author: JOHN LEWIS SMITH, Jr., District Judge.

text:
    Alison PALMER, et al., Plaintiffs, v. George P. SHULTZ, Defendant. Marguerite COOPER, et al., Plaintiffs, v. George P. SHULTZ, Defendant.
    Civ. A. Nos. 76-1439, 77-2006.
    United States District Court, District of Columbia.
    Dec. 21, 1984.

      Ellen K. Wayne, Bruce J. Terris, Terris & Sunderland, Washington, D.C., for plaintiffs.
    Asst. U.S. Atty. Diane Sullivan, Washington, D.C., for defendant.
   MEMORANDUM

JOHN LEWIS SMITH, Jr., District Judge.

This matter is presently before the Court on defendant’s motion for reconsideration of this Court’s September 17, 1984 Memorandum Opinion granting, pursuant to § 706(k) of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-5(k), plaintiffs fees and costs in the amount of $439,-541.48. 594 F.Supp. 433. The government moves for reconsideration in light of the Court of Appeals decision in Laffey v. Northwest Airlines, Inc., 746 F.2d 4 (D.C. Cir.1984), which delineates the standards to be used in calculating attorney’s fee awards to “for-profit” firms. Upon careful review of the record, and of recent developments in the law, the defendant’s motion for reconsideration is granted and plaintiffs are awarded $147,807.25.

In the September 17 Memorandum Opinion (Mem.Op.), this Court properly determined that “[t]he initial task in determining an appropriate fee award ... is to establish the ‘lodestar’: the number of hours expended multiplied by a reasonable hourly rate.” Mem.Op. p. 3, quoting National Association of Concerned Veterans v. Secretary of Defense, 675 F.2d 1319, 1323 (D.C.Cir. 1982) (citing Copeland v. Marshall, 641 F.2d 880, 891 (D.C.Cir.1980) (en banc) (“Copeland III")). As there was no dispute as to the “number of hours expended” by plaintiffs, Mem.Op. pp. 3-4, the Court was left to calculate a “reasonable hourly rate.” This Court examined the actual rates charged by plaintiffs but concluded that the “market value” of counsels’ services was more accurately reflected in “prevailing community rates.” The Court found that plaintiffs’ proposed rate schedule “was consistent with ‘prevailing community rates’ and appropriate for use in calculating the lodestar.” Mem.Op. p. 9. The Court rejected the government’s argument that the use of current rates represented a claim for interest barred by sovereign immunity, instead finding that section 706(k) is a statutory waiver of sovereign immunity. Mem.Op. p. 10. In addition, the Court, finding that the facts of this particular application met the criteria established by Blum v. Stenson, — U.S. —, 104 S.Ct. 1541, 79 L.Ed.2d 891 (1984), and Murray v. Weinberger, 741 F.2d 1423 (D.C.Cir. 1984), ordered that the merits lodestar be adjusted upward by 20% to reflect the uncertainty that existed at the commencement of the suit, the so-called contingency multiplier. All told, this Court awarded plaintiffs $439,541.48, which included a fee litigation lodestar of $63,901.25, a final merits award of $337,669.20, and $37,-971.03 as reimbursement for reasonable litigation expenses.

The relevant portions of the Laffey decision concern the hourly rate component of the lodestar calculation. The Court of Appeals drew a distinction between nonprofit and for-profit firms, holding that a private firm’s customary hourly rate, not the rates charged by other attorneys in the community, should be used in calculating a lodestar fee for a prevailing party under a fee-shifting statute. Laffey, at 30. The Circuit Court was concerned with avoiding “a second major litigation” that often accompanies a court’s “essentially impossible task of selecting one rate over another from a wide range of ‘market’ rates.” Id. at 18. The Court of Appeals recognized that while the “prevailing market rate” may be “a necessary evil” when a nonprofit firm is involved, it can be dispensed with where a private, for-profit law firm has established market rates for similar services.

Before dealing with the merits, the Court must first address plaintiffs’ procedural objection to the motion. Plaintiffs assert that Laffey is merely a reaffirmation of current case law, not a change in law, and that defendant has waived any opportunity to argue that Terris and Sunderland’s normal billing rate is the appropriate market rate by the failure to assert this position in earlier proceedings. This contention is without merit. The Court of Appeals decision in Laffey constitutes a significant change in the law and this Court must now decide how this change is applicable to the instant case.

The first issue before the Court is whether Terris and Sunderland’s normal billing rate constitutes an established market rate as defined by Laffey that should be used in computing the lodestar fee. Defendant contends that plaintiffs are no different than the quasi-public interest law firm involved in Laffey and should be subject to payment according to its “long standing history of market rates charged to clients.” Def.Mem., p. 5. Defendant presents Terris and Sunderland as being no different than any ordinary private law firm.

Plaintiffs oppose this characterization, contending both that Terris and Sunderland is not a law firm with a “customary private practice” and that it has no firmly established billing rate. Plaintiffs point to the distinctions that exist between Bredhoff & Kaiser, the firm seeking fees in Laffey, and Terris and Sunderland to illustrate that it' has a different practice. The two most noteworthy distinctions include the fact that Terris and Sunderland has no “partnership track” where lawyers can expect to eventually become partners and the firm bills at a flat rate, with no consideration made for an attorney’s experience or qualifications. Plaintiffs further argue that they have no established billing rate; instead their rates are set “at levels that will allow it to provide representation to individuals and groups who could not afford counsel at full market rates.” Pl.Mem., p. 10. Plaintiffs, thus, contend that Terris and Sunderland is a public interest law firm with no established billing rate, and not subject to the holding of Laffey.

The Court disagrees with plaintiffs’ contention. Sufficient evidence is available to conclude that Terris and Sunderland has an established billing rate, presently set at $80 per hour for partners and $65 per hour for associates. Terris Dep. at 14. It is clear that the $80/65 rate is charged to all clients unless two conditions exist: the client cannot pay and attorney fees can be obtained under an applicable statute. Terris Dep. at 13. Plaintiffs only infrequently encounter a situation where their normal fees are reduced. Terris Dep. at 10-11. At all other times, plaintiffs charged their clients their normal rates.

Plaintiffs argue that this rate does not qualify as an “established billing rate” because it fails to reflect the market value of the firm’s legal services but instead reflects a choice “to cater[] to people who have very limited sums of money.” Terris Dep. at 29. The Court of Appeals in Laffey discounted a similar argument, stating that “the fact that [the applicant’s] clients cannot afford unlimited legal fees fails to distinguish them.” Laffey, at 14 n. 69. Plaintiffs have chosen “to cater” to a particular segment of the market by using lower rates, thereby avoiding competition from the “premium” firms whose high rates could not be paid by plaintiffs’ clients. The Court finds that plaintiffs do indeed have an established billing rate, $80 per hour for partners and $65 per hour for associates, which results in a merits lodestar of $181,820.15 and a fee litigation lodestar of $40,400.00.

Though adopting a rate less than that included in the original award, the Court is convinced that this case is one of the “rare cases” referred to in Blum, 104 S.Ct. at 1549, where an upward adjustment based on quality of representation is entirely appropriate. Though Blum indicated that “the quality of representation ... generally is reflected in the reasonable hourly rate,” the Supreme Court pointed out that quality of representation “may justify an upward adjustment only in the rare case where the fee applicant offers specific evidence to show that the quality of service rendered was superior to that one reasonably should expect in light of the hourly rates charged and that the success was ‘exceptional’.” Id.

In the September 17 Memorandum this Court specifically noted that plaintiffs’ work product “[had] been superior throughout,” Mem.Op. p. 8, and made an award at hourly rates “equal to or below prevailing market rates in the District of Columbia for lawyers of similar skill and experience.” Mem.Op. p. 9. Explicit in the calculation of the award at prevailing market rates was that plaintiffs’ services were equal in quality to those of attorneys charging that rate, thus clearly indicating that plaintiffs’ services were far superior to what could be reasonably expected of attorneys charging a maximum of $65 per hour for associates and $80 per hour for partners. This Court has already described the relief achieved as “exceptional” within the meaning of Blum, albeit in a different context. Mem.Op. pp. 13, 16-17. The relief achieved through entry of the Consent Decree was indeed exceptional, substantially eliminating seven previous years of hiring disparities, and carrying a conservatively estimated monetary value of $8.6 million. Pl.App. 4-6. In view of plaintiffs’ superior services and exceptional success, the Court believes that the merits lodestar should be adjusted upwards by 54.75%, producing an enhancement of $99,546.53.

Defendant also questions this Court’s use of a contingency multiplier in the original award where the odds of success were estimated to be 75%, pointing to the Laffey court’s rejection of a multiplier where it was held that there was a 50% chance of success. Defendant misreads the September 17 Memorandum and Laffey in reaching this conclusion. While the Court of Appeals did state that “[a]ny crude multiplier derived simply from the plaintiff’s chance of success must be rejected as contrary to the congressional scheme,” Laffey, at 28, the Court stopped short of declaring the impropriety of a contingency “enhancement” in every case. Id. at 27-28. The Court in Laffey did hold that an insufficient showing had been made by plaintiffs’ counsel to qualify as an exceptional case pursuant to Blum. Id. at 28.

