Canadian Lumber Trade Alliance v. United States

Slip Op. 06-104

UNITED STATES COURT OF INTERNATIONAL TRADE

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CANADIAN LUMBER TRADE ALLIANCE :

et al., :

:

Plaintiffs, :

:

v. : Before: Pogue, Judge

: Consol. Ct. No. 05-00324

THE UNITED STATES et al., :

:

:

Defendants. :

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Steptoe & Johnson, LLP (Mark A. Moran, Matthew S. Yeo, and

Michael T. Gershberg) for Plaintiff Canadian Lumber Trade Alliance;

Steptoe & Johnson, LLP (Gregory S. McCue) for Plaintiff Norsk

Hydro Canada, LLC;

Steptoe & Johnson, LLP (Edward J. Krauland, Joel D. Kaufman,

and Thomas R. Best)for Plaintiff Canadian Wheat Board;

Sidley Austin LLP (Neil R. Ellis, Andrew W. Shoyer, Carter G.

Phillips, Lawrence R. Walders, and Richard D. Bernstein) for

Plaintiff Government of Canada;

Baker & Hostetler, LLP (Elliot J. Feldman, John Burke, Michael

S. Snarr, and Bryan J. Brown) for Plaintiffs Ontario Forest

Industries Association, Ontario Lumber Manufacturers Association,

and The Free Trade Lumber Council;

Stuart E. Schiffer, Deputy Assistant Attorney General; David

M. Cohen, Director, Jean E. Davidson, Deputy Director, Commercial

Litigation Branch, Civil Division, U.S. Department of Justice

(Kenneth M. Dintzer, Senior Trial Counsel, and David S.

Silverbrand, Trial Attorney) for Defendant United States;

Dewey Ballantine LLP (Bradford L. Ward, Harry L. Clark, Linda

A. Andros, Mayur R. Patel, and Rory F. Quirk) for Defendant-

Intervenor Coalition for Fair Lumber Imports Executive Committee;

King & Spalding, LLP (Joseph W. Dorn, Stephen A. Jones, and

Jeffrey M. Telep)for Defendant-Intervenor US Magnesium LLC;

Skadden Arps Slate Meagher & Flom, LLP (John J. Mangan,

Jeffrey D. Gerrish, and Robert E. Lighthizer) for Defendant-

Intervenor United States Steel Corporation;

Collier, Shannon, Scott, PLLC (Michael R. Kershow, Mary T.

Staley, Paul C. Rosenthal, and Robin H. Gilbert) for Defendant-

Intervenors Neenah Foundry Company, Municipal Castings,

Incorporated, LeBaron Foundry Incorporated, East Jordan Iron Works,

Incorporated, Allegheny Ludlum Corporation, and AK Steel

Corporation;

Pillsbury, Winthrop, Shaw, Pittman, LLP (Stephan E. Becker,

Sanjay J. Mullick, and Joshua D. Fitzhugh) for Amicus Curiae

Government of Mexico.

[Declaratory and injunctive relief granted; request for

disgorgement denied. Judgment entered accordingly.]

OPINION

In Canadian Lumber Trade Alliance v. United States, 30 CIT

___, 425 F. Supp. 2d 1321 (2006) this court found that certain

producers/exporters of goods from Canada to the United States,

Plaintiffs in this proceeding, had standing and a cause of action

to challenge the application of the Continued Dumping and Subsidy

Offset Act of 2000 (commonly known, and referred to herein, as the

“Byrd Amendment”), and that Plaintiffs’ actions were not barred by

the political question doctrine. The court further found that the

Defendant Bureau of Customs and Border Protection (“Customs”) was

improperly applying the Byrd Amendment to goods from Canada and

Mexico ("NAFTA parties") in violation of section 408 of the North

American Free Trade Agreement Act ("NAFTA Implementation Act").1

At the end of that decision, and in light of the court’s holdings,

the court ordered the parties to meet and confer with respect to

1

Familiarity with the court’s prior opinion is presumed.

Consol. Ct. 05-324 Page 3

the appropriate remedy/remedies; if the parties failed to agree on

remedies, the court further ordered the parties to submit

recommendations as to the appropriate remedy and scope of such

remedy.

