Int'l Custom Prods., Inc. v. United States
Decision Date | 15 December 2016 |
Docket Number | 2016-1024 |
Citation | 843 F.3d 1355 |
Parties | International Custom Products, Inc., Plaintiff–Appellee v. United States, Defendant–Appellant |
Court | U.S. Court of Appeals — Federal Circuit |
Gregory Hugh Teufel , OGC Law, LLC, Pittsburgh, PA, argued for plaintiff-appellee.
Claudia Burke , Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellant. Also represented by Benjamin C. Mizer , Jeanne E. Davidson ; Amy Rubin , Edward Francis Kenny , New York, NY; Yelena Slepak , Office of Assistant Chief Counsel, International Trade Litigation, United States Bureau of Customs and Border Protection, New York, NY.
Before Reyna, Linn, and Wallach, Circuit Judges.
Appellant United States ("the Government") appeals the decision of the U.S. Court of International Trade ("CIT") awarding attorney fees to Appellee International Custom Products, Inc. ("ICP") pursuant to the Equal Access to Justice Act ("EAJA"), 28 U.S.C. § 2412(d)(1)(A) (2012). See Int'l Custom Prods., Inc. v. United States (ICP VII ), 77 F.Supp.3d 1319, 1335 (Ct. Int'l Trade 2015). We have jurisdiction over the appeal pursuant to 28 U.S.C. § 1295(a)(5). We affirm.
Int'l Custom Prods., Inc. v. United States (ICP VI ), 748 F.3d 1182, 1182–83 (Fed. Cir. 2014). Since ICP filed its first action in 2005, the CIT has issued five separate opinions on the matter, two of which were appealed to us. See generally Int'l Custom Prods., Inc. v. United States (ICP I ), 29 C.I.T. 617, 374 F.Supp.2d 1311 (2005) ( ); Int'l Custom Prods., Inc. v. United States (ICP II ), 467 F.3d 1324 (Fed. Cir. 2006) ( ); Int'l Custom Prods., Inc. v. United States (ICP III ), 32 C.I.T. 302, 549 F.Supp.2d 1384 (2008) ( ); Int'l Custom Prods., Inc. v. United States (ICP IV ), 33 C.I.T. 79, 2009 WL 205860 (2009) ( ); Int'l Custom Prods., Inc. v. United States (ICP V ), 878 F.Supp.2d 1329 (Ct. Int'l Trade 2012) ( ); ICP VI , 748 F.3d 1182 (affirming ICP V ); ICP VII , 77 F.Supp.3d 1319 ( ). The case now returns to us for the third time.
The EAJA provides that "a court shall award to a prevailing party other than the United States fees and other expenses ... unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust." 28 U.S.C. § 2412(d)(1)(A). The Government's position is substantially justified if it is "justified to a degree that could satisfy a reasonable person" and has a "reasonable basis both in law and fact." Pierce v. Underwood , 487 U.S. 552, 565–66, 108 S.Ct. 2541, 101 L.Ed.2d 490 (1988) (internal quotation marks and citations omitted). The Government's position includes the prelitigation actions of the relevant administrative agency, as well as the U.S. Department of Justice's litigation arguments. See Smith v. Principi , 343 F.3d 1358, 1361–62 (Fed. Cir. 2003). Although the Government's position involves both prelitigation and litigation conduct, "only one threshold determination for the entire civil action is to be made." INS v. Jean , 496 U.S. 154, 159, 110 S.Ct. 2316, 110 L.Ed.2d 134 (1990) (footnote omitted).
We review the CIT's determination to award attorney fees under the EAJA for abuse of discretion. See Chiu v. United States , 948 F.2d 711, 713 (Fed. Cir. 1991). "[O]nly if the [CIT] erred in interpreting the law or exercised its judgment on clearly erroneous findings of material fact, or its decision represents an irrational judgment in weighing the relevant factors can its decision be overturned." Id. (citations omitted).
