Agro Dutch Industries Ltd. v. United States

United States Court of Appeals for the Federal Circuit
2009-1127

AGRO DUTCH INDUSTRIES LIMITED,

Plaintiff,

v.

UNITED STATES,

Defendant-Appellant,

and

COALITION FOR FAIR PRESERVED MUSHROOM TRADE,

Defendant.

Richard P. Schroeder, Trial Attorney, Commercial Litigation Branch, Civil
Division, United States Department of Justice, of Washington, DC, argued for
defendant-appellee. With him on the brief were Michael F. Hertz, Acting Assistant
Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant
Director.

Appealed from: United States Court of International Trade

Senior Judge R. Kenton Musgrave
 United States Court of Appeals for the Federal Circuit

2009-1127

AGRO DUTCH INDUSTRIES LIMITED,

Plaintiff,

v.

UNITED STATES,

Defendant-Appellant,

and

COALITION FOR FAIR PRESERVED MUSHROOM TRADE,

Defendant.

Appeal from the United States Court of International Trade in case no.
02-00499, Senior Judge R. Kenton Musgrave.

___________________________

DECIDED: December 15, 2009
___________________________

Before RADER, BRYSON, and LINN, Circuit Judges.

BRYSON, Circuit Judge.

The government appeals from a decision of the Court of International Trade

ordering the reliquidation of certain imported entries by plaintiff Agro Dutch Industries,

Ltd. At issue is whether liquidation of the entries by Customs and Border Protection

after the court issued an injunction against liquidation but before the injunction took
effect rendered the case moot. The trial court held that the case was not moot, and we

affirm.

I

On July 12, 2002, the Department of Commerce published the final results of its

second administrative review of an antidumping duty order imposing duties on

preserved mushrooms from India. 67 Fed. Reg. 46,172. Commerce assigned Agro

Dutch, a foreign producer and exporter, an antidumping duty of 27.80 percent.

Agro Dutch sought review of Commerce’s determination by filing an action in the

Court of International Trade on July 19, 2002. On September 26, 2002, Agro Dutch

moved for a preliminary injunction, pursuant to 19 U.S.C. § 1516a(c), to prevent

liquidation of its covered entries during the pendency of the action. Although Agro

Dutch’s request occurred after the expiration of the 30-day deadline under Rule 56.2 of

the Rules of the United States Court of International Trade, which provides that a party

may file a motion to enjoin liquidation “within 30 days after service of the complaint, or at

such later time, for good cause shown,” the government nevertheless consented to

Agro Dutch’s request for an injunction.

On October 1, 2002, the trial court granted Agro Dutch’s consent motion and

issued an order enjoining liquidation. By its terms, the injunction was to become

effective five days after service on particular Commerce and Customs officials.

According to the government, which requested the five-day delay in the effective

date of the injunction, the purpose of the delay was to avoid “an inadvertent violation” of

the injunction by “ensuring that the appropriate Government officials receive notice” and

by “providing the Government with the time needed to keep the entries from being . . .

2009-1127 2
liquidated.” Agro Dutch served the injunction on the pertinent government officials three

days after it was issued.

Meanwhile, on August 23, 2002, Commerce had issued liquidation instructions to

Customs based on the July 12 Final Results. On October 4, 2002, the same day on

which Agro Dutch served the injunction on the appropriate government officials,

Customs acted on those instructions and liquidated nearly all of Agro Dutch’s entries.

After extensive additional proceedings that are not relevant here, the trial court

remanded the matter to Commerce for a redetermination of Agro Dutch’s antidumping

duty margin. Commerce then issued a redetermination that lowered Agro’s antidumping

duty rate from 27.80 percent to 1.54 percent. The trial court sustained that duty rate.

Agro Dutch then moved to amend the judgment, requesting reliquidation of the

previously liquidated entries at the reduced rate of 1.54 percent.

The trial court granted the motion in part, ordering that the effective date of the

injunction be amended to the date the injunction was issued, October 1, 2002, and

directing that the relevant entries be reliquidated at the lower duty rate. Agro Dutch

Indus. Ltd. v. United States, No. 02-499, slip op. at 8 (Ct. Int’l Trade Oct. 17, 2008). The

court rejected the argument that this court’s decisions in SKF USA, Inc. v. United

States, 512 F.3d 1326 (Fed. Cir. 2008), and Zenith Radio Corp. v. United States, 710

F.2d 806 (Fed. Cir. 1983), barred the reliquidation of the entries on the ground that the

liquidation rendered the action before the court moot.

