Standard Furniture Mfg. Co. v. United States , 2011 CIT 32 ( 2011 )

Slip Op. 11-32
UNITED STATES COURT OF INTERNATIONAL TRADE
STANDARD FURNITURE
MANUFACTURING CO., INC.,
Plaintiff,
v.
UNITED STATES, Before: Gregory W. Carman, Judge
Timothy C. Stanceu, Judge
Defendant, Leo M. Gordon, Judge
and Consol. Court No. 07-00028
AMERICAN FURNITURE
MANUFACTURERS COMMITTEE FOR
LEGAL TRADE, VAUGHAN-BASSETT
FURNITURE COMPANY, INC., KINCAID
FURNITURE CO., INC., L. & J.G.
STICKLEY, INC., SANDBERG FURNITURE
MANUFACTURING COMPANY, INC.,
STANLEY FURNITURE COMPANY, INC.,
and T. COPELAND AND SONS, INC.,
Defendant-Intervenors.
OPINION AND ORDER
[Granting plaintiff’s motions to amend complaints to add a new claim and additional factual
allegations and extending the time for plaintiff to respond to defendant-intervenors’ motion to
dismiss]
Dated: March 23, 2011
Mowry & Grimson, PLLC (Jeffrey S. Grimson, Jill A. Cramer, Kristin H. Mowry, Sarah
M. Wyss and Susan E. Lehman) for plaintiff.
Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, Franklin E. White,
Jr., Assistant Director, Commercial Litigation Branch, Civil Division, United States Department
of Justice (David S. Silverbrand and Michael J. Dierberg) and Neal J. Reynolds and Patrick V.
Gallagher, Jr., United States International Trade Commission, for defendant.
Consol. Court No. 07-00028 Page 2
King & Spalding, LLP (Jeffrey M. Telep, Joseph W. Dorn, Steven R. Keener and Taryn K.
Williams) for defendant-intervenors.
Stanceu, Judge: Plaintiff Standard Furniture Manufacturing Co., Inc. (“Standard”), a
domestic furniture manufacturer, brought four actions, now consolidated, to contest on various
grounds its denial by the United States International Trade Commission (“ITC”) of status as an
“affected domestic producer” (“ADP”) under the Continued Dumping and Subsidy Offset Act of
2000 (“CDSOA”), 19 U.S.C. § 1675c (repealed 2006). ADP status potentially would have
qualified Standard for distributions of antidumping duties collected under an antidumping duty
order on imports of wooden bedroom furniture from the People’s Republic of China. Notice of
Amended Final Determination of Sales at Less Than Fair Value & Antidumping Duty Order:
Wooden Bedroom Furniture From the People’s Republic of China, 70 Fed. Reg. 329 (Jan. 4,
2005). Plaintiff also challenges the failure of United States Customs and Border Protection
(“Customs”) to pay it such distributions.
Before the court are plaintiff’s motions, opposed by defendant and defendant-intervenors,
for leave to amend the complaint in two of the four actions consolidated under Consol. Court
No. 07-00028.1 Also before the court is plaintiff’s motion, opposed by defendant-intervenors,
requesting an extension of time for its response to defendant-intervenors’ motion to dismiss and
for judgment on the pleadings. The court will grant plaintiff’s motions.
1
Due to the presence of common issues, the court, on February 15, 2011, consolidated
plaintiff’s four actions. Order (Feb. 15, 2011), ECF No. 57. Consolidated with Standard Mfg.
Co. v. United States under Consol. Court No. 07-00028 are Standard Mfg. Co. v. United States,
Court No. 07-00295, Standard Mfg. Co. v. United States, Court No. 09-00027, and Standard
Mfg. Co. v. United States, Court No. 10-00082.
Consol. Court No. 07-00028 Page 3
I. BACKGROUND
Plaintiff brought the four actions between January 31, 2007 and March 4, 2010. These
actions pertain to antidumping duties collected by Customs during particular fiscal years, as
follows: FY 2006 (Court No. 07-00028); FY 2007 (Court No. 07-00295); FY 2008 (Court No.
