Bomont Industries v. United States

• Decision Date: 17 June 1986
• Docket Number: Court No. 86-05-00557.
• Citation: 10 CIT 431,638 F. Supp. 1334
• Parties: BOMONT INDUSTRIES, Plaintiff, v. UNITED STATES, Defendant, and Asahi Chemical Industry Co., Ltd., Intervenor-Defendant.
• Court: U.S. Court of International Trade

638 F. Supp. 1334

10 CIT 431

BOMONT INDUSTRIES, Plaintiff, v. UNITED STATES, Defendant and Asahi Chemical Industry Co., Ltd., Intervenor-Defendant.

Court No. 86-05-00557.

United States Court of International Trade.

June 17, 1986.

Stewart and Stewart, Eugene L. Stewart, Terence P. Stewart and Mary Tuck Staley, Washington, D.C., for the plaintiff.

Richard K. Willard, Asst. Atty. Gen.; David M. Cohen, Director, Commercial Litigation Branch, Civ. Div., U.S. Dept. of Justice, Sheila N. Ziff, Washington, D.C., for the defendant.

Barnes, Richardson & Colburn, James S. O'Kelly and Gerard P. Burke, Jr., New York City, for the intervenor-defendant.

AQUILINO, Judge:

Two producers of impression fabric from man-made fiber in Japan, namely, Asahi Chemical Industry Co., Ltd. and Shirasaki Tape Co., Ltd., were excepted from an affirmative dumping determination in 1978. See 43 Fed.Reg. 22,344 (May 25, 1978). The plaintiff domestic producer of nylon impression fabric and another company eventually filed a dumping petition with the Department of Commerce limited to sales from Asahi and Shirasaki. Thereafter, the International Trade Administration ("ITA") issued a final determination that "nylon impression fabric from Japan is not being, nor is likely to be, sold in the United States at less than fair value, as provided in section 731 of the Tariff Act of 1930, as amended". 51 Fed.Reg. 15,816 (April 28, 1986).

This action seeks judicial review of that determination pursuant to subsections (A)(i)(I) and (B)(ii) of 19 U.S.C. § 1516a(a)(2) and 28 U.S.C. § 1581(c).

Plaintiff's application for a temporary restraining order was denied after all parties were heard in open court. Thereafter, a hearing was held on plaintiff's application for a preliminary injunction. The proposed order submitted in conjunction with that application would enjoin liquidation of any nylon impression fabric produced by Asahi and Shirasaki and entered during the period April 28, 1986 through final resolution of this action by the court.

I

At both hearings, counsel for the defendant argued that any suspension of liquidation of entries during the pendency of this action would be "meaningless".¹ This position is articulated further in defendant's memorandum of law as follows:

The suggestion that a favorable outcome for plaintiff in this action could possibly affect entries covered by a preliminary injunction suspending liquidation and could result in the retroactive assessment of antidumping duties on those entries betrays plaintiff's misunderstanding of the antidumping law. It is patent from the statutory scheme that the merchandise covered by the involved entries will enter the commerce of this country free of antidumping duties and beyond the reach of this Court, regardless of the outcome of this action or the issuance of a preliminary injunction. The reach of the antidumping law is prospective only, not retroactive, except in the limited situations where provisional measures (suspension of liquidation and imposition of provisional antidumping duties or a security deposit equal to the amount of the provisionally estimated antidumping duties) are allowed. Under the statutory scheme, these provisional measures may be imposed only after the publication of a preliminary affirmative determination by Commerce in an antidumping or countervailing duty proceeding.²

* * * * * *

... Enjoining liquidation of the involved entries upon plaintiff's application would be a futile exercise as those entries are beyond the reach of this antidumping litigation and of this Court and must ultimately be liquidated free of antidumping duties. Under these circumstances, issuance of a preliminary injunction would be contrary to the statutory scheme, the legislative intent, and an abuse of discretion.³

This position, which concentrates on the roles and responsibilities of the ITA and International Trade Commission ("ITC") for the imposition of antidumping duties under Subtitle B of Title I of the Trade Agreements Act of 1979, 93 Stat. 162-75, is clearly erroneous. Title X of that same statute provides for judicial review of the exercise of those roles and responsibilities. Section 1001(c)(2) thereof, now 19 U.S.C. § 1516a(c)(2), as amended, states that this Court of International Trade

may enjoin the liquidation of some or all entries of merchandise covered by a determination of the ... administering authority, or the Commission, upon a request by an interested party for such relief and a proper showing that the requested relief should be granted under the circumstances.⁴

