Sioux Honey Ass'n v. Hartford Fire Ins. Co.

Decision Date26 March 2010
Docket NumberCourt No. 09-00141.,Slip Op. 10-31.
Citation700 F.Supp.2d 1330
PartiesSIOUX HONEY ASSOCIATION, Adee Honey Farms, Monterey Mushrooms, Inc., The Garlic Company, and Beaucoup Crawfish, Inc., dba Riceland Crawfish, Inc. individually and on behalf of all others similarly situated, Plaintiffs,v.HARTFORD FIRE INSURANCE COMPANY, Hartford Accident and Indemnity Company, Hartford Casualty Insurance Company, Hartford Insurance Company of Illinois, Hartford Insurance Company of The Midwest, Hartford Insurance Company of The Southeast, Aegis Security Insurance Company, American Contractors Indemnity Company, American Home Assurance Company, Great American Alliance Insurance Company, Great American Insurance Company, Great American Insurance Company of New York, International Fidelity Insurance Company, Lincoln General Insurance Company, Washington International Insurance Company, XL Specialty Insurance Company, United States Customs and Border Protection, Acting Customs Commissioner Jayson P. Ahern, United States Department Of Commerce, Secretary Of Commerce Gary F. Locke, and Does 1 through 50, inclusive, Defendants.
CourtU.S. Court of International Trade

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Kelley Drye & Warren LLP (John E. Heintz, Donna L. Wilson, Kathleen W. Cannon, Michael J. Coursey, Maria H. Kanemitsu, and Richard D. Milone), counsel for plaintiffs Sioux Honey Association, Adee Honey Farms, The Garlic Company, and Monterey Mushrooms, Inc. and co-counsel for plaintiff, Beaucoup Crawfish of Eunice, Inc., dba Riceland Crawfish, Inc.

Adduci, Mastriani & Schaumberg, LLP (Will E. Leonard and John C. Steinberger), co-counsel for plaintiff, Beaucoup Crawfish of Eunice, Inc., dba Riceland Crawfish, Inc.

Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, Patricia M. McCarthy, Assistant Director, Franklin E. White, Jr., Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Michael J. Dierberg); Andrew G. Jones and Albert T. Kundrat, Office of Assistant Chief Counsel (Indianapolis), United States Customs and Border Protection, of counsel; Jonathan Zielinski, Office of Chief Counsel for Import Administration, United States Department of Commerce, of counsel, for defendant, United States.

Sidley Austin, LLP (Neil R. Ellis, Lawrence R. Walders, Richard M. Belanger, Jennifer Lee H. McCandless, Jill Caiazzo, Carter G. Phillips, and Geoffrey D. Antell) for defendants Hartford Fire Insurance Company, Hartford Accident and Indemnity Company, Hartford Casualty Insurance Company, Hartford Insurance Company of Illinois, Hartford Insurance Company of the Midwest, and Hartford Insurance Company of the Southeast.

Sandler, Travis & Rosenberg, PA (San Francisco, California) (Thomas R. Ferguson) for defendants, Aegis Security Insurance Company and Lincoln General Insurance Company.

Steptoe & Johnson LLP (Herbert C. Shelley, Mark F. Horning, Mark A. Moran, and Susan R. Gihring) for defendants, American Contractors Indemnity Company American Home Assurance Company, and XL Speciality Insurance Company.

Crowell & Moring, LLP (Theodore R. Posner and Alexander H. Schaefer) for defendants, Great American Alliance Insurance Company, Great American Insurance Company, and Great American Insurance Company of New York.

Wolff & Sampson PC, Roseland, NJ (Armen Shahinian and Adam P. Friedman) for defendant, International Fidelity Insurance Company.

Sandler, Travis & Rosenberg, PA (Miami, Florida) (Gilbert L. Sandler) co-counsel for defendant, Washington International Insurance Company.

Simpson Thatcher & Bartlett, LLP, New York City (Barry R. Ostrager, Mary K. Vyskocil, and Michael J. Garvey) co-counsel for defendant, Washington International Insurance Company.

Before: Timothy C. Stanceu, Judge.

OPINION AND ORDER

STANCEU, Judge.

Plaintiffs Sioux Honey Association, Adee Honey Farms, Monterey Mushrooms, Inc., The Garlic Company, and Beaucoup Crawfish of Eunice, Inc., dba Riceland Crawfish, Inc. brought this action against the United States, alleging that numerous statutory and regulatory violations by the United States Department of Commerce (Commerce) and United States Customs and Border Protection (“Customs”) impaired antidumping duty collections on products in new shipper reviews spanning more than a decade. As each plaintiffs name indicates, plaintiffs are domestic producers of honey, mushrooms, garlic, or crawfish. They claim that statutory and regulatory violations by Commerce and Customs denied them certain rights due them under the antidumping laws and, specifically, prevented them from obtaining the full amount of distributions to which they are entitled under the Continued Dumping and Subsidy Offset Act of 2000 (“CDSOA” or “Byrd Amendment), 19 U.S.C. § 1675c (repealed 2006).

