Aspects Furniture International, Inc. v. United StatesAspects Furniture International, Inc. v. United States
OPINION AND ORDER
[Granting Plaintiff‘s motion for leave to file a first amended complaint. Denying as moot Defendant‘s motion for judgment on the pleadings and Plaintiff‘s cross-motion for partial judgment on the pleadings.]
Dated: August 17, 2020
Marcella Powell, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for Defendant. With her on the brief were Justin R. Miller, Attorney-in-Charge, International Trade Field Office, Jeanne E. Davidson, Director, and Ethan P. Davis, Acting Assistant Attorney General. Of counsel on the brief was Paula Smith, Office of the Assistant Chief Counsel, International Trade Litigation, U.S. Customs and Border Protection.
Barnett, Judge: In this action, Plaintiff Aspects Furniture International, Inc. (“Plaintiff” or “AFI“) contests the denial of two protests1 challenging U.S. Customs and Border Protection‘s (“CBP” or “Customs“) allegedly untimely liquidation of ten entries associated with those protests. See generally Compl., ECF No. 2. The matter is before the court on Defendant‘s (“the Government“) motion for judgment on the pleadings pursuant to
BACKGROUND
The imported merchandise at issue in this case consists of wooden bedroom furniture from the People‘s Republic of China. Pl.‘s Mоt. Am. Compl., Ex.1 (“Proposed Am. Compl.“) ¶ 7. AFI is the importer of record. Id. ¶ 3. On various dates in January, February, July, and December of 2014, AFI made ten entries of wooden
On April 11, 2016, the U.S. Department of Commerce (“Commerce“) published the final results of its tenth administrative review of the antidumping duty order on wooden bedroom furniture from China. Proposed Am. Compl. ¶ 11 (citing
On April 27, 2016, the court issued a statutory injunction to enjoin the liquidation of certain entries during a lawsuit filed to challenge the Final Results. Proposed Am. Compl. ¶¶ 14-15; see also Am. Furniture Mfrs. Comm. for Legal Trade, et al. v. United States, Court No. 16-cv-00070 (CIT Apr. 27, 2016) (hereinafter, “the AFMC litigation“). On February 28, 2017, the court held a hearing in connection with the AFMC litigation. Proposed Am. Compl. ¶ 17. On March 13, 2017, the court dismissed that lawsuit for lack of subject matter jurisdiction. Id. ¶ 18.
On March 29, 2017, CBP published the court‘s judgment in the AFMC litigation in its Customs Bulletin and Decisions Official Reporter. Id. ¶ 19. Thereafter, on May 30, 2017, Customs published Message No. 7150306 in its online antidumping and countervailing duty search portal, referred to as “ACE Services,” which servеd to “inform[] CBP port officials that the suspension of liquidation of the [s]ubject [e]ntries had been lifted.” Id. ¶ 20.
On November 24, 2017, CBP liquidated the nine subject entries. Id. ¶ 21. On December 1, 2017, CBP liquidated the single subject entry. Id. ¶ 22. AFI timely protested the liquidations. Id. ¶ 23. CBP denied AFI‘s protests on May 10, 2018. Id. ¶¶ 24, 26.
On October 27, 2018, AFI timely commenced this action challenging the denial of its protests. See Summons. On June 21, 2019, the court denied the Government‘s partial motion to dismiss for lack of subject matter jurisdiction. Aspects Furn. Int‘l, Inc. v. United States (“AFI“), 43 CIT ___, 392 F. Supp. 3d 1317 (2019). On July 19, 2019, the Government filed its Answer to Plaintiff‘s Complaint. Ans., ECF No. 28.
On July 26, 2019, the court entered a scheduling order, pursuant to which “[a]ny motions regarding the pleadings or other preliminary matters” were due by August 9, 2019. Scheduling Order (July 26, 2019) (“Scheduling Order“), ECF No. 31. On January 8, 2020, the Government filed its motion for judgment on the pleadings. Def.‘s Mot. J. Shоrtly thereafter, the court granted the Government‘s motion to stay discovery. Order (Jan. 14, 2020) (“Stay Order“), ECF No. 40. On February 24, 2020, Plaintiff opposed the Government‘s motion and filed a cross-motion for partial judgment on the pleadings or, alternatively for partial summary judgment. Pl.‘s Cross-Mot. J. Those motions have been fully briefed. See Def.‘s Reply in Further Supp. of its Mot. for J. on the Pleadings and in
On June 10, 2020, AFI moved for leave to amend its complaint. Pl.‘s Mot. Am. Compl. On July 8, 2020, the Government filed its opposition to AFI‘s motion. Def.‘s Mem. in Opp‘n to Pl.‘s Mot. for Leave to File the First Am. Compl. (“Def.‘s Opp‘n Am. Compl.“), ECF No. 63.
JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction pursuant to section 514(a) of the Tariff Act of 1930, as amended,
Pursuant to
Once a scheduling order is established, a motion to amend a pleading is subject to any deadline established in that scheduling order. See
Good cause requires the moving party to show that the deadline for which an extension is sought cannot reasonably be met despite the movant‘s diligent efforts to comply with the schedule. See High Point Design LLC v. Buyers Direct, Inc., 730 F.3d 1301, 1319 (Fed. Cir. 2013) (discussing “good cause” in the context of
The court assesses excusable neglect by considering: “(1) the danger of prejudice to the opposing party, (2) the length of the delay and its potential impact on judicial proceedings, (3) the reason for
DISCUSSION
I. Legal Framework
When a statutory or court-ordered suspension of liquidation is lifted, Customs shall liquidate an entry “within 6 months after receiving notice of the removal from [Commerce], [an]other agency, or a court with jurisdiction over the entry,” otherwise the entry will be deemed liquidated “at the rate of duty, value, quantity, and amount of duty asserted by the importer of record.”
An entry that liquidated by operation of law may, however, be voluntarily reliquidated by CBP pursuant to
[a] liquidation made in accordance with section 1500 [i.e., a manual liquidation] or 1504 [i.e., a dеemed liquidation] . . . may be reliquidated in any respect by [Customs], notwithstanding the filing of a protest, within ninety days from the date on which notice of the original liquidation is given or transmitted to the importer, his consignee or agent. Notice of such reliquidation shall be given or transmitted in the manner prescribed with respect to original liquidations under section 1500(e) of this title.
II. Plaintiff‘s Original Complaint and Proposed First Amended Complaint
In its original complaint, AFI alleged that Customs untimely liquidated the subject entries and, moreover, those entries liquidated by operation of law on November 12, 2017, at the latest. Compl. ¶ 43. According to AFI, Customs received notice of the removal of suspension on or before May 12, 2017, which notice triggered the six-mоnth timeframe within which Customs is to liquidate the entries to avoid a deemed liquidation. Id. ¶¶ 25-42. Specifically, AFI alleged that Customs received notice on the following dates: (1) April 11, 2016, when Commerce published the Final Results in the Federal Register, id. ¶ 29; (2) March 13, 2017, when the court issued its final judgment in the AFMC litigation, id. ¶¶ 30, 35–36; (3) March 29, 2017, when Customs published notice of the court‘s opinion in the Customs Bulletin and Decisions Official Reporter, id. ¶ 30; or (4) May 12, 2017, when the dismissal of the AFMC litigation became final and conclusive, id. ¶¶ 31, 41. AFI also alleged that, assuming the liquidation period ended on November 30, 2017, Customs nevertheless untimely liquidated the single subject entry on December 1, 2017. Id. ¶ 43.
AFI‘s proposed amended complaint differs from its original complaint in the following respects. First, AFI has separated its claims regarding the nine subjeсt entries (count one) and the single subject entry (count two). Proposed Am. Compl. ¶¶ 28–33, 34-37. With respect to the nine subject entries, AFI alleges that “nothing in” Message No. 7150306, published by CBP on May 30, 2017, “indicated the source of the information contained therein or the date on which Customs received such notice of lifting of suspension of liquidation.” Id. ¶ 32. AFI alleges further that, “to the extent Customs received notice [of the lifting of suspension of liquidation] pursuant to
Second, AFI no longer alleges that Customs received notice of the lifting of suspension of liquidation on April 11, 2016, March 13, 2017, March 29, 2017, or on May 12, 2017 solely by virtue of the finality of the judgment issued in the AFMC litigation. Compare Compl. ¶¶ 25–42, with Proposed Am. Compl. ¶¶ 28–37.
