ORDER
LOUISE FLANAGAN, Chief District Judge
This matter comes before the court on plaintiffs' motion for reconsideration (DE # 254) and defendant's motion for leave to register judgment immediately (DE # 256). The issues raised are ripe for ruling. For the reasons that follow, both motions are denied.
BACKGROUND
On September 28, 2007, the court denied plaintiffs' motion for summary judgment on its declaratory claims, granted defendant's motion for summary judgment as to the breach of contract and declaratory counterclaims, but denied defendant's motion for summary judgment as to its counterclaims for fraud and unfair and deceptive trade practices (herein "liability order"). At that time, the amount of damages and plaintiffs' alternative claim regarding set-off charges were left unresolved. Following this determination, plaintiffs initiated various appeals and the matter did not return to the court until September 2009. In December 2009, the parties filed various motions relating inter alia to remand and damages.
On March 15, 2010, the court denied plaintiffs' motion to remand, granted in part defendant's motion for partial summary judgment on damages, and denied plaintiffs' motion for partial summary judgment as to its set-off claims (herein "damages order"). The court ordered plaintiffs collectively to pay defendant $31,764,194.08 plus interest at the federal legal rate from date of entry of judgment. On March 17, 2010, the clerk entered judgment.
On April 14, 2010, plaintiffs moved for reconsideration of judgment pursuant to Federal Rule of Civil Procedure 59(e). On May 5, 2010, defendant moved for leave to register judgment immediately pursuant to 28 U.S.C. § 1963. It is undisputed that plaintiffs lack sufficient assets in this district to satisfy the instant judgment. (Def.'s Mem. Supp. Mot. for Leave to Register J. Exs. D-F.) Plaintiffs, however, have refused to provide information regarding the location of their assets, citing in part the instant motion for reconsideration before the court. (Id.)
DISCUSSION
A. Motion to Alter or Amend Judgment
Pursuant to Federal Rule of Civil Procedure 59(e), a court may amend or alter its judgment. Amendment is proper "(1) to accommodate an intervening change in controlling law; (2) to account for new evidence not available at trial; or (3) to correct a clear error of law or prevent manifest injustice."Zinkand v. Brown, 478 F.3d 634, 637 (4th Cir. 2007). "Rule 59(e) motions may not be used, however, to raise arguments which could have been raised prior to the issuance of the judgment, nor may they be used to argue a case under a novel legal theory that the party had the ability to address in the first instance." Pac. Ins. Co. v. Am. Nat'l Fire Ins. Co., 148 F.3d 396, 403 (4th Cir. 1998). Further, "reconsideration of a judgment after its entry is an extraordinary remedy which should be used sparingly." Id. (quoting 11 Charles Alan Wright et al., Federal Practice and Procedure § 2810.1 (2d ed. 1995)).
Here, plaintiffs argue the judgment should be amended because (1) the court incorrectly treated the liability order as law of the case; (2) factual issues exist as to whether some of plaintiffs' traffic was voice over internet protocol ("VoIP") and, thus, summary judgment was improper; (3) it was improper to grant defendant summary judgment for transit charges; (4) factual questions exist as to charges for access service requests ("ASRs") and point of presence ("POP") moves; and (5) recent rulings suggest the summary judgment orders should be revisited. Plaintiffs' arguments fail.
1. Treatment of the Liability Order as Law of the Case
Plaintiffs first contend that the damages order must be reconsidered because it relied on the liability order. Plaintiffs argue the liability order is clearly erroneous, and thus, the court must revisit its determinations. Specifically, plaintiffs contend the liability order's interpretation of the ICAs is contrary to the plain meaning of those agreements, which exclude certain types of traffic, such as VoIP from charges. Plaintiffs cite in support provisions of the ICAs which define telecommunications and provide limitations as to which traffic can be charged as switched access traffic. As a result of these provisions, plaintiffs argue charges cannot be levied on VoIP traffic. In the alternative, plaintiffs argue the liability order is erroneous because the terms of the contracts are ambiguous.
Plaintiffs, however, acknowledge that "[i]t appears that the [liability order] failed to deal with the [these] definitions and key clauses because they may not have been raised by either party at that point." (Pls.' Mem. Supp. Mot. For Recons. 6.) In other words, plaintiffs now seek to raise new arguments regarding interpretation of the ICAs. Plaintiffs contend they have not waived these arguments because (1) interpretation of a contract is a question of law and (2) they are raising the issue now.
The instant circumstances do not warrant reconsideration. Rather, plaintiffs' argument illustrates they simply seek to relitigate liability by presenting arguments that they chose not to raise when originally opposing defendant's summary judgment motion on liability. This is precisely the type of situation in which reconsideration is inappropriate. See Pac. Ins. Co., 148 F.3d at 403. That plaintiffs' new argument rests on contract clauses and an alternative argument of contractual ambiguity does not change the result. See Kona Enters. v. Estate of Bishop, 229 F.3d 877, 890 (9th Cir. 2000) (finding plaintiff had waived argument based on choice-of-law provision in agreement when plaintiff first raised the argument in a motion for reconsideration). In support of their motion for summary judgment, plaintiffs argued defendant's charges were precluded under federal law; further, plaintiffs argued the contractual provisions were irrelevant on this point because they were preempted. (Pls.' Mem. Supp. Summ. J. 13-19, Dec. 19, 2006.) In opposing defendant's motion for summary judgment on liability, plaintiffs again argued that federal law precluded defendant's charges. (Pls.' Mem. Opp. Summ. J. 7, Jan. 22, 2007.) On neither occasion did plaintiffs raise the instant contractual provisions or argue the terms of the contracts were ambiguous, preventing summary judgment. For strategic reasons or otherwise, plaintiffs chose not to raise these arguments earlier. As a result, these arguments are waived and the court declines to revisit them here.
2. Factual Issues Regarding VoIP Traffic
Plaintiffs next argue that factual issues exist regarding whether certain traffic was VoIP traffic. Plaintiffs are correct that the court did not determine what quantity of the traffic was VoIP or enhanced. Such a determination, however, is unnecessary as the liability order found that transit charges apply regardless of whether the traffic is categorized as VoIP traffic. (Corrected Order 8, Sept. 28, 2007; Order 12, March 15, 2010.) As such, this is not a ground on which to reconsider the court's earlier orders.
