Am. Drew v. United States

• Decision Date: 08 June 2022
• Docket Number: Slip Op. No. 22-61,Court No. 17-00086
• Citation: 577 F.Supp.3d 1367
• Parties: AMERICAN DREW, et al., Plaintiffs, v. UNITED STATES, et al., Defendants.
• Court: U.S. Court of International Trade

577 F.Supp.3d 1367

AMERICAN DREW, et al., Plaintiffs,

v.UNITED STATES, et al., Defendants.

Slip Op. No. 22-61

Court No. 17-00086

United States Court of International Trade.

June 8, 2022

J. Michael Taylor, King & Spalding LLP, of Washington, D.C., 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 LLC (successor to Stanley Furniture Company, Inc.), T Copeland and Sons, Inc., Tom Seely Furniture LLC, Vaughan Bassett Furniture Company, Inc., Vermont Quality Wood Products, LLC, and Webb Furniture Enterprises, Inc. With him on the submissions were Jeffrey M. Telep, Jeremy M. Bylund, and Neal J. Reynolds.

Beverly A. Farrell, Senior Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of New York, NY, for defendants United States, U.S. Customs and Border Protection, and Chris Magnus, Commissioner of U.S. Customs and Border Protection. With her on the submission were Brian M. Boynton, Principal Deputy Assistant Attorney General, Jeanne E. Davidson, Director, and Justin R. Miller, Attorney-in-Charge, International Trade Field Office. 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, Judge:

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 LLC, T Copeland and Sons, Inc., Tom Seely Furniture LLC, Vaughan Bassett Furniture Company, Inc., Vermont Quality Wood Products, LLC, and Webb Furniture Enterprises, Inc. are U.S. producers of wooden bedroom furniture. Each qualified as an "affected domestic producer" ("ADP") entitled to receive certain cash distributions under the Continued Dumping and Subsidy Offset Act of 2000 (the "CDSOA" or "Byrd Amendment"), 19 U.S.C. § 1675c.¹ Under the Byrd Amendment, ADPs were eligible to receive annual "continued dumping and subsidy offsets" ("distributions") resulting from duties assessed upon imported merchandise under antidumping duty ("AD") and countervailing duty ("CVD") orders.

The CDSOA directed the U.S. Customs Service (now U.S. Customs and Border Protection ("Customs" or "CBP")) to include, in the distributions made to ADPs on a fiscal-year basis, interest the government earned on assessed antidumping and countervailing duties. In this litigation, plaintiffs claim that Customs, while including in their distributions the interest the government earned pursuant to Section 778(a) of the Tariff Act of 1930 ("Tariff Act"), 19 U.S.C. § 1677g, on underpaid antidumping and countervailing duties that was assessed at liquidation (" Section 1677g interest"), unlawfully failed to include interest collected according to Section 505(d) of the Tariff Act, 19 U.S.C. § 1505(d). This interest, which can be identified as "Section 505(d)" interest or "delinquency" interest, accrues if the importer of record or its surety is delinquent in paying the combined amount of all duties, fees, and interest that Customs determined at liquidation to be owing on an entry of imported merchandise.

Before the court is Plaintiffs’ Motion for Judgment on the Agency Record and for Reconsideration (May 24, 2021), ECF No. 81, on behalf of all plaintiffs, pursuant to USCIT Rule 56.1 ("Pls.’ Mot."). In this Opinion and Order, the court rules only on the portion of plaintiffs’ motion that seeks reconsideration of the court's June 1, 2020 Opinion and Order, in which the court, granting in part defendants’ motion to dismiss, ruled that certain of plaintiffs’ claims were time-barred by the two-year statute of limitations. See American Drew v. United States , 44 CIT ––––, ––––, 450 F. Supp. 3d 1378, 1390 (2020) (" American Drew I "). The court denies the motion for reconsideration, reserving its ruling on the remaining issues addressed in plaintiffs’ Rule 56.1 motion.

I. BACKGROUND

Background on this litigation is presented in this court's prior Opinion and Order granting defendants’ motion to dismiss in part and denying it in part. See American Drew I , 44 CIT at ––––, 450 F. Supp. 3d at 1380–82.

