Snap-on, Inc. v. United States

Case Information

UnitED STATES COURT OF INTERNATIONAL TRADE

SNAP-ON, INC., Plaintiff, v. UNITED STATES, Defendant.

Before: Donald C. Pogue, Chief Judge

Court No. 13-00238 [granting the Defendant's motion for summary judgment and denying Plaintiff's motion for summary judgment]

Dated: December 16, 2013

Bruce J. Casino and J. Scott Maberry, Sheppard Mullin Richter &; Hampton, LLP, of Washington, DC. for Snap-on, Inc.

Tara K. Hogan, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, Department of Justice, of Washington, DC for Defendant. Also on the brief were Stuart F. Delery, Assistant Attorney General, Jeanne E. Davidson, Director, and Reginald T. Blades, Jr., Assistant Director. Of counsel on the brief was Joanna Theiss, Office of Import Trade Administration, Department of Commerce, of Washington, DC.

OPINION

Pogue, Chief Judge: In this action, Plaintiff, Snap-on, Inc. ("Snap-on"), a U.S. importer of goods containing aluminum

extrusions manufactured in China, seeks an order enjoining the Department of Commerce from requiring, and U.S. Customs and Border Protection from collecting, 374.15\% "all others" cash deposits and countervailing duties for Plaintiff's entries. Plaintiff contends that the "all others" rate applicable to its entries should be 137.65\% (the "revised rate") in accordance with this court's judgment in MacLean-Fogg v. United States, 36 CIT _, 885 F. Supp. 2d 1337 (2012)("MacLean-Fogg IV"). ^[1]

The court has jurisdiction over Plaintiff's claim under 28 U.S.C. $\backslash$ 1581$ (i) (2006).

Currently before the court are Defendant's Motion to Dismiss and for Summary Judgment, ECF No. 16, and Plaintiff's Motion for Summary Judgment, Motion for Writ of Mandamus, Declaratory Relief, or Preliminary Injunction, ECF No. 18. By its motion, Defendant asserts that, as a matter of law, Plaintiff cannot establish entitlement to the revised 137.65\% rate. In its cross-motion, Plaintiff asserts that it is entitled to the revised rate and thus the court should grant its request for a writ of mandamus, declaratory judgment, and permanent injunction.

As explained below, because there was no injunction suspending the liquidation ^[2] of Plaintiff's entries in the litigation challenging the $374.15\%$ rate, or any subsequent administrative review, and because Plaintiff did not participate in any of these proceedings, Section 561A(c) of the Tariff Act of 1930, as amended, 19 U.S.C. $\backslash$ 1516 \mathrm{a}(\mathrm{c})(1)(2006),{ }^{3}$ requires that Defendant's motion be granted.

BACKGROUND

The duty rates at issue stem from Commerce's April 27, 2010 initiation of antidumping ("AD") and countervailing duty ("CVD") investigations of certain aluminum extrusions from the People's Republic of China ("China" or "PRC"). Statement of Stipulated Facts ("Stipulated Facts"), ECF No. 15 at \%\% 6-7; see also Aluminum Extrusions from the People's Republic of China, 75 Fed. Reg. 22,114 (Dep't Commerce Apr. 27, 2010) (initiation of countervailing duty investigation); Aluminum Extrusions from the People's Republic of China, 75 Fed. Reg. 22,109 (Dep't Commerce Apr. 27, 2010) (initiation of antidumping duty investigation). In that investigation, Commerce, on April 4, 2011, issued a

final CVD determination that set the CVD rate for those exporters and producers not individually investigated (the "all others" rate) ^[4] at $374.15\%$ . Stipulated Facts at \% 12; see also Aluminum Extrusions from the People's Republic of China, 76 Fed. Reg. 18,521 (Dep't Commerce Apr. 4, 2011) (final affirmative countervailing duty determination).

