PrimeSource Building Products, Inc. v. United States et al

Slip Op. No. 21-
UNITED STATES COURT OF INTERNATIONAL TRADE
PRIMESOURCE BUILDING
PRODUCTS, INC.,
Plaintiff,
v.
UNITED STATES, et al.,
Defendants.
Before: Timothy C. Stanceu, Chief Judge
Jennifer Choe-Groves, Judge
M. Miller Baker, Judge
Court No. 20-00032
OPINION
[Granting summary judgment in favor of plaintiff. Judge Baker dissents.]
Dated: April 5, 2021
Jeffrey S. Grimson, Mowry & Grimson, PLLC, of Washington, D.C., for plaintiff.
With him on the brief were Kristin H. Mowry, Jill A. Cramer, Sarah M. Wyss, Bryan P.
Cenko, and Wenhui Ji.
Jeanne E. Davidson, Director, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of Washington, D.C., for defendants. With her on the brief were
Tara K. Hogan, Assistant Director, and Stephen C. Tosini, Senior Trial Counsel.
Stanceu, Chief Judge: Plaintiff PrimeSource Building Products, Inc.
(“PrimeSource”), a U.S. importer of steel nails, contested a proclamation issued by the
President of the United States (“Proclamation 9980”) in January 2020. Adjusting Imports
of Derivative Aluminum Articles and Derivative Steel Articles Into the United States, 85 Fed.
36
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Reg. 5,281 (Exec. Office of the President Jan. 29, 2020) (“Proclamation 9980”). Before the
court is a “Joint Status Report” the parties submitted in response to our order in
PrimeSource Bldg. Prods., Inc. v. United States, 45 CIT __, Slip. Op. 21-8 (Jan. 27, 2021)
(“PrimeSource I”). Joint Status Report (Mar. 5, 2021), ECF No. 108. In response to
statements of the parties in the Joint Status Report, the court enters summary judgment
in favor of plaintiff. 1
I. BACKGROUND
The background of this action is set forth in our prior opinion and summarized
briefly herein. See PrimeSource Bldg. Prods., Inc. v. United States, 45 CIT __, Slip. Op. 21-8
(Jan. 27, 2021) (“PrimeSource I”).
A. Proclamation 9980
On January 24, 2020, President Donald Trump issued Proclamation 9980, which
imposed a 25% duty on certain imported articles made of steel, including steel nails,
and a 10% duty on certain imported articles made of aluminum. As authority for its
imposition of duties on the articles, identified as “derivative aluminum articles” and
“derivative steel articles,” Proclamation 9980 cited Section 232 of the Trade Expansion
1 Judge Baker dissents from the entry of summary judgment in favor of plaintiff
for the reasons stated in his dissent from the court’s prior opinion and order.
PrimeSource Bldg. Prods., Inc. v. United States, 45 CIT __, Slip. Op. 21-8 (Jan. 27, 2021)
(Baker, J., dissenting).
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Act of 1962, 19 U.S.C. § 1862 (“Section 232”). 2 Proclamation 9980 also cited previous
Presidential proclamations that invoked Section 232, including Proclamation 9704,
Adjusting Imports of Aluminum Into the United States, 83 Fed. Reg. 11,619 (Exec. Office of
the President Mar. 15, 2018) (“Proclamation 9704”), and Proclamation 9705, Adjusting
Imports of Steel Into the United States, 83 Fed. Reg. 11,625 (Exec. Office of the President
Mar. 15, 2018) (“Proclamation 9705”). Proclamation 9980 ¶¶ 9–10, 85 Fed. Reg. at 5,283.
B. Procedural History of this Litigation
On February 4, 2020, PrimeSource commenced this action, naming the United
States, et al., as defendants and asserting five claims in contesting Proclamation 9980.
Summons, ECF No. 1; Compl., ECF Nos. 8 (conf.), 9 (public). Defendants filed a Rule
12(b)(6) motion to dismiss an amended complaint on March 20, 2020 for failure to state
a claim on which relief can be granted. Defs.’ Mot. to Dismiss for Failure to State a
Claim, ECF No. 60 (“Defs.’ Mot.”). Plaintiffs opposed defendants’ motion to dismiss
and moved for summary judgment on April 14, 2020. Rule 56 Mot. for Summ. J., Pl.
PrimeSource Bldg. Prods. Inc.’s Mem. of Points and Authorities in Supp. of Mot. for
Summ. J. and Resp. to Defs.’ Mot. to Dismiss for Failure to State a Claim, ECF No. 73-1.
