Royal Brush Mfg., Inc. v. United States

675 F.Supp.3d 1282

ROYAL BRUSH MANUFACTURING, INC., Plaintiff, v. UNITED STATES, Defendant,andDixon Ticonderoga Co., Defendant-Intervenor.

Slip Op. 23-177 Court No. 19-00198

United States Court of International Trade

December 15, 2023

Ronald A. Oleynik, Holland & Knight LLP, of Washington, DC, for Plaintiff Royal Brush Manufacturing, Inc.

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

Felicia L. Nowels, Michael J. Larson, and Li X. Massie, Akerman LLP, of Tallahassee, FL, for Defendant-Intervenor Dixon Ticonderoga Co.

OPINION

Barnett, Chief Judge:

This case concerns Plaintiff Royal Brush Manufacturing, Inc.'s ("Royal Brush") challenge to U.S. Customs and Border Protection's ("Customs" or "CBP") affirmative determination of evasion of the antidumping duty order on certain cased pencils from the People's Republic of China, issued pursuant to Customs' authority under the Enforce and Protect Act ("EAPA"), 19 U.S.C. § 1517 (2018).¹ The matter returns to the U.S. Court of International Trade ("CIT") following the U.S. Court of Appeals for the Federal Circuit's ("Federal Circuit") decision vacating and remanding the case to this court. See Royal Brush Mfg., Inc. v. United States, 75 F.4th 1250, 1263 (Fed. Cir. 2023) ("Royal Brush CAFC");² Mandate, ECF No. 83. The Federal Circuit "remand[ed] this case to the CIT with instructions to remand to CBP" for further proceedings consistent with the Federal Circuit's decision. Royal Brush CAFC, 75 F.4th at 1263. For the following reasons, the court concludes that it lacks subject-matter jurisdiction and must dismiss the action.

BACKGROUND

This court has issued two opinions summarizing the factual and procedural background in this case; familiarity with those opinions is presumed. See Royal Brush Mfg., Inc. v. United States ("Royal Brush I"), 44 CIT —, 483 F. Supp. 3d 1294 (2020); Royal Brush Mfg., Inc. v. United States ("Royal Brush II"), 45 CIT —, 545 F. Supp. 3d 1357 (2021), vacated, 75 F.4th 1250. The court summarizes herein the factual and procedural background relevant to this opinion.³

Royal Brush is a U.S. importer of pencils exported by a company located in the Republic of the Philippines ("the Philippines"). Royal Brush I, 483 F. Supp. 3d at 1298. "On March 27, 2018, CBP initiated an investigation in EAPA Case No. 7238." Id. (citing Initiation of Investigation in EAPA Case No. 7238 (Mar. 27, 2018), CR 4, PR 5, ECF No. 24-1). CBP informed Royal Brush that "the entries covered by this investigation are those that were entered for consumption, or withdrawn from a warehouse for consumption, from March 6, 2017 through the pendency of this investigation." Id. at 1298-99 (quoting Notice of Initiation of Investigation and Interim Measures (June 26, 2018) ("Initiation Notice") at 1, CR 8, PR 14, ECF No. 24-1).⁴ CBP further stated that it had "suspended liquidation for any entries that entered on or after March 27, 2018, the date of initiation of this investigation, and extended liquidation for all unliquidated entries that entered before March 27, 2018." Id. at 1299 (citing Initiation Notice at 6). Section 1517(e)(1) provides statutory authority for CBP to impose the "interim measure[ ]" of suspension or extension of liquidation after finding "a reasonable suspicion" that the entries covered by the period of investigation were made through evasion. 19 U.S.C. § 1517(e)(1).

On May 6, 2019, CBP issued a determination in which the agency concluded that the subject imports "entered through evasion." Notice of Final Determination as to Evasion, EAPA Case No. 7238 (May 6, 2019) at 5, CR 131, PR 57, ECF No. 24-19. Royal Brush requested and obtained an administrative review of that determination. Decision on Request for Admin. Review, EAPA Case No. 7238 (Sept. 24, 2019) ("Sept. 24 Determination"), PR 64, ECF No. 23-3; see also 19 U.S.C. § 1517(f) (providing for de novo administrative review of an initial determination). CBP affirmed its initial affirmative determination. Sept. 24 Determination at 11.

On November 6, 2019, Royal Brush commenced this case seeking judicial review of CBP's determination. Summons, ECF No. 1; Compl., ECF No. 2. On November 27, 2019, the court granted Royal Brush's consent motion for a preliminary injunction barring CBP from liquidating "any and all unliquidated entries of cased pencils" imported by Royal Brush "from [the Philippines] that were . . . subject to [CBP's evasion determination in EAPA Case No. 7238]" and were "entered, or withdrawn from warehouse, for consumption on or after March 6, 2017, up to and including the date a final and conclusive court decision, including all appeals and remand proceedings, is issued" and which "remain unliquidated as of 5:00 p.m. on the day the Court enters the order enjoining liquidation on the docket of this action." Order (Nov. 27, 2019), ECF No. 13. On December 10, 2019, the court granted the consent motion to intervene as a defendant-intervenor filed by Dixon Ticonderoga Company ("Dixon"). Order (Dec. 10, 2019), ECF No. 19.