Snap-on's merchandise was entered after Commerce's final CVD determination --- between May 31, 2011, and March 12, 2012. Stipulated Facts at \%\% 14, 16-24, 30. The merchandise constitutes ten entries of goods manufactured by Zhangjiagang GuPai Aluminum Industry Co. ("GuPai"). Although Commerce's final affirmative countervailing determination was challenged in this court, neither GuPai nor Snap-on participated in the investigation as a named respondent or otherwise qualify for a separate rate for entries of subject merchandise, Stipulated Facts at \% 9, nor was either a party to the court review. Snap-on also did not deposit estimated countervailing duties on their entries. Stipulated Facts at \% 24. Rather, the entries were designated as CBP Entry Type 01. Id. ^[5] Customs did ^[4] See 19 U.S.C. $\backslash$ \ 1516a(c)(2) ; \underline{\text { SKF USA Inc. v. United States, }} 28$ CIT 170, 316 F.

Supp. 2d 1322 (2004). ^[14] If litigation results in court approval of a revised rate, all entries for which liquidation was suspended pursuant to court order and section 1516a(c)(2), and all entries that occur after publication of notice of the court decision in the Federal Register, are subject to liquidation at the revised rate. See 19 U.S.C. $\backslash$ 1516 \mathrm{a}(\mathrm{e})$. The same is not true, however, for other entries prior to notice of the court decision. Rather, the statute specifically provides that "[u]nless liquidation is enjoined by the court under [§ 1516a(c)(2)] entries of merchandise . . . shall be liquidated in accordance with the determination of [Commerce], if they are entered . . . on or before the date of publication in the Federal Register by [Commerce] of a notice of a decision of the [CIT] . . . not in harmony with that determination." 19 U.S.C. § 1516a(c)(1). These provisions have led to some confusion regarding when Commerce may liquidate entries at a rate that has been held contrary to law by the court, and this issue has been addressed in the "Laclede line"15 of cases, to which we now turn.

II. The Laclede line of Cases

The Laclede line of cases "stand[s] for the established principle that an invalid antidumping determination cannot serve as a legal basis for the imposition of antidumping duties." Andaman Seafood Co. v. United States, 34 CIT ., 675 F. Supp. 2d 1363, 1369 (2010).

In Laclede Steel, 928 F. Supp. 1182, the plaintiff had challenged a $6.21\%$ rate and the court had found that rate contrary to law, approving a revised rate on remand; however, while the challenge to the $6.21\%$ rate was underway, Commerce initiated an administrative review that did not include the plaintiff. Therefore, the plaintiff's entries became subject to liquidation at the $6.21\%$ rate pursuant to 19 U.S.C. $\S$ 1516a(c)(1) and 19 C.F.R. $\backslash$ 353.22 $(e)(1995).LacledeSteel,928F.Supp.at1184-85.Theplaintiffsoughtaninjunctiontopreventliquidationatthe$ 6.21 \% $rate.Id.Commerceassertedthatithadimplementedthecour{t}^{\prime }sdecisioninvalidatingthe6.21\%rateforallfutureentries,pursuanttoTimkenCo.v.UnitedStates,893F\mathrm{.2}d337(Fed.Cir.1990),butthatmerchandiseenteredorwithdrawnduringthependencyofappealwassubjecttotheoriginalratepursuantto19U.S.C.$ \ $1516a(a)(1)$ . Laclede Steel, 928 F. Supp. at 1186-87. The court disagreed with Commerce, finding that the court's judgment had established the plaintiff's rate and, the plaintiff was

"simply asking that this Court's judgment be given its full effect with respect to it." Id. at 1187. Therefore, the court held that with regard to a party for whom a judgment was final and conclusive - i.e., not subject to appeal to the court of appeals - the entries should be liquidated pursuant to 19 U.S.C. $\backslash$ 1516 a(e)$, in accordance with the court's decision. Id. at 1188 .