3. Propriety of Summary Judgment on Transit Charges, ASRs, and POP Moves
Plaintiffs next argue that they should not be liable to defendant for certain transit charges. They also argue that the propriety of defendant's charges for ASRs and POP moves are disputed. With respect to transit charges, plaintiffs rehash points raised in prior briefing, such as that these charges cannot apply to a forwarder of calls and that some calls originated on defendant's network. Regarding charges for ASRs and POP moves, plaintiffs again argue that they are not liable for these costs. In support, plaintiffs rely on evidence previously submitted and supplemental briefing to bolster their argument. The court already found that plaintiffs' showing on these issues was insufficient to avoid summary judgment and the time for supplemental briefing on this issues has passed. Plaintiffs' arguments do not raise issues of newly discovered evidence or implicate manifest injustice but rather only display plaintiffs' dissatisfaction with the court's decisions. Without more, such dissatisfaction does not warrant reconsideration of prior summary judgment orders.
4. Recent Developments in the Law
With respect to plaintiffs' final argument regarding recent developments in the law, plaintiffs point to decisions by the district courts for the District of Columbia and the Southern District of Ohio which address charges for VoIP traffic. As decisions of these courts are not controlling or binding on this court, the recent decisions of these districts are an inadequate basis on which to revisit the instant judgment. Accordingly, the court need not parse these decisions here.
B. Motion for Leave to Register Judgment
A judgment may be registered "by filing a certified copy of the judgment in any other district . . . when the judgment has become final by appeal or expiration of the time for appeal or when ordered by the court that entered the judgment for good cause shown." 28 U.S.C. § 1963. Good cause is shown where there is "an absence of assets in the judgment forum, coupled with the presence of substantial assets in the registration forum."Columbia Pictures Television, Inc. v. Krypton Broad. of Birmingham, Inc., et al., 259 F.3d 1186, 1197-98 (9th Cir. 2001) (quotations omitted). There is some disagreement as to whether a motion for leave to register judgment is only timely if an appeal is pending. Compare Spray Drift Task Force v. Burlington Bio-Med. Corp., 429 F. Supp.2d 49, 51 (D.D.C. 2006) (finding there is no requirement that an appeal must be pending in order to move to register judgment), with Educ. Emp. Credit Union v. Mut. Guar. Corp., 154 F.R.D. 233, (E.D. Mo. 1994) (finding a motion to register judgment is premature where an appeal is not yet pending).
Assuming defendant's motion is timely, it has failed to meet the good cause standard at this juncture. Here, plaintiffs admit they have insufficient assets in North Carolina to satisfy the instant judgment. (Def.'s Mem. Supp. Mot. for Leave to Register J. Exs. D-F). Defendant, however, fails to offer evidence regarding the specific district(s) where plaintiffs have assets. Without further information, the court finds good cause lacking at this time and denies defendant's request. Of note, however, defendant's insufficient showing is a result of plaintiffs' refusal to provide such information. (Id.) Should defendant dispute the propriety ofplaintiffs' refusal to answer defendant's post-judgment interrogatories, it should file a motion to compel. If defendant later obtains specific information regarding the presence of plaintiffs' assets in another specific district, it may renew its request to register judgment.
CONCLUSION
For the reasons given, plaintiffs' motion for reconsideration (DE # 254) and defendant's motion for leave to register judgment immediately are DENIED (DE # 256).
SO ORDERED.
s 35-36. According to defendant's argument, subparagraph (G) transfers only authority to compromise claims "with respect to matters for
which Commerce was given authority by virtue of section 5(a)(1)(C), such as determining whether to issue an antidumping order and the rate of duties determined in an administrative review,"
id., and that "Customs retains substantial authority with respect to matters following the issuance of a final determination by Commerce and the issuance of liquidation instructions."
Id. at 36. Defendant contends, further, that "[p]articularly with respect to the issues that SHA is most concerned about in this suit payment by sureties upon a bond Customs has broad discretion," relying on
Hartford Fire Insurance Co. v. United States, 544 F.3d 1289, 1294 (Fed. Cir. 2008), and
United States v. Hanover Insurance Co., 82 F.3d 1052, 1054 (Fed. Cir. 1996). Mot. to Dismiss 36.
Plaintiffs have the better argument. Subparagraph (G) of the Reorganization Plan transfers to Commerce all functions pursuant to Section 617, i.e., all functions pertaining to the cancellation of claims, "with respect to the functions transferred by subparagraph (C)." Reorganization Plan, § 5(a)(1)(G), 44 Fed. Reg. at 69,275. The functions transferred by subparagraph (C) included the functions of determining what antidumping duties are to be assessed and collected and determining what "deposits, bonds, or other security" are appropriate to secure payment of antidumping duties. Id. § 5(a)(1)(C), 44 Fed. Reg. at 69,275. Under the exception in subparagraph (C), Customs is to assess and collect antidumping duties as directed by the Commerce Secretary and accept the security that the Commerce Secretary deems appropriate. Id. The language of subparagraph (C) under which Customs is to "assess and collect" antidumping duties does not connote retention of authority to compromise claims for those duties. Id. Defendant's construction of the exceptions in subparagraph (C) is overly broad in presuming retention in Customs of a specific function, the compromising of claims for
antidumping duties, that the plain language of the Reorganization Plan neither requires nor implies. The function of assessing and collecting antidumping duties are distinct from the function of compromising claims for those duties. An established canon of construction is that exceptions to general principles are to be construed narrowly. See Comm'r v. Clark, 489 U.S. 726, 739 (1989); 2A Norman J. Singer, Sutherland on Statutes and Statutory Construction § 47:11, at 331 (7th ed. 2007) ("Where a general provision in a statute has certain limited exceptions, all doubts should be resolved in favor of the general provision rather than the exceptions."). Thus, the better construction of the Reorganization Plan is that Customs may not act on its own to compromise antidumping duties and may do so only with the direction or participation of the Secretary of Commerce. Defendant's reliance on Hartford Fire Insurance Co., 544 F.3d at 1294, and Hanover Insurance Co., 82 F.3d at 1054, is misplaced. Neither case holds that Customs, under the Reorganization Plan, retained authority to compromise claims for antidumping duties.
