Slip Op. 14-
UNITED STATES COURT OF INTERNATIONAL TRADE
UNITED STATES OF AMERICA,
Plaintiff, Before: Richard W. Goldberg, Senior Judge
Court No. 10-00185
v.
AMERICAN HOME ASSURANCE CO.,
Defendant.
OPINION
[Plaintiff’s motion for summary judgment is granted in part, denied in part. Defendant’s cross-
motion for summary judgment is granted in part, denied in part.]
Dated:
Edward F. Kenny, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of New York, NY, argued for plaintiff. With him on the brief were Stuart
F. Delery, Principal Acting Assistant Attorney General, and Barbara S. Williams, Attorney in
Charge of International Trade Field Office. Of counsel on the brief was Beth C. Brotman,
Attorney, Office of Assistant Chief Counsel for International Trade Litigation, U.S. Customs and
Border Protection, of Washington, DC.
Herbert C. Shelley, Steptoe & Johnson LLP, of Washington, DC, argued for defendant.
On the brief were Taylor Pillsbury, Meeks, Sheppard, Leo & Pillsbury, of Newport Beach, CA,
and Ralph Sheppard, Meeks, Sheppard, Leo & Pillsbury, of Fairfield, CT.
Goldberg, Senior Judge: This case is before the court on competing cross-motions for
summary judgment. In this action on a bond, Plaintiff, the United States (“United States” or “the
Government”), seeks recovery of unpaid antidumping duties from surety Defendant American
Home Assurance Company (“AHAC”). The parties dispute (1) whether AHAC is liable for the
unpaid duties as the surety on a continuous bond, and (2) assuming AHAC is liable, whether
AHAC owes the Government both prejudgment interest in the form of equitable interest and
Court No. 10-00185 Page 2
interest pursuant to 19 U.S.C. § 580 (2006). For reasons set forth below, the court finds that
AHAC is liable under the bond, but that the Government is only entitled to equitable
prejudgment interest. Accordingly, summary judgment as to the United States is granted in part
and denied in part, and summary judgment as to AHAC is granted in part and denied in part.
SUBJECT MATTER JURISDICTION AND STANDARD OF REVIEW
In 2001, AHAC entered into a continuous bond with importer JCOF (USA) International,
Inc. (“JCOF”). The Government now seeks recovery on the bond for unpaid antidumping duties.
Thus, jurisdiction is proper pursuant to 28 U.S.C. § 1582(2).
Both parties have moved for summary judgment. Summary judgment is available when
“the movant shows that there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” USCIT R. 56(a). To make the requisite showing, the
movant must cite “particular parts of materials in the record” and “show[] that the materials cited
do not establish the absence or presence of a genuine dispute.” USCIT R. 56(c). A fact is
material if it could affect the outcome of the action. See Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986). A genuine dispute as to a material fact exists if, based on the evidence, a
reasonable factfinder could return a verdict for the nonmoving party. Id.
UNDISPUTED FACTS
Importers must generally post security before U.S. Customs and Border Protection
(“Customs”) will release imported merchandise from its custody. Hartford Fire Ins. Co. v.
United States, 648 F.3d 1371, 1372 (Fed. Cir. 2011). Importers often use surety companies to
post the required security. Id. A “surety bond creates a three-party relationship, in which the
surety becomes liable for the principal’s debt or duty to the third party obligee.” Ins. Co. of the
W. v. United States, 243 F.3d 1367, 1370 (Fed. Cir. 2001).
Court No. 10-00185 Page 3
AHAC is a surety company authorized to issue surety bonds. Pl.’s Statement of Material
Facts as to Which There Are No Genuine Issues to Be Tried, ECF No. 27 (“Pl.’s Facts”) ¶ 1;
Def.’s Resp. to Pl.’s Statement of Material Facts as to Which There Are No Genuine Issues to Be
Tried, ECF No. 30 (“Def.’s Resp.”) ¶ 1. AHAC issued the surety bond at issue in this case
pursuant to an arrangement with U.S. importer JCOF. Pl.’s Facts ¶ 2; Def.’s Resp. ¶ 2. The
bond, on which JCOF and AHAC were jointly and severally obligated, had a limit of liability of
$600,000 per bond period. Pl.’s Facts ¶ 3; Def.’s Resp. ¶ 3.1
During the period covered by the continuous bond, JCOF imported two entries of
crawfish tail meat from Yangzhou Lakebest Foods Company, Ltd. (“Yangzhou Lakebest”)—a
Chinese exporter. Pl.’s Mot. & Mem. in Supp. of Mot. for Summ. J., ECF No. 27 (“Pl.’s Br.”),
at Ex. D, Resp. 4. The entries occurred on November 1, 2001 and November 2, 2001 and were
identified as entry numbers M42-1164064-2 and M42-1164065-9, respectively. Pl.’s Facts ¶¶ 4–
5; Def.’s Resp. ¶¶ 4–5. JCOF declared a zero percent ad valorem antidumping duty rate for both
entries at importation. Pl.’s Br. at Ex. D, Resp. 4.
On February 13, 2004, the U.S. Department of Commerce (“Commerce”) published the
final results of an administrative review of the order on crawfish tail meat from the People’s
Republic of China. Freshwater Crawfish Tail Meat from the People’s Republic of China, 69
Fed. Reg. 7193 (Dep’t Commerce Feb. 13, 2004) (“Final Results”). In those results, Commerce
assigned Yangzhou Lakebest an antidumping duty rate of 223.01% ad valorem. Id. at 7197. The
review period spanned from September 1, 2001 to August 31, 2002. Id. at 7194.
1
This bond is called a continuous bond, and it “cover[s] liabilities resulting from multiple import
transactions over a period of time, such as one year.” Nat’l Fisheries Inst., Inc. v. U.S. Bureau of Customs & Border
Prot., 30 CIT 1838, 1839, 465 F. Supp. 2d 1300, 1302 (2006).