The trial court noted that, unlike in SKF, the court entered its injunction before the

subject entries were liquidated. Moreover, the court observed that the liquidation of

Agro Dutch’s entries occurred as a result of “what might best be charitably described as

2009-1127 3
‘inadvertence’” and that the parties had intended that liquidation would be enjoined

during the pendency of the court action. The court therefore reasoned that backdating

the injunction would “comport with the parties’ intention.” The court added that not

granting relief would result in “manifest injustice” to the non-party importer of record,

which was likely to be rendered insolvent unless the entries were reliquidated at the

proper, lower duty rate.

II

On appeal, the government argues that the trial court lacked jurisdiction to

entertain Agro Dutch’s challenge regarding the entries that were liquidated prior to the

effective date of the injunction. Relying principally on the Zenith case, the government

argues that the October 4 liquidations rendered Agro Dutch’s claims moot, and that the

trial court was powerless to order reliquidation or to amend the injunction nunc pro tunc.

In Zenith, the trial court refused to issue a preliminary injunction to prevent

liquidation, on the ground that the movant had not established a likelihood of irreparable

injury. We reversed. Under the statutory scheme that governs judicial review of

Commerce’s annual review determinations, we held that challenged entries must be

liquidated at the disputed duty rate unless liquidation is enjoined. 710 F.2d at 810

(discussing 19 U.S.C. §§ 1516a(c) and 1516a(e)). From the absence of any statutory

provision allowing subsequent reliquidation if a challenge is successful, we inferred that

“[o]nce liquidation occurs, a subsequent decision by the trial court on the merits of [a]

challenge can have no effect on the dumping duties assessed.” Id. We therefore

concluded that the movant had established a likelihood of irreparable injury because

2009-1127 4
liquidation would eliminate its only available remedy: the reassessment of dumping

duties in accordance with a corrected duty rate. Id. at 810, 812.

Subsequent case law has interpreted Zenith to establish a general rule that, at

least in the context of judicial review under 19 U.S.C. § 1516a, liquidation moots a

party’s claims pertaining to the liquidated entries. See, e.g., SKF, 512 F.3d at 1329

(“The Zenith rule renders a court action moot once liquidation occurs.”); Yancheng

Baolong Biochemical Prods. Co. v. United States, 406 F.3d 1377, 1381 (Fed. Cir. 2005)

(“As this court held in [Zenith], if there is no injunction, liquidation is automatic under 19

U.S.C. § 1516a(e) and § 1516a(c)(1), and any decision on the merits of a liquidation

challenge after liquidation has taken place is without effect.”); Cambridge Lee Indus.,

Inc. v. United States, 916 F.2d 1578, 1579 (Fed. Cir. 1990) (“Once an entry has been

liquidated, the duties paid cannot be recovered even if the payor subsequently prevails

in its challenge to the antidumping order.”).

In SKF, we vacated a judgment affirming a redetermination of antidumping

duties, where the covered entries had been deemed liquidated by operation of law prior

to the redetermination. 512 F.3d at 1328, 1332. In that case, the government had

consented to the importer’s request for an injunction preventing liquidation during the

pendency of the action in the trial court. Id. at 1328. However, before the trial court

issued the injunction, the importer’s entries became subject to 19 U.S.C. § 1504(d),

which provides that if Customs has not liquidated an entry within six months of receiving

notification that Commerce has completed its annual review, any unliquidated entries

will be “treated as having been liquidated” at the amount of duty deposited by the

importer at the time of import. 512 F.3d at 1329. We held that under the Zenith rule the

2009-1127 5
deemed liquidation rendered the importer’s claims moot in the absence of an injunction.

Id. Although the trial court ultimately granted an injunction several months after the

deemed liquidation, we concluded that “[t]o allow backdating of an injunction on

liquidation that the court granted after the covered entries were liquidated would

undermine the rule of Zenith.” Id. at 1332.

The government relies on SKF to argue that the trial court violated the rule of

Zenith when it backdated Agro Dutch’s injunction to eliminate the five-day period before

the injunction went into effect. In SKF, however, we emphasized the complete absence

of an issued injunction, as the trial court had failed to “decide whether it [would] exercise

its equitable power to grant relief” before the liquidation occurred. Id. In the present

case, the trial court considered Agro Dutch’s motion, determined that relief should be

granted, and issued a valid injunction—all before liquidation occurred. Moreover, unlike

the deemed liquidation in SKF, Customs affirmatively liquidated Agro Dutch’s entries,

despite the government’s awareness of the injunction.

