Court Opinion

ID: 818493
Source: CourtListenerOpinion
Date Created: 2013-02-02 23:37:41.739735+00
Date Added: 2024-06-11T15:25:18.822358
License: Public Domain

Slip Op. 06-4

            UNITED STATES COURT OF INTERNATIONAL TRADE
______________________________
                               :
OLYMPIA INDUSTRIAL, INC.,      :
                               :
          Plaintiff,           :
                               : Before: Richard K. Eaton, Judge
          v.                   :
                               : Court No. 04-00647
UNITED STATES,                 :
                               :
          Defendant,           :
                               :
     and                       :
                               :
AMES TRUE TEMPER,              :
                               :
          Def.-Intervenor.     :
______________________________:

                       MEMORANDUM OPINION

[Plaintiff’s motion for a preliminary injunction denied]

                                          Dated: January 6, 2006

     Hume & Associates, PC (Robert T. Hume, Akil Vohra, and Jon
C. Cooper), for plaintiff.

     Peter D. Keisler, Assistant Attorney General, Civil
Division, United States Department of Justice; David M. Cohen,
Director, Commercial Litigation Branch, Civil Division, United
States Department of Justice (Stephen Carl Tosini), for
defendant.

     Wiley, Rein & Fielding, LLP (Charles Owen Verrill, Jr. and
Timothy C. Brightbill), for defendant-intervenor.

     Eaton, Judge: This matter is before the court on the motion

of plaintiff Olympia Industrial, Inc. (“plaintiff” or “Olympia”)

for a preliminary injunction pursuant to USCIT Rule 65(a).   By
Court No. 04-00647                                             Page 2

its motion, plaintiff seeks “to enjoin the Defendant, the United

States, as well as the United States Department of Commerce

(“Commerce”) . . ., and the United States Customs and Border

Protection . . ., from imposing certain cash deposit rates on

future imports of the MUTT®, (Multi-Use Tough Tools), a scraper,

imported by the Plaintiff, that are included in the antidumping

orders on heavy forged hand tools, finished or unfinished, with

or without handles, from the People’s Republic of China

(“HFHTs”).”   Pl.’s Mot. for Temporary Restraining Order and

Prelim. Injunction at 1-2 (“Pl.’s Br.”).   Plaintiff seeks

injunctive relief pending the outcome of this court’s review of

Commerce’s Final Scope Ruling of Dec. 9, 2004.   See Pub. Doc. 13

(not published in the Federal Register).   Defendant United States

(“defendant”) opposes the motion, as does Defendant-Intervenor

Ames True Temper (“Ames”).

     On October 25, 2005, this court granted plaintiff’s request

for a temporary restraining order (“TRO”), which enjoined

defendant and the United States Department of Customs and Border

Protection (“Customs”) from “requiring the payment of, or

otherwise collecting antidumping cash deposits on any entry of

axes/adzes . . . more specifically, of the MUTTs®, . . . at any

rate other than what would preserve the status quo, namely ZERO,”

until October 28, 2005, the date of the evidentiary hearing on
Court No. 04-00647                                           Page 3

the instant preliminary injunction motion.    See Order of

10/25/2005 (emphasis in original).   Following the evidentiary

hearing, the court did not extend the TRO and reserved judgment

on the motion for a preliminary injunction.   Jurisdiction lies

under 19 U.S.C. § 1516a(c)(2) (2000).   For the following reasons,

the court denies plaintiff’s motion for a preliminary injunction.