Although rejecting defendant's construction of the Reorganization Plan, the court still is unable to conclude that relief can be granted on the claim plaintiffs assert in Count Twelve, in which plaintiffs allege as follows:
Based on the limited Customs data available to Plaintiffs, Customs has not publicly accounted for all AD duties assessed under the China NSR Orders during FY 2001 through FY 2008 as having been either collected or not collected by that agency. On information and belief, some if not all of the AD duties assessed under the China NSR Orders during FY 2001 through FY 2008 for which Customs has not accounted are assessed AD duties that Customs has unlawfully compromised in violation of
19 U.S.C. § 1617. On information and belief, at least some of such compromised AD duties were secured by new shipper bonds, and were compromised by Customs through a legal process that excluded the Plaintiffs and Class members that are intended third-party beneficiaries of such bonds.
Compl. ¶ 201. To the extent plaintiffs base their claim on their alleged status as intended third-party beneficiaries on the new shipper bonds, they lack standing because they do not qualify as intended third-party beneficiaries. Sioux Honey I, 34 CIT at ___, 700 F. Supp. 2d at 1348.
To the extent that the claim can be construed to be based on something other than plaintiffs' purported beneficiary status, the claim still fails, as plaintiffs fail to allege facts according to which the injury they claim to have incurred resulted from the conduct to which they object, i.e., the compromising of antidumping duties without the direction or participation of Commerce. In Count Eleven, the only relevant factual allegations in the complaint are that "Customs has not publicly accounted for" the assessed antidumping duties, and that some, if not all, of the unaccounted-for duties were "unlawfully compromised" by Customs. Compl. ¶ 201. The complaint adds that
[a]s a result of Customs' unlawful compromise of AD duties . . . Customs is unable to collect such duties, and has directly injured Plaintiffs and Class members by depriving them of (1) the remedial benefits of the China NSR Orders intended by the AD law; [and] (2) their constitutionally protected property interest in assessed AD duties under the China NSR Orders as ADPs and Contingent ADPs under those orders.
Id. ¶ 203. Although the complaint does not so state explicitly, the court infers from Count Twelve, considered as a whole, that plaintiffs allege that the compromising was contrary to law because it occurred without Commerce's direction or participation. Other than the untenable contention that the duties were compromised by Customs through a process that was unlawful because it excluded plaintiffs and class members, whom plaintiffs erroneously identify as intended third-party beneficiaries of the bonds, nothing in Count Twelve enables the court to infer an additional reason why plaintiffs consider the alleged compromising unlawful.
Plaintiffs could be injured by the loss of remedial benefits of antidumping duty orders and CDSOA distributions only if duties were not collected that would have been collected but for the alleged unlawful conduct. But absent from Count Twelve is an allegation that any government official compromised antidumping duties that could have been, and should have been, collected to safeguard the public fisc. The allegation that "Customs has not publicly accounted for all AD duties assessed under the China NSR Orders during FY 2001 through FY 2008 as having been either collected or not collected by that agency," id. ¶ 201, does not suffice because it fails to allege "but for" causation. Although plaintiffs allege an injury in fact, the action complained of compromising of antidumping duties by the wrong government agency in itself cannot be the cause of the injury plaintiffs allege they incurred. The allegation that Customs is "unable" to collect certain antidumping duties "[a]s a result of Customs' unlawful compromise of AD duties," id. ¶ 203, is circular: Customs is unable to collect any duties once a claim for such duties is "compromised," whether Commerce authorized the compromising or not. The generalized allegations in Count Twelve, when assumed to be true, impermissibly leave to the court the task of speculating as to whether plaintiffs could qualify for some form of relief. See Bell Atl., 550 U.S. at 555. Count Twelve, therefore, must be dismissed according to USCIT Rule 12(b)(5).
It is unclear how the court, in response to the demand for relief, could "hold unlawful and set aside Customs' compromise of AD duties assessed under the China NSR Orders." Compl. ¶ 205 (emphasis added). At least some of the duties alleged to be unlawfully compromised would need to be collected from importers who are not parties to this action.
G. Claims that Customs Wrote Off Uncollected Antidumping Duties (Count Thirteen)
In Count Thirteen, plaintiffs allege on information and belief that "Customs has written off as uncollectible, or intends to write off as uncollectible, uncollected AD duties assessed under the China NSR Orders," Compl. ¶ 207, and that in so doing, Customs has violated and will violate various statutes and regulations. Id. ¶¶ 208-210. As a threshold matter, the claim is defective in failing to allege that an agency action actually has occurred. A mere intention to act unlawfully to write off duties as uncollectible, absent extraordinary circumstances calling for emergency equitable relief (not alleged here), is not agency action ripe for judicial review. See U.S. Ass'n of Imps. of Textiles Apparel v. U.S. Dep't of Commerce, 413 F. 3d 1344, 1349-50 (Fed. Cir. 2005).
Even if the court were to construe Count Thirteen to challenge an agency action that has occurred or is so imminent that judicial review may obtain, Count Thirteen would fail to state a valid claim in alleging that "Customs did not and will not meet the requirements and conditions of 31 U.S.C. § 3711(a)(1) with regard to any or all of the AD duties assessed but not collected under the China NSR Orders that Customs has written off, or intends to write off, as uncollectible." Compl. ¶ 208. The statutory provision on which plaintiffs rely provides in pertinent part that the head of an executive agency "shall try to collect a claim of the United States Government for money or property arising out of the activities of . . . the agency." 31 U.S.C. § 3711(a)(1) (2006). Plaintiffs cite no facts which, if presumed to be true, would allow the court to conclude that Customs has violated or is about to violate 31 U.S.C. § 3711(a)(1). The provision on which plaintiffs rely does not prohibit an agency from determining that a claim for duties is uncollectible. In alleging merely that Customs either has, or is about to, write off uncollected duties, plaintiffs have done nothing beyond identifying the statute and alleging that Customs, in some unspecified way, has violated the statute or is about to do so. Thus, were this claim ripe for review, it still would be dismissed as speculative. See Bell Atl., 550 U.S. at 555.
Second, plaintiffs claim that "Customs did not and will not meet the requirements and conditions of 31 C.F.R. § 901.1(a) with regard to some or all AD duties that were assessed but not collected under the China NSR Orders, and which Customs has written off, or intends to write off, as uncollectible." Compl. ¶ 209. Plaintiffs rely on language in the Federal Claims Collection Standards, under which "[f]ederal agencies shall aggressively collect all debts . . ." arising out of their activities or referred to them for collection, and under which "[c]ollection activities shall be undertaken promptly with follow-up action taken as necessary." 31 C.F.R. § 901.1(a) (2009); see Compl. ¶ 209. Here also, plaintiffs fail to allege facts from which the court could conclude that Customs has violated, or is about to violate, § 901.1(a). The regulations cannot plausibly be construed to require the impossible collection of an uncollectible debt and essentially all that plaintiffs allege is that Customs is writing off debt as uncollectible or is about to do so.
