Slip Op. 06-4
UNITED STATES COURT OF INTERNATIONAL TRADE
______________________________
:
OLYMPIA INDUSTRIAL, INC., :
:
Plaintiff, :
: Before: Richard K. Eaton, Judge
v. :
: Court No. 04-00647
UNITED STATES, :
:
Defendant, :
:
and :
:
AMES TRUE TEMPER, :
:
Def.-Intervenor. :
______________________________:
MEMORANDUM OPINION
[Plaintiff’s motion for a preliminary injunction denied]
Dated: January 6, 2006
Hume & Associates, PC (Robert T. Hume, Akil Vohra, and Jon
C. Cooper), 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 (Stephen Carl Tosini), for
defendant.
Wiley, Rein & Fielding, LLP (Charles Owen Verrill, Jr. and
Timothy C. Brightbill), for defendant-intervenor.
Eaton, Judge: This matter is before the court on the motion
of plaintiff Olympia Industrial, Inc. (“plaintiff” or “Olympia”)
for a preliminary injunction pursuant to USCIT Rule 65(a). By
Court No. 04-00647 Page 2
its motion, plaintiff seeks “to enjoin the Defendant, the United
States, as well as the United States Department of Commerce
(“Commerce”) . . ., and the United States Customs and Border
Protection . . ., from imposing certain cash deposit rates on
future imports of the MUTT®, (Multi-Use Tough Tools), a scraper,
imported by the Plaintiff, that are included in the antidumping
orders on heavy forged hand tools, finished or unfinished, with
or without handles, from the People’s Republic of China
(“HFHTs”).” Pl.’s Mot. for Temporary Restraining Order and
Prelim. Injunction at 1-2 (“Pl.’s Br.”). Plaintiff seeks
injunctive relief pending the outcome of this court’s review of
Commerce’s Final Scope Ruling of Dec. 9, 2004. See Pub. Doc. 13
(not published in the Federal Register). Defendant United States
(“defendant”) opposes the motion, as does Defendant-Intervenor
Ames True Temper (“Ames”).
On October 25, 2005, this court granted plaintiff’s request
for a temporary restraining order (“TRO”), which enjoined
defendant and the United States Department of Customs and Border
Protection (“Customs”) from “requiring the payment of, or
otherwise collecting antidumping cash deposits on any entry of
axes/adzes . . . more specifically, of the MUTTs®, . . . at any
rate other than what would preserve the status quo, namely ZERO,”
until October 28, 2005, the date of the evidentiary hearing on
Court No. 04-00647 Page 3
the instant preliminary injunction motion. See Order of
10/25/2005 (emphasis in original). Following the evidentiary
hearing, the court did not extend the TRO and reserved judgment
on the motion for a preliminary injunction. Jurisdiction lies
under 19 U.S.C. § 1516a(c)(2) (2000). For the following reasons,
the court denies plaintiff’s motion for a preliminary injunction.
BACKGROUND AND STANDARD OF REVIEW
This motion differs from those most often seen by this Court
because plaintiff does not seek to enjoin liquidation of its
merchandise during the pendency of the underlying action.1
Rather, plaintiff asks the court to enjoin the collection of cash
deposits pending this court’s review of Commerce’s Final Scope
Ruling. This ruling found plaintiff’s product, the MUTT®, was
within the scope of the heavy forged hand tools antidumping duty
1
Liquidation is the “final computation or ascertainment
of the duties or drawback accruing on an entry.” 19 C.F.R. §
159.1 (2000); see also Ammex, Inc. v. United States, 419 F.3d
1342, 1345 n.1 (Fed. Cir. 2005). As a general rule, the United
States consents to motions to enjoin liquidation of entries
covered by antidumping administrative reviews during the pendency
of actions. See Zenith Radio Corp. v. United States, 710 F.2d
806, 808 (Fed. Cir. 1983) (noting that, upon Zenith’s motion,
“[t]he government agreed not to liquidate the subject entries
until the trial court could rule on the request for a preliminary
injunction.”). Here, if liquidation were enjoined, plaintiff
would make the required cash deposits but, should it prevail on
the merits, the cash deposits would be returned with interest.
See 19 U.S.C. § 1505(b) (“The Customs Service shall collect any
increased or additional duties and fees due, together with
interest thereon, or refund any excess moneys deposited, together
with interest thereon . . . .”) (emphasis added).
