National Fisheries Inst. v. U.S. Bureau of Customs

Citation465 F.Supp.2d 1300
Decision Date13 November 2006
Docket NumberCourt No. 05-00683.,Slip Op. 06-166.
CourtU.S. Court of International Trade

Steptoe & Johnson LLP, Washington, DC (Eric C. Emerson, Gregory S. McCue and Michael A. Pass) for plaintiffs.

Peter D. Keisler, Assistant Attorney General, David M. Cohen, Director, Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Stephen C. Tosini); Chi S. Choy, Bureau of Customs and Border Protection, United States Department of Homeland Security, of counsel, for defendant.



Plaintiffs National Fisheries Institute, Inc. ("NFI"), a non-profit trade association, and 27 of its members move, pursuant to USCIT Rules 7 and 65, for an order entering a preliminary injunction against United States Customs and Border Protection ("Customs" or the "Agency"). Pls.' Mot. for Prelim. Inj., attached Order at 1; First Am. Compl Attach. 1. Plaintiffs are commercial importers of seafood products, including shrimp products that are subject to six antidumping duty orders issued by the International Trade Administration, United States Department of Commerce ("Commerce"). First Am. Compl. at 1, 19-22. Plaintiffs seek a preliminary injunction essentially to preclude Customs, during the pendency of this case, from applying a particular Customs directive, as amended in 2004 and clarified in 2005, when determining the sufficiency of each plaintiffs basic importation and entry bond. See Pls.' Mot. for Prelim. Inj. at 2-3. Plaintiffs, who challenge on the merits the individual bond sufficiency determinations by Customs, also request in their preliminary injunction motion that the court enjoin Customs from considering potential antidumping and countervailing duty liability in determining bond sufficiency and that Customs be directed by the court to allow replacement of any bond used to enter merchandise on or after the date of filing of Plaintiffs' Motion for Preliminary Injunction with a superseding bond calculated without regard to antidumping or countervailing duty liabilities. Id. at 1; Mot. to Amend Injunctive Relief Requested at 2-3.

As required by the customs laws and regulations, a basic importation and entry bond allows Customs to make a monetary demand on the surety that issued the bond should the importer of record (i.e., the "principal" on the bond) fail to meet its legal obligation to "pay duties, taxes, and charges" or fail to comply with another obligation (i.e., a "bond condition") guaranteed by the bond. See 19 C.F.R. § 113.62 (2005). An importer breaching a bond condition typically will incur contractual liability to Customs in the form of liquidated damages that may not exceed the limit of liability of the bond, and also will incur contractual liability to indemnify the surety. See id. Commercial importers, such as the plaintiffs in this case, typically obtain "continuous" bonds (also referred to as "term" bonds), which cover liabilities resulting from multiple import transactions over a period of time, such as one year. See id. § 113.12(b). For commercial importers who conduct frequent import transactions, continuous bonds typically are more practical and economical than "single entry" bonds, which cover the obligations arising from one entry. See id. § 113.12(a).

To date, Customs has applied the amendment and the clarification of its bond directive only to importers of shrimp products covered by the six antidumping duty orders. The amendment and the clarification of the bond directive have had the effect of increasing substantially the limits of liability for the continuous bonds that Customs has demanded of the individual plaintiffs. See Pls.' Mot. for Prelim. Inj. at 2-3. The member-importers seeking injunctive relief are Admiralty Island Fisheries, Inc., d.b.a. "Aqua Star" ("Aqua Star"); Berdex Seafood, Inc. ("Berdex Seafood"); Censea Inc.; Crystal Cove Seafood Corp.; Eastern Fish Company, Inc. ("Eastern Fish"); Harbor Seafood, Inc.; Icicle Seafoods, Inc.; International Gourmet Fisheries, Inc., d.b.a. "Mid Pacific Seafoods" ("IGF"); Interocean Inc.; L.N. White & Co., Inc.; Mazzetta Company, LLC; McRoberts Sales Co., Inc.; Mseafood Corporation; Newport International; Ocean Cuisine International; Ocean to Ocean Seafood, LLC; Ore-Cal Corp. ("Ore-Cal"); Oriental Foods, Inc. ("Oriental Foods"); Pacific Seafood Group; Red Chamber Co. ("Red Chamber"); Sea Port Products Corporation; Sea Snack Foods Inc.; Southwind Foods LLC, d.b.a. "Great American Seafood Imports Co."; Tampa Bay Fisheries, Inc. ("Tampa Bay"); Thai Royal Frozen Foods Co., Inc.; The Seafood Exchange of Florida; and The Talon Group LLC. See First Am. Compl. Attach. 1.