Plaintiffs allege a violation of Section 631(a) of the Tariff Act of 1930, which directs the Treasury Secretary to "enter into contracts and incur obligations with one or more persons for collection services to recover indebtedness arising under the customs laws" and conditions the obligation with the words "but only after the Customs Service has exhausted all administrative efforts, including all claims against applicable surety bonds, to collect the indebtedness." 19 U.S.C. § 1631(a) (2006). The only pertinent "fact" alleged in support of this claim is "[o]n information and belief, Customs did not and will not meet the requirements and conditions of 19 U.S.C. § 1631(a) with regard to some or all AD duties that were assessed but not collected under the China NSR Orders and that Customs has written off, or intends to write off, as uncollectible." Compl. ¶ 210. This vague allegation fails to identify what Customs did or did not do (or is about to do) in violation of 19 U.S.C. § 1631(a).
The provision reads in full as follows:
Notwithstanding any other provision of law, the Secretary, under such terms and conditions as the Secretary considers appropriate, shall enter into contracts and incur obligations with one or more persons for collection services to recover indebtedness arising under the customs laws and owed the United States Government, but only after the Customs Service has exhausted all administrative efforts, including all claims against applicable surety bonds, to collect the indebtedness.
19 U.S.C. § 1631(a) (2006).
Finally, plaintiffs allege "[o]n information and belief" that "in writing off as uncollectible AD duties assessed under the China NSR Orders, Customs has failed to meet other statutory and regulatory obligations required of that agency before it may write off such AD duties." Compl. ¶ 211. This claim is devoid of any specific factual allegation and legal basis.
Due to the lack of ripeness, Count Thirteen must be dismissed under USCIT Rule 12(b)(1). Were the claims therein construed to contest a final government action, they still would offer insufficient factual allegations to state a claim upon which relief can be granted. See Bell Atl., 550 U.S. at 555.
H. Claim that Customs Unlawfully Canceled, or Intends to Cancel, New Shipper Bonds or Charges Thereunder (Count Fourteen)
In Count Fourteen, plaintiffs direct their claim to the alleged failure of Customs to publish guidelines on the exercise of authority to cancel customs bonds and charges thereunder, as required by Section 623(c) of the Tariff Act of 1930, 19 U.S.C. § 1623(c) (2006), and the Freedom of Information Act, 5 U.S.C. § 552(a)(1)(C)-(D) (2006). Compl. ¶¶ 216-225. Plaintiffs state in Count Fourteen that the lack of such published guidelines renders unlawful a cancellation of a new shipper bond or a charge under such bond. Id. ¶ 219.
Because Count Fourteen relies upon the Administrative Procedure Act ("APA") for a cause of action, Compl. ¶ 222 (citing 5 U.S.C. § 706(2)(A)-(D)), the court first must construe Count Fourteen to ascertain the agency action being challenged. See Motions Systems Corp. v. Bush, 437 F.3d 1356, 1359 (Fed. Cir. 2006). The court observes, first, that nothing in Count Fourteen indicates that plaintiffs are challenging a failure by Customs to issue guidelines. Instead, the claim challenges as unlawful cancellations of bonds or charges effected in the absence of such guidelines. See Compl. ¶¶ 219-220, 222. The court's construction of the claim is consistent with the nature of the relief plaintiffs seek. Rather than relief directing Customs to issue guidelines, plaintiffs request that the court "hold unlawful and set aside Customs' cancellation of any new shipper bond, or any charge to such bond" and "compel and order Customs to cease and refrain from unlawfully canceling any new shipper bond, or any charge to such bond." Id. ¶ 225.
Construing the claim as a challenge to the failure to issue guidelines would raise questions of standing, as plaintiffs do not claim to be principals or sureties on customs bonds and are not intended third-party beneficiaries on the customs bonds that are the subject of many of the claims in their case. See Compl. ¶¶ 6-8; Sioux Honey Ass'n v. Hartford Fire Ins. Co., 34 CIT ___, ___, 700 F. Supp. 2d 1330, 1348-49 (2010) (" Sioux Honey I").
Despite basing their claim on unlawful cancellation of bonds and charges, plaintiffs, paradoxically, fail to allege any specific instance in which Customs actually has canceled a new shipper bond or charge against a new shipper bond. Plaintiffs only state "[o]n information and belief" that "Customs has cancelled, or intends to cancel, one or more new shipper bonds, or charges to such bonds, that secure the payment of assessed AD duties on imports subject to the China NSR Orders." Id. ¶ 221 (emphasis added). Similarly, plaintiffs contend that "Customs' actual or intended cancellation of any new shipper bond, or any charge to such bond, violates or would violate Section 1623(c) and Section 552(a)(1)(C) and (D), and constitutes, or would constitute, final agency action. . . ." Id. ¶ 222 (emphasis added). Thus, if Customs has not effected one of the cancellations to which plaintiffs refer a possibility left open by their pleading the agency action on which plaintiffs base their claim has yet to occur. Moreover, there is no allegation in Count Fourteen of imminent irreparable harm that will result to plaintiffs from an agency action that is about to be taken. Upon assuming plaintiffs' factual allegations to be true, the court cannot conclude that the stated claim is ripe for judicial review. See U.S. Ass'n of Imps., 413 F.3d at 1349-50. Therefore, the claim in Count Fourteen must be dismissed according to USCIT Rule 12(b)(1).
Even were the court able to construe the claim in Count Fourteen to allege irreparable harm from an imminent agency action, it still would be required to dismiss this claim under USCIT Rule 12(b)(5). Plaintiffs are incorrect in concluding that 19 U.S.C. § 1623(c) and the Freedom of Information Act would invalidate a cancellation of a new shipper bond or a charge under such bond for lack of the published guidelines. See Compl. ¶ 219.
