Harmoni Int'l Spice, Inc. v. United States

• Citation: 211 F.Supp.3d 1298
• Decision Date: 07 February 2017
• Docket Number: Court No. 17–00009,Slip Op. 17–14
• Parties: HARMONI INTERNATIONAL SPICE, INC., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

211 F.Supp.3d 1298

HARMONI INTERNATIONAL SPICE, INC., Plaintiff,

v.UNITED STATES, Defendant.

Court No. 17–00009

Slip Op. 17–14

United States Court of International Trade.

February 7, 2017

Ned Herman Marshak , Robert Barry Silverman , and Bruce M. Mitchell , Grunfeld Desiderio Lebowitz Silverman & Klestadt, LLP, of New York, NY, argued for plaintiff. With them on the brief were Alan Gary Lebowitz , Joseph Martin Spraragen , and Yun Gao .

Emma Eaton Bond , Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for defendant. With her on the brief were Benjamin C. Mizer , Principal Deputy Assistant Attorney General, Jeanne E. Davidson , Director, and Reginald T. Blades, Jr. , Assistant Director. Of counsel on the brief was Chi S. Choy , Attorney, Assistant Chief Counsel U.S. Customs and Border Protection, of New York, NY.

OPINION AND ORDER

Kelly, Judge:

This matter is before the court on Plaintiff, Harmoni International Spice, Inc.'s ("Harmoni"), motion for a preliminary injunction to enjoin United States Customs and Border Protection ("Customs" or "CBP") from requiring Plaintiff to post single transaction bonds ("STB") on its entries of fresh garlic at the $4.71 per kilogram ("/kg") antidumping duty ("ADD") rate that the U.S. Department of Commerce ("Commerce") preliminarily assigned to entries of fresh garlic purchased from Zhengzhou Harmoni Spice Co., Ltd. ("ZH") in the twenty-first administrative review of the ADD order on fresh garlic from the People's Republic of China. See Pl.'s Appl. TRO and Mot. Prelim. Inj., Jan. 11, 2017, ECF No. 10 ("Pl.'s Mot."); see also Fresh Garlic From the People's Republic of China , 59 Fed. Reg. 59,209 (Dep't Commerce Nov. 16, 1994) (antidumping duty order) ("ADD Order "); Fresh Garlic From the People's Republic of China , 81 Fed. Reg. 89,050, 89,051 (Dep't Commerce Dec. 9, 2016) (preliminary results and partial rescission of the 21^st ADD administrative review; 2014–2015) ("Prelim. Results ") and accompanying Decision Memorandum for the Preliminary Results of the 2014–2015 Antidumping Duty Administrative Review: Fresh Garlic from the People's Republic of China, A–570–831, (Dec. 5, 2016) available at http://ia.ita.doc.gov/frn/summary/prc/2016–29569–1.pdf (last visited Feb. 7, 2017) ("Prelim. Decision Memo").

Plaintiff argues that the court should enjoin CBP's determination to require it to post STBs to obtain release of its entries of imported garlic, which are all exported by ZH, because it has demonstrated: (1) irreparable harm would result from complying with CBP's enhanced bonding requirement; (2) likelihood of success on the merits of its underlying claim; (3) that Plaintiff's hardship in posting STBs outweighs any hardship to the government; and (4) that the public interest favors enjoining CBP from requiring plaintiff to post STBs in these circumstances. See Pl.'s Mot. 11–28. Plaintiff specifically argues it lacks sufficient cash flow and assets to provide full collateral, which its sureties would require, in connection with entries in transit. See id. at 11. Plaintiff argues that its inability to provide bonding to secure release of its merchandise would cause it to suffer a loss of goodwill and damage to its reputation due to its failure to deliver orders to customers. Id. at 11. Further, Plaintiff argues that CBP lacks authority, as a matter of law, to require it to post STBs to secure the release of its goods because a preliminary determination that ZH's exports may be subject to antidumping duties cannot form the basis for a decision to require enhanced security in the form of STBs. Id. at 11–25.

Defendant opposes Plaintiff's motion on the ground that Plaintiff has failed to demonstrate any of the factors necessary to entitle it to a preliminary injunction. Def.'s Opp'n Pl.'s Mot. Prelim. Inj. Confidential Version 11–28, Jan. 19, 2017, ECF No. 30 ("Def.'s Resp. Br."). Specifically, Defendant contends that Plaintiff is unlikely to succeed on the merits because CBP properly exercised its broad statutory authority to require additional bonding. Id. at 11–22. Further, Defendant claims that Plaintiff has not demonstrated it is unable to provide the collateral required to post STBs. Id. at 23. In any event, Defendant argues Plaintiff has not demonstrated enhanced bonding would cause it to suffer an immediate and irreparable harm before Commerce issues its final determination. Id. at 22–23. For the reasons that follow, the court denies Plaintiff's motion for a preliminary injunction.

BACKGROUND

Plaintiff's underlying action challenges CBP's decision to require Plaintiff to post STBs on its entries of fresh garlic purchased from ZH as arbitrary, capricious, and otherwise contrary to law. Compl. ¶¶ 60–73, Jan. 11, 2017, ECF No. 2 ("Compl."). On January 11, 2017, CBP issued a User Defined Rule ("UDR") to alert the Office of Field Operations—including the ports and CBP's Agricultural and Prepared Products Center—to entries of fresh garlic from China imported by Plaintiff and produced by ZH.¹ Def.'s Opp'n Pl.'s Mot. Prelim. Inj. Confidential Version Ex. A at ¶ 12, Jan. 19, 2017, ECF No. 30–1 ("Amdur Decl."). CBP's UDR issued in this case reads, in relevant part:

Name: CB_STB_HARMONY

...

