Tianjin Magnesium Int'l Co. v. United States

TIANJIN MAGNESIUM INTERNATIONAL CO., LTD., Plaintiff, v. UNITED STATES, Defendant,andUS MAGNESIUM, LLC, Defendant-Intervenor.

Slip Op. 14-63 Consol. Court No. 11-00006

UNITED STATES COURT OF INTERNATIONAL TRADE

Dated: June 11, 2014

Before: Richard K. Eaton, Judge

OPINION and ORDER

[Costs imposed; attorney's fees denied.]

David J. Craven, Riggle & Craven, of Chicago, IL, argued for plaintiff. With him on the brief was David A. Riggle.

Claudia Burke, Trial Attorney, Civil Division, U.S. Department of Justice, of Washington, D.C., argued for the defendant. With her on the brief were Stuart F. Delery, Acting Assistant Attorney General, Jeanne E. Davidson, Director, Patricia McCarthy, Assistant Director, Renee Gerber, Trial Attorney. Of counsel on the brief was Melissa Brewer, Senior Attorney, Office of the Chief Counsel for Import Administration, United States Department of Commerce, of Washington, D.C.

Stephen A. Jones and Jeffrey B. Denning, King & Spalding, LLP, of Washington, D.C., argued for defendant-intervenor. With them on the brief was Jeffery M. Telep.

Eaton, Judge:

On March 12, 2014 the court granted plaintiff Tianjin Magnesium International Co., Ltd.'s ("Tianjin," "TMI", or "plaintiff") Motion for Reconsideration of Slip Op. 13-53. Order (ECF Dkt. No. 143); Tianjin Magnesium Int'l Co. v. United States, 37 CIT ___, ___, 922 F. Supp. 2d 1345 (2013) ("Tianjin III"). Tianjin III followed the Tianjin Court's orders of November 21, 2012 and December 20, 2012 imposing costs and awarding attorney's fees, respectively. Tianjin Magnesium Int'l Co. v. United States, 36 CIT ___, ___, 878 F. Supp. 2d 1351, 1352-53 (2012) ("Tianjin I") (awarding costs); Tianjin Magnesium Int'l Co. v. United States, 36 CIT ___, ___, 883 F. Supp. 2d 1330, 1332 (2012) ("Tianjin II") (awarding attorney's fees). The court now addresses the questions of whether the imposition of costs and award of attorney's fees was warranted.

For the reasons set forth below the court finds that the award of attorney's fees is not warranted, but affirms the imposition of costs.

I. BACKGROUND

On January 7, 2011 plaintiff commenced its action, challenging the final results of the administrative review of the antidumping order on pure magnesium from the People's Republic of China ("PRC"). Pure Magnesium From the PRC, 75 Fed. Reg. 80791 (Dep't of Commerce Dec. 23, 2010) (final results of the antidumping administrative review of the antidumping duty drder). During the proceedings before the defendant United States Department of Commerce ("Commerce" or "the Department"), plaintiff submitted certain "voucher books" that were found to be unreliable during the previous administrative review. Tianjin Magnesium Int'l v. United States, 36 CIT ___, ___, 844 F. Supp. 2d 1342, 1346 (2012) ("Remand Order"). Despite thissubmission, and although fully aware of its previous findings with respect to the reliability of the voucher books, in the Final Results the Department did not use adverse inferences with regard to any facts. Id.; 19 U.S.C. § 1677e(b) ("If the [Department] find[s] that an interested party has failed to cooperate by not acting to the best of its ability to comply with a request for information[, . . . the Department], in reaching the applicable determination[,] . . . may use an inference that is adverse to the interest of that party in selecting from among the facts otherwise available.")

On May 13, 2011, plaintiff moved to amend its original complaint, seeking to "include a new claim that the Department of Commerce unlawfully applied zeroing in the calculation of" plaintiff's rate. Mem. of Law in Supp. of Pl.'s Mot. for Leave to Amend its Compl. 1 (ECF Dkt. No. 29-1). In its motion, plaintiff argued that the Federal Circuit's decision in Dongbu Steel represented a change in the law applied by the Department during the review. Id. at 2 (citing Dongbu Steel Co. v. United States, 635 F.3d 1363 (Fed. Cir. 2011)).

On May 18, 2011, the Tianjin Court granted the motion to amend. May 18, 2011 Order (ECF Dkt. No. 30). The Department, however, moved for reconsideration of that order on June 17, 2011. There, it argued that Tianjin should not be permitted to amend its complaint because it failed to raise the issue of zeroing before the Department. Def.'s Mot. for Reconsideration of the Ct. Order Granting Pl. Leave to Amend Compl. 2, 7-9 (ECF Dkt. No. 32). Five days later, the Tianjin Court granted defendant's motion for reconsideration, vacated the order permitting amendment of the complaint, and ordered the Department to file a responsive pleading to plaintiff's May 13, 2011 motion. June 22, 2011 Order (ECF Dkt. No. 33). On July 13, 2011, after the Department and defendant-intervenor U.S. Magnesium, L.L.C. ("USM" or "defendant-intervenor") had filed responses, the Tianjin Court denied plaintiff's motion to amend because Tianjin had failed to exhaust its administrative remedies. July 13, 2011 Order (ECF Dkt. No. 38).