This Court in its September 17 Memorandum went beyond merely examining the chance of success in awarding a contingency adjustment to plaintiffs. This Court found, pursuant to Blum and Murray, that this was an exceptional case worthy of a contingency adjustment. The specific circumstances justifying the enhancement enumerated in the September 17 Memorandum bear repeating here.

Both legal and factual complexity and uncertainty existed at the commencement of this suit. For example, on the critical issue of employment test validation, there was no legally preferred method of validation, and plaintiffs had no knowledge of whether defendant in fact employed validation procedures. That remained to be uncovered through discovery. Furthermore, plaintiffs’ counsel were obviously committing significant time and resources, particularly in view of the firm’s small size. Class actions involve efforts beyond those associated with an ordinary lawsuit, and the massive statistical evidence required expert (and expensive) analysis. It appears to the Court that a contingency adjustment is “necessary to facilitate the filing” of cases of this type, where both the scope of the claims and the number of complainants are atypical.

Mem.Op. pp. 16-17 (citations omitted). Unlike Laffey, plaintiffs’ counsel did make sufficient showing to qualify as an exceptional case.

The reasoning used by this Court in the original award for granting the contingency adjustment is not changed by Laffey. While the September 17 Memorandum does make mention of the district court decision in Laffey v. Northwest Airlines, 572 F.Supp. 354 (D.D.C.1983), the reasoning used there, based on Blum and Murray, would stand even were those references to Laffey excised from the opinion. Consequently, for the reasons cited by the Court here and in the September 17 Memorandum, the risk of nonpayment undertaken by counsel in this case is “exceptional” within the meaning of Blum and Murray, and a 20% enhancement, totaling $36,-364.03, is awarded.

The Court finds it unnecessary to address the propriety of its award of $37,-971.03 as reimbursement for reasonable litigation expenses. In addition, Laffey expressly approves the use of current rates against federal defendants to counterbalance the delay in payment as well as to simplify the task of the district court. Laffey, at 20 n. 104. These portions of the original award remain intact.

Plaintiffs have submitted a supplemental application for an award of attorney’s fees and expenses arising incident to litigating the motion for reconsideration. Included in this application is a request for fees for time expended litigating plaintiffs’ original application for attorney’s fees. Plaintiffs are not entitled to compensation for the 10.75 hours associated with litigating their original application. Any compensation for those hours should have been presented to the Court in time to have been considered in the September 17 Memorandum. The Court’s consideration of defendant’s motion was not intended to provide plaintiffs with a second opportunity to obtain fees for hours not included in their original application.

The Court must next determine what portion of the remaining hours was reasonably expended litigating the applicability of Laffey. Copeland III, 641 F.2d at 891. Plaintiffs have provided sufficient documentation so that the Court can make an independent determination as to whether or not the hours claimed are justified. The Court finds that the hours submitted by plaintiffs, except those categorized as research and miscellaneous, should be reduced by one third. This leaves plaintiffs with 99.5 hours billable to associates and 9.75 to partners. As previously established, the proper hourly rate to be used in calculating the lodestar fee is $65 for associates and $80 for partners. With expenses, this Court finds reasonable a fee litigation lodestar of $9,367.72.

Accordingly, defendant’s motion for reconsideration is granted and plaintiffs are entitled to a total payment of $405,469.46. This figure represents a total merits lodestar of $317,730.71 ($181,820.15 plus the 54.75% quality enhancement, $99,546.53, and the 20% contingency enhancement, $36,364.03), a fee litigation lodestar from the original application of $40,400.00, $37,-971.03 for expenses, and $9,367.72 in fees for litigating the motion for reconsideration. As defendant has already been ordered to pay $257,662.21, plaintiffs are awarded an additional amount of $147,-807.25.

An appropriate order follows.


source: Caselaw Access Project

author: DiCARLO, Judge:

license: Public Domain

text:
    AUDIOVOX CORP., Plaintiff, v. The UNITED STATES, Defendant.
    Court No. 82-5-00652.
    United States Court of International Trade.
    Oct. 10, 1984.
    Mandel & Grunfeld, New York City (Steven P. Florsheim and Robert B. Silverman, New York City), for plaintiff.
    Richard K. Willard, Acting Asst. Atty. Gen., Washington, D.C., Joseph I. Liebman, Attorney in Charge, International Trade Field Office, Commercial Litigation Branch, New York City, (Susan Handler-Menahem, New York City), for defendant.
   Memorandum Opinion and Order

DiCARLO, Judge:

Plaintiff made sixty entries of FM Micro Converter Radios from June to December, 1978, and a further entry, No. 627164, in August, 1979. Before each entry GSP Certificates of Origin (Forms A) were executed by an appropriate certifying authority in the country of export, the Republic of China (Taiwan). The merchandise entered in 1978 was liquidated in January and April, 1979, at 10.4% ad valorem under item 685.-21, Tariff Schedules of the United States (TSUS), a classification under which GSP treatment was not available. Plaintiff filed timely protests of these liquidations, requesting reliquidation under item 685.29 at 6% ad valorem or item 688.40 at 5.5% ad valorem. Although merchandise imported from Taiwan and classifiable under item 685.29 was accorded duty-free treatment under the GSP, plaintiff failed to request duty-free treatment in its protests, and plaintiff did not file the previously executed Forms A.

Entry No. 627164 was liquidated in October, 1979. It also was liquidated by Customs under item 685.21 at ÍO.4% ad valorem. In its protest of the liquidation of entry No. 627164 plaintiff requested reliquidation free of duty under item 685.29 pursuant to the GSP and filed a Form A.

All of plaintiff’s protests were granted, and on June 8, 1981 all the entries were reliquidated at 6% ad valorem under item 685.29, TSUS, except entry No. 627164, which was reliquidated under item 685.29 duty free pursuant to the GSP.

On August 24, 1981 plaintiff filed protests against all sixty-one reliquidations, requesting that the entries be liquidated for a third time, free of duty under item 685.29, TSUS, and the GSP. With these protests plaintiff filed the Forms A executed two and a half to three years earlier. These protests against the reliquidations were denied in November and December, 1981. Suit was timely filed in this Court on May 11, 1982. The United States now moves to dismiss the action.

Respecting entry No. 627164, the Government argues that since plaintiff was granted reliquidation free of duty as requested in its protest against the liquidation, there is no claim upon which relief can be granted. Plaintiff concedes that there is no case or controversy with respect to this entry, and that the case should be dismissed with respect to this entry. It is so ordered.

The Government contends that the Court is without jurisdiction to review the denial of plaintiffs protests concerning the reliquidations of the sixty 1978 entries at 6% ad valorem because 19 U.S.C. § 1514(d) and 19 C.F.R. § 174.16 prohibit the protest of a question outside the scope of a reliquidation and § 1514(c)(1) prohibits the filing of more than one protest for each category of merchandise. F. W. Woolworth Co. v. United States, 26 CCPA 157, C.A.D. 10 (1938); Dover Shipping Co., Ltd. v. United States, 4 Cust.Ct. 135, C.D. 306 (1940); Pistorino & Co., Inc. v. United States, 71 Cust.Ct. 166, C.D. 4491 (1973); Ataka America, Inc. v. United States, 79 Cust.Ct. 135 C.D. 4724 (1977).

Plaintiff’s contentions are (1) that it did request GSP treatment in its protests of the liquidations, that Customs did not grant the requests, and that plaintiff now protests only the refusal of Customs to grant it duty-free treatment on reliquidation, and (2) that it was unnecessary to request GSP treatment when plaintiff filed its original protests, and plaintiff could validly request GSP treatment within ninety days of the reliquidation.

Plaintiff strains to find language in its original protests concerning the sixty 1978 entries indicating an intent to request for GSP treatment. In seeking relief under items 685.29 and 688.40, plaintiff asserts that it sought all appropriate relief, including GSP treatment, should the merchandise be classified under item 685.29. Thus, plaintiff notes that its protests of the liquidations stated, in relevant part, that it protested Customs “... decision, liquidation and assessment of duties charged at 10.4% under TSUS item 685.21 ... [A]s to the classification and rate and amount of duties, it is claimed that the proper Classification is under TSUS item 685.29 at the rate of 6% or 688.40 at the rate of 5.5% [Emphasis added]” (Plaintiff’s Memorandum at 3).

But, none of these protests can be fairly read to claim duty-free treatment. Plaintiff explicitly requested reliquidation at either 6% or 5.5% ad valorem. Where GSP treatment was expressly requested, in the protest of the liquidation in entry No. 627164, it was granted. That plaintiff did not intend to request duty-free treatment pursuant to the GSP in his protests of the liquidations is further demonstrated by his failure to file Forms A until after the reliquidations. The Forms A must be filed to support an importer’s claim for GSP treatment, 19 C.F.R. § 10.173, and a GSP claim may be allowed only if the district director is satisfied that this requirement has been fulfilled. 19 C.F.R. § 10.172. The district director thus could not have granted plaintiff GSP treatment under plaintiff’s original protests as plaintiff failed to satisfy a condition precedent to such treatment.

