# United States **Court of Appeals**  **for the Federal Circuit**

______________________
INTERNATIONAL CUSTOM PRODUCTS, INC., Plaintiff

- Appellee

v.

UNITED STATES, Defendant

- Appellant

______________________

2016

- 1024

______________________ Appeal from the United States Court of International Trade in No. 1:07

- cv

- 00318

- GWC, Judge Gregory W. Carman.

______________________

Decided: December 15, 2016

______________________
G REGORY H UGH T EUFEL , OGC Law, LLC

, Pittsburgh, PA , argued for plaintiff -appellee.

C LAUDIA B URKE , Commercial Litigation Branch, Civil Division, United States Department of Justice, Washin gton, DC, argued for defendant

- appellant

. Also represen ted by B ENJAMIN C. M IZER , J EANNE E. D AVIDSON ; A MY R UBIN , E DWARD F RANCIS K ENNY , New York, NY; Y ELENA S LEPAK , Office of Assistant Chief Counsel, International Trade Litigation, United States Bureau of Customs and Border Protection, New York, NY.

______________________INT ’ L CUSTOM PRODS ., INC

. v. UNITED STATES 2

Before R EYNA , L INN , and W ALLACH , Circuit Judges.

W ALLACH , Circuit Judge

. Appellant United States (“the Government”) appeals the decision of the U .S. Court of International Trade (“CIT”) awarding attorney fees to Appellee International Custom Products, Inc. (“ICP” ) pursuant to the Equal Access to Justice Act (“EAJA”), 28 U.S.C. § 2412(d) (1)(A) (2012). See Int’l Customs Prods., Inc. v. United States ( ICP VII ), 77 F. Supp. 3d 1319, 1335 (Ct. Int’l Trade 2015). We have jurisdiction over the appeal pursuant to 28 U.S.C. § 1295 (a)(5) . We affirm.

B ACKGROUND The facts and procedural history of this appeal are e xtensive, and a brief explanation of the nature of the action is warranted. ICP’s request for attorney fees stems from litigation
regard ing the classification of certain white sauce imports under the Harmonized Tariff Schedule of the United States (“HTSUS”). Following a r equest from [ICP], the United States Customs and Border Protection (“Customs”) issued New York Ruling Letter D86228 (“t he Ruling Letter”) class ifying ICP’s white sauce as “sauces and prepar ations therefor” under HTSUS 2103.90.9060 (1999). Years later, Customs issued a notice of action r eclassifying all pending and future entries of white sauce as “[b]utter and

. . . dairy spreads” under HTSUS 0405.20.3000 (2005) (“the Notice of A ction”), which increased the tariff by approximately 2400%. After protesting and paying duties on a single e ntry, ICP filed a claim in the CIT, alleging the N otice of Action improperly revoked th e RulingINT ’ L CUSTOM PRODS ., INC

. v. UNITED STATES 3

Letter without following the procedures required by 19 U.S.C. § 1625(c) (2006)

. Int’l Custom Prods., Inc. v

. United States ( ICP VI ), 748 F.3d 1182, 1182

– 83 (Fed. Cir. 2014). Since ICP filed its first action in 2005, the CIT has issued five separate opinions on the matter, two of which were appealed to us

. See generally Int’l Custom Prods., Inc. v. United States ( ICP I ), 29 Ct. Int’l Trade 617 (2005) (exercising jurisdi ction pursuant to 28 U.S.C. § 1581 (i)(4) (2000) and finding the Notice of Action null and void ); Int’l Custom Prods., Inc. v

. United States ( ICP II ), 467 F.3d 1324 (Fed. Cir. 2006) (reversing the CIT’s exercise of jurisdiction in ICP I

, vacating on the merits, and remanding with instructions to dismiss ); Int’l Custom Prods., Inc. v

. United States ( ICP III ), 32 Ct. Int’l Trade 302 (2008) ( granting

- in

- part and denying

- in

- part the Government ’s motion to dismiss ICP’s C omplaint in a new action ); Int’ l Custom Prods

. , Inc. v

. United States ( ICP IV ), 33 C t. I nt’l T rade 79 ( 2009) ( den ying the parties ’ cross

- motions for summary judgment ); Int’ l Custom Prods

. , Inc. v

. United States ( ICP V ), 878 F. Supp. 2d 1329 (Ct. Int’l Trade 2012) (finding the Notice of Action null and void pursuant to § 1625 (c) (1) and ordering Customs to reliquidate p ursuant to the Ruling Letter); ICP VI , 748 F.3d 118 2 (affirming ICP V ); ICP VII , 77 F. Supp. 3d 1319 (awarding attorney fees to ICP pursuant to the EAJA ). The case now returns to us for the third time.

