Int'l Customs Prods., Inc. v. United States

Slip Op. 06-5

UNITED STATES COURT OF INTERNATIONAL TRADE
______________________________
:
INTERNATIONAL CUSTOM :
PRODUCTS, INC., :
:
Plaintiff, :
: Before: Richard K. Eaton, Judge
:
V. :
: Court No. 05-00615
: Public Version
UNITED STATES OF AMERICA, :
:
Defendant. :
______________________________:

MEMORANDUM OPINION

[Plaintiff’s motion for a preliminary injunction denied]

Dated: January 11, 2006

Mayer, Brown, Rowe & Maw, LLP (Andrew A. Nicely and Simeon
Munchick Kriesberg), for plaintiff.

Peter D. Keisler, Assistant Attorney General, Civil
Division, United States Department of Justice; David M. Cohen,
Director, Commercial Litigation Branch, Civil Division, United
States Department of Justice (Edward F. Kenny); Barbara S.
Williams, Attorney-in-Charge, International Trade Field Office,
of counsel, Office of Assistant Chief Counsel, International
Trade Litigation, United States Customs and Border
Protection,(Yelena Slepak), for defendant.

Eaton, Judge: This matter is before the court on the motion

for a preliminary injunction of plaintiff International Custom

Products, Inc. (“plaintiff” or “ICP”), and the opposition thereto

of defendant the United States (“defendant” or the
Court No. 05-00615 Page 2

“Government”).1 For the reasons set forth below, the court

denies plaintiff’s motion.

BACKGROUND

Plaintiff is an importer and supplier of a milk-fat based

white sauce product used as an ingredient in sauces, salad

dressings, and other food products. On January 20, 1999, the

United States Customs Service (now the Bureau of Customs and

Border Protection) issued New York ruling letter D86228 (“Ruling

Letter”), which classified the white sauce under the Harmonized

Tariff Schedule of the United States (“HTSUS”) 2103.90.9060

(later numbered 2103.90.9091) as “[s]auces and preparations

therefor.” Pl.’s Conf. Mem. of Points and Authorities in Supp.

of Pl.’s App. for a Temporary Restraining Order and Mot. for a

Prelim. Injunction (“Pl.’s Mem.”) at 4. The current duty rate

under HTSUS 2103.90.9091 is 6.4% ad valorem. Id.

On August 24, 2005, Customs published a Proposed Revocation

of Ruling Letter [D86228] and Revocation of Treatment Relating to

1
In addition to opposing plaintiff’s motion for a
preliminary injunction, defendant moves to dismiss based on lack
of subject matter jurisdiction. Because the court will order
more complete briefing on this issue, it declines to rule on the
motion to dismiss here. See U.S. Ass’n of Importers of Textiles
and Apparel v. United States Dep’t of Commerce, 413 F.3d 1344,
1348 (Fed. Cir. 2005) (“We see no abuse of discretion in the
trial court’s decision to delay consideration of the government’s
motion to dismiss until briefing was completed.”).
Court No. 05-00615 Page 3

the Tariff Classification of White Sauce (“Proposed Revocation”).

See 39 Cust. Bull. & Dec. 35 (Aug. 24, 2005).2 By publication of

the Proposed Revocation, Customs gave notice that it was

commencing an administrative procedure to reclassify ICP’s

merchandise. ICP timely submitted comments disputing Customs’

proposed classification on both technical and legal grounds. See

Comments of ICP on Proposed Revocation (Sept. 23, 2005), Conf. R.

Annex B.

On November 2, 2005, following completion of its

administrative procedure, Customs issued HQ 967780 (the

“Revocation”), which revoked ICP’s Ruling Letter. The Revocation

reclassified ICP’s white sauce as a “dairy spread” under HTSUS

0405.20.3000, which is subject to a duty of $1.996 per kilogram,

plus safeguard duties of $0.149 per kilogram. Customs’ new

classification has the effect of greatly increasing the duty on

2
Prior to this motion for a preliminary injunction,
there has been substantial litigation in this case. See Int’l
Custom Prods., Inc. v. United States, 29 CIT __, __, 374 F. Supp.
2d 1311 (2005) (holding Customs’ notice of action reclassifying
ICP’s white sauce to be null and void); Int’l Custom Prods., Inc.
v. United States, 29 CIT __, __, slip op. 05-117 (Sept. 1, 2005)
(not published in the Federal Supplement) (granting ICP’s request
for expedited briefing while holding that Customs did not violate
a previous Court order by imposing continuous-entry bonds on
ICP’s white sauce); Int’l Custom Prods., Inc. v. United States,
29 CIT __, __, slip op. 05-145 (Nov. 8, 2005) (not published in
the Federal Supplement) (finding ICP’s claim concerning unlawful
imposition of single-entry bonds on future entries to be moot and
lacking a justiciable issue).
Court No. 05-00615 Page 4

