Slip Op. 11-28
UNITED STATES COURT OF INTERNATIONAL TRADE
FIVE RIVERS ELECTRONICS
INNOVATION, LLC,
Plaintiff,
Before: Leo M. Gordon, Judge
v.
Court No. 10-00201
UNITED STATES,
Defendant.
OPINION
[Defendant’s motion to dismiss granted.]
Dated: March 14, 2011
Kelley Drye & Warren, LLP (Mary T. Staley, Grace W. Kim, Laurence J. Lasoff) for
Plaintiff Five Rivers Electronics Innovation, LLC.
Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, Franklin
E. White, Jr., Assistant Director, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice (David S. Silverbrand); and Office of Assistant Chief Counsel,
U.S. Customs and Border Protection (Andrew G. Jones), of counsel, for Defendant
United States.
Gordon, Judge: Plaintiff challenges a decision by U.S. Customs and Border
Protection (“Customs”) denying Plaintiff an offset distribution for fiscal year 2009 under
the Continued Dumping and Subsidy Offset Act of 2000, Section 754 of the Tariff Act of
1930, as amended, 19 U.S.C. § 1675c (2000)1 (“CDSOA”), repealed by the Deficit
Reduction Act of 2005, Pub. L. No. 109-171, Title VII, Subtitle F § 7601(a), 120 Stat.
1
Further citations to the Tariff Act of 1930, as amended, are to the relevant provisions
in Title 19 of the U.S. Code, 2000 edition.
Court No. 10-00201 Page 2
154 (2005). Defendant has moved to dismiss Plaintiff’s complaint pursuant to USCIT
Rule 12(b)(5).
Background
The CDSOA directs that duties assessed pursuant to an antidumping duty order
be distributed on an annual basis to the “affected domestic producers [ADPs] for
qualifying expenditures.” 19 U.S.C. § 1675c(a) (emphasis added). On May 29, 2009,
Customs issued a notice of intent to distribute duties collected during fiscal year 2009
on color television receivers from China. Distribution of Continued Dumping and
Subsidy Offset to Affected Domestic Producers (“Distribution Notice”), 74 Fed. Reg.
25,814 (U.S. Customs and Border Protection May 29, 2009). On July 23, 2009, Five
Rivers filed a certification of qualified expenses in response to the Distribution Notice,
seeking a share of the CDSOA distributions for the 2009 fiscal year. Customs denied
Five Rivers’ certification because Five Rivers did not produce the color television
receivers during fiscal year 2009. On September 17, 2009, Five Rivers filed a request
for reconsideration. Customs denied the request for reconsideration because Five
Rivers had ceased production of the subject receivers, and therefore, under the statute
and the applicable regulation, did not qualify as an ADP.
Standard of Review
When deciding a USCIT Rule 12(b)(5) motion to dismiss for failure to state a
claim upon which relief can be granted, the court assumes all factual allegations to be
true and draws all reasonable inferences in plaintiff’s favor. Cedars-Sinai Med. Ctr. v.
Watkins, 11 F.3d 1573, 1583-84 & n.13 (Fed. Cir. 1993). Plaintiff’s factual allegations,
however, must be “enough to raise a right to relief above the speculative level on the
Court No. 10-00201 Page 3
assumption that all the allegations in the complaint are true (even if doubtful in fact).”
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). “[T]o raise a right to relief
above the speculative level,” a complaint must allege “enough factual matter (taken as
true)” by making allegations “plausibly suggesting (not merely consistent with)” a valid
claim. Id. at 556. Also, when reviewing Customs’ regulations interpreting the CDSOA,
the court applies the two-step framework provided in Chevron, U.S.A., Inc. v. Natural
Res. Def. Council, Inc., 467 U.S. 837, 842-45 (1984). See, e.g., Candle Corp. of Am. v.
Int’l Trade Comm’n, 374 F.3d 1087, 1093 (2004).
Discussion
The CDSOA defines an ADP as “any manufacturer, producer, farmer, rancher, or
worker representative (including associations of such persons) that (A) was a petitioner
or interested party in support of the petition with respect to which an antidumping duty
order . . . has been entered, and (B) remains in operation.” 19 U.S.C. § 1675c(b)(1).