                 BACKGROUND AND STANDARD OF REVIEW

     This motion differs from those most often seen by this Court

because plaintiff does not seek to enjoin liquidation of its

merchandise during the pendency of the underlying action.1

Rather, plaintiff asks the court to enjoin the collection of cash

deposits pending this court’s review of Commerce’s Final Scope

Ruling.   This ruling found plaintiff’s product, the MUTT®, was

within the scope of the heavy forged hand tools antidumping duty

     1
          Liquidation is the “final computation or ascertainment
of the duties or drawback accruing on an entry.” 19 C.F.R. §
159.1 (2000); see also Ammex, Inc. v. United States, 419 F.3d
1342, 1345 n.1 (Fed. Cir. 2005). As a general rule, the United
States consents to motions to enjoin liquidation of entries
covered by antidumping administrative reviews during the pendency
of actions. See Zenith Radio Corp. v. United States, 710 F.2d
806, 808 (Fed. Cir. 1983) (noting that, upon Zenith’s motion,
“[t]he government agreed not to liquidate the subject entries
until the trial court could rule on the request for a preliminary
injunction.”). Here, if liquidation were enjoined, plaintiff
would make the required cash deposits but, should it prevail on
the merits, the cash deposits would be returned with interest.
See 19 U.S.C. § 1505(b) (“The Customs Service shall collect any
increased or additional duties and fees due, together with
interest thereon, or refund any excess moneys deposited, together
with interest thereon . . . .”) (emphasis added).
Court No. 04-00647                                            Page 4

order.   See Heavy Forged Hand Tools, Finished or Unfinished, With

or Without Handles, From the People’s Republic of China, 70 Fed.

Reg. 54,897 (September 19, 2005) (“Final Results”).    As a result

of that ruling, starting on September 19, 2005, the date of

publication of the Final Results in the Federal Register, entries

of the MUTTs® have been subject to a cash deposit requirement of

174.5% of their entered value.   The collection of the cash

deposit upon Commerce’s issuance of its final affirmative

determination is authorized by 19 C.F.R. § 351.211(a), which

states that “importers no longer may post bonds as security for

antidumping . . . duties, but instead must make a cash deposit of

estimated duties.”   Pursuant to this provision, “when an

antidumping order is published [in the Federal Register],

importers normally must begin to make a cash deposit of estimated

antidumping duties upon the entry of subject merchandise.”    19

C.F.R. § 351.215(a).

     In seeking the extraordinary remedy of a preliminary

injunction,2 plaintiff claims to have borne the burden of

satisfying each part of the familiar four-part test.   That is, to

obtain the extraordinary relief of an injunction prior to trial,

     2
          This court recognizes that “[a] preliminary injunction
is extraordinary relief that is available only on a special
showing of need for relief pendente lite . . . .” MercExchange,
LLC v. eBay, Inc., 401 F.3d 1323, 1339 (Fed. Cir. 2005).
Court No. 04-00647                                             Page 5

the movant carries the burden of establishing: (1) that it will

suffer irreparable harm if preliminary relief is not granted; (2)

that the public interest would be better served by the relief

requested; (3) that the balance of the hardships tips in the

movant’s favor; and (4) that the movant is likely to succeed on

the merits at trial.    See FMC Corp. v. United States, 3 F.3d 424,

427 (Fed. Cir. 1993) (citing Zenith Radio Corp. v. United States,

710 F.2d 806, 809 (Fed. Cir. 1983)).      The court will address each

part of the test in turn.

                             DISCUSSION

I.   Irreparable Harm

     Plaintiff claims that it will suffer immediate and

irreparable harm if Customs’ collection of the cash deposit is

not enjoined because of the economic hardship that would result

from its payment.3   See Shandong Huarong Gen. Group v. United

States, 24 CIT 1286, 1288, 122 F. Supp. 2d 143, 145 (2000).

Generally, when analyzing the necessity for a preliminary

injunction, “[t]he crucial factor is irreparable injury.”      Corus

Group PLC v. Bush, 26 CIT 937, 942, 217 F. Supp. 2d 1347, 1354

     3
          Plaintiff also argues that inclusion of the trademarked
MUTT® in the scope of the antidumping duty order results in
selective enforcement of the antidumping laws. However, as
plaintiff has produced no evidence indicating how such selective
enforcement would result in irreparable harm, the court declines
to address this issue.
Court No. 04-00647                                             Page 6

(2002) (citing Elkem Metals Co. v. United States, 25 CIT 186,

190, 135 F. Supp. 2d 1324, 1329 (2001)).

