Resolute Forest Prods., Inc. v. U.S. Dep't of Agric., Civil Action No. 14–2103 (JEB)
| Decision Date | 30 November 2016 |
| Docket Number | Civil Action No. 14–2103 (JEB) |
| Parties | RESOLUTE FOREST PRODUCTS, INC., Plaintiff, v. U.S. DEPARTMENT OF AGRICULTURE, et al., Defendants. |
| Court | U.S. District Court — District of Columbia |
Elliot J. Feldman, Andrew M. Grossman, David B. Rivkin, Jr., Michael Steven Snarr, Baker & Hostetler LLP, Washington, DC, for Plaintiff.
David Michael Glass, James O. Bickford, U.S. Department of Justice, Washington, DC, for Defendants.
After three Opinions, the Court has finally chopped this case all the way down to its stump. All that remains is the determination of a remedy. Yet just as the roots of the tree are often tricky to yank out, such is the predicament here. This dispute involves Defendant U.S. Department of Agriculture's so-called Softwood Lumber Checkoff Order, which authorized its Softwood Lumber Board to collect assessments from lumber companies and then to spend those funds on marketing efforts on behalf of the softwood-lumber industry as a whole. Plaintiff Resolute Forest Products, Inc., which was assessed some $1.1 million since the Order went into effect in 2011, challenged the Department's Order as unlawfully promulgated. This Court ultimately agreed. See Resolute Forest Prods., Inc. v. U.S. Dep't of Agric. (Resolute III ), 187 F.Supp.3d 100, 2016 WL 2885869 (D.D.C. 2016).
Resolute now asks for its money back. That simple request, however, is laden with complicated questions of sovereign immunity, the statutory authority for relief, and considerations of equity. Following a status hearing, submissions on the remedies question, and supplemental Court–ordered briefing, the Court ultimately determines that a full refund of the illegal assessments is indeed due.
Prior Opinions have mostly set the backdrop for the latest spat between Resolute and the Department of Agriculture as well as its Secretary, Tom Vilsack (the two of which the Court will refer to jointly as Defendant). See Resolute III , 187 F.Supp.3d at 102–05, 2016 WL 2885869, at *1–3 ; Resolute Forest Prods., Inc. v. U.S. Dep't of Agric. (Resolute II ), No. 14–2103, 2016 WL 1714312, at *1 (D.D.C. Feb. 2, 2016) ; Resolute Forest Prods., Inc. v. U.S. Dep't of Agric. (Resolute I ), 130 F.Supp.3d 81, 86–88 (D.D.C. 2015). Even so, because none of those dispositions focused on remedial issues, the Court sketches in a few added details.
"Congress has long regulated the promotion and sale of agricultural commodities by enabling the federal government to coordinate with industries to advance such promotional efforts." Resolute I , 130 F.Supp.3d at 86. Everything from kiwifruit to popcorn is subject to federal marketing orders. See 7 U.S.C. §§ 7461 –7491.
At issue here is softwood lumber. For that product, the Commodity Promotion, Research, and Information Act of 1996 (CPRIA), id. §§ 7411–7425, empowers the Secretary to issue an order that creates an industry-led board and allows that board to collect assessments from lumber companies so that it can engage in marketing campaigns for the industry as a whole. See id. §§ 7413(a), 7414(b), (c)(1); Resolute I , 130 F.Supp.3d at 87. To protect small-volume lumber distributors and minimize administrative costs, the Secretary may specify in that order that a "de minimis quantity of an agricultural commodity" produced annually by each company is exempt from these fees. See 7 U.S.C. § 7415(a)(1).
In the present case, the Secretary's Softwood Lumber Checkoff Order—promulgated in 2011 following notice-and-comment rulemaking—did precisely these things. First, the Checkoff Order established the Softwood Lumber Board to carry out lumber-promotion activities. See Softwood Lumber Research, Promotion, Consumer Education and Industry Information Order , 76 Fed. Reg. 46,185 (Aug. 2, 2011). Next, to fund those activities, the Checkoff Order required industry members that trafficked in more than a de minimis quantity of softwood lumber—specifically, 15 million board feet (15mmbf) per fiscal year—to pay assessments to the Board. See Resolute I , 130 F.Supp.3d at 87 ; see also 7 U.S.C. § 7415(a)(1). Those members producing less are exempt from such fees.
As certain as taxes are, few are keen to pay the toll. Suspecting as much, the CPRIA provides a legal mechanism for companies to object to a checkoff order. Relevant here, the Act allows disgruntled members to bring administrative, and then judicial, challenges to an order. The statute provides, first, for administrative relief:
Id. § 7418(a)(1). Once the Secretary rules on the petition, federal district courts then have "jurisdiction to review the final ruling on the petition of the person." Id. § 7418(b)(1). If the order is unlawful, however, courts have a choice of remedies:
Id. § 7418(b)(3).
