Tuesday, October 15, 2013

No Money, No Day in Court

E&S Express Inc. and Simon Ying v. United States, is another of those exasperating cases where a technicality prevents a judgment on the merits. That said, let me absolutely clear that the technicality involved is unquestionably the law and not something the Court could or should have ignored. Nevertheless, the result stinks for the importer.

Much like the most recent International Custom Products case involving imported white sauce, the sole question here is whether E&S has taken all the steps necessary to secure jurisdiction for the U.S. Court of International Trade to review a protest U.S. Customs and Border Protection denied. The two necessary steps are (1) a timely summons and (2) payment to Customs of all liquidated duties, fees, and taxes. It is the second prong that is the problem here.

E&S imported wooden bedroom furniture from China, which is subject to an antidumping duty order. At the time of entry, E&S deposited the estimated antidumping duties. Subsequent to importation, Customs billed  E&S for additional antidumping duties, to the tune of $76,895. That bill arrived after importation, after the goods had been sold, and about 10 months ater E&S dissolved. E&S protested the assessment, which was subsequently and separately rescinded by Commerce. But, E&S never paid the duties.

After Customs denied the protest, E&S filed suit in the Court of International Trade. The government then moved to dismiss based on E&S's failure to pay the duties.

E&S raised a number of arguments including that the retroactive application of the duty assessment against a dissolved company violated the company's due process rights. More interesting, E&S pointed out that its surety bond of $50,000 covered six of the nine entries at issue and, therefore, Customs could have collected duties on some of the entries. According to E&S, the Court should find the presence of the bond and the opportunity for Customs to collect sufficient to give the Court jurisdiction over at least six of the entries.

The Court did not see a way to do that. The statute, 28 U.S.C. § 2636(a)(1), is clear that the party seeking judicial review must pay the duties before getting its day in Court. E&S, having failed to satisfy that requirement, has not perfected its claim. The Court of International Trade, therefore, had no jurisdiction and the Court dismissed the case.

That said, this can be an onerous requirement. That is far more clear from the International Custom Products case. Perhaps Congress should consider an alternative whereby the plaintiff secures a bond to proceed in Court. That is how appeals work in many courts, which require a bond to secure payment of the judgment. From a litigation strategy position, E&S might have been able to work out a deal by which Customs denied only a single protest to serve as a test. E&S would then have been able to deposit a smaller sum of money and proceed to a judgment on the merits. I recognize that is nothing more than Monday morning quarterbacking, but it might have worked. Obviously, that would also depend on the good graces of Customs.

Lastly, if E&S is out of business, I wonder if there is any way for CBP to collect. If this case is really about protecting Mr. Ying, Counsel for E&S should be sure to read Trek Leather.

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