CIT Dismisses Section 301 Exclusion Case Over Faulty Complaint, Gives 10 Days to Fix

The Court of International Trade on April 11 dismissed without prejudice a suit from Environment One Corp. seeking to impose a Section 301 exclusion on 31 entries, for failing to state a claim on which relief can be granted. While Judge Mark Barnett ruled against the government's motion to dismiss the case pertaining to 23 of the entries for lack of jurisdiction, the judge ultimately granted the U.S. motion to dismiss the case since the plaintiff failed to include key information about the merchandise at issue in the case's amended complaint. Barnett gave Environment One 10 days to file a second amended complaint lest the case be dismissed with prejudice.

Barnett said Environment One's claims currently do not do enough to raise a right to CBP's refund of Section 301 duties "above the speculative level," and instead "constitute no more than a threadbare recital of the elements of the cause of action." The court said a complaint should include a description of the merchandise involved and a specificaiton of the contested CBP decision, while listing the Harmonized Tariff Schedule classifaciton, tariff description and allegations of the contentions of fact and law.

Environment One's complaint lacks this information, Barnett held. "The amended complaint fails to allege (1) the HTSUS classification or tariff description of the subject merchandise at issue; (2) the specific errors Customs allegedly made in the contested protest denials; and (3) the section 301 exclusion Plaintiff alleges is applicable to the subject imports," the opinion said.

The suit concerns 31 entries on which Section 301 duties were levied. Environment One sought jurisdiction under Section 1581(a) for 23 of the entries given that they were timely protested, and under Section 1581(i) for eight of the entries, seeing as they were either untimely protested or not protested at all. Also ruling on the government's motion to dismiss for lack of jurisdiction, Barnett dismissed the case for the eight entries claimed under Section 1581(i).

Ruling on the 1581(i) claims, the judge turned to the Federal Circuit's decision in ARP Materials v. U.S., in which the appellate court said a protest was needed to sue for the retroactive imposition of a Section 301 exclusion, even when such exclusion was issued more than 180 days after liquidation (see 2209060035). As was the case in ARP Materials, Environment One needed a protest to make its claims, the judge ruled, adding that, "[i]n this case, USTR published the exclusion prior to liquidation, so the availability of the protest procedure is even more evident than it was in ARP Materials."

The judge did say that the claims regarding the 23 protests filed under Section 1581(a) did have jurisdiction to be heard at the trade court, though they were ultimately tossed for failure to state a claim on which relief can be granted. The government sought to dismiss these claims for lack of jurisdiction. The government said that the initial summons failed to identify any protests, but even if it had, the complaint does not state which protests the plaintiff is challenging under Section 1581(a), adding that the importer's motion to amend is time-barred since the initial summons did not establish jurisdiction and was filed more than 180 days after the denial of the protests.

Barnett took the government to task on this issue, holding that Environment One's incorrect summons filing "is the type of technicality that the court should not concern itself with at the expense of 'basic considerations of justice.'" The judge ruled that since the complaint listed the entries at issue, the summons could be properly amended without issue. Barnett relied on Zenith Electronics Corp. v. U.S., a case in which the plaintiff listed an incorrect antidumping duty amount in the summons, though it correctly listed it on other contemporaneous documents, leading the trade court and the Federal Circuit to grant the motion to amend the summons.

(Environment One Corp. v. United States, Slip Op. 23-49, CIT # 22-0124, dated 04/11/23; Judge: Mark Barnett; Attorneys: Christopher Kane of Simon Gluck for plaintiff Environment One; Jamie Shookman for defendant U.S. government)