D ISCUSSION I. Legal Standard and Standard of Review

T he EAJA provides that “a court shall award to a pr evailing party other than the United States fees and other

expenses . . . unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.” 28 U.S.C. § 2412(d)(1)(A). The Government’s position is substa ntia l ly justified if it is “justified to a d egree that could satisfy a reasonable person” and has a “reasonable basisINT ’ L CUSTOM PRODS ., INC

. v. UNITED STATES 4

both in law and fact.” Pierce v. Underwood , 487 U.S. 552, 5 65

– 66 (1988) (internal quotation mark s and citations omitted) . The Government’s position includes the prelit igation actio ns of the relevant administrative agency, as well as the U.S. Department of Justice ’s litigation arg uments. See Smith v. Principi , 343 F.3d 1358, 1361

– 62 ( Fed. Cir. 2003). Although the Government’s posit ion in volves both prelitigation and litigation cond uct, “only one threshold determination for the entire civil action is to be made.” INS v. Jean , 496 U.S. 154, 159 (1990) (foo tnote omitted)

. We review the CIT’s determination to award attorney fees under the EAJA for abuse of discretion. See Chiu v. U

nited States , 948 F.2d 711, 713 (Fed. Cir. 1991). “ [O] nly if the [CIT] erred in interpreting the law or exercised its judgment on clearly erroneous findings of material fact, or its decision represents an irrational judgment in weighing the relevant factors can its decision be overturned.” Id. (citation s omitted).

II. The C IT Did Not Abuse Its Discretion by Awarding Attorney Fees to ICP
The CIT found that the Government’s position was not substantially justified and, consequently, awarded attorney fees to ICP. ICP VII

, 77 F. Supp. 3d at 1329

– 31, 1335 . The CIT determined th at “[t]he record, considered

as a w hole, establishe[d] that the [G]overment position was rooted in a desire to avoid the timely revocation process” by using the Notice of Action , rather than follo wing the procedures of § 1625(c) (1)

, to improperly revoke th e Ruling Letter

. Id. at 1331. Thus, the CIT held that “the [G]overnment’s position was not founded on ‘a re asonable basis both in law and fact,’ ‘justified to a degree that could satisfy a reasonable person.’” Id. (quoting Pierce , 487 U.S. at 565).

The Government argues that the CIT abused its di scretion by committing five legal errors: (1) “using anINT ’ L CUSTOM PRODS ., INC

. v. UNITED STATES 5

improperly heightened legal standard,” Appellant’s Br. 9; (2) “reject[ing] the notion that surviving a motion to dismiss or a motion for summary judgment indicates that the surviving party has presented significant evidence that its position is substantially justified,” id. at 11

– 12; (3) “improperly minimiz[ing] the significance of [the Government’s] trial evidence because of [the Gover nment’s] post

- trial decision not to appeal adverse factual findings,” id. at 16; (4) “rejecting the Government’s pos ition that an EAJA award was not wa rranted in light of the novel or unsettled area of law upon which one of the Government’s defenses was bas ed,” id. at 18; and (5) “find[ing] that [Customs] was not substantially just ified in its actions during the administrative phase of the matter,” id. at 21. We address these arguments in turn.