     At the evidentiary hearing, plaintiff called two witnesses,

Randal L. Wright, its Senior Vice President of operations, and

John Mackin, Vice President of its lawn and garden division.

Each was called to substantiate the claim that the plaintiff was

unable to make the required cash deposit and would, therefore, be

prevented from importing the MUTT® and having it in its sales

inventory.   The witnesses were also called to testify as to the

economic harm to plaintiff that would result from its inability

to advertise and sell the MUTT® and that such harm would be

immediate and irreparable.   Each witness was subject to cross

examination.   Mr. Wright testified that Olympia had a total of

$62 million of sales for all its products in the fiscal year

ending on March 1, 2005, see Tr. of Civ. Cause for Prelim.

Injunction Hearing (“Tr.”) at 75:6–8; and that sales of its lawn

and garden tools alone amounted to $15 million.   Mr. Wright

further testified that, of that amount, garden tool sales alone

were about $7.8 million and that MUTT® sales made up

approximately $1.7 million of that total.   See Tr. at 92:1–10.

For his part, Mr. Mackin testified that the MUTT® was so

important to Olympia’s sales that, without it as part of its

sales inventory, the company would lose sales of approximately $6
Court No. 04-00647                                             Page 7

million.    See Tr. at 105–06:21–25, 1–6; 109:4–8 (indicating that

a customer who purchases the MUTT® will typically purchase a

variety of other tools sold by Olympia).

     This Court has twice before addressed the question of

enjoining the collection of cash deposits.   The first case,

Queen’s Flowers de Colombia v. United States, 20 CIT 1122, 947 F.

Supp. 503 (1996), involved twenty Colombian producers/exporters

of fresh cut flowers and three related U.S. importers, who sought

a preliminary injunction to prevent the collection of cash

deposits.   With respect to the issue of whether the plaintiffs

faced irreparable harm, the Queen’s Flowers Court focused on the

magnitude4 and immediacy of plaintiffs’ prospective injury.

Specifically, the court noted that

     plaintiffs have established that under the new cash
     deposit rate of 76.60 percent, eight of the twenty
     companies will go out of business within periods
     ranging from a few days to a few weeks. . . .

     These companies sell an extremely high percentage of
     their production of the subject merchandise to the
     United States (all around 80%) and these sales account
     for a similarly high percentage of their total sales

     4
          While the magnitude of the anticipated harm is not an
essential element in most cases dealing with irreparable injury,
in Queen’s Flowers, the Court found that the magnitude of the
prospective harm was so great that it could not be repaired by
future court action. Cf. CPC Int’l, Inc. v. United States, 19
CIT 978, 980, 896 F. Supp. 1240, 1243 (1995) (“What is critical
is not the magnitude of the injury, but rather its immediacy and
the inadequacy of future corrective relief.”) (citations omitted)
(internal quotation marks omitted).
Court No. 04-00647                                             Page 8

     revenue. Also, the product they sell is a perishable
     good tailored to the unique demands of the United
     States flower market; alternative markets do not exist
     in which the companies can sell their excess capacity
     to stay in business. The new deposit rate is also very
     high, relative to the rates set . . . in an industry
     that is so competitive. Thus, collection of the 76.60
     deposit rate will force each of the eight companies out
     of business within an extremely short time period,
     eliminating their opportunity for future corrective
     judicial relief.

Id. at 1125–26, 947 F. Supp. at 506–07 (footnotes omitted).

Based on these findings, the Court concluded that eight of the

plaintiffs had satisfied the requirement that they would suffer

irreparable harm in the absence of an injunction.   In reaching

its conclusion, the Court relied on evidence establishing that

paying the antidumping duty deposits would drive the eight flower

producers/exporters out of business in an extremely short period

of time.   Id. at 1126, 947 F. Supp. at 507 (stating that the

remaining plaintiffs failed to “establish the same level of

immediacy of harm that the other eight companies [had]: immediate

extinction.”).   The court then analyzed the remaining three

factors and granted plaintiffs their requested relief while

“limiting the scope of the injunction affecting the cash deposit

rates to the eight companies that established a risk of immediate

economic harm . . . .”   Id. at 1128, 947 F. Supp. at 509.