Court No. 04-00647 Page 4
order. See Heavy Forged Hand Tools, Finished or Unfinished, With
or Without Handles, From the People’s Republic of China, 70 Fed.
Reg. 54,897 (September 19, 2005) (“Final Results”). As a result
of that ruling, starting on September 19, 2005, the date of
publication of the Final Results in the Federal Register, entries
of the MUTTs® have been subject to a cash deposit requirement of
174.5% of their entered value. The collection of the cash
deposit upon Commerce’s issuance of its final affirmative
determination is authorized by 19 C.F.R. § 351.211(a), which
states that “importers no longer may post bonds as security for
antidumping . . . duties, but instead must make a cash deposit of
estimated duties.” Pursuant to this provision, “when an
antidumping order is published [in the Federal Register],
importers normally must begin to make a cash deposit of estimated
antidumping duties upon the entry of subject merchandise.” 19
C.F.R. § 351.215(a).
In seeking the extraordinary remedy of a preliminary
injunction,2 plaintiff claims to have borne the burden of
satisfying each part of the familiar four-part test. That is, to
obtain the extraordinary relief of an injunction prior to trial,
2
This court recognizes that “[a] preliminary injunction
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).
Court No. 04-00647 Page 5
the movant carries the burden of establishing: (1) that it will
suffer irreparable harm if preliminary relief is not granted; (2)
that the public interest would be better served by the relief
requested; (3) that the balance of the hardships tips in the
movant’s favor; and (4) that 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)). The court will address each
part of the test in turn.
DISCUSSION
I. Irreparable Harm
Plaintiff claims that it will suffer immediate and
irreparable harm if Customs’ collection of the cash deposit is
not enjoined because of the economic hardship that would result
from its payment.3 See Shandong Huarong Gen. Group v. United
States, 24 CIT 1286, 1288, 122 F. Supp. 2d 143, 145 (2000).
Generally, when analyzing the necessity for a preliminary
injunction, “[t]he crucial factor is irreparable injury.” Corus
Group PLC v. Bush, 26 CIT 937, 942, 217 F. Supp. 2d 1347, 1354
3
Plaintiff also argues that inclusion of the trademarked
MUTT® in the scope of the antidumping duty order results in
selective enforcement of the antidumping laws. However, as
plaintiff has produced no evidence indicating how such selective
enforcement would result in irreparable harm, the court declines
to address this issue.
Court No. 04-00647 Page 6
(2002) (citing Elkem Metals Co. v. United States, 25 CIT 186,
190, 135 F. Supp. 2d 1324, 1329 (2001)).
At the evidentiary hearing, plaintiff called two witnesses,
Randal L. Wright, its Senior Vice President of operations, and
John Mackin, Vice President of its lawn and garden division.
Each was called to substantiate the claim that the plaintiff was
unable to make the required cash deposit and would, therefore, be
prevented from importing the MUTT® and having it in its sales
inventory. The witnesses were also called to testify as to the
economic harm to plaintiff that would result from its inability
to advertise and sell the MUTT® and that such harm would be
immediate and irreparable. Each witness was subject to cross
examination. Mr. Wright testified that Olympia had a total of
$62 million of sales for all its products in the fiscal year
ending on March 1, 2005, see Tr. of Civ. Cause for Prelim.
Injunction Hearing (“Tr.”) at 75:6–8; and that sales of its lawn
and garden tools alone amounted to $15 million. Mr. Wright
further testified that, of that amount, garden tool sales alone
were about $7.8 million and that MUTT® sales made up
approximately $1.7 million of that total. See Tr. at 92:1–10.
For his part, Mr. Mackin testified that the MUTT® was so
important to Olympia’s sales that, without it as part of its
sales inventory, the company would lose sales of approximately $6
Court No. 04-00647 Page 7
million. See Tr. at 105–06:21–25, 1–6; 109:4–8 (indicating that
a customer who purchases the MUTT® will typically purchase a
variety of other tools sold by Olympia).
This Court has twice before addressed the question of
enjoining the collection of cash deposits. The first case,
Queen’s Flowers de Colombia v. United States, 20 CIT 1122, 947 F.