plaintiff’s merchandise.3 Upon publication of the Revocation,

plaintiff filed the complaint in this action, in which, among

other things, it asks the court to “enjoin[] [the Revocation]

from taking effect during the pendency of this action and further

enjoin[] Customs from classifying or liquidating ICP’s white

sauce in a manner inconsistent with [the Ruling Letter] during

the pendency of this action.” Compl. of 11/14/05 at 21. Should

an injunction be issued, plaintiff’s merchandise entered prior to

a final judicial determination would be liquidated4 at the duty

determined by the ultimate outcome. Should the injunction not

issue, during the pendency of this action plaintiff could be

required to pay or deposit the increased duty on its entries.

Should plaintiff ultimately prevail, by protesting the

liquidation it would receive a refund of the duties paid or

deposited, plus interest. See 19 C.F.R. § 159.51 (2005)

(“Liquidation of entries shall not be suspended simply because

3
The new rate amounts to an approximate 2400 percent
increase from roughly [[ ]] per kilogram, the rate applied
in accordance with the Ruling Letter. The [[ ]] figure is
the result of calculating the rate as to volume so that it might
be compared to HTSUS 0405.20.3000, which is calculated on volume.
See Conf. R. Annex A, Ex. 6.
4
Liquidation is the “final computation or ascertainment
of the duties . . . or drawback accruing on an entry.” 19 C.F.R.
§ 159.1 (2005); see also Ammex, Inc. v. United States, 419 F.3d
1342, 1345 n.1 (Fed. Cir. 2005).
Court No. 05-00615 Page 5

issues involved therein may be before the Customs Court5 in

pending litigation, since the importer may seek relief by

protesting the entries after liquidation.”). With respect to the

relief requested in the underlying action, plaintiff asks that

the Revocation be declared unlawful.6 Plaintiff claims 28 U.S.C.

5
Prior to 1980, this Court was called the Customs Court.
The Customs Court Act of 1980 changed not only the name of the
Court to the United States Court of International Trade, but also
altered its powers. See Customs Court Act of 1980, Pub. L. No.
96-417, 94 Stat. 1728.
6
Plaintiff styles its request for relief as a

request[] that the Court issue a preliminary
injunction enjoining [the Revocation] from
taking effect during the pendency of this
action and further enjoining Customs from
classifying or liquidating ICP’s white sauce
in a manner inconsistent with [the Ruling
Letter] during the pendency of this action;
and . . . that this Court enter judgment:

(1) declaring unlawful and setting
aside [the Revocation];

(2) ordering Defendant not to enforce
[the Revocation];

(3) declaring that ICP’s white sauce is
properly classified under HTSUS
2103.90.9091;

(4) ordering that [the Ruling Letter]
shall remain in effect;

(5) enjoining Defendant from taking any
actions with respect to ICP’s
imports that are inconsistent with
[the Ruling Letter];

(6) ordering Defendant to provide ICP
(continued...)
Court No. 05-00615 Page 6

§ 1581(i)(4) as the basis of jurisdiction. Pl.’s Conf. Mem. of

Points and Authorities in Supp. of Pl.’s Mot. for a Prelim.

Injunction (“Pl.’s Mot.”) at 6. While the validity of this

jurisdictional claim is not without doubt, see infra Part IV

(relating to likelihood of success on the merits), “it is not

imperative that this court conclusively determine jurisdiction

over an action as a predicate to ruling on the merits of such

threshold equitable relief.” Ugine & Alz Belg., N.V. v. United

States, 29 CIT __, __, slip op. 05-113 at 5–6 (Aug. 29, 2005)

(not published in the Federal Supplement). For the reasons set

forth below, the court denies plaintiff’s motion.

DISCUSSION

To obtain the extraordinary relief7 of an injunction prior

6
(...continued)
with an additional 5 months to
import from the effective date of
the Revocation if the Revocation is
upheld by this Court;

(7) ordering Defendant to pay ICP the
reasonable attorney fees, expenses, and
court costs incurred by ICP and as to
which it is entitled under the Equal
Access to Justice Act; and

(8) awarding ICP such other and further
relief as the Court deems appropriate.

Compl. of 11/14/05 at 21–22.
7
This Court recognizes that “[a] preliminary injunction
(continued...)
Court No. 05-00615 Page 7

to trial, the movant bears the burden of establishing that: (1)

it will suffer irreparable harm if preliminary relief is not

granted; (2) the public interest would be better served by the

relief requested; (3) the balance of the hardships tips in the

movant's favor; and (4) the movant is likely to succeed on the

merits at trial. See FMC Corp. v. United States, 3 F.3d 424, 427

(Fed. Cir. 1993) (citing Zenith Radio Corp. v. United States, 710

F.2d 806, 809 (Fed. Cir. 1983)). In its analysis, the Court need

not assign equal weight to each factor. Rather, the “crucial

factor [in granting a preliminary injunction] is irreparable

injury.” Corus Group PLC v. Bush, 26 CIT 937, 942, 217 F. Supp.