A. The CIT Did Not Apply a Heightened Legal Standard

The Government first argues that the CIT misapplied the “substantially justified” standard when it stated that

“ the substantial justification standard is ‘slightly more stringent than a simple reasonableness standard,’ and requires that the Government show that its position ‘was clearly reasonable ,’ ” because the Supreme Court rejected th e “slightly more” and “clearly” standard s in Pierce

. Id. at 10

– 11 (quoting ICP VII , 77 F. Supp. 3d at 13 24

– 25). According to the Government, the recitation of the “sligh tl y more” and “clearly” standard s “ undermines the [CIT]’s entire substantial justification review” and, thus, “the fee award should be vacated and the matter reman ded . . . with instructions to apply the proper legal stan dard.” Id. at 11. We disagree.

The Government is correct that the CIT erred by reci ting in the standard of review section of its opinion the “slightly more ” and “clearly” standard s , which the S upreme Court rejected in Pierce

. See 487 U.S. at 567

– 68 (rejecting the “slightly more” and “clearly” standard s (internal quotation marks and citation omitted) ) . Howe v-INT ’ L CUSTOM PRODS ., INC

. v. UNITED STATES 6

er, a single reference to an incorrect legal standard does not undermine a final decision, only its application does. Although the CIT referenced the “slightly more ” and “clearly” standard s once, ICP VII , 77 F. Supp. 3d at 13 24

– 25 (internal quotation marks and citation omitted) , it repeatedly applied the correct “substantial ly justified” standard, evaluating whether the Government’s position

was “justified to a degree that coul d satis fy a reasonable person” and had a “reasonable basis both in law and fact,” Pierce , 487 U.S. at 565

– 66 (internal quotation marks and citations omitted)

. Indeed , the CIT repeated the word “reasonable” or its variants no less than nine times when evaluating the Government’s position. See ICP VII , 77 F. Supp. 3d at 1324 n.1, 1329 n.3, 1330

– 31

. In contrast, there are no instances where the CIT a ctually applied the “slightl y more” and “clearly ” stand ard s , as the Government acknowledged during oral argument. See Oral Argument at 1:33

– 2:11
, http://oralarguments. cafc.uscourts.gov/default.aspx?fl=2016

- 1024.mp3 (stating that “it’s true that when the [CIT] made its ac tual fin din gs, it used the word ‘reasonableness’ and didn’t res tate the ‘clearly reasonable[] ’ standard or restate the ‘slightly more stringent’ standard” ). The Government nevertheless
argues that the CIT’s recitation of the heightened stan dard s “in fected” the CIT’s entire analysis. Id. at 2: 38

. However, the Government cites no affirmative evidence in support of its argument, and speculation does not demo nstrate reversible error

. See Rogers v. United States , 877 F.2d 1550, 1557 (Fed. Cir. 1989) (holding that speculation cannot demonstrate an abuse of discretion). As a result,
t he CIT’s lone recitation of the “slightly more ” and “clea rly ” standard s , when viewed against the remainder of the CIT’s analysis, did not constitute an abuse of its discr etion.INT ’ L CUSTOM PRODS ., INC

. v. UNITED STATES 7

B. Surviving Summary Judgment Alone D oes Not Prove that the Government’s Position W as Substantially Justified

The Government next contends that “surviving a m otion for summary judgment strongly suggests that the Government’s position [was] substantially justified for EAJA purposes” and that, consequently, the CIT erred by holding otherwise. Appellant’s Br. 12. In particular, the Government alleges that the CIT “committed legal error ” because it presented sufficient evidence to survive su mmary judgment, w hich it alleges demonstrates that the Government’s position during trial was substantially justified. Id. at 16. In support, the Government cite s to the summary judgment standard s of proof articulated by the Supreme Court in Anderson v. Liberty Lobby, In c. , i d. at 12 (citing 477 U.S. 242, 249

– 50 (1986)) , and to prec edent from the Seventh Circuit indicating that surviving a motion to dismiss or motion for summary judgment may indicate that a position was substan tially justified, i d. at 13

– 14 (citing United States v. Pecore , 664 F.3d 1125, 1135 (7th Cir. 2011) ; United States v. Thouvenot, Wade & Moerschen, Inc. , 596 F.3d 378, 382 (7th Cir. 2010) ).
As an initial matter, t he Government “bears the bu rden of proving its position was substantially justified ” to avoid the award of attorney fees under the EAJA, Libas, Ltd. v. United States , 314 F.3d 1362, 1365 (Fed. Cir. 2003), a nd Anderson does not hold or otherwise suggest that this burden shifts if the Government survives su mmary judgment

. Rather

, Anderson concerns standards of proof at the summary judgment stage, not the award of attorney fees under the EAJA. See 477 U.S. at 247

– 57.