The parties have now reported to the court that they were

unable to reach agreement on remedies and have accordingly

submitted their recommendations. Upon consideration of the

parties’ comments, and for the reasons set forth below, the court

awards both declaratory and injunctive relief.

DISCUSSION

The court’s authority to grant relief is defined by 28 U.S.C.

§§ 1585 and 2643. Section 2643 states, in relevant part,

Except as provided in paragraphs (2), (3), (4), and (5)

of this subsection, the Court of International Trade may,

in addition to the orders specified in subsections (a)

and (b) of this section, order any other form of relief

that is appropriate in a civil action, including, but not

limited to, declaratory judgments, orders of remand,

injunctions, and writs of mandamus and prohibition.

28 U.S.C. § 2643(c)(1). The authority provided by Section 2643

complements 28 U.S.C. § 1585 which specifies that “[t]he Court of

International Trade shall possess all the powers in law and equity

of, or as conferred by statute upon, a district court of the United

States.” The legislative history of these provisions supports a

broad reading of the court’s remedial authority. See Borlem

S.A.-Empreedimentos Industriais v. United States, 913 F.2d 933, 937

Consol. Ct. 05-324 Page 4

(Fed. Cir. 1990) ("[T]he legislative history of 28 U.S.C. § 1585

(1980) provides the Court of International Trade 'with all the

necessary remedial powers in law and equity possessed by other

federal courts established under Article III of the

Constitution.'") (footnote omitted) (quoting Rhone Poulenc, Inc.

v. United States, 880 F.2d 401, 402 (Fed. Cir. 1989) ); see also

Shinyei Corp. of Am. v. United States, 355 F.3d 1297, 1312 (Fed.

Cir. 2004); United States v. Hanover Ins. Co., 82 F.3d 1052, 1054

(Fed. Cir. 1996) ("Like district courts, the Court of International

Trade has the inherent power to determine the effect of its

judgments and issue injunctions to protect against attempts to

attack or evade those judgments." (citations omitted)).

Plaintiffs here have asked the court to use its authority to

grant three types of relief: (1) a declaratory judgment; (2) a

permanent injunction enjoining all future Byrd distributions

collected on Plaintiffs' goods; and (3) disgorgement of prior past

distributions. Defendant and Defendant-Intervenors contest this

relief, albeit in varying degrees, and with sometimes similar and

sometimes different concerns. The court will address in turn each

aspect of the requested relief.

(1) Declaratory Relief

Pursuant to the Declaratory Judgment Act,

In a case of actual controversy within its

jurisdiction, except with respect to Federal taxes

other than actions brought under section 7428 of

Consol. Ct. 05-324 Page 5

the Internal Revenue Code of 1986 [26 U.S.C. §

7428], a proceeding under section 505 or 1146 of

title 11, or in any civil action involving an

antidumping or countervailing duty proceeding

regarding a class or kind of merchandise of a free

trade area country (as defined in section

516A(f)(10) of the Tariff Act of 1930 [19 U.S.C. §

1516a(f)(10)]),[2] as determined by the

administering authority, any court of the United

States, upon the filing of an appropriate pleading,

may declare the rights and other legal relations of

any interested party seeking such declaration,

whether or not further relief is or could be

sought. Any such declaration shall have the force

and effect of a final judgment or decree and shall

be reviewable as such.

28 U.S.C. § 2201(a) (emphasis added). See also USCIT R. 57; 28

U.S.C. § 2202.

The Supreme Court has explained that “[w]hile the courts

should not be reluctant" to grant relief in appropriate cases,

Public Serv. Comm'n of Utah v. Wycoff Co., 344 U.S. 237, 243

(1952), the declaratory judgment statute "is an enabling Act, which

confers a discretion on the courts rather than an absolute right

upon the litigant," id. at 241. See also Green v. Mansour, 474

U.S. 64, 72 (1985); Wilton v. Seven Falls Co., 515 U.S. 277, 288

(1995) ("By the Declaratory Judgment Act, Congress sought to place

a remedial arrow in the district court's quiver; it created an

opportunity, rather than a duty, to grant a new form of relief to

qualifying litigants."). Accordingly, "declaratory relief in a

2

No party contends that this case involves an antidumping or

countervailing duty proceeding within the meaning of Section

2201(a).

