Alston & Bird LLP (Paul F. Brinkman and Daniel J. Gerkin) for
Vanderhoof Specialty Wood Products, Inc., plaintiff.
Peter D. Keisler, Assistant Attorney General; Barbara S.
Williams, Attorney-in-Charge, International Trade Field Office,
Civil Division, Commercial Litigation Branch, United States
Department of Justice (Aimee Lee) for the United States, defendant.
MEMORANDUM OPINION
TSOUCALAS, Senior Judge: The United States (“the government”)
moves to dismiss the action brought by plaintiff, Vanderhoof
Specialty Wood Products, Inc. (“Vanderhoof”), pursuant to USCIT R.
Court No. 02-00793 Page 2
12(b)(5) for failure to state a claim upon which relief may be
granted. The government argues that there is no justiciable case
or controversy in this matter because the merchandise at issue was
entered duty free. Vanderhoof opposes the motion and argues that
it suffered actual injury since reclassification of the subject
entries obligated plaintiff to expend valuable Canadian export
permits on such entries.
DISCUSSION
A. Background
Vanderhoof “remanufactures” value-added softwood lumber
products in Vanderhoof, British Columbia, Canada. See Compl. ¶ 9.
Vanderhoof “purchases ‘trim blocks’ or ‘mill trim ends’ (waste
wood) from sawmills in British Columbia, cuts off defects, and
joins the blocks to form longer dimensional wood products . . .
using a finger-jointing machine. These products are graded, and
some are sold as framing lumber (e.g. ‘studs’).” Id. ¶ 11. Some
of these finger-jointed studs were used by Vanderhoof to
manufacture Deckmate brand handrails (“handrails” or “subject
merchandise”) that were imported into the United States. See id.
¶ 12. Vanderhoof entered the handrails under subheading 4409.10.45
of the Harmonized Tariff Schedule of the United States (“claimed
provision”). See id. ¶ 14. The United States Bureau of Customs
and Border Protection (“Customs”) liquidated the subject
Court No. 02-00793 Page 3
merchandise under subheading 4407.10.00 (“assessed provision”).
See id. ¶ 15. Both subheadings carry a duty-free rate of
importation since all NAFTA-originating wood products are duty
free. See Pl.’s Opp’n Def.’s Mot. Dismiss (“Pl.’s Opp’n”) at 1.
However, Customs’ reclassification of the handrails under
subheading 4407.10.00 “required Vanderhoof to present valid
Canadian export permits for the [subject] merchandise.”1 Id. at 2.
As a result, Vanderhoof filed timely protests against the subject
entries that were ultimately denied by Customs on August 30, 2002.
See Compl. ¶ 4. Subsequently, Vanderhoof filed a complaint with
this Court contesting Customs’ reclassification of the subject
entries and requesting a judgment directing Customs to reliquidate
the subject entries under the proposed subheading.
B. Contention of the Parties
The government argues that this action involves a non-
justiciable controversy and, accordingly, this case should be
dismissed. See Def.’s Mot. Dismiss Lack Justiciable Controversy
1
Under the Softwood Lumber Agreement between the United
States and Canada, items classified under subheading 4407.10.00 are
encumbered with a bond requirement mandating Vanderhoof to present
a government issued permit within 20 days of entry. See Softwood
Lumber Agreement (“SLA”), May 29, 1996, Canada-United States, 35
I.L.M. 1195 (entered into force May 29, 1996); 19 C.F.R. §§
12.140(a), 113.62(k) (2000). The permit fee may cost a Canadian
exporter $50.00 (USD) or $100.00 (USD) per thousand board feet. See
id. This requirement is not imposed on Canadian imports classified
under 4409.10.45. See 19 C.F.R. § 12.140(a).
Court No. 02-00793 Page 4
(“Def.’s Mot.”) at 2-4. According to the government, “[e]ven if
the Court decides that plaintiff’s proposed classification is
correct, which is not the case, the Court cannot grant relief to
plaintiff” because both the assessed and claimed provisions are
duty free. Id. at 2. The government cites a string of cases to
support its contention that “where the duty rate under both the
assessed and the claimed tariff provisions is the same, the case
should be dismissed as moot.” Id. at 3. (citing Sneakers Circus,
Inc. v. Carter, 566 F.2d 396, 400 n.9 (2d Cir. 1977) (stating, in
dicta, that where “a reclassification would have no effect on
either the rate or amount of duty payable, no opportunity to
challenge exists”); 3V, Inc. v. United States, 23 CIT 1047, 1049,
83 F. Supp. 2d 1351, 1353 (1999) (finding no case or controversy
where the claimed an assessed classifications were duty free);
Acrilicos v. Regan, 9 CIT 442, 449, 617 F. Supp. 1082, 1088 (1985)
(finding that any decision would render an advisory opinion because
the amount of duty to be paid by plaintiff is unaffected by the
action); Carson M. Simon & Co. v. United States, 55 Cust. Ct. 103,
108, C.D. 2558 (1965) (dismissing claims as to entries that were
entered at a rate lower than the claimed rate)).
Vanderhoof argues that Customs’ classification does not
involve rate of duty, but rather the resulting encumbrance placed
on plaintiff pursuant to the Softwood Lumber Agreement. See Pl.’s
Court No. 02-00793 Page 5
Opp’n at 3. Specifically, plaintiff argues that Customs’
reclassification of the subject entries under subheading 4407.10.00
required Vanderhoof to obtain export permits from the Canadian
government. See id. at 2. To obtain these permits, Vanderhoof
paid fees to Canada determined in accordance with the schedule
listed under Article II of the Softwood Lumber Agreement. See id.