Court No. 10-00185 Page 4
On May 12, 2004, Commerce directed Customs to liquidate entries of the subject
crawfish meat at the rates set forth in its Final Results.2 Pl.’s Facts ¶ 9; Def.’s Resp. ¶ 9.
Because Commerce’s review period included November 2001, JCOF’s two entries were subject
to Yangzhou Lakebest’s 223.01% ad valorem antidumping duty rate plus interest. See Pl.’s
Facts ¶ 6; Def.’s Resp. ¶ 6. On June 25, 2004, Customs liquidated the entries accordingly (“June
2004 liquidations”). See Pl.’s Facts ¶ 11; Def.’s Resp. ¶ 11. When JCOF did not timely pay the
duties, Customs made a formal demand on AHAC. Pl.’s Br. at Ex. G. AHAC then filed Protest
Number 2704-04-102655. Pl.’s Facts ¶ 12; Def.’s Facts ¶ 12. Customs denied that protest on
July 8, 2005, and AHAC did not institute litigation challenging the protest denial. See Pl.’s Facts
¶ 15; Def.’s Facts ¶ 15.
Much of the confusion in this case stems from litigation that an exporter other than
Yangzhou Lakebest instituted in response to the Final Results. Due to the pendency of litigation,
the court preliminarily enjoined the Government from liquidating entries exported by Shanghai
Taoen International Trading Co., Ltd (“Shanghai Taoen”) during the period of review. Pl.’s
Facts ¶ 8; Def.’s Facts ¶ 8. The preliminary injunction did not affect JCOF’s imports, as the
imports came from Yangzhou Lakebest and Yangzhou Lakebest was not a party to the pending
litigation. See Def.’s Statement of Add’l Material Facts as to Which There Are No Genuine
Issues to Be Tried, ECF No. 30 (“Def.’s Facts”) ¶ 3; Pl.’s Resp. to Def.’s Statement of Add’l
Facts as to Which There Are No Genuine Issues to Be Tried, ECF No. 37 (“Pl.’s Resp.”) ¶ 3.
Nonetheless, when the Shanghai Taoen litigation concluded, Customs reliquidated JCOF’s two
entries on June 3, 2005 (“June 2005 reliquidations”). See Pl.’s Facts ¶ 14; Def.’s Resp. ¶ 14.
2
“Liquidation means the final computation or ascertainment of duties on entries for consumption or
drawback entries.” 19 C.F.R. § 159.1 (2013). In antidumping duty cases, liquidation is suspended “until such time
as a party may request an administrative review, and during the pendency of any such review.” Decca Hospitality
Furnishings, LLC v. United States, 30 CIT 357, 360, 427 F. Supp. 2d 1249, 1252 (2006). Liquidation of the entries
at issue here had been suspended pending issuance of the Final Results. Def.’s Facts ¶¶ 1–2; Pl.’s Resp. ¶¶ 1–2.
Court No. 10-00185 Page 5
The June 2005 reliquidations resulted in new bills with a total bill amount $51,997.31 greater
than the bills associated with the June 2004 liquidations. See Pl.’s Br. at Exs. G, H.3 After
Customs made a second demand on AHAC, AHAC filed protest number 2704-05-102579. See
Pl.’s Facts ¶ 16; Def.’s Resp. ¶ 16. Again, AHAC did not institute litigation when Customs
denied the protest.
Customs sent AHAC a demand letter on February 9, 2007, seeking total payment of
$1,157,898.22 for unpaid duties plus interest in connection with JCOF’s two entries. Pl.’s Facts
¶ 18; Def.’s Facts ¶ 18. AHAC denied liability on grounds unrelated to those it raises in the
instant action. Pl.’s Facts ¶ 19; Def.’s Facts ¶ 19; Pl.’s Br. at Ex. K. The Government then
instituted this action on a bond on June 21, 2010. Summons & Compl., ECF Nos. 1–2. In its
answer, AHAC asserts multiple affirmative defenses hinging on its belief that JCOF’s two
entries were deemed liquidated at the rate in effect at the time of entry—i.e., zero percent. See
Answer to Compl., ECF No. 8. AHAC, thus, believes it is not liable under the surety bond.
DISCUSSION
The parties raise two issues in their summary judgment briefing. First, AHAC argues
that the bills underlying the Government’s collection action “are legally void” and that AHAC is
not obligated to pay under continuous bond number 270114235. See Def.’s Cross-Mot. & Mem.
in Supp. of Summ. J. & in Opp’n to Pl.’s Mot. for Summ. J., ECF No. 30 (“Def.’s Br.”), at 5.
Second, the parties dispute whether the Government is entitled to equitable and statutory interest
on any recovery. Id. at 9. As set forth below, the court finds that the Government is entitled to
recovery on the bond and awards equitable interest, but not statutory interest.
3
The parties apparently dispute the composition of the enlarged figure. The Government avers that any
increase in the amount of the bills is due exclusively to interest accruing between October 2004 and October 2005.
See Pl.’s Resp. ¶ 7. AHAC asserts that the increased bill amount represents a combination of increased principal
and interest. See Def.’s Facts ¶ 7. Any dispute on this issue is not material for purposes of this case.
Court No. 10-00185 Page 6
I. AHAC is legally obligated to pay under continuous bond number 270114235
The first issue in this case turns on the parties’ divergent interpretations of the legal effect
of the June 2005 reliquidations. AHAC essentially argues that the untimely June 2005
reliquidations superseded and canceled the timely June 2004 liquidations. Def.’s Br. at 6–7
(citing Mitsubishi Elecs. Am., Inc. v. United States, 18 CIT 929, 931, 865 F. Supp. 877, 879
(1994)). Because the reliquidations occurred more than ninety days after the June 2004
liquidations, AHAC further avers that the June 2005 voluntary reliquidations were invalid under
19 U.S.C. § 1501. Def.’s Br. at 7. As a result, AHAC believes there were no valid liquidations.
Without any valid liquidations, AHAC asserts that the entries were deemed liquidated by
operation of law at the rate asserted by the importer of record. Id. at 8 (citing 19 U.S.C.
