United States Court of International Trade

Motion to Dismiss Cross Claim Granted in Part

In United States v. UPS Supply Chain Solutions, Inc. et al., Court No,16-00010, Slip Op. 17- 134 (September 29, 2017 ), the Court considered a motion to dismiss cross claims initiated by Defendant 4174925 Canada, Inc. d/b/a Majestic Mills (“Majestic Mills”). Plaintiff United States, on behalf of U.S. Customs and Border Protection (“Customs”), brought claims against Majestic Mills, UPS, American Service Insurance Co. (“ASI”), and Great American Alliance Insurance Co. (“Great American”) (collectively, “Defendants”) for unpaid duties and civil penalties under Section 592 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1592(a) and (d) (2012). In UPS’ cross-claim, UPS alleged that Majestic Mills agreed to indemnify UPS from any liabilities arising from the importation of subject merchandise through a series of contractual agreements. The other causes of action in the cross-claim: breach of contract, fraud, and negligent representation were borne from Majestic Mills’ provision of incorrect information to UPS upon which UPS relied upon to declare classifications to Customs.

While the Court denied counts regarding breach of contract, fraud, and negligence, because they were time barred, the Court did allow the claim regarding indemnification. 28 U.S.C. § 1583 grants the Court the authority to decide cross-claims when “(1) such claim or action involves the imported merchandise that is the subject matter of such civil action, or (2) such claim or action is to recover upon a bond or customs duties relating to such merchandise. UPS seeks judgment on which party is liable to pay duties sought by plaintiff United States involving those entries, and reimbursement of any amounts plaintiff obtains from UPS in the underlying action.  Because liability of the duties owed and reimbursement of those duties involve the imported merchandise, the case falls in the CIT’s jurisdiction under section 1583(1). Moreover, because of judicial efficiency and because both parties are defendants in the case, the Court allowed jurisdiction over the indemnification claim.

Commerce’s Decision Remanded in Part

Before the Court in Aristocraft of America, LLC, et al. v. United States, Court No. 15-307, Slip Op. 17-132 (September 28, 2017) were the USCIT Rule 56.2 motions for judgment on agency record of Plaintiffs Shanghai Wells Hanger Co., Ltd., Hong Kong Wells Ltd., and Hong Kong Wells Ltd. (USA), (collectively “Shanghai Wells”); Best For Less Dry Cleaners Supply LLC, Ideal Chemical & Supply Company, Laundry & Cleaners Supply Inc., Rocky Mountain Hanger MFG Co., Rosenberg Supply Co., Ltd., and ZTN Management Company, LLC (collectively, “U.S. Distributors”); and Aristocraft of America LLC (“Aristocraft”), (together with Shanghai Wells and U.S. Distributors, “Plaintiffs”). This action involves the sixth administrative review conducted by the U.S. Department of Commerce (“Commerce”) of the antidumping duty order covering steel wire garment hangers from the People’s Republic of China (“PRC”). See Steel Wire Garment Hangers from the PRC, 80 Fed. Reg. 69,942 (Dep’t of Commerce Nov. 12, 2015) (final results admin. rev.) (“Final Results”). First, plaintiff challenged Commerce’s calculations of Export Price (EP) and Constructed Export Price (CEP). The issue was whether irrevocable VAT may be deducted from EP and CEP. While the Court agreed that the irrevocable VAT should be deducted, it did not agree with the manner in the amount of VAT to be deducted was calculated.

Second, the Court sustained both the surrogate value of Shanghai Wells’ corrugated paper input and the B&H surrogate costs because they were the “best information available”.  Finally, in regards to selecting financial statements for calculating surrogate financial ratios, the Court remanded this issue to Commerce to address reasonably the importance of drawing wire from wire rod as a surrogate company selection criterion. An efficient way to address this would be to simply use the one company’s statements (LS) that drew wire from wire rod, as Commerce did in the fourth administrative review.