International Custom Products, Inc. v. United States
2016 U.S. App. LEXIS 22246
| Fed. Cir. | 2016Background
- International Custom Products, Inc. (ICP) imported a white sauce that Customs originally classified under HTSUS 2103.90.9060 via a ruling letter (NY D86228); later Customs issued a Notice of Action reclassifying white sauce under HTSUS 0405.20.3000, dramatically increasing duties.
- ICP protested, paid duties on one entry, and sued in the U.S. Court of International Trade (CIT), alleging the Notice effectively revoked the ruling letter without following the notice-and-comment procedures of 19 U.S.C. § 1625(c)(1).
- Litigation produced multiple CIT opinions and appeals; the Federal Circuit previously affirmed the CIT’s ruling that the Notice was invalid (see ICP VI) and remanded; the CIT in ICP VII awarded attorney fees to ICP under the Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412(d)(1)(A).
- The Government appealed the EAJA fee award, arguing the Government’s position was substantially justified and that the CIT erred legally and factually in several particulars.
- The Federal Circuit reviewed the CIT’s EAJA determination for abuse of discretion and affirmed the award, concluding the Government’s overall position (including Customs’ administrative actions) was not substantially justified.
Issues
| Issue | Plaintiff's Argument (ICP) | Defendant's Argument (United States) | Held |
|---|---|---|---|
| Whether the CIT applied the correct EAJA “substantially justified” standard | CIT applied correct Pierce standard: position must be reasonable in law and fact | CIT misstated the law by referencing rejected “slightly more” / “clearly” standards, requiring remand | Court: CIT’s stray language was error but harmless; CIT applied the correct Pierce standard in substance and did not abuse discretion |
| Whether surviving summary judgment means the Government’s position is substantially justified | Surviving summary judgment is not dispositive; whole-record assessment required | Surviving summary judgment indicates substantial justification (citing Seventh Circuit) | Court: Surviving summary judgment may weigh in favor but is not dispositive; EAJA requires assessment of the entire record |
| Whether the Government’s post-trial decisions (e.g., not appealing factual findings) preclude an EAJA award | CIT legitimately considered the Government’s litigation and prelitigation conduct together; deliberate administrative choices mattered | Government’s decision not to appeal a factual finding should not be treated as concession; Solicitor General’s choices are strategic | Court: Decision not to appeal is not dispositive but was one of multiple factors; ample administrative evidence supported finding of lack of substantial justification |
| Whether Customs’ issuance of the Notice of Action was substantially justified (novel/unsettled legal question) | Customs officials believed notice-and-comment was required; litigation justifications were post-hoc | Government contends the legal status of a Notice of Action was unsettled and justified Customs’ conduct | Court: Customs knew notice-and-comment applied yet proceeded for expedience; CIT’s finding that administrative action was not substantially justified was reasonable |
Key Cases Cited
- Pierce v. Underwood, 487 U.S. 552 (1988) (defines “substantially justified” as reasonable in law and fact)
- INS v. Jean, 496 U.S. 154 (1990) (EAJA requires one overall reasonableness determination covering all stages)
- Anderson v. Liberty Lobby, 477 U.S. 242 (1986) (summary judgment standard of proof)
- Int’l Custom Prods., Inc. v. United States (ICP VII), 77 F. Supp. 3d 1319 (Ct. Int’l Trade 2015) (CIT awarded EAJA fees to ICP)
- Int’l Custom Prods., Inc. v. United States (ICP VI), 748 F.3d 1182 (Fed. Cir. 2014) (affirmed CIT’s prior ruling invalidating the Notice of Action)
- Pecore v. United States, 664 F.3d 1125 (7th Cir. 2011) (surviving summary judgment may be objective evidence of substantial justification but not conclusive)
- Thouvenot v. United States, 596 F.3d 378 (7th Cir. 2010) (discusses presumption from surviving pretrial motions in EAJA context)
- Chiu v. United States, 948 F.2d 711 (Fed. Cir. 1991) (EAJA fee-award review is for abuse of discretion)
- Libas, Ltd. v. United States, 314 F.3d 1362 (Fed. Cir. 2003) (Government bears burden to show its position was substantially justified)