The statute further provides that “[c]ompanies, businesses, or persons that have ceased
the production of the product covered by the order or finding . . . shall not be an [ADP].”
Id. (emphasis added). Customs, in turn, has further clarified this statutory production
requirement: “Product no longer produced. A company, business or person that has
ceased production of the product covered by the antidumping duty order or finding, or
countervailing duty order, i.e., did not manufacture that product at all during the fiscal
year that is the subject of the disbursement, is not an [ADP] under this section.” 19
C.F.R. § 159.61(b)(2)(i) (emphasis added).
There is no dispute that Plaintiff had ceased production and did not manufacture
color television receivers at all during fiscal year 2009. It is therefore difficult to imagine
Court No. 10-00201 Page 4
how Plaintiff could possibly qualify as an ADP under the CDSOA. Undaunted, Plaintiff
challenges the validity of Customs regulation, arguing that
it is untenable that a producer who ‘remains in operation’ . . . was not able
to obtain a CDSOA disbursement simply because it was forced to cease
production, especially when it did so because of the continued dumping of
subject imports. To force a company that has been injured by the dumped
imports to continue to produce subject product especially in the face of
continued dumping and other harsh economic conditions, not only defies
logic but is contrary to the purpose behind the law, and could certainly not
have been Congress' intent.
Pl.’s Resp. in Opp’n to Def.’s Mot. to Dismiss at 8, ECF 18.
With all due respect for Plaintiff’s particular plight, these arguments ignore the
plain language of the CDSOA, which excludes from ADPs those domestic producers
that have “ceased production,” 19 U.S.C. § 1675c(b)(1)(B), and which plainly and
unambiguously forces a company to continue to produce the subject product if that
company wants CDSOA distributions. Part of Plaintiff’s problem is that Plaintiff
incorrectly assumes that the primary purpose of the CDSOA is to benefit all domestic
producers without qualification. Pl.’s Resp. in Opp’n to Def.’s Mot. to Dismiss at 8. That
is simply not the case. The CDSOA has a much more limited pool of beneficiaries than
all domestic producers. Congress placed specific conditions on who could qualify as an
ADP, excluding those domestic producers that had “ceased production.” 19 U.S.C. §
1675c(b)(1)(B). In so doing, Congress explicitly favored domestic producers who
remain in production over those, like Plaintiff, that have not. Plaintiff unfortunately
“ceased production.” The statute therefore mandates that Plaintiff may not qualify as an
ADP. Much as Plaintiff would like, the court cannot rewrite the statute and eliminate the
production requirement.
Court No. 10-00201 Page 5
With that said, Customs’ additional regulatory clarification that an affected
domestic producer must have been manufacturing the product “during the fiscal year
that is the subject of the disbursement,” 19 C.F.R. § 159.61(b)(2)(i), is not, as Plaintiff
contends, an impermissible, gap-filling construction of the CDSOA, but rather a
straightforward implementation of the Congressional requirement that ADPs not have
“ceased production.” At the time of the application for CDSOA distributions, prospective
ADPs must certify, among other things, that they “remain in operation and continue to
produce the product covered by the particular order.” 19 C.F.R. 159.63(b)(3)(iii). If they
do, then they may qualify as ADPs, if they do not, they cannot qualify because they
have “ceased production.” 19 U.S.C. § 1675c(b)(1)(B). It is simply not enough that
Plaintiff “‘remained in operation’ . . . and maintains the capacity to sell the subject
merchandise.” Compl. ¶ 24, ECF 4. By ceasing production Plaintiff disqualified itself as
an ADP. Customs’ denial of Plaintiff’s CDSOA distribution was therefore correct, and
Plaintiff cannot prevail in this action.
Conclusion
For the foregoing reasons, Plaintiff’s complaint fails to state a claim upon which
relief can be granted. Accordingly, the court will enter judgment granting Defendant’s
motion to dismiss and dismiss this action.
/s/ Leo M. Gordon
Judge Leo M. Gordon
Dated: March 14, 2011
New York, New York