Fakhri v. U.S.

507 F.Supp.2d 1305

Firoze A. FAKHRI d.b.a. International Trading Co., Plaintiff v. UNITED STATES, Defendant.

Slip Op. 07-126.

Court No. 98-08-02658.

United States Court of International Trade.

August 20, 2007.

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Rode & Qualey (R. Brian Burke and William J. Maloney), for Plaintiff Firoze A. Fakhri D.B.A. International Trading Co.

Peter D. Keisler, Assistant Attorney General; Barbara S. Williams, Attorney in Charge, International Trade Field Office Commercial Litigation Branch, Civil Division, U.S. Department of Justice (James A. Curley); Edward N. Maurer, Office of Assistant Chief Counsel, U.S. Customs and Border Protection, of Counsel; and. Dean A. Pinkert, Office of Chief Counsel for Import Administration, U.S. Department of Commerce, of Counsel, for Defendant United States.

OPINION

WALLACH, Judge.

I INTRODUCTION

Firoze A. Fakhri, who does business as "International Trading Company" ("Int'l Trading Co."), an importer of shop towels from Bangladesh, seeks recovery of expenses and fees under the Equal Access To Justice Act ("EAJA")¹ for being forced to relitigate an issue previously decided in a case between the same parties.² Defendant United States claims that an EAJA award is unavailable to Plaintiff, arguing its position in the second case was substantially justified, and that Intl Trading Co. may not recover because this case was filed in his fictitious business name and not in the name of Fakhri's Subchapter S corporation. Although the Government's position in this case was wholly without merit, because Plaintiff has come to the court with unclean hands, his EAJA claim is denied.

II BACKGROUND

The subject of the civil action for which a fee award is sought³ is a shipment of shop towels that Fakhri purchased in the name of his unincorporated business, Int'l Trading Co.⁴

In Int'l Trading II, the Federal Circuit affirmed this court's judgment in Int'l Trading I, holding that where liquidation of entries had been suspended by statute pending completion of an administrative review, "the publication of the final results in the Federal Register constituted notice from Commerce to Customs that the suspension of liquidation on the subject entries had been removed" within the meaning of 19 U.S.C. § 1504(d) (1993). Int'l Trading II, 281 F.3d at 1277. The Federal Circuit also stated that § 1504(d) (1993) had thereafter "been amended, but not in ways material to the issue in [that] case." Id. at 1271.

Int'l Trading III and Int'l Trading IV were similar in all material respects to Int'l Trading II, except that the entry of shop towels covered by these cases was made approximately one month after the last entry of merchandise covered by Int'l Trading II. Thus, Int'l Trading III and Int'l Trading IV fall into the subsequent administrative review of the antidumping duty order in place against shop towels from Bangladesh. That last entry was also subject to an amended statute, modified by the passage of the Uruguay Round Agreements Act, Pub.L. No. 103-465, 108 Stat. 4809 (1994).⁵

The Federal Circuit in Int'l Trading IV affirmed Int'l Trading III, holding that the period for deemed liquidation pursuant to § 1504(d) was triggered when the final results of the administrative review covering the entry were published in the Federal Register on October 30, 1996, and not when Customs finally received liquidation instructions from Commerce on July 1, 1997.

Plaintiff filed a Motion to Amend the Pleadings and Fee Application to Conform to the Evidence and More Fully Identify the Plaintiff, Real Party in Interest ("Plaintiffs Motion") on March 8, 2006. Oral arguments concerning Plaintiffs Motion and the parties' supplemental briefings were held on May 9 and August 23, 2006.

III STANDARD OF REVIEW

Under EAJA, an application for fees and expenses must be granted when "(1) the claimant is a prevailing party; (2) the government's position during the administrative process or during litigation was not substantially justified; (3) no special circumstances make an award unjust; and (4) the fee application is timely and supported by an itemized fee statement." Former Employees of Tyco Elecs., Fiber Optics Div. v. United States, 350 F.Supp.2d 1075, 1081 (CIT 2004) (citing 28 U.S.C. § 2412(d)(1)(A)-(B)); see Libas, Ltd. v. United States, 314 F.3d 1362, 1365 (Fed.Cir.2003) (citing INS v. Jean, 496 U.S. 154, 158, 110 S.Ct. 2316, 110 L.Ed.2d 134 (1990)). The EAJA is a waiver of sovereign immunity that "must be strictly construed." Ardestani v. INS, 502 U.S. 129, 137, 112 S.Ct. 515, 116 L.Ed.2d 496 (1991). Once sovereign immunity has been waived, the court may not narrow such a waiver. United States v. Kubrick, 444 U.S. 111, 117-18, 100 S.Ct. 352, 62 L.Ed.2d 259 (1979).