After following this trail of statutory breadcrumbs, here Resolute is. Once the Softwood Lumber Checkoff Order was approved, the company filed its petition with the Secretary to review that Order. That petition was twice rejected, however, first by an Administrative Law Judge and then by a Judicial Officer acting on behalf of the Secretary. See In re Resolute Forest Prods. , No. 12–40, 2014 WL 1993757 (U.S.D.A. Apr. 30, 2014); In re Resolute Forest Prods. , No. 12–40, 2014 WL 7534275 (U.S.D.A. Nov. 26, 2014).
In December 2014, Plaintiff sought judicial review through this lawsuit, enumerating a number of constitutional and administrative objections to the Checkoff Order. Part of its Complaint challenged the 15mmbf de minimis exemption as an arbitrarily selected threshold. See ECF No. 1 (Complaint), ¶¶ 111, 116, 151–55. As relief, Resolute requested "an order instructing USDA to cease the collection of Softwood Lumber Order assessments and refund all unspent funds collected from Plaintiff" and "an order requiring USDA to make restitution for all spent funds collected from Plaintiff." Id. at 40 (emphases added). In short, Resolute wanted all of its money back.
In three Opinions this past year, this Court dealt with the substance of Plaintiff's suit. Resolute I concluded that the Department's setting of the de minimis exemption did not pass administrative-review muster and so "remanded without vacatur to the Department of Agriculture for a reasoned and coherent treatment of [its] decision." 130 F.Supp.3d at 105 ; see 7 U.S.C. § 7418(b)(3)(A). The Department fared no better on remand, as this Court, in Resolute II , still was not assured that the agency had relied on "some verifiable source of data [that] accurately depicted the softwood-lumber market and supported the selection of 15 million board feet as the appropriate de minimis quantity." 2016 WL 1714312, at *3. The Court then ordered the Secretary to provide supplemental information to bolster that threshold. Id. at *4.
Only after the Department's third unsuccessful explanatory attempt did the Court fell the Checkoff Order. In Resolute III , it concluded that the Department's selection of the "de minimis quantity was arbitrary and capricious and that, accordingly, the Checkoff Order was promulgated unlawfully." 2016 WL 2885869, at *19. The Court then ordered the parties to attend a hearing "to discuss the appropriate next steps concerning the remedies sought by Plaintiff." Id.
The resulting issue of whether Resolute is entitled to a refund—as it had asked for in its Complaint—has proved rather complex. After a hearing, the Court initially enjoined the Department and the Board from collecting further assessments from Plaintiff and from maintaining a balance of less than $1.1 million, in the event a refund was appropriate. See 6/1/16 Minute Order.
In that same Order, the Court asked the parties to address the remedies question, which resulted in additional briefing along with supplemental authorities. See ECF Nos. 42 (Defendant's Remedies Memorandum), 45 (Plaintiff's Remedies Response), 47 (Defendant's Remedies Reply), 48 (Plaintiff's Notice of Supplemental Authority), 49 (Defendant's Response to Notice of Supplemental Authority). While the Department argued that the refund should be reduced to zero (or some other partial sum) because of various benefits that Resolute has gained from the Board's marketing and promotion efforts, see Mem. at 3–5, Resolute (unsurprisingly) retorted that its refund should not be subject to any offset. See Resp. at 5–7.
These memoranda opened another can of worms. In a footnote in its Reply, Defendant mentioned that "[t]he focus of Resolute's brief on the nature of the award seems to present the unanswered question [of] whether the relief it seeks would fit within the waiver of sovereign immunity." Reply at 6 n.1. The Department went on to concede that it would "not raise[ ] that potential bar here" but would "reserve[ ] the right to raise this argument in future cases." Id. The Court, sensing that this issue was jurisdictional in nature, nonetheless ordered the parties to discuss the sovereign-immunity bar. See ECF No. 50.
That additional briefing is now complete, and the Court at last turns to the question of what remedy to award Resolute.
The parties here start at opposite poles. Where the Department would prefer to refund none of Resolute's dues paid under the unlawful Checkoff Order, the company asks for its entire...
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Resolute Forest Prods., Inc. v. U.S. Dep't of Agric.
...the case and direct[ing] the Secretary to issue Plaintiff a full refund of its assessments." Resolute Forest Prods., Inc. v. USDA (Resolute IV ), 219 F. Supp. 3d 69, 80 (D.D.C. 2016).On remand, the agency complied with its prior representation to the Court that it would "diligently work[ ] ......