Court Opinion

ID: 2663864
Source: CourtListenerOpinion
Date Created: 2014-04-04 02:47:51.188913+00
Date Added: 2024-06-11T13:04:06.681398
License: Public Domain

UNITED STATES DISTRICT COURT
                            FOR THE DISTRICT OF COLUMBIA

 FURNITURE BRANDS
 INTERNATIONAL, INC.,

           Plaintiff,
                  v.                                       Civil Action No. 11-00202 (JDB)
 UNITED STATES INTERNATIONAL
 TRADE COMMISSION, et al.,

           Defendants.

                                  MEMORANDUM OPINION

       Furniture Brands International, Inc. ("plaintiff") has brought suit against Customs and

Border Protection ("Customs"), the International Trade Commission ("ITC"), and, in their

official capacities, Customs Commissioner Bersin and ITC Chairperson Okun (collectively

"defendants"), to recover funds it believes it is owed under the Continued Dumping and Subsidy

Offset Act of 2000 ("CDSOA"), 19 U.S.C. § 1675c, repealed by Pub. L. No. 109-171, § 7601,

120 Stat. 154 (Feb. 8, 2006). Before its repeal, the CDSOA directed Customs to redistribute

money that it collected pursuant to an individual antidumping duty to "affected domestic

producers."1 Id. § 1675c(d)(3). The ITC would provide Customs with a list of these "affected

domestic producers" based on the producers' support for levying that antidumping duty. Id.

§ 1675c(d)(1).

       Plaintiff seeks a declaration, under the Declaratory Judgment Act, 28 U.S.C. § 2201, that

       1
          "The terms 'dumped' and 'dumping' refer to the sale or likely sale of [foreign] goods at
less than fair value" in the United States. 19 U.S.C. § 1677(34).

                                                -1-
the CDSOA's definition of "affected domestic producer" violates the First Amendment to the

extent that a producer is required to support an antidumping duty in order to receive a

distribution. Furthermore, plaintiff requests that the Court order the ITC, pursuant to the

Administrative Procedure Act, 5 U.S.C. § 702, to include plaintiff on its list of "affected

domestic producers" and order Customs to distribute to plaintiff its share of the antidumping duty

funds. Because the finite funds collected under an individual antidumping duty are divided

among affected producers, the following affected furniture manufacturers have intervened in this

litigation: Kincaid Furniture Co., Inc.; L. & J.G. Stickley, Inc.; Sandberg Furniture Mfg. Co.,

Inc.; Stanley Furniture Co., Inc.; T. Copeland & Sons, Inc.; and Vaughan-Bassett Furniture Co.,

Inc. (collectively "defendant-intervenors").

        Defendants have filed motions to dismiss for lack of subject matter jurisdiction,

contending that the Court of International Trade ("CIT") has exclusive jurisdiction pursuant to 28

U.S.C. § 1581(i). Defendant-intervenors, in addition to moving to dismiss for lack of subject

matter jurisdiction, have moved to dismiss or transfer the case under the first-to-file rule.

Plaintiff originally filed a virtually identical suit at the CIT in 2007. Furniture Brands Int'l, Inc.

v. United States, No. 07-00026 (Ct. Int'l Trade Jan. 23, 2007). Although the parties have fully

briefed the merits in that case, plaintiff has moved to dismiss its own complaint, arguing that the

CIT lacks subject matter jurisdiction. Pl.'s CIT Mot. to Dismiss or Amend Compl., Furniture

Brands Int'l, Inc., No. 07-00026. For the reasons detailed below, the Court will dismiss this

action pursuant to the first-to-file rule in deference to the earlier action pending before the CIT.

                                                  -2-
                                          BACKGROUND

I.      Statutory Framework

        Customs collects an antidumping duty when (1) the Commerce Department "determines

that a class or kind of foreign merchandise is . . . sold in the United States at less than its fair

value" and (2) the ITC determines that a U.S. industry is, or is threatened with being, "materially

injured" because of "imports of that merchandise." 19 U.S.C. § 1673. In 2000, Congress passed

the CDSOA, which directed Customs to distribute money that it has collected pursuant to an

antidumping duty to certain "affected domestic producers." 19 U.S.C. § 1675c(e) (repealed in

2006). The CDSOA directed Customs to deposit funds collected pursuant to an individual

antidumping duty into a segregated "special account[]." Id. § 1675c(e). The ITC would then

send Customs a list of "affected domestic producers"— defined as producers who petitioned for

an antidumping duty or "indicate[d] support of the petition by letter or through questionnaire

response." Id. § 1675c(d)(1). Customs would distribute the funds from the special account to

"affected domestic producers" based on their share of "qualifying expenditures." Id.

