Second Nature Designs, Ltd. v. United States

• Citation: 586 F.Supp.3d 1334
• Decision Date: 25 July 2022
• Docket Number: Slip Op. 22-86,Court No. 17-00271
• Parties: SECOND NATURE DESIGNS, LTD., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

586 F.Supp.3d 1334

SECOND NATURE DESIGNS, LTD., Plaintiff,
v.
UNITED STATES, Defendant.

Slip Op. 22-86
Court No. 17-00271

United States Court of International Trade.

July 25, 2022

586 F.Supp.3d 1336

John M. Peterson, Neville Peterson LLP, of New York, N.Y., for Plaintiff Second Nature Designs, LTD. With him on the brief was Patrick B. Klein.

Brandon A. Kennedy, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of New York, N.Y., for Defendant United States. With him on the brief were Brian M. Boynton, Principal Deputy Assistant Attorney General, Patricia M. McCarthy, Director, Justin R. Miller, Attorney-In-Charge, International Trade Office. Of counsel on the brief was Alexandra Khrebtukova, Senior Attorney, Office of the Assistant Chief Counsel, International Trade Litigation, U.S. Customs and Border Protection, of New York, N.Y.

OPINION AND ORDER

Katzmann, Judge:

Before the court is Defendant the United States’ ("the Government") motion for leave to file an amended answer and supplemental pleading asserting a counterclaim against Plaintiff Second Nature Designs, Ltd. The Government argues that its motion is permissible, timely, and that the equities favor permitting it to amend and to assert a counterclaim. Plaintiff responds that the Government's motion must be denied because its proposed counterclaim and amendments are barred by the finality of liquidation, impermissible on statutory and Constitutional grounds, and unreasonably prejudicial to Plaintiff's ability to participate in the litigation. Except with respect to the proposed counterclaim, which the court redenominates as a defense

586 F.Supp.3d 1337

pursuant to USCIT Rule 8(d)(2), the court is not persuaded by Plaintiff's arguments and grants the Government's motion for leave.

BACKGROUND

This action involves the proper tariff classification of "thousands of decorative items" reflecting "at least 852 distinct product styles" imported by Plaintiff. Joint Rule 56.3 Stmt. of Material Facts as to which there are No Genuine Issues to be Tried, Jan. 28, 2022, ECF No. 91-1 ("56.3 Statement"). In general, the at-issue goods consist of a wide variety of items of botanical home décor. Mot. to File an Am. Ans. and a Suppl. Pleading Asserting a Counterclaim at 2, Jan. 28, 2022, ECF No. 92 ("Def.’s Br."); Pl.’s Resp. in Opp. to Def.’s Mot. to Am. at 2, Feb. 18, 2022, ECF No. 95 ("Pl.’s Resp."). The goods were originally liquidated by U.S. Customs and Border Protection ("CBP") under subheading 0604.90.60¹ of the Harmonized Tariff Schedule of the United States ("HTSUS"); a classification Plaintiff timely protested. Compl. at 4–5, Dec. 21, 2017, ECF. No. 7. Following the denial of its protests, Plaintiff timely filed suit on November 17, 2017, contesting CBP's classification and alleging that the goods are instead properly classified under HTSUS provision 0604.90.3000.² Summons, Nov. 17, 2017, ECF No. 1; Compl. at 4. The Government answered Plaintiff's complaint on April 12, 2018, defending CBP's classification. Ans., ECF No. 12.

Discovery commenced thereafter, and was slated to conclude on November 2, 2018. Scheduling Order, May 25, 2018, ECF No. 17. However, following numerous motions for extension by the parties, discovery was ultimately extended until February 14, 2022 -- largely to accommodate the parties’ joint efforts to establish the scope of the litigation and prepare an agreed-upon statement of facts. See Order, Oct. 27, 2021, ECF No. 80; see, e.g., Joint Status Report at 1–3, Dec. 1, 2021, ECF No. 84 ("JSR 84") (discussing efforts to produce a joint statement of facts pursuant to Rule 56.3 of the Court of International Trade). Shortly before the close of discovery, on January 28, 2022, the Government filed a motion to amend its answer and assert a counterclaim that the at-issue subject merchandise is, in part, correctly classified under HTSUS 6702.90.65.^{3 ,4} Def.’s

586 F.Supp.3d 1338

Br. at 8–9. Plaintiff responded in opposition on February 18, 2022, Pl.’s Resp., and the Government replied on March 22, 2022, Def.’s Reply in Supp. of its Mot. to File an Am. Ans. and a Suppl. Pleading Asserting a Counterclaim, ECF No. 99 ("Def.’s Reply").

JURISDICTION AND STANDARD OF REVIEW

The court has subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1581(a), which provides that the court "shall have exclusive jurisdiction of any civil action commenced to contest the denial of a protest, in whole or in part, under section 515 of the Tariff Act of 1930." The court also has jurisdiction over the assertion of counterclaims, as provided in 28 U.S.C. § 1583.

DISCUSSION

I. The Motion to File a Counterclaim

As a threshold matter, the court adopts the conclusions of Cyber Power Sys. (USA) Inc. v. United States, 46 CIT ––––, ––––, 586 F.Supp.3d 1325 (Jul. 20, 2022) and finds that there is no statutory basis for the Government's proposed counterclaim. Although 28 U.S.C. § 1583 grants the court exclusive...