Importer Defends Bid to Add New Claim of Prior 'Treatment' Afforded by CBP in Customs Suit
Importer Under the Weather defended its motion for leave to amend its complaint in a customs case, arguing that the government's grounds for opposition to the motion, untimeliness and prejudice, don't defeat it. The importer said any delay the Court of International Trade might find due to the motion isn't "undue" and that the amendment doesn't prejudice the U.S., since the amendment would add a claim based on the "same transactions and events as the original complaint" (Under the Weather v. United States, CIT # 21-00211).
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The case concerns Under the Weather's pop-up tent "pods" the company imported from 2010 through 2018, receiving duty-free treatment under subheading 6306.22.1000, which covers backpacking tents. CBP then said in 2018 that the entries would be classified as "other" tents under subheading 6306.22.9030, dutiable at 8.8%.
The importer successfully protested the decision before CBP, reverting its goods in 2019 to duty-free treatment. However, in 2020, CBP issued an HQ ruling declaring that the goods fit under subheading 6306.22.9030. Under the Weather sued, claiming that the HQ ruling needed to be accompanied by a notice-and-comment period, since the HQ ruling revoked or modified a previous interpretive decision or ruling.
The trade court rejected that argument last year, finding that the previously decided protest wasn't a "prior interpretive ruling or decision" (see 2409050030). During discovery on the importer's remaining claims, Under the Weather sought to amend its complaint to effectively renew its claim that CBP needed to impose a notice-and-comment period since it modified a "treatment previously accorded" to its pods. The importer cited two alleged examinations of the pods by CBP in 2015. The U.S. opposed the motion on the grounds that it's untimely and would prejudice the government (see 2503100063).
In response, Under the Weather said the U.S. mischaracterizes the case law when arguing that the motion is untimely. While the government said "delay alone" has been found to be enough to deny a motion for leave to file an amended pleading, the importer said this claim is contradicted by the trade court's "lenient standard" and the "supporting authorities." The main case the U.S. relied on for its rule statement is Cencast Servs. v. U.S., in which the U.S. Court of Appeals for the Federal Circuit denied a similar motion for "delay alone," since the case had been pending for over six years by the time the motion was filed.
Under the Weather said that in its case, the suit "remains procedurally 'young.'" The motion for leave was filed 19 months after the complaint was opened and not "nearly two years" as the government "self-servingly characterizes it," the importer argued. The motion came "before the expiration of any deadlines set in the current Scheduling Order, and no specific deadlines exist for amending the pleadings," the brief added.
Under the Weather also argued that its motion wouldn't prejudice the government, which the U.S. said would occur due to increased discovery burdens. The importer said that there's no such prejudice, since the new "treatment" claim involves the "same transactions and events as plaintiff's original complaint," adding that the U.S. will have "ample opportunity to defend plaintiff's new claim." Under the Weather also noted that the trade court has previously held that "potential discovery difficulties" aren't enough to show actual prejudice.
Lastly, the government opposed the importer's motion on the grounds that it didn't state a proper claim for prior treatment afforded to the imported pods. In response, Under the Weather said its proposed count does state a sufficient claim, since it "relies on an actual determination made by Customs, which was consistently applied for a period longer than the requisite two-year period, and identifies relevant examinations that support the existence of the claimed treatment."
The government's claim that Under the Weather's new claim is futile departs from the "established 'plausibility' threshold and instead" tries to impose a higher "probability" standard at the pleading stage, the brief said.