Section 623(c) of the Tariff Act of 1930 authorizes the Treasury Secretary to cancel a bond or a charge against a bond, in the event of breach of a bond condition, "upon the payment of such lesser amount or penalty or upon such other terms and conditions as he may deem sufficient." 19 U.S.C. § 1623(c). The statute further provides that "[i]n order to assure uniform, reasonable, and equitable decisions, the Secretary of the Treasury shall publish guidelines establishing standards for setting the terms and conditions for cancellation of bonds or charges thereunder." Id. Plaintiffs allege that Customs has failed to publish the guidelines that § 1623(c) expressly requires. Compl. ¶ 217.
The provision requiring Customs to publish guidelines for cancellation of bonds or charges was added to Section 623(c) in 1988 by the Omnibus Trade and Competitiveness Act. Omnibus Trade and Competitiveness Act of 1988, Pub.L. No. 100-418, § 1904, 102 Stat. 1107, 1313 (1988). Nothing in the amending statute indicates that Congress intended to condition on the issuance of the required guidelines the exercise of the long-standing authority to cancel bonds or charges. Nor is there an indication of such an intent in the legislative history of the 1988 amendment. See id.; H.R. Rep. No. 100-576 (Conf. Rep.), as reprinted in 1988 U.S.C.C.A.N. 1547. The court concludes that plaintiffs have based their claim on an invalid construction of Section 623(c).
In Count Fourteen, plaintiffs claim that the cancellations of bonds and charges against bonds were unlawful because Customs failed to satisfy the requirement in the Freedom of Information Act that an agency publish in the Federal Register, for the guidance of the public, its rules of procedure and substantive rules of general applicability. Compl. ¶ 218. Plaintiffs impliedly allege that Customs has adopted such procedures. Id. ("Customs has failed to meet these requirements for the procedures it has adopted for exercising its authority to cancel customs bonds under Section 1623(c)."). Here also, the assumed existence of such unpublished procedures is not a basis on which any bond or charge cancellations could be held to be invalid. Although the Freedom of Information Act, 5 U.S.C. § 552(a)(1)(C) and (D), requires an agency to publish its rules of procedure and its generally-applicable substantive rules and statements of general policy, nothing in the Freedom of Information Act states or suggests the conclusion plaintiffs would have the court draw: that bond or charge cancellations grounded in the statutory authority of 19 U.S.C. § 1623 are invalid due to the agency's failure to publish guidelines.
Plaintiffs also allude in Count Fourteen to a claim that Customs, by cancelling new shipper bonds or charges thereunder that pertain to antidumping duties, has acted contrary to law because, according to plaintiffs, antidumping duties "can only be compromised by Commerce under 19 U.S.C. § 1617." Compl. ¶ 220. This reference in Count Fourteen reiterates a claim made in Count Twelve, which is dismissed for failure to state a claim upon which relief can be granted, as discussed previously in this Opinion.
Therefore, the court concludes that plaintiffs' claim in Count Fourteen must be dismissed pursuant to USCIT Rule 12(b)(1) for lack of ripeness. See U.S. Ass'n of Imps., 413 F.3d at 1349-50. And, in the alternative, even were the court able to construe the claim in Count Fourteen to allege irreparable harm from an imminent agency action, it still would be required to dismiss this claim under USCIT Rule 12(b)(5) for failure to state a claim upon which relief can be granted.
I. Claim that Customs Failed to Provide Prosecution Notices (Count Fifteen)
Plaintiffs' claim in Count Fifteen involves alleged failures by Customs to provide notices to the Department of Justice for collection of unsatisfied demands on sureties. Compl. ¶¶ 226-235. Plaintiffs base their claim on a provision of the Customs regulations, 19 C.F.R. § 113.52, which requires Customs, in the event a customs bond "is unsatisfied upon the expiration of 90 days after liability has accrued under the bond," to report the matter "to the Department of Justice for prosecution unless measures have been taken to file an application for relief or protest . . . or to satisfactorily settle the matter." 19 C.F.R. § 113.52 (2009); see Compl. ¶¶ 230-231, 233-235. As relief, plaintiffs seek, inter alia, an order compelling Customs to provide the Justice Department with overdue notices and to provide timely notices henceforth. Compl. ¶ 235.
The complaint does not cite this provision but erroneously cites to 19 C.F.R. § 114.52, a nonexistent provision. Compl. ¶¶ 230-231, 233-235.
Upon crediting all facts alleged in Count Fifteen, the court is unable to conclude that plaintiffs have established beyond the speculative level their right to relief on their claim. Plaintiffs allege "[o]n information and belief" that "Customs has failed to provide Justice with Section 11[3].52 Notices for its claims under one or more new shipper bonds that secure the payment of assessed AD duties on imports subject to one of the China NSR Orders." Id. ¶ 233. They also allege "[o]n information and belief" that "Customs has issued one or more demands to the Surety Defendants for performance under new shipper bonds that are final as to those defendants." Id. ¶ 228. Count Fifteen adds that Hartford (certain of the dismissed defendants in Sioux Honey I, 34 CIT at ___, 700 F. Supp. 2d at 1352) has admitted that demands for performance under customs bonds are final as to it. Compl. ¶ 228. Stating that the Justice Department is unable to bring a lawsuit for collection of duties from a surety absent the notice from Customs, id. ¶ 231, plaintiffs allege that "[b]ased on Plaintiffs' review of this Court's docket, Justice, to date, has not filed any collections lawsuit against any Surety Defendant for performance under a new shipper bond." Id. ¶ 232.
The "Hartford defendants" include Hartford Fire Insurance Company, Hartford Accident and Indemnity Company, Hartford Casualty Insurance Company, Hartford Insurance Company of Illinois, Hartford Insurance Company of the Midwest, and Hartford Insurance Company of the Southeast. The Hartford Defs.' Mot. to Dismiss the Compl. 1 n. 1 ("Hartford Mot."); see Sioux Honey I, 34 CIT at ___, 700 F. Supp. 2d at 1352.
The regulation on which plaintiffs rely does not impose a rigid requirement that Customs refer to the Justice Department for collection any demand on a surety for payment of duties that is unsatisfied upon the expiration of 90 days after liability has accrued under the bond. Customs is directed by the regulation to make the referral "unless measures have been taken . . . to satisfactorily settle the matter." 19 C.F.R. § 113.52. Plaintiffs' claim does not address the measure of discretion that the regulation permits government officials with respect to satisfactory settlement. There is no allegation in Count Fifteen of any specific instance in which there has been neither a referral by Customs nor measures taken to "satisfactorily" settle the liability.