Plaintiff’s reliance on Sanyo Electric, Inc. v. United States, 81 Cust.Ct. 114, 115, C.D. 4775 (1978) is misplaced. Consistent with 19 U.S.C. § 1514(c)(1), Sanyo holds merely that where alternative claims are made in a protest and one of the claims is granted, jurisdiction will not lie in this Court as the protest is not “denied” within the meaning of 28 U.S.C. § 1582(a) (super-ceded by the current 28 U.S.C. § 1581(a) November 1, 1980).

Dicta in that case, counseling the importer to raise the alternative claim by filing a new protest, does not support plaintiff’s position here as plaintiff made ho claim for GSP treatment in its original protests. To allow an importer to raise á claim in the protest of a reliquidation not raised in the protest to the liquidation, and which could have been raised there, would drain 19 U.S.C. §§ 1514(c)(1) and (d) of all meaning. The number of possible protests of a single entry would be limited only by the importer’s imagination; an endless series of “reliquidations” could result.

Plaintiff’s second argument is that it could validly request duty-free treatment under the GSP in its protests of the reliquidations, and cites 19 C.F.R. § 10.112, which provides, in pertinent part, that the appropriate duty-free document “may be filed at any time prior to liquidation of the entry or, if the entry was liquidated, before the liquidation becomes final.”

But the requirements of 19 U.S.C. § 1514 are conditions precedent for jurisdiction in this Court under 28 U.S.C. § 1581(a), Lowa, Ltd. v. United States, 724 F.2d 121, (Fed. Cir.1984) (“The judgment appealed from is affirmed on the basis of the opinion filed by the CIT. Lowa, Ltd. v. United States, 561 F.Supp. 441 (C.I.T.1983)”); Wally Packaging Inc. v. United States, 7 CIT -, 578 F.Supp. 1408, 1411-12 (1984), and the Court may not construe 19 C.F.R. § 10.112 to increase its jurisdiction, Ata ka America, Inc., supra. As plaintiff failed to timely request duty-free treatment, the Court is without jurisdiction under 28 U.S.C. § 1581(a). Since plaintiff did not act diligently to pursue and exhaust its administrative remedies under 19 U.S.C. § 1514, the Court will not exercise its subject matter jurisdiction under § 1581(i). See United States v. Uniroyal, Inc., 69 CCPA 179, 182, 687 F.2d 467, 471 (1982) (“Congress did not intend the Court of International Trade to have jurisdiction over appeals concerning completed transactions when the appellant had failed to utilize an avenue for effective protest before the Customs Service”). Section 1581(i) may be invoked as a basis for subject matter jurisdiction when no other remedy is available under § 1581(a), or the remedy available is manifestly inadequate.

The action is dismissed. Judgment will be entered accordingly.

      . On January 29, 1981, following trial in this Court, five other entries of the same merchandise by the same importer classified by Customs under item 685.21 were ordered reliquidated under item 685.29. Audiovox Corp. v. United States, 1 CIT 136 (1981) (Newman, J.). Plaintiff's protests of the liquidations of the entries at issue here were "suspended” by Customs pending decision in that case.

      . 19 U.S.C. § 1514(d) provides: “The reliquidation of an entry shall not open such entry so that a protest may be filed against the decision of the customs officer upon any question not involved in such reliquidation.”

      . Similarly, 19 C.F.R. § 174.16 states: "A protest shall not be filed against the decision of the district director or reliquidation upon any question not involved in the reliquidation.”

      . Section 1514(c)(1) states, in part: “Only one protest may be filed for each entry of merchandise, except that where the entry covers merchandise of different categories, a separate rate protest may be filed for each category."

      . The Court notes that on a motion to dismiss, the allegations of the complaint must be accepted as true and the motion must be denied if the pleadings raise any issue of fact against the moving party. “It must appear to a certainty that the opposing party is entitled to no relief under a state of facts that could be approved in support of its claim or allegations." C.J. Tower & Sons v. United States, 68 Cust.Ct. 377, 379, C.R.D. 72-11 (1972); See Hishon v. King & Spaudling - U.S. -, 104 S.Ct. 2229, 81 L.Ed.2d 59, (1984); Suwannee Steamship Co., v. United States, 79 Cust.Ct. 19, 21 C.D. 4708, 435 F.Supp. 389, 390 (1977).
      The administrative record before the Court consists of 61 packets of documents transmitted by Customs pursuant to 28 U.S.C. § 2635(a)(1). Certificates of Origin (Forms A) and the protests of the liquidations, distinct from the protests at issue here, for each entry are included in these packets. Though the Forms A and protests of the liquidations are not within the § 2635(a)(1) list of documents, § 2635(a)(1) is not exclusive and where documents are “of the same character as those ennumerated there," American Motorists Insurance Co. v. United States, 5 CIT_, Slip Op. 83-8 (February 1, 1983), the Court will consider them part of the official record of the administrative determination. American Motorists Insurance Co., supra.

      . 19 U.S.C. § 1514(c) requires that protests "shall ... set forth distinctly and specifically ... the nature of each objection and the reasons therefore." As the Supreme Court observed:
      ... the object of the requirement [that protests distinctly and specifically state objections] is to prevent a party, if he suffers the mistake or oversight to pass without notice, from taking advantage of it when it is too late to make the correction, and to compel him to disclose the grounds of his objection at the time when he makes his protest.
      ... Technical precision is not required; but. the objections must be so distinct and specific, as, when fairly construed, to show that the objection taken at the trial was at the time in the mind of the importer, and that it was sufficient to notify the collector of its true nature and character, to the end that he might ascertain the precise facts, and have an opportunity to correct the mistake and cure the defect, if it was one which could be obviated. Davis v. Arthur, 96 U.S. 148, 151, 24 L.Ed. 758 (1878) as quoted in American Mail Line, Ltd. v. United States, 34 CCPA 1, 6, 4 C.A.D. 335 (1946); See also United States v. Sheldon and Co., 5 CCPA 427 T.D. 34946 (1914).
      The Court holds as a matter of law that plaintiff’s protests of the liquidations cannot be "fairly construed” to have sufficiently and distinctly informed Customs that plaintiff sought duty-free treatment.

      . The Court finds no cases where 19 C.F.R. § 10.112 has been interpreted to allow an importer to receive duty-free treatment where it failed to timely request such treatment in its protest. See Harwood Manufacturing Co. v. United States, 7 CIT —, Slip. Op. 84-57 (May 30, 1984) (plaintiff failed to present Forms A until trial but timely requested GSP treatment in its protest); Mattel, Inc. v. United States, 67 CCPA 74, C.A.D. 1248, 624 F.2d 1076 (1980); Green Giant Co. v. United States, 79 Cust.Ct. 61, C.D. 4715 (1977); F.W. Myers & Co., Inc. v. United States, 70 Cust.Ct. 202, C.D. 4431, 360 F.Supp. 429, appeal dismissed 61 CCPA 121 (1973); Freres, Inc. v. United States, 47 Cust.Ct. 155, 159, C.D. 2296 (1961).

      . Were the Court to allow this second protest, 19 U.S.C. § 1514(c)(1) would be circumvented. This subsection provides that an amendment to a protest may only be made "prior to the expiration of the time in which such protest could have been filed,” ninety days from the date of liquidation.


author: RESTANI, Judge.

text:
    JERNBERG FORGINGS CO., et al., Plaintiffs, v. The UNITED STATES, Defendant.
    Court No. 84-1-00150.
    United States Court of International Trade.
    Nov. 19, 1984.

      Dow, Lohnes & Albertson, William Silverman, James M. McElfish, Jr., and John C. Jost, Washington, D.C., for plaintiffs.
    Howrey & Simon, David C. Murchison, John F. Bruce, and Kevin P. O’Rourke, Washington, D.C., for defendant-intervenor.
    Richard K. Willard, Acting Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Washington, D.C., J. Kevin Horgan, Civ. Div., U.S. Dept, of Justice, New York City, for defendant.
   RESTANI, Judge.

Plaintiffs have moved for disclosure of six business-confidential documents, or groups of documents, from the administrative record in this case. Plaintiffs’ action challenges two negative aspects of a final affirmative countervailing duty determination concerning certain Italian steel products manufactured by Industria Meccanica e Stampaggio, S.p.A. (I.M.E.S.). Defendant-intervenor I.M.E.S. argues against disclosure. Defendant United States makes no objection to plaintiffs’ motion.