Jilin, 342 F. Supp. 2d 1301, contained very similar facts to Laclede Steel. The plaintiff had participated in a challenge to a dumping margin that resulted in the court's invalidation of the original margin. Id. at 1303. Though plaintiff was originally a party to the third administrative review, the request for review was withdrawn, and Commerce rescinded the review as to plaintiff. Id. at 1304. Commerce subsequently issued liquidation instructions for those entries entered between the second and third administrative reviews, which instructed Customs to liquidate at the cash deposit rate in effect at the time of entry. Id. The cash deposit rate in effect at the time of entry was the original rate invalidated by the court.

The Jilin court relied on Laclede Steel to hold that the decision invalidating the original rate was "final and conclusive as to whether [plaintiff] was properly included in the antidumping order on bulk aspirin from China; [sic] once

that decision became final. Commerce was bound to follow it." Id. at 1309. The Jilin court went on to state that "[o]nce Commerce's final antidumping determination has been invalidated, it cannot serve as a legal basis for the imposition of antidumping duties on [plaintiff's] entries." Id. at 1309-10. Finally, in Tembec, 461 F. Supp. 2d 1355, a three judge panel of this court applied reasoning similar to Laclede Steel and Jilin in the context of an appeal to a North America Free Trade Agreement ("NAFTA") panel. In particular, the Tembec court read the statutes related to suspension of liquidation upon appeal to a NAFTA panel, 19 U.S.C. $\backslash$ 1516 \mathrm{a}(\mathrm{g})(5)(\mathrm{B})-(\mathrm{C})$, to preclude liquidation of entries entered prior to a NAFTA panel review in a way that was inconsistent with the panel decision. Tembec, 461 F. Supp. 2d at 1364-67.

Thus, the court has consistently held that when a party secures a right to a revised rate through judicial review, all unliquidated entries of that party which are subject to the revised rate must be liquidated at that rate regardless of whether entry occurred before or after judicial review. Furthermore, as noted above, a determination that is found to be contrary to law cannot be the basis of a duty assessment with respect to the prevailing litigant.

III. Plaintiff's Waiver Issue

Here, however, the Lackde line of cases does not support Plaintiff's argument that the $374.15\%$ rate, because it is contrary to law following the date of the court's decision, cannot be a valid assessment or cash deposit rate with respect to Plaintiff's prior entries. This is true because, before applying the Lackde reasoning, the Plaintiff must show that it has a right to the $137.65\%$ revised rate affirmed in MacLean-Fogg IV. On the facts of the Lackde line, the plaintiffs suing to enforce the court's decision had an established right to the revised rate because they were parties to the litigation in which the revised rate was affirmed. See, e.g., Jilin, 342 F. Supp. 2d at 1309 ("The decision in Rhodia II was final and conclusive as to whether Jilin was properly included in the antidumping order on bulk aspirin from China; [sic] once that decision became final."); Decca, 427 F. Supp. 2d 1249 (ordering Commerce to collect the plaintiff's revised cash deposit, as affirmed by the CIT, while the case was pending before the CAFC). Therefore, the Lackde line of cases turned on the fact that the court had adjudicated the rights of the plaintiff in a prior case, and Commerce was bound to uphold those rights.

In this case, the Government asserts that Snap-on does not have any right to the $137.65\%$ margin. Thus, unlike the Lackde line, this case does not present the question of whether

the plaintiff should receive the benefit of an earlier judgment rendered in its favor. Rather, this case raises the prior, threshold question of whether a recipient of the all others rate should receive the retrospective benefit of a judgment rendered in a case to which the recipient was not a party. If the answer to this threshold question is yes, then the Laclede line is relevant, but a Laclede analysis cannot be conducted without answering the logically prior question. A consideration of that prior question reveals that the Plaintiff has waived any right to the $137.65\%$ rate.

