Pleading is the New Black

Every litigator knows the importance of pleadings. The complaint is the document that sets the parameters of your case. If you claim someone trespassed on your property, the complain needs to say that you own the property and that the defendant was there uninvited. For years, the federal courts have held parties to a standard called "notice pleading." Under this standard, the plaintiff needs to tell the defendant enough to notify the defendant the nature of the claim against it and the basic facts supporting the claim. The notice pleading standard was intended to avoid having meritorious claims dismissed on technicalities and make sure that plaintiffs get their day in court.

The pleading pendulum has swung a bit back toward a more technical style of pleading. Under a 2007 Supreme Court decision, plaintiffs need to include sufficient factual allegations to raise the right to relief above speculation even when read with the assumption that all the facts are true. So, it is not sufficient to plead the conclusion plaintiff hopes to be able to prove after completing discovery. We can debate whether that was ever sufficient, but it is clearly not enough now.

Recently, pleading has been an issue in cases at the Court of International Trade. This was an issue in Tip Top Pants and in Totes. Now, it is an issue in Nereida Trading Co., Inc. v. United States.

The specific issues in this decision have to do with whether Nereida properly plead claims under the fifth amendment and the Administrative Procedure Act.

The fifth amendment theory was that Customs and Border Protection improperly applied the presumption that Nereida had been reimbursed for antidumping duties because it failed to file a timely certificate to the contrary. According to the Court, the elements of a fifth amendment due process claim are a lack of both notice and an opportunity to be heard that results in a a fundamental unfairness under the circumstances. According to the facts it asserted, Nereida received prior notice of Customs' intent to liquidate based on the assumption of reimbursement and failed to timely respond. Thus, it did not plead a fifth amendment case.

The second issue involves the Administrative Procedure Act. The importer filed a typical customs protest, which CBP denied. That creates an opportunity for judicial review under 19 USC 1514 and 28 USC 1581(a). Nereida also claims a right to relief for an alleged "violation" of the APA. The problem with this claim is that the APA provides for judicial review under the Act only where there is no other adequate remedy in a court. Nereida asserted a claim seeking the same relief under 1851(a) and did not plead any facts showing that review of the denied protest was an inadequate remedy. Plus, the Court held that recognizing an independent cause of action allowing to APA review of protestable decisions would frustrate the remedy provided for in 19 USC 1514.

Accordingly, the Court dismissed both counts. There are other claims (including the denied protest) that remain alive in this case. So, there is probably more to this story. In the meantime, the takeaways from the case seem to be:
  • The CIT is looking closely at pleadings and is amenable to Rule 12(b)(5) motions to dismiss
  • Late responses and unfair results do not constitute a lack of due process
  • The APA neither trumps nor complements the existing scheme for judicial review of protestable decision.

Comments

Post a Comment

Popular posts from this blog

CAFC Decision in Double Invoicing Case

The Federal Circuit has issued a decision on the merits in United States v. Inn Foods, Inc.  There had been a previous decision on jurisdiction, which was followed by a trial at the Court of International Trade and then this appeal on the substance. The initial issue is whether Inn Foods' invoicing practice amounts to fraud.  Inn Foods had been receiving an invoice from growers in Mexico that had a relatively low sales prices on it.  Subsequent to entry, Inn Foods created a second invoice at something more similar to market value, retaining the original invoice number, and paid at that higher amount.   Superficially, this looks like a standard-issue double-invoicing scheme.  But, in the age of reconciliation, is it really more like a provisional pricing mechanism?  It might have been possible to make that argument had Inn Foods adjusted its entries accordingly.  It didn't and the loss of revenue was approximately $624,000.  Based on testimony and evidence indicating both knowl
Read more

Target on Finality

Image
In the last post , about the Federal Circuit’s very important decision on due process and allegations of evasion of antidumping duties, I made a snarky, offhand comment that the government believes “liquidation is magic.” That was in the context of the government arguing that Customs’ liquidation of entries mooted an appeal, thereby taking away the importer’s right to further judicial review. I said that knowing full well that I still needed to write this post summarizing Target Corp. v. United States in which Target made what I want to be a valid and righteous argument that Customs’ improper liquidation of entries at a favorable rate of antidumping duty prevents the Court of International Trade from ordering Customs to collect the legally applicable duties. But it turns out that while liquidation is an important legal step, in at least one unusual circumstance it is not sufficiently powerful to overcome the full force of an Article III court. Understanding this case requires a lot
Read more

CAFC: EAPA Process Really Does Violate Due Process

Image
Hot on the heels of my complaining about how the EAPA law and process is stacked against importers, the Court of Appeals for the Federal Circuit has issued an important decision that will have a major impact on how those cases work. If you are unfamiliar with evasion cases under the Enforce and Protect Act and how Customs and Border Protection handles them, go back and look at these two posts: Part 1 , Part 2. Royal Brush Manufacturing, Inc. v. United States , is the decision in an evasion case against Royal Brush involving pencils allegedly transshipped from China through the Philippines. Customs determined that there was evasion of an antidumping duty order based in part on evidence that was not disclosed to Royal. Specifically, Customs sent a representative to the facility in the Philippines to photograph the interior and provide a report. Customs refused to disclose all the photographs to Royal. Moreover, CBP's report concluded that the facility did not have sufficient capacit
Read more