09-00027); and FY 2009 & FY 2010 (Court No. 10-00082). The court stayed the four actions
pending a final resolution of other litigation raising the same or similar issues.2 See, e.g., Order
(June 11, 2007), ECF No. 37. Plaintiff filed the motions to amend the complaints on January 24,
2011. Mot. for Leave to Amend Compl. (Court No. 07-00028) (Jan. 24, 2011), ECF No. 47;
Mot. for Leave to Amend Compl. (Court No. 07-00295) (Jan. 24, 2011), ECF No. 45.3 The court
lifted the stays soon thereafter. Order (Feb. 9, 2011), ECF No. 52. Defendant-intervenors filed
their motion to dismiss and for judgment on the pleadings on February 23, 2011. Def.-
Intervenors’ Mot. to Dismiss & for J. on the Pleadings (Feb. 23, 2011), ECF No. 61 (“Def.-
Intervenors’ Mot.”); Def.-Intervenors’ Mem. in Supp. of their Mot. to Dismiss & for J. on the
Pleadings (Feb. 23, 2011), ECF No. 61 (“Def.-Intervenors’ Mem.”).
II. DISCUSSION
In the CDSOA, Congress directed the ITC to forward to Customs a list of “petitioners
and persons with respect to each [antidumping or countervailing duty] order . . . and a list of
2
The court’s orders stayed the actions “until final resolution of Pat Huval Restaurant &
Oyster Bar, Inc. v. United States International Trade Commission, Consol. Court No. 06-00290,
that is, when all appeals have been exhausted.” Order (June 11, 2007), ECF No. 37. The
language of the court’s stay orders in the other consolidated actions was substantially the same.
3
Plaintiff amended the complaints in Court Nos. 07-00295, 09-00027, and 10-00082, as
of right. Am. Compl. (Court No. 07-00295) (Oct. 4, 2007), ECF No. 16; First Am. Compl.
(Court No. 09-00027) (Feb. 9, 2011), ECF No. 32; First Am. Compl. (Court No. 10-00082) (Feb.
9, 2011), ECF No. 29.
Consol. Court No. 07-00028 Page 4
persons that indicate support of the petition by letter or through questionnaire response.”
19 U.S.C. § 1675c(d)(1). The CDSOA also directed Customs to deposit collected antidumping
and countervailing duties into special accounts, to segregate those duties according to the
relevant antidumping or countervailing duty order, and to distribute, on an annual basis, a ratable
share of duties collected for a particular unfairly-traded product to domestic producers who
qualified as ADPs under the CDSOA as reimbursement for incurred qualifying expenditures. Id.
§ 1675c(e). In the 2006 repeal of the CDSOA, Congress provided for the continued distribution
of duties “on entries of goods made and filed before October 1, 2007.” Deficit Reduction Act of
2005, Pub. L. No. 109-171, § 7601(b), 120 Stat. 4, 154 (2006).4
Common to each of Standard’s complaints are four claims. Standard claims, first, that
the actions of the two agencies were inconsistent with the CDSOA, not supported by substantial
evidence, and otherwise not in accordance with law. Compl. ¶ 41 (Court No. 07-00028) (Jan.
31, 2007), ECF No. 5. Second, it claims that the “petition support requirement” of the CDSOA,
which conditions the availability of ADP status on a domestic producer’s support of an
antidumping or countervailing duty petition, violates the First Amendment of the United States
Constitution. Id. ¶¶ 43-44. Third, Standard claims that the petition support requirement violates
the Equal Protection Clause of the Fourteenth Amendment of the United States Constitution by
impermissibly discriminating between Standard and other domestic furniture producers who
expressed support for the antidumping petition. Id. ¶¶ 46-47. Fourth, plaintiff claims that the
4
In 2010, Congress further limited distributions by prohibiting payments with respect to
entries of goods that as of December 8, 2010 were “(1) unliquidated; and (2)(A) not in litigation;
or (B) not under an order of liquidation from the Department of Commerce.” Pub. L. No.
111-291, § 822, 124 Stat. 3064, 3163 (2010).
Consol. Court No. 07-00028 Page 5
petition support requirement, by basing eligibility for distributions on past conduct, i.e., the past
expression of support for an antidumping petition, is impermissibly retroactive under the Due
Process Clause of the Fifth Amendment of the United States Constitution. Id. ¶ 49.
The complaints Standard filed in the two most recent actions, Court Nos. 09-00027 and
10-00082, also state a fifth claim, designated as Count Five, that the petition support requirement
of the CDSOA “violates the First Amendment to the Constitution as applied to Standard because
it discriminates against Standard based on expression of its views rather than action (its litigation
support).” First Am. Compl. ¶ 50 (Court No. 09-00027) (Feb. 9, 2011), ECF No. 32; First Am.