Consol. Ct. 05-324 Page 6

particular case will depend upon a circumspect sense of its fitness

informed by the teachings and experience concerning the functions

and extent of federal judicial power." Wycoff, 344 U.S. at 243.

See also Green, 474 U.S. at 72 (noting the court's authority is

bound in “equitable considerations”); Samuels v. Mackell, 401 U.S.

66, 70-73 (1971).

In its prior decision, this court determined that there exists

a “case of actual controversy” between the parties, that is within

the court’s jurisdiction. The court also concluded that Customs is

violating the Plaintiffs' “legal rights.” See Canadian Lumber

Trade Alliance v. United States, 30 CIT ___, 425 F. Supp. 2d 1321,

1373 (2006). Moreover, the court found that future injury to

Plaintiffs from Defendant’s conduct is certain. Id. at 1348-49;

cf. Duke Power Co. v. Carolina Envtl. Study Group, 438 U.S. 59, 71

n.15 (1978) ("While the Declaratory Judgment Act does not expand

our jurisdiction, it expands the scope of available remedies. Here

it allows individuals threatened with a taking to seek a

declaration of the constitutionality of the disputed governmental

action before potentially uncompensable damages are sustained.").

Although neither Defendant or Defendant-Intervenors consent to

declaratory relief,3 neither offers any justification for why it

should not issue. Because Plaintiffs have satisfied the

3

At oral argument, the government appeared to soften its

position on this issue, though the court could not divine the

government’s precise intent.

Consol. Ct. 05-324 Page 7

requirements for declaratory relief, and defendants have failed to

show good cause for why it should not issue, the court finds

declaratory relief appropriate. Therefore, in conformity with the

requirements of USCIT R. 57, and as requested by Plaintiffs, the

court grants the Plaintiffs declaratory relief as set forth in the

judgment issued concurrent with this opinion.

(2) Injunctive Relief

Next, Plaintiffs seek a permanent injunction barring future

distributions. Although Defendant concedes that an injunction

should issue, it questions whether Plaintiffs have satisfied parts

of the test for an injunction; Defendant-Intervenors contend that

an injunction should not issue. The court agrees with Plaintiffs

and Defendant that an injunction should issue.

To be sure, "[a]n injunctive order is an extraordinary writ,

enforceable by the power of contempt." Gunn v. Univ. Comm. to End

the War in Viet Nam, 399 U.S. 383, 389 (1970). Because of the

force behind an injunction, and because injunctive relief is an

exception to the rule that "courts have no general supervising

power over the proceedings and action of the various administrative

departments of the government," Keim v. United States, 177 U.S.

290, 292 (1900), permanent injunctions do not "issue[] as of

course," Weinberger v. Romero-Barcelo, 456 U.S. 305, 311 (1982)

(quoting Harrisonville v. W. S. Dickey Clay Mfg. Co., 289 U.S. 334,

Consol. Ct. 05-324 Page 8

337-338 (1933)). Rather, "the decision whether to grant or deny

injunctive relief rests within the equitable discretion of the

district courts, and [] such discretion must be exercised

consistent with traditional principles of equity . . . ." eBay

Inc. v. MercExchange, L.L.C.,___ U.S. ___, 126 S. Ct. 1837, 1841

(2006).

As the Supreme Court recently stated in eBay:

According to well-established principles of equity,

a plaintiff seeking a permanent injunction must

satisfy a four-factor test before a court may grant

such relief. A plaintiff must demonstrate: (1)

that it has suffered an irreparable injury; (2)

that remedies available at law, such as monetary

damages, are inadequate to compensate for that

injury; (3) that, considering the balance of

hardships between the plaintiff and defendant, a

remedy in equity is warranted; and (4) that the

public interest would not be disserved by a

permanent injunction. The decision to grant or

deny permanent injunctive relief is an act of

equitable discretion by the district court,

reviewable on appeal for abuse of discretion.

Id. at 1839 (citations omitted). All parties agree, as they must,

that the "four-factor test" is a balancing test. See, e.g., Amoco

Prod. Co. v. Gambell, 480 U.S. 531, 542 & 546 n.12 (1987).

