Court Opinion

ID: 818804
Source: CourtListenerOpinion
Date Created: 2013-02-03 08:29:12.255905+00
Date Added: 2024-06-11T12:41:38.238053
License: Public Domain

Slip Op 04-23

           UNITED STATES COURT OF INTERNATIONAL TRADE

BEFORE: NICHOLAS TSOUCALAS, SENIOR JUDGE
__________________________________________
                                          :
VANDERHOOF SPECIALTY WOOD PRODUCTS, INC., :
                                          :
               Plaintiff,                 :
                                          :    Court No.
               v.                         :    02-00793
                                          :
UNITED STATES,                            :
                                          :
               Defendant.                 :
__________________________________________:

     The United States moves to dismiss the action brought by
plaintiff, Vanderhoof Specialty Wood Products, Inc., pursuant to
USCIT R. 12(b)(5) for failure to state a claim upon which relief
may be granted. The government argues that there is no justiciable
case or controversy in this matter because the merchandise at issue
was entered duty free. Vanderhoof opposes the motion and argues
that it suffered actual injury since reclassification of the
subject entries obligated plaintiff to expend valuable Canadian
export permits on such entries.

     Held: For the reasons stated below, Government’s motion to
dismiss this case is granted. Case dismissed.

                                                     March 11, 2004

     Alston & Bird LLP (Paul F. Brinkman and Daniel J. Gerkin) for
Vanderhoof Specialty Wood Products, Inc., plaintiff.

     Peter D. Keisler, Assistant Attorney General; Barbara S.
Williams, Attorney-in-Charge, International Trade Field Office,
Civil Division, Commercial Litigation Branch, United States
Department of Justice (Aimee Lee) for the United States, defendant.

                        MEMORANDUM OPINION

     TSOUCALAS, Senior Judge:   The United States (“the government”)

moves to dismiss the action brought by        plaintiff, Vanderhoof

Specialty Wood Products, Inc. (“Vanderhoof”), pursuant to USCIT R.
Court No. 02-00793                                                         Page 2

12(b)(5) for failure to state a claim upon which relief may be

granted.      The government argues that there is no justiciable case

or controversy in this matter because the merchandise at issue was

entered duty free.     Vanderhoof opposes the motion and argues that

it suffered actual injury since reclassification of the subject

entries obligated plaintiff to expend valuable Canadian export

permits on such entries.

                                   DISCUSSION

A. Background

      Vanderhoof     “remanufactures”       value-added    softwood     lumber

products in Vanderhoof, British Columbia, Canada.              See Compl. ¶ 9.

Vanderhoof “purchases ‘trim blocks’ or ‘mill trim ends’ (waste

wood) from sawmills in British Columbia, cuts off defects, and

joins the blocks to form longer dimensional wood products . . .

using a finger-jointing machine.           These products are graded, and

some are sold as framing lumber (e.g. ‘studs’).”               Id. ¶ 11.    Some

of    these    finger-jointed      studs   were   used    by   Vanderhoof     to

manufacture     Deckmate   brand    handrails     (“handrails”    or   “subject

merchandise”) that were imported into the United States.                See id.

¶ 12. Vanderhoof entered the handrails under subheading 4409.10.45

of the Harmonized Tariff Schedule of the United States (“claimed

provision”).      See id. ¶ 14.      The United States Bureau of Customs

and    Border    Protection     (“Customs”)       liquidated     the   subject
Court No. 02-00793                                                        Page 3

merchandise under subheading 4407.10.00 (“assessed provision”).

See   id.   ¶   15.     Both   subheadings   carry   a     duty-free   rate      of

importation since all NAFTA-originating wood products are duty

free.     See Pl.’s Opp’n Def.’s Mot. Dismiss (“Pl.’s Opp’n”) at 1.

However,     Customs’     reclassification     of    the     handrails        under

subheading      4407.10.00     “required   Vanderhoof      to   present       valid

Canadian export permits for the [subject] merchandise.”1               Id. at 2.

As a result, Vanderhoof filed timely protests against the subject

entries that were ultimately denied by Customs on August 30, 2002.

See Compl. ¶ 4.       Subsequently, Vanderhoof filed a complaint with

this Court contesting Customs’ reclassification of the subject

entries and requesting a judgment directing Customs to reliquidate

the subject entries under the proposed subheading.

