Thursday, August 28, 2014

Reservations about the Reserve Calendar

Customs cases present a few unique challenges to potential litigants in the U.S. Court of International Trade. One of those that every unfavorable liquidation of a customs entry stands alone as a possible claim to be brought to the Court for review. Often, multiple entries are grouped together into a single protest and the denied protest forms the basis of the case. The plaintiff initiates the case by filing a summons, rather than a complaint as is done in most courts. The summons puts the case on the Court's Reserve Calendar (see Rule 83) where it can sit for 18 months or more if the Court grants an extension. Sometimes, the cases sit on the Reserve Calendar for substantially more than 18 months.

Why is this the process? Because the typical customs case involves a small potential refund but is often one in a series of many similar potential cases that are worth litigating in the aggregate. To facility the resolution of issues covering many entries and many protests, the Court allows cases to sit on the Reserve Calendar and pile up. The plaintiff then has several options for how to proceed.

As far as I know, the most common approach is for the plaintiff to select one representative case as a "test case" under Rule 84. Once a test case is designated, cases with the same questions of law and fact can be suspended pending the outcome of the test case. When the test case is finally resolved, the parties can usually agree to stipulated judgments in the suspended cases. In some circumstances, it may turn out that the judgment in the test case is not applicable to the some of the suspended cases. When that happens, those cases need to proceed to judgment. Sometime, not often, one side or the other just does not like the result in the test case and will proceed to litigate again in the hope of getting a different result. In customs law, because each denied protest is a separate case, we can have serial litigation of the same issue until pressing the case again is frivolous and a waste of time. At that point, the lawyers involved has problems of their own.

An alternative is to consolidate all of the cases into one action and have all of the cases finally resolved together. That happens when the collection of cases is relatively small and manageable.

Another option is to keep the cases on the Reserve Calendar while a single case is litigated but not designated a test case. When the litigation is done, the parties can negotiate a settlement or stipulated judgment. That, however, requires plaintiffs to manage the docket very closely and ensure that the time allowed for the case to remain on the Reserve Calendar does not expire. After 18 months, the case is in danger of being dismissed. Rule 83 says, in part:

(c) Dismissal for Lack of Prosecution. A case not removed from the Reserve Calendar within the 18-month period will be dismissed for lack of prosecution and the clerk will enter an order of dismissal without further direction from the court unless a motion is pending. If a pending motion is denied and less than 14 days remain in which the case may remain on the Reserve Calendar, the case will remain on the Reserve Calendar for 14 days from the date of entry of the order denying the motion. 

The Rule also says:

(d) Extension of Time. The court may grant an extension of time for the case to remain on the Reserve Calendar for good cause. A motion for an extension of time must be made at least 30 days prior to the expiration of the 18-month period. 

 All of which is background to Rockwell Automation, Inc. v. United States. I will not go into the gory (and they are gory) details of what happened. In the end, the requested extension of time to remain on the reserve calendar was granted. However, the case puts the bar on notice that it is not acceptable to repeatedly miss the deadline for filing motions for an extension of time and to seek relief out of time, even with the consent of the defendant. Again, I leave it to you to read the gory details.

But, I have a question about how Rule 83 is supposed to work. Honestly, I had always treated Rule 83(d) as requiring that a motion for an extension of time be made at least 30 days prior to the expiration of the 18-month period and also 30 days prior to the expiration of any subsequent extension granted by the Court. That's safe and conservative.

But, a good friend of mine who is also in the thick of CIT litigation pointed out that the rule does not actually say that. The 30-day requirement specifically references "the expiration of the 18-month period." That is the first period on the Reserve Calendar and not the subsequent extensions. It would appear that motions for subsequent extensions are permitted without any advance notice. The Court effectively rejected this argument when it quoted Rule 83(d) as follows, including the bracketed edits and italics: "[a] motion for an extension of time [to remain on the Reserve Calendar] must be made at least 30 days prior to the expiration of the 18-month period [or later, if the 18-month period has been extended pursuant to USCIT Rule 83(d)]."

A similar issue crops up with respect to the role of the Clerk's Office. Rule 83(c) says that a case not removed from the Reserve Calendar within the 18-month period will be dismissed by the Clerk of the Court without the involvement of a judge (assuming no motion is pending). But, what happens after that 18-month period when a case is still on the Reserve Calendar due to an extension of time having been granted? That is not "within the 18-month period" and, therefore, it appears that the Clerk should not dismiss the case on her own.

If the 30-day notice and automatic dismissal rules only apply to the first 18-month period and not subsequent extensions, then Rockwell may be a lot of angst over nothing because the requests for extensions were timely if filed before the last day of the extended Reserve Calendar period. If they were timely, the Court should liberally grant them when the plaintiff shows "good cause," which the Court refers to as a lenient standard. If the motions were untimely, then the plaintiff has the much higher burden of having to show excusable neglect. No one likes to argue that they were negligent even if the neglect was excusable.

Unfortunately, given that the motion was granted, there is nothing from which to appeal. That means the questions raised above will remain theoretical until someone misses a date and has their case dismissed after the initial 180-day period on the Reserve Calendar. Not that anyone asked, but it looks to me like the test case-suspension process is looking better. Of course, that process has its own docket management issues. But those issues do not arise until after the test case is decided.

As always, tell me if I am wrong about this.

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