§§ 1675c(b)(4), (d)(3). On June 1, 2006, Congress repealed the CDSOA but provided that it

would continue in force for "[a]ll duties on entries of goods made and filed before October 1,

2007." Pub. L. No. 109-171, § 7601(b), 120 Stat. 154 (Feb. 8, 2006).

II.     Plaintiff's Challenge to the CDSOA

        In 2003, the ITC began investigating whether Chinese wooden bedroom furniture

manufacturers were dumping their products on the U.S. market. Wooden Bedroom Furniture

from China, 68 Fed. Reg. 63816, 63817 (Nov. 10, 2003). In relation to this investigation,

plaintiff responded to the ITC's questionnaire and indicated that it was opposed to levying any

                                                   -3-
antidumping duties on imports of Chinese wooden bedroom furniture. Compl. [Docket Entry 1]

¶ 31. Based on its investigation, the ITC ultimately issued an antidumping order against

imported Chinese wooden bedroom furniture. Wooden Bedroom Furniture from the People's

Republic of China, 70 Fed. Reg. 329 (Jan. 4, 2005). Because plaintiff opposed the imposition of

this antidumping duty in its questionnaire, plaintiff was statutorily excluded from the list of

"affected domestic producers." See Distribution of Continued Dumping and Subsidy Offset to

Affected Domestic Producers, 71 Fed. Reg. 31336 (June 1, 2006). Customs distributed funds

under the wooden bedroom furniture antidumping duty in Fiscal Years 2006, 2007, and 2008.

Plaintiff challenges its exclusion for each of those years.

       Plaintiff filed a complaint in the CIT on January 23, 2007, claiming, like here, that it was

entitled to a CDSOA distribution because the CDSOA's definition of "affected domestic

producer" violates the First Amendment insofar as it requires a producer to support an

antidumping duty in order to receive a distribution. CIT Compl., Furniture Brands Int'l, Inc., No.

07-00026. At that time, plaintiff asserted that the CIT had exclusive jurisdiction pursuant to 28

U.S.C. § 1581(i). Id. at 2. On June 25, 2007, the CIT stayed plaintiff's case pending the

resolution of similar First Amendment challenges to the CDSOA in the Federal Circuit. After

the Federal Circuit upheld the constitutionality of the CDSOA in SKF USA, Inc. v. U.S. Customs

& Border Protection, 556 F.3d 1337 (Fed. Cir. 2009), the CIT ordered plaintiff to show cause

why its claim should not be dismissed.

       In the wake of the Federal Circuit's rejection of plaintiff's First Amendment argument,

plaintiff moved to dismiss its CIT action for lack of subject matter jurisdiction and filed an

identical action in this Court. Again, plaintiff asks that this Court declare that the CDSOA is

                                                 -4-
unconstitutional, order the ITC to name it an "affected domestic producer," and order Customs to

distribute to it a share of money from the antidumping fund. Defendants have moved to dismiss

for lack of subject matter jurisdiction. Following that motion, this Court stayed briefing on the

merits in order to first determine whether the Court has subject matter jurisdiction. Order

[Docket Entry 18]. Defendant-intervenors then entered this litigation unopposed and, in addition

to moving to dismiss for lack of subject jurisdiction, moved to dismiss or transfer the action

under the first-to-file rule because of plaintiff's pending case in the CIT.

                                    STANDARD OF REVIEW

       District courts have the discretion to stay or dismiss a pending suit when confronted with

parallel litigation of factually related cases filed in two separate forums. Handy v. Shaw, 325

F.3d 346, 349 (D.C. Cir. 2003). In fact, the Supreme Court has stated that "though no precise

rule has evolved, the general principle is to avoid duplicative litigation" between federal district

courts. Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 817 (1976)

(citations omitted).2

       Moreover, it is well-established in the D.C. Circuit that "[w]here two cases between the

same parties on the same cause of action are commenced in two different Federal courts, the one

which is commenced first is to be allowed to proceed to its conclusion first." Washington Metro.

Area Transit Auth. v. Ragonese, 617 F.2d 828, 830 (D.C. Cir. 1980) (citations omitted). The

Circuit has warned against mechanically applying the first-filed rule if the second-filed action

deserves priority, see Columbia Plaza Corp. v. Sec. Nat'l Bank, 525 F.2d 620, 628 (D.C. Cir.

