Primesource Bldg. Prods., Inc. v. United States

• Decision Date: 02 August 2021
• Docket Number: Slip Op. No. 21-94,Court No. 20-00032
• Citation: 535 F.Supp.3d 1327
• Parties: PRIMESOURCE BUILDING PRODUCTS, INC., Plaintiff, v. UNITED STATES, et al., Defendants.
• Court: U.S. Court of International Trade

535 F.Supp.3d 1327

PRIMESOURCE BUILDING PRODUCTS, INC., Plaintiff,

v.UNITED STATES, et al., Defendants.

Slip Op. No. 21-94

Court No. 20-00032

United States Court of International Trade.

August 2, 2021

Jeffrey S. Grimson, Mowry & Grimson, PLLC, of Washington, D.C., for plaintiff. With him on the brief were Kristin H. Mowry, Jill A. Cramer, Sarah M. Wyss, and Bryan P. Cenko.

Brian M. Boynton, Acting Assistant Attorney General, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., for defendants. With him on the brief were Jeanne E. Davidson, Director, and Tara K. Hogan, Assistant Director.

OPINION AND ORDER

Stanceu, Judge:

Defendants move for a partial stay pending their appeal of the judgment this Court entered in PrimeSource Bldg. Prods., Inc. v. United States , Judgment (Apr. 5, 2021), ECF No. 111 ("Judgment"). The Judgment granted certain relief to plaintiff PrimeSource Building Products, Inc. ("PrimeSource"), an importer of steel nails, in a challenge to a Presidential action taken under Section 232 of the Trade Expansion Act of 1962, 19 U.S.C. § 1862 ("Section 232") imposing additional duties of 25% ad valorem on certain imported products made of steel, including steel nails.¹ See Proclamation 9980, Adjusting Imports of Derivative Aluminum Articles and Derivative Steel Articles Into the United States , 85 Fed. Reg. 5,281 (Exec. Office of the President Jan. 29, 2020) (" Proclamation 9980"). Plaintiff opposes the motion for a stay.

The court grants the motion for a stay, orders suspension of liquidation of the entries affected by this litigation, and requires PrimeSource and the government to consult to obtain agreement on bonding of entries made on and after April 5, 2021, for protection of the revenue potentially owing due to Proclamation 9980.

I. BACKGROUND

The background of this action is set forth in our prior opinions and supplemented herein. See PrimeSource Bldg. Prods., Inc. v. United States , 45 CIT ––––, 497 F. Supp. 3d 1333 (2021) (" PrimeSource I "), PrimeSource Bldg. Prods., Inc. v. United States , 45 CIT ––––, 505 F. Supp. 3d 1352 (2021) (" PrimeSource II ").

On February 13, 2020, upon the consent of both parties, this Court entered a preliminary injunction that prohibited defendants from collecting 25% cash deposits on PrimeSource's entries of merchandise within the scope of Proclamation 9980 and prohibited the liquidation of the affected entries. Order (Feb. 13, 2020), ECF Nos. 39 (conf.), 40 (public) ("Prelim. Inj. Order"). The preliminary injunction required, further, that PrimeSource terminate its existing continuous bond and replace it with a continuous bond having a higher limit of liability to reflect the additional duties PrimeSource otherwise would have been required to deposit. Prelim. Inj. Order 2.

On February 12, 2021, again with the consent of parties, the court amended the preliminary injunction to require PrimeSource, instead of conferring with defendants prior to the expiry of its continuous bond, "to monitor its subject imports and foregone duty deposits" and terminate and replace its continuous bond once the amount of foregone duty deposits reached the amount of the bond, minus the baseline bond amount as calculated pursuant to the general continuous bonding formula of U.S. Customs and Border Protection ("Customs" or "CBP"). [Amended] Order 1–2 (Feb. 12, 2021), ECF No. 105 ("Am. Prelim. Inj. Order"). The amended preliminary injunction also authorized Customs "to deny release to PrimeSource's entries until PrimeSource terminates its current continuous bond and obtains a new continuous bond ... or enters the merchandise using single transaction bonds in the amount of 100 percent of the value of the merchandise, plus 100 percent of the estimated duties, taxes, and fees, plus the foregone duty deposit on each entry." Id. at 2.

This amended preliminary injunction dissolved upon the entry of judgment entered in PrimeSource II on April 5, 2021. See Judgment 1–2. In the Judgment, this Court ordered, inter alia , that defendants liquidate the duties affected by this litigation without the assessment of the 25% additional duties provided for in Proclamation 9980. Id.

Defendants filed a notice of appeal of the judgment entered in PrimeSource II on June 4, 2021, ECF No. 112, and filed the instant motion for a stay pending appeal the same day. Defs.’ Mot. for Partial Stay of J. to Maintain the Status Quo Pending Appeal (June 4, 2021), ECF No. 113 (conf.); (June 9, 2021), ECF No. 114 (public) ("Defs.’ Mot. for Stay"). Defendants requested that, for the pendency of the appeal, the court: (1) stay the requirement to liquidate PrimeSource's entries without the assessment of the 25% additional duties; (2) reinstate the order to suspend liquidation; and (3) reinstate the requirement that PrimeSource monitor its imports of merchandise covered by Proclamation 9980 and maintain a sufficient continuous bond for the duty liability on these imports. Defs.’ Mot. for Stay 1–2.