Supp. 503 (1996), involved twenty Colombian producers/exporters
of fresh cut flowers and three related U.S. importers, who sought
a preliminary injunction to prevent the collection of cash
deposits. With respect to the issue of whether the plaintiffs
faced irreparable harm, the Queen’s Flowers Court focused on the
magnitude4 and immediacy of plaintiffs’ prospective injury.
Specifically, the court noted that
plaintiffs have established that under the new cash
deposit rate of 76.60 percent, eight of the twenty
companies will go out of business within periods
ranging from a few days to a few weeks. . . .
These companies sell an extremely high percentage of
their production of the subject merchandise to the
United States (all around 80%) and these sales account
for a similarly high percentage of their total sales
4
While the magnitude of the anticipated harm is not an
essential element in most cases dealing with irreparable injury,
in Queen’s Flowers, the Court found that the magnitude of the
prospective harm was so great that it could not be repaired by
future court action. Cf. CPC Int’l, Inc. v. United States, 19
CIT 978, 980, 896 F. Supp. 1240, 1243 (1995) (“What is critical
is not the magnitude of the injury, but rather its immediacy and
the inadequacy of future corrective relief.”) (citations omitted)
(internal quotation marks omitted).
Court No. 04-00647 Page 8
revenue. Also, the product they sell is a perishable
good tailored to the unique demands of the United
States flower market; alternative markets do not exist
in which the companies can sell their excess capacity
to stay in business. The new deposit rate is also very
high, relative to the rates set . . . in an industry
that is so competitive. Thus, collection of the 76.60
deposit rate will force each of the eight companies out
of business within an extremely short time period,
eliminating their opportunity for future corrective
judicial relief.
Id. at 1125–26, 947 F. Supp. at 506–07 (footnotes omitted).
Based on these findings, the Court concluded that eight of the
plaintiffs had satisfied the requirement that they would suffer
irreparable harm in the absence of an injunction. In reaching
its conclusion, the Court relied on evidence establishing that
paying the antidumping duty deposits would drive the eight flower
producers/exporters out of business in an extremely short period
of time. Id. at 1126, 947 F. Supp. at 507 (stating that the
remaining plaintiffs failed to “establish the same level of
immediacy of harm that the other eight companies [had]: immediate
extinction.”). The court then analyzed the remaining three
factors and granted plaintiffs their requested relief while
“limiting the scope of the injunction affecting the cash deposit
rates to the eight companies that established a risk of immediate
economic harm . . . .” Id. at 1128, 947 F. Supp. at 509.
The second case in which this Court addressed the issue at
bar is Corus Group PLC v. Bush, 26 CIT 937, 217 F. Supp. 2d 1347.
Court No. 04-00647 Page 9
In that case, the plaintiff sought a preliminary injunction to
enjoin the collection of additional duties imposed on its
products pursuant to a Presidential Proclamation. Id. at 937,
217 F. Supp. 2d at 1349. At an evidentiary hearing in that case,
two witnesses testified that if the duties were collected,
the [plaintiff’s] Norway factory was not sufficiently
profitable to attract investment for upgrades that
might allow it to produce [new products]. Both
witnesses [also] testified that, as a result, the
Bergen Plant would have to raise prices or absorb the
tariffs. . . . [Plaintiff] argues that sound business
principles would require it to close the plant rather
than operate at a loss.
Id. at 944, 217 F. Supp. 2d at 1355. In denying petitioner’s
motion for a preliminary injunction, the Court said:
Every increase in duty rate will necessarily have an
adverse affect on foreign producers and importers.
That is particularly true with regards to the 30%
increase imposed under the safeguard provision. If the
court were to find irreparable harm under these facts,
the court would likely be required to do so in any
challenge to a duty increase because every plaintiff
could argue that increased tariffs would cause revenue
shortfalls possibly resulting in either operating at a
loss or plant closure at some future date. On balance,
[plaintiff] has shown that it may suffer an adverse
economic impact, but to find irreparable harm here
would effectively create a per se irreparable harm rule
in similar challenges–a result likely contrary to the
extraordinary nature of the remedy.
Id. (citing Am. Spring Wire Corp. v. United States, 7 CIT 2, 6,
578 F. Supp. 1405, 1408 (1984)). Ultimately, the Court found
that the plaintiff had not produced sufficient evidence
demonstrating that its factory was “in danger of imminent
closure.” Id. In other words, despite having “arguably
Court No. 04-00647 Page 10
presented evidence of economic injury,” the Court found that
plaintiff’s evidence failed to exhibit the magnitude and
immediacy of injury necessary for finding irreparable harm. Id.