       2
          The CIT "is a court established under article III of the Constitution of the United
States." 28 U.S.C. § 251.

                                                  -5-
1975), but "[c]onsiderations of comity and orderly administration of justice dictate that two

courts of equal authority should not hear the same case simultaneously," Ragonese, 617 F.2d at

830; see also Columbia, 525 F.2d at 626 ("Sound judicial administration counsels against

separate proceedings, and the wasteful expenditure of energy and money incidental to separate

litigation of identical issues should be avoided."); Nat'l Family Planning & Reprod. Health Ass'n

v. Sullivan, 1992 WL 345629 at *2 (D.D.C. 1992) ("This principle of judicial comity is derived

from the policies favoring the conservation of judicial resources as well as providing for the

comprehensive disposition of litigation before the federal courts.").

                                          DISCUSSION

       Plaintiff readily acknowledges that "it has a parallel action pending at the CIT." Pl.'s

Mem. in Opp. to Defs.' Mot. to Dismiss [Docket Entry 15] at 12. In both cases, plaintiff

contends that the CDSOA's definition of "affected domestic producer" violates the First

Amendment and it seeks to compel Customs to disburse its share of the funds from the

segregated antidumping duty account. Accordingly, there is no question that this Court is

presented with the second of "two cases between the same parties on the same cause of action."

Ragonese, 617 F.2d at 830. In such situations, "[d]istrict courts have the discretion to stay or

dismiss a pending suit." Poku v. FDIC, 752 F. Supp. 2d 23, 28 (D.D.C. 2010) (citing Handy, 325

F.3d at 349).

       Plaintiff nonetheless contends that the Court "has an independent obligation to assess its

jurisdiction over this case, and that determination cannot give way to prudential considerations."

Pl.'s Mem. in Opp. to Def.-Ints.' Mot. to Dismiss [Docket Entry 27] at 12. Plaintiff's contention,

however, directly contravenes Sinochem Int'l Co. Ltd. v. Malaysia Int'l Shipping Corp., 549 U.S.

                                                -6-
422 (2007), which "firmly establishes that certain non-merits, nonjurisdictional issues may be

addressed preliminarily, because '[j]urisdiction is vital only if the court proposes to issue a

judgment on the merits.'" Public Citizen v. U.S. Dist. Court for the Dist. of Columbia, 486 F.3d

1342, 1348 (D.C. Cir. 2007) (quoting Sinochem, 549 U.S. at 431). Plaintiff, with good reason,

does not dispute that the first-to-file rule is one such "non-merits, nonjurisdictional issue[]." Id.;

see, e.g., Cadle Co. v. Whataburger of Alice, Inc., 174 F.3d 599, 606 (5th Cir. 1999) ("[T]he 'first

to file rule' . . . determines which court may decide the merits of substantially similar cases.");

Long v. CVS Caremark Corp., 695 F. Supp. 2d 633, 637 (N.D. Ohio 2010) ("A dismissal based

on the first-to-file rule is disposed of on a ground which does not go to the merits of the action.")

(internal quotation marks omitted).

       At oral argument, plaintiff introduced five cases which it contends are examples where

courts found that it was necessary to determine jurisdiction before considering whether to dismiss

or transfer on first-to-file grounds. None of these cases, however, suggest that this Court must

examine its subject matter jurisdiction before dismissing on first-to-file grounds. Three of the

cases are simply examples where courts explained the first-to-file rule using the phrases "obtain

jurisdiction" and "acquire jurisdiction" in a non-technical manner to mean when the plaintiff

commenced the action. See Nw. Airlines, Inc. v. Am. Airlines, Inc., 989 F.2d 1002, 1004 (8th

Cir. 1993) ("[T]he district court first obtaining jurisdiction over the parties should proceed to

adjudicate the controversy."); Pacesetter Sys., Inc. v. Medtronic, Inc., 678 F.2d 93, 95 (9th Cir.

1982) ("[T]he court which first acquired jurisdiction should try the lawsuit."); O'Hare Int'l Bank

v. Lambert, 459 F.2d 328, 331 (7th Cir. 1972) ("[T]he first federal district court which obtains

jurisdiction of parties and issues should have priority."). For example, the Pacesetter court

                                                  -7-
explained that by "acquired jurisdiction" it was referring to when the "federal action [was]

commenced," not when the court decided that it had subject matter jurisdiction. 678 F.2d at 96

n.3. Notably, none of these three courts actually discussed whether a court was required to

address subject matter jurisdiction before turning to the first-to-file rule. Hence, these cases do

not present any authority for the proposition that a court must decide its subject matter

jurisdiction before dismissing on first-to-file grounds.