     The second case in which this Court addressed the issue at

bar is Corus Group PLC v. Bush, 26 CIT 937, 217 F. Supp. 2d 1347.
Court No. 04-00647                                           Page 9

In that case, the plaintiff sought a preliminary injunction to

enjoin the collection of additional duties imposed on its

products pursuant to a Presidential Proclamation.    Id. at 937,

217 F. Supp. 2d at 1349.   At an evidentiary hearing in that case,

two witnesses testified that if the duties were collected,

     the [plaintiff’s] Norway factory was not sufficiently
     profitable to attract investment for upgrades that
     might allow it to produce [new products]. Both
     witnesses [also] testified that, as a result, the
     Bergen Plant would have to raise prices or absorb the
     tariffs. . . . [Plaintiff] argues that sound business
     principles would require it to close the plant rather
     than operate at a loss.

Id. at 944, 217 F. Supp. 2d at 1355.   In denying petitioner’s

motion for a preliminary injunction, the Court said:

     Every increase in duty rate will necessarily have an
     adverse affect on foreign producers and importers.
     That is particularly true with regards to the 30%
     increase imposed under the safeguard provision. If the
     court were to find irreparable harm under these facts,
     the court would likely be required to do so in any
     challenge to a duty increase because every plaintiff
     could argue that increased tariffs would cause revenue
     shortfalls possibly resulting in either operating at a
     loss or plant closure at some future date. On balance,
     [plaintiff] has shown that it may suffer an adverse
     economic impact, but to find irreparable harm here
     would effectively create a per se irreparable harm rule
     in similar challenges–a result likely contrary to the
     extraordinary nature of the remedy.

Id. (citing Am. Spring Wire Corp. v. United States, 7 CIT 2, 6,

578 F. Supp. 1405, 1408 (1984)).   Ultimately, the Court found

that the plaintiff had not produced sufficient evidence

demonstrating that its factory was “in danger of imminent

closure.”   Id.   In other words, despite having “arguably
Court No. 04-00647                                             Page 10

presented evidence of economic injury,” the Court found that

plaintiff’s evidence failed to exhibit the magnitude and

immediacy of injury necessary for finding irreparable harm.       Id.

     While plaintiff in the instant case has demonstrated that it

will suffer some economic loss should the demand for cash

deposits be enforced, it has not demonstrated either the

immediacy or magnitude of the injury petitioners showed in

Queen’s Flowers.     Indeed, plaintiff has failed to produce

evidence equal to that found wanting in Corus Group.     First,

plaintiff argues that it will be difficult or impossible for it

to make the cash deposits because

     we have a weak company that’s trying to emerge from a
     weak position and cash flow is really important to the
     company at this time to try to maintain [its]
     operations. The loss of what amounts to over $1
     million of cash deposit requirements would make a major
     difference in [the] cash flow for the company . . . .”

Tr. at 20–21:23–25, 1–3.    Thus, plaintiff argues that, as it does

not have sufficient funds to make the cash deposit, it will not

be able to import the MUTT®.5    Second, plaintiff argues that

should it be unable to import the MUTT®, it will suffer

irreparable injury.    This argument is difficult to credit.     Even

if the court were to accept plaintiff’s claim that it would lose

all of its garden tool sales without the MUTT® in its sales

     5
          Olympia makes no argument that making the cash deposit
will render it insolvent or force it out of business.
Court No. 04-00647                                          Page 11

inventory, this would still leave over 90% of its sales intact.

Thus, plaintiff has made no showing that, absent the ability to

sell the MUTT®, it will immediately fail.   Accordingly, the court

finds no evidence indicating that plaintiff will face immediate

and irreparable injury should the requirement of the cash deposit

remain in place.

