Agro Dutch Industries Ltd. v. U.S.

• Decision Date: 15 December 2009
• Docket Number: No. 2009-1127.,2009-1127.
• Citation: 589 F.3d 1187
• Parties: AGRO DUTCH INDUSTRIES LIMITED, Plaintiff, v. UNITED STATES, Defendant-Appellant, and Coalition for Fair Preserved Mushroom Trade, Defendant.
• Court: U.S. Court of Appeals — Federal Circuit

589 F.3d 1187

AGRO DUTCH INDUSTRIES LIMITED, Plaintiff, v. UNITED STATES, Defendant-Appellant, and Coalition for Fair Preserved Mushroom Trade, Defendant.

No. 2009-1127.

United States Court of Appeals, Federal Circuit.

December 15, 2009.

Richard P. Schroeder, Trial Attorney, Commercial Litigation Branch, Civil Division,

United States Department of Justice, of Washington, DC, argued for defendant-appellee. With him on the brief were Michael F. Hertz, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director.

Before RADER, BRYSON, and LINN, Circuit Judges.

BRYSON, Circuit Judge.

The government appeals from a decision of the Court of International Trade ordering the reliquidation of certain imported entries by plaintiff Agro Dutch Industries, Ltd. At issue is whether liquidation of the entries by Customs and Border Protection after the court issued an injunction against liquidation but before the injunction took effect rendered the case moot. The trial court held that the case was not moot, and we affirm.

I

On July 12, 2002, the Department of Commerce published the final results of its second administrative review of an antidumping duty order imposing duties on preserved mushrooms from India. 67 Fed.Reg. 46,172. Commerce assigned Agro Dutch, a foreign producer and exporter, an antidumping duty of 27.80 percent.

Agro Dutch sought review of Commerce's determination by filing an action in the Court of International Trade on July 19, 2002. On September 26, 2002, Agro Dutch moved for a preliminary injunction, pursuant to 19 U.S.C. § 1516a(c), to prevent liquidation of its covered entries during the pendency of the action. Although Agro Dutch's request occurred after the expiration of the 30-day deadline under Rule 56.2 of the Rules of the United States Court of International Trade, which provides that a party may file a motion to enjoin liquidation "within 30 days after service of the complaint, or at such later time, for good cause shown," the government nevertheless consented to Agro Dutch's request for an injunction.

On October 1, 2002, the trial court granted Agro Dutch's consent motion and issued an order enjoining liquidation. By its terms, the injunction was to become effective five days after service on particular Commerce and Customs officials.

According to the government, which requested the five-day delay in the effective date of the injunction, the purpose of the delay was to avoid "an inadvertent violation" of the injunction by "ensuring that the appropriate Government officials receive notice" and by "providing the Government with the time needed to keep the entries from being ... liquidated." Agro Dutch served the injunction on the pertinent government officials three days after it was issued.

Meanwhile, on August 23, 2002, Commerce had issued liquidation instructions to Customs based on the July 12 Final Results. On October 4, 2002, the same day on which Agro Dutch served the injunction on the appropriate government officials, Customs acted on those instructions and liquidated nearly all of Agro Dutch's entries.

After extensive additional proceedings that are not relevant here, the trial court remanded the matter to Commerce for a redetermination of Agro Dutch's antidumping duty margin. Commerce then issued a redetermination that lowered Agro's antidumping duty rate from 27.80 percent to 1.54 percent. The trial court sustained that duty rate. Agro Dutch then moved to amend the judgment, requesting reliquidation of the previously liquidated entries at the reduced rate of 1.54 percent.

The trial court granted the motion in part, ordering that the effective date of the injunction be amended to the date the injunction was issued, October 1, 2002, and directing that the relevant entries be reliquidated at the lower duty rate. Agro Dutch Indus. Ltd. v. United States, No. 02-499, slip op. at 8 (Ct. Int'l Trade Oct. 17, 2008). The court rejected the argument that this court's decisions in SKF USA, Inc. v. United States, 512 F.3d 1326 (Fed.Cir.2008), and Zenith Radio Corp. v. United States, 710 F.2d 806 (Fed.Cir. 1983), barred the reliquidation of the entries on the ground that the liquidation rendered the action before the court moot.

The trial court noted that, unlike in SKF, the court entered its injunction before the subject entries were liquidated. Moreover, the court observed that the liquidation of Agro Dutch's entries occurred as a result of "what might best be charitably described as `inadvertence'" and that the parties had intended that liquidation would be enjoined during the pendency of the court action. The court therefore reasoned that backdating the injunction would "comport with the parties' intention." The court added that not granting relief would result in "manifest injustice" to the non-party importer of record, which was likely to be rendered insolvent unless the entries were reliquidated at the proper, lower duty rate.

