VoestAlpine USA Corp. v. United StatesVoestAlpine USA Corp. v. United States
OPINION AND ORDER
[Granting Defendant‘s motion to dismiss for lack of subject matter jurisdiction upon finding that Plaintiffs’ claim is moot.]
Dated: August 26, 2021
Aimee Lee, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for Defendant. With her on the brief were Brian M. Boynton, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Tara K. Hogan, Assistant Director. Of counsel on the brief were Anthony Saler, Assistant Division Chief, and Kenneth S. Kessler, Senior Counsel, Office of the Chief Counsel, Bureau of Industry and Security, U.S. Department of Commerce, of Washington, DC, and Yelena Slepak, Senior Attorney, Office of the Assistant Chief Counsel, International Trade Litigation, U.S. Customs and Border Protection, of Washington, DC.
Barnett, Chief Judge: In this consolidated action, Plaintiffs VoestAlpine USA Corp. (“VoestAlpine“) and Bilstein Cold Rolled Steel LP (“Bilstein“) seek a court order requiring reliquidation of two entries of steel merchandise exclusive of duties imposed pursuant to
Defendant United States (“the Government“) moves to dismiss the consolidated action pursuant to U.S. Court of International Trade (“CIT“) Rules 12(b)(1) and 12(b)(6). Def.‘s Mot. to Dismiss (“Def.‘s Mot.“), ECF No. 19; see also Def.‘s Reply Br. in Supp. of its Mot. to Dismiss (“Def.‘s Reply“), ECF No. 23. The Government presents several grounds for dismissal. Most relevant here, the Government argues that the court lacks jurisdiction pursuant to
Plaintiffs oppose the motion. Pls.’ Resp. to Def.‘s Mot. to Dismiss Compls. (“Pls.’ Resp.“), ECF No. 21; Pls.’ Surreply to Def.‘s Mot. to Dismiss (“Pls.’ Surreply“), ECF No. 25.
For the following reasons, the court finds that Plaintiffs’ claim is moot and therefore grants the Government‘s motion to dismiss for lack of subject matter jurisdiction.
STANDARD OF REVIEW
To adjudicate a case, a court must have subject-matter jurisdiction over the claims presented. See Steel Co. v. Citizens for a Better Env‘t, 523 U.S. 83, 94-95 (1998). “[W]hen a federal court concludes that it lacks subject-matter jurisdiction, the complaint must be dismissed in its entirety.” Arbaugh v. Y & H Corp., 546 U.S. 500, 514 (2006).
Plaintiffs bear the burden of establishing subject-matter jurisdiction. See Norsk Hydro Can., Inc. v. United States, 472 F.3d 1347, 1355 (Fed. Cir. 2006). When, as here, the plaintiff asserts jurisdiction pursuant to
Article III of the U.S. Constitution also limits the court to resolving “legal questions only in the context of actual ‘Cases’ or ‘Controversies.‘” Alvarez v. Smith, 558 U.S. 87, 92 (2009) (quoting
BACKGROUND
I. The Imposition of Section 232 Duties and the Exclusion Process
“Section 232 of the Trade Expansion Act of 1962 authorizes the President to restrict imports of goods to ‘[s]afeguard[ ] national security.‘” N. Am. Interpipe, Inc. v. United States, Slip Op. 21-66, 2021 WL 2106427, at *1 (CIT May 25, 2021) (alterations in original) (quoting
of Canada and of Mexico, classifiable in the headings or subheadings enumerated in this note.” Id., Annex (U.S. Note 16(a)).