However, the parties, to some degree, dispute elements of each

factor. The court will address each in turn.

(i) Irreparable Harm & Lack of Alternative Remedies4

4

Although stated as two separate prongs by the Court in

eBay, whether something is "irreparable" requires, to a certain

(Footnote continued)

Consol. Ct. 05-324 Page 9

Here, by providing cash to Plaintiffs' domestic competitors,

Customs alters the balance of trade preserved by the NAFTA

Implementation Act and enhances the competitive position of

Plaintiffs’ domestic competitors, resulting in a loss of trade

over time. Canadian Lumber Trade Alliance, 30 CIT at ___, 344

F. Supp. 2d at 1345-49. Such a harm is cognizable. See, e.g.,

Parker v. Winnipiseogee Lake Cotton & Woolen Co., 67 U.S. (2

Black) 545, 551 (1863) (noting that a “recurring grievance” which

causes “the loss of trade” counsels in favor of an equitable

remedy). The only question is whether the harm to Plaintiffs is

more than “merely trifling.” Consol. Canal Co. v. Mesa Canal Co.,

177 U.S. 296, 302 (1900) (citing Parker, 67 U.S. (2 Black) at

552).

extent, a lack of alternative remedies. Moreover, the eBay Court

based the test on "well-established principles of equity." Id.

at 1839. Under traditional principles of equity, “irreparable

injury is not an independent requirement for obtaining a

permanent injunction; it is only one basis for showing the

inadequacy of a legal remedy.” 11A Arthur Wright et al., Federal

Practice and Procedure § 2944 (1995) (at page 94). See also Dan

B. Dobbs, Law of Remedies 50 (2d ed. 1993); Douglas Laycock, The

Death of the Irreparable Injury Rule, 103 Harv. L. Rev. 687

(1990). As Judge Friendly explained,

A plaintiff asking [for] an injunction because of the

defendant's violation of a statute is not required

to show that otherwise rigor mortis will set in

forthwith; all that 'irreparable injury' means in this

context is that unless an injunction is granted, the

plaintiff will suffer harm which cannot be repaired.

Studebaker Corp. v. Gittlin, 360 F.2d 692, 698 (2d Cir. 1966).

Consol. Ct. 05-324 Page 10

In Canadian Lumber Trade Alliance, 30 CIT at ___, 425 F.

Supp. 2d at 1345-49, this court held that although the extent of

Plaintiffs' injury may be disputed, there was no question

Plaintiffs had sufficiently demonstrated injury to satisfy the

very "generous test" for standing. Similarly here, the court is

again cautious to speculate on the extent of Plaintiffs' injury.

Nonetheless, upon consideration of the testimony adduced at trial

and various government reports entered into evidence, together

with Customs’ failure to publish notice of an intent to comply

with the court’s order, the court concludes that Plaintiffs have

sufficiently shown that their injury is more than "merely

trifling." The record demonstrates that Customs has used the Byrd

Amendment to provide significant support to Plaintiffs' domestic

competitors in violation of section 408. The court must conclude

that, absent an order by this court, this violation will continue.

Id.; cf. United States v. W. T. Grant Co., 345 U.S. 629, 633

(1953) ("The purpose of an injunction is to prevent future

violations, and, of course, it can be utilized even without a

showing of past wrongs." (citing Swift & Co. v. United States, 276

U.S. 311, 326 (1928)).

The court also finds that this harm is "irreparable." Given

that the United States, and the agencies thereof, are cloaked in

sovereign immunity, a party may only sue the United States for

monetary damages when Congress has affirmatively waived the

Consol. Ct. 05-324 Page 11

government's immunity. See, e.g., Lane v. Pena, 518 U.S. 187,

192 (1996); FDIC v. Meyer, 510 U.S. 471, 475 (1994). Here,

Plaintiffs have raised their claims under the Administrative

Procedure Act ("APA"). Although the APA generally waives the

United States' immunity from suit, it does not permit claims for

monetary damages. See 5 U.S.C. § 702; Lane, 518 U.S. at 196.

Nor is there any other basis for Plaintiffs to seek relief.

