GMBH v. United States, CIVIL ACTION NO. 4:18-2061

CourtUnited States District Courts. 5th Circuit. United States District Courts. 5th Circuit. Southern District of Texas
Docket NumberCIVIL ACTION NO. 4:18-2061
Decision Date02 July 2018


CIVIL ACTION NO. 4:18-2061


July 2, 2018


This case is before the Court on the Complaint and Application for Temporary Restraining Order, Temporary Injunction and Permanent Injunction [Doc. # 1], and Brief Regarding Standard of Review in Support of Temporary Restraining Order ("TRO") [Doc. # 7] filed by Plaintiff Andritz Sundwig, GmbH ("Andritz"). The United States filed an Opposition [Doc. # 8], and Andritz filed a Reply [Doc. # 11].

Also pending is the Motion to Modify Court's Status Quo Order [Doc. # 9]. The United States has filed a Response [Doc. # 12], and Andritz filed a Reply [Doc. # 19].

The Court has carefully reviewed the parties' briefing, and conducted an evidentiary hearing on Andritz's request for injunctive relief. Based on its review of the full record and the applicable legal authorities, the Court denies both of Plaintiff's motions.

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Andritz is a German company. Andritz sold two cold rolling steel mills (the "Cargo") to Nucor Corporation ("Nucor") for installation in its facility in Arkansas. The Cargo was packaged in 439 crates of widely varying shapes and sizes that were subject to two separate Bills of Lading, one ending in H01 (the "H01 Crates") and the other ending in H02 (the "H02 Crates"). The Cargo was shipped from Germany to Houston on board the vessel M/V Nordic Svalbard. Portions of the crates were constructed of solid wood, rather than manufactured wood (such as plywood) or particle board. The tops of the crates were covered with water impermeable plastic.

The Cargo arrived at the Port of Houston on Friday, June 8, 2018. Much of the Cargo was unloaded at the Manchester Terminal and scattered throughout the property. The following afternoon, June 9, 2018, United States Customs and Border Protection ("CBP") Inspector John Lopez saw Cargo that was packaged in solid wood that was marked with a "heat treatment" stamp. Lopez was concerned because, based on his training and experience, he knew that heat treatment can be ineffective for certain pests.

Lopez chiseled into one of the pieces of wood packaging material ("WPM") for the H01 Crates, and he found live insect larvae inside. Based on his training and experience, he believed that the insects were siricidae, or wood wasps. He removed two of the insects, placed them into a container, sealed the container, and sent it to the

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CBP Houston Laboratory at the George Bush Intercontinental Airport for identification.

Having found insects that he believed to be siricidae in the H01 Crates, Lopez examined the H02 Crates. The H02 Crates also contained live insects. Lopez removed one from a piece of WPM of the H02 Crates, but he could not determine whether it was a siricidae. Lopez sealed this insect in a vial and sent it to the CBP Houston Laboratory for identification.

Brian Petty, a CBP Houston Laboratory Identifier, received the samples the next day, June 10, 2018. He confirmed that the insects in the H01 Crates were siricidae. The insect from the H02 Crates was not.

Based on the presence on June 9, 2018, of what he correctly believed to be siricidae in the H01 Crates, in the early morning on June 10, Lopez issued Emergency Action Notices ("EAN") for safeguarding the entire Cargo and packaging.1 This and the other EANs in this case were issued on behalf of the the United States Department of Agriculture ("USDA"), Animal Plant Health Inspection Service ("APHIS"), Plant Protection and Quarantine ("PPQ"). See, e.g., EAN, Administrative Record ("AR"),

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001. Each EAN notified the shipper that the "cargo and [WPM] must be tarped immediately by a USDA compliant firm as a safeguarding measure to prevent the spread of live pests." See EAN Serial No. 96029 (AR-001); EAN Serial No. 96030 (AR-002). Lopez did not perform any analysis regarding the availability or feasibility of less drastic alternatives but, at this point, the only action required was for the shipper to tarp the Cargo as a safeguarding measure.2

On June 11, 2018, after the insects were confirmed to be siricidae, CBP issued an EAN requiring the re-exportation within seven days of the WPM in the H01 Crates. See EAN Serial No. 96081 (AR-003). The EAN provided that the "cargo and wood packing imported under bill of lading [H01] has been refused entry and must be exported immediately from the Port of Houston." Id. The EAN required that the Cargo and shipping material must be "loaded in a sealed hold and cannot be opened while in US waters/ports." Id. The EAN provided that the Cargo could not be "loaded or moved until all conditions" of the EAN have been satisfied and approved

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by CBP. Id. This EAN again required that the Cargo be tarped and quarantined as required by the prior EAN, Serial No. 96029, and provided that only the USDA compliant fumigator could enter the safeguarding area. Id.