2d 1347, 1354 (2002) (citing Elkem Metals Co. v. United States,

25 CIT 186, 190, 135 F. Supp. 2d 1324, 1329 (2001)). The court

will address each part of the test in turn.

I. Irreparable Harm

In support of its motion, plaintiff has submitted the

affidavits of (1) Dennis V. Raybuck, president and founder of ICP

of DuBois, Pennsylvania (“Raybuck Declaration” or “Raybuck

Decl.”); (2) the president and chief operating officer8 of what

7
(...continued)
is extraordinary relief that is available only on a special
showing of need for relief pendente lite . . . .” MercExchange,
LLC v. eBay, Inc., 401 F.3d 1323, 1339 (Fed. Cir. 2005).
8
[[ ]], the president and chief
(continued...)
Court No. 05-00615 Page 8

ICP refers to as “Supplier A” for purposes of confidentiality;

and (3) Gregory L. Wade, the global Chief Technical Officer of

MolsonCoors Brewing Company in Montreal, Quebec and Denver,

Colorado (“Wade Decl.”). See Conf. R. Annex A, Exs. 2,9 5; Conf.

R. Annex B, Ex. 6.10 Plaintiff relies primarily on the Raybuck

Declaration to establish that, in the absence of a preliminary

injunction, ICP will suffer irreparable harm. Irreparable injury

or harm is harm “which cannot receive reasonable redress in a

court of law.” Connor II v. United States, 24 CIT 195, 197

(2000) (not reported in the Federal Supplement) (internal

quotation marks omitted) (internal citations omitted); see also

Zenith Radio, 710 F.2d at 809.

8
(...continued)
operating officer of [[
]], the U.S. subsidiary of [[
]]. Conf. R. Annex A, Ex. 5.
9
ICP has submitted two different versions of the Raybuck
Declaration. See Conf. R. Annex A, Ex. 2; Conf. R. Annex B, Ex.
5. The two documents contain the same information up to and
including paragraph 22; however the document in Annex B stops at
that paragraph, while the document in Annex A continues through
paragraph 40. For purposes of this opinion, the court’s
citations are to the Annex A declaration.
10
ICP has also proffered affidavits of Bernard D.
Liberati, ICP’s customs broker, and John F. Michel, the president
and senior underwriter of Trade Risk Guaranty, Inc., the company
that issues ICP its customs bonds. See Conf. R. Annex A, Exs. 3,
4. While these affidavits are not relevant to the instant
motion, they may be relevant to the underlying action.
Court No. 05-00615 Page 9

ICP’s primary claim11 is that its importation business

cannot survive if Customs is permitted to revoke its Ruling

Letter and reclassify the white sauce as a dairy spread. See

Pl.’s Mot. at 13. As ICP explains, “[t]he new classification

would subject ICP’s imports to prohibitively high tariffs,

increasing the applicable duty rates by over 2400 percent. ICP

cannot afford to remain in business with such exorbitant costs.”

Id.;12 see also Conf. R. Annex A, Ex. 10.

11
Plaintiff makes several other arguments concerning
injury it claims will be suffered, in the absence of an
injunction, by (1) a related company’s manufacturing plant, see
Raybuck Decl. ¶ 1 at 1, and (2) an unrelated purchaser of its
merchandise, see id. ¶ 26 at 10. Because neither of these
corporate entities is a party to this action, these arguments
cannot be heard as proof of the irreparable harm facing ICP. See
Heartland By-Products, Inc. v. United States, 23 CIT 754, 760, 74
F. Supp. 2d 1324, 1331 (1999), rev’d on other grounds, 264 F.3d
1126 (Fed. Cir. 2001) (holding that a party cannot demonstrate
the presence or absence of irreparable harm “based on the
potential financial abilities of a nonparty.”).
12
ICP claims that

Just on the entries of white sauce that ICP
is scheduled to make between October 1, 2005
and September 30, 2006 to meet its purchase
and supply contracts for the fiscal year, the
increased duties required by the Revocation
equate to over [[ ]]. In
contrast, ICP’s entire net income during each
of the last three fiscal years prior to 2005
was only about [[ ]]. In other
words, the new duties for one year would
amount to over [[ ]] ICP’s net
income for the year.