While the Zenith rule ordinarily renders moot court actions in which liquidation

has already occurred, we have acknowledged that there are exceptions to that general

rule. 1 For example, mootness does not occur when steps are required to enforce a

1
We have recognized several situations in which the Zenith rule does not
deprive the trial court of jurisdiction to address the merits of an antidumping duty
determination. See Shinyei Corp. of Am. v. United States, 524 F.3d 1274 (Fed. Cir.
2008) (entries that were deemed liquidated by operation of law may be reliquidated in
action brought under the Administrative Procedure Act (“APA”) to challenge
Commerce’s liquidation instructions); Gerdau Ameristeel Corp. v. United States, 519
F.3d 1336, 1343 (Fed. Cir. 2008) (liquidation did not moot challenge to dumping
margins because of an issue having ongoing legal consequences relating to the
possible revocation of the underlying antidumping order); Shinyei Corp. of Am. v. United
States, 355 F.3d 1297 (Fed. Cir. 2004) (an APA action challenging Commerce’s

2009-1127 6
valid injunction. See Yancheng, 406 F.3d at 1377, 1381-82 (Fed. Cir. 2005) (upholding

the trial court’s contempt ruling against the government when liquidation violated an

injunction that remained in effect through appeal); Shinyei, 355 F.3d at 1312 (declining

“to find that the statute [imposing finality upon liquidations] as a whole was intended to

preclude judicial enforcement of court orders after liquidation”). The government does

not suggest that the Zenith rule would moot Agro Dutch’s claim if the liquidation had

taken place after the injunction became effective. Moreover, like the Court of

International Trade, we believe that when liquidation violates an injunction, not only

does the trial court retain jurisdiction, but a broad array of remedies (including

reliquidation) is available to the court to rectify the unlawful liquidation. See Allegheny

Bradford Corp. v. United States, 342 F. Supp. 2d 1162, 1171 (Ct. Int’l Trade 2004)

(ordering refund of monies exacted pursuant to the enjoined liquidation in order to purge

contempt and ordering reliquidation upon a final decision on the underlying action); AK

Steel Corp. v. United States, 281 F. Supp. 2d 1318, 1323 (Ct. Int’l Trade 2003)

(ordering that the matter be returned to the status quo ante and declaring liquidations

null and void ab initio, where entries were liquidated through an illegal act of Customs in

violation of a preliminary injunction); LG Elecs. U.S.A., Inc. v. United States, 991 F.

Supp. 668, 675 (Ct. Int’l Trade 1997) (finding that liquidations in violation of a valid

preliminary injunction had no legal effect and ordering reliquidation in accordance with

Commerce’s instructions and the court’s rulings).

liquidation instructions is not rendered moot by liquidation). Moreover, while
acknowledging that this court has consistently applied the Zenith rule in the context of
judicial review under 19 U.S.C. § 1516a, we have also noted that “the rule’s effect may
run counter to a congressional intent to facilitate judicial review of Commerce
determinations.” SKF, 512 F.3d at 1329.

2009-1127 7
 The Zenith rule would also not apply if liquidation occurred because of a clerical

or typographical error in the injunctive order that was contrary to the purpose of the

injunction and the parties’ intent. Courts enjoy broad discretion to correct clerical errors

in previously issued orders in order to conform the record to the intentions of the court

and the parties. See R. Ct. Int’I Trade 60(a); Fed. R. Civ. P. 60(a) (“The court may

correct a clerical mistake or a mistake arising from oversight or omission whenever one

is found in a judgment, order, or other part of the record . . . on motion or on its own,

with or without notice.”); see also Robert Lewis Rosen Assocs., Ltd. v. Webb, 473 F.3d

498, 504-05 & n.11 (2d Cir. 2007) (trial court properly corrected an omission from a

judgment to conform with the court’s original intent); Robi v. Five Platters, Inc., 918 F.2d

1439, 1445-46 (9th Cir. 1990) (district court did not abuse its discretion by amending the

judgment to clarify its original intention to cancel certain trademarks); Pattiz v. Schwartz,

386 F.2d 300 (8th Cir. 1968) (where the intent of the parties was to apply a stipulation to

an amended complaint rather than the original complaint, trial court had authority to

issue an order that would reflect the intent of the parties and the court).

As a general matter, a court of equity may exercise its sound discretion to modify

an injunctive order when modification is necessary to achieve the order’s intended

purpose and does not otherwise result in prejudice to a party. See United States v.

United Shoe Mach. Corp., 391 U.S. 244, 252 (1968) (if the district court’s injunctive

decree did not accomplish its intended goals, “the [d]istrict [c]ourt should modify the

decree so as to achieve the required result with all appropriate expedition”); see also

Regal Knitwear Co. v. NLRB, 324 U.S. 9, 15 (1945). The trial court’s discretion is not

limited to the correction of clerical or typographical errors but encompasses the

2009-1127 8
correction of errors needed to comport the order with the original understandings and

intent of the court and the parties.