       Although the other two cases that plaintiff introduced at oral argument discuss whether a

court must determine its subject matter jurisdiction before relying on the first-to-file rule, those

cases are similarly inapposite. In Zavanna, LLC v. RoDa Drilling Co., 2009 WL 3720177

(D.N.D. 2009), the court discussed whether it had the power to transfer a case based on first-to-

file considerations when it lacked subject matter jurisdiction. That court, however, was merely

addressing whether a "court lacking subject matter jurisdiction can[] transfer a case to another

court under 28 U.S.C. § 1404(a)." Id. at *14. The court emphasized that it was only engaging in

"statutory construction of the transfer statutes." Id. at *15. Zavanna said nothing as to whether a

court must determine its subject matter jurisdiction before dismissing an action on first-to-file

grounds.

       Similarly, in Patterson v. Drews, the court stated that "the 'first to file' rule is a doctrine

allowing a district court to transfer, stay or dismiss a complaint over which it does have

jurisdiction when a similar complaint has been filed in another district court." 2009 WL

2474687, *4 (N.D. Cal. 2009) (citing Alltrade Inc. v. Uniwield Products, Inc., 946 F.2d 622, 623

(9th Cir.1991)). That court, however, appears to miscite Alltrade for that proposition, which says

nothing about whether a court must "have jurisdiction" in order to dispose of a case on first-to-

                                                  -8-
file grounds. See 946 F.2d at 623 (noting that the "'first to file rule,' . . . allows a district court to

transfer, stay, or dismiss an action when a similar complaint has already been filed in another

federal court," without mentioning anything about its jurisdiction). The Patterson court also

suggests that a court must determine its jurisdiction because "'jurisdiction [must] be established

as a threshold matter.'" 2009 WL 2474687 at *4 (citing Steel Co. v. Citizens for a Better Env't,

523 U.S. 83, 94-95 (1998)). As discussed above, however, the Supreme Court explained in

Sinochem, 549 U.S. at 431, that "[j]urisdiction is vital only if the court proposes to issue a

judgment on the merits," and the Patterson court never suggests that relying on the first-to-file

rule is a decision on the merits.

        It is worth noting that in Zavanna and Patterson the courts were clearly devoid of subject

matter jurisdiction. That is not the case here. When subject matter jurisdiction is clearly lacking,

it conserves judicial resources to dismiss a case for lack of subject matter jurisdiction. Plaintiff,

however, cites no case where a court facing an open question regarding subject matter

jurisdiction found that it must first determine its subject matter jurisdiction before relying on the

first-to-file rule. And that jurisdictional dispute lies at the heart of plaintiff's dual filings. Indeed,

it is difficult to imagine that a court would find that it must first determine subject matter

jurisdiction when the very basis of the first-to-file rule is the avoidance of "the wasteful

expenditure of energy and money incidental to separate litigation of identical issues." Columbia,

525 F.2d at 626.

        Plaintiff further contends that, even if the Court is not required to decide jurisdiction, the

first-to-file rule should not be applied when "subject matter jurisdiction lies exclusively in the

second-filed court." Pl.'s Opp. to Def.-Ints.' Mot. to Dismiss 10. That argument, however, begs

                                                    -9-
the question of which court should decide the jurisdictional question. Plaintiff treats the

jurisdictional question as if the CIT is clearly devoid of jurisdiction. The CIT, however, has

taken jurisdiction in many other similar CDSOA claims. See, e.g., SKF USA, Inc. v. United

States, 451 F. Supp. 2d 1355 (Ct. Int'l Trade 2006); Chez Sidney, L.L.C. v. U.S. Int'l Trade

Comm'n, 442 F. Supp. 2d 1329 (Ct. Int'l Trade 2006). Indeed, the one other district court in

which a party attempted to challenge the CDSOA found that "Congress has vested exclusive

jurisdiction over this matter with the [CIT] pursuant to 28 U.S.C. § 1581(i)." Pat Huval's

