National Fisheries Institute, Inc. v. United States Bureau of Customs & Border Protection , 34 Ct. Int'l Trade 1539 ( 2010 )

Slip Op. 10-137
UNITED STATES COURT OF INTERNATIONAL TRADE
NATIONAL FISHERIES INSTITUTE,
INC., ET AL.,
Plaintiffs,
v. Before: Timothy C. Stanceu, Judge
UNITED STATES BUREAU OF Court No. 05-00683
CUSTOMS AND BORDER
PROTECTION,
Defendant.
OPINION AND ORDER
[Denying defendant’s motion under USCIT Rule 62 for a stay of the judgment pending possible
appeal]
Dated: December 17, 2010
Steptoe & Johnson LLP (Eric C. Emerson, Gregory S. McCue, and Michael A. Pass) for
plaintiffs.
Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, Patricia M.
McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, United States
Department of Justice (Stephen C. Tosini and David F. D’Alessandris); Chi S. Choy, Customs
and Border Protection, United States Department of Homeland Security, of counsel, for
defendant.
Stanceu, Judge: Defendant moves pursuant to USCIT Rule 62 to stay the judgment
entered in this case on October 21, 2010. See Mot. for Stay Pending Possible Appeal (“Def.’s
Mot.”); Nat’l Fisheries Inst., Inc. v. United States, 34 CIT __, Slip Op. 10-120 (Oct. 21, 2010)
(“Nat’l Fisheries V”). The court concludes that a stay of the judgment is not warranted.
Court No. 05-00683 Page 2
I. BACKGROUND
Defendant filed its motion to stay the judgment on December 2, 2010.1 Def.’s Mot. The
judgment ordered the United States Bureau of Customs and Border Protection (“Customs” or
“CBP”) to cancel, and, if necessary, allow replacements for, plaintiffs’ bonds affected by the
amended second remand redetermination that Customs submitted in response to the court’s order
in National Fisheries Institute, Inc. v. United States, 34 CIT __, Slip Op. 10-61 (May 25, 2010).
Nat’l Fisheries V, 34 CIT at __, Slip Op. 10-120, Judgment. For each plaintiff, the court allowed
Customs sixty days from the date that judgment was entered or five days after a plaintiff tenders
a replacement bond, whichever occurs later, to comply with the judgment by effectuating the
amended second remand redetermination. Id. at __, Slip Op. 10-120, Judgment. Further, the
court permanently enjoined Customs “from issuing any demand, claim, or charge upon any bond
that has undergone the cancellation procedure” described in the judgment. Id. at __, Slip Op.
10-120, Judgment.
II. DISCUSSION
Defendant seeks a stay of the judgment “pending the Government’s possible appeal so as
not to possibly render an appeal moot, thus denying the reviewing courts any opportunity to
decide the important issues presented by this case.” Def.’s Mot. 1. Citing Hilton v. Braunskill,
481 U.S. 770, 776 (1987), defendant argues that all four factors that the United States Supreme
Court identified as appropriate for adjudication of a motion for stay of a judgment pending
1
Plaintiffs’ response to defendant’s motion for a stay of the judgment is due on
December 21, 2010. Because the time for the government to bring an appeal will be exhausted
before that date, the court rules on defendant’s motion prior to considering a possible response
by plaintiffs.
Court No. 05-00683 Page 3
appeal–specifically, whether the stay applicant has made a strong showing that he is likely to
succeed on the merits, whether the applicant will be irreparably harmed absent a stay, whether
the issuance of the stay will substantially injure the other parties, and where the public interest
lies–favor granting a stay in this case. Def.’s Mot. 6. The court disagrees.
As a threshold matter, the court observes that no appeal is pending. In Hilton v.
Braunskill, the Supreme Court discussed the equitable factors pertaining to the power of federal
courts under Federal Rule of Civil Procedure 62(c) and Federal Rule of Appellate Procedure 8(a)
to grant a stay pending an actual appeal, not a possible appeal. See Hilton v. Braunskill, 481
U.S. at 776. USCIT Rule 62(c), which parallels the Federal Rule of Civil Procedure,
contemplates a stay in the event of an actual appeal. As of the time of issuance of this Opinion
and Order, defendant has not filed a notice of appeal with the Clerk of the Court of International
Trade. See F.R. App. P. 3. Defendant acknowledges in its motion that “[t]he decision of the
appropriate official upon whether to appeal remains pending.” Def.’s Mot. 1 n.1.
The lack of a pending appeal does not necessarily preclude the court from exercising its
power to stay its judgment and in so doing modify the injunctive relief it has ordered in this case.
