Kwo Lee, Inc. v. United States

• Decision Date: 16 October 2014
• Docket Number: Court No. 14–00212.,Slip Op. 14–121.
• Citation: 24 F.Supp.3d 1322
• Parties: KWO LEE, INC., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

24 F.Supp.3d 1322

KWO LEE, INC., Plaintiff

v.UNITED STATES, Defendant.

Slip Op. 14–121.

Court No. 14–00212.

United States Court of International Trade.

Oct. 16, 2014.

Robert T. Hume and Carol Wyzinski, Hume & Associates, LLC, of Ojai, CA, for the Plaintiff.

Tara K. Hogan, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for the Defendant. Also on the brief were Joyce R. Branda, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director. Of counsel was Chi Choy, Attorney, Office of Assistant Chief Counsel, U.S. Customs and Border Protection, of New York, NY.

OPINION and ORDER

POGUE, Senior Judge:

Plaintiff, Kwo Lee, Inc. (Shuzhang “Steven” Li, owner), moves to enjoin U.S. Customs and Border Protection (“Customs” or “CBP”) from imposing a single transaction bond requirement on Plaintiff's entries of fresh garlic from the People's Republic of China (“PRC”). Pl.'s Appl. for a TRO & Mot. for a Prelim. Inj., ECF No. 7 (“Pl.'s Br.”), at 1. Plaintiff's entries are subject to an antidumping duty order (A–570–831). Customs enhanced bond requirement would equal Plaintiff's total potential antidumping duty liability as calculated at the PRC-wide rate ($4.71/kg), rather than the expected $0.35/kg cash deposit rate otherwise applicable to Plaintiff's exporter/producer (Qingdao Tiantaixing Foods Co., Ltd. (“QTF”)). Id.; Am. Compl., ECF No. 19, at ¶ 1. Because Plaintiff has established his entitlement to a preliminary injunction, his motion is granted.

BACKGROUND

This action has its origins in a nearly twenty-year-old antidumping duty order on fresh garlic from the PRC. Fresh Garlic from the [PRC], 59 Fed. Reg. 59,209 (Dep't Commerce Nov. 16, 1994) (antidumping duty order). This order set a PRC-wide rate at 376.67 percent (which translates to a cash deposit rate of $4.71/kg of garlic). Id. at 59,210 ; Ex. 3 to Pl.'s Br. (Undated Port of San Francisco Information Notice), ECF No. 7–2 at Ex. 3 (“Information Notice”).

QTF did not begin shipping fresh garlic to the United States until 2006, at which point it requested and, following investigation, was granted a new shipper rate (“NSR”) by the U.S. Department of Commerce (“Commerce”). Fresh Garlic from the [PRC], 73 Fed. Reg. 56,550, 56,552 (Dep't Commerce Sept. 29, 2008) (final results and rescission, in part, of twelfth new shipper reviews) (“Twelfth NSR ”). QTF's NSR is 32.78 percent (which translates to a cash deposit rate of $0.352/kg of garlic). Id. ; App. to Mem. Supp. Def.'s Opp'n to Pls.' Appl. for TRO & Mots. for Prelim. Inj. (“Def.'s App.”), (CBP Cash Deposit Instructions for Fresh Garlic from China, A–570–831 (Oct. 15, 2008)), ECF No. 25–1 (“CBP Cash Deposit Instructions”), at A3.¹ QTF made no subsequent shipments of the subject garlic to the United States until 2014,² when Plaintiff attempted to import some of QTF's fresh garlic. Ex. 5 to Pl.'s Br. (Decl. of Steven [Li] (Owner)), ECF No. 7–2 (“Li Decl.”), at ¶ 10. Customs denied entry, conducted import specialist review of entry documents, and, ultimately, denied release of the entries. Def.'s App. (Edert Decl.), ECF No 25–1 (“Edert Decl.”), at A10–A11 ¶¶ 6, 11. Customs provided Plaintiff with notice that “[t]o ensure entries are filed correctly and to protect [the] revenue [of the United States]” it would require that he provide an “additional single transaction bond [for each entry] to cover antidumping duties” at the PRC-wide rate of $4.71/kg. See Information Notice, ECF No. 7–2 at Ex. 3. Plaintiff challenges this determination as arbitrary and capricious under 28 U.S.C. § 1581(i) (2012).³ See Am. Compl., ECF No. 19, at ¶ 2; Pl.'s Br., ECF No. 7, at 1.

Plaintiff sought a temporary restraining order (“TRO”) and preliminary injunction to prevent Customs from imposing the heightened bonding requirement, Pl.'s Br., ECF No. 7, at 1. The court held an evidentiary hearing on October 1, 2014, see Hr'g, ECF No. 29, and subsequently granted Plaintiff's request for a TRO. See TRO, Oct. 2, 2014, ECF Nos. 35 (conf. version) & 36 (pub. version). This TRO, effective through midnight on October 16, 2014, enjoined Customs from imposing the heightened bond requirement on the subject entries, and required instead that the Plaintiff provide security to this Court in the amount of one million dollars ($1,000,000.00), “to pay the costs or damages as may be incurred or suffered by the Defendant in the event of a finding that the Defendant has been wrongfully enjoined or restrained.” Id. at 2.

