CIT Dismisses “Bond Sufficiency”, Negligence Claims Against Sureties in AD Lawsuit

Domestic producers of honey, mushrooms, garlic and crawfish sued the U.S. government and a number of import sureties, claiming the government failed to collect AD duties and the sureties failed to require sufficient bond guarantees or collect and remit AD duties owed.

The Court of International Trade dismissed the claims against the surety providers, but withheld a decision on the claims against the government.

Lax Enforcement by CBP Alleged

Among other claims, the domestic parties argued that in AD new shipper reviews for honey, canned mushrooms, garlic and crawfish meat from China, U.S. Customs and Border Protection failed to:

• liquidate some entries within six months of the ITA’s instructions,
• make sufficient efforts to collect some duties,
• distribute some AD duties that it did collect¹, and
• pursue sureties to recover duties covered by new shipper bonds.

Negligent Issuance of STBs by Sureties Also Alleged

The domestic parties also claimed that surety providers acted negligently in issuing hundreds of single-transaction customs bonds to new shippers with little creditworthiness, ostensibly guaranteeing the payment of any dumping duties the government might assess.

CIT Finds Domestic Parties Lacked Standing for Claims Against Sureties

The court dismissed the domestic parties’ six claims against either the surety providers alone or the sureties and the government together, finding that for some claims, the domestic parties lacked standing, while for others, these parties had no inherent right to the insurers’ funds. The court reasoned that domestic producers are not intended by law to be third-party beneficiaries of customs bonds.

CIT Defers Claims Against Customs and ITA

Regarding the claims solely against the government with respect to errors and failures to act on the part of the ITA and Customs, and the government’s motion to dismiss these claims, the court reserved decision pending further deliberation.

¹as required by The Continued Dumping and Subsidy Offset Act of 2000, or Byrd Amendment.

(See ITT’s Online Archives or 04/10/09 news, (Ref: 09041010), for BP summary of plaintiff’s initiation of the lawsuit.

See ITT’s Online Archives or 02/10/06 news, (Ref: 06021005), for BP summary of the bill which repealed the Byrd Amendment.)

Sioux Honey Association, Adee Honey Farms, Monterey Mushrooms, Inc., The Garlic Company, and Beaucoup Crawfish, Inc., dba Riceland Crawfish, dated March 26, 2010, available at http://www.cit.uscourts.gov/slip_op/Slip_op10/10.31.pdf