After addressing Royal Brush's claims, the court sustained CBP's affirmative determination as modified on remand and entered judgment. See Royal Brush II, 545 F. Supp. 3d at 1374; J., ECF No. 73. Royal Brush appealed to the Federal Circuit. Notice of Appeal, ECF No. 74.

While the case was on appeal, the Government informed the Federal Circuit that CBP had liquidated all five Royal Brush entries subject to the evasion determination. Royal Brush CAFC, 75 F.4th at 1255. All liquidations occurred before this court entered the preliminary injunction referenced above, and CBP assessed antidumping duties on two of the five entries. Id. The other three entries were liquidated without antidumping duties. Id. The Government sought dismissal of the action for lack of subject-matter jurisdiction because Royal Brush had failed to protest the liquidations, rendering those liquidations "final and conclusive" pursuant to 19 U.S.C. § 1514(a). Id.

The Federal Circuit disagreed. The appellate court noted that the EAPA "statute does not require a liquidation protest as a condition of review," and that with respect to the three entries liquidated without the assessment of duties (referred to herein as the "duty-free entries"), "Royal Brush had nothing to protest . . . because Royal Brush was not assessed any antidumping duties." Id. at 1256. The Federal Circuit concluded that, "[a]t least as to [the duty-free entries] it is clear that the case is not moot" because "CBP might successfully seek reliquidation of the entries" and "the evasion determination makes Royal Brush potentially liable for civil penalties" pursuant to 19 U.S.C. § 1517(h).⁵ Id. (observing further that "[t]he [G]overnment has given no indication that it intends to forgo these remedies").

For the two entries liquidated inclusive of duties (referred to herein as the "duty-assessed entries"), the Federal Circuit stated that it "need not determine for purposes of this case what remedies Royal Brush may have to recover the assessed duties . . . since Royal Brush, in this case, has not sought such relief." Id. at 1256-57. After finding that the case was not moot at least as to some of the entries, the appellate court addressed Royal Brush's claims and subsequently reversed this court's holdings with instructions to remand the matter to CBP. Id. at 1257-63.⁶

Royal Brush CAFC thus establishes that when CBP erroneously liquidates entries for which suspension applies pending an EAPA determination, filing a protest is not a precondition to obtaining judicial review of an evasion determination and that liquidation exclusive of potential duties does not moot the action when further government action in reliance on the evasion determination remains available. Royal Brush CAFC did not, however, decide whether failure to protest a liquidation inclusive of potential duties precludes an importer from obtaining a refund of those duties.

Prior to issuing a remand order, the court posed a series of questions to the parties "in order to determine how best to proceed in this case." Order (Nov. 3, 2023) ("Nov. 3 Order"), ECF No. 86. It is well established that "courts . . . have an independent obligation to determine whether subject-matter jurisdiction exists, even in the absence of a challenge from any party." Arbaugh v. Y&H Corp., 546 U.S. 500, 514, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006). The reason for this is clear: "if the . . . court lack[s] jurisdiction, many months of work on the part of the attorneys and the court may be wasted." ECC Int'l Constructors, LLC v. Sec'y of Army, 79 F.4th 1364, 1368 (Fed. Cir. 2023) (quoting Henderson ex rel. Henderson v. Shinseki, 562 U.S. 428, 435, 131 S.Ct. 1197, 179 L.Ed.2d 159 (2011)). In order to assess whether the bases for jurisdiction found by the Federal Circuit continue to exist, the court requested the parties to address whether: 1) 19 U.S.C. § 1501—or any other legal provision—authorizes CBP to reliquidate the duty-free entries, Nov. 3 Order at 1-2; 2) the Government intends to seek civil penalties pursuant to 19 U.S.C. § 1592 on any of the entries, id. at 2; 3) Royal Brush intends to seek refunds in connection with the duty-inclusive entries and, if so, the legal basis for reliquidation "absent a protest and in light of 19 U.S.C. § 1514(a), the Federal Circuit's decisions in SKF USA, Inc. v. United States, 512 F.3d 1326 (Fed. Cir. 2008), and Zenith Radio Corp. v. United States, 710 F.2d 806 (Fed. Cir. 1983), and this court's exercise of jurisdiction pursuant to 28 U.S.C. § 1581(c)," id. at 2; and 4) the...