CIT Says CBP's Refusal to Cancel Enhanced Bonds Didn't Start Lawsuit Clock

The Court of International Trade has ruled in Ocean Duke Corporation v. U.S., that the time limit to file suit for relief from enhanced continuous bond requirements that were applied to shrimp imports subject to AD/CV duties began when CBP required Ocean Duke Corporation to post the higher, enhanced bonds, and not when CBP denied Ocean Duke's requests to cancel them.

(In 2004, CBP amended the guidelines under which port directors set continuous entry bond requirements for importers of shrimp subject to antidumping (AD) or countervailing (CV) duties. The altered rules, called enhanced bond requirements (EBR), significantly increased minimum bond amounts due from shrimp importers. However, in 2009, the World Trade Organization ruled against the EBR for shrimp.¹)

Ocean Duke Obtained Five Separate Enhanced Bonds Between 2005-2008

In 2005, new AD duty orders were issued covering shrimp from six countries. As an importer and distributor of seafood products, including shrimp, Ocean Duke had grown accustomed to posting import bonds for shrimp in amounts calculated under the old rules. Following the entry of the new AD duty orders on shrimp, however, CBP pronounced the amount of Ocean Duke’s continuous entry bonds insufficient in view of the EBR and advised Ocean Duke that it should post new bonds that comport with the amended rules. As a result, Ocean Duke obtained five separate continuous entry bonds between 2005 and 2008 in amounts that conformed to the EBR, the last of which took effect on February 5, 2008.

Requested CBP Cancel & Replace One Enhanced Bond, CBP Denied

In a separate case in August 2009², the CIT found that in applying the EBR, CBP acted arbitrary and contrary to law and enjoined its continued application. However, prior to this decision, Ocean Duke submitted two requests, which CBP denied, asking CBP to cancel one of the enhanced bonds and to replace it with a superseding bond with a limit of liability calculated in accordance with the CIT's preliminary injunction regarding the 2009 case. Ocean Duke submitted four additional requests between September 2009 and April 2011, all which CBP rejected. The last one was rejected on April 18, 2011 and in May 2011, Ocean Duke filed suit in the CIT.

Ocean Duke Argued Its Claim Accrued When CBP Denied Its April 2011 Request

Ocean Duke argued that CBP’s denial of the company's last request to release and replace the subject bonds is the moment when the claim accrued. Ocean Duke explained that it did not challenge the five separate bond determinations, but instead contested CBP’s April 2011 decision not to apply the holdings from the 2009 litigation to its enhanced bonds. Ocean Duke stated this decision fell within the time period permitted to file suit and also contended that its action amounted to a continuing claim, given that it suffered a new injury when CBP refused to recalculate the amount due under the subject bonds.

CBP Said Claim Accrued When First Required to Get New Bond in Feb 2008

CBP argued that the CIT should dismiss Ocean Duke’s complaint as untimely because its challenge to the EBR accrued in February 2005, when CBP first required Ocean Duke to obtain a new bond under the changed rules. As such, any action against each subsequent bond determination accrued no later than February 5, 2008, the date upon which the last enhanced bond posted by Ocean Duke took effect. CBP noted that 28 USC 2636(i) requires a party to file a suit within two years after the cause of action first accrues, and argued that all events necessary for Ocean Duke to state a claim passed long ago.

CIT Ruled in Favor of CBP, Said Ocean Duke's Untimely Filing of Claim Bars Suit

The CIT concluded that Ocean Duke filed an untimely claim. The CIT stated that 28 USC 1581(i) provides that a plaintiff must commence suit "within two years after the cause of action first accrues." The CIT explained that "a claim accrues when the aggrieved party reasonably should have known about the existence of the claim³."

The CIT noted that Ocean Duke identified the operative events as culminating on the dates that CBP required the company to post the five bonds calculated under the EBR. Since Ocean Duke started to accumulate injuries immediately after it was required by CBP to post the enhanced bonds, Ocean Duke reasonably should have known about the existence of the claim no later than the date each bond took effect, the last of which occurred in February 2008. As a result, the CIT held that Ocean Duke’s claim accrued no later than February 2010, well before it filed suit in May 2011. Therefore, the CIT ruled the statute of limitations bars Ocean Duke’s suit and the case was dismissed for Ocean Duke's failure to state a claim for which the CIT may grant relief.

¹In 2009, CBP terminated the EBR to comply with an adverse World Trade Organization ruling. As a result, CBP stated it would end EBR applied to shrimp from all affected countries, which include: Thailand, India, Brazil, China, Vietnam, and Ecuador. (See ITT’s Online Archives or 04/01/09 news, 09040130, for BP summary.)

²In Nat’l Fisheries Inst. Inc. II, v. U.S. (dated 08/25/09), CIT ruled that CBP’s EBR was unreasonable and capricious and ordered CBP to redetermine the limit of liability on each individual continuous entry bond, without application of the EBR. (See ITT’s Online Archives or 08/31/09 news, 09083135, for BP summary.)

³In another similar ruling, the Federal Circuit held that "a cause of action accrues when 'all events' necessary to state the claim, or fix the alleged liability of the Government, have occurred."

(Slip Op. 11-85, dated 07/18/11)