Barnes Richardson Settles Legal Malpractice Case Related to CDSOA Claims

Under the now-repealed CDSOA, also known as the Byrd Amendment, domestic companies that supported the imposition of antidumping and countervailing duty orders could apply to get money collected as AD/CV duties. One of those orders was imposed on frozen concentrated orange juice from Brazil in 1987. The duties were originally requested by Florida Citrus Mutual, an association of Florida orange growers. Barnes Richardson represented the association during the AD duty investigation, as well as in subsequent proceedings. Longtime Barnes Richardson lawyer Matthew McGrath, now managing partner at the firm, acted as counsel to Florida Citrus Mutual and individual domestic orange juice companies over the following decades.

When CDSOA took effect in 2002, Florida Citrus Mutual sent a memo to orange growers offering free legal assistance on the Byrd Certifications required to obtain CDSOA funds. In return, companies that received disbursements would have to give them to Florida Citrus Mutual to fund its legal efforts to maintain the AD duties. Barnes Richardson sent a memo confirming the offer one week later.

One company that was eligible for CDSOA distributions was A. Duda & Sons. Duda compiled its Byrd Certifications for distribution of CDSOA funds each year between 2002 and 2005. A Barnes Richardson lawyer helped the company compile the certifications. Each year Duda then sent the completed applications to Barnes Richardson, and the law firm filed them with CBP. Although Duda received CDSOA funds each year, it only returned some of the money to Florida Citrus Mutual. Duda did not apply for CDSOA funds in 2006.

Southern Gardens was ineligible for CDSOA distributions under the frozen concentrated orange juice order because it didn’t participate in the original AD duty investigation. But in 2006, the Commerce Department issued another antidumping duty order covering all orange juice from Brazil. This time, Southern Gardens supported the investigation, and was eligible for CDSOA distributions of AD duties collected under the order.

Florida Citrus Mutual held a meeting in July 2007 to instruct its members on how to file Byrd Certifications for disbursements under the new orange juice order. In its announcement of the meeting, the association said Barnes Richardson’s McGrath would be available to help companies file. Southern Gardens filed its 2007 Byrd Certification based on the information from the Florida Citrus Mutual meeting. Duda also filed its 2007 Byrd Certification, with the assistance of another Barnes Richardson lawyer.

When CBP announced the deadline for 2008 Byrd Certifications in May of that year, McGrath emailed the notice to Duda and Southern Gardens and noted the deadline was July 29. McGrath also said he would “send the estimated dollars available as soon as they release it.” Several emails were exchanged over the following day between McGrath and the president of Southern Gardens. Then communication about CDSOA funds went blank. Neither Duda nor Southern Gardens filed Byrd Certifications in 2008. The same is true for 2009 and 2010.

Lawsuit Said Barnes Richardson Neglected Duty, Cost Clients Over $1 Million

Legal malpractice lawsuits in trade law are uncommon, according to industry lawyers. “Malpractice claims in Customs and trade matters are pretty rare,” said one industry attorney. “Part of that is because the laws involved are complex and arcane, and it’s hard to make out a clear duty to the client, and a breach of that duty,” he said.

Southern Gardens and Duda filed their malpractice suit against McGrath and Barnes Richardson in 2011. They said they didn’t file Byrd Certifications in 2008 because they were waiting for McGrath to get back to them about funds available under CDSOA, as he had promised in his May 2008 email. McGrath and Barnes Richardson also had the duty to inform them of the due dates for Byrd Certifications in 2009 and 2010, given his attorney-client relationship with Southern Gardens and Duda, they said. As a result of McGrath’s lack of attention to the matter, Southern Gardens lost out on $1,259,962.20 because of its failure to file the claims, they said, while Duda didn’t collect $211,972.67 in CDSOA funds.

Although no written retainer agreement existed between McGrath and the two companies on representation in CDSOA matters, that didn’t matter, said Southern Gardens and Duda. Under Florida law, it was enough that they had reason to believe an unwritten agreement existed, they said. Because of the extent of Barnes Richardson’s representation of Southern Gardens and Duda in past CDSOA dealings, they inferred an agreement, and failed to file their claims when McGrath didn’t uphold his end of the deal, they alleged.

The case “arose from a disagreement between [Barnes Richardson & Colburn] and those companies concerning the extent of the law firm’s representation, and whether that representation extended beyond the antidumping investigation and litigation to include submission of the companies’ claims for disbursements under the CDSOA, in response to Federal Register notices,” McGrath told us. “We believe that our representation did not cover those submissions, which the plaintiffs did not file in three years,” he said. Barnes Richardson had continued to represent Southern Gardens and Duda between 2008 and 2010 in other matters related to antidumping duties before Commerce and the International Trade Commission. The law firm didn’t dispute that an attorney-client relationship existed. But CDSOA claims are a different area of law, the firm said, and no attorney-client relationship existed with respect to CDSOA claims in particular.

In any case, Southern Gardens’ and Duda’s failure to file Byrd Certifications was their own fault, said Barnes Richardson. First of all, any attorney-client relationship between Barnes Richardson and the two orange juice companies was only to give advice when asked, and not to make sure the claims were filed, it said. Every time the companies had filed claims in past years, they completed them on their own and only sought advice. Also, the companies were aware of the due date for CDSOA claims because of McGrath’s email, the law firm said. When they didn’t do anything with that information, they negated any obligation on McGrath’s part to provide that information in the future, it said.

The Jan. 10 settlement between the parties ends the dispute. Shortly after it was filed, Florida Middle District Judge John Steele dismissed the case. According to Matthew McGrath, the terms of the settlement are confidential. The lawyer representing Southern Gardens in the case declined comment on the settlement, beyond calling it “amicable.”

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