Proclamation 9705 authorized Commerce “to provide relief from the additional duties . . . for any steel article determined not to be produced in the United States in a sufficient and reasonably available amount or of a satisfactory quality” and “to provide such relief based upon
In 2018, Commerce‘s Bureau of Industry and Security (“BIS“) amended
to Submitted Exclusion Requests for Steel and Aluminum, 83 Fed. Reg. 12,106 (Dep‘t Commerce Mar. 19, 2018) (interim final rule) (“March Regulations“); Submissions of Exclusion Requests and Objections to Submitted Requests for Steel and Aluminum, 83 Fed. Reg. 46,026 (Dep‘t Commerce Sept. 11, 2018) (interim final rule) (“September Regulations“); see also
Relevant here, exclusion requests must be filed by an individual or organization “using steel in business aсtivities . . . in the United States” and include “the submitter‘s name, date of submission, and the 10-digit [HTSUS] statistical reporting number.” March Regulations, 83 Fed. Reg. at 12,110. Commerce‘s approval of an exclusion is limited to the product specified in the request and the “individual or organization that submitted the specific exclusion request, unless Commerce approves a broader application of the [exclusion].” Id. Companies may “submit[] a request for exclusion of a product even though an exclusion request submitted for that product by another requester or that requester was denied or is no longer valid.” Id. Additionally, “[e]xclusions will generally be approved for one year.” Id. at 12,111. Commerce will deny “[e]xclusion requests that do not satisfy the [specified] reporting requirements.” Id.
The September Regulations revised the exclusion process set forth in the March Regulations “to improve the fairness, trаnsparency and efficiency of the exclusion and objection process” and to “add a rebuttal and surrebuttal process.” 83 Fed. Reg. at 46,048. In the preamble, Commerce explained that it “will not issue a decision granting an exclusion until CBP confirms that the exclusion is administrable, meaning the exclusion request designates the correct HTSUS statistical reporting number.” Id. at 46,046. When “a request is denied for HTSUS issues, companies are encouraged to work with CBP to confirm the proper classifications and resubmit.” Id. at 46,047. The September Regulations also provide that “[a]ny questions on the refund of duties should be directed to CBP.” Id. at 46,059-60.
In June 2019, Commerce published guidance on the section 232 exclusion process. See 232 Exclusion Process Frequently Asked Questions (FAQs), Bureau of Indus. and Sec., U.S. Dep‘t Commerce (June 19, 2019), https://www.bis.doc.gov/index.php/documents/section-232-investigations/2409-section-232-faq/file (“Commerce FAQs“); see also Pls.’ Resp., Ex. 2 (providing excerpts from Commerce FAQs). Therein, Commerce explained that a company in receipt of an approved exclusion should provide CBP with information concerning the importer of record listed in the exclusion and the “product exclusion number.” Commerce FAQs at 12. Commerce indicated that “an exclusion is granted for one year from the date of signature, or until all excluded product volume is imported (whichever comes first).” Id. Companies “cannot make substantive changes to their exclusion request after submission” but may make “non-substantive changes,” such as changes to the importer of record. Id. at 18. Commerce further stated that it could revoke a granted exclusion “if there was a technical issue that resulted in an inadvertent approval.” Id. at 13.
Commerce also provided guidance on the resubmission of denied exclusion requests, including requests that were denied for HTSUS errors. Id. at 25. Resubmissions may include changes to the importer of record and be tied back “to [the] originаl submission date for refund purposes.” Id. An exclusion request that is withdrawn because of an incorrect tariff provision is not eligible for resubmission
II. Factual and Procedural History
On July 10, 2018, Bilstein, the purchaser of steel imported by VoestAlpine, submitted an exclusion request to Commerce that contained a nonexistent ten-digit HTSUS provision and identified the incorrect importer of record. See Def.‘s Mot., Ex. A at 1 (the exclusion request). Bilstein‘s exclusion request listed 7225.30.0000, HTSUS, as the tariff provision applicable to the steel article covered by the request. Id. (box 1.a)7 It further listed “Peter Wittwer North America” as the importer of record. Id. (box 1.b). Commerce approved this exclusion request on September 28, 2018, with the invalid tariff provision. See Def.‘s Mot., Ex. B (Commerce‘s decision memorandum on exclusion request number BIS-2018-0006-25363) (“Exclusion 25363“); Am. Compl. ¶ 10.
