1 Slip Op. 04-137
UNITED STATES COURT OF I NTERNATIONAL

TRADE

____________________________________ : PACIFI C CIGAR, CO., : : Plaintiff, : PUBLIC V ERSION : v. : : Before: WALLACH, J udge UNI TED STATE S, : Court No.: 04-00130 : Defend ant. :

____________________________________ :
[Plaintiff’s Application For Fees and Other Expenses Pursuant to the Equal Acce ss to Justice Act is den ied. ] Decided: November 10, 2004
Hodes Keating & Pilon , ( Michael Hodes and Lawrence R. Pilon ), for Plaintiff Pacific Cigar Co. Peter D. Keisler , Assistan t Attorne y G eneral ; David M. Cohen , Direct or; Jeanne E. Davidson , Deputy Director; David S. Silverbrand , Trial At torney, Commerc ial Li

tigation Branch, Civil Division, U .S. Depar

tment of Just

ice, for Defend ant Unite d States.

OPINION WALLACH, Judge:

I Introduction This matter is before the court on Plaintiff’s Application For Fe es and Other Expenses Pursuant To The Equal Access To Justice Act (“Plaintiff’s Application”). Plaintiff Pacific Cig ar,1 Pursuant to 18 U.S.C. § 713(a)-(b), (a) Whoever knowingly

displays any

printed or other likeness of the great sea l of the United States, or of the seals of the President or the Vice President of the United States, or the seal of the United States Senate, or the seal of the United States House of Representatives, or the seal of the United States Cong ress, or any facsimile thereof, in, or in connection with, any advertisement, poster, circular, book, pamphlet, or other publication, public meeting, play , motion picture, telecast, or other production, or on any building, monument, or stationery, f or the purpose o f convey

ing, or i n a manne

r reasonably

calcula ted to con vey , a false impression of sponsorship or approval by the Government of the United States or by a ny d epartme nt, age ncy , or instru

mentality thereof , shall be fined und

er this title or imprisoned not more than six months, or both. (b) Whoever, except as authorized under regulations promulg ated by the Preside nt and published in the

Feder al Regis ter, know

ingly manufactures, r

eproduc es, sells, or purchases for resale, either se parately or

appended to any

article manufactured or sold, any likeness of the se als of the President or Vice President, or any substantial part thereof, except for manufacture or sale of the article for the officia l use of th e Gover

nment of the United S tates, sh all be fin ed under this title or imprisoned not more than six months, or both.

2 Co. (“Pac ific”) moves for attorne y’ s fees a nd expense s followin

g a stipu lated or der of di smissal. The court has jurisdiction pursuant to 28 U.S.C. § 1581(h) (2004).

II Background This is a Pre-Importation Ruling matter under 28 U.S.C. § 1581(h) involving Pacific, which imports cigars from the Philippines and the Dominican Republic. On July 29, 2003, the Bureau of Customs and Border Protection (“CBP” or “Customs”) seiz ed a sh ipmen t of P acifi c’s me rchand ise al leging t hat th e goods were ma rked wi th a lo go consisting

of the Gr eat Seal of the Un

ited State s or the Pr

esidentia l Seal, thu s violating

18 U.S.C. § 713(a)-(b) (2003). 1 Pacific brought this case challeng ing two related CBP rulings, HQ 4750732 In the Ruling L etter HQ 476090, CBP stated that the Settlement Agreement took ef fect on May 11, 2004. I

n Plaintiff’s Application at 1, the Plaintiff stated that the Defendant entered in to th e Se tt lem ent Agr eem ent on M ay 10 , 20 04. The Set tl eme nt Agr eem ent at P ara gra ph IX itself states that “[t]he Effective Date of this Settlement Agreement is the date of counsel for Pacific’s receipt of a fully -executed copy of

this Settlement Agreement.” The effec tive date of the Settlement Agreement was prior to the Order of Dismissal.

3 The Settlement Agreement, Exhibit 1 to Plaintiff’s Application, entails no admission of liability nor any

fee allocation. The Settlement Agreeme nt states that it is “in full satisfaction of any and a ll claims, demands, and obligations of every kind with respect to the subject matter of the Action, and without admission of liability by either party

. . . .” Settlement Agreement at 1. Furthermore, it provides that “[n]otwithstanding any other provision in this Agreement to the contrary , the parties agree that Pacific is pre serving its right to apply to the court for an award of fees, costs and expenses under the EAJA, 28 U.S.C. § 2412. The parties neither admit nor deny that Pacific qualifies or is otherwise entitled to any such award.” Id. at 3.