In August, 2011, plaintiff moved for judgment on the agency record, briefing was completed by December, 2011, and oral argument was held on May 2, 2012. On May 16, 2012, based on plaintiff's submission of the unreliable voucher books, the Final Results were remanded upon the Tianjin Court's finding that the Department's decision was unsupported by substantial evidence and contrary to law. Remand Order at ___, 844 F. Supp. 2d at 1348.

Commerce filed the remand results on August 30, 2012 which for the first time used adverse inferences against plaintiff. Remand Results (ECF Dkt. No. 88). Although given additional time to do so, Tianjin filed no comments on the Remand Results. Oct. 2, 2012 Order (ECF Dkt. No. 93). On November 21, 2012, the Tianjin Court issued Tianjin I, in which it sustained the remand results and awarded costs. Tianjin I, 36 CIT at ___, 878 F. Supp. 2d at 1352-53.

On December 20, 2012, plaintiff filed a motion for reconsideration of Tianjin I. Pl.'s Mot. Dec. 20, 2012 at 3 (ECF Dkt. No. 103). The Tianjin Court denied that motion the following day on the grounds that plaintiff failed to file comments within the time frame permitted, and because Tianjin's substantive arguments "fail[ed] to present any new factual or legal authority that was unavailable at the time its objections were due." Tianjin II, 36 CIT at ___, 883 F. Supp. 2d at 1332. In addition, attorney's fees were awarded sua sponte. Id.

On February 18, 2013, plaintiff's Notice of Appeal of the Remand Order, Tianjin I and Tianjin II was docketed. Notice of Appeal (ECF Dkt. No. 109). Thereafter, the appeal wasdocketed by the Federal Circuit. Notice of Docketing (ECF Dkt. No. 110). The Federal Circuit affirmed the Remand Order, Tianjin I, and Tianjin II on February 5, 2014, in a judgment without opinion. Notice of Entry of Judgment Without Opinion 3 (ECF Dkt. No. 139).

After the parties submitted their Bills of Costs and Attorney's fees and plaintiff had the opportunity to comment thereon, Tianjin III was issued. Tianjin III found plaintiff and its counsel jointly and severally liable to Commerce for $8,302.20 in combined fees and costs, and jointly and severally liable to USM for fees and costs in the amount of $34,042.72. Tianjin III, 37 CIT at ___, 922 F. Supp. 2d 13 1352-1353.

On May 22, 2013, plaintiff filed its Motion for Reconsideration of Tianjin III. Motion for Reconsideration (ECF Dkt. No. 119). The parties briefed their respective positions, and oral argument was held on November 19, 2013. As noted, on March 12, 2014, the court ordered reconsideration of Tianjin III.

II. STANDARD OF REVIEW

Federal courts have inherent authority "to award expenses, including attorney's fees, to a litigant whose opponent acts in bad faith in instituting or conducting litigation." Chambers v. NASCO, Inc., 501 U.S. 32, 48 (1991). Nevertheless, the Federal Circuit has refused to uphold sanctions, issued under a Court's inherent authority, for raising an argument that "lacks merit" where the Court did not also find that the sanctioned party was engaging in "'vexatious or unjustified litigation,' 'frivolous suit,' or other type of 'bad faith.'" Depuy Spine, Inc. v. Medtronic Sofamor Danek, Inc., 567 F.3d 1314, 1339 (Fed. Cir. 2009) (discussing the improper application of sanctions in a patent case (citations omitted)).

III. DISCUSSION

A. Attorney's Fees

Tianjin III gave four primary reasons which, taken cumulatively, justified the award of attorney's fees.

First, the Tianjin Court found that "TMI frivolously attempted to amend its complaint to include a challenge to Commerce's use of 'zeroing' despite its failure to exhaust administrative remedies." Def.'s Resp. to Pl.'s Mot. for Reconsideration of the Ct.'s Order Awarding Costs 3 (ECF Dkt. No. 124) ("Def.'s Br."); Tianjin III, 37 CIT at ___, 922 F. Supp. 2d at 1347.

While somewhat out of the ordinary, it is evident that, at the time plaintiff made its motion to amend, its behavior did not support an award of attorney's fees. Prior to the issuance of the Federal Circuit's opinion in Dongbu Steel, it was widely assumed that the questions concerning Commerce's use of "zeroing"¹ in administrative reviews had been settled by that Court's opinion in U.S. Steel Corp. v. United States, 621 F.3d 1351 (Fed. Cir. 2010) (finding that Commerce was not required to use zeroing in investigations but affirming it as a permissible interpretation of the statute). There, the Federal Circuit remarked that "[w]e are bound by our previous decisions . . . which held that § 1677(35)(A)² does not unambiguously preclude—or require—Commerce to use zeroing methodology." Id. at 1361 (citation omitted). Thus, U.S.Steel appeared to hold that the Department was permitted to use zeroing in administrative reviews even though it had abandoned that practice in investigations.

Dongbu Steel called this assumption into question. Dongbu Steel, 635 F.3d at 1373 ("[O]ur prior case law does not address the situation at hand where Commerce has decided to interpret 19 U.S.C. § 1677(35)...