Compl. ¶ 52 (Court No. 10-00082) (Feb. 9, 2011), ECF No. 29. Plaintiff has moved for leave to
amend the complaints in the 2007 actions to add this fifth claim. Mot. for Leave to Amend
Compl. & Proposed First Am. Compl. ¶ 50 (Court No. 07-00028) (Jan. 24, 2011), ECF No. 47;
Mot. for Leave to Amend Compl. & Proposed Second Am. Compl. ¶ 50 (Court No. 07-00295)
(Jan. 24, 2011), ECF No. 45. The proposed amended complaints also contain new factual
allegations.5 Proposed First Am. Compl. ¶¶ 20, 21 (Court No. 07-00028); Proposed Second Am.
Compl. ¶¶ 20, 21 (Court No. 07-00295).
Defendant and defendant-intervenors oppose plaintiff’s motions to amend the complaints
on the ground of futility, arguing that any relief on plaintiff’s proposed new “as applied” claim
5
As plaintiff states in its motions, “Standard’s proposed amended complaint also adds
several paragraphs to the Statement of Facts providing further detail necessary to present the
contrast between the litigation support provided by Standard and that provided by four domestic
producers (1) who provided the same level of support, (2) who were not petitioners, and
(3) received $4.5 million in CDSOA payouts based on their support for the petition.” Mot. for
Leave to Amend Compl. 7 (Court No. 07-00028) (Jan. 24, 2011), ECF No. 47; Mot. for Leave to
Amend Compl. 7 (Court No. 07-00295) (Jan. 24, 2011), ECF No. 45. The proposed amended
complaints also update certain factual information.
Consol. Court No. 07-00028 Page 6
would be foreclosed by binding precedent holding that the CDSOA’s petition support
requirement does not violate the First Amendment. Resp. of Defs., United States & U.S.
Customs & Border Prot., to Mot. for Leave to Amend Compl. (Feb. 14, 2011), ECF No. 55
(“Def.’s Resp.”); Def.-Intervenors’ Opp’n to Pl.’s Mot. for Leave to Amend its Compl. (Feb. 14,
2011), ECF No. 56 (“Def.-Intervenor’s Opp’n”). Defendant and defendant-intervenors argue,
inter alia, that the claim plaintiff seeks to add is indistinguishable from that rejected by the
United States Court of Appeals for the Federal Circuit (“Court of Appeals”) in SKF USA, Inc. v.
United States, 556 F.3d 1337 (Fed. Cir. 2009). In addition, defendant-intervenors base their
motion to dismiss and for judgment on the pleadings on the grounds of lack of subject matter
jurisdiction and failure to state claims on which relief can be granted. Def.-Intervenors’ Mot.;
Def.-Intervenors’ Mem.
The new claim plaintiff proposes to add and the supporting factual allegations are already
before the court as a result of the complaints filed in the 2009 and 2010 actions, but these actions
pertain to only three of the five fiscal years at issue in the consolidated case. The amendments, if
allowed by the court, would permit plaintiff to achieve its objective of conforming the
complaints in the 2007 actions with the complaints in the 2009 and 2010 actions. It also would
allow plaintiff to achieve its objective of pleading its factual allegations with respect to the
CDSOA distributions made in all five of the fiscal years for which plaintiff challenges agency
actions. Plaintiff seeks the opportunity to plead facts sufficient to satisfy the factual pleading
standard set forth in Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007) and Ashcroft v. Iqbal,
129 S.Ct. 1937, 1951-52 (2009), and the interpretations of those cases in the United States Court
of International Trade and the Court of Appeals. Mot. for Leave to Amend Compl. 7-8 (Court
Consol. Court No. 07-00028 Page 7
No. 07-00028) (Jan. 24, 2011), ECF No. 47; Mot. for Leave to Amend Compl. 7-8 (Court
No. 07-00295) (Jan. 24, 2011), ECF No. 45. In the interest of justice, plaintiff should be
permitted to amend its complaints in the 2007 actions to serve both of these objectives.
As provided in USCIT Rule 15(a)(2), the court should freely give leave to amend a
pleading “when justice so requires.” USCIT R. 15(a)(2). The court has discretion, however, to
deny a motion for leave to amend a pleading on various grounds, including futility or prejudice
to the other parties. See Foman v. Davis, 371 U.S. 178, 182 (1962); see also Intrepid v. Pollock,
907 F.2d 1125, 1128 (Fed. Cir. 1990); 6 Charles A. Wright, Arthur R. Miller & Mary K. Kane,
Federal Practice and Procedure § 1487, at 701 (3d ed. 2010) (“Perhaps the most important factor
listed by the Court for denying leave to amend is that the opposing party will be prejudiced if the
movant is permitted to alter a pleading.”).