Defendants responded to plaintiff’s summary judgment motion on May 12, 2020. Defs.’
Reply in Supp. of their Mot. to Dismiss and Resp. to Pl.’s Mot. for Summ. J., ECF No. 78.
2 All citations to the United States Code are to the 2012 edition.
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On June 9, 2020, plaintiff replied in support of its summary judgment motion. Pl.
PrimeSource Bldg. Prods. Inc.’s Reply Br. in Supp. of its Mot. for Summ. J., ECF No. 91.
C. Our Decision in PrimeSource I
In PrimeSource I, we granted defendants’ motion to dismiss as to all of plaintiff’s
claims in the amended complaint except one, stated as “Count 2,” in which plaintiff
claimed that Proclamation 9980 was issued beyond the statutory time limits set forth in
Section 232. PrimeSource I, 45 CIT at __, Slip Op. at 55. In Count 2, plaintiff argued that
Proclamation 9980 was issued after the expiration of the 105-day time period set forth in
Section 232(c)(1), which PrimeSource described as commencing upon the President’s
receipt, on January 11, 2018, of a report the Secretary of Commerce issued under Section
232(b)(3)(A) on the effect of certain steel articles on the national security of the United
States (the “2018 Steel Report”). That report culminated in the President’s issuance of
Proclamation 9705 in March 2018, which imposed 25% duties on various steel articles,
see Proclamation 9705, ¶¶ 1–2, 83 Fed. Reg. at 11,625, but not on the derivative steel
articles affected by Proclamation 9980 in January 2020.
We stated in PrimeSource I that “[d]efendants do not dispute that the 2018 Steel
Report is, for purposes of Section 232(c), 19 U.S.C. § 1862(c), the report issued according
to Section 232(b)(3)(A), 19 U.S.C. § 1862(b)(3)(A), upon which the President based his
adjustment to imports of steel derivatives, including steel nails.” PrimeSource I, 45 CIT
at __, Slip Op. at 20 (citing Defs.’ Mot. 24–29). In denying defendants’ motion to dismiss
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Count 2, we concluded that Proclamation 9980 does not comply with the limitation on
the President’s authority imposed by the 105-day time limitation of Section 232(c)(1) if
that time period is considered to have commenced upon the President’s receipt of the
2018 Steel Report. Id. at __, Slip Op. at 44–45. We held that in this circumstance Count 2
stated a plausible claim for relief. Id. at __, Slip Op. at 50.
After denying defendants’ motion to dismiss as to the claim in Count 2, we
denied plaintiff’s motion for summary judgment on that remaining claim upon
determining that there existed one or more genuine issues of material fact. Although
concluding that Proclamation 9980 was untimely under Section 232(c)(1) when viewed
solely as an action taken in response to the Steel Report, we also concluded that there
were genuine issues of material fact that bore on the extent to which the subsequent
“assessment” or “assessments” of the Commerce Secretary, as identified in
Proclamation 9980, validly could be held to have served a function analogous to that of
a Section 232(b)(3)(A) report. Id. at __, Slip Op. at 54. We also noted that we did not
know what form of inquiry or investigation the Commerce Secretary conducted prior to
his submission of these communications to the President and whether, or to what
extent, that inquiry or investigation satisfied the essential requirements of Section
232(b)(2)(A), 19 U.S.C. § 1862(b)(2)(A). Id.
In summary, we concluded in PrimeSource I that factual information pertaining to
the Secretary’s inquiry on, and his reporting to the President on, the derivative articles
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would be required in order for us to examine whether and to what extent there was
compliance by the President with the procedural requirements of Section 232 and
whether any noncompliance that occurred was a “significant procedural violation.” Id.
at __, Slip Op. at 54–55 (quoting Maple Leaf Fish Co. v. United States, 762 F.2d 86, 89 (Fed.
Cir. 1985) (requiring that a procedural violation be “significant” in order to serve as a
ground for judicial invalidation of a Presidential action)). We added that “at this early
stage of the litigation, we lack a basis to presume that these unresolved factual issues
are unrelated to the issue of whether the President clearly misconstrued the statute or
the issue of whether the President took action outside of his delegated authority.” Id.
at __, Slip Op. at 55. We noted that the “filing of a complete administrative record could
be a means of resolving, or helping to resolve, these factual issues” and directed the
parties to consult on this matter and file a scheduling order to govern the subsequent
litigation. Id.