§ 1504(d)). 19 U.S.C. § 1504(d) compels Commerce to liquidate previously suspended entries
“within 6 months after receiving notice of the removal [of the suspension] from the Department
of Commerce.” For purposes of this case, the six-month clock began running when Commerce
published its Final Results on February 13, 2004. Def.’s Br. at 8 (citing Int’l Trading Co. v.
United States, 412 F.3d 1303, 1313 (Fed. Cir. 2005)). The entries, thus, purportedly liquidated
by operation of law at zero percent ad valorem—the rate JCOF asserted at the time of entry. Id.
According to AHAC, it did not need to challenge the June 2005 reliquidations in this
Court because they were void at their inception and not merely voidable. Generally, “all
liquidations, whether legal or not, are subject to [19 U.S.C. § 1514’s] timely protest requirement”
and become final and conclusive unless an authorized party files a protest or commences a civil
action contesting the denial of a protest. Juice Farms, Inc. v. United States, 68 F.3d 1344, 1346
(Fed. Cir. 1995). However, relying on the Federal Circuit’s holding in United States v. Cherry
Hill Textiles, Inc., 112 F.3d 1550, 1560 (Fed. Cir. 1997), AHAC argues that the June 2005
Court No. 10-00185 Page 7
reliquidations were legally void because they occurred after a final, deemed liquidation. Def.’s
Br. 9. AHAC therefore asserts that it was not subject to the timely protest requirement. Id.
AHAC’s arguments are unpersuasive. The court agrees that Customs’ untimely
reliquidations vacated and “substituted for the collector’s original liquidation.” Mitsubishi, 18
CIT at 931, 865 F. Supp. at 879. Nonetheless, the court finds that the timely protest requirement
applied because the entries at issue were not deemed liquidated by operation of law and because
the reliquidations occurred before the June 2004 liquidations became final. Thus, the June 2005
reliquidations—“whether legal or not”—became final and conclusive against AHAC when
AHAC did not institute litigation challenging them. See Juice Farms, 68 F.3d at 1346; accord
Philip Morris U.S.A. v. United States, No. 89-1712, 1990 WL 79000, at *2 (Fed. Cir. June 13,
1990) (“[A]n unlawful reliquidation is not void, but is merely voidable.”).
A review of relevant case law is instructive. In Juice Farms, Customs erroneously
liquidated entries subject to a suspension order. 68 F.3d at 1345. The importer did not recognize
the error until the administrative review concluded, at which point the importer attempted to
protest the liquidations. Id. Customs denied the protest as untimely, and the importer filed suit
in this Court. Id. In affirming the court’s dismissal of the action for lack of jurisdiction, the
Federal Circuit found that even inadvertent, unlawful liquidations are subject to the timely
protest requirement. Id. at 1346.
In Cherry Hill, the Federal Circuit concluded that the timely protest requirement applied
with equal force in government collection actions. 112 F.3d at 1557. Nonetheless, based on the
facts of the case, the court identified an exception to this general rule. Id. at 1558. In Cherry
Hill, Customs delayed more than thirteen months before liquidating certain entries as dutiable
that had previously entered duty-free. Id. at 1551. In the intervening period between entry and
Court No. 10-00185 Page 8
liquidation, though, a liquidation had already taken effect by operation of law under the deemed
liquidation statute. Id. at 1559 (citing 19 U.S.C. § 1504(a)).
The surety in Cherry Hill did not protest the belated liquidation, but raised the deemed
liquidation issue in a subsequent government enforcement action. Id. at 1558. The Federal
Circuit found that the surety was not barred from launching this collateral attack. Id. Because a
previous, deemed liquidation had already become final, the court found that the new liquidation
“ha[d] no legal effect” and could not increase the surety’s liability. Id. at 1560. In other words,
once a final and conclusive liquidation occurs (and the Government’s cause of action expires),
“Customs cannot breathe new life into it merely by liquidating the entry anew.” Id.
Unlike in Cherry Hill, there were no final and conclusive liquidations in this case when
the June 2005 reliquidations occurred. First, the June 2004 liquidations were not yet final under
19 U.S.C. § 1514 because AHAC’s protest was still pending on June 3, 2005. See 19 U.S.C.
§ 1514(a) (providing that liquidations become “final and conclusive upon all persons (including
the United States and any officer thereof) unless a protest is filed in accordance with this section”
(emphasis added)). Second, despite AHAC’s contrary assertions, the entries were not deemed
liquidated by operation of law under 19 U.S.C. § 1504(d).
On its face, 19 U.S.C. § 1504(d) applies when an entry is “not liquidated by [Customs]
within 6 months after receiving” notice of the removal of a suspension of liquidation. See also
Fujitsu Gen. Am., Inc. v. United States, 283 F.3d 1364, 1376 (Fed. Cir. 2002). Customs’ June
2004 liquidations occurred within six months of the February 13, 2004 publication of the Final
Results, which constituted notice for the purpose of 19 U.S.C. § 1504(d) that the suspension of
liquidation had been removed. See Int’l Trading, 412 F.3d at 1313. Therefore, no deemed
liquidation occurred under 19 U.S.C. § 1504(d).