2-3; see also SLA, 35 I.L.M. at 1197. According to Vanderhoof, the
injury suffered deals not with the amount of duties assessed
pursuant to the reclassification, but rather the surrender of
“valuable” export permits to Customs as a result of the
reclassification. See Pl.’s Opp’n at 2-3. Vanderhoof further
argues that this injury can be redressed by a favorable judicial
decision because proper classification of the subject merchandise
and reliquidation under 4409.10.45 would require Customs to return
the permits submitted by plaintiff under protest at the time of
entry. See id. at 3.
C. Analysis
Pursuant to Article III of the United States Constitution,
federal courts are empowered to decide only those claims that
present live cases or controversies. See Iron Arrow Honor Soc’y v.
Heckler, 464 U.S. 67, 70 (1983) (citing DeFunis v. Odegaard, 416
U.S. 312, 316 (1974)). In order to satisfy the case or controversy
Court No. 02-00793 Page 6
requirement, “a litigant must have suffered some actual injury that
can be redressed by a favorable judicial decision.” See id.(citation omitted). A claim must be dismissed as non-justiciable
if it fails to meet the Article III criteria. See Powell v.
McCormack, 395 U.S. 486, 496 n.7 (1969); Liner v. Jafco, Inc., 375
U.S. 301, 306 n.3 (1964). Ultimately, “[t]he duty of this [C]ourt,
as of every judicial tribunal, is limited to determining rights of
persons or of property, which are actually controverted in the
particular case before it.” California v. San Pablo & Tulare R.R.
Co., 149 U.S. 308, 314 (1893). “Even where a court possesses
jurisdiction to hear a claim, it may not do so in cases where the
claim . . . is such that the court lacks ‘ability to supply
relief.’” Adkins v. United States, 68 F.3d 1317, 1322 (Fed. Cir.
1995)(citing Murphy v. United States, 993 F.2d 871, 872 (Fed. Cir.
1993)).
The parties in this case disagree as to the correct
classification of the subject merchandise. It is uncontested that
no matter the Court’s ruling, “the Government collects and [the
plaintiff] pays nothing” since all NAFTA-originating wood products
are duty free. See 3V, 23 CIT at 1049, 83 F. Supp. 2d at 1353.
The crux of plaintiff’s argument is that classification under the
proposed heading would entitle Vanderhoof to the return of
“valuable” export permits currently in Customs’ possession. See
Court No. 02-00793 Page 7
Pl’.s Opp’n 2-3. Plaintiff’s complaint, however, makes no mention
of such permits. See Compl. It is not until plaintiff’s
opposition papers to the government’s motion to dismiss that
Vanderhoof claims its injury rests in something other than the
assessment of duties and links this case to the Softwood Lumber
Agreement.
Even after reading plaintiff’s arguments, the Court cannot
discern what injury can be redressed by a favorable ruling. In
this case, valid export permits were presented to Customs at
importation for the subject entries. Once such permits were
presented, any encumbrance of Vanderhoof’s entries were
extinguished. See Def.’s Reply Pl.’s Opp’n Def.’s Mot. Dismiss
(Def.’s Reply”) at 2. But see Pl.’s Opp’n at 1 (stating that
Customs’ classification resulted in “the unlawful encumbrance of
Vanderhoof’s entries and that the resolution of the classification
dispute by this Court and an order directing reliquidation under
the claimed tariff provision would, albeit belatedly, remove the
encumbrance”). Moreover, plaintiff does not seek a refund for the
export permits but rather their return. See Pl.’s Opp’n at 3.
The Court agrees with the government. “The matter of permits
is wholly peripheral to the issue actually raised by Vanderhoof in
its complaint.” Def.’s Reply at 2. The permits were issued by the
Canadian government under the requirements of the U.S.-Canada
Court No. 02-00793 Page 8
Softwood Lumber Agreement and, ultimately, pursuant to 19 C.F.R. §
12.140(a). This agreement expired in 2001 (five years after its
effective date) and, accordingly, there no longer exists a permit
requirement pursuant to such agreement. See SLA, 35 I.L.M. at
1195; Def.’s Reply at 3; see also 19 C.F.R. § 12.140 (stating that
“[t]he requirements set forth in this section are applicable for as
long as the Softwood Lumber Agreement . . . remains in effect”).
Thus, Vanderhoof would be precluded from using such permits today.
Although Vanderhoof has termed these permits “valuable,” it has not
established what, if any, value such permits possess. Since
plaintiff has no “legally cognizable interest” in the outcome of
this litigation, Vanderhoof’s claims are moot. See PPG Indus.,
Inc. v. United States, 11 CIT 303, 306, 660 F. Supp. 965, 968
(1987) (quoting Powell, 395 U.S. at 496). Accordingly, this case
is dismissed.
CONCLUSION
Plaintiff’s claim fails to meet the Article III criteria.
Since the encumbrance on Vanderhoof’s entries was extinguished upon
presenting Customs with required export permits, and since return
of such permits can not meaningfully redress any economic or legal
Court No. 02-00793 Page 9
injury, this case is dismissed. Judgment will be entered
accordingly.
/s/ Nicholas Tsoucalas
NICHOLAS TSOUCALAS
SENIOR JUDGE
Dated: March 11, 2004
New York, New York