While plaintiff in the instant case has demonstrated that it
will suffer some economic loss should the demand for cash
deposits be enforced, it has not demonstrated either the
immediacy or magnitude of the injury petitioners showed in
Queen’s Flowers. Indeed, plaintiff has failed to produce
evidence equal to that found wanting in Corus Group. First,
plaintiff argues that it will be difficult or impossible for it
to make the cash deposits because
we have a weak company that’s trying to emerge from a
weak position and cash flow is really important to the
company at this time to try to maintain [its]
operations. The loss of what amounts to over $1
million of cash deposit requirements would make a major
difference in [the] cash flow for the company . . . .”
Tr. at 20–21:23–25, 1–3. Thus, plaintiff argues that, as it does
not have sufficient funds to make the cash deposit, it will not
be able to import the MUTT®.5 Second, plaintiff argues that
should it be unable to import the MUTT®, it will suffer
irreparable injury. This argument is difficult to credit. Even
if the court were to accept plaintiff’s claim that it would lose
all of its garden tool sales without the MUTT® in its sales
5
Olympia makes no argument that making the cash deposit
will render it insolvent or force it out of business.
Court No. 04-00647 Page 11
inventory, this would still leave over 90% of its sales intact.
Thus, plaintiff has made no showing that, absent the ability to
sell the MUTT®, it will immediately fail. Accordingly, the court
finds no evidence indicating that plaintiff will face immediate
and irreparable injury should the requirement of the cash deposit
remain in place.
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,” a brief discussion of the remaining three parts of the
four-part test is nonetheless useful. 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. In arguing
that the grant of a preliminary injunction will serve the public
interest, plaintiff insists:
It is well settled that the public interest is served
by “ensuring that [Commerce] complies with the law, and
interprets and applies [the] trade statutes fairly.”
See, e.g., Ugine-Savoie Imphy v. United States, 24 CIT
at 1252, 121 F. Supp. 2d at 690. In addition, the
“public interest is best served when all parties can
obtain effective judicial review.” Int’l Brotherhood of
Elec. Workers v. United States, Slip Op. 05-11 (Jan.
27, 2005) at 16, 2005 Ct. Intl. Trade LEXIS 10, *24, 25
(citations omitted).
In the case at bar, the public interest will be served
by this Court’s issuance of a temporary restraining
order and a preliminary injunction. A temporary
Court No. 04-00647 Page 12
restraining order and a preliminary injunction will
permit this Court, pursuant to 19 U.S.C. §
1516a(b)(1)(B), to review Commerce’s decision to place
the MUTT® within the scope of the HFHTs order and to
ensure that Commerce’s final action in determining the
proper antidumping duties and setting cash deposit
rates is supported by substantial evidence, and is not
arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law.
Pl.’s Br. at 6–7. Despite plaintiff’s argument, the public
interest in ensuring that Commerce complies with the trade laws
through judicial review would not be advanced by the issuance of
its proposed injunction. This court will endeavor to ensure
these ends whether an injunction is in place or not. Therefore,
plaintiff’s argument with respect to the public interest is
unconvincing.
The defendant, on the other hand, has a substantial public
interest claim. Defendant contends that
[Customs] is directed to protect the revenue of the
United States. See generally Carolina Tobacco Co.,
Inc. v. United States, 402 F.3d 1345 (Fed. Cir. 2005).
If an importer does not pay duties upon each entry at
the time the entry is made, the importer must post
bonds that provide security for the duties owed. 19
U.S.C. § 1623. However, the antidumping duty statute
requires that importers post cash deposits of estimated
antidumping duties. 19 U.S.C. §§ 1675(a)(1) and
1675(a)(2)(B)(iii).
Accordingly, [in the event an injunction is granted],
the revenue would be left unprotected, in clear
violation of the express will of Congress.
Def.’s Resp. in Opp’n. to Pl.’s Mot. for a TRO and Prelim.