Court No. 10-00185 Page 9
AHAC has not convinced the court that a contrary conclusion is warranted. Indeed,
adopting AHAC’s interpretation would set untenable precedent. Logically extended, AHAC’s
argument would mean that any reliquidation after six months could result in a retroactive deemed
liquidation, as the reliquidation would supersede the original, timely liquidation. AHAC’s
argument also fails if it hinges on the belief that the June 2005 reliquidations were invalid
because they violated 19 U.S.C. § 1501. Though the reliquidations occurred more than ninety
days following notice of the original liquidation, such belated reliquidations are still subject to
the timely protest requirement. See Philip Morris, 1990 WL 79000, at *2; Mitsubishi, 18 CIT at
931, 865 F. Supp. at 879. Further, AHAC cannot reasonably argue that the June 2005
reliquidations are simultaneously valid for purposes of creating deemed liquidations by replacing
the original liquidations and void ab initio such that they need not be challenged under the
procedures for protesting reliquidations and contesting protest denials in this Court.
AHAC’s interpretation also does little to advance the purposes of the deemed liquidation
statute. 19 U.S.C. § 1504 was designed to “‘eliminate unanticipated requests for additional
duties coming years after the original entry.’” Cherry Hill, 112 F.3d at 1559 (quoting Customs
Procedural Reform Act of 1977: Hearings on H.R. 8149 and H.R. 8222 Before the Subcomm. on
Trade of the H. Comm. on Ways & Means, 95th Cong. 56 (1977) (statement of Robert E. Chasen,
Comm’r of Customs)); S. Rep. No. 95-778, at 31–32 (1978), reprinted in 1978 U.S.C.C.A.N.
2211, 2243 (“Under the present law, an importer may learn years after goods have been imported
and sold that additional duties are due . . . .”). An erroneous reliquidation occurring before a
timely liquidation had even become final does not fall within the statute’s intended reach.
In sum, the facts of Cherry Hill are distinguishable from those in the instant case;
accordingly, a different result obtains. AHAC bore the burden of timely challenging the
Court No. 10-00185 Page 10
admittedly erroneous reliquidations before this court. Because it did not, and because no
exception to the timely protest requirement applies, AHAC has not preserved its challenge and is
liable as a surety under the continuous bond.4 See Juice Farms, 68 F.3d at 1346.
II. The Government is entitled to equitable interest, but not 19 U.S.C. § 580 interest
The court must next determine the amount of money due to the Government. The
importer’s total liability for the two entries exceeds AHAC’s $600,000 bond limit. See Pl.’s
Facts ¶ 11; Def.’s Resp. ¶ 11. Therefore, if AHAC owes anything over the bond limit, it will
come exclusively as damages in the form of interest for its own default. The Government seeks
two types of interest in this case—statutory interest under 19 U.S.C. § 580 and equitable interest.
As explained below, the court rejects the Government’s claim for § 580 interest, but awards
equitable interest.
A. Statutory interest under 19 U.S.C. § 580 is not available when the bond secures
antidumping duties
19 U.S.C. § 580 provides that “[u]pon all bonds, on which suits are brought for the
recovery of duties, interest shall be allowed, at the rate of 6 per centum a year, from the time
when said bonds became due.” (emphasis added). The Government asserts that the statute’s
plain language compels an award of interest in this case. Pl.’s Br. 21–22; see also United States
v. Fed. Ins. Co., 857 F.2d 1457, 1459 (Fed. Cir. 1988) (finding in a case involving ordinary
customs duties that, “[a]s a matter of law, whenever a court awards unpaid import duties in a suit
4
The same logic applies to an alternative argument AHAC first raised at oral argument. Specifically,
AHAC asserted that Customs ignored Commerce’s June 1, 2004 instructions when it liquidated the entries in
question on June 25, 2004 and that Customs’ action rendered the June 2004 liquidations void. Transcript of Oral
Argument 22–24, ECF No. 49. AHAC’s argument centers on instructions Commerce issued to Customs on June 1,
2004 in response to the Shanghai Taoen injunction. Those instructions directed Customs not to liquidate entries of
subject merchandise exported by Shanghai Taoen or imported by an importer other than JCOF, and further ordered
Customs to “[c]ontinue to suspend liquidation of other entries until liquidation instructions are provided.” Pl.’s Br.
at Ex. I (emphasis added). Because AHAC concedes that the injunction itself did not cover JCOF’s entries, see
Def.’s Facts ¶ 3, it was incumbent on AHAC to pursue any concerns regarding the legality of the June 2004
liquidations through normal protest avenues. By twice abandoning its protests, AHAC may not now attack the
legitimacy of the June 2004 liquidations. See Juice Farms, 68 F.3d at 1346.
Court No. 10-00185 Page 11
upon a bond, interest must be attached pursuant to section 580”). In other words, because the
instant action is a suit for the recovery of antidumping “duties,” the Government submits that
interest “shall be allowed.” See 19 U.S.C. § 580.
The historical context of 19 U.S.C. § 580 complicates the matter. Congress enacted
§ 580 in 1799, and the statute applied at its inception to bonds securing payment of then-existing
customs duties. Antidumping duties did not arise until 1921. Antidumping Act of 1921, Pub. L.
No. 67-10, 42 Stat. 11. Aside from codifying the statute and moving it from Title 28 of the U.S.
Code (pertaining to Judiciary and Judicial Procedure) to Title 19 of the U.S. Code (pertaining to
Customs Duties), Congress has not substantively updated § 580 or otherwise signaled whether
the statute applies to antidumping duties.5 Further, no court has ruled on whether § 580’s
reference to “duties” contemplates antidumping duties.
Against this backdrop, both sides advance divergent interpretations of 19 U.S.C. § 580
and its application in this case. According to the Government, several reasons support extending
the statute to bonds securing antidumping duties. Initially, the Government notes that early
customs duties—like antidumping duties—were at least partially rooted in protectionist
principles. Pl.’s Mem. in Supp. of Summ. J. & Opp’n to Def.’s Cross-Mot. for Summ. J., ECF
No. 37 (“Pl.’s Resp. Br.”), at 8. Moreover, modern Congress has used the word duties to refer
collectively to customs duties and antidumping duties. See id. at 9–11. Thus, the Government
asserts that Congress has extended § 580’s reach by retaining its unqualified language even as
new duties emerged. See Pl.’s Br. 22.
