Trade Court Says No Attorney Fees for Importer After Favorable EAPA Ruling

The Court of International Trade on March 1 rejected importer Diamond Tools Technology's request for attorney fees in its suit challenging CBP's finding that the company evaded the antidumping duty order on diamond sawblades from China. Judge Timothy Reif said that since the case presented two issues of "first impression," the government's position was "substantially justified."

The two novel issues concerned whether CBP is bound by the timeline created by the Commerce Department's start of a circumvention inquiry after referring a "covered merchandise" matter to Commerce and whether Diamond Tools Technology made a "material and false statement or act, or material omission" within the meaning of the Enforce and Protect Act.

On the first issue, the court said the "the interaction between Customs’ EAPA investigations and Commerce’s scope inquiries, specifically a circumvention inquiry," was a matter of first impression (see 2307310021). On the second question, CBP interpreted the term "false" in EAPA to mean "incorrect" -- a position the court said "was not inconsistent with past rulings by Customs in other circumstances."

After litigation on the EAPA proceeding, CBP reversed its finding that Diamond Tools Technology's shipments of diamond sawblades assembled in Thailand but made with Chinese cores and segments before Dec. 1, 2017, evaded the AD order. The trade court sustained the move in August 2023, prompting the importer's application for attorney fees (see 2311280045).

In its application for recovery of attorney fees, Diamond Tools Technology cited the U.S. Court of Appeals for the 3rd Circuit ruling in Washington v. Heckler, which said that the government's burden of showing "substantial justification is a strong one and is not met merely because the government adduces 'some evidence' in support of its position." Reif noted that the 3rd Circuit didn't just rest its decision "solely on the language that plaintiff invokes."

The appellate court said the case law hasn't set a "comprehensive formula" for finding what constitutes a "reasonable basis in law" and found that the U.S. position "clearly offends established precedent." However, "there was no court precedent with respect to the narrow circumstances presented by plaintiff’s EAPA claims at the time of litigation, rendering the decision in Washington inapposite," the judge said.

In fact, the U.S. Court of Appeals for the 1st Circuit recently said that "when the issue is a novel one on which there is little precedent, courts have been reluctant to find the government's position was not substantially justified." Given the only "handful" of cases on EAPA, the U.S. position was substantially justified, the court said.

(Diamond Tools Technology v. United States, Slip Op. 24-27, CIT # 20-00060, dated 03/01/24; Judge: Timothy Reif; Attorneys: Lucius Lau of White & Case for plaintiff Diamond Tools Technology; Antonia Soares for defendant U.S. government)