Court Opinion

ID: 820202
Source: CourtListenerOpinion
Date Created: 2013-02-10 19:37:10.054889+00
Date Added: 2024-06-11T09:03:03.115727
License: Public Domain

Slip Op. 12- 8

              UNITED STATES COURT OF INTERNATIONAL TRADE

 SCHAEFFLER GROUP USA, INC.,

                      Plaintiff,

                      v.

 UNITED STATES, UNITED STATES
 CUSTOMS AND BORDER PROTECTION,                   Before:   Gregory W. Carman, Judge
 and UNITED STATES INTERNATIONAL                            Timothy C. Stanceu, Judge
 TRADE COMMISSION,                                          Leo M. Gordon, Judge

                      Defendants,                 Consol. Court No. 06-00432

                      and

 THE TIMKEN COMPANY and MPB
 CORPORATION,

                      Defendant Intervenors.

                                       OPINION

[Dismissing the consolidated action for failure to state a claim upon which relief can be
granted]

                                                                  Dated: January 17, 2012

        Max F. Schutzman, and Andrew T. Schutz, Grunfeld, Desiderio, Lebowitz,
Silverman & Klestadt, LLP, of New York, NY, for plaintiff.

         David S. Silverbrand, and Courtney S. McNamara, Trial Attorneys, Commercial
Litigation Branch, Civil Division, United States Department of Justice, of Washington,
DC, for defendant United States Customs and Border Protection. With them on the
briefs were Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, Franklin
Consol. Court No. 06-00432                                                           Page 2

E. White, Jr., Assistant Director, and Andrew G. Jones, Office of Assistant Chief Counsel,
United States Customs and Border Protection, of counsel.

          Patrick V. Gallagher, Jr., Attorney Advisor, Office of the General Counsel, U.S.
International Trade Commission, of Washington, DC, for defendant, U.S. International
Trade Commission. With him on the briefs were James M. Lyons, General Counsel, and
Neal J. Reynolds, Assistant General Counsel for Litigation.

         Geert De Prest, Stewart and Stewart, of Washington, DC, for defendant
intervenors. With him on the brief were Terence P. Stewart, Amy S. Dwyer, and Patrick J.
McDonough.

CARMAN , JUDGE: Plaintiff brought five cases1 challenging the constitutionality of the

Continued Dumping and Subsidy Offset Act of 2000 (“CDSOA” or “Byrd

Amendment”).2 These cases were consolidated by order of the Court under Consol. Ct.

No. 06 00432. (Order (Feb. 15, 2011), ECF No. 37.) Plaintiff claims that it unlawfully

was denied affected domestic producer (“ADP”) status, which would have qualified it

to receive distributions under the CDSOA. The consolidated case is now before the

Court on dispositive motions. Defendants United States Customs and Border

Protection (“CBP”) and the United States International Trade Commission (“ITC”) each

move to dismiss Plaintiff’s complaints for failure to state a claim upon which relief can

       1
        Compl., Ct. No. 06 00432, Nov. 27, 2006, ECF No. 4 (“Compl. 1“); Compl., Ct.
No. 07 00064, Feb. 26, 2007, ECF No. 2 (“Compl. 2“); Compl., Ct. No. 07 00477, Dec. 20,
2007, ECF No. 2 (“Compl. 3“); Compl., Ct. No. 08 00387, Nov. 3, 2008, ECF No. 4
(“Compl. 4“); Compl., Ct. No. 10 00048, Feb. 16, 2010, ECF No. 2 (“Compl. 5“).
       2
        Pub. L. No. 106 387, §§ 1001 1003, 114 Stat. 1549, 1549A 72 75 (codified at
19 U.S.C. § 1675c (2000)), repealed by Deficit Reduction Act of 2005, Pub. L. 109 171,
§ 7601(a), 120 Stat. 4, 154 (Feb. 8, 2006; effective Oct. 1, 2007).
Consol. Court No. 06-00432                                                            Page 3

be granted pursuant to USCIT Rule 12(b)(5), and for judgment on the pleadings under

USCIT R. 12(c). (Defs. The United States and United States Customs and Border

Protection’s Mot. to Dismiss for Failure to State a Claim upon Which Relief Can Be

Granted and for Judgment on the Pleadings (“CBP Mot.”), May 4, 2011, ECF No. 60);

(Def. United States International Trade Commission’s Mot. to Dismiss for Failure to

State a Claim and For Judgment on the Pleadings (“ITC Mot.”), May 2, 2011, ECF No.

