Ethan Allen Global, Inc. v. United States

Slip Op. 14-161

UNITED STATES COURT OF INTERNATIONAL TRADE

ETHAN ALLEN GLOBAL, INC. and
ETHAN ALLEN OPERATIONS, INC.,

Plaintiffs,

v. Before: Timothy C. Stanceu, Chief Judge

UNITED STATES and UNITED STATES Court No. 13-00183
INTERNATIONAL TRADE
COMMISSION,

Defendants.

OPINION

[Dismissing an action for failure to state a claim upon which relief can be granted in an action
seeking distributions under the Continued Dumping and Subsidy Offset Act of 2000]

Dated: December 31, 2014

Jill A. Cramer, Kristin H. Mowry, Jeffrey S. Grimson, Sarah Wyss, and Daniel R. Wilson,
Mowry & Grimson, PLLC, of Washington, DC, for plaintiffs Ethan Allen Global, Inc. and Ethan
Allen Operations, Inc.

Franklin E. White, Jr., Assistant Director, Martin M. Tomlinson, Trial Attorney, Jeanne
E. Davidson, Director, and Joyce R. Branda, Acting Assistant Attorney General, Commercial
Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for defendant
United States.

Robin L. Turner, Acting Assistant General Counsel for Litigation, Patrick V. Gallagher,
Jr., Attorney-Advisor, and Dominic L. Bianchi, General Counsel, Office of the General Counsel,
U.S. International Trade Commission, of Washington, DC, for defendant U.S. International
Trade Commission.

Stanceu, Chief Judge: This case arose from the actions of two agencies, the U.S.

International Trade Commission (the “Commission” or “ITC”) and U.S. Customs and Border

Protection (“Customs” or “CBP”), that denied plaintiffs Ethan Allen Global, Inc. and Ethan

Allen Operations, Inc. (collectively, “Ethan Allen”) certain monetary benefits under the
Court No. 13-00183 Page 2

now-repealed Continued Dumping and Subsidy Offset Act of 2000 (the “CDSOA” or “Byrd

Amendment”), §§ 1001-03, 114 Stat. 1549, 19 U.S.C. § 1675c (2000) (repealed 2006, effective

2007). Compl. ¶¶ 1, 27-34 (May 8, 2013), ECF No. 4 (“Compl.”). The ITC determined that

Ethan Allen did not qualify for “affected domestic producer” (“ADP”) status, which would have

made Ethan Allen eligible to receive distributions of duties collected under an antidumping duty

order on wooden bedroom furniture from the People’s Republic of China (“PRC” or “China”)

because Ethan Allen, in responding to an ITC questionnaire, stated that it took no position on the

petition that resulted in the order. Compl. ¶¶ 22, 27, 28. Customs made no CDSOA

distributions to Ethan Allen for Fiscal Years 2011 and 2012. Compl. ¶¶ 32-33.

Plaintiffs brought this case alleging various facial and as-applied constitutional

challenges to the CDSOA and claiming that the actions by the ITC and Customs violated the

Administrative Procedure Act (“APA”), 5 U.S.C. § 706 (2006). Compl. ¶¶ 37-55. Plaintiffs

seek declaratory and injunctive relief to establish Ethan Allen as eligible for a distribution of

antidumping duties collected on the relevant order for Fiscal Years 2011 and 2012, as well as for

future distributions under the CDSOA, and mandating the distribution of Ethan Allen’s pro rata

share of such distributions. Compl. ¶ 1, Prayer for Relief (1), (2). Plaintiffs also seek declaratory relief

“that the conduct of CBP and the ITC in limiting eligibility for disbursement of funds to those

ADPs that expressed supported for antidumping petitions and denying eligibility to those ADPs

that supported the Petition through their conduct is unlawful, arbitrary, capricious, an abuse of

discretion, not supported by substantial evidence, and in violation of Ethan Allen’s constitutional

rights.” Compl. ¶ 1, Prayer for Relief (4). Finally, plaintiffs seek damages as a result of being excluded

from past and current CDSOA distributions and reasonable attorney’s fees and costs. Compl. ¶ 1, Prayer

for Relief (3), (5).
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Before the court is defendants’ motion to dismiss under USCIT Rule 12(b)(5) for failure

to state a claim upon which relief can be granted. Defs.’ Mot. to Dismiss (Apr. 24, 2014), ECF

No. 23 (“Defs.’ Mot.”). The court determines that no relief is available on any of plaintiffs’

claims and will enter judgment dismissing this action.