Plaintiff has waived any right to the $137.65\%$ rate because it did not participate in the litigation challenging the investigation rate or any subsequent administrative reviews or assert a private right of action in any manner contemplated by the statute. The statute specifically provides that Commerce will liquidate entries at the cash deposit rate in effect at the time of entry for those entries entered prior to notice of a decision, if such entries are not suspended by court order. 19 U.S.C. $\backslash$ 1516 \mathrm{a}(\mathrm{c})(1) $;see19C.F.R.$ \ $351.212(c)(1)$ . As a result of this statutory provision, when a respondent does not join litigation, and where liquidation of its entries is not

suspended by court order, ^[16] such entries may be liquidated in accordance with instructions that are not affected by the notice of a revised rate pursuant to a court decision.

The statute provides two pathways for importers in Plaintiff's situation to challenge a CVD order in a way that insures retrospective application of a correct rate - a challenge to the investigation and a challenge to the administrative review - and it is the failure of Plaintiff to properly use these mechanisms that undermines both the legal and equitable arguments offered in favor of its motion. While this case derives from a challenge to an investigation, the extent of a party's private right to a rate has been clearly articulated in the context of administrative reviews.

The benefit from lower CVD rates calculated in an administrative review or subsequent judicial review must be obtained by participating in the review processes, which is intended as the proper forum for challenging erroneous rate determinations. See 19 U.S.C. $\backslash$ 1675 $(a)(2)(C)(authorizingperiodicadministrativereviews);19C.F.R.$ \ $351.213$ (b) (permitting a domestic interested party to request review); see

also 19 U.S.C. $\backslash$ 1677(9)(A) $(defining"interestedparty"toincludeU.S.importerofaffectedmerchandise).Barringsuchparticipationinanadministrativereview,therelevantregulationprovidesforautomaticassessmentoftheimporte{r}^{\prime }sentries"atratesequaltothecashdepositof...estimated...countervailingdutiesrequiredonthatmerchandiseatthetimeofentry."19C.F.R.$ \ $351.212$ (c) (1) (i) . Plaintiff argues that 19 U.S.C. $\backslash$ \ $1516a(c)(2)$ and (e) (2) entitle it to the lower rate because the contested entries were covered by the Department's determination that was challenged and invalidated in MacLean-Fogg IV. Pl's Reply at 9, ECF No. 24. This misconstrues what it means for an entry to be "covered" by a determination and ignores the Plaintiff's failure to avail itself of the proper administrative remedy by challenging the all others rate or participating in the administrative review. It is well established that a party who does not participate in an administrative review does not have a right to any rate calculated in the review. See Consol. Bearings, 348 F.3d at 1005-06 ("[19 U.S.C. $\backslash$ 1675$ (a) (2) (C)] requires Commerce to apply the final results of an administrative review to all entries covered by the review. If the review did not examine a particular importer's transaction, then that importer's entries enjoy no statutory entitlement to the rates established by the review. The 'entries' must be

'covered by the determination' to gain entitlement to the review's results as the 'basis for the assessment' of duties.") (quoting 19 U.S.C. $\backslash$ 1675$ (a) (2) (C) (2000)); United States v. ITT Indus., Inc., 28 CIT 1028, 1030, 343 F. Supp. 2d 1322, 1325 (2004) ("If an interested party fails to request an administrative review, Commerce generally directs Customs to liquidate merchandise at the cash deposit rates in effect at the time the merchandise entered the United States, which rate is published in the Federal Register as the 'all others' cash deposit rate, unless the party received an individual rate in the original investigation." (internal citations omitted)).

Thus, because Snap-on did not participate in a challenge to the investigation rate as applied to its entries when it had the opportunity to do so, or during any administrative review, ^[17] it cannot benefit from the revised rate established for those entries that are the subject of the