Plaintiffs claim that the application of the amendment and the clarification of the bond directive are causing and will continue to cause them substantial economic harm because of the obligation to post large amounts of collateral with the surety to satisfy the current and impending bond sufficiency determinations by Customs, which plaintiffs consider to be excessive. See Pls.' Mot. for Prelim. Inj. at 2-5; Mem. of P. & A. in Supp. of Pls.' Mot. for Prelim. Inj. at 15 ("Pls.' Mem."). Plaintiffs argue that the decision of Customs to require continuous bonds sufficient to cover potential antidumping or countervailing duty liability exceeds the Agency's authority under 19 U.S.C. § 1623(a) (2000). See Pls.' Mot. for Prelim. Inj. at 5-6; Pls.' Mem. at 40-44. They further claim that the selective application of the amendment and the clarification by Customs to shrimp importers is arbitrary and capricious. See Pls.' Mot. for Prelim. Inj. at 6; Pls.' Mem. at 39-0, 47-50. Plaintiffs maintain that in weighing whether or not to grant the requested injunctive relief, the balance of the hardships and the public interest favor NFI and its members. See Pls.' Mem at 50-52.

Defendant contends that plaintiffs' alleged economic hardships "do not rise to the severe level necessary to establish immediate irreparable harm" sufficient to warrant a preliminary injunction. Def.'s Opp'n to NFI's Mot. For Prelim. Inj. at 7 ("Def.'s Opp'n"). Defendant argues that a preliminary injunction should not be ordered because, in its view, plaintiffs have not established a likelihood of success on the merits. See id. at 7-8, 12-23. Defendant submits that because 19 U.S.C. § 1623 grants the Agency "broad authority to protect the revenue by requiring bonds or other security as Customs `may deem necessary,'" Customs acted reasonably and within its statutory authority when it increased the continuous bond requirements for importers of shrimp. Id. at 15 (quoting 19 U.S.C. § 1623(a)). Defendant further submits that "the specter of harm faced by the Government is very real and acute" if Customs is not allowed to protect the revenue of the United States through increased bonding, and that this potential harm outweighs the hardships alleged by the plaintiffs. Id. at 24-25. Defendant also argues that the public interest favors the protection of the revenue through resort to continuous bonds of the size Customs determines to be necessary under the amendment and the clarification of the bond directive. See id.

During a hearing held at the United States Court of International Trade on March 30 and March 31, 2006, representatives of eight plaintiffs, specifically, Eastern Fish, Ore-Cal, Red Chamber and affiliates IGF and Tampa Bay, Oriental Foods, Berdex Seafood, and Aqua Star, testified in support of the claim that plaintiffs will suffer immediate, irreparable harm absent injunctive relief. On April 5, 2006, a representative from Customs testified to the hardship that Customs will suffer in protecting the potential revenue and in collecting outstanding antidumping duties from shrimp importers if Customs is prevented from applying the new bond formulas.

The court's decision on plaintiffs' motion for preliminary injunctive relief is based on a review of the evidence introduced at the hearing; the transcripts of the oral argument held on April 7, 2006; plaintiffs' motion to amend its request for preliminary injunction relief filed on April 14, 2006; post-hearing briefs submitted by the parties on May 5, 2006; plaintiffs' unopposed motions to amend the de novo hearing record to admit limited additional evidence, filed on May 5, 2006 and July 31, 2006; and other relevant papers and proceedings in this case. The court concludes that plaintiffs have not established their entitlement to the particular injunctive relief sought in their amended motion. The court, however, further concludes that limited injunctive relief is appropriate.

The court held an in-chambers conference on July 19, 2006, during which the court discussed with the parties the reasons that the court would not grant the specific preliminary injunction sought by plaintiffs, the court's conclusion that only the eight plaintiffs that presented evidence at the hearing could satisfy the requirement of showing irreparable harm, and the court's view that plaintiffs' showing of likelihood of success on the merits does not support plaintiffs' request to permit plaintiffs "to replace any bond used to enter merchandise on or after February 23, 2006, with a bond calculated without regard to potential antidumping or countervailing duties." Mot. to Amend Injunctive Relief Requested, attached Order at 3. As discussed in Section II.A.3 of this opinion, such relief is more akin to the restoration of a form of status quo ante, rather than a preliminary injunction to preserve the status quo, because it would require the court to order the cancellation of bonds, thereby extinguishing all obligations under such bonds, and would require Customs to approve the replacement of such bonds with superseding bonds with lower limits of liability. During the ...

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