The court discerns no prejudice to defendant or defendant-intervenors that would result
from allowing the amendment of the two earlier complaints, and neither defendant nor
defendant-intervenors point to any. The opposition to plaintiff’s motions to amend is based
solely on the ground of futility. However, in the circumstances of this consolidated case, in
which the legal theory supporting the new claim and the new factual allegations already are
before the court and are addressed in defendant-intervenors’ motion to dismiss and for judgment
on the pleadings, and in which amendment would not prejudice opposing parties, the court is not
required to consider futility in ruling on plaintiff’s motions to amend. See Foman, 371 U.S.
at 182 (“Of course, the grant or denial of an opportunity to amend is within the discretion of the
District Court . . . .”). The court necessarily would consider whether the proposed new claim
should be dismissed in ruling on defendant-intervenors’ motion to dismiss and for judgment on
Consol. Court No. 07-00028 Page 8
the pleadings, whether or not it grants the instant motions to amend. Therefore, the court
reserves any decision on dismissing the new claim until it rules on defendant-intervenors’
motion to dismiss, which is now moot with respect to the 2007 actions but not with respect to the
2009 and 2010 actions.6 Briefing on this motion is not yet complete. Defendant-intervenors
may submit new a new motion to dismiss the complaints, as now amended, in the 2007 actions.
Also before the court is plaintiff’s motion for an extension of time to respond to
defendant-intervenors’ motion to dismiss and for judgment on the pleadings. Partial Consent
Mot. for Extension of Time (Mar. 16, 2011), ECF No. 74. This motion is also moot as to the
2007 actions but not moot as to the 2009 and 2010 actions. Defendant-intervenors oppose this
motion. Def.-Intervenors’ Opp’n to Pl.’s Mot. for Extension of Time (Mar. 18, 2011), ECF No.
77. The court finds good cause for an extension of this time period.
III. CONCLUSION AND ORDER
The court, in its discretion, will grant plaintiff’s motions to amend its complaints in Court
Nos. 07-00028 and 07-00295, reserving any ruling on whether the new claim plaintiff is adding
to those actions should be dismissed. As to the claims in the 2009 and 2010 actions, the court
will grant plaintiff additional time to respond to defendant-intervenors’ motion to dismiss.
6
Defendant-intervenors’ motion for judgment on the pleadings, which applies only to the
complaint in Court No. 07-00028 (the only of the four now-consolidated actions in which
answers have been filed) is mooted by this Opinion and Order, which allows an amended
complaint in that action. Answer of Def., United States Customs & Border Protection (Court
No. 07-00028) (Apr. 3, 2007), ECF No. 20; Answer of Defs. Int’l Trade Comm’n & its
Chairman Daniel R. Pearson (Court No. 07-00028) (Apr. 6, 2007), ECF No. 21; Answer of Def.-
Intervenors, American Furniture Manufacturing Committee for Legal Trade & Vaughan-Bassett
Furniture Co., Inc. (Court No. 07-00028) (Apr. 11, 2007), ECF No. 24. Also moot is defendant-
intervenors’ motion to dismiss with respect to the complaint in Court No. 07-00295, now
amended.
Consol. Court No. 07-00028 Page 9
ORDER
In consideration of plaintiff’s motions to amend its complaints in Court Nos. 07-00028
and 07-00295, defendant and defendant-intervenors’ oppositions thereto, plaintiff’s motion for
an extension of time to respond to defendant-intervenors’ motion to dismiss and for judgment on
the pleadings, as filed on March 16, 2011, and all papers and proceedings herein, and upon due
deliberation, it is hereby
ORDERED that plaintiff’s motions to amend its complaints, as filed on January 24,
2011, be, and hereby are, GRANTED; it is further
ORDERED that the proposed amended complaints in Court No. 07-00028 and Court No.
07-00295 be, and hereby are, accepted for filing in the consolidated action as of this date; and it
is further
ORDERED that the period for plaintiff to respond to defendant-intervenors’ motion to
dismiss the claims in the complaints filed in Courts Nos. 09-00027 and 10-00082, be, and hereby
is, extended to April 22, 2011.
/s/ Timothy C. Stanceu
Timothy C. Stanceu
Judge
Dated: March 23, 2011
New York, New York