II

On appeal, the government argues that the trial court lacked jurisdiction to entertain Agro Dutch's challenge regarding the entries that were liquidated prior to the effective date of the injunction. Relying principally on the Zenith case, the government argues that the October 4 liquidations rendered Agro Dutch's claims moot, and that the trial court was powerless to order reliquidation or to amend the injunction nunc pro tunc.

In Zenith, the trial court refused to issue a preliminary injunction to prevent liquidation, on the ground that the movant had not established a likelihood of irreparable injury. We reversed. Under the statutory scheme that governs judicial review of Commerce's annual review determinations, we held that challenged entries must be liquidated at the disputed duty rate unless liquidation is enjoined. 710 F.2d at 810 (discussing 19 U.S.C. §§ 1516a(c) and 1516a(e)). From the absence of any statutory provision allowing subsequent reliquidation if a challenge is successful, we inferred that "[o]nce liquidation occurs, a subsequent decision by the trial court on the merits of [a] challenge can have no effect on the dumping duties assessed." Id. We therefore concluded that the movant had established a likelihood of irreparable injury because liquidation would eliminate its only available remedy: the reassessment of dumping duties in accordance with a corrected duty rate. Id. at 810, 812.

Subsequent case law has interpreted Zenith to establish a general rule that, at least in the context of judicial review under 19 U.S.C. § 1516a, liquidation moots a party's claims pertaining to the liquidated entries. See, e.g., SKF, 512 F.3d at 1329 ("The Zenith rule renders a court action moot once liquidation occurs."); Yancheng Baolong Biochemical Prods. Co. v. United States, 406 F.3d 1377, 1381 (Fed.Cir.2005) ("As this court held in [Zenith], if there is no injunction, liquidation is automatic under 19 U.S.C. § 1516a(e) and § 1516a(c)(1), and any decision on the merits of a liquidation challenge after liquidation has taken place is without effect."); Cambridge Lee Indus., Inc. v. United States, 916 F.2d 1578, 1579 (Fed.Cir.1990) ("Once an entry has been liquidated, the duties paid cannot be recovered even if the payor subsequently prevails in its challenge to the antidumping order.").

In SKF, we vacated a judgment affirming a redetermination of antidumping duties, where the covered entries had been deemed liquidated by operation of law prior to the redetermination. 512 F.3d at 1328, 1332. In that case, the government had consented to the importer's request for an injunction preventing liquidation during the pendency of the action in the trial court. Id. at 1328. However, before the trial court issued the injunction, the importer's entries became subject to 19 U.S.C. § 1504(d), which provides that if Customs has not liquidated an entry within six months of receiving notification that Commerce has completed its annual review, any unliquidated entries will be "treated as having been liquidated" at the amount of duty deposited by the importer at the time of import. 512 F.3d at 1329. We held that under the Zenith rule the deemed liquidation rendered the importer's claims moot in the absence of an injunction. Id. Although the trial court ultimately granted an injunction several months after the deemed liquidation, we concluded that "[t]o allow backdating of an injunction on liquidation that the court granted after the covered entries were liquidated would undermine the rule of Zenith." Id. at 1332.

The government relies on SKF to argue that the trial court violated the rule of Zenith when it backdated Agro Dutch's injunction to eliminate the five-day period before the injunction went into effect. In SKF, however, we emphasized the complete absence of an issued injunction, as the trial court had failed to "decide whether it [would] exercise its equitable power to grant relief" before the liquidation occurred. Id. In the present case, the trial court considered Agro Dutch's motion, determined that relief should be granted, and issued a valid injunction — all before liquidation occurred. Moreover, unlike the deemed liquidation in SKF, Customs affirmatively liquidated Agro Dutch's entries, despite the government's awareness of the injunction.

While the Zenith rule ordinarily renders moot court actions in which liquidation has already occurred, we have acknowledged that there are exceptions to that general rule.¹ For example, mootness does not occur when steps are required to enforce a valid injunction. See Yancheng, 406 F.3d at 1377, 1381-82 (Fed.Cir.2005) (upholding the trial court's contempt ruling against the government when liquidation violated an injunction that remained in effect through appeal); Shinyei, 355 F.3d at 1312 (declining "to find that the statute [imposing finality upon liquidations] as a whole was intended to preclude judicial enforcement of court orders after liquidation"). The...