Pl.’s Mot. at 13; see also Conf. R. Annex A, Ex. 10.
Court No. 05-00615 Page 10

ICP further argues that it will lose the goodwill of its

largest supplier, Supplier A, if an injunction is not issued,

since ICP will not be able to purchase the amount13 of white

sauce that it is contractually obligated to purchase. Pl.’s Mot.

at 15. Indeed, ICP’s president asserts that the company is “in

serious danger of losing the goodwill of both [its largest

customer,14 which ICP refers to as “Customer A” for purposes of

confidentiality], and Supplier A,” resulting in “significant

damage to [its] reputation in the industry.” Raybuck Decl. ¶ 27

at 10–11. Thus, absent an injunction, ICP insists that it will

suffer irreparable harm to its relationships with both its

supplier and customer. Id. at 11.

Finally, ICP maintains that if Customs is not immediately

enjoined from revoking the Ruling Letter, ICP will face

substantial business uncertainty. Specifically, “[u]ntil [ICP]

can be certain that [its] white sauce will be able to enter under

the advance ruling, [ICP] [is] unable to give Supplier A the

advance notice that it requires to accommodate ICP within its

production cycle.” Raybuck Decl. ¶ 24 at 9. ICP explains:

Supplier A has an eight-month production cycle.
Supplier A begins its production of white sauce and

13
ICP claims that this amount is [[ ]] pounds.
See Raybuck Decl. ¶ 23 at 9.
14
[[ ]]. See id. ¶ 26 at 10.
Court No. 05-00615 Page 11

other products in early August of each year, and it
requires two months to plan the capacity of its plants
for production during that annual period. The lead
time needed by Supplier A means that ICP has already
lost any potential supply of white sauce for the first
six months of Supplier A’s eight month production
cycle, and it may lose another month during the course
of this litigation.

Pl.’s Mot. at 19–20.15

Defendant first contends that any irreparable harm to ICP is

self-created.

On November 10, 2005, [lawyers for Customs] notified
ICP . . . that jurisdiction was not proper under 28
U.S.C. § 1581(i), as jurisdiction appeared manifestly
adequate under 28 U.S.C. § 1581(a), and under 28 U.S.C.
§ 1581(h). . . . [Defendant] offered to work out an
expedited schedule under those jurisdictional bases
which would provide ICP with a very rapid resolution of
its action. . . . [Defendant] informed ICP [that] [it]
would be happy to work with ICP to obtain a denied
protest within hours after the effective date of the
ruling revocation. . . . [T]he parties could agree
that ICP would bring in a test shipment of its dairy
spread on January 2, 2006. The dairy spread would be
liquidated that day . . . with ICP filing a protest on
the day of liquidation. In addition, the protest would
be denied immediately, so ICP would have the ability to
timely commence an action under 28 U.S.C. § 1581(a)
within a day or two of January 2, 2006.

Def.’s Mem. in Resp. to Pl.’s App. for Prelim. Injunction and in

Supp. of Def.’s Mot. to Dismiss (“Def.’s Mem.”) at 7, 10–11

(footnote omitted). Despite this offer, defendant maintains that

ICP “knowingly chose a course of action which involved

significant jurisdictional problems . . . .” Id. at 20.

15
See also [[ ]] Decl. ¶¶ 6, 7 at 2.
Court No. 05-00615 Page 12

Next, defendant argues that, even if ICP were to obtain a

preliminary injunction, it would not provide ICP with any

protection against alleged irreparable harm. Defendant explains:

ICP is seeking a preliminary injunction preventing
Customs from liquidating its entries as dairy spread
(as opposed to seeking an injunction affirmatively
requiring the liquidation of entries as a sauce
preparation). However, the injunction styled by ICP
would not provide it with any financial protection. As
noted previously, ICP claimed its alleged financial
harm arose from the uncertainty about the validity of
[the Revocation]. Here, even if ICP were granted the
preliminary injunction it seeks, and Customs were
prevented from liquidating its entries as dairy spread
during the pendency of the injunction, ICP would have
no financial certainty because if the Government
prevails in this action, Customs will – properly –
liquidate all of these entries subject to the
preliminary injunction as dairy spread.

Def.’s Mem. at 17 (emphasis in original). In other words,

defendant argues that, should it prevail on the merits, Customs

will liquidate all of the entries at the higher duty required of

dairy spread. Thus, according to defendant, an injunction will

remove none of the uncertainty as to the validity of the Ruling

Letter because this uncertainty will only end at the conclusion

of the underlying litigation.

More fundamentally, defendant argues that the evidence

proffered by ICP is insufficient to establish irreparable harm.

First, defendant asserts that a substitute domestic supply of

white sauce is available to ICP, and that ICP’s own witness bears
Court No. 05-00615 Page 13

this out. Defendant states:

ICP’s own expert Gregory L. Wade, in his declaration
dated September 22, 2005, submitted as part of ICP’s
supporting documents, stated at paragraph 13:

Dozens of manufacturers and refiners in the
United States have the capacity to deliver
fat preparations of almost infinite variety,
using fat sources singly or in combination.
These companies[’]. . . principal mode of
selling their products is through an employed
sales force or sales agents that visit the
sauce and dressing manufacturers and
demonstrate how their fat preparation
specifications meet the manufacturers’ need.