Section 516A(b)(2)(B) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(b)(2)(B) (1982) vests discretion in this court to determine “whether to release confidential documents to parties involved in countervailing duty cases.” American Spring Wire Corp. v. United States, 5 CIT —, 566 F.Supp. 1538, 1539 (1983). In exercising its discretion the court is guided by three considerations: (1) a litigant’s need for the data used by the Government to respond adequately to the Government’s subsidy findings, (2) the Government’s need to obtain confidential information from businesses in future proceedings, and (3) the foreign manufacturer’s need to protect from disclosure information which, in the hands of a competitor, might injure its relative position in the industry. Id., 566 F.Supp. at 1539-40, citing Freres v. United States, 4 CIT 239, 241-42, 554 F.Supp. 1246, 1248 (1982). See also Star-Kist Foods, Inc. v. United States, Slip Op. 84-108 at 3 (October 24, 1983). The court has made an in camera examination of the documents in question and will balance plaintiffs’ need for the information against “ ‘the public interest in protecting confidential business information, recognized by section 516A(b)(2)(B) and inherent in the administrative authority’s ability to effectively perform its investigative duties’ under the countervailing duty law.” American Spring Wire Corp., 566 F.Supp. at 1540, quoting Nakajima All Co. v. United States, 2 CIT 170, 174 (1981).

Plaintiffs first seek access to Document No. 50, a computer print-out of calculations made in the course of The United States Department of Commerce’s (“Commerce”) preliminary determination. The calculations were based on data supplied by I.M.E.S. and already in plaintiffs’ possession. Plaintiffs assert a need to see the method according to which the data was organized. I.M.E.S. argues that the information is irrelevant to plaintiffs’ case because it concerns a preliminary finding and not a final determination. Here, however, the aspects of the final determination being challenged are referenced in the preliminary findings. Furthermore, since Document 50 involves confidential information which is no longer secret as to plaintiff, its disclosure to plaintiff cannot injure I.M. E. S. Therefore, the document’s possible minimal relevancy is no bar to disclosure under the terms of the strict protective order applicable to this action.

Plaintiffs next seek disclosure of certain exhibits to the verification report prepared by Commerce in connection with its investigation. Verification exhibits may properly be disclosed. Star-Kist Foods, Inc. v. United States, — CIT —, Slip Op. 84-108 at 4; American Spring Wire Corp., 566 F.Supp. at 1540; Committee of U.S. Rayon Producers v. United States, 3 CIT 177 (1982). To obtain disclosure of verification exhibits a party is not required to express a particularized need for the data. American Spring Wire Corp., 566 F. Supp. at 1540-41, quoting Atlantic Sugar Ltd. v. United States, 85 Cust.Ct. 128, 129 (1980). Nonetheless, the scope of disclosure of confidential data, as in a discovery proceeding, is not boundless. Only material that is relevant to the claims at issue in a case will be released. See Katunich v. Donovan, — CIT —, 576 F.Supp. 636, 638 (1983). In discovery, however, the concept of relevance is very broad. Heath- man v. United States Dist. Ct. for Cent. Dist. of Cal., 503 F.2d 1032, 1035 (9th Cir.1974); Dunn v. Midwestern Indemnity, 88 F.R.D. 191, 195 (S.D.Ohio 1980) (both cases discussing relevancy as required by Fed.R.Civ.P. 26(b)).

Although plaintiffs must demonstrate more than “mere curiosity or a vague groping for clues,” Atlantic Sugar Ltd., 85 Cust.Ct. at 129, the threshold of relevancy in this situation, as in ordinary discovery, is not high. As this court’s predecessor explained:

At this preparatory stage, to require plaintiffs to make an exact demonstration of how the contents of [a] document will support their attack on the administrative determinations would, in effect, require the court to make an advance judgment of the existence of substantial evidence for those determinations. Aside from demanding impossible prescience from the plaintiffs such an inquiry would result in a distorted and piecemeal judicial review.

Id.

The first series of exhibits that plaintiffs seek is the “A” series labeled “Statistics.” These documents consist of tables of customs classifications, Commerce’s monthly, yearly, and summarized calculations concerning the subject products, I.M.E.S. invoices, and a general information booklet. Plaintiffs assert that Commerce relied on the Series A data in determining that none of I.M.E.S.’s exports to the United States benefited from preferential export financing. The calculations, customs tables, and general information booklet (exhibits A-l — A-ll) do not contain customer names, trade secrets or other information that could damage I.M.E.S.’s competitive position and therefore will be disclosed. The invoices do contain customer names and other confidential information. Disclosure of customer identity and pricing information could be quite damaging to I.M.E.S.’s market position and thus balances heavily against plaintiffs’ need for the documents in order to present a case. American Spring Wire, Corp., 566 F.Supp. at 1540. Plaintiffs, however, allege that Commerce used the pricing information in part to verify the negative determination . regarding preferential export credit financing which plaintiffs challenge in this action. Without the pricing information, the documents would merely be lists of products. Plaintiff would not be able to attempt to relate the prices of I.M. E.S. exported products to the challenged program. Thus, the documents will be disclosed with the pricing information included. All customer names and addresses except the identity of the customer’s country, however, will be redacted.

Plaintiffs seek two verification exhibits from the report on rebate of indirect taxes. These documents, I.M.E.S.’s financial statements (exhibits B-6 and B-7), appear to concern I.M.E.S.’s overall financial position. The documents contain information regarding the role of exports in I.M. E.S. operations and thus are relevant to plaintiffs’ action. The documents appear to contain much confidential business information. Nonetheless, plaintiffs’ need for these documents seems to be great. Exhibit B-6, however, contains a section labeled “clienti” (clients). Disclosure of that section could damage I.M.E.S.’s market position, and does not appear to be vital to plaintiffs’ case. Therefore, that section will be redacted. Exhibits B-6 and B-7 will then be disclosed.

Plaintiffs also seek two documents from the report on preferential financing. Exhibit C-14 is a book on the Italian banking system. The exhibit appears to be a public document. It contains no confidential information which could damage I.M. E.S. or discourage future disclosure. It will therefore be disclosed.

Exhibit C-15 from the preferential financing report is an Italian document concerning short-term financing. The document contains no customer names or other secret information. Although plaintiffs have not demonstrated its relevancy, it appears that the document may be relevant and no harm will stem from its disclosure. Thus, it will be disclosed.

The final verification exhibits that plaintiffs seek are those supporting the findings on the two challenged programs. Exhibits D-l — D-23 specifically address the steel pricing scheme. Although these documents contain certain customer names and other possibly confidential information, the documents must be disclosed to allow plaintiffs to prosecute their claim. “[T]he court is unable to see how plaintiffs would be able to meaningfully challenge the Government’s findings in this action without them.” American Spring Wire Corp., 566 F.Supp. at 1540. The same rationale applies to the series of exhibits relating to export credit financing (exhibits F-l — F-21). Those exhibits were used by Commerce to support its determinations and therefore must be disclosed. In both sets of exhibits, however, customer names will be redacted.

Plaintiffs also seek disclosure of two internal memoranda which I.M.E.S. has never seen. The first document, No. 124, is an issue paper on export credit financing. This document directly relates to plaintiffs’ action and will be disclosed.

The second memorandum, Document No. 125, is an issue paper on the rebate of indirect taxes. The determination concerning this program has not been challenged. Plaintiffs, however, argue that the memorandum is needed to determine whether Commerce analyzed the two challenged negative aspects in a manner consistent with the analysis of the indirect tax rebate issue. Although this document may be only minimally relevant to plaintiffs’ claims, it does not appear to contain sensitive information which could injure I.M.E.S. if disclosed. Document No. 125 will therefore be released.

Plaintiffs’ final requests involve two letters written by I.M.E.S.’s counsel to Commerce. Plaintiffs assert that they need the first document, No. 132, which deals with I.M.E.S.’s purchase of steel from two mills, in order to challenge Commerce’s use of the “best information available” in making its final determination. This information would also be necessary for plaintiffs to meaningfully challenge the government’s findings. See American Spring Wire Corp., 566 F.Supp. at 1540. Thus, Document No. 132 will be disclosed after the customer names have been redacted.

The second letter, Document No. 133A contains I.M.E.S.’s comments on plaintiffs’ letters to Commerce concerning steel prices. The letter itself notes that I.M.E.S. had possession of the confidential versions of plaintiffs’ letters. Fairness dictates that plaintiffs be allowed to obtain the confidential version of I.M.E.S.’s reply to plaintiffs’ arguments.

The protective order previously entered in this matter, as modified herein, shall be applicable to the documents covered by this opinion. Commerce shall redact the confidential information as directed herein before disclosure of the documents.

If after this confidential information is redacted pursuant to this order, plaintiffs are unable to decipher the documents so as to proceed with their case, the court will entertain a motion for further disclosure.

It is therefore ORDERED:

1. That plaintiffs’ motion for discovery of confidential information subject to judicial protective order is granted to the extent indicated herein; and

2. That a true, accurate and complete (except for the ordered redactions) copy of the following confidential exhibits in the administrative record, together with English translations, shall be made available to plaintiffs by defendant within ten (10) days of the date of this order pursuant to the protective order previously stipulated to by the parties:

Document Number Description
50 Computerized data used in the preliminary determination.
Exhibits to
110: Verification exhibits.
Nos. A-l — A-16,
B-6, B-7, C-14
D-l — D-23 and
F-l — F-21
124 Commerce issue paper on’ export credit financing.
125 Commerce issue paper on rebate of indirect taxes.
132 Letter from Howrey & Simon to Commerce regarding steel purchased by I.M.E.S.
133A Letter from Howrey & Simon commenting on Dow, Lohnes & Albertson letters to Commerce of 9/30/83 and 10/7/83 concerning steel pricing.

