Nat'l Ass'n of Mfrs. v. U.S. Dep't of Treasury
| Decision Date | 15 May 2020 |
| Docket Number | Slip Op. 20-67,Court No. 19-00053 |
| Parties | THE NATIONAL ASSOCIATION OF MANUFACTURERS, Plaintiff, THE BEER INSTITUTE, Intervenor-Plaintiff v. UNITED STATES DEPARTMENT OF THE TREASURY, UNITED STATES CUSTOMS AND BORDER PROTECTION, STEVEN T. MNUCHIN, in his official capacity as Secretary of the Treasury, and JOHN SANDERS, in his official capacity as Acting Commissioner of United States Customs and Border Protection, Defendants. |
| Court | U.S. Court of International Trade |
Before: Jane A. Restani, Judge
OPINION AND ORDER[The motion to stay the court's judgment pending appeal is denied]
Peter D. Keisler, Virginia A. Seitz, Tobias S. Loss-Eaton, and Barbara G. Broussard, Sidley Austin, LLP, of Washington, D.C., Catherine E. Stetson and Susan M. Cook, Hogan Lovells US LLP, of Washington, D.C., Peter C. Tolsdorf and Leland P. Frost, Manufacturers' Center for Legal Action, of Washington, D.C., for Plaintiff The National Association of Manufacturers.
James E. Tysse, Lars-Erik A. Hjelm, Raymond P. Tolentino, Devin S. Sikes, and Jeffrey W. Kane, Akin, Gump, Strauss, Hauer & Feld LLP, of Washington, D.C., for Intervenor-Plaintiff The Beer Institute.
Justin R. Miller, Attorney-in-Charge, International Trade Field Office, National Courts Section, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of New York, N.Y., and Alexander J. Vanderweide, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., for Defendants U.S. Department of the Treasury, U.S. Customs and Border Protection, Steven T. Mnuchin, and John Sanders. With them on the brief were Joseph H. Hunt, Assistant Attorney General, Civil Division, U.S. Department of Justice, of Washington, D.C., David M. Morrell, Deputy Assistant Attorney General, Civil Division, U.S. Department of Justice, of Washington, D.C., Jeanne E. Davidson, Director, National Courts Section, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., Claudia Burke, Assistant Director, National Courts Section, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C. Of counsel on the brief were Daniel J. Paisley, U.S. Department of the Treasury, of Washington, D.C., and Alexandra Khrebtukova, Office of the Assistant Chief Counsel, International Trade Litigation, U.S. Customs and Border Protection, of New York, N.Y.
John M. Peterson, Richard F. O'Neill, and Patrick B. Klein, Neville Peterson, LLP, of New York, N.Y., for Amicus Curiae Customs Advisory Services, Inc.
Restani, Judge: In a recent opinion, the court held that certain regulations affecting duty drawback were inconsistent with the animating statute. See Nat'l Ass'n of Mfrs v. United States, 427 F. Supp. 3d 1362, Slip Op. 20-9 (CIT 2020) ("Slip Op 20-9"); see also Judgment, ECF No. 45 (Feb. 18, 2020). The government has appealed that decision to the Court of Appeals for the Federal Circuit. See Notice of Appeal, ECF No. 49 (April 17, 2020). The matter presently before the court is a motion by the government under USCIT Rule 62(e) to stay the court's judgment in this case pending appeal. Mot. for a Stay of the Enforcement of J. and Suspension of Drawback Claims Pending Appeal, ECF No. 50 (April 17, 2020) ("Gov. Mot."). The plaintiff, intervenor-plaintiff, and amicus curiae oppose the motion. Pl. and Intervenor-Pl.'s Joint Opp. To Def.s' Mot. for a Stay and Suspension of Drawback Claims Pending Appeal, ECF No. 52 (May 8, 2020) ("Pl. Opp."); Br. of Amicus Curiae, Customs Advisory Services, Inc. Opp. Def.s' Mot. to Stay Enforcement of J. and Suspension of Drawback Claims Pending Appeal, ECF No. 53 (May 8, 2020) ("CASI Br."). For the reasons stated below, the government has failed to demonstrate that a complete stay of the judgment is warranted. Thus, to preserve the status quo, the court denies the government's motion and instead will order suspension of liquidation of relevantentries pending the resolution of the current appeal, as the finality of liquidation appears to be the main claim of harm by the government.