3 issu ed on J anuary 12, 2004, and HQ 47546 8 iss ued on March 9 , 2004 , clai ming t hat th e ruli ngs were arbitrary, capricious, and contrary to law.
On March 19, 2004, Plaintiff filed its Su

mmons and Complaint al ong with a Motion to
Acc ele rat e Co mp li anc e wi th CIT R ul e 73 .3( a), to Sh ort en D efe nda nt ’s R esp ons e Ti me u nde r CIT Rule 12(a) and to Grant Precedence unde r CIT Rule 3(g)( 6) (“Plaintiff’s Motion”). The parties signed a Settlement Agreement, which took e ffect on May 11, 2004, 2 in which CBP agreed, inter alia , to withdraw Ruling Letters HQ 475073 a nd HQ 475468. 3 On May 14, 2004, Plaintiff, on consent, filed a proposed Order of Dismissal pursuant to USCI T Rule 41(a)(2). On May 25, 2004, the court sig ned Plaint

iff’s pr oposed Or

der of D ismissal, g

ranting Plaintiff leave to withdraw its pending Motion to Accelerate and dismissing the ac tion. On June 22, 2004, Plaintiff filed an Application under the Equal Access to Justice Act (“EAJA”) in which it claimed that it was a “prevailing par ty,” pursuant to 28 U.S.C. § 2412(d)(1)(B) (2004). I

n its Opposition to Plaintiff’s Application for Fees and Other Expenses4 Under th e catal yst theory a party can be d eemed “ prevail ing” whenever

the lawsu

it brings a bout the de sired change in the defe ndant’s c onduct, e

ven if the defenda nt’s cond uct is voluntar y, a nd the suit

is dismisse d as moot. 4 Pursuant to the Equal Access to Justice Act (“Defendant’s Opposition”) on July 22, 2004, Defendant argued that Plaintiff failed to e stablish that it was a prevailing party . Defendant’s argument centers on the Supreme Court’s re jection of the cataly st theory of re covery 4 as explained in Buckha

nnon Bd. & Care H ome, I nc. v. W. Va . Dep’t o f Health & Human

Res. , 532 U.S. 598, 602, 121 S. Ct. 1835, 149 L. Ed. 2d 855 (2001). Defendant arg ues in the alternative that if the court grants Plaintiff’s EAJA application, it should reduce the amount of attorney ’s fees and expenses as unreasonably overstated and excessive. On August 23, 2004, Plaintiff filed its Reply to Defendant’s Response to Plaintiff’s Application for Fees and Other Expenses Pursuant to the Equal Access to Justice Act (“Plaintiff’s Reply ”), arguing that its application was based not o n the c atalyst t heory, bu t on t he argum ent th at “th e tota lity of t he circ umst ances b rings Plaintiff’s EAJA claim within the ‘consent decree’ ty pe of resolution. . . .” Plaintiff’s Reply a t 3-
4.

III

Plaintiff’s Claim Does Not Merit Attorney’s F ees Under EAJA The EAJA sta

tes that f ees and e xpenses mus t be awa

rded if “ (1) the c laimant is a prevailing party ; (2) the government’s position during the administrative proce ss or during litigation was not substantially justified; (3) no specia l circumstances make an award unjust; and (4) the fee application is timely and supported by a

n itemized fee statement.” Former Emples. of Tyco Elec s., Fiber Optics Div. v. United States , Slip Op. 04-118 at 14-15, 2004 Ct. Int’l Trade5 The EAJA, 2 8 U.S.C. § 24 12(d)(1 )(A)-( B), stat es that: (A) Except as otherwise specifically provided by statute, a c ourt shall award to a prevailing party

other than the United States fees and other expenses, in addition to any costs awa

rded pursuant to su

bsection (a), inc urred by that par ty in any civil action (other than cases sounding in tort), including pr oceedings for judicial review of agency

action, brought by

or against the United States in any court having jurisdiction of that action, unless the court finds that the position of the United States was substantially justified or that specia l circumstances make an award u njust. (B ) A pa rt y se ek in g a n a wa rd of fe es an d o th er ex pe ns es sh al l, wi th in th ir ty d ays of final judgment in the action, submit to the court an application for fees a nd other expe

nses whic h shows tha

t the par ty is a preva iling pa rty and is elig

ible to receive an award under this subsection, and the amount sought, including an itemized statement from any attorne y or expert witness repr

esenting or appearing in behalf of the party

stating the actual time expended and the rate at which fe es and other expenses were computed. The party shall also allege that the position of the United States was not substantially justified. Whether or not the position of the United States was substantially justified shall be deter mined on the basis of the record (including the recor d with respect to the action or failure to act by the agency upon which the civil action is based) which is made in the civil action for which fe es and other expens es are s ought.