See, e.g., 11 Charles A. Wright, Arthur R. Miller & Mary K. Kane, Federal Practice and
Procedure § 2904, at 516-17 (2d ed. 1995) (observing that courts have authority to stay an
injunction pending appeal “[w]hen there is reason to believe that an appeal will be taken”).
However, the court weighed the equitable considerations affecting a decision on a stay when
ruling on the amended second remand redetermination. At that time, the court, in deciding
whether to award permanent injunctive relief in this case, considered whether to stay the
effective date of the judgment to avoid mooting any appeal of the judgment that the government
Court No. 05-00683 Page 4
might bring. Nat’l Fisheries V, 34 CIT at __, Slip Op. 10-120 at 6-12. Deciding against such a
stay, the court concluded “that the bonds remaining at issue in this litigation must be canceled as
soon as possible” and that “the possible mooting of defendant’s appeal is not a sufficient reason
for the court to deny plaintiffs the equitable relief to which plaintiffs are otherwise entitled.” Id.
at __, Slip Op. 10-120 at 11. In deciding defendant’s current motion, the court reconsiders the
matter and again concludes that the likely mooting of defendant’s appeal, were such an appeal to
occur, is not a sufficient ground on which the judgment should be stayed.
Concerning possible success on appeal, defendant argues that “there is more than a
serious and substantial question concerning whether bond determinations are committed to
CBP’s discretion by statute, given the lack of any statutory standards for the Court to apply in
reviewing CBP’s efforts to protect the revenue” and that, as a result, “the ‘arbitrary and
capricious’ standard of review should not have applied to bond determinations.” Def.’s Mot.
9-10. According to defendant, a court must uphold any bond determination by Customs unless
Customs exceeded its statutory authority, there was a constitutional violation, or Customs
violated its own regulation. Id. at 10 (citing Heckler v. Chaney, 470 U.S. 821, 830-31 (1985);
Webster v. Doe, 486 U.S. 592, 600 (1988)). The court previously rejected these arguments. See
Nat’l Fisheries Inst., Inc. v. United States, 33 CIT __, __, 637 F. Supp. 2d 1270, 1283-85 (2009)
(“Nat’l Fisheries II”). In considering the question anew, the court again finds meritless
defendant’s arguments to the effect that the “arbitrary and capricious” standard of review, as
provided by Congress, Section 301 of the Customs Courts Act of 1980, 28 U.S.C. § 2640(e)
(2000), does not apply to the judicial review of the agency actions that were contested in this
litigation. Were defendant correct, individual bond liability limits determined by Customs
Court No. 05-00683 Page 5
essentially would be unreviewable even if arbitrary, capricious, or unreasonable. Nat’l Fisheries
II, 637 F. Supp. 2d. at 1284. The court previously concluded from its examination of
Section 623 of the Tariff Act of 1930, 19 U.S.C. § 1623(a), (2000), which expressly identifies as
relevant factors “the protection of the revenue” and “compliance with any provision of law,
regulation, or instruction which the Secretary of the Treasury or the Customs Service may be
authorized to enforce,” that “there is law for a court to apply in this case.” Id. __, 637 F. Supp.
2d at 1284 (citing Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 410 (1971)).
Defendant argues, in the alternative, that the bond determinations that remain at issue in
this litigation must be sustained as reasonable upon judicial review. Def.’s Mot. 12-14. The
court earlier concluded that the enhanced bonding requirement was contrary to law in multiple
respects. At issue in this case are terminated bonds, the limits of liability of which Customs set
at 100% of an importer’s previous annual duty payments. Nat’l Fisheries II, 33 CIT at __, 637
F. Supp. 2d at 1275. After analyzing the allocation by Congress of authority between the two
agencies, the court held that the U.S. Department of Commerce (“Commerce”) has “the specific
responsibility . . . to determine potential antidumping duty liability as accurately as possible in
the form of the cash deposit” and that Customs acted contrary to the limitations on its authority
when it required a class of importers to post security for antidumping liability at double the level
Commerce determined to be appropriate. Id. at __, 637 F. Supp. 2d at 1294. Moreover, this case
involved not only individual bond determinations but an onerous new bond requirement that
Customs arbitrarily imposed on a specific class of importers, without an adequate justification
grounded in any particularized risk to the revenue. As the court previously concluded, “Customs
arbitrarily and capriciously imposed its heightened bonding requirement solely on U.S. importers
Court No. 05-00683 Page 6
of subject shrimp, even though Customs did not consider whether U.S. shrimp importers pose a
greater risk of defaulting on antidumping duties . . . .” Id. at __, 637 F. Supp. 2d at 1294.