      . 19 U.S.C. § 1516a(b)(2)(B) provides:
      The confidential or privileged status accorded to any documents, comments, or information shall be preserved in any action under this section. Notwithstanding the preceding sentence, the court may examine, in camera, the confidential or privileged material, and may disclose such material under such terms and conditions as it may order.

      . When plaintiffs first filed this motion, they sought disclosure of all verification exhibits relating to the findings regarding each "subsidy" program. Later, plaintiffs filed a reply to I.M.E. S.’s relevancy objections. In their reply plaintiffs greatly narrowed the scope of their request for disclosure.

      . Although disclosure of the administrative record is technically not discovery, disclosure of the administrative record and discovery serve the same purpose. Both are designed to allow a plaintiff to adequately develop and prosecute its case.

      . Defendant-intervenor urges that it should be allowed to inspect Document No. 124 before it is revealed to plaintiffs in order to allow I.M. E.S. to see if the document contains confidential material not previously exposed to plaintiffs. Because neither party has yet seen the document, early disclosure to defendant-intervenor only would give one party an advantage over another. In any case, the court is assuming that this document contains confidential information.

      . Plaintiffs also argue for disclosure on the ground that Documents 132 and 133A were not part of the original administrative record only because I.M.E.S. filed the letters thirteen days before the final determination. It is also unclear whether I.M.E.S. contests the relevancy of Documents 132 and 133A. In any event, the documents will be disclosed.


author: NEWMAN, Senior Judge:

text:
    HIDE-AWAY CREATIONS, LTD., Plaintiff, v. The UNITED STATES, et al., Defendants. CONFECCIONES GENERALES, S.A., Plaintiff, v. The UNITED STATES, et al., Defendants.
    Court Nos. 83-5-00644, 83-5-00645.
    United States Court of International Trade.
    Nov. 21, 1984.

      Kemp, Smith, Duncan & Hammond (Luis Chavez and John J. Scanlon, Jr., El Paso, Tex., of counsel), for plaintiffs.
    Richard K. Willard, Acting Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch and Sheila N. Ziff, Washington, D.C., for defendants.
    Collier, Shannon, Rill & Scott, Washington, D.C. (Lauren R. Howard and Michael R. Kershow, Washington, D.C., of counsel), for amicus curiae, Footwear Industries of America, Inc.
   NEWMAN, Senior Judge:

Introduction

The matter presently before the Court raises an issue of fundamental importance to the administration of our countervailing duty law: whether the Government is obligated by 19 U.S.C. § 1677g to pay interest on overpayments of amounts deposited as estimated countervailing duties in cases arising under 19 U.S.C. § 1303.

The parties, by motions for rehearing, seek reconsideration of the decision and amendment of the judgment in these companion cases dated April 13, 1984 (7 CIT -, 584 F.Supp. 18), respecting this Court’s holding that plaintiffs are not entitled to interest on overpayments of amounts deposited for estimated countervailing duties in connection with entries of leather wearing apparel from Mexico. Footwear Industries of America, Inc. participated in the current proceedings as amicus curiae in support of plaintiffs’ and defendants’ motions for rehearing.

Both parties contend that section 1677g requires interest be paid on overpayments of estimated countervailing duties in cases arising under section 1303, but they disagree as to the entries that are eligible for such interest. There is no dispute that the amounts deposited representing overpayments ($169,216.18) must be refunded.

Background

By decision of this Court dated December 21, 1983 (6 CIT-, 577 F.Supp. 1021) these cases were remanded to the United States Department of Commerce, International Trade Administration (ITA) for further proceedings in connection with its first annual review pursuant to section 751 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1675 (section 751) covering entries of leather wearing apparel from Mexico for the period January 14, 1981 through December 31, 1981, 40 Fed.Reg. 13474 (March 31, 1983). In brief, this Court held that ITA failed to comply with the statutory requirement for publication of notice in the Federal Register of the initiation of a section 751 review. Further, this Court found that the lack of proper notice prejudiced plaintiffs by ITA’s refusal to consider zero deposit rate certifications submitted by Confecciones, which were regarded by ITA as untimely, and by ITA’s subsequent denial of a zero deposit rate to Confecciones. The Court remanded the case directing ITA to: 1) review as part of the administrative record Confecciones’ zero deposit rate certifications and any matters pertinent thereto; 2) publish in the Federal Register supplemental final results of its review; 3) file those results with the Clerk of this Court; and 4) to serve the supplemental final results upon plaintiffs.

In compliance with the Court’s direction, on January 20, 1984 ITA submitted to the Court its “Notice of Supplemental Final Results of Administrative Review of Countervailing Duty Order” regarding leather wearing apparel from Mexico, dated January 13, 1984. The notice indicated that on remand ITA had reviewed Confecciones’ zero deposit rate certifications and determined that “the total bounty or grant for the period was zero for the firm of Confecciones”. ITA’s notice further indicated that in accordance with the supplemental final results, ITA would instruct Customs to assess no countervailing duties on shipments of plaintiffs’ leather wearing apparel from Mexico that were entered, or withdrawn from warehouse, for consumption on or after January 14, 1981 and exported on or before December 81, 1981.

Thereafter, the Court received a letter from plaintiffs’ counsel dated January 27, 1984 advising that plaintiffs approved ITA’s supplemental final results. By letter dated February 1,1984, this Court requested plaintiffs’ counsel to submit an appropriate motion and order, preferably consented to by defendants, disposing of these cases. Subsequently, counsel for both parties conferred on the appropriate form of a consent motion and order for judgment, but were unable to agree on a proposed order.

In their proposed order, plaintiffs sought judgment: 1) approving ITA’s supplemental final results; 2) releasing plaintiffs and their surety from their bond; 3) directing the Customs Service to refund all cash deposits of estimated countervailing duties tendered by Hide-Away to Customs for the entry of Mexican leather wearing apparel during the period January 14,1981 through December 31, 1981; and 4) directing the Customs Service to pay interest on all such cash deposits under 19 U.S.C. § 1677g. Defendánts’ counsel wrote on March 6, 1984 to plaintiffs’ counsel stating that “[w]e cannot agree to a motion and order which requires Commerce to do what it is statutorily mandated to do, i.e., refund cash deposits of estimated countervailing duties and release plaintiff from its bond”. Moreover, for reasons known only to themselves, defendants took no position respecting plaintiffs’ request for the payment of interest.

For the reasons stated in its decision of April 13, 1984 (7 CIT-, 584 F.Supp. 18) this Court: 1) affirmed ITA’s supplemental final results; 2) released plaintiffs and their surety from their bond; 3) directed Customs to refund all of Hide-Away’s cash deposits of estimated countervailing duties; and 4) denied plaintiffs’ request for interest.

Why Interest Was Denied

In essence, the Court "denied plaintiffs’ request for interest under 19 U.S.C. § 1677g because that provision, by its terms, provides for the payment of interest on overpayments of amounts deposited as estimated countervailing duties “on merchandise entered, or withdrawn from warehouse, for consumption on and after the date on which notice of an affirmative [injury] determination of the [International Trade] Commission [“ITC”] under section 705(b) or 735(b) [19 U.S.C. § 1671d(b) or 1673d(b) ] with respect to such merchandise is published”. The Court reasoned that inasmuch as Mexico is not a “country under the Agreement” within the meaning of 19 U.S.C. § 1671b (Mexico is a nonsignatory to the Agreement on Interpretation and Application of Articles VI, XVI and XXIII of the General Agreement on Tariffs and Trade (“Subsidies Code”)) no injury determination by the ITC under 19 U.S.C. § 1671d(b) was required in order to impose countervailing duties. Thus, an operative circumstance or prerequisite for the payment of interest under 19 U.S.C. § 1677g— viz., notice of an affirmative injury determination under section 1671d(b) — did not, and could not, occur. Consequently, the Court determined that in the case of a nonsignatory country such as Mexico, the law existing prior to the Trade Agreements Act of 1979, when no interest could be paid by the Government respecting overpayments of amounts to secure a liability for countervailing duties, is still in effect.

It was further noted that plaintiffs seek interest on their deposits of estimated countervailing duties in connection with entries on and after January H, 1981, the date of ITA’s preliminary affirmative determination. Such an award, if granted, would be more favorable than could be allowed under 19 U.S.C. § 1677g in the case of merchandise imported from a country under the Agreement for which an injury determination is required. Concluding, the Court emphasized that in the case of merchandise from countries under the Agreement, 19 U.S.C. § 1677g provides for interest on overpayments only with respect to entries on and after the date of publication of the ITC’s injury determination.

