Qingdao Taifa Group Co., Ltd. v. U.S.

Decision Date28 September 2009
Docket NumberNo. 2009-1103.,2009-1103.
PartiesQINGDAO TAIFA GROUP CO., LTD., Plaintiff-Appellee, v. UNITED STATES, Defendant-Appellee, v. Gleason Industrial Products, Inc. and Precision Products, Inc., Defendants-Appellants.
CourtU.S. Court of Appeals — Federal Circuit

Louis S. Mastriani, Adduci, Mastriani & Schaumberg, L.L.P., of Washington, DC, argued for plaintiff-appellee Qingdao Taifa Group Co., Ltd. With him on the brief was William C. Sjoberg.

Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee United States. With her on the brief were Michael F. Hertz, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Stephen C. Tosini, Attorney.

Alexander H. Schaefer, Crowell & Moring LLP, of Washington, DC, argued for defendants-appellants. With him on the brief was Matthew P. Jaffe.

Before LOURIE, RADER, and MOORE, Judges.

RADER, Circuit Judge.

The United States Court of International Trade ("CIT") enjoined liquidation of entries for importers of hand trucks manufactured and exported by Qingdao Taifa Group Co., Ltd. ("Taifa"), during the 2005 to 2006 period. Because the trial court did not abuse its discretion in halting the liquidation, this court affirms.

I.

Taifa, based in China, manufactures and exports hand trucks. Gleason Industrial Products, Inc., and Precision Products, Inc. (collectively "Gleason") manufacture hand trucks in the domestic market. From December 2005 through November 2006, various United States companies purchased hand trucks from Taifa and imported them into the United States. Upon entry of the hand trucks, the United States importers posted antidumping duty cash deposits as required by antidumping regulations. Taifa did not import any hand trucks itself and therefore did not post any cash deposits.

The Department of Commerce ("Department") then published a notice to all interested parties of the opportunity to request a review of the entries. Based on requests from both Taifa and Gleason, the Department initiated a review and sent agency officials to China to interview Taifa personnel. During the visits to Taifa, the Department detected concealment, destruction, and tampering with responsive documents. Due to Taifa's resistance, the Department applied adverse facts available under 19 U.S.C. § 1677e(b), and assigned an antidumping rate used for the People's Republic of China ("PRC"). That rate is significantly higher than the rate normally applied to independent exporters.

Taifa filed a case at the CIT to challenge the Department's high antidumping duty. On the same day, Taifa filed a motion for a preliminary injunction to enjoin liquidation of entries subject to the challenged determination pursuant to 19 U.S.C. § 1516a(c)(2), serving both the United States and Gleason with copies of its complaint and motion. The court granted Taifa's motion before the time for filing an opposition had lapsed. Gleason later intervened and filed a motion to set aside the injunction arguing—among other things—that Taifa had failed to show that it would be irreparably harmed if an injunction was not granted. Gleason filed its motion on the same day that responses to Taifa's motion would have been due. The court denied Gleason's motion, finding:

No extraordinary showing of irreparable harm is required to obtain the injunction sought here. It has long been established that liquidation of entries after a final determination of duties for a particular period, before the merits can be litigated, is sufficient harm. See Zenith Radio Corp. v. United States, 710 F.2d 806, 810 (Fed.Cir.1983) (granting domestic producer injunction of liquidation during challenge to periodic review determination). Also, one need not be an importer to seek relief under 19 U.S.C. § 1516a(c)(2). See id. at 811. Competitive concerns of the domestic producer were one of the determining factors in Zenith. See id. at 810-11. Competition is no less a concern for a foreign producer or exporter than it is for a domestic producer. Therefore, Gleason's argument based on Taifa's lack of its own imports is of no consequence and, as a legal matter, Taifa has established irreparable harm. There is also little doubt that the public interest is served by permitting the court to reach a considered decision regarding the agency's determination as to whether, and in what amount, duties are owed, before precluding the parties from litigating the issue. No harm comes to either side by preserving the status quo.

Qingdao Taifa Group Co. v. United States, No. 08-00245, 2008 WL 4787488, at *1 (Ct. Int'l Trade Nov. 4, 2008). Gleason timely appealed. This court has jurisdiction under 28 U.S.C. § 1292(c)(1).

II.

