Almond Bros. Lumber Co. v. United States

• Citation: 721 F.3d 1320
• Decision Date: 01 July 2013
• Docket Number: No. 2012–1393.,2012–1393.
• Parties: ALMOND BROS. LUMBER CO., Bighorn Lumber Company, Blue Mountain Lumber Products, LLC, CF Industries, Inc. (Formerly Known as Clearwater Forest Industries), Collins Pine Company, Cody Lumber, Inc., D.R. Johnson Lumber Co., Empire Lumber Co., F.H. Stoltze Land & Lumber Company, Grayson Lumber Corp., Hampton Resources, Inc., Harwood Products Inc., Hedstrom Lumber Company, Inc., Idaho Veneer Company, Intermountain Resources, LLC, Mountain Valley Lumber Co., Inc., Neiman Sawmills, Inc., Northern Lights Timber & Lumber, Inc., Ochoco Lumber Company, Pinecrest Lumber Co. (Division Of Green Bay Packaging, Inc. ), Precision Pine & Timber, Inc., Rosboro, LLC, RSG Forest Products, Inc., Rushmore Forest Products, Inc., Sanders Wood Products, Inc., Spanish Trail Lumber Co., LLC, Sundance Lumber Company, Inc., Thrift Brothers Lumber Co., Inc., Trinity River Lumber Company, Triple T Studs Co., Viking Lumber Company, Inc., Warm Springs Forest Products Industries, Western Cascade Industries LLC, Wrenn Brothers, Inc., Wyoming Sawmills, Inc., and Zip–O–Log Mills, Inc., Plaintiffs–Appellants, and Herbert Lumber Co., Plaintiff, v. UNITED STATES and Ron Kirk, United States Trade Representative, Defendants–Appellees.
• Court: U.S. Court of Appeals — Federal Circuit

721 F.3d 1320

ALMOND BROS. LUMBER CO., Bighorn Lumber Company, Blue Mountain Lumber Products, LLC, CF Industries, Inc. (Formerly Known as Clearwater Forest Industries), Collins Pine Company, Cody Lumber, Inc., D.R. Johnson Lumber Co., Empire Lumber Co., F.H. Stoltze Land & Lumber Company, Grayson Lumber Corp., Hampton Resources, Inc., Harwood Products Inc., Hedstrom Lumber Company, Inc., Idaho Veneer Company, Intermountain Resources, LLC, Mountain Valley Lumber Co., Inc., Neiman Sawmills, Inc., Northern Lights Timber & Lumber, Inc., Ochoco Lumber Company, Pinecrest Lumber Co. (Division Of Green Bay Packaging, Inc. ), Precision Pine & Timber, Inc., Rosboro, LLC, RSG Forest Products, Inc., Rushmore Forest Products, Inc., Sanders Wood Products, Inc., Spanish Trail Lumber Co., LLC, Sundance Lumber Company, Inc., Thrift Brothers Lumber Co., Inc., Trinity River Lumber Company, Triple T Studs Co., Viking Lumber Company, Inc., Warm Springs Forest Products Industries, Western Cascade Industries LLC, Wrenn Brothers, Inc., Wyoming Sawmills, Inc., and Zip–O–Log Mills, Inc., Plaintiffs–Appellants,andHerbert Lumber Co., Plaintiff,

v.UNITED STATES and Ron Kirk, United States Trade Representative, Defendants–Appellees.

No. 2012–1393.

United States Court of Appeals, Federal Circuit.

July 1, 2013.

Alan I. Saltman, Smith, Currie & Hancock, LLP, of Washington, DC, argued for plaintiffs-appellants. With him on the brief was Alan F. Holmer.

David S. Silverbrand, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendants-appellees. With him on the brief were Stuart F. Delery, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Franklin E. White, Jr., Assistant Director.

Before MOORE, LINN, and REYNA, Circuit Judges.

REYNA, Circuit Judge.

Plaintiffs (collectively, “Almond”) are domestic producers of softwood lumber products. Almond initiated this action in the Court of International Trade (“Trade Court”), alleging that United States Trade Representative (“USTR”) exceeded its authority by agreeing to certain terms in the Softwood Lumber Agreement it entered into with Canada in 2006. The Trade Court dismissed counts 2, 3, and 4 of the complaint for failure to state a claim and, alternatively, dismissed count 2 as a non-justiciable political question. ¹Almond Bros. Lumber Co. v. United States, No. 08–00036, ––– F.Supp.2d ––––, 2012 WL 1372173 (Ct. Int'l Trade April 19, 2012) (“ Dismissal Order ”). Because Almond failed to allege facts to make plausible any of its claims for relief, we affirm.

Background

I

For over two decades, members of the United States softwood lumber industry have accused Canada of unfairly subsidizing ² the production of softwood lumber. These accusations have spawned an enormous amount of litigation. See Almond Bros. Lumber Co. v. United States, 651 F.3d 1343 (Fed.Cir.2011) (“ Almond III ”).³ Over the years, the United States and Canada have entered into a number of agreements intended to resolve this dispute. See id. at 1345–48, 1351.

The history of this case begins in 1986, when the Coalition for Fair Lumber Imports (“Coalition”), “an association made up of many, but not all, domestic softwood lumber producers, filed petitions with the Department of Commerce (‘Commerce’) and the International Trade Commission (‘ITC’) alleging that” Canada was subsidizing its softwood lumber exports. Id. at 1344–45. Commerce investigated and issued a “preliminary finding that Canada was subsidizing its softwood lumber exports.” Id. at 1345. This dispute was resolved by a memorandum of understanding (the “1986 MOU”) between the United States and Canada that became the first of several such agreements.