And, although referring to the statute of limitations for collection actions, Compl. ¶ 231 (citing the six-year general statute of limitations in 28 U.S.C. § 2415(a) (2006)), Count Fifteen does not allege, either in general or with respect to any specific demand on a surety, that the Justice Department is now unable to file a collection action because Customs neglected to make a timely referral of a collectible claim against a surety on a new shipper bond. See id. ¶¶ 226-235. Moreover, any such allegation would appear to be precluded by the six-year statute of limitations applying to an action by the United States to collect on an unsatisfied demand on a surety. Under 28 U.S.C. § 2415(a), any failure of Customs to make a referral for prosecution that occurred within the two years prior to the initiation of this action (as required by the statute of limitations in 28 U.S.C. § 2636(i) (2006) for actions brought under 28 U.S.C. § 1581(i)) could not yet have resulted in a time-barred collection action.
The alleged fact that the Justice Department has not filed collection lawsuits against sureties on new shipper bonds, if presumed true, does not establish that Customs has acted contrary to 19 C.F.R. § 113.52. For example, it is conceivable that, subsequent to referral, circumstances caused Justice Department officials to decide not to initiate a collection action. Count Fifteen does not claim that the Justice Department impermissibly failed to initiate collection lawsuits; moreover, any such claim, in attempting to challenge the exercise of enforcement discretion, would be beyond judicial review. See Heckler v. Chaney, 470 U.S. 821, 832 (1985).
Because the factual allegations offered to support the claim in Count Fifteen do not suffice to allow the court to conclude that the prospect of relief is anything but a matter of speculation, Count Fifteen must be dismissed as required by USCIT Rule 12(b)(5) and Bell Atlantic, 550 U.S. at 555.
J. Motion for Jurisdictional Discovery, Other Pending Motions, and Entry of Judgment
Plaintiffs filed on March 18, 2010 a motion, opposed by defendant, to take discovery in the form of interrogatories seeking information in support of subject matter jurisdiction for their claims against the United States. Pls.' Mot. for Jurisdictional Discovery. On April 13, 2010, plaintiffs moved for oral argument on this motion, Pls.' Mot. for Oral Argument Regarding Pls.' Mot. for Jurisdictional Discovery, and on April 14, 2010 moved for oral argument on defendant's motion to dismiss. Pls.' Mot. for Oral Argument Regarding the Gov't's Mot. to Dismiss. On April 29, 2010, plaintiffs moved for leave to file a reply to defendant's response to plaintiffs' motion for jurisdictional discovery. Pls.' Mot. for Leave to File a Reply to the Gov't's Resp. to Pls.' Mot. for Jurisdictional Discovery Mot. for Oral Argument Concerning Request for Jurisdictional Discovery. The court will grant the motion for leave to file the reply for purposes of ruling on the motion to allow discovery and, because the court is denying the motion to allow discovery and granting defendant's motion to dismiss, will deny as moot plaintiffs' motions for oral arguments.
In their motion to take discovery and thereby obtain answers to their interrogatories, plaintiffs maintain that their allegations "are more than sufficient to establish this Court's jurisdiction over Plaintiffs' claims brought under the Administrative Procedure [] Act," Pls.' Mot. for Jurisdictional Discovery 1, but add that "to the extent the Court determines that more detailed allegations and/or supporting evidence is required, Plaintiffs move this Court for leave to take discovery relating to subject matter jurisdiction." Id. at 2. Plaintiffs indicate that their motion to take discovery is, at least in part, in response to defendant's argument that plaintiffs may not obtain judicial review because they fail to identify specific instances in which the government has acted, or failed to act, contrary to law. Id. ("The crux of the Government's argument is that in order to establish subject matter jurisdiction, Plaintiffs must allege, on an entry-by-entry and/or bond-by-bond basis, each specific instance in which the Government has acted or failed to act in the manner alleged in the Complaint."). Plaintiffs argue that "the information necessary to identify such instances is in the Government's sole control." Id. The court concludes, after considering plaintiffs' motion for discovery in the individual contexts of the nine remaining counts in this litigation, that the motion should be denied.
The court observes, first, that plaintiffs include interrogatories directed to Counts Eight, Nine, Twelve, Thirteen, and Fourteen even though the contemplated discovery could not benefit plaintiffs with respect to the claims in those counts. See Pls.' Interrogatories to the Gov't Relating to Jurisdiction ("Pls.' Interrogatories"). The claim in Count Seven, that Customs must allow them to participate in protest proceedings as a matter of due process, fails for a reason lack of the property interests on which plaintiffs base their due process claim outside the scope of the intended discovery. For Counts Eight and Nine, plaintiffs, due to their own admissions, cannot demonstrate an injury in fact and, therefore, lack standing to maintain the claims therein, either on their own behalf or on behalf of the members of their proposed class. For Count Twelve, plaintiffs' interrogatories seek information on individual entries "for which Customs has wholly or partially cancelled or compromised under 19 U.S.C. § 1617 that Entry's Amounts Assessed and/or Post-Liquidation Interest," Pls.' Interrogatories 7, including the dates of each action, the amounts compromised, the amounts paid in lieu of the full amounts assessed, and whether the collected amounts were distributed under CDSOA. Id. at 7-8. The claim in Count Twelve fails, however, for two reasons that would not be addressed by the information sought in the interrogatories. Those two reasons are that plaintiffs are not intended third-party beneficiaries on the new shipper bonds and that the action plaintiffs challenge the compromising of claims without the direction or participation of the Commerce Department has no causal relationship to the injury they allege. Count Thirteen fails for lack of ripeness, but even were discoverable facts to overcome this deficiency, plaintiffs could qualify for no relief because they erroneously conclude that the writing off of antidumping duties is contrary to various statutes and regulations that do not place a blanket prohibition on the writing off of obligations owed the United States. Count Fourteen also fails for lack of ripeness, and even were discoverable facts to allow a ripe claim that Customs has canceled a new shipper bond or charge, that claim still would be invalid because plaintiffs err in concluding that the absence of published guidelines by Customs would invalidate such a cancellation. In summary, the discovery plaintiffs want to conduct will be of no benefit with respect to the claims in Counts Seven, Eight, Nine, Twelve, Thirteen, and Fourteen.
Plaintiffs do not address directly in their interrogatories the claim in Count Seven. See Pls.' Interrogatories to the Gov't Relating to Jurisdiction ("Pls.' Interrogatories").