As the trial court found, it was the purpose of the injunction and the

understanding and intent of all the parties to suspend liquidation pending a decision on

the merits of Agro Dutch’s challenge. As issued by the trial court on October 1, 2002,

the injunction contained a grace period delaying the effective date of the injunction until

five days after it was served on the appropriate government officials. 2 However, the

five-day window was apparently added only to ensure against subjecting Customs

officials to contempt sanctions for an inadvertent liquidation. It was not intended to give

the government free rein to liquidate the subject entries before the injunction took effect.

As counsel for the government conceded at oral argument, the five-day window was not

intended to allow the government to “rush in” to liquidate the relevant entries and

thereby avoid the effect of the injunction. Thus, as the government has acknowledged

and the trial court has found, the five-day grace period was not intended to allow the

government an opportunity to effect liquidation if it moved quickly.

Pointing to Agro Dutch’s delay of more than 30 days after service of the

complaint before seeking an injunction, the government argues that if Agro Dutch had

2
Even if the appropriate government officials had been served on October 1,
the injunction would not have taken effect until October 8, after the liquidation of Agro
Dutch’s entries took place on October 4. Therefore, the fact that it took Agro Dutch
three days to serve the injunction is irrelevant to our reasoning, which focuses upon the
effect of Customs’ act of liquidating the entries during the five-day period between the
injunction’s issuance and its effective date.

2009-1127 9
acted more promptly, it could have prevented the case from becoming moot. 3 That

assertion is belied, however, by the fact that the government consented to the injunction

even though Agro Dutch had delayed in seeking it. Moreover, counsel for the

government maintained at oral argument that liquidation during the five-day window

would have deprived the trial court of jurisdiction even if Agro Dutch had filed its request

for an injunction within the 30-day period after serving the complaint. Thus, the

government is not relying upon Agro Dutch’s lack of timeliness as a basis for its legal

position that liquidation prior to the effective date of the injunction renders moot any

challenge with respect to the liquidated entries.

We agree with the trial court that there is no reason to upset the court’s and the

parties’ clear intentions by applying the rule of Zenith to this case. By amending the

effective date of the injunction and ordering reliquidation, the trial court gave full effect to

the purposes underlying both the injunction and the five-day window provision. Under

the court’s final order, Agro Dutch’s claim would proceed on the merits, and no

contempt proceedings would be instituted against government officials for the

inadvertent liquidation.

The government argues that upholding the trial court’s decision would create

uncertainty regarding the finality of antidumping duties imposed by the government. We

have observed that the rule of Zenith is designed to promote finality for antidumping

3
The government asserts that if Agro Dutch had not waited past the 30-day
deadline Commerce would not have issued the liquidation instructions that were
ultimately implemented during the window prior to the injunction’s effective date.
However, this argument is undermined by the government’s acknowledgement, in oral
argument, that Commerce is not required to delay issuing liquidation instructions upon
the filing of a timely motion for a preliminary injunction.

2009-1127 10
duties and related liquidations. As noted by this court in SKF, liquidation is “designed to

close the books on an importer’s entries” and reflects a “decision that an importer’s

liability has been finalized.” 512 F.3d at 1329.

While finality is an important goal, the interest in finality must give way in the face

of a more compelling interest in this case: namely, effecting the intent of the parties and

the court to prevent a premature liquidation while judicial review is ongoing. Granting

relief in this case is unlikely to give rise to any real uncertainty because the parties

specifically contemplated that Agro Dutch’s challenge to the Final Results would go

forward. No valid interest in finality is served by foreclosing judicial review in a case

such as this one, where the parties and trial court agreed that finality was not warranted,

and where an injunction was entered for the very purpose of preventing the antidumping

duty from becoming final.

While the government argues that affirming the trial court’s decision will “turn[]

what generally is a relatively cooperative endeavor into an adversarial one,” we think

the opposite is the case. The endeavor would be more likely to become adversarial if

we were to allow liquidation during the five-day notice period to render moot a challenge

to the antidumping duty determination, in contravention of the parties’ express intent.

Foreign importers are far more likely to trust and cooperate with the government if they

can be confident that grace periods in issued injunctions cannot be exploited. Under

the result urged by the government, in which liquidation occurring during the period after

issuance and before the effective date of an injunction would be unchallengeable, it

seems unlikely that any party challenging an antidumping duty in the future would agree

to the government’s request for a postponement of the effective date of the injunction.

2009-1127 11
 For the foregoing reasons, we hold that the trial court did not abuse its discretion

in amending the judgment to effect the parties’ intent to prevent liquidation and allow

adjudication of the merits of this dispute.

AFFIRMED.

2009-1127 12