5
The precursor to 19 U.S.C. § 580 originally provided as follows: “[O]n all bonds upon which suits shall
be commenced, an interest shall be allowed at the rate of six per cent. per annum, from the time when said bonds
become due, until the payment thereof.” See Act of Mar. 2, 1799, ch 22, § 65, 1 Stat. 627, 677. The language
changed to what it is now when the statute was first codified in the Revised Statutes. See 1 Rev. Stat. 181, § 963
(1875). Section 580 was then later reclassified in the U.S. Code as 28 U.S.C. § 787, before being moved to Title 19
in 1948. See 28 U.S.C. § 787 (1946); 19 U.S.C. § 580 (1952). However, these minor editorial changes neither
substantively altered the provision nor resulted from subsequent congressional action. See Chapman v. Houston
Welfare Rights Org., 441 U.S. 600, 625 (1979) (noting the Revised Statutes were not intended to alter existing law).
Court No. 10-00185 Page 12
AHAC counters that revenue generation was the overriding purpose of early customs
duties and that antidumping duties are imposed for distinct, remedial reasons. See Def.’s Reply
to Pl.’s Resp. to Def.’s Cross-Mot. for Summ. J. & in Opp’n to Pl.’s Mot. for Summ. J., ECF No.
42 (“Def.’s Resp. Br.”), at 9. AHAC asserts that the disparate purposes underlying duties
implementing trade remedies and customs duties preclude interpreting “duties” in § 580 to cover
antidumping duties. Def.’s Br. 12. AHAC also notes that courts have distinguished between
duties implementing trade remedies and customs duties, and in some instances have interpreted
the word “duties” to exclude antidumping duties. Id. (citing Dynacraft Indus. v. United States,
24 CIT 987, 992, 118 F. Supp. 2d 1286, 1291 (2000); Wheatland Tube Co. v. United States, 495
F.3d 1355, 1361 (Fed. Cir. 2007)). For these reasons, Congress’ failure to clarify § 580’s reach
supposedly forecloses its application in this context.
i. Legal framework
Supreme Court precedent teaches that the meaning of statutory language can expand over
time. See West v. Gibson, 527 U.S. 212, 218 (1999) (“Words in statutes can enlarge or contract
their scope as other changes, in law or in the world, require their application to new instances
. . . .”). A “statute is presumed to speak from the time of its enactment” and to “embrace[] all
such . . . things as subsequently fall within its scope.” De Lima v. Bidwell, 182 U.S. 1, 197
(1901). As a result, general, prospective statutes apply to later-created concepts so long as the
“language fairly and clearly includes them.” Newman v. Arthur, 109 U.S. 132, 138 (1883);
accord Cain v. Bowlby, 114 F.2d 519, 522 (10th Cir. 1940). The court looks to the meaning and
intent of the original statute to determine whether that statute fairly and clearly includes a new
concept. See Jerome H. Remick & Co. v. Am. Auto. Accessories Co., 5 F.2d 411, 411 (6th Cir.
1925) (cited approvingly in Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 158 (1975)).
Court No. 10-00185 Page 13
For example, in Cain, a widow instituted litigation against a truck driver who fatally
struck her husband on a highway. 114 F.2d at 521. The statute underlying the widow’s action
applied to the negligence of “driver[s] of any stage coach or other public conveyance.” Id. The
court addressed whether the words “other public conveyance” fairly included a truck driver
operating as a common carrier even though trucks did not exist at the statute’s enactment. Id. at
522. In its analysis, the court examined the historical purpose of stage coaches—to transport
passengers and property—and concluded that truck drivers engaged as common carriers did not
differ in any meaningful way. Id. at 523. Thus, the court extended the statute to cover truck
drivers engaged as common carriers. Id.
Other courts have used reasoning similar to that found in Cain. For instance, in Jerome
H. Remick & Co., another court interpreted a Copyright Act provision to apply to radio
broadcasts, even though radios did not exist at the Copyright Act’s inception. 5 F.2d at 411–12.
In In re Fox Film Corp., 145 A. 514 (Pa. 1929), a Pennsylvania court interpreted a statute
requiring pre-approval before publicly presenting “films” to include subsequently-created sound
films. Specifically, the court found that sound films were not “so distinctly and intrinsically
separate and apart from the” original meaning of the word film (i.e., silent films) as to be a
“fundamentally . . . new creation.” Id. at 516–17.
ii. 19 U.S.C. § 580 does not apply to later-created antidumping duties serving a
fundamentally different purpose than historical customs duties
In light of that background, this court must decide whether “duties” in § 580 (and the
meaning assigned to it in 1799) “fairly and clearly includes” modern remedial duties like
antidumping duties. See Newman, 109 U.S. at 138. Because neither Customs nor any other
agency has been charged with administering § 580, the court construes the statute without
deference. See Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 844
Court No. 10-00185 Page 14
(1984) (requiring deference to an agency’s reasonable “construction of a statutory scheme it is
entrusted to administer” (emphasis added)).
In 1799, Congress used the word “duties” to describe the duty assessment scheme that it
had established for imported merchandise, similar to the modern customs duty regime. At first
glance, it might appear reasonable to read § 580 to cover all subsequently-created import duties.
But the court declines to reach that conclusion because in the period since the statute’s enactment
over 200 years ago, Congress, courts, and the Government itself have counseled that
antidumping duties are not comparable to normal customs duties in function, purpose, and
character. See, e.g., Dynacraft, 24 CIT at 992–93, 118 F. Supp. 2d at 1291–92 (cataloging
disparate treatment); Wheatland, 495 F.3d at 1361–63 (same).