As the Government acknowledges, we have not yet d irectly considered whether surviving summary judgment ipso facto demonstrat es that the Government’s position was substantially justified. When our precedent is silent on a particular question, “ we may look to another circuitINT ’ L CUSTOM PRODS ., INC

. v. UNITED STATES 8

for guidance and may be persuaded by its analysis ,” though “ decisions from other circuit s are not binding on this court

. ” Amerikohl Mining, Inc. v. United States , 899 F.2d 1210, 1214 (Fed. Cir. 1990)

. We fi rst turn to the approach taken by the Seventh Circuit, which the Government cites . U nder the Seventh Circuit’s approach, s urviving summary judgment may weigh in favor of finding that the Government’s position was “substantially justified,” but it is not dispositive. See Pecore , 664 F.3d at 1135 (stating that surviving summary judgment is “objective, although not necessarily concl usive , evidence” of a su bstantially justified position (e mphasis added) (citation and footnote omitted) ). 1 Indeed, the Seventh Circuit has recognized that, while surviving summary judgment creates a “presumption” of a substa ntially justified position under the EAJA, 2 “something might emerge at trial that showed that the [G]overment really had no case at all[,] [o]r the [trial] judge m ight on reflection decide that he had erred grie vously in refusing to grant the

. . . motion to dismiss or motion for summary judgment .” Thouvenot

, 596 F.3d at 382

. Thus, e ven if the CIT were bound by the Seventh Circuit’s standard

, the

1 The Seventh Circuit’s statement in Pecore about surviving motions to dismiss and for summary judgment was dicta. See 664 F.3d at 11 35 (st ating that the co mment was a “final point[]

. . . [that] bear [s] mentioning” after having determined that “the intense nature of th[e] debate suggests

. . . that either party’s position could be accepted as true by a reasonable person”).

2 The Seventh Circuit cited the Eight h Circuit’s d ecision in EEOC v. Liberal R

– II School District to support the application of a presumption. Thouvenot , 596 F.3d at 382 (citing 314 F.3d 920, 926 (8th Cir. 2002) ). We are not aware of any other circuits having applied a presumption similar to the Seventh and Eighth Circuits.INT ’ L CUSTOM PRODS ., INC

. v. UNITED STATES 9

CIT did not abuse its discretion by determining that the Government’s position was not substantially justified. Instead, t he CIT properly considered “the entirety of the record

. . . and the positions taken by the [G]overment as a whole,” including evidence and arguments presented after the CIT denied ICP’s motion to dismiss and motion for summary judgment

, and determined that “the [G]overn ment’s position was not substantially justified.” ICP VII , 77 F. Supp. 3d at 1329.

Our discussion of Seventh Circuit case law does not mean that we have adopted the “presumption” articulated in those decision s

. Indeed, a voiding summary judgment does no t necessarily mean that the position taken at that stage has a reasonable basis in law and fact. For exa mple, pursuant to Federal Rule of Civil Procedure 56(d), “the court may

. . . defer consider [ ation of ] the motion or deny it” when “a nonmovant shows b y affidavit or decl aration that, for specified reasons, it cannot present facts essential to justify its opposition. ” Such circumstances

may arise because, inter alia, the party asserting Rule 56(d) did not possess all of the requisite information,

necess itating discovery, or the party moving for summary judgment presented temporarily unverifiable or otherwise unusable evidence . The circumstances also may arise simply because final resolution may require the trier of fact to observe witnesses and determine their credibility

. Thus, rather than attach a presumption to the Gover nment’s conduct based on a single action taken , we find it more appropriate to assess the Government’s conduct in light of the entire record, as the Supreme Court has instructed

. See Jean , 496 U.S. at 159 (explaining that 28 U.S.C. § 2412(d)(1)(A) does not refer “ to separate parts of the litigation ” and that courts should consider all stages of the dispute before making a single determination about the Government’s conduct)