I. BACKGROUND

Background on this action is provided in the court’s prior opinion, Ethan Allen Global,

Inc. v. United States, 38 CIT __, Slip Op. 14-76 (June 27, 2014) (“Ethan Allen I”) (denying

motion to stay), and is supplemented herein.

A. The CDSOA

The CDSOA amended the Tariff Act of 1930 (“Tariff Act”) by establishing an annual

distribution of assessed antidumping and countervailing duties to eligible ADPs as

reimbursement for qualifying expenses. 19 U.S.C. § 1675c(a)-(d) (2000). ADP status is limited

to petitioners and interested parties, id. § 1675c(b)(1), that indicated support for the petition that

gave rise to the pertinent antidumping or countervailing duty order “by letter or through

questionnaire response,” id. § 1675c(d)(1). Under the CDSOA, within sixty days after the

International Trade Administration, U.S. Department of Commerce (“Commerce” or the

“Department”) issued an antidumping order, the ITC would forward to Customs a list of ADPs

potentially eligible for CDSOA distributions of duties collected under that order and Customs

would publish that list in the Federal Register. Id. § 1675c(d)(1). Customs was then responsible

for making the annual distributions to qualifying ADPs that file certifications with Customs. Id.

§ 1675c(d)(3), (e).
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B. Administrative Actions at Issue

In 2003, the ITC commenced an investigation to determine whether imports of wooden

bedroom furniture from the People’s Republic of China (“China”) were causing or threatening to

cause material injury to the domestic industry. Initiation of Antidumping Duty Investigation:

Wooden Bedroom Furniture from the People’s Republic of China, 68 Fed. Reg. 70,228 (Int’l

Trade Comm’n Dec. 17, 2003). Ethan Allen domestically manufactures and distributes wooden

bedroom furniture. Compl. ¶ 2. In response to an ITC questionnaire issued during this

investigation, Ethan Allen stated that it took no position on the petition that triggered the

investigation. Compl. ¶ 22. In 2005, Commerce issued an antidumping duty order on imports of

wooden bedroom furniture from China. Notice of Amended Final Determination of Sales at Less

Than Fair Value and Antidumping Duty Order: Wooden Bedroom Furniture From the People’s

Republic of China, 70 Fed. Reg. 329 (Int’l Trade Admin. Jan. 4, 2005).

For Fiscal Years 2011 and 2012, Customs published individual lists of ADPs that the ITC

determined were potentially eligible for CDSOA distributions and did not include Ethan Allen

on either list. Distribution of Continued Dumping and Subsidy Offset to Affected Domestic

Producers, 76 Fed. Reg. 31,020 (Dep’t of Homeland Sec. May 27, 2011) (concerning Fiscal

Year 2011); Distribution of Continued Dumping and Subsidy Offset to Affected Domestic

Producers, 77 Fed. Reg. 32,718 (Dep’t of Homeland Sec. June 1, 2012) (concerning Fiscal

Year 2012). On July 20, 2011, Ethan Allen filed a certification with Customs requesting

CDSOA distributions for Fiscal Year 2011. Compl. ¶ 32. On June 27, 2012, Ethan Allen filed

another certification with Customs, this time requesting CDSOA distributions for Fiscal

Year 2012. Compl. ¶ 33. Customs did not grant Ethan Allen CDSOA distributions for either

Fiscal Years 2011 or 2012. Compl. ¶¶ 32, 33.
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C. Procedural History

Plaintiffs commenced this action on May 8, 2013. Summons, ECF No. 1; Compl.