5 LEXI S 116 (Sept. 16, 2004) (citing 28 U.S.C. § 2412(d)(1)(A)-(B) ). 5 Defendant has not claimed that the CB P’s position

was substa

ntially justified , no spec ial circ

umstance s have be en broug ht to the court’s attention, and Plaintiff’s Application was timely filed and adequately

supported. Thus, the only issue curre ntly before the

court is whether Plaintiff is entitled to be considered a “prevailing party

” for purposes of the EAJA. Plaintiff states that it was a “prevailing party,” for purposes of 28 U.S.C. § 2412(d)(1)(B), in that it achieved the objective it sought when it commenced this litigation. Plaintiff’s Application at 1. Specifically, Plaintiff c laims that the rulings which it argued in its complaint were “null and void” and “could not be enforc ed” have now been withdrawn pursuant to the6

Settlement Agreement. Id. Plaintiff states tha t “[t]he Cour

t . . . dismiss ed this ca se pursua nt to CIT Rule 41(a)(2) af

ter it was informed of the settlement.” Id. In its Reply , Plaintiff

argue s that, althoug h it would c learly

be a pre vailing party under the discred ited cata lys t theory

, its application was based not on the catalyst theory, but rather on “the totality of the circ umstances bring[ing] Plaintiff’s EAJA claim within the ‘consent decree’ ty pe of resolution . . . .” Plaintiff’s Reply at 3-4. Plaintiff states that “the pa rticular facts and circumstances of this case : the nature and lang uage o f the ord

er of dismissal, the

settleme nt agre ement an

d the proc edures required to implement the settlement, bring the Plaintiff’s EAJA claim within the ‘consent decree’ c ategory of cases for which EAJA awards are pe rmitted.” Id. at 5 (emphasis in original). Plaintiff argues that because the Order of Dismissal refer s to the Settlement Agreement and includes a key provision of it, it constitutes a consent decree, bestowing the requisite “judicia l imprimatur” on the settlement. Id. (quot ing Buckhannon , 532 U.S. a t 605). Pla

intiff fu rther re asons tha

t becaus e the Order of Dismissal implicitly require s remand back to Customs to enforce the Settlement, the court retains ancillary

jurisdiction to enforce the settlement if necessary

. Id. Plaintiff also finds significance in Customs’ memorandum withdrawing the ruling letters, wherein Customs takes notice of the CIT case. Plaintiff thus conc ludes that retention of jurisdiction, together with the language of the Orde

r of Dismissal, provide the requisite “judicial imprimatur” required under Buckhannon

to establish Plaintiff as a prevailing party

. Id. Defend ant resp onds in its O

pposition that Plaintif

f failed to establi sh that it w as a prevailing party . Defendant suggests that its stipulation to dismiss, although accomplishing what Plaintiff sought, represented a voluntary change in conduct, which lacks the nec essary “ judicial imprimatur” to rise to the level of a judicially sanctioned change in the lega l relationship of the7

parties. Defendant’s Opposition at 3-4. Defendant c laims that Plaintiff relies on a dismissal order w hich “doe s not const

itute the ‘ court-ordered

chang e in the le gal re lationship of the pa rties’

ex pr es sl y re qu ir ed by [ Brickwood Contrs., Inc. v. United States , 288 F.3d 1371, 1380 (2002), cert. denied, 537 U.S. 1106, 123 S. Ct. 871, 154 L. Ed. 2d 775 (2003)], because Customs is not required to take any

specific action pursuant to the Court’s order of dismissal. Any actions which Customs agreed to in a settlement agre ement are independent of the Court’s order and not part of the record of these proce edings.” Defendant’s Opposition at 6 (emphasis in original). Defendant thus argues that beca use the Supreme Court’s rejection of the cataly st theory has bee

n found to apply to EAJA claims, Plaintiff’s application for fe es must be denied. Id. at 4 (citing Brickwood , 288 F.3d. at 1380). The Supreme Court has stated that the phrase “prevailing party” doe s not “[authorize] federal courts to award attorney ’s fees to a plaintiff who, by simply filing a nonfrivolous but nonetheless potentially meritless lawsuit (it will never be determined), has reached the ‘sought-after destination’ without obtaining any judicial relief.” Buckhannon , 532 U.S. at 606. To be a prevailing party

the party must “re ceive at least some relief on the merits,” which “[alters] . . . the legal relationship of the parties.” Former Emples. of Motorola Ceramic Prods. v. United States , 336 F .3d 13 60, 13 64 (Fed . Cir . 2003 ) (quo ting Buckhannon , 532 U.S. at 603-06).
In Buckhannon , the Cour t provide d two exampl es of such an alte ration in t he lega l relationship between the parties: an enforcea ble judgment on the merits and a court-ordere d consent decree.
532 U.S. at 605. “ A defendant’s voluntary change in conduct, although per haps accomplishing what the p laintiff