VoestAlpine, the importer of record for the relevant entries, made two entries of steel products on November 17, 2018, referred to herein as “the subject entries.” Def.‘s Mot., Ex. C (entry documentation).8 VoestAlpine entered the merchandise under subheadings 7208.39.00909 and 9903.80.01, HTSUS, thereby indicating that the subject entries were subject to section 232 duties. Id. at ECF pp. 13, 15. VoestAlpine paid the applicable duties on or around the time of entry. Am. Compl. ¶¶ 6-8; Compl., ¶¶ 6, 8, Ct. No. 20-3840. CBP liquidated the subject entries on October 18, 2019. Def.‘s Mot., Ex. C at ECF pp. 13, 15.10
Plaintiffs assert that they “sought advice from Customs and BIS” regarding the error(s) in Exclusion 25363 after “becom[ing] aware of the problem in September 2019.” Pls.’ Resp. at 15. On September 2, 2020, BIS informed counsel for Bilstein that in order to obtain
retroactive relief on a request that lists an erroneous tariff classification, they must file an exclusion request that is functionally identical to the original request except for the corrected [HTSUS] Code. If thе new request is granted, the requestor may then contact the 232 Help Desk via email to declare their intention to open a resubmission case. [BIS] will review the filings to determine whether the resubmitted request is functionally identical to the original request and, if approved, issue a new
decision memo that allows the requestor to receive retroactive relief dating back to the submission date of the original request.
Id., Ex. 3 at 1 (email correspondence between Bilstein and BIS); see also Am. Compl. ¶ 13.
On November 10, 2020, Plaintiffs commenced this lead action through the concurrent filing of a Summons and Complaint. Summons, ECF No. 2; Compl., ECF No. 1. Plaintiffs filed the Amended Complaint on November 12, 2020. Am. Compl. Plaintiffs commenced the member action on November 23, 2020. Summons, Ct. No. 20-3840 (CIT Nov. 23, 2020); Compl., Ct. No. 20-3840).
On December 11, 2020, Commerce granted Bilstein‘s second exclusion request. Def.‘s Mot., Ex. E. Notwithstanding Commerce‘s guidance that resubmissions would not be approved when liquidation was final, on January 15, 2021, Commerce made Bilstein‘s resubmitted exclusion retroactive to July 10, 2018, the date on which Bilstein submitted the original exclusion request. Def.‘s Mot., Ex. F (Commerce‘s decision memorandum on exclusion request number 155507) (“Exclusion 155507“); see also Pls.’ Resp., Ex. 3 at 5 (email dated January 20, 2021 from BIS to counsel for Plaintiffs regarding BIS‘s approval of Bilstein‘s resubmission).
On January 28, 2021, the court consolidated the cases. Order (Jan. 28, 2021), ECF No. 14. On April 26, 2021, the court afforded Plaintiffs the opportunity to “file a surreply addressing arguments for dismissal raised for the first time in Defendant‘s Reply Brief.” Order (Apr. 26, 2021), ECF No. 24. Plaintiffs filed a surreply on May 17, 2021. See Pls.’ Surreply.