Seeking monetary damages and equitable relief, plaintiffs also bring claims sounding in contract, tort (based on alleged negligence), and restitution (based on alleged unjust enrichment) against a large number of individual sureties (the “surety defendants). Plaintiffs allege inter alia, that the surety defendants issued, negligently, single-transaction customs bonds to importers of the merchandise at issue in the new shipper reviews and, on an unjust enrichment theory, claim a right to restitution of certain premiums that these importers paid to the sureties. See Compl. ¶¶ 9, 11. Plaintiffs broadly direct their claims to all new shipper reviews that Commerce conducted during a period from January 1, 1995, when new shipper reviews began, to August 18, 2006, after which bonding to secure future antidumping duties on products subject to new shipper reviews was no longer permissible. Id. ¶¶ 2-4, 9, 11. They state, however, that [a]ll or virtually all” of the bonds on which they are suing the surety defendants were issued for imports subject to one of twenty antidumping duty orders on imports from China and that the “vast majority” were issued on imports of Chinese fresh garlic, certain preserved mushrooms, freshwater catfish tail meat, and pure honey. Id. ¶ 4.1 The complaint includes claims against fifty (50) unnamed surety defendants, which plaintiffs allege [u]pon information and belief” to have “committed acts substantially similar to the acts by the named Surety Defendants.” Id. ¶ 30.

Plaintiffs bring this action on their own behalf but also seek to represent the interests of a class consisting of

[a]ny person or entity that (1) is an affected domestic producer (“ADP”) under the ... CDSOA ..., under any antidumping order on imports from the People's Republic of China (“China”) under which one or more new shipper administrative reviews were conducted between January 1, 1995 and August 18, 2006; or (2) would be an ADP under any such order if the CDSOA's requirement that to qualify as an ADP, a domestic interested party, must have supported the relevant petition to impose [antidumping] duties, is stricken from the CDSOA as unconstitutional.

Id. ¶ 77. The court dismisses all claims plaintiffs bring against the surety defendants. Some claims the court dismisses for lack of standing and others for failure to state a claim upon which relief can be granted. Accordingly, the court dismisses all surety defendants, named and unnamed, from this action. The court dismisses in the entirety those claims brought jointly against the surety defendants and the United States. The court declines to rule at this time on the numerous remaining claims, which plaintiffs assert solely against the United States and which challenge various actions, or failures to act, alleged on the part of Commerce and Customs.

I. Background
A. Customs Bonding for Merchandise Subject to New Shipper Reviews

Upon request, Commerce conducts reviews to establish individual weighted-average dumping margins for foreign exporters or producers of merchandise subject to an antidumping duty order who did not export subject merchandise during the period of the investigation and are not affiliated with a producer or exporter who did so. 19 U.S.C. § 1675(a)(2)(B) (2006). From January 1, 1995 to April 1, 2006, the antidumping law permitted these “new shippers” to post bonds with Customs in lieu of cash deposits to serve, during the time required to conduct the review, as security for the future payment of antidumping duties. See id. § 1675(a)(2)(B)(iii) (suspended by Pension Protection Act of 2006, Pub.L. No. 109-280, § 1632(a), 120 Stat. 780, 1165 (2006)). At the center of this action are customs bonds obtained from sureties by importers of Chinese products subject to new shipper reviews. See id. § 1623 (authorizing the collection of bonds for protection of the revenue and compliance with laws enforced by Customs); 19 C.F.R. § 113.62 (2009) (setting forth regulations and conditions for basic importation and entry bonds). Plaintiffs estimate that the “new shipper bonds” at issue in this case number in the hundreds and have “an estimated combined face value of several hundred million dollars.” Compl. ¶ 2.

B. Rights of Domestic Producers to Distributions under the CDSOA

The CDSOA directed Customs to deposit collected antidumping (and countervailing) duties into special accounts, to segregate those duties according to the relevant antidumping (or countervailing) duty order, and to distribute, on an annual basis, a ratable share of duties collected for a particular unfairly-traded product to domestic producers who qualified as affected domestic producers (“ADPs”) under the CDSOA as reimbursement for incurred qualifying expenditures.2 19 U.S.C. § 1675c(e) (repealed 2006). Although Congress repealed the CDSOA in 2006, it permitted the continued distribution of duties “on entries of goods made and filed before October 1, 2007.” Deficit Reduction Act of 2005, Pub.L. No. 109-171, § 7601(b), 120 Stat. 4, 154 (2006).

C. Judicial Proceedings and Pending Motions

Plaintiffs commenced this action on April 7, 2009. Summons. With the consent of the parties, ...

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