Opinion

Plaintiffs and defendants, as well as amicus, contend that the Court erred in holding that plaintiffs were not entitled to interest on amounts deposited as estimated countervailing duties. Accordingly, plaintiffs request that Point 4 of this Court’s order of April 13, 1984 be modified to award them interest on their cash deposits of estimated countervailing duties tendered to Customs for the entry of Mexican leather wearing apparel during the period January 14, 1981 (date liquidation was suspended in the preliminary affirmative determination) through December 31, 1981 (end of the review period); that interest be allowed at the annual rate or rates established by section 6621 of the Internal Revenue Code as provided 19 U.S.C. § 1677g; and that the interest be calculated from April 10, 1981 (date ITA published notice of its final affirmative countervailing duty determination) to the date plaintiffs’ entries during the period of January 14, 1981 through December 31, 1981 are liquidated. Although defendants and amicus agree that interest should be paid on plaintiffs’ cash deposits of estimated countervailing duties, they are of the view that interest is payable only on such deposits made in connection with entries of Mexican leather wearing apparel on and after April 10, 1981 —the date of ITA’s final affirmative countervailing duty determination — through December 31, 1981.

For the reasons below, the Court holds that plaintiffs are entitled to interest on their cash deposits of estimated countervailing duties, but that such interest is payable only on deposits made in connection with entries on and after April 10, 1981, the date of ITA’s final affirmative countervailing duty determination.

Prior to enactment of the Trade Agreements Act of 1979, Pub.L. No. 96-39, 93 Stat. 144 (“the Act”), effective January 1, 1980, our countervailing duty law {viz., section 303 of the Tariff Act of 1930,19 U.S.C. § 1303) did not (except in certain cases) require an injury determination as a condition precedent to the imposition of countervailing duties upon imported merchandise benefitting from a subsidy. In order to conform United States law to the Subsidies Code, such an injury test was included in the Act. The test, however, was intended to be applicable to only those countries who were signatories to the Subsidies Code. S.Rep. No. 249, 96th Cong., 1st Sess. 13, reprinted in 1979 U.S.Code Cong. & Ad. News 399. For nonsignatories to the Subsidies Code, countervailing duties would continue to be imposed without an injury determination. S.Rep. No. 249 at 43-44, 1979 U.S.Code Cong. & Ad.News 429-430.

The new countervailing duty law (Title VII added to the Tariff Act of 1930 by the Trade Agreements Act of 1979) not only introduced a “material injury” test, but also included a number of other important provisions. One such provision pertinent here is section 778 of the Act, 19 U.S.C. § 1677g, providing for interest on overpayments and underpayments of deposits. As explained in Slip Op. 84-41, prior to the Act no interest was allowed on overpayments or underpayments of amounts deposited by an importer to secure a liability for countervailing duties.

To reiterate, in 7 CIT-, 584 F.Supp. 18 the Court held that plaintiffs were not entitled to interest because Mexico is not a signatory to the subsidies code, and therefore, no injury determination by the Commission was required or was made in the present case. The Court has carefully considered the arguments of counsel for the parties and of amicus and must agree that in the present cases interest must be allowed, but only in connection with cash deposits of estimated countervailing duties on shipments of Mexican wearing apparel entered, or withdrawn from warehouse for consumption, on and after April 10, 1981 through December 31, 1981, if any.

As part of the new countervailing duty law, Congress amended 19 U.S.C. § 1303 to provide, in relevant part, as follows:

(b) The duty imposed under subsection (a) of this section shall be imposed, under regulations prescribed by the administering authority ..., in accordance with subtitle IV of this chapter [19 U.S.C. § 1671 et seq.] (relating to the imposition of countervailing duties) except that, in the case of any imported article or merchandise which is not free of duty—
(1) no determination by the United States International Trade Commission under section 1671b(a), 1671c, or 1671(b) of this title shall be required, ¡k % ¡k “k 5k
(4) any reference to determinations by the Commission, or to the suspension of an investigation under section 1671c(c) of this title which are not permitted or required by this subsection shall be disregarded.

It appears from a reading of 19 U.S.C. § 1303(b) that one of the major differences between section 1303 proceedings (for countries not “under the Agreement”) and those pursuant to 19 U.S.C. § 1671, et seq. (for countries “under the Agreement”), is that section 1671, et seq. require an affirmative injury determination by the ITC prior to the issuance of a countervailing duty order. That there is no other relevant difference in the applicable procedures is established by virtue of the reference in section 1303(b) to the provisions of 19 U.S.C. § 1671, et seq., and the requirement that “any reference to determinations by the Commission ... which are not permitted or required by ... [section 1303(b) ] shall be disregarded.” See Industrial Fasteners Group, American Importers Association v. United States, 2 CIT 181, 184, 525 F.Supp. 885 (1981); S.Rep. No. 249, at 103-104, 1979 U.S.Code Cong. & Ad.News, at 489-490.

Congress specified, with certain exceptions not pertinent to this case, that countervailing duties under section 1303 be imposed in accordance with the provisions contained in 19 U.S.C. § 1671 et seq.; hence the provisions of 19 U.S.C. § 1677g concerning interest on overpayments (and the collection of interest on underpayments) of estimated countervailing duties are also applicable to deposits of estimated countervailing duties imposed under section 1303.

It appears that interest is payable under 19 U.S.C. § 1677g in cases where section 1303 is applicable, but significantly the statute is silent as to the particular entries that are eligible for such interest. To simply “disregard” the reference in section 1677g to an injury determination, as required by 19 U.S.C. § 1303(b)(4) — without more — would leave a vital gap in the statute. While under section 1677g the Government is directed to pay interest on overpayments of countervailing duty deposits, Congress did not prescribe the time frame within which entries would be eligible for such interest in cases arising under section 1303. Congress did, however, direct the administering authority to prescribe regulations in accordance with the applicable provisions of Title VII for cases arising under 19 U.S.C. § 1303, as is clearly stated in section 1303(b): “The duty imposed under subsection (a) shall be imposed, under regulations prescribed by the administering authority ... in accordance with title VII of this Act____” Unfortunately, no regulation pertinent to the parties’ disagreement in interpretation of section 1677g has been promulgated by ITA (indeed, no such regulation has been called to the Court’s attention).

Since Congress has not expressly addressed the issue of the time frame for which interest is to be paid in the absence of a final affirmative injury determination by the Commission (nor has ITA addressed that issue by regulation), “the court must extrapolate congressional intent from areas where the expression of intent is clear, applying the more generally expressed intent to the specific issue before it”. Na tional Wildlife Federal v. Gorsuch, 530 F.Supp. 1291 (D.D.C.1982). Cf., Asahi Chemical Industry Company, Ltd. v. United States, 4 CIT 120, 548 F.Supp. 1261 (1982); Diversified Products Corporation v. United States, 6 CIT-, 572 F.Supp. 883 (1983).

While plaintiffs and (now) defendants agree that all overpayments of estimated countervailing duty deposits must be refunded, they do not agree as to the entries for which interest must be paid pursuant to section 1677g. As noted supra, plaintiffs seek interest on cash deposits of estimated countervailing duties for entries during the period January 14, 1981 through December 81, 1981, with interest to be calculated from April 10, 1981, the date ITA published notice of its final affirmative countervailing duty determination, to the date the entries are liquidated. Defendants and amicus, on the other hand, maintain that under section 1677g interest must be paid only with respect to entries on or after April 10, 1981 through December 31, 1981. Essentially, then, defendants and amicus insist that plaintiffs are not entitled to interest respecting entries made prior to April 10, 1981.

The Court agrees with the interpretation urged by defendants and amicus.

In specifying which entries would be eligible for interest under 19 U.S.C. 1677g, Congress chose the point in an investigation at which an importers’ liability for countervailing duties first becomes fixed— that is, upon ITC’s final affirmative injury determination. Following the injury determination, all that remains, then, is the purely ministerial task of publication by ITA of a countervailing duty order “[wjithin 7 days after being notified by the Commission of an affirmative determination under section 705(b).” See 19 U.S.C. § 1671e(a) (1982). Cf., Royal Business Machines, Inc. v. United States, 1 CIT 80, 86, 507 F.Supp. 1007, 1012 (1980). Where investigations under 19 U.S.C. § 1303 do not require an injury finding by the ITC, the last substantive determination is ITA’s final affirmative determination that a “bounty or grant” is being received within the meaning of section 1303. At that point, all the prerequisites for the imposition of countervailing duties on merchandise from countries not “under the Agreement” are satisfied. It is reasonable, therefore, in applying 19 U.S.C. § 1677g to the context of an investigation under 19 U.S.C. § 1303, that interest be paid only in connection with entries on and after the date of ITA’s final affirmative countervailing duty determination.

The short of the matter is: by its retention and amendment of 19 U.S.C. § 1303 for countervailing duty investigations concerning imports from countries not “under the Agreement”, Congress intended that the injury determination required by the Subsidies Code and implemented by the new Title VII of the Act would be inapplicable to countries not “under the Agreement”. In all other respects, with the exception of certain specifically exempted provisions, the new procedures of Title VII were made fully applicable to countervailing duty orders issued under 19 U.S.C. § 1303.

Furthermore, the Court finds that the most reasonable construction of section 1677g in proceedings under section 1303 is that urged by defendants and amicus.

