Travenol Laboratories, Inc. v. U.S.

Decision Date02 July 1997
Docket NumberNo. 96-1534,96-1534
Citation118 F.3d 749
PartiesTRAVENOL LABORATORIES, INC., Plaintiff-Appellant, v. The UNITED STATES, Defendant-Appellee. Federal Circuit
CourtU.S. Court of Appeals — Federal Circuit

Mark S. Zolno, Katten, Muchin & Zavis, Chicago, IL, argued, for plaintiff-appellant. With him on the brief was Michael E. Roll. Of counsel on the brief was Charles R. Mattenson, Corporate Counsel, Baxter Healthcare Corporation, McGaw Park, IL.

James A. Curley, Attorney, Commercial Litigation Branch, Civil Division, Department of Justice, New York City, argued, for defendant-appellee. With him on the brief were Frank W. Hunger, Assistant Attorney General, and David M. Cohen, Director, Washington, DC, and Joseph I. Liebman, Attorney in Charge, International Trade Field Office, New York City. Of counsel on the brief was Sheryl A. French, Office of Assistant Chief Counsel, United States Customs Service, New York City.

James F. O'Hara, Stein Shostak Shostak & O'Hara, Los Angeles, CA, for amici curiae Nike, Inc. and Nissho Iwai American Corporation. Of counsel on the brief was Michael P. Maxwell, Law Offices of Michael P. Maxwell, Los Angeles, CA.

Michael P. Maxwell, Law Offices of Leonard M. Fertman, P.C., Los Angeles, CA, for amicus curiae Technicolor Videocassette, Inc. Corporation.

Steven P. Kersner, Kersner & Associates, of Washington, DC, for amicus curiae Dal-Tile Corporation. With him on the brief was Roger Banks.

CLEVENGER, Circuit Judge.

This case asks whether certain provisions of the Customs Modernization Act (Mod Act) apply to goods entered before, but liquidated after, that act's effective date of December 8, 1993. The Customs Service (Customs) contends, and the Court of International Trade agreed, that application of those provisions to such goods would be retroactive and impermissible, given the lack of a clear statement by Congress that it intended those provisions to be applied retroactively. Because we conclude that application of the relevant provisions of the Mod Act to the goods in question would not be retroactive, we reverse.

I

Between 1985 and 1992, Baxter Healthcare Corporation (Baxter) imported medical devices used in renal dialysis. 1 Customs classified the devices as dutiable "electro-medical apparatus" and required Baxter to deposit estimated duties on each entry of devices. When Customs liquidated the goods as entered, Baxter filed a protest, arguing that its products were entitled to duty-free entry as "articles specially designed or adapted for the use or benefit of the blind or other physically or mentally handicapped persons." Customs, however, denied Baxter's protest.

Baxter challenged Customs' classification decision in the Court of International Trade. That court agreed with Baxter that the goods were entitled to duty-free entry, and entered final judgment on February 3, 1993, directing Customs to reliquidate the entries duty-free and to refund the excess duties deposited, with interest "as provided by law." 2 The entry at issue in the present case was reliquidated on August 18, 1995. The dispute in this case concerns the quantum of interest that must be paid on the reliquidated entry.

The law relating to interest owed changed on December 8, 1993, when Congress enacted the Mod Act as part of the North American Free Trade Implementation Act. Pub.L. No. 103-182, 107 Stat.2057 (codified in scattered sections of 19 U.S.C.). Section 642 of the Mod Act amends 19 U.S.C. § 1505 to provide:

(c) Interest--Interest assessed due to an underpayment of duties, fees, or interest shall accrue, at a rate determined by the Secretary, from the date the importer of record is required to deposit estimated duties, fees, and interest to the date of liquidation or reliquidation of the applicable entry or reconciliation. Interest on excess moneys deposited shall accrue, at a rate determined by the Secretary, from the date the importer of record deposits estimated duties, fees, and interest to the date of liquidation or reliquidation of the applicable entry or reconciliation.

19 U.S.C. § 1505(c) (1994) (emphasis added). This change became effective upon enactment. See Mod Act § 692, Pub.L. No. 103-182, 107 Stat. 2225.