56). Defendant Intervenors the Timken Company and MPB Corp. (collectively,

“Timken”) move for judgment on the pleadings pursuant to USCIT Rule 12(c).

(Timken’s Mot. for J. on the Pleadings (“Timken Mot.”), May 2, 2011, ECF No. 58.)

Plaintiff also cross moved for judgment on the pleadings. (Pl.’s Cross Mot. for J. on the

Pleadings (“Pl.’s Mot.”), June 6, 2011, ECF No. 62.) For the reasons set forth below,

Plaintiff’s consolidated action will be dismissed for failure to state a claim upon which

relief can be granted.

                                       BACKGROUND

           Plaintiff Schaeffler Group USA, Inc. (“Schaeffler”), a U.S. producer of

antifriction bearings, is the legal successor to two U.S. producers of antifriction

bearings3 who participated in a 1988 investigation conducted by the ITC that

       3
        The Court accepts Plaintiff’s undisputed representation that it is the legal
successor to INA Bearing Co., Inc. and FAG Bearings Corp., and will refer to these
companies interchangeably as “Schaeffler.”
Consol. Court No. 06-00432                                                            Page 4

culminated in the issuance of antidumping duty orders on antifriction bearings and

parts thereof from Germany, France, Italy, Japan, Sweden, Romania, Thailand,

Singapore, and the United Kingdom. (See Compl. 1 ¶¶ 1, 7.) During those proceedings,

Schaeffler responded to the ITC’s questionnaires but declined to indicate to the ITC that

it supported the antidumping petition. (Id. at ¶ 10.) Consequently, the ITC has never

included Schaeffler on a published list of ADPs, and, as a result, Schaeffler has never

received a CDSOA distribution. (Compl. 1 ¶ 36; Compl. 2 ¶ 36; Compl. 3 ¶¶ 39, 42;

Compl. 4 ¶ 39; Compl. 5 ¶ 39.)

           Plaintiff brought a series of cases to challenge the government’s refusal to

provide it CDSOA distributions for fiscal years 2004 through 2009. (Compls. 1 5,

Prayer for Relief.) Shortly after each of Schaeffler’s cases was filed, the Court stayed the

actions pending final resolution of other litigation raising the same or similar issues.4

Following the decision of the U.S. Court of Appeals for the Federal Circuit in SKF USA

Inc. v. U.S. Customs and Border Protection, 556 F.3d 1337 (2009) (“SKF USA II”), the

Court ordered Plaintiff to show cause why its cases should not be dismissed. (Order

(Jan. 3, 2011), ECF No. 31.) After Plaintiff responded to the Court’s order, the Court

lifted the stay in each of Plaintiff’s cases for all purposes. (Order (Feb. 9, 2011), ECF No.

       4
         The Court’s order stayed the action until final resolution of Pat Huval
Restaurant & Oyster Bar, Inc. v. United States, Consol. Ct. No. 06 0290. (See Order
(Feb. 23, 2007), ECF No. 23.)
Consol. Court No. 06-00432                                                           Page 5

34.) The Court then consolidated Plaintiff’s five cases under Consol. Ct. No. 06 00432.

(Order (Feb 15, 2011)).5

                                       JURISDICTION

           The Court exercises subject matter jurisdiction over this action pursuant to

section 201 of the Customs Courts Act of 1980, 28 U.S.C. § 1581(i)(4), which grants the

Court of International Trade exclusive jurisdiction of any civil action commenced

against the United States that arises out of any law providing for administration and

enforcement with respect to, inter alia, the matters referred to in § 1581(i)(2), which are

“tariffs, duties, fees, or other taxes on the importation of merchandise for reasons other

than the raising of revenue.” The CDSOA, under which this action arises, is such a law.

See Furniture Brands Int’l, Inc. v. United States, 35 CIT __, __ __ Ct. No. 07 00026, Slip

Op. 11 132 at 9 15 (Oct. 20, 2011).

