Am. Drew v. United States

• Decision Date: 01 June 2020
• Docket Number: Slip Op. No. 20-76,Court No. 17-00086
• Citation: 450 F.Supp.3d 1378
• Parties: AMERICAN DREW, et al., Plaintiffs, v. UNITED STATES, et al., Defendant.
• Court: U.S. Court of International Trade

450 F.Supp.3d 1378

AMERICAN DREW, et al., Plaintiffs,

v.UNITED STATES, et al., Defendant.

Slip Op. No. 20-76

Court No. 17-00086

United States Court of International Trade.

June 1, 2020

J. Michael Taylor, King & Spalding LLP, of Washington D.C., argued for plaintiffs American Drew; American of Martinsville; Basset Furniture Industries Inc.; Carolina Furniture Works, Inc.; Century Furniture LLC d/b/a Century Furniture Industries; Harden Furniture Inc.; Johnston Tombigbee Furniture Mfg. Co.; Kincaid Furniture Company Inc.; L & J G Stickley, Inc.; La-Z-Boy Casegoods, Inc.; Lea Industries; MJ Wood Products, Inc.; Mobel Inc.; Perdues Inc. d/b/a Perdue Woodworks Inc.; Sandberg Furniture Mfg. Co., Inc.; Stanley Furniture Company, Inc.; T Copeland and Sons, Inc.; Tom Seely Furniture LLC; Vaughan Bassett Furniture Company, Inc.; Vermont Quality Wood Products, LLC; Webb Furniture Enterprises, Inc. With him on the briefs were Jeffrey M. Telep and Neal J. Reynolds.

Beverly A. Farrell, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of New York, NY. argued for defendants United States, Kevin K. McAleenan, Acting Commissioner of Customs, and U.S. Customs and Border Protection. With her on the briefs were Joseph H. Hunt, Assistant Attorney General, Jeanne E. Davidson, Director and Amy M. Rubin, Assistant Director. Of counsel were Suzanna Hartzell-Ballard and Jessica Plew, Office of Assistant Chief Counsel, U.S. Customs and Border Protection, of Indianapolis, Indiana.

OPINION AND ORDER

Stanceu, Chief Judge:

Plaintiffs contest a decision of U.S. Customs and Border Protection ("Customs" or "CBP") under which Customs did not include a type of interest ("delinquency interest") in monetary distributions Customs made to them under the Continued Dumping and Subsidy Offset Act of 2000 ("CDSOA" or "Byrd Amendment").

Before the court is defendants’ motion to dismiss this action under USCIT Rule 12(b)(6) for failure to state a claim on which relief can be granted, arguing that the action is untimely under the applicable two-year statute of limitations. The court grants defendants’ motion in part and denies it in part.

I. BACKGROUND

The CDSOA, 19 U.S.C. § 1675c,¹ enacted in October 2000 and repealed in February 2006,² amended the Tariff Act of 1930 ("Tariff Act") to direct Customs to distribute assessed antidumping and countervailing duties to "affected domestic producers" ("ADPs"), on an annual basis, as compensation for certain qualifying expenditures. An "affected domestic producer" is a U.S. "manufacturer, producer, farmer, rancher, or worker representative" that was a "petitioner or interested party in support of a petition with respect to which an antidumping duty ... or countervailing duty order was entered." 19 U.S.C. § 1675c(b)(1).

Under the CDSOA, domestic parties who qualified as petitioners or parties in support of a petition were identified initially by the U.S. International Trade Commission, which then provided a list of these parties to Customs. Id. § 1675c(d)(1). Customs was required to publish annually a notice of intent to distribute CDSOA funds for the relevant fiscal year that included the current list and invited submissions of certifications of eligibility, each of which was required to include, inter alia , a certification of qualifying expenditures. Id. § 1675c(d)(2). Distributions for a fiscal year were required to occur within 60 days following the first day of the succeeding fiscal year. See id. § 1675c(d)(3).

A. Plaintiffs in this Action

The 20 plaintiffs in this action are ADPs (or successors to ADPs) that received CDSOA distributions under the antidumping duty order on wooden bedroom furniture from the People's Republic of China (the "Order"). Compl. ¶ 3 (Apr. 18, 2017), ECF No. 5; see Notice of Amended Final Determination of Sales at Less Than Fair Value and Antidumping Duty Order; Wooden Bedroom Furniture From the People's Republic of China , 70 Fed. Reg 329 (Int'l Trade Admin. Jan. 4, 2005). Plaintiffs first became ADPs under the CDSOA in 2005 and 2006; Fiscal Year 2006 was the most recent fiscal year in which any plaintiff first was an ADP and received distributions.³

B. Interest under the CDSOA

In administering the CDSOA, Customs treated differently two types of interest that pertain to antidumping and countervailing duties: pre-liquidation interest on under-deposited antidumping and countervailing duties that accrued pursuant to 19 U.S.C. § 1677g (" Section 1677g interest")⁴ and post-liquidation interest that accrued pursuant to 19 U.S.C. § 1505(d) (the aforementioned "delinquency interest," also identified herein as " Section 1505(d) interest").⁵ Section 1677g interest applies only to underpayments (and overpayments) of antidumping and countervailing duties; Section 1505(d) interest applies to duties, taxes, and fees generally.⁶ During the period for which plaintiffs claim entitlement to delinquency interest, Customs included Section 1677g interest, but not Section 1505(d) interest, in CDSOA distributions made to ADPs, including plaintiffs.

