Hoed v. U.S. Secretary of Agriculture

• Decision Date: 16 January 2008
• Docket Number: Slip Op. 08-6. Court No. 06-00445.
• Citation: 533 F.Supp.2d 1354
• Parties: Arthur J. Den HOED, Plaintiff, v. UNITED STATES SECRETARY OF AGRICULTURE, Defendant.
• Court: U.S. Court of International Trade

533 F.Supp.2d 1354

Arthur J. Den HOED, Plaintiff, v. UNITED STATES SECRETARY OF AGRICULTURE, Defendant.

Slip Op. 08-6. Court No. 06-00445.

United States Court of International Trade.

January 16, 2008.

Skadden, Arps, Slate, Meagher & Flom LLP, Washington, DC (Jeffrey D. Gerrish; Neena G. Shenai) for Arthur J. Den Hoed, plaintiff.

Jeffrey S. Bucholtz, Acting Assistant Attorney General, Jeanne E. Davidson, Director, Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Devin A. Wolak); of counsel: Jeffrey Kahn, Office of the General Counsel United States Department of Agriculture, for the United States Secretary of Agriculture, defendant.

Before: Senior Judge Nicholas Tsoucalas.

OPINION

TSOUCALAS, Senior Judge.

Defendant United States Secretary of Agriculture ("Defendant" or "Secretary") moves pursuant to USCIT R. 12(b)(5) to dismiss this action for failure to state a claim upon which relief may be granted: Plaintiff Arthur J. Den Hoed ("Plaintiff') opposes the motion and moves pursuant' to USCIT R. 7 to supplement the administrative record. Plaintiff contends that the record is inadequate and argues that Defendant's denial of trade adjustment assistance ("TAA") benefits to Plaintiff is not supported by substantial evidence. Plaintiff also seeks a protective order with respect to the, information with which he seeks to supplement the administrative record. The Secretary opposes Plaintiffs motion to supplement the administrative record on the ground that the administrative record is complete and sufficient.

JURISDICTION

The Court has jurisdiction over this matter pursuant to 19 U.S.C. § 2395.

STANDARD OF REVIEW

A court should not dismiss a complaint for failure to state a claim upon which relief may be granted "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); see also Halperin Shipping Co., Inc. v. United States, 13 CIT 465, 466 (1989). Moreover, the Court must accept all well-pleaded facts as true and view them in the light most favorable to the non-moving party. See United States v. Islip, 22 CIT 852, 854, 18 F.Supp.2d 1047, 1051 (1998) (citing Gould, Inc. v. United States, 935 F.2d 1271, 1274 (Fed.Cir.1991)). A pleading that sets forth a claim for relief must contain "a short and plain statement" of the grounds upon which jurisdiction depends and "of the claim showing that the pleader is entitled to relief." USCIT R. 8(a). "To determine the sufficiency of a claim, consideration is limited to the facts stated on the face of the complaint, documents appended to the complaint, and documents incorporated in the complaint by reference." Fabrene, Inc. v. United States, 17 CIT 911, 913 (1993). Accordingly, the Court Must decide whether plaintiff is entitled to offer evidence in support of its claim, and not whether plaintiff will prevail in its claim. See Halperin, 13 CIT at 466.

BACKGROUND

On June 9, 2006, Plaintiff filed his application for TAA benefits for crop year 2004. See Administrative Record ("Admin.R.") at 1. Plaintiff's application reflected that Plaintiff reported a net farm loss of $291.00 in 2003, see id. at 2, and a net farm loss of $140.00 in 2004, see id. at 3.

In November 2006, the Secretary denied Plaintiffs application on the ground that Plaintiff "did not provide acceptable documentation of net farm or fishing income ... to show that [his] net income declined from that reported during the petition's pre-adjustment tax year." Id. at 30-32. Thereafter, Plaintiff timely sought review of Secretary's decision by filing a letter complaint:

On March 2, 2007, Defendant filed its motion to dismiss the action for failure to state a claim for which a relief may be granted. On October 26, 2007, Plaintiff filed (1) an opposition to Defendant's motion to dismiss, (2) a motion to supplement the administrative record, and (3) a motion for a protective order with respect to documents designated as confidential or business confidential. On November 16, 2007, Defendant filed its responses to Plaintiffs motion to supplement the administrative record and to Plaintiffs motion for a protective order. On November 20, 2007, Defendant filed a reply brief in support of its motion to dismiss.

DISCUSSION

I. Plaintiff Failed To State A Claim For Which A Relief May Be Granted

To receive TAA benefits, 19 U.S.C. § 2401e(a)(1)(C) requires that "[t]he producer's net farm income (as determined by the Secretary) for the most recent year is less than the producer's net farm income for the latest year in which no adjustment assistance was received by the producer under this part." Pursuant to 7 C.F.R. § 1580.301(e)(6), the producer must

"provide either — (i) [s]upporting documentation from a certified public accountant or attorney, or (ii) [r]elevant documentation and other supporting financial data, such as financial statements, balance sheets, and reports prepared for or provided to the Internal Revenue Service or another U.S. Government agency."