                                        DISCUSSION

           The CDSOA amended the Tariff Act of 1930 to provide for an annual

distribution (a “continuing dumping and subsidy offset”) of duties assessed pursuant to

an antidumping duty or countervailing duty order to affected domestic producers as

       5
         CBP has not made any CDSOA distributions affecting this case and indicates
that it will refrain from doing so until January 31, 2012 at the earliest. (Def. U.S.
Customs & Border Protection’s Resp. to the Ct.’s Feb. 14, 2011 Request (Feb. 28, 2011),
ECF No. 43.)
Consol. Court No. 06-00432                                                               Page 6

reimbursements for qualifying expenditures.6 19 U.S.C. § 1675c(a) (d). ADP status is

limited to petitioners, and interested parties in support of petitions, with respect to

which antidumping duty and countervailing duty orders are entered, and who remain

in operation. Id. § 1675c(b)(1). The CDSOA directed the ITC to forward to Customs,

within sixty days after an antidumping or countervailing duty order is issued, lists of

persons with ADP status, i.e., “petitioners and persons with respect to each order and

finding and a list of persons that indicate support of the petition by letter or through

questionnaire response.” Id. § 1675c(d)(1). The CDSOA also provided for distributions

of antidumping and countervailing duties assessed pursuant to existing antidumping

duty and countervailing duty orders and for this purpose directed the ITC to forward to

CBP a list identifying ADPs “within 60 days after the effective date of this section in the

case of orders or findings in effect on January 1, 1999 or thereafter . . . .” Id. The

CDSOA directed CBP to publish in the Federal Register, prior to each distribution, lists

of ADPs potentially eligible for distributions based on the lists obtained from the ITC,

       6
         Congress repealed the CDSOA in 2006, but the repealing legislation provided
that “[a]ll duties on entries of goods made and filed before October 1, 2007, that would
[but for the legislation repealing the CDSOA], be distributed under [the CDSOA] . . .
shall be distributed as if [the CDSOA] . . . had not been repealed . . . .” Deficit Reduction
Act of 2005, Pub. L. No. 109 171, § 7601(b), 120 Stat. 4, 154 (2006). In 2010, Congress
further limited CDSOA distributions by prohibiting payments with respect to entries of
goods that as of December 8, 2010 were “(1) unliquidated; and (2)(A) not in litigation; or
(B) not under an order of liquidation from the Department of Commerce.” Claims
Resolution Act of 2010, Pub. L. No. 111 291, § 822, 124 Stat. 3064, 3163 (2010).
Consol. Court No. 06-00432                                                            Page 7

id. § 1675c(d)(2), and to distribute annually all funds, including accrued interest, from

antidumping and countervailing duties received in the preceding fiscal year. Id.

§ 1675c(d)(3), (e).

           The Court of Appeals, in SKF USA II, upheld the CDSOA against

constitutional challenges brought on First Amendment and equal protection grounds.

556 F.3d at 1360 (“[T]he Byrd Amendment is within the constitutional power of

Congress to enact, furthers the government’s substantial interest in enforcing the trade

laws, and is not overly broad. We hold that the Byrd Amendment is valid under the

First Amendment.”); id. (“Because it serves a substantial government interest, the Byrd

Amendment is also clearly not violative of equal protection under the rational basis

standard.”).7

           Plaintiff challenges the constitutionality of Defendants’ application of the

CDSOA to Schaeffler on three grounds. In Count One, Plaintiff challenges the “in

support of the petition” requirement of the CDSOA (“petition support requirement”), as

applied, on First Amendment grounds. (Compl. 1 ¶¶ 41 43, Compl. 2 ¶¶ 41 43, Compl.

3 ¶¶ 44 46, Compl. 4 ¶¶ 41 43, Compl. 5 ¶¶ 41 43.) In Count Two, Plaintiff challenges

the petition support requirement, as applied, on Fifth Amendment Equal Protection

       7
       SKF USA II reversed the decision of the Court of International Trade in SKF
USA Inc. v. United States, 30 CIT 1433, 451 F. Supp. 2d 1355 (2006) (“SKF USA I”),
which held the petition support requirement of the CDSOA unconstitutional on Fifth
Amendment equal protection grounds.
Consol. Court No. 06-00432                                                              Page 8

grounds. (Compl 1 ¶¶ 44 47, Compl. 2 ¶¶ 44 47, Compl. 3 ¶¶ 47 50, Compl. 4

¶¶ 44 47, Compl. 5 ¶¶ 44 47.) In Count Three, Plaintiff claims that the petition support

requirement violates the Fifth Amendment Due Process guarantee, in basing

Schaeffler’s eligibility for disbursements on past conduct, i.e., support for a petition.