Defendants filed a motion to dismiss the action on April 24, 2014. Defs.’ Mot. 1. Plaintiffs filed

a response to defendants’ motion on June 2, 2014,1 Pl. Ethan Allen Global. Inc. & Ethan Allen

Operations, Inc.’s Resp. to Defs.’ Mot. to Dismiss, ECF No. 24, and defendants filed a reply in

support of the motion on August 22, 2014, Defs.’ Reply in Supp. of Mot. to Dismiss, ECF

No. 37. On June 17, 2014, the court denied a motion by plaintiffs to stay this action pending

final resolution of a petition for a writ of certiorari to the U.S. Supreme Court in a case

concerning the denial of Ethan Allen’s CDSOA distribution requests for Fiscal Years 2006

through 2010. Ethan Allen I, 38 CIT at __, Slip Op. 14-76 at 4-5. Defendants filed a status

report on October 20, 2014, following the U.S. Supreme Court’s denial of the petition for a writ

of certiorari that was the subject of plaintiffs’ motion to stay. Defs. United States & U.S.

Customs & Border Prot.’s Status Report, ECF No. 39; see Ashley Furniture Indus., Inc., et al. v.

United States, 135 S. Ct. 72 (2014) (denying certiorari).

II. DISCUSSION

The court exercises jurisdiction over this matter pursuant to section 201 of the Customs

Courts Act of 1980, 28 U.S.C. § 1581(i) (2006), which grants this Court exclusive jurisdiction

over various civil actions not falling under the jurisdictional grants of subsections (a)-(h) of

section 201 but that arise out of a law of the United States, such as the CDSOA, that provides for

the administration of duties (including antidumping duties) on the importation of merchandise.

1
Plaintiffs’ response to defendants’ motion to dismiss asserts only that the court should
deny defendants’ motion and reiterates its position that the court should stay this case pending
the U.S. Supreme Court’s consideration of a writ of certiorari, a request the court denied. Pl.
Ethan Allen Global. Inc. & Ethan Allen Operations, Inc.’s Resp. to Defs.’ Mot. to Dismiss 1-2
(June 2, 2014), ECF No. 24.
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“[A] judge ruling on a defendant’s motion to dismiss a complaint ‘must accept as true all

of the factual allegations contained in the complaint.’” Bell Atlantic Corp. v. Twombly,

550 U.S. 544, 570 (2007) (“Twombly”) (citations omitted). However, a complaint must be

dismissed if it does not “contain sufficient factual matter, accepted as true, to ‘state a claim to

relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (“Iqbal”)

(quoting Twombly, 550 U.S. at 570). “Determining whether a complaint states a plausible claim

for relief [is] . . . a context-specific task that requires the reviewing court to draw on its judicial

experience and common sense.” Id., 556 U.S. at 679.

In Counts One and Two of the complaint, plaintiffs challenge the CDSOA, both facially

and as applied to Ethan Allen, on First Amendment grounds. Compl. ¶¶ 37–50. In Count Three,

plaintiffs claim that the actions of the ITC and Customs violate the APA and Ethan Allen’s

constitutional rights. Compl. ¶¶ 51-54.

A. No Relief Can be Granted on Plaintiffs’ Constitutional Challenges

Counts One and Two of plaintiffs’ complaint bring several constitutional challenges

grounded in the First Amendment guarantees of free speech and belief and the right to petition

the government for redress of grievances. Compl. ¶¶ 37-50; see U.S. Const. amend. I (“Congress

shall make no law . . . abridging the freedom of speech, or of the press; or the right of the people

peaceably to assemble, and to petition the Government for a redress of grievances.”). In

Count Three, plaintiffs allege that the agencies’ actions “violate[] Ethan Allen’s constitutional

rights,” Compl. ¶ 53, but offer no additional constitutional grounds on which the court may

evaluate plaintiffs’ claims. See Compl. ¶¶ 51-54.

In Count One, plaintiffs bring various as-applied challenges to the CDSOA under the

First Amendment. Compl. ¶ 37-43. Plaintiffs claim specifically that the CDSOA unlawfully
Court No. 13-00183 Page 7

discriminates against those, such as Ethan Allen, who did not express support for the

antidumping petition. Compl. ¶ 39. They claim, further, that such an application of the CDSOA

is overbroad and not narrowly tailored to achieve a compelling government objective. Compl.

¶ 40. Plaintiffs claim, further, that the CDSOA as applied to Ethan Allen impermissibly compels

speech by requiring manufacturers such as plaintiffs to articulate support for a specific policy,

Compl. ¶ 41, and imposes viewpoint discrimination in a designated public form for political

speech in a way that is not narrowly drawn to any compelling state interest. Compl. ¶ 42.