Def.’s Mem. at 21 (emphasis omitted); Wade Decl. ¶ 13 at 5.

In addition, defendant insists that ICP has failed to

document any of its present or prospective lost sales with

contracts or sales figures. Rather, ICP’s evidence “consisted

mainly of a declaration from ICP’s president and that of its

chief dairy spread supplier.”16 Def.’s Mem. at 23.

16
With respect to economic harm, Mr. Raybuck states that:

We are struggling to hold on to our white
sauce suppliers, our white sauce
customers, . . . and all the goodwill that we
have built up over the 17 years of our white
sauce business, without the major source of
our income. I do not think we will be able
to sustain this current situation much
longer. Our import business will soon
collapse . . . .

Raybuck Decl. ¶ 35 at 14.
Court No. 05-00615 Page 14

The crucial factors in determining whether irreparable harm

exists are the immediacy of the harm and the inadequacy of future

corrective relief. See Nat’l Juice Prods. Ass’n v. United

States, 10 CIT 48, 53, 628 F. Supp. 978, 984 (1986). Plaintiffs

seeking preliminary injunctions bear an “extremely heavy burden,”

particularly with respect to demonstrating irreparable harm.

Shandong Huarong Gen. Group Corp. v. United States, 24 CIT 1279,

1282, 122 F. Supp. 2d 1367, 1369 (2000). “It is not enough

merely to establish a possibility of injury, even where

prospective injury is great. A presently existing, actual threat

must be shown.” Id. at 1282, 122 F. Supp. 2d at 1370 (internal

quotation marks omitted).

As noted by defendant, in making its case for irreparable

injury, ICP relies almost entirely17 on the Raybuck Declaration.

It has submitted no financials, contracts, or other proof to make

its case. Considering the heavy burden it is required to carry,

an examination of the Raybuck Declaration reveals that it is

simply inadequate to its task.

17
The only other proof, the affidavit of Supplier A’s
president and CEO, pertains to the nature of Supplier A’s
production schedule and the prospective harm to Supplier A should
it lose ICP’s business. See generally [[ ]] Decl.,
Conf. R. Annex A, Ex. 5.
Court No. 05-00615 Page 15

First, ICP has failed to produce any probative evidence of

the economic losses that would result from the imposition of the

new duty. Rather, plaintiff has presented the unsupported

conclusory statements of Mr. Raybuck. “[A] prayer for an

injunction based solely on affidavits should be denied unless the

affidavits attest with crystal clarity and without speculation to

the imminence of real injury to the movant.” Leland v. Morin,

104 F. Supp. 401, 404 (D.C.N.Y. 1952); see also Shree Rama

Enters. v. United States, 21 CIT 1165, 1168, 983 F. Supp. 192,

195 (1997) (“[A]ffidavits submitted by interested parties are

weak evidence, unlikely to justify a preliminary injunction.”);

Elkem Metals Co. v. United States, 25 CIT 186, 192, 135 F. Supp.

2d 1324, 1331 (2001).

Second, even if the court were to credit plaintiff’s claim

that it would be financially unable to import white sauce at the

new rate, ICP has not shown that it would be unable to purchase

the white sauce from a domestic supplier. That such a supply is

available is evident from both the Raybuck and Wade

Declarations.18 It is apparent, however, that ICP has made no

effort, at least no effort that it is willing to reveal to the

18
Mr. Raybuck acknowledges the availability of a domestic
source but further states that a domestic substitute would not be
available “except at prices well above the price of [ICP’s]
imported white sauce.” Raybuck Decl. ¶ 3 at 2.
Court No. 05-00615 Page 16

court, to determine if a domestic supply is available and, if so,

at what price. Nor, for that matter, has plaintiff seemingly

sought out an imported product that would fill its needs. This

is particularly puzzling since it is apparent that, for a

significant period prior to importing its own supply, ICP relied

solely on another importer to satisfy its demands. See Raybuck

Decl. ¶ 5 at 2.

Third, plaintiff has failed to provide this court with any

specific evidence relating to the terms of its present

contractual relationships or its financial situation. In

addition, plaintiff has not substantiated its claim that, in the

event plaintiff is forced to raise the price of its white sauce

to offset the effect of the new duty, its customers will choose

to purchase white sauce from another source. Indeed, plaintiff

has submitted, at best, weak evidence suggesting what effect a

denial of its motion would have on the health of the company.

See Thyssen Steel Co., Sw. Div. of Thyssen Inc. v. United States,

13 CIT 323, 326, 712 F. Supp. 202, 205 (1989) (“Plaintiff . . .

must set forth sufficient documentation to support its

allegations in establishing the threat of irreparable harm.