On June 13, 2018, CBP Agriculture Specialist Howard Adams inspected the Cargo. At that time, the Cargo was located in multiple places in the Manchester Terminal. Adams looked for infestation and found exit holes and excrement from insects in the WPM of the H02 Crates. Adams also examined the WPM on the bottom of a crate set on a pallet, and found live insects and larvae in the solid wood. He placed the live insects into a vial, and submitted them to CBP's Houston Laboratory for inspection. These insects from the H02 Crates were later identified as siricidae.

Adams also observed that some of the tarping of the Cargo was not compliant with the earlier EANs; those tarps did not cover the Cargo completely and/or were not secured at the bottom. Adams issued a second EAN for the H02 Crates, again requiring that the H02 Crates be properly tarped as a safeguarding measure. See EAN Serial No. 96733 (AR-005).

On June 14, 2018, CBP issued a new EAN for the H02 Crates. See EAN Serial No. 96842 (AR-006). The EAN contained the same requirements for the H02 Crates as EAN Serial No. 96081 contained for the H01 Crates.

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On June 15, 2018, Andritz filed a Protest challenging the EANs and requesting permission to separate the Cargo from the infested WPM. See Protest, Exh. 2 to Complaint [Doc. # 1]. CBP, through the Assistant Port Director, responded that, after consultation with the USDA, it was determined that separation presented a pest risk. See Communication from Assistant Port Director to Andritz, Exh. 1 to Complaint.

On June 17, 2018, Andritz filed a Complaint and Application for Temporary Restraining Order, Temporary Injunction and Permanent Injunction in the United States Court of International Trade. In that case, Andritz challenged the EANs issued on and before June 13, 2018. The case in the Court of International Trade was later transferred to the Southern District of Texas.

On June 18, 2018, CBP issued new EANs for the crates under both bills of lading. See EAN Serial No. 97291 (AR-008) (for H02 Crates); EAN Serial No. 97296 (AR-009) (for H01 Crates). These EANs required that all Cargo and WPM "be immediately loaded inside the sealed vessel hold(s) of the Nordic Svalbard to prevent further spread of the pests." Id. The shipper was required to continue safeguarding the Cargo until given further direction by CBP's Agriculture Specialists.

On June 20, 2018, CBP issued EANs Serial No. 97819 (AR-010) (for the H01 Crates) and Serial No. 97820 (AR-011) (for the H02 Crates) requiring immediate exportation of the Cargo from the Port of Houston (the "Re-Exportation Order"). The

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EANs required that the Cargo be loaded in a sealed hold and not opened while in US waters or ports.

That same day, Andritz filed a separate Complaint and Application for Temporary Restraining Order, Temporary Injunction and Permanent Injunction in this federal district. In an ex parte Order entered at 10:33 p.m. on June 20, 2018, United States Magistrate Judge Dena Palermo scheduled a conference on the Application for Temporary Restraining Order for June 21, 2018, at 10:30 a.m. before the undersigned. See Order [Doc. # 3]. Magistrate Judge Palermo ordered that "the status quo regarding the vessel and cargo must be maintained." See id., ¶ 3.

At the conference on June 21, 2018, this Court scheduled a status conference for June 22, 2018, and ordered that the "status quo remains in effect until a ruling is made on the TRO motion." See Hearing Minutes and Order [Doc. # 4]. The next day, on June 22, 2018, at a second conference, the Court scheduled an evidentiary hearing for June 25, 2018. See Hearing Minutes and Order [Doc. # 5].

The parties and the Court agreed that the June 25, 2018, hearing would be a preliminary injunction hearing. The Court asked the United States to present its evidence first in order to introduce and explain the administrative record. The United States presented testimony from Customs Inspector Lopez and CBP Agriculture Specialist Adams. Their testimony is set forth in relevant part above.

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The United States also presented at the hearing live testimony from Dr. John Daniels, the Department of Agriculture Officer in Charge of Plant Protection and Quarantine in Houston. Dr. Daniels's testimony is set forth below in Section III.A. regarding Andritz's likelihood of success on the merits of its challenge to the agency decision to issue the EANs and the Re-Exportation Order.

Andritz also presented testimony at the hearing. Andritz presented, via telephone, testimony of its President, Guido Andree Burgel, and live testimony of Keith Williams, a corporate representative of Nucor. These two witnesses testified primarily on the issue of irreparable harm, discussed more fully in Section III.B. below.

Andritz also presented the testimony of Eugene Albert Hall, Jr. and David Wayne Cottrell regarding ideas for dealing with the WPM infestation problem. Hall, a representative of International Fumigators Inc.,...

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