II.   Public Interest

      Although the “[f]ailure of an applicant to bear its burden

of persuasion on irreparable harm is ground to deny a preliminary

injunction [without] conclusively determin[ing] the other

criteria,” a brief discussion of the remaining three parts of the

four-part test is nonetheless useful.   Bomont Indus. v. United

States, 10 CIT 431, 437, 638 F. Supp. 1334, 1340 (1986); see also

Corus Group, 26 CIT at 942, 217 F. Supp. 2d at 1354.   In arguing

that the grant of a preliminary injunction will serve the public

interest, plaintiff insists:

      It is well settled that the public interest is served
      by “ensuring that [Commerce] complies with the law, and
      interprets and applies [the] trade statutes fairly.”
      See, e.g., Ugine-Savoie Imphy v. United States, 24 CIT
      at 1252, 121 F. Supp. 2d at 690. In addition, the
      “public interest is best served when all parties can
      obtain effective judicial review.” Int’l Brotherhood of
      Elec. Workers v. United States, Slip Op. 05-11 (Jan.
      27, 2005) at 16, 2005 Ct. Intl. Trade LEXIS 10, *24, 25
      (citations omitted).

      In the case at bar, the public interest will be served
      by this Court’s issuance of a temporary restraining
      order and a preliminary injunction. A temporary
Court No. 04-00647                                           Page 12

     restraining order and a preliminary injunction will
     permit this Court, pursuant to 19 U.S.C. §
     1516a(b)(1)(B), to review Commerce’s decision to place
     the MUTT® within the scope of the HFHTs order and to
     ensure that Commerce’s final action in determining the
     proper antidumping duties and setting cash deposit
     rates is supported by substantial evidence, and is not
     arbitrary, capricious, an abuse of discretion, or
     otherwise not in accordance with law.

Pl.’s Br. at 6–7.    Despite plaintiff’s argument, the public

interest in ensuring that Commerce complies with the trade laws

through judicial review would not be advanced by the issuance of

its proposed injunction.    This court will endeavor to ensure

these ends whether an injunction is in place or not.    Therefore,

plaintiff’s argument with respect to the public interest is

unconvincing.

     The defendant, on the other hand, has a substantial public

interest claim.   Defendant contends that

     [Customs] is directed to protect the revenue of the
     United States. See generally Carolina Tobacco Co.,
     Inc. v. United States, 402 F.3d 1345 (Fed. Cir. 2005).
     If an importer does not pay duties upon each entry at
     the time the entry is made, the importer must post
     bonds that provide security for the duties owed. 19
     U.S.C. § 1623. However, the antidumping duty statute
     requires that importers post cash deposits of estimated
     antidumping duties. 19 U.S.C. §§ 1675(a)(1) and
     1675(a)(2)(B)(iii).

     Accordingly, [in the event an injunction is granted],
     the revenue would be left unprotected, in clear
     violation of the express will of Congress.

Def.’s Resp. in Opp’n. to Pl.’s Mot. for a TRO and Prelim.

Injunction (“Def.’s Resp.”) at 9.    In other words, if a
Court No. 04-00647                                             Page 13

preliminary injunction is granted, the public’s interest in

collecting antidumping revenue may be placed in the kind of

jeopardy both the statutes and the regulations are designed to

prevent.   This is a more than theoretical possibility.    Plaintiff

has indicated that in the event the court grants the proposed

injunction, but defendant prevails on the merits, it will be

unable to pay the duties imposed on its merchandise that has

already entered the stream of commerce.6    See Tr. at 33–34.    This

being the case, defendant, not plaintiff, has demonstrated that

the public interest would be better served by the requirement of

the cash deposit remaining undisturbed.

III. Balance of Hardships

     “An inquiry into the balance of hardships requires this

Court to determine which party will suffer the greatest adverse

effects as a result of the grant or denial of the preliminary

injunction.”   Ugine-Savoie Imphy v. United States, 24 CIT 1246,

1250, 121 F. Supp. 2d 684, 688 (2000).     Having previously

determined that plaintiff will not be irreparably harmed absent

an injunction does not settle this part of the four-part test.