Pursuant to the judgment of the Court of International Trade, Customs reliquidated the entries duty-free and refunded the duties previously paid by Baxter. In doing so, Customs provided interest, based on 28 U.S.C. § 2644, from the date Baxter filed the summons for each entry to the date of refund. 3 Baxter protested this reliquidation, contending that under amended section 1505(c) interest should be paid for the entire time span from the date of deposit to the date of refund, rather than simply from the date of filing summons for each entry to the date of refund (under § 2644). When Customs denied this protest, Baxter filed a Motion to Enforce Judgment with the Court of International Trade, seeking the additional interest, computed from the date of deposit to the date of summons for each entry, to which it asserted entitlement.

II

Before the Court of International Trade, the parties disputed whether application of amended section 1505(c) to Baxter's entries would constitute a retroactive application of that statute. In arguing that it would not, Baxter cited Syva Co. v. United States, 681 F.Supp. 885 (C.I.T.1988), for the proposition that liquidation (as in that case) or reliquidation (as in the present case) is the operative event triggering the time for assessment of interest. Because the entries at issue were reliquidated after the effective date of the Mod Act, Baxter argued that application of section 1505(c) to those goods is prospective, not retroactive.

The court, however, agreed with Customs that the relief sought by Baxter would amount to a retroactive application of section 1505(c). While acknowledging the statements in Syva that liquidation is the triggering event for assessing interest, the court determined that matters had changed under the amended laws, and that deposit of estimated duties is now the triggering event. The court was led to this conclusion, in part, because the amended statute directs that interest "shall accrue" from the date of deposit to the date of reliquidation. Because deposits for the subject imports had already been paid by the time section 1505(c) was amended, the court concluded that applying it to those deposits would constitute a retroactive application of that law.

Having decided that Baxter was seeking a retroactive application of the law, the court next considered whether Congress had made a clear statement of an intent that section 1505(c) apply retroactively. After analyzing the statute's language as well as its legislative history, the court failed to find the requisite clear statement of retroactive intent. Accordingly, the court denied Baxter's motion to enforce. Baxter appeals.

We review Baxter's appeal from the judgment of the Court of International Trade pursuant to 28 U.S.C. § 1295(a)(5) (1994). The dispositive issue in the present case is the proper interpretation of section 1505(c), a question of law that we review de novo. See Medline Indus., Inc. v. United States, 62 F.3d 1407, 1409 (Fed.Cir.1995).

III

As the United States Supreme Court has stated, retroactivity in general is not favored in the law and, accordingly, legislation will be construed to operate only prospectively unless Congress has clearly expressed a contrary intention. See Landgraf v. USI Film Prods., 511 U.S. 244, 264, 268, 114 S.Ct. 1483, 1496, 1498-99, 128 L.Ed.2d 229 (1994). Under this standard, the first issue is whether application of legislation to certain facts constitutes a retroactive application of that law. Only if the answer to that question is "yes" must we search for a clear expression of congressional intent to apply the law retroactively.

Deciding if application of legislation would be retroactive is not a simple or mechanical task but is instead one that "comes at the end of a process of judgment." Id. at 268-70, 114 S.Ct. at 1498-1500. Although there exist no hard and fast rules for this decision, we are aided by guidance provided by prior law, which has focused on the interrelationship between the new law and past conduct. Typical of these prior cases is the following formulation by the First Circuit: "The determination of whether a statute's application in a particular situation is prospective or retroactive depends upon whether the conduct that allegedly triggers the statute's application occurs before or after the law's effective date." McAndrews v. Fleet Bank of Mass., N.A., 989 F.2d 13, 16 (1st Cir.1993); see also Kaiser Aluminum & Chem. Corp. v. Bonjorno, 494 U.S. 827, 857 n. 3, 110 S.Ct. 1570, 1588 n. 3, 108 L.Ed.2d 842 (explaining that the inquiry "depends upon what one considers to be the determinative event by which retroactivity or prospectivity is to be calculated") (Scalia, J., concurring); Landgraf, 511 U.S. at 270, 114 S.Ct. at 1499 (stating that the inquiry requires consideration of "the degree of connection between the operation of the new rule and a relevant past event").

Therefore, we must evaluate the importing process in an effort to find the event that triggers the application of section 1505(c). An importer is required to deposit estimated duties with Customs at the time of importation. 4 19 C.F.R. § 141.101 (1996). At some later time, Customs reviews the entry and makes its final determination as to whether the amount of duty deposited is correct--i.e., Customs liquidates the entry. See 19 C.F.R. §§ 159.0-.12 (1996). If an importer is dissatisfied with the liquidation, it may file an administrative protest within ninety days of The statutory provision at issue, section 1505(c), relates to interest--specifically, interest owed for either an underpayment or overpayment of estimated duties. As the foregoing demonstrates,...

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