III. Parties’ Contentions
AFI contends that the interests of justice would be served by granting its motion
The Government contends that AFI has not shown excusable neglect for failing to seek leave to amend sooner, Def.‘s Opp‘n Am. Compl. at 8, and, thus, the court need not consider the requirements of
The Government also contends that AFI‘s amendment would be futile because the proposed claims would not survive a motion to dismiss for failure to state a claim pursuant to
IV. Analysis
The court first addresses whether AFI has made the requisite showings of good cause and excusable neglect pursuant to
Since the inception of this case, AFI has sought to challenge Customs’ allegedly untimely liquidations of the subject entries. See Compl. ¶ 43. AFI initially alleged several theories regarding the way in which CBP received public and unambiguous notice of the lifting of suspension of liquidation following the conclusion of the AFMC litigation sufficient to trigger the six-month deemed liquidation period. See id. ¶¶ 25–42. In IMSS, however, the court held that those events could not, as a matter of law, constitute adequate notice pursuant to
To the extent that “diligence” also requires timely action, AFI filed its motion less than 60 days after the court issued the referenced ruling in IMSS and about one week after a telephone conference concerning the pending cross-motions for judgment on the pleadings. See supra pp. 5, 11. While AFI likely could have filed its motion sooner, there is no indication that AFI sought to delay the case. Accordingly, good cause exists to permit AFI the opportunity to replead its claims.9
The court first finds that AFI‘s amendments would not unduly prejudice the Government. The Government argues that Customs’ Message No. 7150306 “is the only public notice of thе removal of suspension of liquidation” and AFI‘s claim that Customs may have received earlier notice is speculative and unrelated to that message. Def.‘s Opp‘n Am. Compl. at 9. In IMSS, the court rejected the Government‘s argument that the date of publication necessarily controls the inquiry, explaining in the context of analogous facts:
While the Federal Circuit has referred to a publication requirement, see, e.g., Cemex, 384 F.3d at 1321 & n.5, it has done so in the context of cases evincing Commerce‘s publication in the Federal Register of a “Timken notice” or the amended final results of an administrative review, see Fujitsu Gen. Am., 283 F.3d at 1369, 1380; Int‘l Trading Co. v. United States, 281 F.3d 1268, 1270, 1275–76 (Fed. Cir. 2002) (selecting the date of Federal Register publication because it would not afford “the government the ability tо postpone indefinitely the removal of suspension of liquidation (and thus the date by which liquidation must be completed) as would be the case if the six-month liquidation period did not begin to run until Commerce sent a message to Customs advising of the removal of suspension of liquidation“). There is no such Federal Register notice implicated in the court‘s disposition of this case. Thus, at a minimum, to the extent discovery reveals that Customs received unambiguous notice of the lifting of suspension of liquidation on a date other than May 30, 2017, the court will need to determine when the six-month period for deemed liquidation began to run. Cf. Am. Int‘l Chem., Inc. v. United States, 29 CIT 735, 748, 387 F. Supp. 2d 1258, 1269 (2005) (the six-month period began on date Customs received notice even though it was published the following day).
Moreover, the possibility that Customs received non-public notice of the lifting of suspension of liquidation before publishing Message No. 7150306 is precisely why AFI was unable to allege the date of receipt with greater specificity. Discerning those facts through discovery would not necessarily lead to a “fishing expedition,” Def.‘s Opp‘n Am. Compl. at 9, and there are procedural remedies available to the Government in the event any discovery request is overly broad, see
With respect to the reason for and extent of the delay, as discussed above in the context of good cause, AFI‘s motion was prompted by the court‘s ruling in IMSS and developments in this case. See supra pp. 13–14. Moreover, AFI filed its motion reasonably soon thereafter so as not to delay the proceeding. Given the minimal prejudice to the Government, the length of the delay does not merit denial of AFI‘s motion. See Rockwell Automation, Inc. v. United States, 38 CIT ___, 7 F. Supp. 3d 1278, 1292 (2014) (stating that the length of the delay is “typically accord[ed] relatively little weight, because (for a variety of reasons) the length of the delay in most cases is minimal, both in absolute and relative terms“). Thus, based on the foregoing, the court finds that AFI has demonstrated excusable neglect for its untimely mоtion.