In its motion to dismiss, the Secretary argues that Plaintiff failed to plead an essential element of his claim because his complaint fails to state that his farm income decreased between 2003 and 2004. See Def.'s Mem. Supp. Mot. Dismiss ("Def.'s Mem.") at 5-7. Citing Wooten v. United States ("Wooten II"), 30 CIT ___, 441 F.Supp.2d 1253 (2006), the Secretary contends that an applicant who is unable to demonstrate a decrease in his income based on the administrative record has failed to state a claim for which a relief may be granted. See Def.'s Mem. at 6-7. The Secretary notes that Plaintiffs income actually increased between 2003 and 2004 based on his IRS Schedule F forms, and therefore argues that the complaint must be dismissed. See id. at 6.

Plaintiff does not claim that he successfully plead the required elements to establish his entitlement to TAA benefits, but instead argues that Defendant's motion should be denied because the Secretary acted improperly in denying Plaintiffs TAA benefits. See Mem. Opp' n Def.'s Mot. Dismiss ("Pl.'s Opp' n") at 5-6. Plaintiff states that the Secretary failed to conduct an investigation of his application that met the threshold of reasonableness, and as a result, failed to find that Plaintiffs net income declined from 2003 to 2004. See id. at 6-11. In addition, Plaintiff complains that the Secretary may not rely solely on tax returns to determine net income. See id. at 8.

The Court agrees with Defendant and finds Wooten II controlling. In Wooten II, the court found that an applicant who reported a net loss of $86,470 in 2002 and a net loss of $125,671 in 2001 had an actual increase in income of $39,201 during the two years although he reported losses in both years. See 30 CIT at ___, 441 F.Supp.2d at 1256. Finding that the applicant had failed to demonstrate a decrease in his income based on the administrative record, the court in Wooten II dismissed the case for failure to state a claim upon which relief may be granted. See 30 CIT at ___, 441 F.Supp.2d at 1259.

Accepting all well-pleaded facts as true and viewed in the light most favorable to the plaintiff, the Court finds that Plaintiff has failed to state a claim for which a relief may be granted. See Conley v. Gibson, 355 U.S. at 45-46, 78 S.Ct. 99. Nowhere in the letter complaint does the Plaintiff allege that his net income decreased between 2003 and 2004, an essential element of his claim. Indeed, like the plaintiff in Wooten II, the letter complaint states that Plaintiff should receive TAA benefits if he reported losses in both ma and 2004. See letter complaint dated December 7, 2006. Moreover, the administrative record contains only one form of documentation demonstrating Plaintiffs net income, and that document indicates that Plaintiff reported an actual increase in income during the relevant period. Thus, the Court finds that Plaintiff has failed to allege facts sufficient to demonstrate that he is entitled to receive TAA benefits. Because Plaintiff has not stated a claim upon which relief may be granted, this case must be dismissed, unless Plaintiff establishes that he is entitled to supplement the administrative record.

II. Plaintiff Is Not Entitled To Supplement The Administrative Record

The Court must sustain the Secretary's decision as long as it is "reasonable and supported by the record as a whole." Lady Kim T. Inc. v. United States Sec'y of Agric. ("Lady Kim I"), 30 CIT ___, ___, 469 F.Supp.2d 1262, 1266 (2006) (quoting Universal Camera Corp. v. National Labor Relations Board, 340 U.S. 474, 488, 71 S.Ct. 456, 95 L.Ed. 456 (1951)). The Secretary, in examining the documents submitted in connection with individual applications for TAA benefits, must meet "a threshold requirement of reasonable inquiry." See, e.g., Van Trinh v. United States Sec'y of Agric., 29 CIT ___, ___, 395 F.Supp.2d 1259, 1268 (2005) ("While the Department has considerable discretion in conducting its investigation of TAA claims, there exists a threshold requirement of reasonable inquiry.") (citation, internal quotation marks and alterations omitted); see also Anderson v. United States Sec'y of Agric., 30 CIT ___, ___, 429 F.Supp.2d 1352, 1355 (2006) ("The Department of Agriculture's discretion in conducting its investigations of TAA claims is prefaced by the existence of a threshold requirement of reasonable inquiry.") (citation and internal quotation marks omitted). The. Court "cannot uphold a determination based upon manifest inaccuracy or incompleteness of record when relevant to a determination of fact." Anderson, 30 CIT at ___, 429 F.Supp.2d at 1355 (quoting Former Employees of Pittsburgh Logistics Sys. Inc. v. United States Sec'y of Labor, 27 CIT 339 (2003)); see also Wooten v. United States Sec'y of Agric. ("Wooten I"), 30 CIT ___, 414 F.Supp.2d 1313 (2006...