Fisherman Wharf v. U.S. Int'l Trade Comm'n, 2006 WL 2460846 at *2 (W.D. La. 2006). Either

the CIT or this Court will have to decide the jurisdictional issue, and tellingly, plaintiff advances

no argument as to why this Court is in a better position than the CIT to do so.3

       Not only is the CIT the first-filed court, but it is the court that is far better-positioned to

decide this jurisdictional issue. In deciding which court should proceed first when presented with

parallel filings, the D.C. Circuit has explained that it does not automatically "favor[] the

first-filed action . . . because countervailing equitable considerations, where present, cannot be

ignored." Columbia Plaza, 525 F.2d at 627. In Columbia Plaza, the court looked to (1) whether

all parties are present in both cases, (2) the location of witnesses, and (3) the stage of the

       3
          Plaintiff further suggests that this Court should determine whether "the first-filed court
ha[s] subject matter jurisdiction over the plaintiff's claims" before deferring to the first-filed court
because this Court did so in Poku, 752 F. Supp. 2d 23. Pl.'s Opp. to Def-Ints.' Mot. to Dismiss
11. Nothing in Poku, however, suggests that the Court is required to determine subject matter
jurisdiction before dismissing on first-to-file grounds. Poku was merely addressing plaintiff's
concern that the first-filed court did not have jurisdiction when "the case law overwhelmingly
suggest[ed] otherwise." Poku, 752 F. Supp. 2d at 29. To determine the novel jurisdictional
question here, which plaintiff acknowledges has "never before been presented to or considered by
the CIT or the Federal Circuit," Pl.'s Opp. to Defs.' Mot. to Dismiss [Docket Entry 15] at 11,
while the CIT is presented with the same question, would be an inefficient use of scarce judicial
resources.

                                                 -10-
respective proceedings. Id. at 629. None of these equitable considerations favor this Court over

the CIT for deciding the threshold jurisdictional question. All parties are present in both cases,

no witnesses are necessary to determine the threshold jurisdictional issue, and briefing, both on

the merits and on the jurisdictional issue, is complete in the CIT.

        Moreover, other equitable considerations show that the CIT is the better forum to decide

whether CDSOA distributions under 19 U.S.C. § 1675c fall within its exclusive jurisdiction

under 28 U.S.C. § 1581(i), because the CIT is far more familiar with those statutes than is this

Court. Although there is no question that this Court is competent to decide this question of

statutory interpretation, the CIT must interpret its jurisdictional statute every time subject matter

jurisdiction is questioned, and the CIT also has far more experience in interpreting the CDSOA.

A Westlaw search of "Continued Dumping and Subsidy Offset Act" returns thirty-nine results in

the CIT, while it returns none for the U.S. District Court for the District of Columbia. Similarly,

a Westlaw search of the jurisdictional subsection at issue, 28 U.S.C. § 1581(i), returns 451

results in the CIT but only five results in the District Court for the District of Columbia.

        Indeed, the CIT has many similar challenges still pending before the same three-judge

panel. See Furniture Brands Int'l., No. 07-00026, Order to Show Cause (Jan. 3, 2011) (ordering

forty-five other similar cases to show cause why they should not be dismissed). This three-judge

panel, which is handling all similar challenges, further evidences the CIT's expertise in the

matter. Moreover, whether or not parties in those matters challenge subject matter jurisdiction,

the CIT necessarily will confront that issue if it rules on the merits in those cases. As this Court

has explained, when another court is "actively wrestling with the issues presented" by multiple

parties, it is "[f]ar better for the litigation to proceed in a single location" as the "possibility of

                                                   -11-
inconsistent results cannot be ignored." Entines v. United States, 495 F. Supp. 2d 84, 86 (D.D.C.

2007). Because equitable considerations favor the CIT for determining the threshold

jurisdictional issue, and because the CIT is the first-filed court, this Court will defer to the

litigation at the CIT and dismiss this case.4

                                          CONCLUSION

        This Court will avoid duplicative litigation by deferring to the CIT to resolve this case.

Hence, for reasons of comity and judicial economy, the Court will dismiss plaintiff's complaint

without prejudice. A separate Order accompanies this Memorandum Opinion.

                                                                      /s/
                                                               JOHN D. BATES
                                                          United States District Judge

Dated: August 15, 2011

       4
          If this Court transferred this case to the Court of International Trade, it might be barred
by that court's statute of limitations. 28 U.S.C. § 2401. Moreover, plaintiff indicated at oral
argument that it would not be prejudiced by dismissal, rather than transfer.

                                                 -12-