Plaintiffs bring, in Count Two, various facial challenges to the CDSOA under the First

Amendment. Compl. ¶¶ 44-50. Plaintiffs claim specifically that the CDSOA engages in

impermissible viewpoint discrimination and conditions a government benefit on the content of

political speech, i.e., expression of support for an antidumping petition. Compl. ¶ 46. They

claim, further, that the CDSOA is overbroad and not narrowly tailored to achieve a compelling

government objective, Compl. ¶ 47, and that the statute imposes an unconstitutional condition on

the receipt of a government benefit by requiring domestic manufacturers to articulate support for

a particular policy in a designated public forum for political speech, Compl. ¶¶ 48–49.

The court concludes that plaintiffs’ constitutional challenges are foreclosed by binding

precedent and, therefore, must be dismissed. In Ashley Furniture Industries, Inc., 734 F.3d 1306

(Fed. Cir. 2013) (“Ashley”), the U.S. Court of Appeals for the Federal Circuit (“Court of

Appeals”) denied the relief requested on First Amendment grounds in a joint decision addressing

the appeals of two related decisions of this Court. One of the decisions on appeal was Ethan

Allen Global Inc. v. United States, 36 CIT __, 816 F. Supp. 2d 1330 (2012) (“Ethan Allen”), in

which Ethan Allen challenged the ITC’s refusal to designate Ethan Allen as an ADP and CBP’s

refusal to disburse to Ethan Allen funds collected under the relevant antidumping order, but with
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respect to CDSOA distributions for Fiscal Years 2006 through 2010. Id. at __, 816 F. Supp. 2d

at 1333. In Ashley, the Court of Appeals rejected both Ethan Allen’s facial and as-applied

challenges under the First Amendment, which were brought on nearly identical grounds to the

challenges Ethan Allen now brings. The Court of Appeals stated that “the government did not

deny Byrd Amendment distributions to Appellants solely on the basis of abstract expression,”

Ashley, 734 F.3d at 1310, and that Ethan Allen’s facial First Amendment challenges in that case

were precluded by the holding in SKF USA, Inc. v. U.S. Customs & Border Prot.,

556 F.3d 1337, 1382 (Fed. Cir. 2009) (“SKF”), cert. denied, 130 S. Ct. 3273 (2010). See Ashley,

734 F.3d at 1310 (“We are bound to follow this precedent and are not free to revisit the First

Amendment arguments that were before the SKF panel.”). In SKF, the Court of Appeals held

broadly that the CDSOA is “valid under the First Amendment” because it “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.” SKF, 556 F.3d at 1360.

In summary, plaintiffs have failed to allege facts sufficient to demonstrate that its

constitutional claims are not foreclosed by the binding precedents of Ashley and SKF. As to

these claims, therefore, the complaint does not “contain sufficient factual matter, accepted as

true, to ‘state a claim to relief that is plausible on its face.’” Iqbal, 556 U.S. at 662, 129 S.

Ct. 1937 (citation omitted). The court must dismiss these claims pursuant to defendants’ motion

under USCIT Rule 12(b)(5).

B. No Relief Can be Granted on Plaintiffs’ Statutory Challenges

Plaintiffs’ complaint alleges that the actions of the ITC and Customs violated the

Administrative Procedure Act (“APA”), 5 U.S.C. § 706, and that the conduct of the two agencies

was “arbitrary, capricious, and an abuse of discretion.” Id. ¶¶ 51-54. Specifically, plaintiffs
Court No. 13-00183 Page 9

allege that the agencies “inappropriately treated similarly-situated domestic producers

differently, without any rational basis for doing so,” and unlawfully “limit[ed] the definition of

Affected Domestic Producer to include only those domestic producers who supported the

Petition by their conduct and expressed support for the petition, while excluding from this

definition those domestic producer who likewise supported the Petition by their conduct but did

not express support for the petition.” Id. ¶ 53. Relying on a decision of the Court of Appeals,

plaintiffs assert that such an interpretation conflicts with the purpose of the CDSOA, which,

according to plaintiffs, is “to reward domestic producers who support the Petition through their

conduct.” Id. (citing PS Chez Sidney, L.L.C. v. U.S. Int’l Trade Comm’n, 684 F.3d 1374, 1382

(Fed. Cir. 2012) (“PS Chez Sidney”)).