The CIT found that the Government's position was not substantially justified and, consequently, awarded attorney fees to ICP. ICP VII , 77 F.Supp.3d at 1329–31, 1335. The CIT determined that "[t]he record, considered as a whole, establishe[d] that the [G]overment position was rooted in a desire to avoid the timely revocation process" by using the Notice of Action, rather than following the procedures of § 1625(c)(1), to improperly revoke the Ruling Letter. Id. at 1331. Thus, the CIT held that "the [G]overnment's position was not founded on ‘a reasonable basis both in law and fact,’ ‘justified to a degree that could satisfy a reasonable person.’ " Id. (quoting Pierce , 487 U.S. at 565, 108 S.Ct. 2541 ).
The Government argues that the CIT abused its discretion by committing five legal errors: (1) "using an improperly heightened legal standard," Appellant's Br. 9; (2) "reject[ing] the notion that surviving a motion to dismiss or a motion for summary judgment indicates that the surviving party has presented significant evidence that its position is substantially justified," id. at 11–12; (3) "improperly minimiz[ing] the significance of [the Government's] trial evidence because of [the Government's] post-trial decision not to appeal adverse factual findings," id. at 16; (4) "rejecting the Government's position that an EAJA award was not warranted in light of the novel or unsettled area of law upon which one of the Government's defenses was based," id. at 18; and (5) "find[ing] that [Customs] was not substantially justified in its actions during the administrative phase of the matter,"id. at 21. We address these arguments in turn.
The Government first argues that the CIT misapplied the "substantially justified" standard when it stated that "the substantial justification standard is ‘slightly more stringent than a simple reasonableness standard,’ and requires that the Government show that its position ‘was clearly reasonable,’ " because the Supreme Court rejected the "slightly more" and "clearly" standards in Pierce . Id. at 10–11 (quoting ICP VII , 77 F.Supp.3d at 1324–25 ). According to the Government, the recitation of the "slightly more" and "clearly" standards "undermines the [CIT]'s entire substantial justification review" and, thus, "the fee award should be vacated and the matter remanded ... with instructions to apply the proper legal standard." Id. at 11. We disagree.
The Government is correct that the CIT erred by reciting in the standard of review section of its opinion the "slightly more" and "clearly" standards, which the Supreme Court rejected in Pierce . See 487 U.S. at 567–68, 108 S.Ct. 2541 ( ). However, a single reference to an incorrect legal standard does not undermine a final decision, only its application does. Although the CIT referenced the "slightly more" and "clearly" standards once, ICP VII , 77 F.Supp.3d at 1324–25 (internal quotation marks and citation omitted), it repeatedly applied the correct "substantially justified" standard, evaluating whether the Government's position was "justified to a degree that could satisfy a reasonable person" and had a "reasonable basis both in law and fact," Pierce , 487 U.S. at 565–66, 108 S.Ct. 2541 (internal quotation marks and citations omitted). Indeed, the CIT repeated the word "reasonable" or its variants no less than nine times when evaluating the Government's position. See ICP VII , 77 F.Supp.3d at 1324 n.1, 1329 n.3, 1330–31.
In contrast, there are no instances where the CIT actually applied the "slightly more" and "clearly" standards, as the Government acknowledged during oral argument. See Oral Argument at 1:33–2:11, http://oralarguments.cafc.uscourts.gov/default.aspx?fl=2016-1024.mp3 ("it's true that when the [CIT] made its actual findings, it used the word ‘reasonableness' and didn't restate the ‘clearly reasonable[ ]’ standard or restate the ‘slightly more stringent’ standard"). that The Government nevertheless argues that the CIT's recitation of the heightened standards "infected" the CIT's entire analysis. Id. at 2:38. However, the Government cites no affirmative evidence in support of its argument, and speculation does not demonstrate reversible error. See Rogers v. United States , 877 F.2d 1550, 1557 (Fed. Cir. 1989) ( ). As a result, the CIT's lone recitation of the "slightly more" and "clearly" standards, when viewed against the remainder of the CIT's analysis, did not constitute an abuse...
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