Plaintiff bears a heavy burden in producing this evidence.”)

(citations omitted). Plaintiff has not “bolstered these

affidavits through independent evidence indicating exactly how
Court No. 05-00615 Page 17

and when [the denial of the injunction] would force it out of

business.” Shandong, 24 CIT at 1283, 122 F. Supp. 2d at 1371;

see also Companhia Brasileira Carbureto de Calcio v. United

States, 18 CIT 215, 217 (1994) (not reported in the Federal

Supplement) (“No hard evidence was submitted to the court

indicating what specific effect loss of such sales would have

upon [plaintiff].”); Shandong, 24 CIT at 1284, 122 F. Supp. 2d at

1371 (denying plaintiff’s motion for a preliminary injunction

because, among other things, “Plaintiff . . . offered no proof

that it would be unable to . . . sustain its business throughout

the course of this litigation.”).

With respect to ICP’s claim of prospective loss of goodwill

owing to its inability to fulfill its contracts, plaintiff has

presented no evidence other than Mr. Raybuck’s declaration that

this is the necessary result of the increased duties. For

instance, it has not produced its contracts with either Supplier

A or Customer A so it is impossible to know if a loss of goodwill

will result under their provisions. See Inner Secrets/Secretly

Yours, Inc. v. United States, 19 CIT 281, 286, 876 F. Supp. 283,

287 (1995) (stating that, by not submitting substantive evidence

indicating that “contract losses or a damaged reputation as a

reliable supplier [would] occur,” plaintiff failed to demonstrate

irreparable harm).
Court No. 05-00615 Page 18

Finally, plaintiff’s claims with respect to financial

uncertainty are unconvincing. That is, it is difficult to see

how any financial certainty is achieved by the issuance of an

injunction. This is because any certainty of what duties will

finally be imposed must await a final determination on the

merits.

Because plaintiff’s claims concerning potential financial

harm, loss of goodwill, and business uncertainty are either

unsupported by objective evidence or lack a logical explanation,

the court finds that plaintiff has failed to demonstrate that it

will face immediate and irreparable loss should liquidation of

its merchandise not be enjoined. Thus, plaintiff has not made a

showing sufficient to support a finding of irreparable harm.

II. Public Interest

Although the “[f]ailure of an applicant to bear its burden

of persuasion on irreparable harm is ground to deny a preliminary

injunction, [without] conclusively determin[ing] the other

criteria,” in this case, the remaining factors merit examination.

Bomont Indus. v. United States, 10 CIT 431, 437, 638 F. Supp.

1334, 1340 (1986); see also Corus Group., 26 CIT at 942, 217 F.

Supp. 2d at 1354. With respect to whether the grant of a

preliminary injunction will better serve the public interest,
Court No. 05-00615 Page 19

plaintiff insists that

When a small company like ICP has relied on Customs’
“definitive interpretation of applicable law,” to build
its business, the public interest is served by
permitting that company to remain in operation while it
challenges the agency’s reversal of that
interpretation. Absent a preliminary injunction, ICP’s
import business will fail. If ICP is forced to close
its doors, rather than resume its import business, the
Government will be unable to collect any further
revenue from ICP, the DuBois, Pennsylvania economy will
suffer the loss of a viable business and prospective
jobs, and current ICP employees would lose their
livelihoods.

And when so fundamental a principle of Customs’ policy
as “informed compliance” is thrown into doubt by a
revocation supported by neither facts nor law, the
public interest is served by enjoining that revocation
until the merits can be fully and fairly considered.

Pl.’s Mot. at 62–63 (internal citations omitted).

Plaintiff is apparently claiming that the public interest is

best served if the United States collects some, but not all, of

the duties that may be ultimately owed, and that there is a

public interest in the continuing employment of ICP’s workers and

the reliance on “informed compliance.” While there may be some

merit in plaintiff’s arguments regarding its workers’ continued

employment and the usefulness of informed compliance,19 ICP’s

argument with respect to the payment of duties misses the mark.

19
It is difficult, however, to see how the cause of
informed compliance would be further advanced by the issuance of
plaintiff’s proposed injunction than it would be by a review of
the underlying merits of plaintiff’s case.
Court No. 05-00615 Page 20

Indeed, ICP’s plan seems to be to default on its obligations with

respect to duties owed should it lose on the merits. That is,

one of plaintiff’s primary arguments is that it is unable to pay

the duties under the new tariff classification.20 Should an

injunction issue and defendant ultimately prevail, plaintiff’s

entries made during the pendency of this action will be

liquidated at the new, higher rate. Plaintiff’s inability to pay

the assessed duties would result in its default and a loss of

duties to the Treasury. As noted by the Government,

[B]ecause ICP readily admits it cannot pay the
increased duties required under [the Revocation], if
ICP does not prevail on the merits of this action in
the end, and Customs has to reliquidate these entries
as dairy spread, the chance to actually recover the
duty itself on these entries is permanently lost.