sought to achieve by t he lawsu it, lacks t he nece ssary

judicial imprimatur

on the change.” Id. (emphasis in original). The Court further stated that “[a]lthough a c onsent decree6 The Court took pains

to disting

uish priva te settle ments from consent

decree s, specifically tha

t “[p]rivate settlements do not entail the judicial approval and oversight involved in consent decrees. And federal jurisdiction to enfor ce a private contractual settlement will often be lacking unless the terms of the agr eement are incorporated into the order of dismissal.” Buckhannon , 532 U .S. at 604, n .7 (ci ting Kokkonen v. Guardian Life Ins. Co. of America , 511 U.S. 375, 114 S. Ct. 1673, 128 L. Ed. 2d 391 (1994).

7 Pursuant to USCIT Rule 41(a)(2), (a) Voluntary

Dismissal; Effect Thereof. (2) By order of Court. Exce

pt as prov ided in pa ragra ph (1) of this subdivision (a), a

n action shall not be

dismissed by th e plaintif f unless upon order of the court, and upon such terms and conditions as the cour t deems proper . . . .Unless otherwise specified in the orde r, a dismissal under this paragraph is without prejudice. 8 does not a

lway s include

an admiss ion of liab ility

by t he defe ndant, . . . it noneth eless is a court-ordered ‘chang e [in] the legal relationship between [the plaintiff] and the defendant.’” Id. at 604 (c itin g Texas State

Teache rs Assn. v . Garlan

d Ind ep. Schoo l Dist. , 489 U.S. 7 82, 792, 10 9 S. Ct. 1486 103 L. Ed. 2d 866 (1989)). However, the Court specified that a party who benefits from a settlement may be c onsidered a prevailing party for purposes of obtaining attorney ’s fees if the settlement is “enforced through a conse nt decree” or where “the

terms of the agreement are incorporated into the order of dismissal.” 6 Id. Plaintiff here is not entitled to “prevailing party ” status under the EAJA. The Order of Dismissal s tates:

“[t]he Court having been informed by the parties that they ha

ve entered into a written settlement agreement, the key provision of which is the agreement of the Defendant to withdraw the rulings which are the subject of this action, and the parties further desiring that this matter be dismissed pursuant to order e ntered under CIT Rule 41(a)(2) , it is hereby . . . order ed that this action is dismissed.” 7 Plaintiff finds legal significance in the Court’s ref erence to the settlement agree ment and its key9

provision. The question before the court is whether this langua ge rises to the level of a settlement agreement enforce d through a consent decree, pursuant to Buckhannon . It do es not. On the da te the Or der of D ismissal wa s issued, t he court had take n no notice

of the te rms of the Sett lemen t Agreem ent be yond not ing in the Or der of D ismi ssal - - usin g langua ge submitted by the parties -- that the pa rties had informed the court of the Settlement’s existence and that the Settlement required Defendant to withdraw ce rtain rulings. No copy

of the Settlement Agreement was filed with the court with the proposed Order of Dismissal, nor was the court informed in any

fashion other than the language of the proposed order. I

n fact, only upon making its application for fees did Plaintiff provide a copy of the Settlement Agreement as an attachment to its Application. Thus any lang uage in, or procedures ar

ising from, the Settlement are not relevant to determining whether Plaintiff prevailed. Plaintiff finds sig nificance in the

fact tha t the Orde r of Dismis sal was is sued purs uant to USCIT Rule 41(a)(2). The r ule states that “an action shall not be dismissed by the plaintiff unless upon order of the court, and upon such terms and conditions as the cour t deems proper.”
USCIT Rule 41(a

)(2). The court i

n this cas e has set

no terms or conditions, nor wa s it asked to consider any . The Order of Dismissal stipulates only tha t Plaintiff is granted leave to withdraw its motion and that the case is dismissed. Thus, the Order of Dismissal does not provide for oversig ht of the Se

ttlement Agreement by

the cour t, or for enforc ement of

its terms. Plaintiff argues that the facts and circumstanc es of the instant case fall within the ‘consent decree’ categ ory of ca ses. The court finds that the facts more closely mirror the circumstances described by

the Supreme Court in rejecting the cataly st theory in Buckhannon : any actions on the part of the Defendant were ta ken voluntarily and not as a result of any r

ulings or orders by

the10

court. There has been no relief g ranted on the merits to alter the legal relationship of the pa rties. Thus, the Plaintiff cannot be

consider ed a pre vailing party in this act

ion and fa ils to meet

the first requirement for fees under the EAJA.

IV Conclusion For the foregoing r

easons, Plaintiff’s Application is denied.

/s/ Evan J. Wallach Evan J . Wal lach, Judge Dated: November 10, 2004 New York, New York