Initially, the court notes that different entities administer antidumping duty law and
customs law. Congress itself sets customs duty rates, while an administrative agency
(Commerce) sets antidumping duty rates. Although Customs implements the regime that
Congress has established, it does not have discretion regarding the rates of duty or whether to
collect customs duties at all. Commerce, however, is authorized to investigate alleged dumping
and set antidumping duty rates on its own. See, e.g., 19 U.S.C. §§ 1673, 1675. The two duty
regimes are also applied differently. “Regular” customs duties are assessable on all imports of
particular merchandise and are permanent unless modified by Congress. Wheatland, 495 F.3d at
1362; Int’l Forwarding Co. v. United States, 6 Cust. Ct. 881, 882, R.D. 5197 (1941). “Special”
antidumping duties are levied against only certain imports, are subject to administrative review
annually, and terminate after five years unless Commerce and the U.S. International Trade
Commission respectively determine that revocation would lead to continuation or recurrence of
Court No. 10-00185 Page 15
dumping and material injury. See 19 U.S.C. § 1675(a), (d)(2); Wheatland, 495 F.3d at 1362;
Int’l Forwarding, 6 Cust. Ct. at 882.
Moreover, ordinary customs duties and antidumping duties serve fundamentally different
purposes. The court accepts that the nation’s first customs duties were rooted in some muted
protectionist principles. See Act of July 4, 1789, ch. 2, § 1, 1 Stat. 24 (1789) (creating duties “for
the support of government, for the discharge of the debts of the United States, and the
encouragement and protection of manufactures”). Nonetheless, the critical purpose of early
duties was to generate revenue for the nascent country—a purpose that is still reflected in
modern customs duties. See, e.g., United States v. Laurenti, 581 F.2d 37, 41 n.12 (2d Cir. 1978)
(noting that customs duties were a principal source of early federal revenue).6 Antidumping
duties, in contrast, are not intended as revenue-generating devices. See Canadian Wheat Bd. v.
United States, 641 F.3d 1344, 1351 (Fed. Cir. 2011). Antidumping duties serve the distinct
purpose of remedying the effect of unfair trade practices resulting in actual or threatened injury
to domestic like-product producers. See id. Specifically, antidumping duties are “intended to
raise the United States market price for the subject merchandise and thereby increase sales and
profits of domestic producers.” Wheatland, 495 F.3d at 1364.
Due to the well-documented differences between antidumping and customs duties, the
court has previously interpreted the word “duties” in an interest statute to encompass only
ordinary customs duties. Dynacraft, 24 CIT at 993, 118 F. Supp. 2d at 1292. In Dynacraft, an
importer deposited estimated duties after an affirmative preliminary determination in an
6
The Second Circuit has even opined that Congress enacted statutes like § 580 because customs duties
were so critical to early revenue. See Laurenti, 581 F.2d at 41 n.12. In Laurenti, the Second Circuit catalogued
instances where early Congress used the words “without delay” in connection with the collection of customs duties.
Id. The court ultimately concluded that Congress used that language because swift collection of duties was essential
to government function. Id. Notably, the section of the Act of March 2, 1799 establishing § 580 provided that
customs collectors should “forthwith and without delay, cause a prosecution to be commenced for the recovery” of
unpaid duties. Act of Mar. 2, 1799, ch 22, § 65, 1 Stat. 627, 676 (emphasis added). This suggests that Congress
may have passed § 580, at least in part, out of concern for the steady flow of revenue.
Court No. 10-00185 Page 16
antidumping duty investigation. Id. at 989–90, 118 F. Supp. 2d at 1288–89. The International
Trade Commission ultimately reached a negative injury determination, and an antidumping duty
order never went into effect. Id. at 989, 118 F. Supp. 2d at 1288. The parties disputed whether
interest accrued on the importer’s duty overpayment. Id. at 990, 118 F. Supp. 2d at 1289.
On this point, two statutes conflicted. 19 U.S.C. § 1677g provided that overpayment
interest would not begin accruing until after publication of an antidumping or countervailing
duty order. 19 U.S.C. § 1505(c), by contrast, provided that interest would accrue from whenever
the importer was required to deposit “estimated duties, fees, and interest.” (emphasis added).
The importer argued that it was entitled to § 1505(c) interest on the overpayment even though
§ 1677g interest was unavailable. In effect, the importer asserted that “any antidumping duty is a
‘duty’ within the scope of” 19 U.S.C. § 1505(b) and (c). Dynacraft, 24 CIT at 992, 118 F. Supp.
2d at 1291.
The court disagreed, equating the word “duties” in 19 U.S.C. § 1505(c) with customs
duties and finding no interest due to the importer. Id. at 993, 118 F. Supp. 2d at 1292. In partial
support of this finding, the court traced the disparate treatment of antidumping and customs
duties both pre- and post-Uruguay Rounds Agreement Act (“URAA”). For instance, before the
URAA, the Customs Court considered “regular” duties to be customs duties and “special” duties
to include antidumping duties. Id. at 992, 118 F. Supp. 2d at 1291 (citing Int’l Forwarding, 6
Cust. Ct. at 882). Congress maintained a similar distinction, referring to antidumping duties as
“special duties” and countervailing duties as “additional duties.” Id., 118 F. Supp. 2d at 1291
(citing 19 U.S.C. § 1516(a) (Supp. V. 1975)); see also S. Rep. No. 67-16, at 1 (1921)
(establishing a “special dumping duty” to be imposed “in addition to the duties imposed . . . by
law”). The URAA statutory scheme continued to separate the two types of duties, placing
Court No. 10-00185 Page 17
antidumping duties in a separate subtitle from other duties and referring to antidumping duties as
“additional duties.” 24 CIT at 992–93, 118 F. Supp. 2d at 1292 (citing URAA, Pub. L. No. 103-
465, 108 Stat. 4809 (1994)). Based on its examination, the Dynacraft court concluded that
“antidumping and countervailing duties were never intended to be regular or general duties.” Id.
at 992, 118 F. Supp. 2d at 1291.