In September 1991, Canada terminated the 1986 MOU. Id. Shortly thereafter, Commerce initiated a countervailing duty investigation, again determining that Canada was subsidizing softwood lumber exports. Id. This initiated a new round of litigation, which the United States and Canada eventually settled by entering into a new settlement agreement (“the 1996 SLA”). Id. at 1345–46. In return for Canada's agreement to impose certain export taxes on certain softwood lumber exports to the United States, the United States agreed not to self-initiate any countervailing duty investigations and to dismiss any countervailing duty petitions that were filed on softwood lumber from Canada. Id. at 1346.

The 1996 SLA expired on March 31, 2001, and in April 2001, the Coalition filed new petitions with Commerce and the ITC seeking the imposition of both antidumping and countervailing duty orders. Id. This eventually resulted in the entry of an antidumping duty order and a countervailing duty order. Id. at 1346–47. A new round of litigations between the United States and Canada ensued, with Canada appealing these orders to various fora. Id. at 1347. This exhaustive litigation concluded with the United States and Canada entering into a third agreement: the 2006 Softwood Lumber Agreement (“2006 SLA”).

Under the 2006 SLA, Commerce agreed to revoke the outstanding antidumping and countervailing duty orders and to refund duties collected on Canadian softwood lumber after May 22, 2002. Id. At the time of the agreement, these duties amounted to approximately $5 billion. In return, Canada agreed that for a period of seven years after the 2006 SLA's effective date, it would impose export taxes on certain softwood lumber exported to the United States. Id. Paragraphs 4 and 5 of Annex 2C to the 2006 SLA required Canada to distribute $1 billion to various groups in the United States:

4. By the Effective Date, the United States shall provide Canada or its agent with information identifying separate accounts whose beneficiaries are respectively:

(a) the members of the Coalition for Fair Lumber Imports;

(b) a binational industry council described in Annex 13; and

(c) meritorious initiatives in the United States identified by the United States in consultation with Canada as described in Article XIII(A).

5. Canada or its agent shall distribute $US 1 billion pursuant to the Irrevocable Directions to Pay to the accounts referred to in paragraph 4 in the following amounts: $US 500 million to the members of the Coalition for Fair Lumber Imports, $US 50 million to the binational industry council, and $US 450 million for meritorious initiatives.

Appellant's Br. Addendum 61 (“Distribution Term”). Notably, half of the $1 billion was to be distributed by Canada to a fund benefitting members of the Coalition. Although the 2006 SLA does not state its purpose, the USTR, Canada's Minister of International Trade, and Canada's Industry Minister announced in an April 27, 2006, press release that the 2006 SLA was aimed at “resolving the softwood lumber dispute, including revocation of orders, refund of deposits, imposition of an export measure in Canada and addressing long term policy reform.” Almond III, 651 F.3d at 1347 (internal quotation marks omitted).

II

Plaintiffs are domestic softwood lumber producers who are not members of the Coalition and who therefore do not stand to receive any of the $500 million set aside by the Distribution Term to benefit Coalition members. Plaintiffs brought suit in the Trade Court against the United States and the USTR, asserting three theories under which they believed the Distribution Term negotiated by the USTR was contrary to law. Count 2 alleges that by agreeing to a Distribution Term which did not include all members of the domestic softwood lumber industry, the USTR acted outside of its statutory authority. Count 3 alleges that the Distribution Term violates equal protection. Count 4 alleges that the USTR wrongfully delegated the function of determining how much each affected domestic producer should receive to the Coalition, a non-governmental entity.

The Trade Court initially dismissed the complaint for lack of jurisdiction, Almond Bros. Lumber Co. v. United States, No. 08–00036, ––– F.Supp.2d ––––, 2009 WL 1397182 (Ct. Int'l Trade May 20, 2009), and denied reconsideration, Almond Bros. Lumber Co. v. United States, No. 08–000362010, –––F.Supp.2d ––––, 2010 WL 1409656 (Ct. Int'l Trade April 8, 2010). This court reversed, holding that the Trade Court had jurisdiction under 28 U.S.C. § 1581(i). Almond III, 651 F.3d at 1351.

On remand, the Trade Court dismissed all counts. The court concluded that count 2 failed to state a claim because 19 U.S.C. § 2411(c)(4) did not prohibit the USTR from negotiating the Distribution Term. Dismissal Order, 2012 WL 1372173, at *12. It concluded that count 3 failed to state a claim because the Distribution Term “was rationally related to the legitimate government purpose of ending the undesirable trade practices of the Canadian softwood lumber industry.” Id. at *14. Finally, it concluded that count 4 failed to state a claim because Almond had “failed to identify a governmental function that was impermissibly delegated,” id. at *16, and because Almond lacked standing to object to the Coalition's allocation of funds among its members. Id. at *17.

Plaintiffs timely appealed. This court has jurisdiction under 28 U.S.C. § 1295(a)(5).

Discussion

We review the Trade Court's dismissal of a claim for failure to state a claim de novo. See Sioux Honey Ass'n v. Hartford Fire Ins. Co., 672 F.3d 1041, 1049 (Fed.Cir.2012). To survive a motion to dismiss for failure to state a claim, “[f]actual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555–56, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (footnote omitted) (citations omitted). To the extent that the Trade Court based its dismissal on standing, our review of that issue is also de novo. Canadian Lumber Trade Alliance v. United States, 517 F.3d 1319, 1330 (Fed.Cir.2008).

I

Count 2 of Almond's...