D. The Joint Status Report
On March 5, 2021, the parties submitted the Joint Status Report in lieu of a
scheduling order. In it, defendants expressly waived “the opportunity to provide
additional factual information that might show that the ‘essential requirements of
Section 232(b)(2)(A), 19 U.S.C. § 1862(B)(2)(A)’ were met,” adding that “[d]efendants do
not intend to pursue that argument.” Joint Status Report 2 (quoting PrimeSource I, 45
CIT at __, Slip Op. at 54). Defendants informed the court that their “position continues
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to be that procedural preconditions for the issuance of Proclamation 9980 were met by
the Secretary’s 2018 Steel Report and the timely issuance of Proclamation 9705, a
position that the majority has already rejected.” Id. at __, Slip Op. at 2–3. The Joint
Status Report concludes by stating that “the parties agree and respectfully submit that
there is no reason for this Court to delay entry of final judgment. In so representing, the
parties fully reserve all rights to appeal any adverse judgment.” Id. at __, Slip Op. at 3.
II. DISCUSSION
A. Sua Sponte Entry of Summary Judgment according to USCIT Rule 56(f)
Because we denied plaintiffs’ motion for summary judgment in PrimeSource I, no
motion for summary judgment is now before us. Nevertheless, we may enter summary
judgment for a party sua sponte under USCIT Rule 56(f), which provides that “[a]fter
giving notice and a reasonable time to respond, the court may . . . consider summary
judgment on its own after identifying for the parties material facts that may not be
genuinely in dispute.”
The United States Supreme Court in Celotex Corp. v. Catrett, 477 U.S. 317, 326
(1986) (“Celotex”) opined that “district courts are widely acknowledged to possess the
power to enter summary judgments sua sponte.” In interpreting Celotex, the Court of
Appeals for the Federal Circuit instructed that “[t]he Celotex Court also made clear that
all that is required is notice [to the party with the burden of proof] that she had to come
forward with all of her evidence.” Exigent Tech., Inc. v. Atrana Sols., Inc., 442 F.3d 1301,
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1308 (Fed. Cir. 2006) (brackets in original). In determining whether to enter summary
judgment sua sponte, a court must ensure that prejudice will not accrue to the would-be
losing party stemming from that party’s inability to present evidence of a genuine
dispute of material fact. See Celotex, 477 U.S. at 326.
B. Defendants’ Waiver of the Opportunity to Present Evidence and of Any Defense
Related to Procedures Subsequent to the 2018 Steel Report
In this litigation, the parties, and defendants in particular, expressly have
declined to pursue the opportunity to present additional evidence to demonstrate the
existence of a genuine dispute of a material fact. Specifically, defendants waive any
defense they might base on a showing that the “‘essential requirements of Section
232(b)(2)(A), 19 U.S.C. § 1862(b)(2)(A)’ were met.” Joint Status Report 2 (quoting
PrimeSource I, 45 CIT at __, Slip Op. at 54). Further, we note the significance of
defendants’ statement in the Joint Status Report that their “position continues to be that
procedural preconditions for the issuance of Proclamation 9980 were met by the
Secretary’s 2018 Steel Report and the timely issuance of Proclamation 9705.” Id. at 2–3.
This statement constitutes a waiver of any defense that the assessments of the
Commerce Secretary, as described in Proclamation 9980, were the functional equivalent
of a Section 232(b)(3)(A) report.
By joining in the statement that “the parties agree and respectfully submit that
there is no reason for this Court to delay entry of final judgment,” id. at 3, defendants
have waived any claim of prejudice that could result from the entry of summary
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judgment in favor of plaintiff, subject to their right to appeal. The parties have been
given the full opportunity to “come forward” with any evidence of a dispute of material
fact. A sua sponte order of summary judgment is, therefore, appropriate. See Celotex,
477 U.S. at 326.
The court further notes that defendants did not file an answer to plaintiff’s
complaint or amended complaint. The court’s opinion in PrimeSource I directed the
parties to file a joint scheduling order to govern the remainder of the litigation, which
normally would have included a date for the government to answer the complaint with
respect to the remaining claim. Here, defendants having waived any argument that
Proclamation 9980 was issued within the 105-day time period beginning on the
President’s receipt of a report qualifying under Section 232(b)(3)(A), there are no
contested issues of fact. Therefore, the absence of an answer to the amended complaint
is not a procedural bar to the entry of summary judgment.