DISCUSSION

“A preliminary injunction is an extraordinary remedy never awarded as of right.” Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 24, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008) (citation omitted). To obtain a preliminary injunction, Plaintiff must establish: “[1] that he is likely to succeed on the merits, [2] that he is likely to suffer irreparable harm in the absence of preliminary relief, [3] that the balance of equities tips in his favor, and [4] that an injunction is in the public interest.” Id. at 20, 129 S.Ct. 365 (citations omitted). No one factor is dispositive, FMC Corp. v. United States, 3 F.3d 424, 427 (Fed.Cir.1993), but “[c]entral to the movant's burden are the likelihood of success and irreparable harm factors.” Sofamor Danek Grp., Inc. v. DePuy–Motech, Inc., 74 F.3d 1216, 1219 (Fed.Cir.1996). The court evaluates a request for a preliminary injunction on a “sliding scale,” where “the more the balance of irreparable harm inclines in the plaintiff's favor, the smaller the likelihood of prevailing on the merits he need show in order to get the injunction.” Qingdao Taifa Grp. Co. v. United States, 581 F.3d 1375, 1378–79 (Fed.Cir.2009) (citing Kowalski v. Chi. Tribune Co., 854 F.2d 168, 170 (7th Cir.1988) ). Because of this “sliding scale,” we begin our analysis with discussion of irreparable harm.

I. Plaintiff Has Shown a Viable and Immediate Threat of Irreparable Harm.

Plaintiff must establish that, in the absence of a preliminary injunction, he will suffer irreparable harm. Winter, 555 U.S. at 20, 129 S.Ct. 365. Harm is irreparable when “no damages payment, however great,” can address it, Celsis In Vitro, Inc. v. CellzDirect, Inc., 664 F.3d 922, 930 (Fed.Cir.2012) (citations omitted); see also Morales v. Trans World Airlines, Inc., 504 U.S. 374, 381, 112 S.Ct. 2031, 119 L.Ed.2d 157 (1992) (holding that equitable relief is only appropriate where legal remedies are inadequate). The threat of irreparable harm must be immediate and viable—“[a] preliminary injunction will not issue simply to prevent a mere possibility of injury, even where prospective injury is great.” Zenith Radio Corp. v. United States, 710 F.2d 806, 809 (Fed.Cir.1983) (quotation marks and citations omitted).⁴

Financial loss alone—compensable with monetary damages—is not irreparable. Sampson v. Murray, 415 U.S. 61, 90, 94 S.Ct. 937, 39 L.Ed.2d 166 (1974). However, “the simple fact that one could, if pressed, compute a money damages award does not always preclude a finding of irreparable harm.” Celsis In Vitro, 664 F.3d at 930. Irreparable harm may take the form of “[p]rice erosion, loss of goodwill, damage to reputation, and loss of business opportunities.” Id. (citing Abbott Labs. v. Sandoz, Inc., 544 F.3d 1341, 1362 (Fed.Cir.2008) ; Sanofi–Synthelabo v. Apotex, Inc., 470 F.3d 1368, 1382–83 (Fed.Cir.2006) ).⁵ Bankruptcy is an irreparable harm because, in addition to the obvious economic injury, loss of business renders a final judgment useless, depriving the movant of effective and meaningful judicial review. Doran v. Salem Inn, Inc., 422 U.S. 922, 932, 95 S.Ct. 2561, 45 L.Ed.2d 648 (1975).⁶

Here, Customs seeks to impose single transaction bond requirements on Plaintiff's entries of fresh garlic from the PRC equal to Plaintiff's total potential antidumping duty liability if calculated at the PRC-wide rate ($4.71/kg), see Information Notice, ECF No. 7–2 at Ex. 3, rather than the expected $0.35/kg cash deposit rate otherwise applicable to Plaintiff's exporter/producer, QTF. See Twelfth NSR, 73 Fed. Reg. at 56,552 (setting the antidumping duty rate); CBP Cash Deposit Instructions, ECF No. 25–1, at A3 (setting cash deposit rate); Ex. 1 to Pl.'s Br. (July 3, 2014 letter from QTF to Customs), ECF No. 7–1 at 3 (requesting verification of $0.352/kg rate); Pl.'s Br., ECF No. 7, at 2 n. 3 (Plaintiff receiving oral confirmation of $0.352/kg rate from Customs). For the Plaintiff, this means more than $10 million in additional bonding (i.e., 129 containers at an average of $117,500 additional bonding per container). See Li Decl., ECF No. 7–2 at Ex. 5, at ¶ 10; Attach. to [Pl.'s] Resp. to Ct.'s Req., Oct. 2, 2012, ECF No. 34–1.⁷

Normally, an importer could obtain such single transaction bonds from a surety for a fraction of the bond value, see Mem. Supp. Def.'s Opp'n to Pls.' Appl. for TRO & Mots. for Prelim. Inj., ECF Nos. 17 (pub. version) & 25 (conf. version) (“Def.'s Br.”) at 16; [Def.'s] Resp. to Ct.'s Req., Sept. 30, 2014, ECF No. 26, at ¶ 1. But Plaintiff does not present a normal case. Rather, obtaining a bond at this time, in this industry would require full collateral for the millions of dollars at issue. Pl.'s Resp. to Ct.'s Req., Oct. 2, 2012, ECF No. 30; see also Conf. Tr. of Hr'g Held on Oct. 1, 2014 (“Tr. TRO Hr'g”) (test. Of Mr. Shuzhang “Steven” Li), ECF No. 40 (“Li Test.”), at 8:20–9:8, 17:21–18:17.⁸ Plaintiff represents that he cannot provide this collateral any more than he can post the full amount as a cash deposit. Li Test., ECF No. 40, at 15:1–4, 17:8–11; Tr. TRO Hr'g (Pl.'s Ex. 4), ECF No. 40 (bank statements). While he has paid the additional bonding for two entries himself, see Attach. to [Pl.'s] Resp. to Ct.'s Req., Oct. 2, 2012, ECF No. 34–1 at 1 (listing two entries as released with payment of full collateral ($116,572.50)); Tr. TRO Hr'g (Pl.'s Exs. 1 & 2), ECF No. 40 (providing Customs bonds and collection receipts noting that cash was...