Turning to the requirements of
With respect to the nine subject entries, the Government first argues that AFI has “fail[ed] to allege any date or event to qualify for the removal of suspension of liquidation” and has failed to allege any form of public notice. Def.‘s Opp‘n Am. Compl. at 13. Thus, according to the Government, AFI has not alleged facts demonstrating that the nine subject entries liquidated by operation of law. Id. at 14. The Government‘s argument lacks merit.
However, as discussed, this case does not involve a public communication from Commerce to Customs, for example, in the form of a Federal Register notice. See supra pp. 15–16. The Government does not dispute AFI‘s allegations that Customs rendered Message No. 7150306 publicly accessible, Proposed Am. Compl. ¶ 20, or that the contents of Message No. 7150306 do not reveal the source of the contents or the date on which Customs received the information that formed the basis for liquidation, id. ¶ 32. Instead, the Government points to a declaration it submitted in connection with its motion for judgment on the pleadings that purports to demonstrate that Commerce issued the liquidation instructions constituting Message No. 7150306 to CBP on May 30, 2017. Def.‘s Opp‘n Am. Compl. at 13 (citing Decl. of Bradley Dauble, ECF No. 55-1).
Typically, “a motion to amend is adjudicated without resort to any outside evidence,” DiPace v. Goord, 308 F. Supp. 2d 274, 278 (S.D.N.Y. 2004), because the test of futility is whether “the proposed new claim cannot withstand a 12(b)(6) motion to dismiss for failure to state a claim,” Milanese v. Rust-Oleum Corp., 244 F.3d 104, 110 (2nd Cir. 2001). While the court may consider extrinsic evidence when the parties have conductеd discovery and the motion to amend is filed in response to a motion for summary judgment, see id., that is not the case here. It would therefore be inappropriate for the court to consider outside evidence. See Rose v. Hartford Underwriters Ins. Co., 203 F.3d 417, 420–21 (6th Cir. 2000) (district court abused its discretion in denying leave to amend prior to briefing on summary judgment motions even though evidence subsequently indicated the claim would be futile). Thus, the court finds that AFI‘s claim that the nine subject entries liquidated by operation of law prior to CBP‘s manual liquidation if Customs received notice before May 24, 2017 states a sufficient claim for relief. Proposed Am. Compl. ¶¶ 31, 33.10
The Government next argues that, assuming AFI‘s allegatiоns are true and CBP received non-public notice of the lifting of suspension of liquidation, “as a matter of law, notice that is never made available to the public cannot trigger the” six-month deemed liquidation period. Def.‘s Opp‘n Am. Compl. at 14. The Government relies on Cemex, 384 F.3d at 1320–21, 1325 n.5, and FYH Bearing Units USA, Inc. v. United States, 35 CIT 77, 81-82 & n.6, 753 F. Supp. 2d 1348, 1353 & n.6 (2011), but those cases do not support the Government‘s arguments here. See id. at 14–16.
In Cemex, the court held that a non-public email from Commerce to Customs announcing the lifting of suspension of liquidation that CBP posted on a non-public bulletin board failed to trigger the six-month deemed liquidation period. 384 F.3d at 1321.11 The court did not address whether a non-public communication that is subsequently
In FYH Bearing, the court concluded that a Federal Register notice publishing Commerce‘s amended final results of an administrative review—and not an earlier non-public email from Commerce to Customs regarding forthcoming liquidation instructions—triggered the six-month deemed liquidation period because there was no indication that the email was ever made public. 35 CIT at 80, 82, 753 F. Supp. 2d at 1351-52, 1354. As with Cemex, FYH Bearing does not foreclose the possibility that a non-public communication that is subsequently made public, in whole or in part, constitutes adequate notice pursuant tо
The Government‘s final argument for futility implicates Customs’ ability to reliquidate entries that liquidated by operation of law pursuant to
CONCLUSION AND ORDER
In accordance with the foregoing, it is hereby:
ORDERED that Plaintiff‘s motion for leave to file a first amended complaint (ECF No. 58) is granted; and it is further
ORDERED that Defendant‘s motion for judgment on the pleadings (ECF No. 35) and Plaintiff‘s cross-motion for partial judgment on the pleadings or, alternatively, for partial summary judgment (ECF No. 43) are denied as moot.
The court will contact the parties to discuss further proceedings in this case.
Dated: August 17, 2020
New York, New York
/s/ Mark A. Barnett
Mark A. Barnett, Judge