C. In the Absence of a Genuine Dispute as to any Material Fact, Plaintiff Is Entitled
to Judgment as a Matter of Law
Summary judgment is appropriate when “there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” USCIT
R. 56(a). As discussed above, there is no longer a genuine issue of material fact as a
result of the representations of the parties in the Joint Status Report. In particular,
defendants have waived any defense grounded in a factual circumstance other than one
in which the 2018 Steel Report is the only submission made by the Commerce Secretary
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that could satisfy the requirements of Section 232(b)(3)(A) and upon which
Proclamation 9980 could have been based.
Plaintiff PrimeSource is now entitled to judgment as a matter of law. As we
concluded in PrimeSource I, “the action taken by Proclamation 9980 to adjust imports of
derivatives was not implemented during the 105-day time period set forth in
§ 1862(c)(1), if that time period is considered to have commenced upon the President’s
receipt of the Steel Report.” 45 CIT at __, Slip Op. at 44. Because defendants no longer
may raise as a defense that the procedural requirements of Section 232 were met based
on any procedure other than one reliant upon the 2018 Steel Report, summary judgment
in favor of plaintiff is warranted on the ground that Proclamation 9980 was issued after
the President’s delegated authority to impose duties on derivatives of steel products
had expired. As we held in PrimeSource I, any determination the President could have
made to adjust the duties on imports of derivatives of the articles named in
Proclamation 9705 was required by the statute to have been made during the 90-day
period commencing with the President’s receipt of a report of the Commerce Secretary
satisfying the requirements of Section 232(b)(3)(A), and any action to implement that
determination was required to have been taken, if at all, during the 15-day period
following that determination. See 45 CIT at __, Slip Op. at 32 (holding that “the 90- and
15-day time limitations in Section 232(c)(1) expressly confine the exercise of the
President’s discretion regardless of whether the President determines to adjust imports
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only of the ‘article’ named in the Secretary’s report or, instead, to adjust imports of the
‘article and its derivatives.’”) (emphasis in original).
To declare Proclamation 9980 invalid, we must find “a clear misconstruction of
the governing statute, a significant procedural violation, or action outside delegated
authority.” Maple Leaf Fish Co., 762 F.2d at 89. Because the President issued
Proclamation 9980 after the congressionally-delegated authority to adjust imports of the
products addressed in that proclamation had expired, Proclamation 9980 was action
outside of delegated authority. For the reasons we stated in PrimeSource I, 45 CIT at __,
Slip Op. at 45–49, we reject defendants’ position that Congress intended for the time
limitations in Section 232(c)(1) to be merely directory, and we find in the untimeliness of
Proclamation 9980 a significant procedural violation. As a remedy, PrimeSource is
entitled to a declaratory judgment that Proclamation 9980 is invalid as contrary to law
and to certain other relief, as described below.
III. CONCLUSION
We award summary judgment to PrimeSource on the remaining claim in this
litigation, which was stated in Count 2 of the amended complaint. As relief on this
claim, we will declare Proclamation 9980 invalid as contrary to law and, on that basis,
direct that the entries affected by this litigation be liquidated without the assessment of
duties pursuant to Proclamation 9980, with refund of any deposits for such duty
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liability that may have been collected pursuant to Proclamation 9980. 3 Also, should any
entries of PrimeSource’s merchandise at issue in this litigation have liquidated with the
assessment of 25% duties pursuant to Proclamation 9980, PrimeSource is entitled to
reliquidation of those entries and a refund of any duties deposited or paid, with interest
as provided by law.
Judgment will enter accordingly.
__________________________________
Timothy C. Stanceu, Chief Judge
/s/ Jennifer Choe-Groves
Dated: April 5, 2021
New York, New York
3 Earlier in this litigation, upon the consent of both parties, this Court entered a
preliminary injunction against the collection of 25% cash deposits on PrimeSource’s
entries of merchandise within the scope of Proclamation 9980 and against the
liquidation of the affected entries. Order (Feb. 13, 2020), ECF Nos. 39 (Conf.), 40
(Public). This preliminary injunction will dissolve upon the entry of judgment. Id. If,
despite the preliminary injunction, any cash deposits were made or collected,
PrimeSource is entitled to a refund of these cash deposits, with interest as provided by
law.
/s/ Timothy C. Stanceu
Jennifer Choe-Groves, Judge
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