B.    Contention of the Parties

      The   government    argues    that   this   action    involves      a    non-

justiciable controversy and, accordingly, this case should be

dismissed.      See Def.’s Mot. Dismiss Lack Justiciable Controversy

      1
          Under the Softwood Lumber Agreement between the United
States and Canada, items classified under subheading 4407.10.00 are
encumbered with a bond requirement mandating Vanderhoof to present
a government issued permit within 20 days of entry. See Softwood
Lumber Agreement (“SLA”), May 29, 1996, Canada-United States, 35
I.L.M. 1195 (entered into force May 29, 1996); 19 C.F.R. §§
12.140(a), 113.62(k) (2000). The permit fee may cost a Canadian
exporter $50.00 (USD) or $100.00 (USD) per thousand board feet. See
id. This requirement is not imposed on Canadian imports classified
under 4409.10.45. See 19 C.F.R. § 12.140(a).
Court No. 02-00793                                               Page 4

(“Def.’s Mot.”) at 2-4.      According to the government, “[e]ven if

the Court decides that plaintiff’s proposed classification is

correct, which is not the case, the Court cannot grant relief to

plaintiff”   because both the assessed and claimed provisions are

duty free.   Id. at 2.     The government cites a string of cases to

support its contention that “where the duty rate under both the

assessed and the claimed tariff provisions is the same, the case

should be dismissed as moot.”      Id. at 3. (citing Sneakers Circus,

Inc. v. Carter, 566 F.2d 396, 400 n.9 (2d Cir. 1977) (stating, in

dicta, that where “a reclassification would have no effect on

either the rate or amount of duty payable, no opportunity to

challenge exists”); 3V, Inc. v. United States, 23 CIT 1047, 1049,

83 F. Supp. 2d 1351, 1353 (1999) (finding no case or controversy

where the claimed an assessed classifications were duty free);

Acrilicos v. Regan, 9 CIT 442, 449, 617 F. Supp. 1082, 1088 (1985)

(finding that any decision would render an advisory opinion because

the amount of duty to be paid by plaintiff is unaffected by the

action); Carson M. Simon & Co. v. United States, 55 Cust. Ct. 103,

108, C.D. 2558 (1965) (dismissing claims as to entries that were

entered at a rate lower than the claimed rate)).

     Vanderhoof   argues    that   Customs’   classification   does   not

involve rate of duty, but rather the resulting encumbrance placed

on plaintiff pursuant to the Softwood Lumber Agreement.        See Pl.’s
Court No. 02-00793                                                      Page 5

Opp’n    at   3.      Specifically,     plaintiff   argues    that    Customs’

reclassification of the subject entries under subheading 4407.10.00

required Vanderhoof to obtain export permits from the Canadian

government.        See id. at 2.   To obtain these permits, Vanderhoof

paid fees to Canada determined in accordance with the schedule

listed under Article II of the Softwood Lumber Agreement.              See id.

2-3; see also SLA, 35 I.L.M. at 1197.        According to Vanderhoof, the

injury suffered deals not with the amount of duties assessed

pursuant to the reclassification, but rather the surrender of

“valuable”     export    permits   to    Customs    as   a   result   of   the

reclassification.       See Pl.’s Opp’n at 2-3.          Vanderhoof further

argues that this injury can be redressed by a favorable judicial

decision because proper classification of the subject merchandise

and reliquidation under 4409.10.45 would require Customs to return

the permits submitted by plaintiff under protest at the time of

entry.    See id. at 3.

C.   Analysis

     Pursuant to Article III of the United States Constitution,

federal courts are empowered to decide only those claims that

present live cases or controversies. See Iron Arrow Honor Soc’y v.

Heckler, 464 U.S. 67, 70 (1983) (citing DeFunis v. Odegaard, 416

U.S. 312, 316 (1974)).      In order to satisfy the case or controversy
Court No. 02-00793                                                       Page 6

requirement, “a litigant must have suffered some actual injury that

can be redressed by a favorable judicial decision.”                     See id.

(citation omitted).    A claim must be dismissed as non-justiciable

if it fails to meet the Article III criteria.                    See Powell v.

