CIT Denies Request for Attorney Costs and Fees in Case on Reliquidation of Entry Deemed Liquidated

The Court of International Trade on Nov. 27 denied an importer’s request to have the government cover its attorneys’ costs and fees from a lengthy case on CBP’s authority to reliquidate entries that had been deemed liquidated. CBP was justified when it denied the protest that led to the court case because the aggrieved importer, Consolidated Fibers, raised outdated arguments on the protest, even though the company would eventually prevail after raising different claims in its lawsuit.

The case involved whether CBP could reliquidate an entry at a higher rate, even though the entry should have been deemed liquidated three years earlier (see 14092328). In its underlying protest, Consolidated Fibers cited a 2004 court case to argue the reliquidation was invalid because it occurred well after the six-month liquidation deadline. But the case cited by Consolidated Fibers came some months before a change to the relevant statute in 2004 that set the deadline for reliquidation at 90 days after the date that notice of the deemed liquidation is posted.

Under the Equal Access to Justice Act, courts may award attorneys’ fees if the government’s position, including at the agency level, was not substantially justified. In a 2014 ruling that outlined CBP’s logic for denying Consolidated Fibers’ protest, CBP relied on that new legal language, finding that the reliquidation had occurred within 90 days of notice of the deemed liquidation, even if the six-month liquidation window had expired years earlier (see 14061818). The law was again changed in 2015 so the reliquidation deadline runs from the actual date of liquidation (see 1603010043), not the date of the notice, though CIT has ruled the change is not retroactive (see 1706020037).

CIT found that reason for denying Consolidated Fibers’ protest was justified, even if the reliquidation would find itself on shaky ground in court. The CIT decision that preceded the government’s capitulation in the case questioned whether the three-year period between deemed liquidation and the bulletin notice of deemed liquidation was a “reasonable period” upon which to base CBP’s reliquidation 90 days later (see 1511170068 and 1512280038). That was not the argument raised by Consolidated Fibers in its protest, and as a result CBP did not have to address it. “Under that circumstance, the court is unable to conclude that Customs took a position that was not ‘substantially justified,’” CIT said.

CIT also declined to grant attorneys’ fees and costs on a different “common law cost-shifting analysis” ground: that the government should be held liable for the long delays and faults from forcing Consolidated Fibers to engage in “protracted litigation.” That would only apply if that government “acted in bad faith, vexatiously, wantonly, or for oppressive reasons,” the trade court said. Here there were several delays, but Consolidated Fibers consented to them, CIT said. “The court sees no evidence that could support such a conclusion,” it said.

(Consolidated Fibers, Inc. v. U.S., Slip Op. 17-157, CIT # 14-00222, dated 11/27/17, Judge Stanceu)

(Attorneys: Gregory Menegaz of deKieffer & Horgan for plaintiff Consolidated Fibers, Inc.; Jason Kenner for defendant U.S. government)