Conclusion

In view of the conclusions reached above it is hereby ordered:

1. The parties’ motions for rehearing are granted.

2. Point 4 of this Court’s judgment in Slip Op. 84-41 issued on April 13, 1984 is amended to read as follows:

Interest shall be paid plaintiffs on their cash deposits of estimated countervailing duties in connection with Mexican leather wearing apparel entered, or withdrawn from warehouse, for consumption on or after April 10, 1981 through December 31, 1981, if any.

      . The Government previously took no position on the issue presented here. See discussion infra under "Background”.

      . The Court extended the temporary injunctions that were then in effect in these actions to twenty days after final disposition by the Court following remand.

      . The Court notes that 19 U.S.C. § 1677g provides for interest on underpayments of estimated countervailing duties as well.

      . Defendants previously raised no issue concerning the entries that are eligible for payment of interest.

      . Significantly, it has been ITA’s practice to publish notice of a countervailing duty order under 19 U.S.C. § 1303 concurrently with publication of the corresponding notice of its final affirmative determination. The countervailing duty order in the instant case is in point. See 46 Fed.Reg. 21,357 (1981).


text:
    UNITED STATES of America, Plaintiff, v. F.A.G. BEARINGS, LIMITED, Defendant.
    Court No. 84-7-01027.
    United States Court of International Trade.
    Nov. 28, 1984.

      Richard K. Willard, Acting Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Washington, D.C. (A. David Lafer and Francis J. Sailer, Washington, D.C.), for plaintiff.
    Heron, Burchette, Ruckert & Rothwell, Washington, D.C. (Thomas A. Rothwell, Jr. and John M. Dowd, Washington, D.C.), for defendant.
   Memorandum Opinion and Order

DiCARLO, Judge:

The plaintiff seeks to recover civil penalties under section 592 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1592, as in effect prior to the amendments made by the Customs Procedural Reform and Simplification Act of 1978, Pub.L. 95-410, 92 Stat. 888 (the Reform Act or new law). Defendant is alleged to have made 293 entries using documents containing false statements from January 20, 1972 to January 3, 1977.

Administrative proceedings began with the issuance of a pre-penalty notice on January 31, 1978. A notice of-penalty was issued on May 10, 1979, for the forfeiture value of the subject merchandise, $1,342,-771.00. The defendant petitioned for remission, under section 618 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1618 (1982), and the forfeiture claim was mitigated to $152,909. Defendant declined to pay that amount and plaintiff filed this suit on July 23, 1984.

Defendant now moves to dismiss the complaint for failure to state a claim for which relief can be granted, or, alternatively, for a more definite statement.

Defendant argues that the complaint fails to state a claim in that it: (1) does not state defendant’s degree of culpability under 19 U.S.C. § 1592(e)(2)-(4) (1982); (2) does not state circumstances constituting fraud with the particularity required by Rule 9(b); (3) alleges that the merchandise was entered “by means of” the false statements and (4) does not contain a plain statement of the claim as required by Rule 8(a)(2). Alternatively, defendant claims it is entitled to a more definite statement pursuant to Rule 12(e).

The Court of International Trade is asked to construe, apparently for the first time, the transition rule of the Reform Act. The transition rule provides that the judicial review provision of the Reform Act, subsection 1592(e), becomes effective on the date of enactment, October 3, 1978, while all other provisions apply in actions where administrative proceedings began after January 1, 1979.

It is a “familiar canon of statutory construction that the starting point for interpreting a statute is the language of the statute itself.” Consumer Product Safety Commission v. GTE Sylvania, Inc., 447 U.S. 102, 108, 100 S.Ct. 2051, 2056, 64 L.Ed.2d 766 (1980); see Intercontinental Fibres, Inc. v. United States, 64 CCPA 31, 33, C.A.D. 1179, 545 F.2d 744, 746 (1976).

Since administrative proceedings began in this action before January 1, 1979, the law existing prior to the Reform Act and section (e) of the new law apply. Plaintiff must show “probable cause” that the importer “was without reasonable cause to believe the truth” of its statements. The burden then shifts to the defendant to prove that there was no violation. 19 U.S.C. §§ 1592, 1615 (1976) (amended by the Reform Act).

Defendant’s contention that the complaint fails to state a claim since it does not set forth defendant’s degree of culpability is without merit. Section 1592(e)(2)-(4) (1982) requires application of the new law burdens of proof only “if the monetary penalty is based on fraud” or “based on gross negligence,” or “based on negligence.” Where the penalty is based on the old law, as here, and the defendant is alleged to have been “without reasonable cause to believe the truth” of its statements, subsections (2)-(4) have no application.

The action is subject only to subsection (1) of section 1592(e), which provides for de novo review of the amount of the penalty.

Defendant’s second contention in support of its motion to dismiss is also without merit. Since the plaintiff does not have to prove fraud under the old law, Rule 9(b) does not apply to this action.

Defendant’s third argument is that the complaint failed to state a violation because the merchandise was not entered “by means of” the false statements. Defendant relies on United States v. Teraoka, 669 F.2d 577 (9th Cir.1982), where the Ninth Circuit Court of Appeals held that 18 U.S.C. § 542, the criminal law analogue of section 1592, was violated only where the false statements resulted in the importation of merchandise that was otherwise ex-cludable.

The Court finds nothing in the legislative history of section 1592 or its antecedents to show that Congress intended the statute to apply only to prohibited merchandise. The Senate Report on the bill that was to become the 1978 Reform Act stated that the purpose of section 1592 was “to encourage accurate completion of the entry documents upon which Customs must rely to assess duties and administer other customs laws.” S.Rep. No. 778, 95th Cong., 2d Sess. 17, reprinted in 1978 U.S.Code Cong. & Ad.News 2211, 2229. It is unlikely that Congress would emphasize that section 1592 was intended to allow Customs to properly “assess duties” if the statute was meant to apply only to prohibited merchandise.

Courts have always applied section 1592 and its antecedents to nonprohibited merchandise. See, e.g. United States v. Twenty-five Packages of Panama Hats, 281 U.S. 358, 34 S.Ct. 63, 58 L.Ed. 267 (1913). Defendant’s interpretation would “emasculate that provision, depriving the United States Government of one of its more effective and widely-used customs civil enforcement statutes.” United States v. F.A. G. Bearings, Corp., 8 CIT_, Slip Op. 84-109 (Oct. 4, 1984), at 15.

The Court holds that section 1592 applies to the merchandise entered by the defendant.

Defendant’s fourth ground is that’ the complaint does not contain a plain statement of the claim as required by Rule 8(a)(2).

Rule 8(a)(2) requires only “a short and plain statement of the claim showing that the pleader is entitled to relief.” The purpose of the identical Rule 8(a)(2) of the Federal Rules of Civil Procedure is to “give the defendant fair notice of what the plaintiff’s claim is and the grounds upon which it rests____ Such simplified ‘notice pleading’ is made possible by the liberal opportunity for discovery and other pretrial procedures established by the Rules____” Conley v. Gibson, 355 U.S. 41, 47-48, 78 S.Ct. 99, 102-103, 2 L.Ed.2d 80 (1957); see United States v. Appendagez, Inc., 5 CIT-, 560 F.Supp. 50, 54 (1983).

Count I of the complaint alleges:

... defendant or its agent ... falsely described the imported merchandise as “ball bearings with integral shafts”, dutiable at 6 percent under item 680.33, Tariff Schedules of the United States, when, in fact, the merchandise was ball/roller bearings with integral shafts, dutiable at 7.5 percent plus 1.7 cents per pound, under item 680.35, Tariff Schedules of the United States.

Complaint, Paragraph 7.

Count II of the complaint alleges that “declarations made and invoices filed ... by defendant or its agent with its entries falsely stated the home market price of the imported merchandise.” Complaint, Paragraph 13.

The complaint identifies 293 entries by entry numbers, dates of entry, part numbers, quantity and weight, and domestic forfeiture value. Complaint, Annex A.

The Court holds that the complaint is sufficient to give the defendant fair notice of plaintiff’s claim.

Finally, defendant’s request for a more definite statement under Rule 12(e) is also denied. As demonstrated above, plaintiff’s complaint is not “so vague or ambiguous that a party cannot reasonably be required to frame a responsive pleading” as the Rule requires.

IT IS HEREBY ORDERED that defendant’s motion to dismiss, or, alternatively, for a more definite statement is denied.

      . Rule 9(b) of this Court states in part:
      In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity.

      . Pub.L. 95-410, § 110(f)(1), 92 Stat. 888, 897 (1978) (codified at 19 U.S.C. § 1592 note (1982)).
      Section 110(f) of the Reform Act reads in part:
      (1)(A) Except as provided ... subsections (a), (b), and (c) (other than new subsection (e) of section 592 of the Tariff Act of 1930 as added by subsection (a)) ... shall be effective with respect to proceedings commenced after the 89th day after the date of enactment of this Act [Oct. 3, 1978],
      (C) ... subsection (e) of section 592 of the Tariff Act of 1930 (as added by subsection (a)) shall be effective on the date of enactment of this Act.