As to whether the government will suffer irreparable injury in the absence of a stay, the
court already considered this possibility and weighed it against other equitable factors upon
concluding that complying with the court’s judgment likely would render moot any appeal once
the bonds subject to this case are canceled. Id. at __, Slip Op. 10-120 at 11. This factor does not
outweigh the other factors, including the adverse effect on plaintiffs from a stay pending a
possible appeal, for reasons discussed below.
Concerning whether issuance of the stay will substantially injure the other parties to the
proceeding, defendant states that “NFI will not be injured by a stay. . . . [T]he importers have, for
the most part, continued to import shrimp throughout this proceeding, and no party has
contended that it would be significantly harmed should CBP be allowed to protect the revenue
pending appeal.” Def.’s Mot. 7. The record in this case does not support defendant’s
characterization of past events that are a matter of record in this case. The enhanced bonding
requirement earlier forced some plaintiff importers to curtail certain importing activities and
adversely affected all plaintiffs. As the court stated previously, “plaintiffs have been required to
post collateral, typically in the form of letters of credit, to obtain bonds in amounts demanded by
Customs according to the [enhanced bonding requirement].” Id. at __, Slip Op. 10-120 at 8. The
court also observed that “[e]arlier, some plaintiffs agreed to cease or reduce importing activity to
avoid the costs of enhanced bonding; others have incurred costs due to the reduced availability
of their credit to conduct their general business activities.” Id. As a general matter, “each of the
plaintiffs has incurred, and will continue to incur absent permanent injunctive relief, adverse
Court No. 05-00683 Page 7
effects as a result of being made subject to the unlawful enhanced bonding requirement.” Nat’l
Fisheries V, 34 CIT at __, Slip Op.10-120 at 7. Additionally, it would be incorrect to state or
imply that plaintiffs, who have incurred irrecoverable costs as a result of an illegal agency
action, have conceded that they will not be significantly harmed were the government to obtain a
stay pending appeal. Id. at __, Slip Op. 10-120 at 8-9; Mem. of Points & Authority in Supp. of
Pls.’ Mot. for J. on the Agency R. 28-29. The unjust, discriminatory harm that would occur
throughout the duration of a possible appeal were Customs permitted to continue to impose the
unlawful, and now repealed, enhanced bonding requirement on a small group of importers
weighs heavily against staying enforcement of the judgment.
With respect to the matter of the public interest, defendants cite to the importance of
collecting all antidumping duties and of “multi-tiered review.” Def.’s Mot. 8-9. Defendant’s
“public interest” argument addressing duty collection would appear to overlook the significance
of the fact that Customs never imposed the enhanced bonding requirement on any importers
other than shrimp importers and the fact that Customs, some time ago, discontinued the
requirement prospectively for all importers, including the plaintiffs in this case. Nat’l Fisheries
II, 34 CIT at __, 637 F. Supp. 2d at 1281. The revenue in question is already protected by cash
deposits; in addition, the court’s judgment does not preclude Customs from requiring
superseding bonds according to the same general bond formula that Customs applies to all
importers. The effect of the judgment is to extend to the duty liability secured by plaintiffs’
terminated bonds the same regulatory treatment that Customs accords to continuous bonds of all
other importers, instead of the unlawful treatment resulting from the enhanced bonding
requirement that Customs, despite multiple opportunities, has refused to redress. Allowing the
Court No. 05-00683 Page 8
discriminatory and unlawful treatment to continue throughout an appellate process would be
contrary to fair and equitable administration of the law. Nor does the importance of multi-tiered
judicial review justify a stay of the judgment. The general principle is that an appeal does not
stay the effect of an injunction. See USCIT Rule 62(a). In summary, as the court previously
concluded, “[t]he public interest is not served by the discriminatory, arbitrary, and capricious
continuation of an onerous and unlawful requirement against a single group of importers.” Nat’l
Fisheries V, 34 CIT at __, Slip Op. 10-120 at 10.
III. CONCLUSION AND ORDER
Defendant has not made a strong showing that it is likely to succeed on the merits should
it bring an appeal. Plaintiffs would suffer irredressable harm were the court to grant the stay
defendant seeks, and granting that stay would not serve the public interest. These factors weigh
strongly against a stay, which the court declines to grant even though recognizing that complying
with the court’s judgment likely will render moot any appeal that defendant may bring.
ORDER
For the aforementioned reasons, it is hereby
ORDERED that Defendant’s Motion for Stay Pending Possible Appeal, filed on
December 2, 2010, be, and hereby is, DENIED.
/s/ Timothy C. Stanceu
Timothy C. Stanceu
Judge
Dated: December 17, 2010
New York, New York