507 F.Supp.2d 1331 (CIT. 2007), 07-00101, Hartford Fire Ins. Co. v. United States

Docket Nº:Court No. 07-00101.
Citation:507 F.Supp.2d 1331
Party Name:HARTFORD FIRE INSURANCE CO., Plaintiff, v. UNITED STATES, Defendant.
Case Date:August 29, 2007
Court:Court of International Trade

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507 F.Supp.2d 1331 (CIT. 2007)




Court No. 07-00101.

Slip Op. 07-132.

United States Court of International Trade.

Aug. 29, 2007

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Barnes, Richardson & Colburn,(Daniel F. Shapiro, Eric W. Lander, and Sandra L. Friedman), New York City, for Plaintiff.

Peter D. Keisler, Assistant Attorney General; David M. Cohen, Director; Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Michael J. Dierberg), Beth C. Brotman, Bureau of Customs and Border Protection, of counsel, for the Defendant.

Before: Pogue, Judge.



Faced with a demand by the United States Bureau of Customs and Border Protection ("Customs") for the payment of antidumping duties pursuant to Plaintiff's bond guaranteeing the payment of such duties, Plaintiff, in this action, asks the court to declare its bond unenforceable. Pursuant to USCIT R. 12(b)(1), Defendant moves to dismiss, claiming a lack of subject matter jurisdiction because of Plaintiff's failure to utilize or exhaust its administrative protest remedies. For the reasons stated herein, the court grants Defendant's motion.


This action involves three entries of merchandise imported into the United States by Brother Packaging Inc. The merchandise is subject to antidumping duties. Plaintiff, Hartford Fire Insurance Company ("Plaintiff" or "Hartford") guaranteed a basic importation and entry bond for payment of duties, taxes and charges on these entries.

In its three-count complaint, Plaintiff now asks the court to declare its bond unenforceable, claiming that the Continued Dumping and Subsidy Offset Act of 2000, Pub.L. No. 106-387, § 1003, 114 Stat. 1549, 1623 (2000) codified at 19 U.S.C. § 1675c 1 ("CDSOA" or "Byrd Amendment"), has rendered its bond inapplicable and invalid.

The Byrd Amendment altered the government's use of antidumping and countervailing duties ("ADD" and "CVD" respectively) collected pursuant to ADD and CVD orders on subject merchandise. Customs continues, as it did before the Byrd Amendment, to collect antidumping and countervailing duties, but, pursuant to the Byrd Amendment, rather than depositing those duties into the general treasury of the United States, Customs now deposits all duties collected into "special accounts" established within the U.S. Treasury for each antidumping and countervailing duty order. 19 U.S.C. § 1675c(e); 19 C.F.R. § 159.64. 2, 3 In addition,

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each year, Customs distributes all monies contained in those special accounts, plus interest, on a pro rata basis, to "affected domestic producers," i.e., domestic companies (who continue to produce the subject merchandise under the ADD or CVD order) and worker groups that supported the petition for the antidumping or countervailing duty order. The funds distributed, known as the "continued dumping and subsidy offset," 19 U.S.C. § 1675c(a), 19 C.F.R. § 159.61(a) ("Byrd Distributions"), are allocated based on "qualifying expenditures," i.e., certain enumerated business expenses such as manufacturing facilities, equipment, input materials, health benefits for employees, and "[w]orking capital or other funds needed to maintain production," paid by affected domestic producers. 19 U.S.C. §§ 1675c(b)(4); 1675c(d)(2)-(3); 19 C.F.R. § 159.61(c). 4

Plaintiff claims that, under contract and surety common law, it is not obligated by the terms of its bond to pay what amounts to a subsidy to the U.S. domestic industry. Rather, Plaintiff claims, the Byrd Amendment constitutes a material alteration of its bond that increased Plaintiff's risk of loss, which material alteration discharges Plaintiff from its obligation under the bond. Plaintiff asserts that the court has jurisdiction of what Plaintiff styles a common law dispute pursuant to 28 U.S.C. § 1581(i). 5

Defendant moves to dismiss because Plaintiff has filed no protest in response to Customs' demand for payment of duties guaranteed by Plaintiff's bond. Defendant notes that Customs' demand that Plaintiff pay antidumping duties and interest is a "charge" within the plain meaning of 19 U.S.C. § 1514(a) 6 and that jurisdiction for a challenge to such a charge must be established pursuant to 28 U.S.C. § 1581(a). 7

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Citing a long line of decisions from the Court of Appeals for the Federal Circuit for the proposition that, when jurisdiction under subsection (a) of § 1581 is or could have been available, jurisdiction pursuant to section 1581(i) may not be invoked unless relief under section 1581(a) would be "manifestly inadequate," see Am. Signature Inc. v. United States, 31 CIT ----, 477 F. Supp.2d 1281, 1287 (2007), Defendant argues that Plaintiff may not, in this matter, invoke jurisdiction under section 1581(i), but must first utilize its protest remedy and obtain jurisdiction pursuant to section 1581(a). Defendant also relies on 28 U.S.C. § 2637(d) which states that "the Court of International Trade shall, where appropriate, require the exhaustion of administrative remedies." 8 Finally, Defendant notes that under the rule announced in the court's decision in American Motorists Ins. Co. v. United States, 14 CIT 298, 737 F.Supp. 648 (1990), Plaintiff's complaint is untimely because a protest denying liability under an import bond must be filed within the 180-day period of the Customs decision challenged thereby. 19 U.S.C. § 1514(c) (2004). Nor has Plaintiff paid the duties required by 28...

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