USCIT Rule 62(e) permits a court to stay the enforcement of a judgment pending an appeal taken by the government. See USCIT Rule 62(e). A stay is not reflexively given as it is an "intrusion into the ordinary process of administration and judicial review." See Nken v. Holder, 556 U.S. 418, 428 (2009). A party seeking a stay bears the burden of showing that one is justified under the circumstances. Id. at 433-34. The court considers four factors in determining whether a stay is warranted:
(1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies.
Id. at 426 (citing Hilton v. Braunskill, 481 U.S. 770, 776 (1987)). Each is taken in turn.
Although a "substantial legal question," may be sufficient to show a likelihood of success on the merits, see E.I. DuPont De Nemours & Co. v. Phillips Petroleum Co., 835 F.2d 277, 278 (Fed. Cir. 1987), the government must still make a strong showing that a substantial legal question exists such that success on appeal is likely. See Nken, 556 U.S. at 434 () (citation omitted).
The government's arguments for the likelihood of success on the merits are largely the same ones1 this court considered and rejected. See Gov. Mot. at 10-15. As detailed in the court'sopinion, the regulation unlawfully expands the understanding of "drawback," which results in obvious and irreconcilable statutory conflicts. See Slip Op. 20-9 at 9-13. The government's attempt to undermine the court's reasoning with the same arguments it made previously are no more persuasive now than they were then.2 Much of the government's argument for its likelihood of success on appeal is predicated upon its faulty definition of "drawback." See id. For instance, the government argues that the court's decision perpetuates "untenable results" with regard to 19 U.S.C. § 1313(v) and that its reading gives that provision "no effect at all." Gov. Mot. at 14. This ignores that the court's opinion and judgment maintain the regulatory definition of drawback prior to the change at issue. See Slip Op. 20-9 at 9-10, 13; see also Judgment (invalidating the final sentence added to the definition of drawback). Section 1313(v) is not rendered meaningless by the court's opinion, it is simply given its prior meaning. The government makes no new argument in its motion that causes the court to doubt its prior determination that the promulgated regulations conflicted with the unambiguous text of the statute. Success on appeal appears remote.
Agencies cannot "override Congress' statutory command through regulatory means," as they attempt to do here. See Natural Res. Def. Council, Inc. v. Ross, 348 F. Supp. 3d 1306, 1312 (2018). That the issue presented is "a question of first impression," Gov. Mot. at 10, isinsufficient to demonstrate a likelihood of success on appeal. The government has not made a strong showing that they will prevail on appeal.
The government argues that absent a stay, it will be irreparably harmed if the court's judgment is overturned on appeal. Gov. Mot. at 4-7. The government expresses concern that entries will be deemed liquidated by operation of law during the appeals process, leaving the government without statutory recourse should its appeal succeed. Id.
As noted by the opposing parties, see Pl. Opp. at 11-17, it appears that any potential for irreparable harm to the government is avoided by a much narrower form of relief—suspension of liquidation. By suspending liquidation of the entries at issue, while simultaneously requiring the government to process fully-bonded claims for accelerated drawback, the court ensures that the government will be able to recoup any improperly issued drawback payments if it ultimately prevails on appeal. See 19 U.S.C. § 1504(a)(1); see also 19 C.F.R. § 190.92 (); 19 C.F.R. § 191.92 (same).3 With the ability to recover any improperly paid drawback funds, then the only apparent "harm" to the government is the administrative costs in issuing drawback. See 19 C.F.R. § 113.65 (b) (). But the scheme Congress established to allow accelerateddrawback and later recoupment if the claimant does not prevail necessarily involves administrative costs. Thus, the regulatory burden of processing accelerated payments that could, hypothetically, be found unlawful on appeal does not meet the standard for irreparable harm here as any harm is resultant from defendants' statutory and regulatory mandated obligations. See Philipp Bros., Inc. v. United States, 640 F. Supp. 261, 265 (CIT 1986).
The government incorrectly argues that opposing parties will face no substantial injury if a stay is granted. Gov. Mot. at 7-8. Not so. In contrast to the government's speculative claims of harm, granting a stay of judgment will cause opposing parties certain harm should this court's judgment be affirmed. As noted in this case, and in this court's previous opinion in Tabacos de Wilson v. United States, defendants have flouted their statutory obligations to promulgate regulations in a timely fashion, which has resulted in some drawback claims remaining unprocessed for years. Tabacos de Wilson v. United States, 324 F. Supp. 3d 1304, 1315 (CIT 2018) (...
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