Plaintiff filed its response in opposition to defendants’ stay motion on June 25, 2021. Pl. PrimeSource Resp. to Defs.’ Mot. for Partial Stay of J. to Maintain the Status Quo Pending Appeal, ECF No. 116 ("Pl.’s Resp.").

II. DISCUSSION

In exercising its traditional powers to further the administration of justice, a federal court may stay enforcement of a judgment pending the outcome of an appeal. Nken v. Holder , 556 U.S. 418, 421, 129 S.Ct. 1749, 173 L.Ed.2d 550 (2009). "While an appeal is pending from ... [a] final judgment that grants, continues, modifies, refuses, dissolves, or refuses to dissolve or modify an injunction, the court may suspend, modify, restore, or grant an injunction on terms for bond or other terms that secure the opposing party's rights." USCIT R. 62(d). When that judgment was rendered by a three-judge panel, "the order must be made ... by the assent of all its judges, as evidenced by their signatures." Id.

The party seeking a stay pending appeal has the burden of showing that the stay is justified by the circumstances. Nken , 556 U.S. at 433–34, 129 S.Ct. 1749 (citations omitted). We consider four factors in deciding whether the movant has met that burden: (1) whether defendants have made a strong showing that they will succeed on the merits; (2) whether they will be irreparably harmed absent the stay; (3) whether issuance of the stay will substantially injure the plaintiff; and (4) where the public interest lies. See Hilton v. Braunskill , 481 U.S. 770, 776, 107 S.Ct. 2113, 95 L.Ed.2d 724 (1987). "There is substantial overlap between these and the factors governing preliminary injunctions." Nken , 556 U.S. at 434, 129 S.Ct. 1749 (citing Winter v. Nat. Res. Def. Council, Inc. , 555 U.S. 7, 24, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008) ). The "likelihood of success" and "irreparable harm" factors, working together, are the most critical, and where the United States is a party, the balance of equities and the public interest factors "merge." Id. at 434–35, 129 S.Ct. 1749.

We conclude that all four factors support our granting defendants’ motion to stay.

A. Success on the Merits

A recent decision by the Court of Appeals for the Federal Circuit ("Court of Appeals") in Transpacific Steel LLC v. United States , , 4 F.4th 1306 (Fed. Cir. 2021) (" Transpacific II ") causes us to conclude that defendants have made a sufficiently strong showing that they will succeed on the merits on appeal, so as to satisfy the first factor in our analysis. In Transpacific II , the Court of Appeals vacated a judgment of this Court in Transpacific Steel LLC v. United States , 44 CIT ––––, 466 F. Supp. 3d 1246 (2020) (" Transpacific I "), rejecting a claim similar in some respects to a claim this Court found meritorious in PrimeSource I and PrimeSource II .

The Transpacific litigation involves a Presidential proclamation that increased to 50% the then-existing 25% Section 232 duties on imports of steel products from Turkey. See Proclamation 9772, Adjusting Imports of Steel Into the United States , 83 Fed. Reg. 40,429 (Exec. Office of the President Aug. 15, 2018) (" Proclamation 9772"). In Transpacific I , this Court held the proclamation invalid as untimely and as a violation of equal protection. Regarding the former, Transpacific I held that Proclamation 9772 was issued after the close of the combined 105-day time period Congress established in 1988 amendments to Section 232 (the time period codified as Section 232(c)(1), 19 U.S.C. § 1862(c)(1) ), that commenced upon President Trump's receipt, on January 11, 2018, of a report by the Secretary of Commerce issued under the authority of 19 U.S.C. § 1862(b)(3)(A) (the "2018 Steel Report"). The President's receipt of that report by the Commerce Secretary had been the procedural predicate for the issuance of Proclamation 9705, Adjusting Imports of Steel Into the United States , 83 Fed. Reg. 11,625 (Exec. Office of the President Mar. 15, 2018) (" Proclamation 9705").

The Court of Appeals reversed and remanded the case to this Court. On the issue of the time limits added by the 1988 amendments to Section 232, the Court of Appeals reasoned that "[n]one of the new language in the statute, on its own or by comparison to what came before, implies a withdrawal of previously existing presidential power to take a continuing series of affirmative steps deemed necessary by the President to counteract the very threat found by the Secretary." Transpacific II , 4 F.4th at 1329. The Court of Appeals stated that "[i]n this context, the directive to the President to act by a specified time is not fairly understood as implicitly meaning ‘by then or not at all’ as to each discrete imposition that might be needed, as judged over time." Id.

PrimeSource I and II arose from somewhat different facts than did the Transpacific litigation. Rather than upwardly adjust the tariffs imposed by a previous Section 232 proclamation, the action contested here imposed, for the first time, tariffs...