DISCUSSION
I. The Court‘s Subject Matter Jurisdiction
A. Parties’ Contentions
The Government contends that the “true nature of the action is a challenge to the assessment of duties at liquidation” and, thus, “[t]he appropriate remedy . . . [was] a timely protest of the liquidation.” Def.‘s Mot. at 17; see also Def.‘s Reply at 8-9. The Government relies on Proclamation 9777 and Customs’ guidance, both of which indicate that filing a protest is necessary “to benefit from exclusion decisions” because exclusions may only apply to entries for which liquidation is nonfinal. Def.‘s Mot. at 21 (citing Proc. 9777, cl. 5; CSMS # 18-000352; CSMS # 18-000378; CSMS # 39633923; CSMS # 42566154). Thus, the Government contends, Plaintiffs should have protested the liquidation of its entriеs to “prevent[] liquidation from becoming final while [P]laintiffs sought to correct the exclusion request with Commerce,” and, had they done so and “CBP denied the protests,” Plaintiffs could have commenced an action pursuant to
Plaintiffs contend that “the true nature of this action is a challenge to the approval by BIS of a fatally flawed and therefore useless steel product exclusion.” Pls.’ Resp. at 24-25. Plaintiffs liken the approval of an exclusion with an invalid tariff provision to an exclusion denial, arguing that neither situation is redressable by a protest because there is no Customs decision at issue. Id. at 25; see also id. at 26-27 (arguing that section (a) jurisdiction is manifestly inadequate because “Customs
The Government counters that Customs’ decision to assess section 232 duties on the subject entries was amenable to protest. Def.‘s Reply at 10-14. The Government contends that “a granted exclusion does not automatically apply to an entry and CBP‘s role in deciding whether the imported merchandise falls within an approved exclusion is not ministerial.” Id. at 10; see also id. at 13 (explaining that “CBP . . . decides whether the conditions of the exclusion are met and whether the exclusion applies to the merchandise covered by the entries or whether [s]ection 232 duties should be assessed“). The Government also contends that, “in the absence of a valid exclusion,” CBP “made a decision as to the ‘tariff classification and applicable rate of duty,‘” id. at 12, or in other words, that CBP decided “to assess [s]ection 232 duties at liquidation,” id. at 13
B. Analysis
It is well settled that “[a] party may not expand a court‘s jurisdiction by creative pleading.” Sunpreme Inc. v. United States, 892 F.3d 1186, 1193 (Fed. Cir. 2018) (quoting Norsk Hydro Can., Inc. v. United States, 472 F.3d 1347, 1355 (Fed. Cir. 2006)). Instead, as the Parties have indicated, the court must “look to the true nature of the action . . . in determining jurisdiction of the appeal.” Id. (quoting same).
In seeking to identify the “true nature of the action,” the Government relies on Plaintiffs’ requested relief—a refund of section 232 duties to be accomplished through reliquidation of the subject entries. Def.‘s Mot. at 17; Def.‘s Reply at 9. Thus, the Government asserts, “the true nature of the action is a challenge to [CBP‘s] assessment of duties at liquidation.” Def.‘s Mot. at 17. While Plaintiffs indeed seek a refund of section 232 duties, that relief is predicated on Plaintiffs’ request for a court order retroactively applying Exclusion 25363 to the subject entries, which, in turn, is based on Plaintiffs’ claim against Commerce. See, e.g., Am. Compl. ¶¶ 11-14, 20-22; id., pp. 4-5 (prayer for relief). The operative complaint indicates that Plaintiffs contest Commerce‘s decision to approve Exclusion 25363 with an invalid HTSUS provision. See id. ¶ 3 (identifying BIS as the entity responsible for “evaluating, approving and administering the product exclusion mechanism“); id., ¶¶ 9-14 (discussing the exclusion and Bilstein‘s attempts to work with BIS to “secure a refund” using BIS‘s procedures for resubmission); id. ¶ 21 (alleging that “BIS has refused to assist in securing refund of the duties“).
Plaintiffs therefore seek to challenge final agency action in the form of Commerce‘s approval of Exclusion 25363 with the non-existent HTSUS number,11 which is analogous to actions contesting Commerce‘s denials of exclusion requests. The court reviews such actions pursuant to
decisions of the Customs Service, including the legality of all orders and findings entering into the same, as to-- . . . (2) the classification and rate and amount of duties chargeable; [or] (5) the liquidation or reliquidation of an entry . . . shall be final and conclusive upon all persons (including the United States and any officer thereof) unless a protest is filed in accordance with this section, or unless a civil action contesting the denial of a protest, in whole or in part, is commenced in the United States Court of International Trade.