Section 1677g interest arises from the process of assessing antidumping or countervailing duties. An importer entering goods subject to an antidumping or countervailing duty order deposits estimated antidumping or countervailing duties, with such estimate typically based on the duty rate from the investigation or most recently completed annual review of the order. See 19 C.F.R. § 141.101 -03. When the actual amount of antidumping or countervailing duties owed on the entry is assessed at liquidation, the importer is billed for any underpayment and the accrued Section 1677g interest on the underpayment. See 19 U.S.C. § 1677g(a).

Section 1505(d) interest, or delinquency interest, arises after Customs liquidates an entry. An importer is allowed thirty days to pay the full amount owed as calculated at liquidation, which will include any ordinary duties and special duties (including antidumping and countervailing duties), taxes, fees, and interest, including any Section 1677g interest on under-deposited antidumping and countervailing duties. 19 U.S.C. § 1505(b). Delinquency interest begins to accrue if any of that full amount remains unpaid after 30 days and continues to accrue at each 30-day interval thereafter. Id. § 1505(d).

Prior to 2016, Customs deposited accrued Section 1677g interest, but not Section 1505(d) interest, into the special accounts for distributions made to ADPs under the CDSOA. Defs.’ Mot. to Dismiss 4 (Sept. 12, 2018), ECF No. 19 ("Defs.’ Mot."). In 2016, Congress required specified types of interest received after September 31, 2014 from a bond or a surety on a bond, including Section 1505(d) interest, to be deposited in the special accounts for CDSOA distributions made on or after the date of enactment, February 24, 2016. Trade Facilitation and Trade Enforcement Act of 2015, Pub. L. No. 114-125, § 605, 130 Stat. 122, 187–88 (2016) ("TFTEA"). Because the TFTEA provision was effective upon enactment, id. § 605(a), CDSOA distributions for Fiscal Year 2016 were the first distributions affected by the change.

C. Proceedings in the Court of International Trade

Plaintiffs commenced this action on April 18, 2017. Summons, ECF No. 1; Compl. Defendants filed a motion to dismiss on September 12, 2018. Defs.’ Mot. Plaintiffs filed a memorandum in opposition on November 7, 2018. Pls.’ Mem. in Opp'n to Defs.’ Mot. to Dismiss, ECF No. 25 ("Pls.’ Mem."). Defendants replied in support of their motion on November 28, 2018. Defs.’ Reply Mem. in Further Supp. Of Defs.’ Mot. to Dismiss, ECF No. 26. The court held oral argument on May 2, 2019.

On July 24, 2019, the court ordered supplemental briefing on two issues: (1) whether the Customs regulation implementing the CDSOA provided adequate notice of a decision not to distribute delinquency interest to ADPs, and (2) under an assumption that Customs provided adequate notice, the time at which plaintiffs’ claims accrued. Order, ECF No. 47.

In response to the court's inquiries, plaintiffs filed a supplemental brief in opposition to the motion to dismiss on August 23, 2019. Pls.’ Suppl. Brief Responding to the Court's Questions and in Opp'n to Defs.’ Mot. to Dismiss, ECF No. 50 ("Pls.’ Suppl. Br."). Defendants filed a response on October 2, 2019. Defs.’ Resp. to Pls.’ Suppl. Mem. of Law and in Further Supp. of Defs.’ Mot. to Dismiss, ECF No. 54.

II. DISCUSSION

A. Subject Matter Jurisdiction

The court exercises subject matter jurisdiction according to section 201 of the Customs Courts Act of 1980, 28 U.S.C. § 1581(i)(2), (i)(4). Paragraph (i)(2) of § 1581 grants this Court jurisdiction of a civil action "that arises out of any law of the United States providing for ... tariffs, duties, fees, or other taxes on the importation of merchandise for reasons other than the raising of revenue." Id. § 1581(i)(2). Paragraph (i)(4) grants this Court jurisdiction of a civil action arising "out of any law of the United States providing for ... administration and enforcement with respect to the matters referred to in paragraphs (1)–(3) of this subsection." Id. § 1581(i)(4).

B. Rule 12(b)(6) Motions

In deciding a motion to dismiss for failure to state a claim upon which relief can be granted, the court assumes all factual allegations in the complaint to be true (even if doubtful in fact) and draws all reasonable inferences in a plaintiff's favor. Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (" Twombly "); Gould, Inc. v. United States , 935 F.2d 1271, 1274 (Fed. Cir. 1991). USCIT Rule 8(a)(2) requires that a complaint contain "a short and plain statement of the claim showing that the pleader is entitled to relief." A complaint need not contain detailed factual allegations, but it must plead facts sufficient "to raise a right to relief above the speculative level." Twombly , 550 U.S. at 555, 127 S.Ct. 1955.

C. Plaintiffs’ Claims

Plaintiffs claim that CBP's practice of not...