The court's dismissals of the remaining three counts in the complaint, Counts Ten, Eleven, and Fifteen, result in part from plaintiffs' failures to make specific factual allegations of unlawful government actions. As to each, the court concludes that plaintiffs' motion to conduct jurisdictional discovery should not be granted. Taken together, these three counts pursue a theory that CDSOA distributions received by plaintiffs would have been greater but for either the failure by Customs to distribute collected duties or the distribution by Customs of duties it should not have distributed (Count Ten), the failure of Customs to make one or more demands on a surety or sureties for antidumping duties secured by a new shipper's bond (Count Eleven), and the failure of Customs to report to the Department of Justice instances in which a surety's liability under a customs bond is unsatisfied 90 days after liability has accrued, "unless measures have been taken to file an application for relief or protest . . . or to satisfactorily settle the matter," 19 C.F.R. § 113.52 (Count Fifteen).
In Count Ten, plaintiffs fail to state that any action or inaction definitely occurred and allege only that Customs either failed to distribute collected duties it should have distributed or distributed duties it should not have distributed. See Compl. ¶¶ 184-190. With respect to Count Ten, plaintiffs seek detailed, entry-specific information from Customs on the amounts of antidumping duties assessed, collected, and distributed on all entries of merchandise subject to one of the Four Orders that qualify for distribution under CDSOA. Pls.' Interrogatories 7-8. The court declines to allow this broad, and burdensome, discovery in support of Count Ten, which states no definite claim, alleges no specific facts, and requires a degree of speculation that the Supreme Court considered unacceptable in Bell Atlantic, 550 U.S. at 555.
Plaintiffs seek to support their claim in Count Eleven by obtaining entry-specific information concerning various bonds and the issuing sureties, including information on whether, when, and in what amounts demands were made on the bonds and on the sureties' responses to the demands. Pls.' Interrogatories 8-9. Count Eleven, however, alleges no specific facts and makes only the bare allegation that Customs, "on one or more occasions, has failed to issue a demand that a Surety Defendant perform under one or more new shipper bonds." Compl. ¶ 193. The claim lacks even an allegation that the demand or demands that did not occur are now untimely. Plaintiffs have failed to allege facts that would suffice even as a threshold to justify the extensive jurisdictional discovery they propose.
In support of Count Fifteen, plaintiffs seek detailed information on every bonded entry subject to a new shipper review under one of the Four Orders for which payment of duty was
ever delinquent, including date of issuance of any notice under 19 C.F.R. § 113.52, information on protests related to the entry that were filed by the principal or surety, and information on settlement measures. Pls.' Interrogatories 10. The scope of information sought for Count Fifteen is overly broad and unjustified by the claim stated in that count, which is deficient in failing to recognize the degree of discretion imparted by 19 C.F.R. § 113.52 and the effect of the six-year statute of limitations applying to collection actions.
In summary, the claims in Counts Ten, Eleven, and Fifteen rest on only vague factual allegations which, if assumed to be true, do not establish a right to relief beyond the speculative level. They must be dismissed now for failure to satisfy the pleading standard the Supreme Court set forth in Bell Atlantic, 550 U.S. at 555. The high degree of speculation called for by these claims makes questionable plaintiffs' implied premise that burdensome discovery should be allowed because it might lead to claims upon which this litigation could proceed.
Certain publicly available information relied on by plaintiffs for their discovery motion provides an additional reason why the motion to allow discovery should not be granted. This information indicates that facts are not likely to be uncovered that will overcome the deficiencies in Counts Ten, Eleven, and Fifteen. Specifically, in opposing the government's motion to dismiss and in seeking permission to conduct jurisdictional discovery, plaintiffs submit various materials addressing under-collection of antidumping duties under the Four Orders, including two declarations of one of their attorneys, Mr. Michael J. Coursey. Pls.' Opp'n to Defs.' Mots. to Dismiss, Attach. A; Pls.' Mot. for Jurisdictional Discovery, Attach. B. Plaintiffs summarize these materials generally as signifying that "[a]ccording to its own documents, the Government failed to collect almost $900 million in AD duties assessed under the Four Orders during the past seven years, and in fact collected less than 7 percent of the total AD duties assessed during this period." Pls.' Reply to the Gov't's Resp. to Pls.' Mot. for Jurisdictional Discovery Mot. for Oral Argument Concerning Request for Jurisdictional Discovery 1. Both of the declarations of Mr. Coursey cite, and rely in part on, a 2008 report of the U.S. Government Accountability Office ("GAO"). See Pls.' Opp'n to Defs.' Mots. to Dismiss, Attach. A; Pls.' Mot. for Jurisdictional Discovery, Attach. B; U.S. General Accounting Office, Report to Congressional Requesters, Antidumping Countervailing Duties: Congress Agencies Should Take Additional Steps to Reduce Substantial Shortfalls in Duty Collection, GAO-08-391, at 20-22 (Mar. 2008), http://www.gao.gov/new.items/d08391.pdf (last visited Aug. 25, 2010) ("2008 GAO Report"). The GAO concluded that more than $613 million in assessed antidumping duties went uncollected from Fiscal Years 2001 through 2007, that 84% of that amount resulted from uncollected antidumping duties on entries of Chinese-origin goods subject to one of the Four Orders, and that an estimated 40% of that amount involved entries of merchandise from exporters who had new shipper status. 2008 GAO Report 13-14. The report found that more than one-third of the uncollected duties were owed by only four importers and that 63% of the uncollected duties were owed by only 20 importers. Id. at 16.