Jurisdiction pursuant to
It is well settled that “Customs’ ‘merely ministerial’ actions are not protestable under
The Government‘s contention that CBP acts in a non-ministerial capacity when it decides whether to apply an exclusion to an entry, see Def.‘s Mot. at 17-18; Def.‘s Reply at 10, 13, even if correct generally, does not support the existence of (a) jurisdiction in this case. As the Government is aware, Plaintiffs “never claimed an exclusion from [s]ection 232 duties” at or before the time of entry. Def.‘s Reply at
To the extent the Government argues that Plaintiffs should have submitted Exclusion 25363 prior to making the subject entries such that Plaintiffs would have had a remedy pursuant to
In sum, a Commerce error in a section 232 exclusion is not redressable by a Customs protest because Customs has no control over—or authority to alter—the contents of an exclusion. See Proc. 9705, cl. 3 (locating authority over exclusions within Commerce). Because a protest was incapable of affording Plaintiffs the relief they seek, it would have been a manifestly inadequate remedy to the extent it was available. See Sunpreme, 892 F.3d at 1193-94 (“[T]o be manifestly inadequate, the protest must be an ‘exercise in futility, or incapable of producing any result; failing utterly of the desired end through intrinsic defect; useless, ineffectual, vain.‘” (quoting Hartford Fire Ins. Co. v. United States, 544 F.3d 1289, 1294 (Fed. Cir. 2008))).12
The Government‘s second argument is equally unconvincing. The Government argues that, “in the absence оf a valid exclusion being presented by an eligible importer,” Customs “made a decision as to the ‘tariff classification and applicable rate of duty.‘” Def.‘s Reply at 12 (quoting U.S. Shoe CAFC, 114 F.3d at 1569). According to the Government, CBP‘s role in “issu[ing] directives as to what an importer needed to do to claim a duty exclusion” rendered CBP “no mere passive collector of duties.” Id. CBP‘s provision of guidance as to how to claim an exclusion is, however, immaterial to the identification of an actual protestable decision when no exclusion is presented. The Government fails to
Similarly, in Xerox Corp. v. United States, the U.S. Court of Appeals for the Federal Circuit (“Federal Circuit“) held that when an importer failed to claim a duty preference pursuant to the North American Free Trade Agreement (“NAFTA“) at the time of importation, and failed to claim such a preference within the allotted time before or after the entry was liquidated “as entered,” such “as entered” liquidation did not involve a Customs decision susceptible to protest as to the NAFTA preference. 423 F.3d 1356, 1363-65 (Fed. Cir. 2005). Stated more directly, the court found that Customs could not have made a protestable decision to deny the NAFTA duty preference in the absence of Customs receiving a claim for such treatment. Id. at 1365; cf., ARP Materials, Inc. v. United States, Slip Op. 21-73, 2021 WL 2396329, at *8-13 (CIT June 11, 2021) (denying (i) jurisdiction because (a) jurisdiction was available when Customs had granted protests covering parallel entries and importer possessed a facially applicable exclusion from section 301 duties). Here, when Customs liquidated as entered VoestAlpine‘s entries, inclusive of section 232 duties and absent any claim or request for exclusion, Customs could not be said to have made a protestable decision to deny such an exclusion.
As previously noted,
II. Mootness
A. Parties’ Contentions
The Government contends that Plaintiffs’ сlaim against Commerce for granting Exclusion 25363 with an invalid tariff provision “is now moot” given Commerce‘s grant of Exclusion 155507. Def.‘s Mot. at 22-23; see also Def.‘s Reply at 15-16. According to the Government, the “corrected
Plaintiffs contend that this case is not moot because the court retains the “authority to order reliquidation of entries notwithstanding final liquidation” in a case arising under the court‘s (i) jurisdiction. Pls.’ Resp. at 28.
B. Analysis
An action is mooted when “an event occurs while a case is pending on appeal that makes it impossible for the court to grant any effectual relief.” Nasatka, 58 F.3d at 1580 (citation omitted). “Mootness is a jurisdictional question because the [c]ourt is not empowered to decide moot questions or abstract propositions.” North Carolina v. Rice, 404 U.S. 244, 246 (1971) (citations omitted). Thus, the court must address whether Plaintiffs will be entitled to any relief in addition to the relief obtained through Commerce‘s approval of Exclusion 155507 in the event they prevail on their claim.
The full scope of the CIT‘s remedial authority is set forth in complementary statutory provisions in Title 28 of the U.S. Code. Pursuant to section 1585, “[t]he [CIT] shall possess all the powers in law and equity of, or as conferred by statute upon, a district court of the United States.”