Def.’s Mem. at 48–49 (emphasis omitted). In other words, for

defendant, the issuance of an injunction will not serve the

public interest because of the potential loss of revenue should

it prevail on the merits.

The court finds that, while ICP has not demonstrated that

the public would be better served by the issuance of a

20
Plaintiff insists that if an injunction does not issue,
it will be unable to pay the duties under either classification,
depriving the public fisc of the over [[ ]]
ICP currently pays. Additionally, ICP argues, it “will no longer
pay the approximately [[ ]]
that it currently pays, further causing a loss of revenue to the
Government.” Pl.’s Mot. at 22 n.4.
Court No. 05-00615 Page 21

preliminary injunction, the defendant’s arguments with respect to

the potential loss of revenue to the government have merit, and

that this part of the four-part test favors defendant.

III. Balance of Hardships

“An inquiry into the balance of hardships requires this

Court to determine which party will suffer the greatest adverse

effects as a result of the grant or denial of the preliminary

injunction.” Ugine-Savoie Imphy v. United States, 24 CIT 1246,

1250, 121 F. Supp. 2d 684, 688 (2000). This court has already

determined that plaintiff has not shown that it will be

irreparably harmed absent an injunction. Nonetheless, there can

be little doubt that having to pay the higher duty under the new

tariff classification, or having to find a domestic source for

its merchandise would amount to a substantial hardship. The

court also finds, however, that defendant will endure a

significant hardship of its own should an injunction be granted

and plaintiff not prevail in the underlying action, i.e., the

aforementioned loss of revenue in the event that the duty

contained in the Revocation is ultimately found to be correct.

Given that both parties face significant hardships based on the

adjudication of this motion, this factor does not tip in favor of

plaintiff.
Court No. 05-00615 Page 22

IV. Likelihood of Success on the Merits

With respect to the question as to whether plaintiff has

demonstrated that it is likely to succeed on the merits, two

issues are presented: first, whether this court has the

jurisdiction to hear plaintiff’s case, and second, whether the

merits of plaintiff’s cause indicate that the court will find for

it at trial.

Regarding the first issue, the Court of Appeals for the

Federal Circuit (“Federal Circuit”) has indicated that the

question of jurisdiction closely affects a plaintiff’s likelihood

of success on the merits. See U.S. Ass’n of Importers of

Textiles and Apparel v. United States Dep’t of Commerce, 413 F.3d

1344, 1348 (Fed. Cir. 2005). In urging that this court has

jurisdiction over its case, plaintiff relies on two theories: (1)

that the substantially larger duties ICP would be required to pay

if the Revocation is upheld would prohibit the continued

importation of its white sauce because resale at a reasonable

price after importation would be impossible and, thus, ICP will

cease business prior to obtaining a final court ruling, thereby

rendering other judicial remedies inadequate; and (2) that, since

no other subsection of § 1581 would permit both the expedited

treatment necessary for the company to survive and the entry of
Court No. 05-00615 Page 23

an injunction, those subsections are manifestly inadequate.21

Pl.’s Mot. at 6. Specifically, plaintiff contends that

Jurisdiction under Section 1581(a) is . . . inadequate
here because . . . ICP would be out of business by the
time a Section 1581(a) case could be brought.
Furthermore, jurisdiction under Section 1581(h) is
inadequate because the relief that ICP seeks is not
limited to declaratory relief, which is the only form
of relief available under Section 1581(h).

Id. at 7. Defendant claims that the court lacks jurisdiction

21
Where the relief provided by the other subsections of
28 U.S.C. § 1581 is manifestly inadequate, 28 U.S.C. § 1581(i)
grants this court residual jurisdiction over

any civil action commenced against the United
States . . . that arises out of any law of the United States
providing for ——

(1) revenue from imports or tonnage;

(2) tariffs, duties, fees, or other taxes on the
importation of merchandise for reasons other than
the raising of revenue;

(3) embargoes or other quantitative restrictions
on the importation of merchandise for reasons
other than the protection of public health or
safety; or

(4) administration and enforcement with respect to
the matters referred to in paragraphs (1)–(3) of
this subsection and subsections (a)–(h) of this
section.

28 U.S.C. § 1581(i) (2000); see also Mukand Int’l, Ltd. v. United
States, 29 CIT __, __, slip op. 05-164 at 4 (Dec. 22, 2005) (not
published in the Federal Supplement) (“Litigants may not invoke
jurisdiction under § 1581(i) ‘when jurisdiction under another
subsection of § 1581 is or could have been available, unless the
remedy provided under that other subsection would be manifestly
inadequate.’” (quoting Miller & Co. v. United States, 824 F.2d
961, 963 (Fed. Cir. 1987))).
Court No. 05-00615 Page 24

because, in its view, 28 U.S.C. §§ 1581(a) and 1581(h) each

provide adequate bases upon which this court may grant relief.