.INT ’ L CUSTOM PRODS ., INC

. v. UNITED STATES 10

C. The Government’s Remaining Arguments Are Unpe rsuasive
The Government’s remaining arguments similarly do not demonstrate an abuse of discretion. The Government argues that the CIT incorrectly determined that the Government conceded a factual issue ( i.e., tha t white sauce conformed to the Ruling Letter ) by deciding not to appeal this adverse factual finding. Appellant’s Br. 16

– 18. And t he Government correctly asserts that courts should not consider the Government’s decision not to appeal a n issue as a conces sion on the issue’s merits

. See Oral Argument at 3:52

– 5:26, http://oralarguments. cafc.uscourts.gov/default.aspx?fl=2016

- 1024.mp3 ; see also United States v. Mendoza , 464 U.S. 154, 161 (1984) (“U nlike a private litigant

. . . , the Solicitor General consid ers a variety of factors, such as the limited resources of the [G] overnment and the crowded dockets of the courts, before authorizing an appeal.”)

. However, the issue was one of many reasons the CIT determined that the Go vernment’s position was not “subst antially justified” for purposes of the EAJA, and the CIT provided numerous other reasons why Customs “ not only knew that it was effectively revoking the Ruling Letter, but it unreasonably ignored the requirement that a ruling letter governs liquidations until revoked.” ICP VII , 77 F. Supp. 3d at 1330; see id. at 1329 (noting that “[m]ultiple officials at [Customs] saw an obvious nexus between a rate advance of the white sauce entries in a Notice of Action and rev ocation of the Ruling Letter and raised warnings about doing that” and that the decision “ w as based not on complying with th e legal restraints identified by others, but on expedience” (footnote omitted) ).

The Government next contends that the CIT improperly found the Government’s position unjustified because “it was unsettled whether a Customs Form 29, Notice of Action, could be characterized as an ‘interpretive ruling or decision’ under . . . § 1625(c) such that its issuance couldINT ’ L CUSTOM PRODS ., INC

. v. UNITED STATES 11

trigger notice and comment procedures required for the revocation of a ruling letter.” Appellant’s Br. 19. A ccording to the Government, the CIT also improp erly relied on the vacated decision in ICP I in finding the Government’s position unjustified

. Id. at 19

– 20. However, the CIT’s decision primarily relied on Customs officials’ stat ements

— made before the Notice of Action issued

— that notice and comment was required. Se e ICP VII , 77 F. Supp. 3d at 1332 (“But more importantly for the question of special circumstances, the purely legal arguments about the nature of a Notice of Action, pursued to final decision by the [G]over nm en t’s attorneys, do not appear to have been a basis for the [G]over n ment’s position at the time [Customs] issued the Notice of Action. The Court thus finds that the [G]over n me n t’s position here was a post

- hoc attempt to justify a rate advance [ Customs ] knew
to be contrary to the governing legal framework

. . . .” (emphases added)).
Finally, the Government contends that the CIT abused its discretion by finding that Customs’ s decision to issue the Notice of Action was not “substantially justified.” Appel lant’s Br. 21

– 23. This argument is meritless. Customs was aware that notice and comment was r equired but, despite the legal ramifications, deliberately decided to forego it

. See , e.g. , IC P VI , 748 F.3d at 1188

– 89 (discussing Custom s ’s deliberations and affirming the CIT’s finding that Customs was required to comply with § 1625(c) (1)); ICP III

, 32 Ct. Int’l Trade at 309 (explaining the “months

- long deliberative process” during which many Customs officials stated that the Notice of Actio n must comply with § 1625(c) (1)). Therefore, the CIT was well within its discretion to make this finding

.INT ’ L CUSTOM PRODS ., INC

. v. UNITED STATES 12

C ONCLUSION

We review the CIT ’s determinations on whether the Government’s position was “substantially justified” for abuse of discretion, s ee Chiu

, 948 F.2d at 713 , and the CIT d id not abuse its discretion

. We have considered the Government’s remaining arguments and find them u npersuasive. For these reasons, the final decision of the U.S

. Court of International Trade is

AFFIRMED

C OSTS
Costs to ICP.