Accordingly, the harm is irreparable. See, e.g., Ohio Oil Co. v.

Conway, 279 U.S. 813, 815 (1929); Kan. Health Care Ass'n, Inc. v.

Kan. Dep't of Soc. & Rehab. Servs., 31 F.3d 1536, 1543 (10th Cir.

1994) (a state's Eleventh Amendment immunity rendered harm

irreparable); Temple Univ. v. White, 941 F.2d 201, 215 (3rd Cir.

1991); Zenith Radio Corp. v. United States, 710 F.2d 806, 811

(Fed. Cir. 1983); Brendsel v. Office of Fed. Hous. Enter.

Oversight, 339 F. Supp. 2d 52, 66 (D.D.C. 2004); cf. Amoco Prod.

Co. v. Gambell, 480 U.S. 531, 545 (1987) (noting that a harm is

irreparable when money damages cannot generally compensate for

it).

Despite the apparent lack of alternative remedies, Defendant

argues that the court could continue to allow Customs to make

distributions which Customs then may (with unreviewable discretion

according to Customs) decide to recoup from the recipients (if it

so elects), pursuant to Customs’ own regulation. See 19 C.F.R.

§159.64(3). This disgorgement, Customs claims, is an alternative

Consol. Ct. 05-324 Page 12

remedy making the harm to Plaintiffs reparable.

Defendant's argument is entirely unpersuasive. First, to

the extent Customs does recoup erroneously distributed monies,

this "alternative" remedy is little different than an injunction

-- Customs would be giving out money only to immediately recollect

it.5 Indeed, the only difference between Defendant's alternative

and an injunction is that an injunction will not require the

administrative cost and inconvenience of Customs' proposal.

Customs correctly notes that disgorgement is an equitable

remedy. See Tull v. United States, 481 U.S. 412, 424 (1987); SEC

v. Cavanagh, 445 F.3d 105, 119 (2d Cir. 2006); United States v.

Philip Morris, Inc., 273 F. Supp. 2d 3, 8-9 (D.D.C. 2002). Courts

must, of course, grant legal remedies if they are available and

adequate. See Idaho v. Coeur d'Alene Tribe of Idaho, 521 U.S.

261, 292 (1997) (O'Connor J., concurring); see also Beacon

Theatres, Inc. v. Westover, 359 U.S. 500, 509 (1959) (“in the

federal courts equity has always acted only when legal remedies

were inadequate”). But where, as here, there is no available

5

Customs does not appear to fully recognize that the issue

here regards the propriety of a permanent injunction, rather than

a preliminary injunction. The court considers a permanent

injunction, after having already concluded that the Defendant has

committed an unlawful act; therefore, when the distribution is

made, there is no issue awaiting judicial resolution regarding

the unlawfulness of the distribution. See Grupo Mexicano de

Desarrollo, S.A. v. Alliance Bond Fund, 527 U.S. 308, 314-15

(1999). While a party certainly may appeal this court's

decision, the permanent injunction inquiry operates under the

assumption that the court's conclusions are correct.

Consol. Ct. 05-324 Page 13

legal remedy, the court has broad discretion to choose the

appropriate equitable remedy. See, e.g., Dan B. Dobbs, Law of

Remedies 82 (2d ed. 1993). As Defendant's alternative remedy is

more burdensome than an injunction, the court does not find that

disgorgement is an alternative. See Beacon Theatres, 359 U.S. at

507 ("Inadequacy of remedy and irreparable harm are practical

terms, however."); Boyce's Ex'rs v. Grundy, 28 U.S. (3 Pet.) 210,

214 (1830) ("It is not enough that there is a remedy at law; it

must be plain and adequate, or, in other words, as practical and

efficient to the ends of justice and its prompt administration as

the remedy in equity.").

But even more fundamentally, Customs has not stated that it

must recoup any erroneously distributed monies; rather, it claims,

any recoupment will depend on its unreviewable discretion. Just

as the possibility that a defendant may voluntarily cease its

illegal conduct does not moot the need for an injunction, the fact

that the Defendant may later take voluntary action to "make things

right" does not negate the need for an injunction either. Cf.