McCormack, 395 U.S. 486, 496 n.7 (1969); Liner v. Jafco, Inc., 375

U.S. 301, 306 n.3 (1964). Ultimately, “[t]he duty of this [C]ourt,

as of every judicial tribunal, is limited to determining rights of

persons or of property, which are actually controverted in the

particular case before it.”       California v. San Pablo & Tulare R.R.

Co., 149 U.S. 308, 314 (1893).           “Even where a court possesses

jurisdiction to hear a claim, it may not do so in cases where the

claim . . . is such that the court lacks ‘ability to supply

relief.’” Adkins v. United States, 68 F.3d 1317, 1322 (Fed. Cir.

1995)(citing Murphy v. United States, 993 F.2d 871, 872 (Fed. Cir.

1993)).

     The   parties    in   this   case   disagree     as    to    the   correct

classification of the subject merchandise.          It is uncontested that

no matter the Court’s ruling, “the Government collects and [the

plaintiff] pays nothing” since all NAFTA-originating wood products

are duty free.   See 3V, 23 CIT at 1049, 83 F. Supp. 2d at 1353.

The crux of plaintiff’s argument is that classification under the

proposed   heading   would   entitle     Vanderhoof    to    the    return   of

“valuable” export permits currently in Customs’ possession.                  See
Court No. 02-00793                                                           Page 7

Pl’.s Opp’n 2-3.       Plaintiff’s complaint, however, makes no mention

of   such   permits.      See   Compl.        It   is    not   until   plaintiff’s

opposition papers to the government’s motion to dismiss that

Vanderhoof claims its injury rests in something other than the

assessment of duties and links this case to the Softwood Lumber

Agreement.

      Even after reading plaintiff’s arguments, the Court cannot

discern what injury can be redressed by a favorable ruling.                     In

this case, valid export permits were presented to Customs at

importation for the subject entries.                    Once such permits were

presented,     any     encumbrance       of    Vanderhoof’s        entries    were

extinguished.     See Def.’s Reply Pl.’s Opp’n Def.’s Mot. Dismiss

(Def.’s Reply”) at 2.           But see Pl.’s Opp’n at 1 (stating that

Customs’ classification resulted in “the unlawful encumbrance of

Vanderhoof’s entries and that the resolution of the classification

dispute by this Court and an order directing reliquidation under

the claimed tariff provision would, albeit belatedly, remove the

encumbrance”).       Moreover, plaintiff does not seek a refund for the

export permits but rather their return.                 See Pl.’s Opp’n at 3.

      The Court agrees with the government.               “The matter of permits

is wholly peripheral to the issue actually raised by Vanderhoof in

its complaint.”      Def.’s Reply at 2.       The permits were issued by the

Canadian government under the requirements of the U.S.-Canada
Court No. 02-00793                                          Page 8

Softwood Lumber Agreement and, ultimately, pursuant to 19 C.F.R. §

12.140(a).   This agreement expired in 2001 (five years after its

effective date) and, accordingly, there no longer exists a permit

requirement pursuant to such agreement.     See SLA, 35 I.L.M. at

1195; Def.’s Reply at 3; see also 19 C.F.R. § 12.140 (stating that

“[t]he requirements set forth in this section are applicable for as

long as the Softwood Lumber Agreement . . . remains in effect”).

Thus, Vanderhoof would be precluded from using such permits today.

Although Vanderhoof has termed these permits “valuable,” it has not

established what, if any, value such permits possess.        Since

plaintiff has no “legally cognizable interest” in the outcome of

this litigation, Vanderhoof’s claims are moot.     See PPG Indus.,

Inc. v. United States, 11 CIT 303, 306, 660 F. Supp. 965, 968

(1987) (quoting Powell, 395 U.S. at 496).   Accordingly, this case

is dismissed.

                            CONCLUSION

     Plaintiff’s claim fails to meet the Article III criteria.

Since the encumbrance on Vanderhoof’s entries was extinguished upon

presenting Customs with required export permits, and since return

of such permits can not meaningfully redress any economic or legal
Court No. 02-00793                                                Page 9

injury,   this   case   is   dismissed.   Judgment   will   be   entered

accordingly.

                                          /s/ Nicholas Tsoucalas
                                           NICHOLAS TSOUCALAS
                                              SENIOR JUDGE

Dated:     March 11, 2004
           New York, New York