In international trade cases, the CIT has authority to grant preliminary injunctions barring liquidation in order to preserve a party's right to challenge the assessed duties. See Yancheng Baolong Biochemical Prods. Co. v. United States, 406 F.3d 1377, 1380-81 (Fed.Cir.2005); see also 19 U.S.C. § 1516a(c)(2). To prevail on a motion for a preliminary injunction, the movant must demonstrate four things: (1) that it will be immediately and irreparably injured; (2) that there is a likelihood of success on the merits; (3) that the public interest would be better served by the relief requested; and (4) that the balance of hardship on all the parties favors the petitioner. Zenith Radio Corp. v. United States, 710 F.2d 806, 809 (Fed.Cir. 1983) (citing S.J. Stile Assoc. Ltd. v. Snyder, 646 F.2d 522, 526 (CCPA 1981)). "Central to the movant's burden are the likelihood of success and irreparable harm factors." Sofamor Danek Group, Inc. v. DePuy-Motech, Inc., 74 F.3d 1216, 1219 (Fed.Cir.1996). "A request for a preliminary injunction is evaluated in accordance with a `sliding scale' approach: the more the balance of irreparable harm inclines in the plaintiff's favor, the smaller the likelihood of prevailing on the merits he need show in order to get the injunction." Kowalski v. Chi. Tribune Co., 854 F.2d 168, 170 (7th Cir.1988).

District courts enjoy broad discretion to grant or withhold injunctions. Accordingly, this court reviews a decision to grant an injunction and the scope of that injunction for an abuse of discretion. See Tegal Corp. v. Tokyo Electron Am., Inc., 257 F.3d 1331, 1335 (Fed.Cir.2001). "`An abuse of discretion may be established under Federal Circuit law by showing that the court made a clear error of judgment in weighing the relevant factors or exercised its discretion based on an error of law or clearly erroneous fact finding.'" Lab. Corp. of Am. Holdings v. Chiron Corp., 384 F.3d 1326, 1331 (Fed.Cir. 2004) (quoting Int'l Rectifier Corp. v. Samsung Elecs. Co., 361 F.3d 1355, 1359 (Fed. Cir.2004)).

III.

As an initial matter, the United States argues that Gleason waived its right to oppose the preliminary injunction by failing to respond to Taifa's motion in a timely fashion. This court disagrees. The record shows that Gleason intervened and filed a response to Taifa's motion before the deadline to oppose the motion had lapsed. Gleason cannot be faulted, as the United States now suggests, for failing to anticipate that the trial court would grant Taifa's request a mere ten days after it was filed. Indeed, the trial court acted before the end of the time period for Gleason's opposition.

The decision of the United States Court of Appeals for the Seventh Circuit, LB Credit Corp. v. Resolution Trust Corp., 49 F.3d 1263 (7th Cir.1995), does not support the position that Gleason waived its opportunity to oppose the injunction. In that case, the defendant attempted to raise a new argument in a Rule 59 motion for a rehearing after the district court had entered summary judgment. Id. at 1267. The district court declined to address the argument because it could and should have been raised before grant of summary judgment. Id. The Seventh Circuit affirmed. Unlike LB Credit, however, Gleason intervened and raised its arguments in a timely manner. The trial court's initial grant of the preliminary injunction did not erect a permanent and impenetrable barrier to Gleason's timely opposition.

IV.

Gleason argues that the lower court clearly erred with respect to each of the four factors for assessing the merits of a preliminary injunction. This court addresses each factor in turn.

A.

"A preliminary injunction will not issue simply to prevent a mere possibility of injury, even where prospective injury is great. A presently existing, actual threat must be shown." Zenith, 710 F.2d at 809. In Zenith, the trial court denied Zenith— an American manufacturer of televisions— an injunction on the liquidation of entries on televisions reasoning that it would suffer no irreparable harm without an injunction. This court reversed:

In this case, we conclude that liquidation would indeed eliminate the only remedy available to Zenith for an incorrect review determination by depriving the trial court of the ability to assess dumping duties on Zenith's competitors in accordance with a correct margin on entries in the '79-'80 review period. The result of liquidating the '79-'80 entries would not be economic only. In this case, Zenith's statutory right to obtain judicial review of the determination would be without meaning for the only entries permanently affected by that determination. In the context of Congressional intent in passing the Trade Agreements Act of 1979 ... we conclude that the consequences of liquidation do constitute irreparable injury.

Id. at 810. Without any other statutory framework or process to challenge the duties, this court reasoned that an injunction was the only way to preserve Zenith's ability to challenge the applicable rates if they were later changed by the trial court. Put differently, once the entries were liquidated the law provided no viable method to recover any additional money even...

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