      . Section 1592(e) (1982) states:
      Notwithstanding any other provisions of law, in any proceeding commenced by the United States in the Court of International Trade for the recovery of any monetary penalty claimed under this section—
      (1) all issues, including the amount of the penalty, shall be tried de novo;
      (2) if the monetary penalty is based on fraud, the United States shall have the burden of proof to establish the alleged violation by clear and convincing evidence;
      (3) if the monetary penalty is based on gross negligence, the United States shall have the burden of proof to establish all the elements of the alleged violation; and
      (4) if the monetary penalty is based on negligence, the United States shall have the burden of proof to establish the act or omission constituting the violation, and the alleged violator shall have the burden of proof that the act or omission did not occur as a result of the negligence.

      . The legislative history makes clear that by "proceedings” the rule refers to administrative proceedings. See H.R.Conf.Rep. No. 1517, 95th Cong., 2d Sess. 13, reprinted in 1978 U.S.Code Cong. & Ad.News 2211, 2255.

      . Under the new law, Customs must allege "fraud,” "gross negligence,” or "negligence,” or a combination thereof. The maximum penalty and the burden of proof vary for each standard. See 19 U.S.C. § 1592(c)(l)-(3), (e)(2)-(4) (1982).

      . The Court disagrees with dictum in United States v. R.I.T.A. Organics, Inc., 487 F.Supp. 75, 77 n. 4 (N.D.Ill.1980), stating that defendant's "alleged degree of culpability ... is important with respect to plaintiff's burden of proof” in an old law case.

      . The purpose of the exception in the transition rule for section (e) was to make immediately effective this major reform of the new law. See H.R.Conf.Rep. No. 1517, 95th Cong., 2d Sess. 11-13, reprinted in 1978 U.S.Code Cong. & Ad. News 2211, 2253-55.
      Under the old law, the only penalty that could be assessed in a section 1592 action was forfeiture of the merchandise involved or a penalty equal to the domestic value of the merchandise. Procedurally, Customs made the initial demand for forfeiture. Upon the filing of a petition by the importer under section 1618, Custqms cquld mitigate the penalty. The importer then risked an all or nothing suit by the government if it refused to pay the amount requested. "Thus, the major deficiency in the [section 1592/1618] procedure was the absence of any meaningful judicial review of an administrative process.” Note, Anachronism Laid to Rest: Customs Reform Act Accomplishes Long Overdue Reform of Section 592 of the Tariff Act of 1930, 10 Law and Pol’y in Int’l Bus. 1305, 1314 (1978).


author: WHITE, District Judge.

text:
    Charles T. GRIFFITH, Plaintiff, v. COMMISSIONER OF INTERNAL REVENUE, Defendant.
    No. C82-3391.
    United States District Court, N.D. Ohio, E.D.
    Feb. 15, 1983.
    Charles Griffith, pro se.
    John M. Siegel, Asst. U.S. Atty., Cleveland, Ohio, for defendant.
   MEMORANDUM AND ORDER

WHITE, District Judge.

According to plaintiff’s complaint, on September 3, 1982 the Internal Revenue Service (IRS) sent plaintiff a letter claiming that his W-4 form did not meet the requirements of Internal Revenue Code § 3402 and informing him that his employer would be directed to disregard the W-4 form and withhold monies from his paycheck as if he were single and claiming one (1) withholding allowance. By letter dated September 14, 1982 plaintiff informed the IRS of his reasons for completing the W-4 form in the allegedly illegal manner. However the IRS notified his employer to proceed withholding as if plaintiff were single, claiming one deduction and also notified him that it was assessing a penalty of five hundred dollars ($500) under 26 U.S.C. § 6682(a). Upon receiving this notice plaintiff requested the IRS to inform him of the proper procedure for appeal. On November 26, 1982 plaintiff received notice from the IRS of its right to levy upon wages, bank accounts, receivables, or any other kind of income in order to collect the five hundred dollars ($500) penalty.

This matter is before the Court upon the plaintiffs motion for a temporary restraining order to enjoin the IRS from collecting any penalty under 26 U.S.C. § 6682(a) and the government’s motion to dismiss for lack of jurisdiction.

The primary issue in this case is whether the anti-injunction provision of the Internal Revenue Code prevents the court from granting the relief requested. 26 U.S.C. § 7421(a) provides:

“Except as provided in SS6212(a) and (c), 6213(a), 6672(b). 6694(c), 7426(a) and (b)(1), and 7429(b), no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed.”

The purpose of the Anti-Injunction Act is to give the United States a free hand in assessing and collecting taxes without intervention by the courts and to limit determination of disputed sums to suit for refund. Matter of Carlson, 580 F.2d 1365 (10th Cir.1978).

Plaintiff was required to pay a penalty under 26 U.S.C. § 6682 authorizing a five hundred dollar ($500) penalty for making a statement under § 3402 which results in a decrease in the amounts deducted and withheld when there was no reasonable basis for such statement. Although the assessment is a penalty it is still considered a tax and comes within the meaning of the anti-injunction statute. Crouch v. Commissioner of Internal Revenue Service, 447 F.Supp. 385 (N.D.CA 1978). 26 U.S.C. § 6671(a) provides:

The penalties and liabilities provided by this Subchapter [B] shall be paid upon notice and demand by the Secretary or his delegate and shall be collected in the same manner as taxes. Except as otherwise provided, any reference in this title to ‘tax’ imposed by this title shall be deemed also to refer to penalties and liabilities provided by this subchapter.”

Section 6671 treats all penalties imposed by Subchapter B as taxes insofar as their assessment and collection is concerned. The penalty pursuant to § 6682 is found in Sub-chapter B.

An exception to the Anti-Injunction Act is permitted if it is clear that under no circumstances the government can ultimately prevail and the taxpayer shows that he would otherwise suffer irreparable injury. Enochs v. Williams Packing Company, 370 U.S. 1, 82 S.Ct. 1125, 8 L.Ed.2d 292 (1962), Commissioner of Internal Revenue v. Shapiro, 424 U.S. 614, 96 S.Ct. 1062, 47 L.Ed.2d 278 (1976).

The plaintiff contends that the government cannot prevail in the assessment or collection of the penalty because his Fifth Amendment due process rights were denied. Specifically he argues that he cannot be deprived of property without due process consisting of a right to a trial or hearing before the tax is paid as well as the right to sue for recovery after payment. Prejudgment garnishment of wages to collect this penalty is such a deprivation of due process.

Under the Internal Revenue Code, when any person owing a federal tax refuses or fails to pay within ten (10) days after notice and demand, the Secretary or his delegate shall collect the tax and necessary expenses by levy upon all property not otherwise exempted from levy belonging to such person or in which there is a lien for payment of the tax. If there is a finding that the collection of the tax is in jeopardy, notice and demand may be made for immediate payment without regard for the ten (10) day period. 26 U.S.C. § 6331(a).

Several courts have held that as long as there is an adequate opportunity for post seizure determination of rights, the summary tax collection procedures of the Internal Revenue Code meet the requirements of due process. Myers v. United States, 647 F.2d 591 (5th Cir.1981) citing G.M. Leasing Corp. v. United States, 429 U.S. 338, 352, n. 18, 97 S.Ct. 619, 628 n. 18, 50 L.Ed.2d 530 (1977). Phillips v. Commissioner, 283 U.S. 589, 595-98, 51 S.Ct. 608, 611-12, 75 L.Ed. 1289 (1931). Commissioner v. Shapiro, supra. 424 U.S. at 630-32 and n. 12, 96 S.Ct. at 1072-73 and n. 12, Ginter v. Southern, 611 F.2d 1226 (8th Cir.1979) cert. denied 446 U.S. 967, 100 S.Ct. 2946, 64 L.Ed.2d 827 (1980).

26 U.S.C. § 6682(c) excludes tax court jurisdiction concerning this five hundred dollar ($500) penalty. However once the penalty is paid the plaintiff may sue to recover improper penalties in a district court pursuant to 28 U.S.C. § 1346.

Plaintiff’s claim that the manner of collection of the penalty violates his Fifth Amendments rights is without merit. He has attempted to show that the government cannot prevail in the collection of the penalty because to do so prior to hearing would deprive him of his Fifth Amendment constitutional rights. Case law dictates otherwise. Plaintiff asserts that prejudgment attachment of wages results in irreparable injury citing several cases, none of which involve the collection of taxes by the United States. Federal taxes, including remedies for collection have been determined to be an important right of the government independent of legislative action of the states. Matter of Carlson, supra. The power of the government to levy is essential to the self assessment tax system because it encourages voluntary compliance with the tax laws and furthers the collection of taxes which are essential to the continuance of the government. Matter of Carlson, supra. Since the constitutionality of levying on a taxpayer’s property prior to a hearing if a post seizure hearing is available has been upheld, plaintiff has not shown that the government will not prevail in the collection of the penalty. Therefore the Anti-Injunction Act is applicable and the motion of the defendant to dismiss for lack of jurisdiction is granted.

IT IS SO ORDERED.