Diamond Tools Tech. LLC v. United States

686 F.Supp.3d 1374

DIAMOND TOOLS TECHNOLOGY LLC, Plaintiff, v. UNITED STATES, Defendant,andDiamond Sawblades Manufacturers' Coalition, Defendant-Intervenor.

Slip Op. 24-27 Court No. 20-00060

United States Court of International Trade

March 1, 2024

Lucius B. Lau, White & Case LLP, of Washington, D.C., for Plaintiff Diamond Tools Technology LLC. With him on the brief were Jay C. Campbell, Walter J. Spak, Ron Kendler, and Allison J.G. Kepkay.

Antonia R. Soares, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., argued for Defendant United States. With her on the brief were Brian M. Boynton, Principal Deputy Assistant Attorney General, Patricia M. McCarthy, Director, and Franklin E. White, Jr., Assistant Director. Of counsel on the brief was Tamari J. Lagvilava, Senior Attorney, Office of the Chief Counsel, U.S. Customs and Border Protection.

OPINION AND ORDER

Reif, Judge:

Before the court is the application by plaintiff Diamond Tools Technology, LLC ("DTT USA" or "plaintiff") for attorney fees brought under 28 U.S.C. § 2412. See Pl.'s Application for Att'y Fees ("Pl. App'n"), ECF No. 103. Plaintiff seeks an award of $603,111.11 on account of the position taken by U.S. Customs and Border Protection ("Customs") throughout the investigation under the Enforce and Protect Act ("EAPA"), 19 U.S.C. § 1517 (2018),¹ and what plaintiff alleges as Customs' "unreasonable adherence to that unlawful position in this Court." Id. at 1.

In response, defendant the United States (the "government" or "defendant") argues that plaintiff's action fails because the "case presented a matter of first impression and a novel issue," which, defendant asserts, substantially justifies the position taken by Customs during the investigation and case before the court. Defs.' Resp. to Pl. App'n ("Def. Resp."), at 1, ECF No. 106. Defendant asserts that plaintiff concedes as much. Id. at 1, 11. For the reasons discussed below, the court denies plaintiff's motion.

BACKGROUND

The court presumes familiarity with the facts of this case as set out in its previous opinions. See Diamond Tools Tech., LLC v. United States ("Diamond I"), 45 CIT —, 545 F. Supp. 3d 1324 (2021); Diamond Tools Tech. LLC v. United States ("Diamond II"), 46 CIT —, 609 F. Supp. 3d 1378 (2022); Diamond Tools Tech. LLC v. United States ("Diamond III"), 47 CIT —, 647 F. Supp. 3d 1383 (2023). The court recounts the following procedural events relevant to plaintiff's application for attorney fees.

On March 12, 2020, plaintiff filed a complaint contesting Customs' final determination of evasion under EAPA. See Compl., ECF No. 2. On November 5, 2021, the court issued an opinion and order sustaining in part and remanding in part Customs' Final Determination of evasion and Final Administrative Decision. See Diamond I, 45 CIT —, 545 F. Supp. 3d 1324 at 1356. In Diamond I, the court remanded in part Customs' determination that DTT USA violated EAPA, ordering Customs to re-examine its finding that plaintiff had entered covered merchandise by means of a material false statement. Id. The court concluded that "the interaction between Customs' EAPA investigations and Commerce's scope inquiries, specifically a circumvention inquiry, [was] a novel one . . . ." Id. at —, 545 F. Supp. 3d at 1349. Relying on the Conference Committee on the Trade Enforcement Act of 2015 ("Conference Report") and the Chevron doctrine, the court further sustained Customs' determination as to the first two elements of a finding under EAPA. Id. at —, 545 F. Supp. 3d at 1349-50 (citing Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc. 467 U.S. 837, 842-43, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984)). The court held "that Customs did not violate DTT USA's due process rights[,]" sustained Customs' imposition of interim measures and concluded "that Customs' finding that DTT USA's entries that pre-dated December 1, 2017, are 'covered merchandise' is in accordance with law." Id. at —, 545 F. Supp. 3d at 1356. However, the court remanded to Customs the issue concerning the entry of the covered merchandise by means of a "material and false statement or act." Id.; see 19 U.S.C. § 1517(a)(5)(A). The court ordered Customs to explain "how DTT USA's failure to seek . . . clarification [as to the scope of Commerce's instructions] constitutes a material and false statement or act, or a material omission." Id. at —, 545 F. Supp. 3d at 1354.

On January 27, 2022, Customs issued a remand redetermination. See Final Remand Redetermination ("First Remand Results"), ECF No. 70. Customs again found that "DTT [USA] made material false statements, or acts, or material omissions with respect to its entries of diamond sawblades imported prior to December 1, 2017." Id. at 1.