While not reaching the level of irreparable harm, the court finds

that being unable to import the MUTT® would amount to a hardship

     6
          Counsel suggested that the duties might be satisfied
through Commerce’s seizure of the “many other goods coming in
from China for Olympia . . . .” Tr. at 34:24.
Court No. 04-00647                                           Page 14

on plaintiff.   In addition, however, the court finds that

defendant faces the possibility of enduring a significant

hardship of its own should an injunction be granted, i.e., the

previously noted prospect of lost revenue.   Here, because both

parties face hardship should their arguments with respect to the

issuance of an injunction not succeed, the balance of hardships

does not aid plaintiff.

IV.   Likelihood of Success on the Merits

      To this point, plaintiff has not demonstrated immediate and

irreparable harm and does not receive assistance from either the

public interest or balance of hardship factors.   With respect to

the likelihood that plaintiff will prevail on its claims in the

underlying action, the court finds that both sides have

substantial cases.   In support of its argument that success on

the merits favors the granting of its motion, plaintiff says:

      [Olympia] is likely to succeed on the merits of this
      case and has raised substantial questions of law.
      Specifically, there is compelling evidence on the
      record that the Plaintiff’s manufacturing process used
      in creating the MUTTs®, roll forging, is not hot
      forging, as specifically stated in the HFHTs order and
      thus the MUTTs® should not be included within the
      scope.

      [Further], the overriding purpose of the MUTT® is its
      use as a scraper to facilitate tasks such as scraping,
      ice breaking, lot clearance, trenching, shingle
      removal, tile removal, carpet and floor removal,
      removing ice from a driveway and paint removal. The
      incidental use of a scraper as a cutting tool does not
      override the main function of the tool as a scraper,
Court No. 04-00647                                             Page 15

     and does not classify the product as having a hewing
     function. Moreover, the MUTT® is advertised and
     displayed in a manner different from the tools found in
     the HFHT order.

Pl.’s Br. at 5 (emphasis omitted) (footnotes omitted) (internal

quotation marks omitted).

     For its part, defendant relies generally on its brief in the

underlying action, which it incorporates by reference.    An

examination of that brief confirms that defendant has a

substantial and serious case.   In particular, defendant makes

strong arguments both with respect to the kind of forging used to

produce the MUTT® and as to its use a hewing tool.   See Def.’s

Resp. to Pl.’s Mot. for J. Upon the Agency Rec. at 10–11 (“[T]he

forging process described in the order is illustrative, not

exclusive. . . .   The critical facts here are that MUTTs® are

forged, and the orders cover heavy forged hand tools.”); see also

id. at 12 (“Commerce correctly examined whether MUTTs® are hewing

tools similar to axes or adzes.”) (emphasis omitted).

     Based on the foregoing, the court finds that both parties

have presented strong cases,7 and, thus, plaintiff has failed to

     7
          As to the exact showing necessary to have this factor
favor plaintiff, the present state of the law is unclear. See
U.S. Ass’n of Importers of Textile and Apparel v. United States
Dep’t of Commerce, 413 F.3d 1344, 1347 (Fed. Cir. 2005) (finding
that, because plaintiff had not even met a minimal threshold for
                                                   (continued...)
Court No. 04-00647                                            Page 16

demonstrate that it is likely to succeed on the merits at trial.

Therefore, this part of the four-part test does not compel the

court to find that Olympia is entitled to injunctive relief.

                           CONCLUSION

     For the reasons stated above, the court denies plaintiff’s

motion for a preliminary injunction.    Judgment shall be entered

accordingly.

                                       /s/ Richard K. Eaton
                                          Richard K. Eaton

Dated:    January 6, 2006
          New York, New York

     7
      (...continued)
establishing likelihood of success on the merits, “we need not,
and thus do not, resolve the dispute over the legal standard
applicable in the Federal Circuit . . . .”).