Threat: AD/CVD

...

Action: ... **DO NOT RELEASE OR MOVE TO CES, SINGLE TRANSACTION BOND & LIVE ENTRY MAY BE REQUIRED***[.] SUBMIT ENTRY TO COMMODITY TEAM FOR ACTION. ON 9 DECEMBER IN 81 FR 89050 THE DEPARTMENT OF COMMERCE PRELIMINARILY INCREASED

DUTY RATE FOR [HARMONI] ... FROM EXPORTER [ZH] .... IN LIGHT OF POSSIBLE INCREASE[D] RISK TO THE REVENUE. PURSUANT TO 19 C.F.R. [§] 113.13(D), STB IN THE AMOUNT OF $4.71 PER KILOGRAM IS RECOMMENDED.

...

Start Date/End Date: 1/11/2017–12/31/2017.²

Amdur Decl. Ex. 2. Both parties concede that CBP issued Notices of Action requiring Plaintiff to post STBs to secure release of its entries entered in various ports of entry in accordance with the UDR.³ It is likewise undisputed that, prior to CBP issuing these Notices of Action, Plaintiff was importing subject merchandise exported by ZH from China without paying ADD cash deposits or posting STBs. Compl. ¶ 22; Def.'s Resp. Br. 4 (citing Amdur Decl. ¶ 9).

Plaintiff alleges that CBP's representative contacted its customs broker on January 4, 2017 to advise that CBP would require Plaintiff to post STBs at the rate of $4.71/kg on all entries of subject merchandise entered after January 9, 2017. Compl. ¶ 7. Plaintiff alleges that CBP's representatives advised Plaintiff's counsel that CBP's decision to require STBs was based on the facts that:

(1) Harmoni is a large volume importer of [s]ubject [m]erchandise; (2) if Commerce's preliminary decision were affirmed by [its final determination], Harmoni would have a potential liability of approximately $200 million; and (3) Commerce's [p]reliminary [d]etermination was based on the fact that ZH/Harmoni had not cooperated to the best of its ability by not responding to Commerce's questionnaire.

Id. at ¶ 12. Defendant avers, and Plaintiff does not deny, that Plaintiff presently provides only a continuous bond to secure potential duties on its entries.⁴ Def.'s Resp. Br. 4 (citing Amdur ¶ 9). Given the actions taken by CBP to require STBs, Plaintiff states that it has instructed ZH to cease production of garlic. Pl.'s Reply Def.'s Opp'n Pl.'s Mot. Prelim. Inj. Confidential Version 9, Jan. 26, 2017, ECF No. 37 ("Pl.'s Reply Br.").

Plaintiff alleges that it purchases all of its Chinese fresh garlic from ZH, which is affiliated with Plaintiff. Compl. ¶ 3. Plaintiff further alleges that ZH first qualified for a zero ADD deposit rate for subject merchandise in a New Shipper Review conducted by Commerce for the period November 1, 2001 through October 31, 2002. Id. at ¶ 4; see also Fresh Garlic From the People's Republic of China , 69 Fed. Reg. 33,626, 33,629 (Dep't Commerce June 16, 2004) (final results of antidumping duty administrative review and new shipper reviews). According to Plaintiff, garlic from the People's Republic of China ("China") exported by ZH has continuously qualified for a $0.00 cash deposit rate since May 4, 2006. See Compl. ¶ 6. In addition, Plaintiff alleges that, until its preliminary determination in the twenty-first annual review, Commerce had not required ZH to participate as a respondent in any annual review of the ADD Order since the tenth administrative review. Id. at ¶ 21.

On January 7, 2016, Commerce initiated its twenty-first annual review of fresh garlic from China, selecting ZH as a mandatory respondent. See id. ¶ 26; see also Prelim. Results , 81 Fed. Reg. at; Prelim. Decision Memo at 1.⁵ Plaintiff concedes that ZH elected not to respond to Commerce's questionnaire in its annual review because it believes "that the [New Mexican Garlic Growers Coalition's ("NMGGC") ] request that Commerce review ZH was conceived in China and is controlled from China by a group of Chinese exporters who, under U.S. law, cannot file their own request."⁶ Compl. ¶ 36.

More specifically, Plaintiff avers that the review of ZH resulted from a request initiated by two individuals who are members of the NMGGC. Id. at ¶ 25. Plaintiff and ZH argued before Commerce that Commerce should rescind its review with respect to ZH, among other reasons, because the two members of NMGGC

are merely straw men for certain Chinese exporters who, having failed in their own attempts to convince Commerce to review Harmoni, enlisted the NMGGC to act on their behalf, by filing a request controlled by the Chinese exporters.

Id. at ¶¶ 27–28. As further support for its claim that Commerce should rescind its review with respect to ZH, Plaintiff further maintains that a recent newspaper article reported that a member of the NMGGC believes that he had been "used as a pawn" in a battle between certain Chinese exporters, ZH, and a coalition of domestic garlic producers who filed the original ADD petition on Chinese garlic. See id. at ¶¶ 30, 46. On December 9, 2016, Plaintiff states...