II. DISCUSSION

Under USCIT Rule 54(b), "any order or other decision, ... that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties ... may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties’ rights and liabilities." USCIT R. 54(b). Plaintiffs urge reconsideration of American Drew I , which dismissed as untimely under the two-year statute of limitations, 28 U.S.C. § 2636(i), plaintiffs’ claims seeking delinquency interest on CDSOA distributions received prior to April 18, 2015.

In American Drew I , the court held that the "Final Rule" promulgated by Customs to implement the CDSOA, Distribution of Continued Dumping and Subsidy Offset to Affected Domestic Producers , 66 Fed. Reg. 48,546 (Customs Serv. Sept. 21, 2001) (codified at 19 C.F.R. §§ 159.61 – 159.64, 178.2 (2002) ) ("Final Rule ") placed interested parties on notice of a decision by Customs with respect to the type of interest Customs would deposit into each "special account," where it would be available for distribution to ADPs. American Drew I , 44 CIT at ––––, 450 F. Supp. 3d at 1385 ("The court concludes that 19 C.F.R. § 159.64(e), when read together with the preamble language that pertained to it, provided adequate notice of the agency's decision that any type of interest other than Section 1677g interest would not be deposited into the special accounts for distribution to ADPs."). As a result, the court held, the only timely claims of the plaintiffs were those relating to the application of the Final Rule to their individual CDSOA distributions occurring during the two years prior to their instituting their actions. Id. , 44 CIT at ––––, 450 F. Supp. 3d at 1389 ("Therefore, those of their claims that accrued during the two-year period prior to commencement of their actions on April 18, 2017 are timely, and those of their claims that accrued prior to that two-year period are not.") As a consequence, the court dismissed as time-barred plaintiffs’ claims seeking delinquency interest on any CDSOA distributions received prior to April 18, 2015.

The Final Rule, in section 159.64(e), provided, specifically, that "statutory interest charged on antidumping and countervailing duties at liquidation will be transferred to the Special Account, when collected from the importer." Final Rule , 66 Fed. Reg. at 48,554 (emphasis added). In American Drew I , the court reasoned that "[t]he reference to statutory interest ‘charged’ on antidumping and countervailing duties ‘at liquidation’ connotes an intent to deposit into the special accounts interest accrued under 19 U.S.C. § 1677g, which governs interest on underpaid (and overpaid) antidumping and countervailing duties that accrues up until liquidation." American Drew I , 44 CIT at ––––, 450 F. Supp. 3d at 1385. The preamble to the regulation clarified that "only interest charged on antidumping and countervailing duty funds themselves, pursuant to the express authority in 19 U.S.C. § 1677g, will be transferred to the special accounts and be made available for distribution under the CDSOA." Final Rule , 66 Fed. Reg. at 48,550. Because interest accrues according to 19 U.S.C. § 1677g from the time of required deposit of estimated antidumping or countervailing duties up until the liquidation of the entry, but not afterward, the court viewed the regulation, as clarified by the preamble, to constitute definitive notice to interested parties that they would be receiving interest that accrued in favor of the government under 19 U.S.C. § 1677g and would not be receiving delinquency interest under 19 U.S.C. § 1505(d).

In moving for reconsideration of the court's ruling in American Drew I , plaintiffs argue that the court should reverse its decision to dismiss the earlier claims. Pls.’ Mot. 50–57. Plaintiffs argue that the "recently submitted Administrative Record Supplement now confirms that CBP is playing an interpretive shell game," id. at 50, and that "it appears that CBP changed its mind about whether to distribute delinquency interest, and reflected that decision (if at all) with the word ‘only’ in the preamble to the final rule," id. at 50–51; see Reply in Supp. of Pls.’ Rule 56.1 Mot. for J. on the Admin. R. and for Recons. 33 (Oct. 8, 2021), ECF No. 92 ("Pls.’ Reply") ("Agencies are afforded a presumption of regularity, and Plaintiffs were not required to assume that CBP would impermissibly use a preamble to change the regulation from one that is consistent with the CDSOA to one that contradicts it.") According to plaintiffs:

This one word, which was tucked away in a non-binding discussion of another issue, was insufficient to give Plaintiffs notice of CBP's change in position to withhold delinquency interest (which the agency also never explained in its final rule). Plaintiffs therefore could not have challenged that decision until they obtained such notice in 2016.

Pls.’ Mot. 51. Contending that "[t]he proposed and final rules are materially the same," plaintiffs argue that "CBP's reading hinges entirely on the word ‘only,’ which appears only in the preamble to the...