In a different context, the Government itself has advocated an approach similar to that of
the Dynacraft court. See Wheatland, 495 F.3d at 1361–63. In Wheatland, the Federal Circuit
considered whether safeguard duties were “United States import duties” for purposes of 19
U.S.C.§ 1677a(c)(2)(A) calculations. Because safeguard duties did not exist at
§ 1677a(c)(2)(A)’s original enactment, there was no congressional guidance on the disposition of
those particular duties. Id. at 1362. The Government averred that Congress did not intend for all
duties to be “United States import duties” and that “special” duties like antidumping duties
“should be distinguished from ordinary customs duties.” Id. at 1361. The Government likened
safeguard duties to special antidumping duties in purpose and function and reasoned that those
duties were, thus, not “United States import duties” under § 1677a(c)(2)(A). Id. at 1361–62.
The Federal Circuit upheld the Government’s interpretation as “clearly reasonable.” Id. at 1366.
This court finds the reasoning in Dynacraft and Wheatland instructive in this case. Here,
like in those cases, the court is asked to construe the open-ended word “duties” to include all
types of duties. However, the Dynacraft and Wheatland cases counsel that the meaning of
“duties” is not necessarily so expansive and that it may be appropriate to distinguish between
duties. Such a distinction is necessary here. Antidumping duties were created over 120 years
after § 580’s enactment, are meaningfully different from the customs duties existing in 1799, and
Court No. 10-00185 Page 18
have long been treated as meaningfully different by Congress, courts, and the Government. 7
For these reasons, the court cannot conclude that Congress in 1799 clearly would have intended
§ 580 to extend to all duties, no matter how distinct. See Newman, 109 U.S. at 138.
Accordingly, § 580 interest is not available to the Government in this action.
B. The Government is entitled to equitable interest
Although the Government cannot receive interest under § 580, the Government is entitled
to equitable prejudgment interest. Prejudgment interest is premised on the idea that it is
“inequitable and unfair for the government to make an interest-free loan . . . from the date of
final demand to the date of judgment.” United States v. Imperial Food Imps., 834 F.2d 1013,
1016 (Fed. Cir. 1987); see also West Virginia v. United States, 479 U.S. 305, 310–11 n.2 (1987)
(affirming award “to compensate for the loss of use of money due as damages from the time the
claim accrues until judgment is entered”). Therefore, the “principle of full compensation”
underlies prejudgment interest awards. Princess Cruises, Inc. v. United States, 397 F.3d 1358,
1368 (Fed. Cir. 2005); accord City of Milwaukee v. Nat’l Gypsum Co., 515 U.S. 189, 195 (1995).
An award of equitable interest in this case raises two primary issues: (1) whether interest
may accrue against AHAC absent a showing of bad faith or dilatory conduct, and (2) whether the
court must balance relative equities before awarding interest. For the following reasons, the
court finds that AHAC did not need to exhibit bad faith to be liable for equitable interest beyond
7
Despite these well-established differences, the Government would have the court read § 580 to apply to
antidumping duties by implication. In other words, because Congress has sometimes used the word “duties” to refer
to all types of duties, the Government asserts that § 580’s language should similarly apply to all duties. See Pl.’s
Resp. Br. 9–11. In the Government’s view, Congress could have repealed § 580 or exempted duties from its
coverage had it intended a different result, but it did not. Pl.’s Br. 22.
The court disagrees. Initially, the Government’s argument is undercut by its own assertion in Wheatland
that “duties” does not necessarily mean all duties. Moreover, the Government’s argument relies on congressional
inaction—a particularly weak tool for ascertaining congressional intent. See Butterbaugh v. Dep’t of Justice, 336
F.3d 1332, 1342 (Fed. Cir. 2003). Lastly, the court is not asked to decide whether Congress has ever used the word
“duties” to refer to all types of duties. Rather, the court must decide whether to interpret § 580 beyond its initial
reach absent persuasive indication that Congress clearly would have intended that result.
Court No. 10-00185 Page 19
its bond limit. The court also finds that equity favors awarding the Government prejudgment
interest from the due date of the second demand on AHAC.
i. AHAC is liable for equitable prejudgment interest in excess of its bond limit
Regarding the first issue, sureties are normally liable only for duties, fees, and interest up
to the bond limit. See United States v. Wash. Int’l Ins. Co., 25 CIT 1239, 1241–42, 177 F. Supp.
2d 1313, 1316 (2001). However, sureties may be answerable for interest beyond that limit for
“their own default in unjustly withholding payment after being notified of the default of the
principal.” United States v. U.S. Fid. & Guar. Co., 236 U.S. 512, 530–31 (1915) (emphasis
added); accord Ins. Co. of N. Am. v. United States, 951 F.2d 1244, 1246 (Fed Cir. 1991).
The parties disagree about when a surety’s failure to pay becomes unjust. AHAC argues
that equitable interest beyond the bond limit is available only when the surety exhibits bad faith
or dilatory conduct. Def.’s Br. 13–14 (citing Wash. Int’l, 25 CIT at 1243, 177 F. Supp. 2d at
1318). The Government maintains that misconduct is not a precondition to an award of equitable
interest here. See Pl.’s Resp. Br. 15–17 (citing United States v. Canex Int’l Lumber Sales Ltd.,
Slip Op. 11-98, 2011 WL 3438870 (CIT Aug. 5, 2011); United States v. Millenium Lumber
Distrib. Co., 37 CIT __, 887 F. Supp. 2d 1369 (2013)).