Unless such liquidation is enjoined, subsection (c)(1) mandates that all entries be liquidated in accordance with the administrative determination. On the other hand, 19 U.S.C. § 1516a(e) provides:

Liquidation in accordance with final decision — If the cause of action is sustained in whole or in part by a decision of the United States Court of International Trade or of the United States Court of Appeals for the Federal Circuit —

(1) entries of merchandise of the character covered by the published determination of the Secretary, the administering authority, or the Commission, which is entered, or withdrawn from warehouse, for consumption after the date of publication in the Federal Register by the Secretary or the administering authority of a notice of the court decision, and

(2) entries, the liquidation of which was enjoined under subsection (c)(2) of this section,

shall be liquidated in accordance with the final court decision in the action. Such notice of the court decision shall be published within ten days from the date of the issuance of the court decision. emphasis added

The Court of Appeals for the Federal Circuit reaffirmed this clear-cut statutory rule in Melamine Chemicals, Inc. v. United States, 732 F.2d 924, 934 (Fed.Cir.1984).⁵ See also Smith-Corona Group, Consumer Products Division, SCM Corporation v. United States, 1 CIT 89, 96-99, 507 F.Supp. 1015, 1021-23 (1980).

II

The Report of the Committee on Ways and Means of the House of Representatives recognized that subsection (c)(2) made a "major change" in the law. H.R. Rep. 317, 96th Cong., 1st Sess. 182 (1979). But that report also stated that the change is not to be construed as granting the court authority to exercise the power in all situations, only "where appropriate". Id. Indeed, subsection (c)(2) codified the traditional judicial criteria for ruling on an application for a preliminary injunction as follows:

... In ruling on a request for ... injunctive relief, the court shall consider, among other factors, whether —

(A) the party filing the action is likely to prevail on the merits,

(B) the party filing the action would be irreparably harmed if liquidation of some or all of the entries is not enjoined,

(C) the public interest would best be served if liquidation is enjoined, and

(D) the harm to the party filing the action would be greater if liquidation of some or all of the entries is not enjoined than the harm to other persons if liquidation of some or all of the entries is enjoined.⁶

In other words, while Congress clearly understood that, in the absence of a preliminary injunction of the kind sought herein, entries "will escape assessment of dumping duties"⁷, it was unwilling to change the law other than where "extraordinary circumstances"⁸ exist which still require analysis of the foregoing criteria for injunctive relief.

Whether the analysis follows the order of those criteria as set forth in the statute, or as articulated in the Federal Circuit or formulated in other jurisdictions⁹, a crucial requirement is irreparable harm to the applicant. In Zenith Radio Corporation v. United States, 710 F.2d 806, 810 (Fed.Cir. 1983), the court concluded

that liquidation would ... 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 and the existing finding of injury to the industry underlying T.D. 71-76, we conclude that the consequences of liquidation do constitute irreparable injury.

As indicated, that case arose out of a review of a fixed period pursuant to section 751 of the 1979 act, 19 U.S.C. § 1675.

In an action such as the one at bar, liquidation of past entries at the proper rate of duty is not the "only remedy available". Rather, this proceeding can affect future entries. Thus, the court in American Spring Wire Corp. v. United States, 7 CIT 2, 578 F.Supp. 1405 (1984), concluded that the Zenith decision did not create an irrebutable presumption of irreparable harm. That is, an applicant for an injunction suspending liquidations during judicial review of a negative administrative dumping determination must prove irreparable injury along with the other requirements for such extraordinary relief. See, e.g., Timken Company v. United States, 6 CIT 75, 79, 569 F.Supp. 65, 69 (1983).¹⁰

At the hearings herein, plaintiff's attorneys, who were also counsel of record in both American Spring Wire and Timken, attempted to persuade the court that failure to suspend liquidation of Asahi and Shirasaki entries during the term of this action will cause their client irreparable harm. Despite an able presentation, they failed to bear their burden in this regard.

The evidence indicates that the plaintiff is having difficulty competing in the marketplace. It sustained a net loss in 1984, then achieved an operating profit for 1985; for the first four months of this year, the company experienced a drop in sales and a net...