litigation regarding those rates. ^[18] Contrary to Plaintiff's assertion, see Plaintiff's Motion for Summary Judgment at 12-13, the Laclede line of cases does not extend the applicability of the automatic assessment regulation under 19 C.F.R. $\S 351.212$ (c) to importers who do not participate in the administrative review or litigation addressing the CVD investigation, and Plaintiff does not question the validity of 19 C.F.R. $\S 351.212$ (c). ^[19] It follows that Plaintiff is not entitled to the $137.65\%$ revised ^[18] Plaintiff relies on the court of appeals decision in Shinyei Corp. v. United States, 355 F.3d 1297 (Fed. Cir. 2004), for the proposition that participation in an administrative review is not a necessary prerequisite for its section 1581(i) challenge to Commerce's liquidation instructions in this action. But Shinyei's recognition of this court's jurisdiction to hear an Administrative Procedure Act challenge to Commerce's liquidation instructions - like this Court's recognition of its jurisdiction over Plaintiff's challenge here - does not establish Snap-on's substantive right to the revised rate established in MacLean-Fogg for entries prior to judgment in that case. ^[19] Plaintiff's citation of Asociación Colombiana de Exportadores de Flores v. United States ("Ascoflores"), 916 F.2d 1571 (Fed. Cir. 1990), is also unavailing. In that case, the plaintiff successfully challenged in the CIT the dumping margin in the underlying AD order. Id. at 1575-76. The subsequent administrative review would not have addressed the issue in dispute, i.e., the validity of the calculated dumping margin in the AD order, but rather would have addressed only the rates calculated for the subsequent period of review. Id. Accordingly, the Federal Circuit found that the futility exception to the exhaustion requirement permitted the plaintiff to seek a reduced dumping margin in the AD order even though the plaintiff did not request an administrative review of its subsequent entries. Id. By contrast, Plaintiff did not participate in MacLean-Fogg IV, which is the principal case in which the Ascoflores rule could have applied to allow Plaintiff to seek relief. Thus, Ascoflores is inapposite to Plaintiff's situation.

rate in accordance with this court's judgment in Maclean-Fogg IV, and Commerce did not act contrary to law by instructing Customs to liquidate Plaintiff's entries at the 374.15\% all others CVD rate. ^[20]

Plaintiff also argues that equity strongly supports granting its motion, since failing to do so would allow the application of a CVD rate known to be unlawful as a result of the Department's own determinations in response to MacLean-Fogg III and IV. Pl's Reply at 10. This argument ignores the fact that a CVD rate can only be challenged by the process laid out in 19 U.S.C. $\backslash$ 1675 $(a)(2)(C)and19C.F.R.$ \ $351.213$ (b) . Retrospective relief for a CVD rate that is later found to be improper is only available to parties for whom liquidation has been properly suspended by participation in this process. The fact that Snap-on's entries were not liquidated for other reasons unrelated to the MacLean-Fogg challenge places Snap-on in the same legal position as any other importer during this period that did not challenge the CVD and was therefore subject ^[20] Contrary to the implication of Plaintiff's argument, collateral estoppel does not apply here because the issue in this case - whether Snap-on is entitled to a lower rate despite its non-participation in the investigation and subsequent litigation and despite automatic assessment under 19 C.F.R. § 351.212 (c) - was not presented in MacLean-Fogg IV. Cf. Consol. Textiles, Inc. v. United States, 28 CIT 1304, 1307-08, 346 F. Supp. 2d 1290, 1293 (2004) (listing factors required for collateral estoppel).

to the $374.15\%$ rate. ^[21] Granting Snap-on's motion would offer the Plaintiff a benefit that its conduct - in failing to participate in either MacLean-Fogg or the administrative review - suggests it did not expect or believe it deserved. Doing so might also reduce the incentive for parties to participate in administrative reviews and actively engage with the Department's procedures by holding out the prospect of free riding on challenges brought by others. These considerations - both of fairness to other parties similarly situated and of protecting the statutory design of the review process - weigh heavily against Snap-on's argument that it alone should benefit retrospectively from the ruling in MacLean-Fogg IV. Like the other parties that failed to participate in the review or properly challenge the all others rate, Snap-on will be subject to the proper rate on future entries, but will not gain disproportionately simply because its past entries were not liquidated for other reasons.

CONCLUSION

Accordingly, Defendant's motion for summary judgment is granted, and Plaintiff's motion for summary judgment is denied. Judgment will be entered accordingly.