When addressing the accrual of prejudgment interest in excess of a surety’s bond limit,
the Federal Circuit has held that “if a surety delays payment beyond proper notification of
liability, interest accrues on the debt.” Ins. Co. of N. Am., 951 F.2d at 1246 (interpreting the
“unjustly withholding” language from U.S. Fid. & Guar. Co.). As a result, the court finds that
AHAC need not have exhibited bad faith to be liable for interest beyond its bond limit. Rather,
the dispositive fact here is that AHAC did not pay following the Government’s proper demand
Court No. 10-00185 Page 20
on the continuous bond, thereby depriving the Government of the ability to use the withheld
funds. That failure exposes AHAC to potential interest liability in excess of its bond limit.
ii. The court finds that an award of prejudgment interest is warranted here
However, case law is less clear regarding whether prejudgment interest should be
awarded automatically after a surety’s default or whether the court must first balance equities.
See Princess Cruises, Inc., 397 F.3d at 1368 (“The degree to which the trial court is to balance
equitable factors to determine whether to award prejudgment interest is not easy to discern from
the case law.”). Earlier Supreme Court case law suggested that prejudgment interest turned on a
balancing of relative equities. For instance, in Blau v. Lehman, 368 U.S. 403, 414 (1962), the
Supreme Court noted that “‘interest is not recovered according to a rigid theory of compensation
for money withheld, but is given in response to considerations of fairness.’” (quoting Bd. of
Comm’rs of Jackson Cty. v. United States, 308 U.S. 343, 352 (1939)).
However, in the years since Blau, the Supreme Court has moved towards a “general rule”
that prejudgment interest is available “subject to a limited exception for ‘peculiar’ or
‘exceptional’ circumstances.” Nat’l Gypsum Co., 515 U.S. at 195 (noting, in a maritime case,
that full compensation is the “essential rationale” for awarding prejudgment interest). Indeed, in
a case involving a contractual dispute between West Virginia and the Federal Government, the
Court explicitly rejected a balancing of the equities approach when awarding prejudgment
interest to the Government. West Virginia, 479 U.S. at 311 n.3. The Court did note, though, that
other equitable considerations like laches might bar a valid claim for interest. Id. In Kansas v.
Colorado, 533 U.S. 1, 13–14 (2001), the Court similarly suggested that prejudgment interest is
now “imposed as a matter of course” without balancing the equities.
Court No. 10-00185 Page 21
Although case law diverges on what equitable factors the Court should consider in
awarding prejudgment interest, it is clear that full compensation should be the court’s overriding
concern. It appears that not awarding equitable prejudgment interest would be aberrational and
due to exceptional circumstances. In this case, AHAC believes that such exceptional
circumstances exist because (1) the Government delayed in bringing suit, (2) AHAC raised good
faith defenses to liability, and (3) Customs did not timely liquidate the subject entries. Def.’s Br.
15–17; Def.’s Resp. Br. 5–8. But those reasons do not demonstrate that equitable interest is
inappropriate here.
While the Government’s delay in bringing suit may justify limiting or declining to award
interest, the Government did not excessively delay instituting the instant action. See United
States v. Reul, 959 F.2d 1572, 1578–79 (Fed. Cir. 1992) (noting that the Government’s “laxness”
in bringing an action may factor into an equity analysis); West Virginia, 479 U.S. at 311 n.3
(citing doctrine of laches). Although the Government waited until close to the expiration of the
statute of limitations, AHAC had no reason to believe that the Government had abandoned its
claim, nor does it pinpoint any prejudice that it suffered as a result of the delay. AHAC does not
argue, for instance, that it was unable to successfully defend itself in the Government’s action.
The fact that AHAC raised good-faith defenses to liability also does not constitute “an
extraordinary circumstance that can justify denying prejudgment interest.” See Nat’l Gypsum
Co., 515 U.S. at 198. As the Supreme Court noted in a maritime case, “the existence of a
legitimate difference of opinion on the issue of liability is merely a characteristic of most
ordinary lawsuits.” Id. at 198. Indeed, if the court were to award prejudgment interest only
when confronted with bad faith claims, the prevailing party would rarely be fully compensated.
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Finally, the court likewise disagrees that Customs’ erroneous reliquidations bar equitable
interest, even though the court generally should “refrain from action which unnecessarily
countenances regulatory breaches.” See United States v. Angelakos, 12 CIT 515, 518, 688 F.
Supp. 636, 639 (1988). The Government only seeks interest from the second Formal Demand on
the Surety, which AHAC received after the erroneous June 2005 reliquidations. See Transcript
of Oral Argument 6, ECF No. 49. This actually benefits AHAC because AHAC’s bond limit
was already exhausted after the June 2004 reliquidations, and AHAC ultimately could have been
liable for prejudgment interest accruing after the first Formal Demand on the Surety pursuant to
the June 2004 liquidations. Thus, the court finds that commencing interest after the second
Formal Demand on the Surety became due strikes a fair balance between the parties.
In sum, equity favors awarding the Government interest in this action. The court, thus,
awards prejudgment interest at a rate set forth in 26 U.S.C. § 6621, commencing from the due
date of the second Formal Demand on the Surety. The court also awards postjudgment interest
at a rate set forth in 28 U.S.C. § 1961 “based on the same considerations of equity and fairness.”
United States v. C.H. Robinson Co., 36 CIT __, __, 880 F. Supp. 2d 1335, 1348 (2012); see also
United States v. Great Am. Ins. Co. of New York, Nos. 2012-1462, 2012-1473, 2013 WL
6820678, at *3 (CAFC Dec. 27, 2013) (extending 28 U.S.C. § 1961 to this Court even though it
is expressly applicable to only district courts).
CONCLUSION
For the foregoing reasons, the court grants in part and denies in part the Government’s
motion for summary judgment. The Government’s motion is granted with respect to the issue of
AHAC’s liability under continuous bond number 270114235. Regarding the Government’s
interest claims, the court grants the Government’s claim for equitable pre- and post-judgment
Court No. 10-00185 Page 23
interest, but denies the claim for statutory interest under 19 U.S.C. § 580. Judgment will enter
accordingly.
/s/ Richard W. Goldberg
Richard W. Goldberg
Senior Judge
Dated:
New York, New York