Trade Court Judge Denies Judgment Motions in Defective Plywood Case

Two separate motions for summary judgment in a case involving allegedly defective plywood were shot down by Court of International Trade Judge Jennifer Choe-Groves in a March 20 opinion. Choe-Groves found that Bral had not sufficiently made a case under the customs regulations that all its imported plywood was defective and should have been appraised at a lower value, but neither had DOJ proven otherwise.

The case centers on whether Bral's imports met the requirements of 19 CFR 158.12(a), which says that when merchandise is found to be partially damaged at the time of importation, it "shall be appraised in its condition as imported, with an allowance made in the value to the extent of the damage." The courts have ruled that to get an allowance, the importer must show it contracted for defect-free merchandise and that it must link the defective merchandise to specific entries. The importer also must prove the amount of the allowance for each entry.

Choe-Groves found that "a genuine issue of material fact exists regarding whether there was a contract, implied or otherwise, for defect-free plywood." Bral did not provide the court with a contract outlining the plywood purchasing agreement, but argued that the court could infer that Bral expected the Chinese supplier, QF, to provide defect-free plywood due to Bral's ordering of more after testing and installation of sample plywood. Bral said that continued purchasing showed an expectation that subsequent supplies would meet the same standards despite a lack of "memorialization in writing" as DOJ claims is required.

The judge did not accept Bral's argument that it is not required to connect any of the allegedly defective products to specific entries because it claims that all plywood entered after May 2017 was defective. Bral cited a U.S. Court of Appeals for the Federal Circuit decision on machine-washable jackets, wherein the court said the importer didn't have to tie the defects to specific entries because all the merchandise was defective, but Choe-Groves ruled that "genuine issues of material fact exist as to whether all of the subject merchandise was defective."

Finally, Bral also did not prove its claim that the defective plywood was worth only 18% of its functional value, Judge Choe-Groves said. Even if 18% were an appropriate value, Bral has not proven that it should be applied to all of the imported plywood in the protested entries, she said. Bral claimed that the 18% figure is based on the cost of skid and crate production using non-grade marine lumber, which the company claims is all the defective plywood is now good for (see 2206030054). The government argued that the case should have been dismissed because Bral failed to show evidence of actual defect or specific value lost in its July motion (see 2207190042).

(Bral Corporation v. U.S., CIT # 20-00154, Slip Op. 23-36, udge Jennifer Choe-Groves. Attorneys: Robert Kevin Williams, Clark Hill PLC, for Plaintiff Bral Corporation; Justin R. Miller for Defendant United States)