It is so ORDERED. ^[21] See note 15 , above.

$/s/$ Donald C. Pogue Donald C. Pogue, Chief Judge

Dated: December 16, 2013 New York, NY

NOTES

${}^1$ This case is currently on appeal.

${}^2$ Liquidation is "the final computation or ascertainment of duties on entries [. . .]" 19 C.F.R. $\backslash$ 159.1$ (defining liquidation).

${}^3$ All further citations to the Tariff Act of 1930, as amended, are to Title 19 of the U.S. Code, 2006 edition.

${}^{11}$ Plaintiff's entries again remained unliquidated because of a suspension order by Commerce in the parallel AD case. Stipulated Facts at $\%35$ .

${}^{12}$ Commerce calculated the all others rate by using the weighted average of the rates for the three mandatory respondents, which Commerce in turn had calculated by resorting to adverse facts available. MacLean-Fogg I, 836 F. Supp. 2d at 1371. See 19 U.S.C. $\backslash$ 1677$ e (authorizing resort to adverse facts available for respondents' lack of cooperation).

${}^{13}$ Although Defendant challenged the Court's jurisdiction over the first count in Plaintiff's original complaint, Plaintiff's First Amended Complaint omits that count. See Defendant's Motion to Dismiss and Motion for Summary Judgment, at 9-11; First Am. Compl. Several cases discuss this court's jurisdiction in this context. See, e.g. Consol. Bearings Co. v. United States, 348 F.3d 997, 1002-03 (Fed. Cir. 2003) ("[A]n action challenging Commerce's liquidation instructions is not a challenge to the final results, but a challenge to the 'administration and enforcement' of those final results. Thus, Consolidated challenges the manner in which Commerce administered the final results. Section 1581(i)(4) grants jurisdiction to such an action."); Canadian Wheat Bd. v. United (footnote continued)

States, 32 CIT 1116, 1125, 580 F. Supp. 2d 1350, 1360 (2008) (noting that the Federal Circuit has "instructed [the CIT] to 'look to the true nature of [an] action'" when considering jurisdiction) (quoting Norsk Hydro Can. Inc. v. United States, 472 F.3d 1347, 1355 (Fed. Cir. 2006) (alteration in original)).

${}^{14}$ Suspension of liquidation preserves litigants' right to judicial review by preventing Customs's action which could moot a dispute. Zenith Radio Corp. v. United States, 710 F.2d 806, 810-11 (Fed. Cir. 1983).

${}^{15}$ The Laclede line includes Laclede Steel Co. v. United States, 20 CIT 712, 928 F. Supp. 1182 (1996); Jilin, 28 CIT 969, 342 F. Supp. 2d 1301 (2004); and Tembec, Inc. v. United States, 30 CIT 1519, 461 F. Supp. 2d 1355 (2006), judgment vacated, 31 CIT 241, 475 F. Supp. 2d 1393 (2007).

${}^{16}$ Contrary to Plaintiff's argument, suspension pursuant to court order in this action does not cure Plaintiff's failure to obtain suspension by court order under MacLean-Fogg. But the suspension here does not render Plaintiff a party to MacLeanFogg.

${}^{17}$ See Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity to Request Administrative Review, 78 Fed. Reg. 25,423, 25,424 (Dep't Commerce May 1, 2013) (announcing opportunity to seek review of entries for the period of January 1, 2012, to December 31, 2012); Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity to Request Administrative Review, 77 Fed. Reg. 25,679, 25,680 (May 1, 2012) (announcing opportunity to seek review of entries for period of September 7,2010, to December 31, 2011).

Case Details

Case Name: Snap-on, Inc. v. United States

Court Name: United States Court of International Trade

Date Published: Dec 16, 2013

Citation: 2013 Ct. Intl. Trade LEXIS 157

Docket Number: Slip Op. 13-150; Court 13-00238

Court Abbreviation: Ct. Intl. Trade