CAFC Says CIT Cannot Consider Equity in Upending Finality of Liquidation

Judge Jimmie Reyna dissented from the ruling, arguing that the majority misapprehends CBP's protest procedures and limits "CIT’s authority to enforce its judgments to a level that is inferior to the full authority" of a court established in Article III of the U.S. Constitution.

The decision came in a case brought by big box retailer Target Corp. to contest the trade court's decision to order reliquidation of a number of its erroneously liquidated metal-top ironing tables. Target paid a 9.47% cash deposit, and CBP accidentally liquidated the entries at this rate even as an AD review found that the products should have been assessed a 72.29% AD margin.

The trade court ordered reliquidation of 224 entries erroneously assessed this lower rate, including 40 of Target's entries, in Home Products International v. U.S. The trade court said that while neither of Section 1514's two exceptions to the finality of liquidation -- CBP protest and AD/CVD civil suit -- applied to the case, the court ultimately has final say over the entries, since the entries must be liquidated in line with the court's final decision.

CIT then undertook an "equitable analysis" and said reliquidation was required. In so doing, the trade court was faced with the appellate court's ruling in Cemex v. U.S., in which the CAFC rejected a group of petitioners' efforts to get the trade court to order the reliquidation of finally liquidated entries on the grounds that the statute says liquidation is final. The Home Products court distinguished Cemex on the grounds that the Cemex court declined to enforce the trade court's judgment, since too much time had passed following liquidation and the petitioners weren't vigilant enough in stopping the liquidation of the entries.

Target challenged the trade court's Home Products order in a separate action.

Chen, writing for the court, said the trade court's order was issued in error and that Cemex governs the case. The judge said it doesn't matter that the 224 entries were assessed an AD rate in violation of a CIT order, since even an "admittedly erroneous decision to liquidate" falls under Section 1514, which "shields such decisions from challenge, without regard for their legality."

The appellate court said the efforts of both CIT and the U.S. to morph Cemex into an "equitable decision" due to the decision's discussion of the petitioners' delay in pursuing remedy and failure to monitor the situation fall flat, and that the statute ultimately doesn't allow for equitable considerations. Chen said that while this result may seem unfair, "the proper forum for remedying the harshness of the statute is Congress, not this court."

The majority emphasized that the Cemex system is devoid of any suggestion "that it was an equitable decision to decline to enforce the judgment based on principles of fairness." CIT held otherwise in Home Products by "overlooking the Cemex opinion’s exhaustive statutory analysis and instead homing in on a few lines at the end of the opinion," Chen said.

The appellate court also rejected CIT's claim that allowing Cemex to govern would "elevate the principle of finality over the inherent power of CIT under Article III of the Constitution." Chen held that an Article III lower court's power can be reined in by Congress, which is precisely what the case is here. "Congress has carefully crafted a statutory scheme that provides for finality," and none of the exceptions to finality established in that scheme apply here, the majority held.

Instead, the trade court tried to "craft its own path," but "[n]o matter how well-intentioned the CIT's efforts were, it is not the CIT's role to use inherent powers to override limits set by Congress's carefully crafted statutory scheme as recognized by binding precedent," the court said.

And while the U.S. argued that Section 1514 doesn't strictly apply, since CBP didn't make a decision as defined by the statute, Chen said this argument is "forfeited as it was not raised in the government's brief."

Reyna dissented from this decision, finding three errors with the majority's ruling. The first is that the majority is mistaken that the case is controlled by Cemex, the judge said.

Reyna agreed with the trade court that Cemex engaged in an equitable analysis itself and that such analyses are allowed under the statute. The Cemex court looked at "equitable considerations such as notice, timeliness, and prejudice to the parties," and also didn't touch on various other issues raised in this case, including the interplay between the two finality exceptions. Here, the trade court is invoking its jurisdiction to hear AD/CVD challenges, which concerns the second finality exception.

Reyna also disagreed with the majority that the trade court is charting its own path, finding that "the CIT has clearly and thoroughly articulated its authority to issue an affirmative injunction in this case." The judge added that "these statutes do not prohibit its ability to do so."

The dissent also said Section 1514 doesn't limit the trade court's authority to order reliquidation in line with its judgments. Reyna would find that "finality is estopped when a lawsuit challenging one of the decisions listed in section 1516a is filed within the CIT." It's undisputed that the AD rate was properly challenged before the trade court, invoking the exception to finality for civil actions challenging AD/CVD determinations, the dissent said.

Lastly, Reyna said the majority strips the trade court of the key power of being able to enforce its judgments. The dissent said Section 2643(c)(1), which says the trade court can "order any other form of relief that is appropriate in a civil action," can be used to let CIT "enforce its own judgments through any appropriate avenues, which would include an affirmative injunction."

(Target Corp. v. United States, Fed. Cir. # 23-2274, dated 04/21/25, Judges: Richard Taranto, Raymond Chen, Jimmie Reyna; Attorneys: Patrick Gill of Sandler Travis for plaintiff-appellant Target; and Alexander Vanderweide for defendant-appellee U.S. government)