While Plaintiffs’ Amended Complaint does not explicitly identify the statutory basis for their cause of action, see Am. Compl. ¶¶ 17-22, “the cause of action generally is considered to arise under the [Administrative Procedure Act (“APA“)]” when the court exercises (i) jurisdiction.13 Nat‘l Fisheries Inst., Inc. v. U.S. Bureau of Customs and Border Prot., 33 CIT 1137, 1148, 637 F. Supp. 2d 1270, 1281 (2009) (citation omitted). In a case arising under the APA, the court may—and generally will—remand for reconsideration an agency action found to be “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”
original submission. See March Regulations, 83 Fed. Reg. at 12,110-11; Commerce FAQs at 25. Bilstein has, however, already obtained exactly that relief from Commerce in the form of Exclusion 155507. See Def.‘s Mot., Ex. F; Pls.’ Resp., Ex. 3 at 5. Commerce can provide no further relief.
Plaintiffs argue, nevertheless, that the case is not moot because the court has the authority to order reliquidation “notwithstanding final liquidation.” Pls.’ Resp. at 28. To support their argument, Plaintiffs cite to Shinyei, among other cases. See id. While Shinyei recognizes the CIT‘s authority to order reliquidation as a form of relief under certain circumstances, 355 F.3d at 1312,14 Plaintiffs fail to develop any arguments addressing reliquidation as a “form of relief that is appropriate in [this] civil action,”
Plaintiffs’ failure to pursue available remedies compels the court to conclude that reliquidation would not constitute an appropriate form of relief.15 First, Plaintiffs did not
seek to apply Exclusion 25363 to the subject entries, Def.‘s Mot., Ex. C, suggesting they were aware the exclusion could not have applied to their entry, and yet they took no immediate remedial action. While CBP would have bеen required to reject the exclusion, that rejection would have alerted Plaintiffs to the error and afforded Plaintiffs time to address the issue.16 Instead, Plaintiffs failed to take any steps concerning Exclusion 25363 until roughly one year after Commerce‘s approval of that exclusion and the exclusion
imported (whichever comes first)“). Plaintiffs therefore bear at least substantial responsibility for their failure to secure a valid exclusion within the time necessary for the exclusion to apply to the subject еntries. Additionally, Plaintiffs failed either to request an extension of liquidation or to protest administratively the liquidation of the subject entries in order to prevent finality of liquidation while they sought to work with BIS to resolve the error. See, e.g., CSMS # 18-000352 (explaining that importers must protest liquidation in order to benefit from an exclusion approved post-entry); supra note 12 (discussing Customs’ use of protests as an administrative mechanism to avoid finality);
Plaintiffs’ clear lack of diligence stands in contrast to the plaintiff in Shinyei. There, the Federal Circuit observed that “Shinyei cannot be described as a party that has slept on its rights” because it first sought “a writ of mandamus ordering liquidation of its entries at the [lower] rate it thought it was entitled to” and, following liquidation at the higher rate, amended its complaint” to assert a claim against Commerce for violating
Shinyei, 355 F.3d at 1309. The Federal Circuit rejected the CIT‘s concern that “allowing Shinyei‘s action to proceed” would permit “the revival of ‘otherwise moot’ claims.” Id. at 1310. But that is precisely what would happen here if the court permitted Plaintiffs’ action to proceed notwithstanding Plaintiffs’ failure to take all steps necessary to secure its rights to an exclusion and to do so in a timely fashion.19
In sum, Plaintiffs commenced an action contesting allegedly unlawful final agency action by Commerce. Am. Compl. ¶¶ 11-22. Plaintiffs have obtained all the relief
CONCLUSION AND ORDER
For the foregoing reasons, the Government‘s motion to dismiss for lack of subject matter jurisdiction is GRANTED. Judgment will be entered accordingly.
/s/ Mark A. Barnett
Mark A. Barnett, Chief Judge
Dated: August 26, 2021
New York, New York