United States v. Millenium Lumber Distribution Co. Ltd.
2013 CIT 1
Ct. Intl. Trade2013Background
- U.S. Government sued Millenium Lumber and XL Specialty Insurance to recover liquidated damages ($1,826,531.80) for alleged breach of customs bonds tied to Softwood Lumber Agreement requirements.
- Millenium entered 168 entries of angle-cut softwood lumber from Canada under HTSUS 4418 initially; Customs later reclassified some merchandise under HTSUS 4407, triggering permit requirements.
- Millenium and XL argued that the reclassification violated 19 U.S.C. § 1625(c)(1) notice-and-comment requirements because the prior ruling letters (NY B81359, NY B88564) described similar lumber and would require permits.
- Customs notified Millenium of required export permits under the Softwood Lumber Agreement and assessed liquidated damages after Millenium failed to provide permits.
- Millenium previously litigated Customs’ classification in a separate action (definitive ruling upholding 4407 classification); Canex and related authority influenced the interpretation of identical merchandise.
- Court has jurisdiction under 28 U.S.C. § 1582(2).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Millenium and XL may raise a notice-and-comment claim in this collection action | Millenium/XL rely on 19 U.S.C. § 1625(c)(1) to challenge the reclassification | Government argues the notice-and-comment claim is not properly raised here and that classification is already litigated | Denied on merits; notice-and-comment claim cannot prevail in this action |
| Whether the Government is entitled to summary judgment on liability for liquidated damages | Millenium/XL deny liability by classification-based defenses | Customs’ reclassification under 4407 and failure to obtain permits breached bond terms; damages properly assessed | Granted the Government’s cross-motion; Millenium/XL liable for $1,826,531.80 (jointly and severally) |
| Whether prejudgment interest should be awarded against Millenium and XL | Equity warrants prejudgment interest to compensate the Government | Public policy or bond limits argued against complex prejudgment interest | Awarded prejudgment interest jointly and severally; rates from first demands (Millenium: 26 U.S.C. § 6621) and from first demand on XL; from dates specified in opinion |
| Whether Millenium and XL bear joint and several liability for liquidated damages | Yes; liquidated damages awarded against both defendants jointly and severally | ||
| Whether Canex and prior rulings control the outcome of the notice-and-comment issue | Court relied on Canex to hold that merchandise must be identical to ruling-letter descriptions to trigger notice-and-comment rights; Millenium's merchandise was not identical, so notice-and-comment claim fails |
Key Cases Cited
- Millenium Lumber Distrib. Ltd. v. United States, 558 F.3d 1326 (Fed. Cir. 2009) (classification upheld for 4407; authority on identity of merchandise)
- Millenium Lumber Distrib. Ltd. v. United States, 31 C.I.T. 575 (2007) (classification upheld; administrative review context)
- Princess Cruises, Inc. v. United States, 397 F.3d 1358 (Fed. Cir. 2005) (prejudgment interest as complete compensation; equities)
- United States v. Reul, 959 F.2d 1572 (Fed. Cir. 1992) (prejudgment interest as equitable remedy in government collections)
- Imperial Food Imports, 834 F.2d 1013 (Fed. Cir. 1987) (prejudgment interest awarded against sureties in certain contexts)