Injunction (“Def.’s Resp.”) at 9. In other words, if a
Court No. 04-00647 Page 13
preliminary injunction is granted, the public’s interest in
collecting antidumping revenue may be placed in the kind of
jeopardy both the statutes and the regulations are designed to
prevent. This is a more than theoretical possibility. Plaintiff
has indicated that in the event the court grants the proposed
injunction, but defendant prevails on the merits, it will be
unable to pay the duties imposed on its merchandise that has
already entered the stream of commerce.6 See Tr. at 33–34. This
being the case, defendant, not plaintiff, has demonstrated that
the public interest would be better served by the requirement of
the cash deposit remaining undisturbed.
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). Having previously
determined that plaintiff will not be irreparably harmed absent
an injunction does not settle this part of the four-part test.
While not reaching the level of irreparable harm, the court finds
that being unable to import the MUTT® would amount to a hardship
6
Counsel suggested that the duties might be satisfied
through Commerce’s seizure of the “many other goods coming in
from China for Olympia . . . .” Tr. at 34:24.
Court No. 04-00647 Page 14
on plaintiff. In addition, however, the court finds that
defendant faces the possibility of enduring a significant
hardship of its own should an injunction be granted, i.e., the
previously noted prospect of lost revenue. Here, because both
parties face hardship should their arguments with respect to the
issuance of an injunction not succeed, the balance of hardships
does not aid plaintiff.
IV. Likelihood of Success on the Merits
To this point, plaintiff has not demonstrated immediate and
irreparable harm and does not receive assistance from either the
public interest or balance of hardship factors. With respect to
the likelihood that plaintiff will prevail on its claims in the
underlying action, the court finds that both sides have
substantial cases. In support of its argument that success on
the merits favors the granting of its motion, plaintiff says:
[Olympia] is likely to succeed on the merits of this
case and has raised substantial questions of law.
Specifically, there is compelling evidence on the
record that the Plaintiff’s manufacturing process used
in creating the MUTTs®, roll forging, is not hot
forging, as specifically stated in the HFHTs order and
thus the MUTTs® should not be included within the
scope.
[Further], the overriding purpose of the MUTT® is its
use as a scraper to facilitate tasks such as scraping,
ice breaking, lot clearance, trenching, shingle
removal, tile removal, carpet and floor removal,
removing ice from a driveway and paint removal. The
incidental use of a scraper as a cutting tool does not
override the main function of the tool as a scraper,
Court No. 04-00647 Page 15
and does not classify the product as having a hewing
function. Moreover, the MUTT® is advertised and
displayed in a manner different from the tools found in
the HFHT order.
Pl.’s Br. at 5 (emphasis omitted) (footnotes omitted) (internal
quotation marks omitted).
For its part, defendant relies generally on its brief in the
underlying action, which it incorporates by reference. An
examination of that brief confirms that defendant has a
substantial and serious case. In particular, defendant makes
strong arguments both with respect to the kind of forging used to
produce the MUTT® and as to its use a hewing tool. See Def.’s
Resp. to Pl.’s Mot. for J. Upon the Agency Rec. at 10–11 (“[T]he
forging process described in the order is illustrative, not
exclusive. . . . The critical facts here are that MUTTs® are
forged, and the orders cover heavy forged hand tools.”); see also
id. at 12 (“Commerce correctly examined whether MUTTs® are hewing
tools similar to axes or adzes.”) (emphasis omitted).
Based on the foregoing, the court finds that both parties
have presented strong cases,7 and, thus, plaintiff has failed to
7
As to the exact showing necessary to have this factor
favor plaintiff, the present state of the law is unclear. See
U.S. Ass’n of Importers of Textile and Apparel v. United States
Dep’t of Commerce, 413 F.3d 1344, 1347 (Fed. Cir. 2005) (finding
that, because plaintiff had not even met a minimal threshold for
(continued...)
Court No. 04-00647 Page 16
demonstrate that it is likely to succeed on the merits at trial.
Therefore, this part of the four-part test does not compel the
court to find that Olympia is entitled to injunctive relief.
CONCLUSION
For the reasons stated above, the court denies plaintiff’s
motion for a preliminary injunction. Judgment shall be entered
accordingly.
/s/ Richard K. Eaton
Richard K. Eaton
Dated: January 6, 2006
New York, New York
7
(...continued)
establishing likelihood of success on the merits, “we need not,
and thus do not, resolve the dispute over the legal standard
applicable in the Federal Circuit . . . .”).