(Compl. 1 ¶¶ 48 50, Compl. 2 ¶¶ 48 50, Compl. 3 ¶¶ 51 53, Compl. 4 ¶¶ 48 50, Compl.

5 ¶¶ 48 50.)

         In ruling on motions to dismiss made under USCIT Rule 12(b)(5), we dismiss

complaints that do not “contain sufficient factual matter, accepted as true, to ‘state a

claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009)

(quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). For the reasons set

forth below, we conclude that each of the claims in Plaintiff’s complaints in this

consolidated action must be dismissed for failure to state a claim upon which relief can

be granted.

I.       Plaintiff’s Challenges Under the First Amendment and the Equal Protection
         Clause Are Foreclosed by Binding Precedent

         Plaintiff fails to plead facts allowing the Court to conclude that its as applied

First Amendment and Equal Protection challenges to the CDSOA are distinguishable

from claims brought, and rejected, in SKF USA II. The complaints contain no assertions

that the CDSOA was applied to Schaeffler in a different manner than the statute was

applied to other parties who did not support a petition. Plaintiff acknowledges that to
Consol. Court No. 06-00432                                                          Page 9

qualify as an ADP, it “must have been a petitioner or supported a petition that led to an

antidumping or countervailing duty order (which Schaeffler did not.)” (See, e.g.,

Compl. 1 ¶ 10.) The facts as pled place Schaeffler on the same footing as other potential

claimants who did not support the petition, such as SKF. See SKF USA II, 556 F.3d at

1343 (“Since it was a domestic producer, SKF also responded to the ITC’s questionnaire,

but stated that it opposed the antidumping petition.”). Consequently, because Plaintiff

does not allege that there was anything unique about the way the CDSOA was applied

to it, Plaintiff’s as applied First Amendment and Equal Protection challenges in Counts

One and Two are foreclosed by the holding in SKF USA II, and must be dismissed

pursuant to USCIT Rule 12(b)(5) for failure to state a claim upon which relief can be

granted.

           Plaintiff’s argument that the recent Supreme Court cases Snyder v. Phelps, 131

S. Ct. 1207 (2011), and Citizens United v. Federal Election Commission, 130 S. Ct. 876

(2010) effectively overturn SKF USA II is wholly unpersuasive. While it is conceivable

that intervening Supreme Court precedent could “effectively overrule” a previous

circuit court decision, we are not convinced that such is the case here.

           In Snyder, the Supreme Court held that the First Amendment provided a valid

defense to certain tort liability, because the defendant’s speech, while “hurtful,” was

made in “a public place on a matter of public concern,” and was therefore “entitled to
Consol. Court No. 06-00432                                                              Page 10

‘special protection’ under the First Amendment.” Snyder, 131 S. Ct. at 1218 20. We

conclude that Snyder has no bearing on the constitutionality of the CDSOA. To

conclude otherwise is to ignore the Supreme Court’s disclaimer that

       [o]ur holding today is narrow. We are required in First Amendment cases
       to carefully review the record, and the reach of our opinion here is limited
       by the particular facts before us. As we have noted, “the sensitivity and
       significance of the interests presented in clashes between First Amendment
       and [state law] rights counsel relying on limited principles that sweep no
       more broadly than the appropriate context of the instant case.”

Snyder, 131 S. Ct. at 1220 (quoting Florida Star v. B.J.F., 491 U.S. 524, 533 (1989))

(emphasis added). Plaintiff is incorrect in asserting that the Supreme Court intended in

Snyder, “for the first time, [to identify] a discrete set of guiding principles to determine

whether the speech at issue [in this case] constitutes ‘public speech’ subject to strict

scrutiny.” (Pl.’s Mot. 11.) Because this case does not involve the First Amendment as a

defense to tort liability for inflammatory speech, nor a question regarding the clash of

First Amendment and state law rights, the Court finds Snyder inapplicable.