On December 16, 2022, the court issued an opinion and order remanding to Customs for the reconsideration of "the applicability of the EAPA in the confined circumstance of an importer's reliance on Commerce's clear directive." Diamond II, 46 CIT at —, 609 F. Supp. 3d at 1391. The court stated that "DTT USA filling out the import documentation based on the explicit and clear terms of Commerce's order and the associated 2006 IDM, does not, in accordance with statutory construction, comprise a material and false statement or omission." Id. at —, 609 F. Supp. 3d at 1388. On March 21, 2023, Customs issued a second remand redetermination "under respectful protest" and determined that DTT USA did not evade the AD Order. See Final Remand Redetermination ("Second Remand Results"), ECF No. 92.

On July 28, 2023, the court issued a final judgment sustaining Customs' Second Remand Results. See Diamond III, 47 CIT —, 647 F. Supp. 3d. 1383.

On October 26, 2023, plaintiff filed its application for attorney fees. See Pl. App'n. The application requests "reasonable attorney fees" in the amount of $603,111.11 pursuant to the Equal Access to Justice Act ("EAJA"). Id. at 1 (citing 28 U.S.C. § 2412). Plaintiff maintains that it is entitled to receive attorney fees under the EAJA because the government's position was not "substantially justified." Id. at 8-12 Plaintiff requests that the court apply a special factor in determining the attorney fees to be awarded pursuant to 28 U.S.C. § 2412(d)(2)(A). Id. at 12. Plaintiff requests further that this court award additional fees for paralegal services, alleges that DTT USA was forced out of business by Customs' actions and asks the court to take this alleged fact into account. Id. at 13-14.

On November 27, 2023, defendant filed a response in opposition to plaintiff's application, moving for the court to deny the application. See Def. Resp. Defendant argues that (1) Customs' decision and position throughout the litigation was substantially justified and (2) special circumstances render attorney fees unjust. Id. at 1-2. Defendant contends further that even if DTT USA is entitled to attorney fees, the requested award is contrary to law and unreasonable due to: (1) DTT USA's failure to establish entitlement on the basis of a "special factor"; (2) DTT USA's failure to establish its entitlement to enhanced fees under the "Adjusted Laffey Matrix"; (3) DTT USA's incorrect calculation of its cost-of-living adjustment; (4) DTT USA's incorrect determination of paralegal fees; (5) DTT USA's impermissible request for attorney fees related to its unsuccessful claims; and (6) DTT USA's impermissible request of attorney fees for "excessive, irrelevant, vague, and duplicative time entries." Id. at 2.

This decision analyzes the first argument and concludes that the position of Customs and the government in the litigation was substantially justified, rendering improper an award of attorney fees in the instant action. Accordingly, the decision does not address the further arguments of plaintiff and defendant.

JURISDICTION AND STANDARD OF REVIEW

The court exercises jurisdiction pursuant to Section 517(g)(1) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1517(g)(1), and 28 U.S.C. § 1581(c). The court retains jurisdiction after issuing judgment to adjudicate parties' timely application for fees and expenses. See 28 U.S.C. § 2412(b), (d)(1)(A) (fees and other expenses awardable "in any civil action" brought against the United States "in any court having jurisdiction of that action"); USCIT R. 54.1 (applications for attorney fees and expenses "must be filed within 30 days after the date of final judgment").

Under the EAJA, the court may grant attorney fees and other expenses to the prevailing party in an action against the United States. 28 U.S.C. § 2412(a)(1), (d)(1)(A). The burden is on the government to demonstrate that the position it took in the action was substantially justified or that special circumstances exist making it unjust to grant the prevailing party fees and other expenses. Scarborough v. Principi, 541 U.S. 401, 414-15, 124 S.Ct. 1856, 158 L.Ed.2d 674 (2004) (citations omitted); Brewer v. Am. Battle Monuments Comm'n, 814 F.2d 1564, 1569 (Fed. Cir. 1987) (citations omitted). The EAJA limits the court's review to the record of the civil action for which fees and other expenses are sought and the agency's action "upon which the civil action is based." 28 U.S.C. § 2412(d)(1)(B), (2)(D).

The EAJA provides that an application for attorney fees shall be filed "within thirty days of final judgment in the action," 28 U.S.C. § 2412(d)(1)(B), and provides further that " 'final judgment' means a judgment that is final and not appealable," 28 U.S.C. § 2412(d)(2)(G); USCIT R. 54.1 (applications for attorney fees and expenses "must be filed within 30 days after the date of final judgment"). The court issued a final judgment in the instant action on July 28, 2023. Diamond III, 47 CIT —, 647 F. Supp. 3d. 1383. The government did not file for appeal within the sixty-day window, and plaintiff's application for attorney fees is therefore timely filed. Fed. R. App. P. 4(a)(1)(B).

DISCUSSION

I. Whether DTT is...