Oman Fasteners, LLC v. United States

520 F.Supp.3d 1332

OMAN FASTENERS, LLC, et al., Plaintiffs,

v.UNITED STATES, et al., Defendants.

Slip Op. No. 21-72

Consolidated Court No. 20-00037

United States Court of International Trade.

June 10, 2021

Michael P. House, Perkins Coie, LLP, of Washington, D.C., for plaintiffs Oman Fasteners LLC and Huttig, Inc., and Huttig Building Products, Inc. With him on the submissions were Andrew Caridas and Shuaiqi Yuan.

Tara K. Hogan, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., for defendants. With her on the submissions were Brian M. Boynton, Acting Assistant Attorney General, Jeanne E. Davidson, Director, Aimee Lee, Assistant Director, and Meen Geu Oh, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Washington, D.C.

Stanceu, Judge:

Plaintiffs Oman Fasteners LLC ("Oman"), Huttig Building Products, Inc., and Huttig Inc. (collectively, "Huttig"), U.S. importers of steel fasteners, brought actions, now consolidated, to contest a proclamation issued by the President of the United States ("Proclamation 9980") in January 2020. Adjusting Imports of Derivative Aluminum Articles and Derivative Steel Articles Into the United States , 85 Fed. Reg. 5,281 (Exec. Office of the President Jan. 29, 2020).

Before the court is a Joint Status Report, submitted by all parties, responding to a request by the court. Also before the court is a motion by plaintiffs for entry of final judgment, which defendants do not oppose, subject to their right to appeal. In response to statements of the parties in the Joint Status Report and the unopposed motion, and for the reasons discussed herein, the court denies a motion by defendants to dismiss Count I of each plaintiff's complaint, enters summary judgment in favor of each plaintiff on their respective Count I claims, and dismisses the remaining counts in each plaintiff's complaint without prejudice.

I. BACKGROUND

A. Proclamation 9980

On January 24, 2020, President Donald Trump issued Proclamation 9980, which imposed a 25% duty on certain imported articles made of steel, including nails and other fasteners, and a 10% duty on certain imported articles made of aluminum. As authority for its imposition of duties on the articles, identified as "derivative aluminum articles" and "derivative steel articles," Proclamation 9980 cited Section 232 of the Trade Expansion Act of 1962, 19 U.S.C. § 1862 ("Section 232").¹

B. Procedural History of this Consolidated Action

On February 7, 2020, Oman commenced an action to contest Proclamation 9980, naming the United States, et al., as defendants and asserting claims in three counts. Summons, ECF No. 1; Compl., ECF No. 2. Huttig commenced its action on February 18, 2020, on a complaint consisting of the same three counts. Summons, ECF No. 1 (Ct. No. 20-00045); Compl., ECF No. 5 (Ct. No. 20-00045).

On joint motions, the court consolidated the two actions, with Court Number 20-00037 serving as the lead case. Order (Mar. 16, 2020), ECF No. 54. In the same order, the court, again with the consent of the parties, stayed Counts II and III of each of the two complaints pending the court's decision on Count I of those complaints. Id. Stated in brief summary, Count I of each complaint claimed that Proclamation 9980 was invalid because it was not based on a determination the President made within the 90-day period provided in Section 232(c)(1)(A) and was not implemented within the 15-day period set forth in Section 232(c)(1)(B). Compl. ¶¶ 86–106.²

Defendants moved under USCIT Rule 12(b)(6) to dismiss Count I of each of the plaintiffs’ complaints on March 20, 2020, for failure to state a claim on which relief can be granted. Mot. to Dismiss Count I for Failure to State a Claim, ECF No. 57. On April 14, 2020, plaintiffs opposed the motion to dismiss and moved for summary judgment on Count I of each complaint. Mot. for Summ. J. with Respect to Count I of Pls.’ Compl., ECF No. 65. Defendants opposed plaintiffs’ motion for summary judgment and replied in support of their motion to dismiss Count I on May 15, 2020. Defs.’ Reply in Supp. of Mot. to Dismiss and Resp. to Pls.’ Mot. for Summ. J., ECF No. 78. Plaintiffs replied in support of their summary judgment motion on June 1, 2020. Reply Mem. in Supp. of Pls.’ Mot. for Summ. J., ECF No. 79.

Defendants’ motion to dismiss Count I of each of the two complaints and plaintiffs’ motion for summary judgment are pending before the court, as is the Joint Status Report and plaintiffs’ motion for entry of final judgment.

II. DISCUSSION

A. Jurisdiction and Standards of Review

The court exercises subject matter jurisdiction according to section 201 of the Customs Courts Act of 1980, 28 U.S.C. § 1581(i)(1)(B), which grants this Court exclusive jurisdiction of a civil action commenced against the United States "that arises out of any law of the United States providing for ... tariffs, duties, fees, or other taxes on the importation of merchandise for reasons other than the raising of revenue."