The GAO identified four key factors for the uncollected antidumping duties: (1) the retrospective component of the antidumping and countervailing duty system, which creates the risk of uncollected duties because assessed duties can exceed cash deposits and bond amounts, id. at 20-24; (2) new shipper reviews, which previously permitted bonding instead of cash deposits and also pose a risk by allowing a new shipper to obtain a low deposit rate going forward that is based on a few unrepresentative transactions or even a single transaction, id.
at 24-26; (3) the standard bond formula Customs uses, which according to the GAO "provides little protection of AD/CV duty revenue because it sets bond amounts at a low level," id. at 20; and (4) the lack of background or financial checks on importers, id. at 28-29. The individual amounts owed by the 20 importers who together owed, as of September 2007, 63% of the total of more than $613 million in uncollected antidumping duties ranged from a high of $122 million to a low of $7 million. Id. at 15-16. The insufficiency of the bonding was revealed as a huge factor in the uncollectibility of the duties, as the reported bonding covered only a minuscule percentage (less than one percent) of the duties owed by those 20 importers. See id. at 16. Of the 20 importers, 11 importers had a bond of $50,000 (the minimum allowed by Customs for any continuous bond, see Monetary Guidelines for Setting Bond Amounts, Directive 99-3510-004 (July 23, 1991),
http://www.cbp.gov/linkhandler/cgov/trade/legal/directives/3510-004.ctt/3510-004.txt (last visited Aug. 25, 2010) (" Bond Directive")), two had bonds of $60,000, and the highest bond of the group, $700,000, belonged to the importer who owed the most antidumping duties, $122 million. 2008 GAO Report 16. A 2003 report of the U.S. Treasury Department's Inspector General on CDSOA implementation, cited to and relied upon by plaintiffs, also identified bond sufficiency as a problem. Pls.' Opp'n to Defs.' Mots. to Dismiss, Attach. A, Ex. 1, at 5. A July 2007 U.S. Treasury Department report, "Duty Collection Problems FY 2003-2006," upon which plaintiffs also rely, is definitive on the cause of under-collection of retrospectively assessed duties:
Of the $939.3 million in antidumping and countervailing duties that were retrospectively assessed in fiscal years 2003-2006, 55 percent ($512.9 million) remains uncollected.
The reason CBP is less successful collecting duties billed after entry is that they are not fully secured by bonds or cash deposits.
Id., Attach. A, Ex. 3, at 3 (emphasis added). The GAO also concluded that the extent of uncollected AD/CV duties is affected by unresolved legal protests, which account for about 43% of the value of uncollected AD/CV duties. 2008 GAO Report 3, 17.
The GAO noted that according to the Office of Chief Counsel of Customs, which is responsible for referring unsatisfied duty claims to the Department of Justice for collection, nearly $290 million of the $350 million of unpaid antidumping and countervailing duties that are in the collection process have slim prospects of collection, id. at 3, 13, "because many of the importers involved have disappeared, have no assets, or have declared bankruptcy," id. at 4. Customs told the GAO that prospects are particularly unfavorable for collecting supplemental duties from foreign importers, which unpaid duties present high costs of collection that may exceed any amount actually collected. Id. at 29. The report also states that "[t]he Office of Chief Counsel reports that it is currently working with Justice to collect over $80 million in outstanding AD/CV duties from two sureties that are undergoing insolvency proceedings." Id. at 18.
The GAO identified deemed liquidations that occurred from October 2004 through June 2007 at a frequency of approximately one percent on 3.1 million entries subject to antidumping duties. Id. at 33. The GAO found that "[t]he potential revenue lost or gained on entries deemed liquidated appears minimal," that the vast majority of the total of 37,000 deemed liquidations during that period appeared to cause no gain or loss of revenue, that 507 of them cost the government $106,000 in lost revenue, and that 171 of them should have resulted in approximately $1.5 million in refunds to importers. Id. at 34.
In summary, the outcome of the discovery plaintiffs seek to conduct could not cure the defects in the claims in Counts Seven, Eight, Nine, Twelve, Thirteen, and Fourteen of the complaint. It is unlikely to cure the defects in the claims in Counts Ten, Eleven, and Fifteen, for which any possible benefit would not justify the burdensome discovery plaintiffs propose. For these reasons, the court concludes that the discovery motion should be denied.
Having concluded that all counts in the complaint must be dismissed, the court further concludes that judgment dismissing the action should be entered at this time. Plaintiffs have given no indication of an intention to amend their complaint, even though they have had ample time to do so; it has been nearly one year since the United States filed its motion to dismiss on September 4, 2009. See Mot. to Dismiss. A court is not required to provide, sua sponte, the opportunity to amend a complaint, particularly in the absence of any intention by a plaintiff to do so. See Demings v. Nationwide Life Ins. Co., 593 F.3d 486, 492 (2010) (6th Cir. 2010) (stating that "it is not incumbent upon a district court to craft a litigant's complaint, especially when it is dealing with sophisticated parties" and citing Sinay v. Lamson Sessions Co., 948 F.2d 1037, 1042 (6th Cir. 1991) ("[A] district court does not abuse its discretion in failing to grant a party leave to amend where such leave is not sought.")); Wagner v. Daewoo Heavy Indus. Am. Corp., 314 F.3d 541, 542 (11th Cir. 2002) ("A district court is not required to grant a plaintiff leave to amend his complaint sua sponte when the plaintiff, who is represented by counsel, never filed a motion to amend nor requested leave to amend before the district court."); Royal Business Group, Inc. v. Realist, Inc., 933 F.2d 1056, 1066 (1st Cir. 1991) (declining plaintiffs' request to amend the complaint and explaining that before the district court, "plaintiffs had the option of filing an amended complaint at any time during the eleven-month period that the motion to dismiss was pending but chose not to exercise that option" (citations omitted)).
Because plaintiffs have not chosen to amend their complaint and instead propose to conduct discovery in the event the court finds insufficient the claims in the complaint as drafted, the court need not consider the question of whether an amended complaint would be futile. Even so, there is reason to conclude that the contemplated discovery would not lead to information supporting claims upon which relief could be granted. The court can appreciate that under-collection of duties on entries subject to any of the Four Orders has reduced substantially the antidumping duties available for distribution to plaintiffs under the CDSOA. Nevertheless, the apparent causes of the under-collection, according to findings by the GAO and other sources upon which plaintiffs rely in seeking discovery, are not those upon which plaintiffs base the theory upon which they are suing the government. The causes of the under-collection as found by the GAO and others i.e., missing or insolvent importers of record, grossly insufficient bonding (including bonding in new shipper reviews), the potential for low cash deposit rates resulting from new shipper reviews conducted on a small number of transactions, and some duty collection actions delayed by protests would not be remediable through judicial review on any theory on which plaintiffs could bring an action under the APA and 28 U.S.C. § 1581(i).
III. CONCLUSION
For the reasons stated above, all claims brought against the United States in Counts Seven through Fifteen of the complaint must be dismissed. Because the discovery plaintiffs seek would produce no benefit that would justify the broad scope, and potential burden, of that discovery, plaintiffs' discovery motion will be denied. Judgment will be entered dismissing this action.