CIT Awards Attorney Fees in Case on Improper 'Notice of Action' on White Sauce
The Court of International Trade on June 24 ordered the government to pay the attorney’s fees and costs incurred by International Custom Products in a case involving an improper CBP notice of action that reclassified the importer’s white sauce (here). In one of several related cases, the U.S. Court of Appeals for the Federal Circuit in April 2014 granted partial victory to ICP by finding CBP’s notice of action revoked an earlier ruling letter without the required notice and comment period (see 14021001). The notice of action had resulted in a 2,400% duty increase that put ICP out of business.
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In order to award attorney’s fees, the court must find the losing side was not “substantially justified” in its actions despite its loss. Here, CBP knew it was on shaky ground when it issued the notice of action, said CIT. According to internal CBP emails discussing whether to rate advance ICP’s entries, the notice of action “was based not on complying with the legal restraints identified by others, but on expedience,” said the court. One letter from a CBP official “clearly indicates that revocation is the proper way to change the tariff rate of white sauce entries,” but that the agency did not have time for a formal revocation process that would also “unduly complicate” its investigation of ICP.
The government’s failed arguments in the resulting court case that the ruling letter was invalid and ICP changed its formula so that the white sauce no longer complied with the ruling letter were merely after-the-fact justifications for why CBP took the improper action, said CIT. “The government position can thus best be summarized as an attempt to promote various post-hoc justifications for taking action CBP knew to be improper. Considered as a whole, the government’s position was not founded on ‘a reasonable basis both in law and fact,’ ‘justified to a degree that could satisfy a reasonable person,’” ruled CIT.
The trade court ordered the fees and costs increased for the high hourly rates paid to specialized customs lawyers involved in the case. It also mandated reductions for certain entries on attorney bills that were not specific enough to show they were related to litigation expenses in the case. CIT gave ICP and the government until July 31 to come back with exact calculations of fees and costs owed.
(Int'l Custom Prods., Inc. v. U.S., Slip Op. 15-68, CIT # 07-00318, dated 06/24/15, Judge Carman)
(Attorneys: Gregory Teufel of OGC Law for plaintiff International Custom Products, Inc.; Edward Kenny for defendant U.S. government)
Email ITTNews@warren-news.com for a copy of CBP's internal discussions referenced by CIT.