In deciding a motion to dismiss for failure to state a claim upon which relief can be granted, the court assumes all factual allegations in the complaint to be true (even if doubtful in fact) and draws all reasonable inferences in a plaintiff's favor.

Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A complaint does not need to contain detailed factual allegations, but it must state enough facts "to raise a right to relief above the speculative level." Id. Rule 8(a)(2) of this Court requires a complaint to contain "a short and plain statement of the claim showing that the pleader is entitled to relief."

"The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." USCIT R. 56(a).

B. Plaintiffs’ Challenges to Proclamation 9980

In Count I of each of their respective complaints, plaintiffs claim that Proclamation 9980 was untimely issued because: (1) it was not issued within 90 days of the date the President received a report from the Secretary of Commerce meeting the requirements of Section 232(b)(3)(A), as required by Section 232(c)(1)(A), Compl. ¶ 103; and (2) it was not implemented within 15 days of a timely decision by the President under Section 232(c)(1)(A), as required by Section 232(c)(1)(B), Compl. ¶ 105.

In Count II, plaintiffs assert that Proclamation 9980 also is invalid because Section 232 is an unconstitutional delegation of power from the Congress to the President that is "devoid of an intelligible principle." Compl. ¶¶ 120, 121. In Count III, plaintiffs argue that Proclamation 9980 violates the constitutional guarantee of equal protection by imposing additional tariffs on some derivative articles of steel and not others, and by excluding from those tariffs identical derivative articles manufactured in some foreign countries but not others, without a legitimate government purpose for the disparate treatment. Compl. ¶¶ 127–131.

C. Our Decision in PrimeSource I

In PrimeSource Bldg. Prods., Inc. v. United States , 45 CIT ––––, 497 F. Supp. 3d 1333 (2021) (" PrimeSource I "), we dismissed under USCIT Rule 12(b)(6) all claims of plaintiff PrimeSource Building Products, Inc. ("PrimeSource") except the claim that Proclamation 9980 was untimely because it was issued beyond the 90-day and 15-day time limitations set forth in Section 232(c)(1)(A) and (B), respectively. PrimeSource I , 45 CIT at ––––, 497 F. Supp. 3d at 1361. As do the plaintiffs in this consolidated case, the plaintiff in PrimeSource argued that Proclamation 9980 was issued after the expiration of the combined 105-day time period of Section 232(c)(1). See id. at ––––, 497 F. Supp. 3d at 1344 ; Compl. ¶ 105. PrimeSource argued that the only report that could have qualified as a predicate for Proclamation 9980, and issued under Section 232(b)(3)(A), was one the Secretary of Commerce issued in January 2018 on the effect of certain steel articles on the national security of the United States (the "2018 Steel Report"). PrimeSource I , 45 CIT at ––––, 497 F. Supp. 3d at 1341. That report culminated in the President's issuance of Proclamation 9705 in March 2018, which imposed 25% duties on various steel articles, see Adjusting Imports of Steel Into the United States ¶¶ 1–2, 83 Fed. Reg. 11,625 (Exec. Office of the President Mar. 15, 2018), but not on the "derivative" articles of steel affected by Proclamation 9980 in January 2020.

We stated in PrimeSource I that "[d]efendants do not dispute that the 2018 Steel Report is, for purposes of Section 232(c), 19 U.S.C. § 1862(c), the report issued according to Section 232(b)(3)(A), 19 U.S.C. § 1862(b)(3)(A), upon which the President based his adjustment to imports of steel derivatives, including steel nails." PrimeSource I , 45 CIT at ––––, 497 F. Supp. 3d at 1345 (citing Defs.’ Mot. 24–29). In denying defendants’ motion to dismiss PrimeSource's "untimeliness" claim, we concluded that Proclamation 9980 does not comply with the limitations on the President's authority imposed by the 90- and 15-day time limitations of Section 232(c)(1) if the combined 105-day time period is considered to have commenced upon the President's receipt of the 2018 Steel Report. Id. at ––––, 497 F. Supp. 3d at 1356. We held that in this circumstance PrimeSource had stated a plausible claim for relief, and therefore we declined to dismiss it. Id. at ––––, 497 F. Supp. 3d at 1359.

After denying defendants’ motion to dismiss as to PrimeSource's timeliness claim, we denied the motion of plaintiff PrimeSource for summary judgment on that claim, determining that there existed one or more genuine issues of material fact. Id. at ––––, 497 F. Supp. 3d at 1361. Although concluding that Proclamation 9980 was untimely under Section 232(c)(1) when viewed solely as an action taken in response to the 2018 Steel Report, we also...