Allee v. Medrano, 416 U.S. 802, 811-12 (1974) ("It is settled that

an action for an injunction does not become moot merely because

the conduct complained of has terminated, if there is a

possibility of recurrence, since otherwise the defendants 'would

be free to return to [their] old ways.'") (quoting Gray v.

Sanders, 372 U.S. 368, 376 (1963)); Goshen Mfg. Co. v. Hubert A.

Consol. Ct. 05-324 Page 14

Myers Mfg. Co., 242 U.S. 202, 208 (1916) (enjoining a patent

infringement was proper because "further infringement was in

effect threatened and could be reasonably apprehended.").

Indeed, the entire purpose of an injunction is to take away

defendant's discretion not to obey the law. Cf. Grupo Mexicano

de Desarrollo, S.A. v. Alliance Bond Fund, 527 U.S. 308, 315

(1999) ("The final injunction establishes that the defendant

should not have been engaging in the conduct that was enjoined."

(emphasis in original)). To wit, a cognizable alternative remedy

must rest on more than the whim or discretion of a defendant.

Therefore, the court finds both that, in the absence of

relief here, the Plaintiffs will suffer irreparable harm and that

there are no available legal remedies for that harm.

(ii) Balance of Hardships

Having established that the Plaintiffs will be irreparably

harmed in the absence of an injunction, the court must consider

the effect on other parties. Defendant, to its credit, has

acknowledged it will not be harmed by an injunction. Defendant-

Intervenors, however, claim that they will be harmed because they

will not get Byrd Distributions. Given the purpose of the Byrd

Amendment, i.e., to strengthen U.S. industry, Defendant-

Intervenors claim that the balance of hardships tips in their

favor. The court disagrees.

Consol. Ct. 05-324 Page 15

In the context of a permanent injunction, because a defendant

"will always suffer a hardship if he must comply with his contract

when it has become expensive or if he must cease operating a

factory that earns profits but also pollutes" only "hardship to

the defendant [that] is not an inseparable part of the plaintiff's

right" is cognizable. Dan B. Dobbs, Law of Remedies 80 (2d ed.

1993); cf. Am. Hosp. Supply Corp. v. Hosp. Prods., Ltd., 780 F.2d

589, 596-97 (7th Cir. 1985) (Posner, J.). Here Defendant-

Intervenors' claimed injury is entirely coextensive with

Plaintiffs' rights. Accordingly, Defendant-Intervenors' claim is

not separable from Plaintiffs' right. Therefore, Defendant-

Intervenors’ argument must be rejected. Because Plaintiffs

have demonstrated harm to their interests, and opposing parties do

not identify any cognizable harm to themselves, this factor tips

in Plaintiffs’ favor.

(iii) Public Interest

Last, the court must consider whether the public interest

favors an injunction. In balancing the public interest, courts

have traditionally looked to the underlying statutory purposes at

issue. See, e.g., Amoco Production Co. v. Gambell, 480 U.S. 531,

544-46 (1987); TVA v. Hill, 437 U.S. 153, 194 (1978); Hecht Co. v.

Bowles, 321 U.S. 321, 331 (1944). Here, as expressed by the court

in its discussion of prudential standing, section 408 of the NAFTA

Consol. Ct. 05-324 Page 16

Implementation Act limits the applicability of any subsequent

amendment to Title VII of the Tariff Act of 1930 with respect to

how those laws relate to the importation of goods from NAFTA

parties (in the absence of an express statement by Congress to the

contrary). See Canadian Lumber Trade Alliance, 30 CIT at ___,

425 F. Supp. 2d at 1373. As such, the language of section 408

indicates that Congress meant to place the interests of respecting

NAFTA above the salutary purposes of future amendments to Title

VII of the Tariff Act of 1930 (absent an express statement from

Congress). Any other conclusion would render section 408

nugatory. Id.