IV DISCUSSION

A The Government's Position Lacked Substantial Justification

The Government Was Not Substantially Justified in its Earlier Arguments Before This Court and the Federal Circuit

Plaintiff argues that the Government's refusal to stipulate judgment on its entry after the close of Int'l Trading II was not substantially justified, entitling Plaintiff to a reimbursement of its costs and expenses enumerated in its Application.

Defendant offers several arguments in response. The Government argues that it was substantially justified because 1) the 1994 amendments altered Customs' obligations to liquidate in a timely manner and 2) that publication in the Federal Register notice does not constitute notice to Customs. Defendant's Opposition To Plaintiffs Application For Fees And Other Expenses ("Defendant's Opposition") at 11-30. Alternatively, the Government argues that even if the amendments are applicable to the entry at issue, the time periods for liquidation commences on the date Commerce issued instructions to Customs. Id. at 30.

a The 1994 Amendments Were Not Significant Enough to Justify Defendant's Position

Under EAJA, a prevailing party other than the United States, in an action against the United States, shall recover fees and expenses, "unless the court finds that the position of the United States is substantially justified or that special circumstances make an award unjust." 28 U.S.C. § 2412(d)(1)(A). Int'l Trading Co. was unquestionably the prevailing party in all aspects of the litigation, both before this court and the Federal Circuit.

The Supreme Court has interpreted the term "substantially justified" to mean "'justified in substance or in the main' — that is, justified to a degree that could satisfy a reasonable person.... To be `substantially justified' means, of course, more than merely undeserving of sanctions for frivolousness; that is assuredly not the standard for Government litigation of which a reasonable person would approve." Pierce v. Underwood, 487 U.S. 552, 565-66, 108 S.Ct. 2541, 101 L.Ed.2d 490 (1988) (citation omitted). "Substantially justified" requires "that the Government show that it was clearly reasonable in asserting its position, including its position at the agency level, in view of the law and the facts." Luciano Pisoni Fabbrica Accessori Instrument Musicali & Enzo Pizzi, Inc. v. United States, 837 F.2d 465, 466 (Fed.Cir.1988) (quoting Gavette v. Office of Pers. Mgmt., 808 F.2d 1456, 1467 (Fed.Cir.1986) (en banc) (emphasis in original)). In assessing the reasonableness of the Government's overall position, the Federal Circuit has stated "it is for the trial court to weigh each position taken and conclude which way the scale tips." Chiu v. United States, 948 F.2d 711, 715 n. 4 (Fed.Cir.1991).

It is the Government's burden to demonstrate it was substantially justified. See, e.g., Libas, Ltd. v. United States, 314 F.3d 1362, 1365 (Fed.Cir.2003).

In making its judgment, the court is guided by certain criteria which can indicate a position's unreasonableness. Ramon-Sepulveda v. INS, 863 F.2d 1458, 1460 (9th Cir.1988); see also Dubose v. Pierce, 761 F.2d 913 (2d Cir.1985). In particular, inconsistency in the Government's position, either in comparison to its agency's actions or to the agency's regulations, evidences a lack of substantial justification. See, e.g., Ramon-Sepulveda, 863 F.2d at 1460; Nakamura v. Heinrich, 17 CIT 119, 120 (1993).

Relitigation of a previously decided issue is also a strong factor against a finding of substantial justification. Save Our Ecosystems v. Clark, 747 F.2d 1240, 1250 (9th Cir.1984). The Government's argument that the proviso of § 1504(d) excepted entries subject to § 1675(a)(3) from the liquidation time requirement was rejected twice, once in Int'l Trading III, and again by the Federal Circuit in Int'l Trading IV. The Federal Circuit has clearly stated its position on this issue.

The Government argues that it did not stipulate to Int'l Trading II "because it believed that the amendments made to §§ 1504(d) and 1675(a), which were not applicable to the earlier case between the parties but are applicable to this case, have brought about significant changes in the law."⁶ Defendant's Opposition at 10-11 (quoting Letter from James A. Curley to R. Brian Burke, dated August 23, 2002, Defendant's Exhibit 4). The Government insists that its, argument earlier in the litigation, that the added proviso to the statute meant there was no time limit for Commerce to give notice to Customs to liquidate the entries, had a reasonable basis in law and fact. See Defendant's Opposition at 19. This court rejected that argument by granting Summary Judgment to Plaintiff, and that Judgment was affirmed on appeal. Int'l Trading III and Int'l Trading IV. Rejecting the Government's position, the Federal Circuit stated:

We think it unlikely that Congress would have undone the primary objective of the 1993 amendment to section 1504(d) by removing time limits already present in the law, without any indication in the legislative history that such a substantive change was being made.

Int'l Trading IV, 412 F.3d at 1313 (emphasis added). The purpose of the...