The court concludes that, on the facts as pled in the complaint, no relief can be granted on

plaintiffs’ statutory claims. The CDSOA provision relevant to these claims is the directive that

the ITC, in providing its list of ADPs to Customs, include “a list of persons that indicate support

of the petition by letter or through questionnaire response.” 19 U.S.C. § 1675c(d)(1) (emphasis

added). Plaintiffs admit that in its questionnaire responses, “Ethan Allen took no position on the

petition . . . .” Compl. ¶ 22. The court must dismiss plaintiffs’ statutory claims that the actions

by the two agencies violated the APA because plaintiffs have admitted that Ethan Allen did not

support the petition in its questionnaire response—a fact disqualifying Ethan Allen from

receiving CDSOA distributions under the plain meaning of the statute—and present no other

facts from which the court could reach a conclusion that the agencies’ actions must be set aside.

Plaintiffs’ contention that the purpose of the CDSOA is “to reward domestic producers

who support the Petition through their conduct,” Compl. ¶ 53, does not save plaintiffs’ statutory

claims. In neither SKF nor PS Chez Sidney did the Court of Appeals construe the CDSOA such
Court No. 13-00183 Page 10

that a domestic producer may take no position on a petition in its ITC questionnaire responses

and still be eligible to receive CDSOA distributions. To the contrary, the Court of Appeals in

SKF reasoned that in enacting the petition support requirement, Congress had permissibly, and

rationally, concluded that those who did not support a petition through a letter or questionnaire

response should not be rewarded. SKF, 556 F.3d at 1357, 1359 (“At best the role of parties

opposing (or not supporting) the petition in responding to questionnaires is similar to the role of

opposing or neutral parties in litigation who must reluctantly respond to interrogatories or other

discovery. . . . It was thus rational for Congress to conclude that those who did not support the

petition should not be rewarded.”). The Court of Appeals’ decision in PS Chez Sidney is not

applicable to this action because it concerned a different factual pattern from the instant case.

The party in PS Chez Sidney checked a box in one questionnaire indicating its support for the

petition and indicated that it took no position in a subsequent questionnaire. PS Chez Sidney,

684 F.3d at 1377. The holding in PS Chez Sidney did not qualify the holding in SKF to the

benefit of parties that did not take a position in support of the petition. Id., 684 F.3d at 1381.

In Ashley, the Court of Appeals explained that “under the plain meaning of the Byrd

Amendment . . . [i]t is not enough . . . merely to supply the answers to the questionnaires,”

Ashley, 734 F.3d at 1311, because “[t]he plain language of the statute requires ‘support of the

petition’ in order to obtain a distribution,” id. (citing 19 U.S.C. § 1675c(b)(1)(A)), and “[a]

producer meets that requirement when it ‘indicate[s] support . . . by letter or through

questionnaire response,’” id. (citing 19 U.S.C. § 1675c(d)(1)). Referring to the same

questionnaire responses at issue here, the Court of Appeals stated that “[t]he conclusion that a

producer who indicates that it ‘takes no position’ in a questionnaire is a supporter is []

incongruous [with the plain language of the statute] because such a producer has not ‘indicated
Court No. 13-00183 Page 11

support.’” Ashley, 734 F.3d at 1311; see also Compl. ¶ 22 (“Ethan Allen took no position on the

petition . . . .”). Plaintiffs fail to plead any facts that would allow the court to distinguish the

application of the CDSOA to Ethan Allen in this case from its application to Ethan Allen in

Ashley. Ethan Allen’s expression that it took no position on the antidumping duty petition did

not satisfy the plain meaning of the statute and properly resulted in Ethan Allen’s disqualification

from receiving distributions under the CDSOA.

Because the statute precludes ADP status to parties that did not support the petition

through letter or questionnaire response, plaintiffs can receive no relief on their statutory claims

on the facts pled and the court, therefore, must dismiss these claims pursuant to USCIT

Rule 12(b)(5).

III. CONCLUSION

For the foregoing reasons, defendants’ motion to dismiss this case under USCIT

Rule 12(b)(5) for failure to state a claim must be granted. The court will enter judgment

dismissing this action.

/s/ Timothy C. Stanceu
Timothy C. Stanceu
Chief Judge

Dated: December 31, 2014
New York, NY