Defendant-Intervenors correctly note that the court may

consider public interest factors outside those implicated by the

statutory provisions. Defendant-Intervenors point to the need to

stop dumping and subsidization as counseling in favor of denying

an injunction. This interest, however, as explained above, was

resolved by Congress against the Defendant-Intervenors through its

adoption of section 408. Cf. Hill, 437 U.S. at 194 (finding that

because it determined that Congress afforded endangered species

"the highest priorities," the balance of interests favored

injunctive relief); Hecht, 321 U.S. at 331. Moreover, Defendant-

Intervenors neglect to mention or consider other public interests

at stake namely, protecting the public treasury or recognizing

that certain U.S. exports to Canada face retaliatory measures

Consol. Ct. 05-324 Page 17

commensurate with the outlay of Byrd Distributions. Clearly then,

this argument must be rejected, and the court concludes that the

public interest in the enforcement of the law weighs in favor of

issuance of an injunction.

(iv) Balancing the Prongs

As all prongs lean in the Plaintiffs' favor, the court finds

injunctive relief appropriate. In doing so, the court

acknowledges that a large balance of the unlawful Byrd

distributions remain to be completed. Nonetheless, because all

the other factors weigh decisively in Plaintiffs' favor, even were

the court to have found that Plaintiffs failed to demonstrate

substantial economic harm, nonetheless the remaining harm to

Plaintiffs’ rights could not be remedied without an injunction,

and the balance of equities would still warrant injunctive relief

here. Therefore, the court would still find that an injunction

should issue. Accordingly, in conformity with USCIT R. 65(d), the

court grants Plaintiffs injunctive relief as set forth in the

judgment issued concurrent with this opinion.

(3) Disgorgement

Last, Plaintiffs request an order directing Customs to

disgorge monies that Customs has improperly disbursed in Fiscal

Years 2004 and 2005. See 19 C.F.R. § 159.64(b)(3). If

Consol. Ct. 05-324 Page 18

declaratory relief is an "arrow in the court's quiver," and

injunctive relief is an "extraordinary remedy," disgorgement is a

landmine. Cf. Grupo Mexicano de Desarrollo, S.A. v. Alliance

Bond Fund, Inc., 527 U.S. 308, 314-15, 329 (1999) (referring to a

Mareva injunction as the "nuclear weapon of law").

When the government grants or distributes money to parties,

those parties have some right to rely on that money they receive.

Cf. Parsons v. United States, 670 F.2d 164, 166 (Ct. Cl. 1982)

("It is well established that there is a presumption that public

officers perform their duties correctly, fairly, in good faith,

and in accordance with law and governing regulations. . . ."). If

there were the constant threat of disgorgement, recipients might

be loath to expend money for the purpose for which it was given

(fearing that they could not repay the money in the event of a

court order). This, in turn, would frustrate Congressional intent

in granting money.

To be sure, as demonstrated here, there are times when

agencies violate congressional intent in granting money.

Nevertheless, where recipients do not bring an action challenging

the distribution of such money at the time the money is initially

granted, public policy ordinarily requires that recipients should

be allowed to expend such money without fear that it will later be

Consol. Ct. 05-324 Page 19

recollected until the distribution of the money is called into

question.6 See Laskowski v. Spellings, 443 F.3d 930, 936(7th Cir.

2006); cf. EEOC v. Sears, Roebuck & Co., 650 F.2d 14, 17 (2d Cir.

1981) (discussing the principles behind the de facto officer

doctrine). In this case, the Plaintiffs filed their complaints in

April 2005. Therefore, recipients were not placed on notice

until that time that the money they received could be recouped.

Consequently, the interests of equity would not be served by

ordering Customs to disgorge any of the money for the period prior

to the filing of the complaint.

The court further finds that equity would not be served by

ordering Customs to disgorge money distributed after recipients

were placed on notice of this action. Customs correctly notes

that the administrative costs of recoupment are high. Moreover,

in light of the other relief the court grants here today, and

because the money already distributed represents a fraction of

what is being held for distribution, the interest in recouping

distributions already made does not warrant the high

administrative costs of a court ordered recoupment.

Accordingly, the court denies Plaintiffs' request for an

6

This applies, of course, only when the recipient's conduct

is innocent.

Consol. Ct. 05-324 Page 20

order directing Customs to disgorge any funds already distributed.7

Dated: New York, New York

July 14, 2006

/s/ Donald C. Pogue

Judge

7

The court does not reach the issues as to whether Customs

is prohibited or allowed to seek disgorgement on its own

initiative.