         Citizens United is similarly inapplicable. In that case, the Supreme Court

invalidated a law that imposed “an outright ban, backed by criminal sanctions” on

corporate spending on “electioneering communication,” which the Supreme Court

regarded as a ban on political speech. Citizens United, 130 S. Ct. at 897 (stating that the

prohibitions at issue were “classic examples of censorship.”). While “it might be

maintained that political speech simply cannot be banned or restricted as a categorical
Consol. Court No. 06-00432                                                              Page 11

matter,” the Supreme Court noted that at a minimum,“[l]aws that burden political

speech are ‘subject to strict scrutiny,’” and evaluated the challenged law under that

framework. Id. at 898 (quoting Federal Election Comm’n v. Wisconsin Right to Life,

Inc., 551 U.S. 449, 464 (2007)). The statute in Citizens United thus contrasts sharply with

the CDSOA, which “does not prohibit particular speech.” SKF USA II, 556 F.3d at 1350.

This is a critical distinction. As SKF USA II noted, “[s]tatutes that are prohibitory in

nature are rarely sustained, and cases addressing the constitutionality of such statutes

are of little assistance in determining the constitutionality of the far more limited

provisions of the Byrd Amendment.” Id. (emphasis added). This Court agrees;

Citizens United is of little assistance.

         Therefore, the Court will dismiss Plaintiff’s First Amendment and Equal

Protection claims in Counts One and Two of its complaints for failure to state a claim

upon which relief can be granted.

II.      The Petition Support Requirement Does Not Violate the Due Process Guarantee
         Due to Retroactivity

         Count Three of each of Plaintiff’s complaints claims that the CDSOA is

impermissibly retroactive, in violation of the Due Process guarantee of the Fifth

Amendment, in basing Schaeffler’s eligibility for disbursements on past conduct, i.e.,

support for a petition. In New Hampshire Ball Bearing v. United States, 36 CIT __, __

__, Slip Op. 12 2, at 8 14 (Jan. 3, 2012), we recently considered a claim essentially
Consol. Court No. 06-00432                                                          Page 12

identical to Plaintiff’s retroactivity claims. We concluded then that “the retroactive

reach of the petition support requirement in the CDSOA is justified by a rational

legislative purpose and therefore is not vulnerable to attack on constitutional due

process grounds.” 36 CIT at __, Slip Op. at 14. We reasoned that “it would not be

arbitrary or irrational for Congress to conclude that the legislative purpose of

rewarding domestic producers who supported antidumping petitions . . . would be

‘more fully effectuated’ if the petition support requirement were applied both

prospectively and retroactively.” 36 CIT at __, Slip Op. at 13 (quoting Pension Benefit

Guaranty Corp. v. R.A. Gray & Co., 467 U.S. 717, 730 31 (1984)). We conclude,

therefore, that Congress did not violate Schaeffler’s Fifth Amendment due process

rights in basing potential eligibility for CDSOA disbursements on a decision on whether

to support the petition that Schaeffler made prior to the enactment of the CDSOA.

Based on this conclusion, we will dismiss the Due Process claims in Count Three of the

complaints for failure to state a claim upon which relief can be granted.

                                        CONCLUSION

           For the foregoing reasons, all claims in the complaints in this consolidated

action must be dismissed for failure to state a claim upon which relief can be granted.8

       8
        Because the Court is granting Defendants’ motions to dismiss, the Court does
not need to reach Defendants’ and Defendant Intervenors’ motions for judgment on the
pleadings. Moreover, since the Court finds no merit in any of Plaintiff’s claims, the
Court has no reason to entertain Defendant Intervenors’ arguments regarding the
Consol. Court No. 06-00432                                                          Page 13

Accordingly, we deny Plaintiff’s motion for judgment on the pleadings. Plaintiff has

not indicated, either in responding to the Court’s order to show cause or in opposing

the motions to dismiss, that there is a plausible basis for Plaintiff to seek leave to amend

the complaints, and we see no such basis. Therefore, the Court shall enter judgment

dismissing this action.

                                                          Gregory W. Carman
                                                         Gregory W. Carman, Judge

Dated:   January 17, 2012
         New York, New York

statute of limitations or failure to exhaust administrative remedies.