Indeed, defendant states that “Congress did not intend section

1581(i) to be used as a vehicle to circumvent the jurisdictional

scheme when another basis of jurisdiction is adequate. Moreover,

. . . section 1581(i) was not intended to create new causes of

action, nor was it meant to supersede more specific

jurisdictional provisions.” Def.’s Mem. at 8–9. Pending final

briefing on the issue of jurisdiction, the court finds that the

parties’ arguments are sufficiently strong so as to prevent this

issue from favoring either. As a result, on the issue of

jurisdiction, plaintiff does not find aid for its claim that it

will prevail on the merits.

As to whether the strength of plaintiff’s case indicates

that it will succeed on its claims in the underlying action, the

court again finds that each side has a substantial case. In

support of its argument that success on the merits favors its

motion, plaintiff says:

ICP demonstrates . . . that the premises of the
Revocation are fabricated. . . . ICP shows that its
white sauce is correctly classified under HTSUS 2103 in
accordance with General Rule of Interpretation (“GRI”)
1. . . . ICP establishes that classification under
HTSUS 2103 also is consistent with GRI 3(a). . . . ICP
[also] shows that the white sauce is properly
classified under HTSUS 2103 in accordance with GRI
3(c). . . . Finally, . . . ICP demonstrates that the
Revocation unlawfully deprives ICP of its due process
Court No. 05-00615 Page 25

rights. Because the Revocation is wholly without merit
and reflects a reckless disregard for the law, ICP is
highly likely to prevail in this action.

Pl.’s Mot. at 22.

Defendant maintains that the Ruling Letter was properly

revoked “because [Customs] determined that the ruling was in

error and not in accord with Customs’ current views.” Def.’s

Mem. at 28 (footnote omitted). Moreover, defendant sets out, in

considerable detail, its case asserting that Customs’

classification of plaintiff’s white sauce under HTSUS heading

0405 was not arbitrary and capricious and was in accordance with

the law. See id. at 28–29; see generally id. at 32–37 (analyzing

Customs’ classification under the factors set forth in United

States v. Carborundum Co., 63 C.C.P.A. 98, 102, 536 F.2d 373, 377

(Fed. Cir. 1976)).

At present, the law concerning the standard for establishing

likelihood of success on the merits at trial is unclear. In a

recent case, the Federal Circuit articulated the competing

standards as “serious, substantial, difficult, and doubtful

questions regarding the merits . . .[;] [whether] the likelihood

of success and harm-related prongs are viewed as a continuum in

which the required showing of harm varies inversely with the

required showing of meritoriousness . . .[;] [and whether] the

movant [demonstrated] at least a fair chance of success on the
Court No. 05-00615 Page 26

merits . . . .” U.S. Ass’n of Importers, 413 F.3d at 1347

(internal quotation marks omitted). The Court, however,

refrained from clarifying the standard stating that “we need not,

and thus do not, resolve the dispute over the legal standard

applicable in the Federal Circuit . . . .” Id. This court has

held that “[w]here it is clear that the moving party will suffer

substantially greater harm by the denial of the preliminary

injunction . . . it will ordinarily be sufficient that the movant

has raised serious, substantial, difficult and doubtful questions

that are the proper subject of litigation.” Ugine-Savoie Imphy,

24 CIT at 1251, 121 F. Supp. 2d at 689 (internal quotation marks

omitted); see also Int’l Bhd. Of Elec. Workers v. United States,

29 CIT __, __, slip op. 05-11 at 13 (Jan. 27, 2005) (not

published in the Federal Supplement). In any event, “the

movant’s evidence and arguments must actually be weighed against

those of the non-movant to determine whether the movant [has

established] likelihood of success” on the merits. U.S. Ass’n of

Importers, 413 F.3d at 1347.

In this case, plaintiff has failed to demonstrate that it

will suffer greater harm by the denial of injunctive relief than

would be suffered by defendant should the injunction be granted.

That being the case, plaintiff cannot claim that it has met the

“serious, substantial, difficult and doubtful questions”
Court No. 05-00615 Page 27

standard. As noted above, weighing each side’s case has

demonstrated that neither party has shown that it is likely to

prevail on the merits. Thus, as to the fourth part of the four-

part test, plaintiff has failed to establish its entitlement to

relief.

CONCLUSION

Because the court has found that plaintiff has satisfied no

part of the four-part test, its motion for a preliminary

injunction is denied. Judgment shall be entered accordingly.

/s/ Richard K. Eaton
Richard K. Eaton

Dated: January 11, 2006
New York, New York