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Gilda Industries, Inc. v. United States

October 13, 2010


Appeal from the United States Court of International Trade in Case No. 07-00474, Senior Judge R. Kenton Mus-grave.

The opinion of the court was delivered by: Newman, Circuit Judge.

Before RADER, Chief Judge, NEWMAN, AND PLAGER, Circuit Judges.

The government appeals from a decision of the Court of International Trade holding that a retaliatory duty order assessing duties against certain imports of Gilda Industries, Inc. had terminated by operation of law. The Court of International Trade ordered liquidation of Gilda's goods without assessment of the duty, and ordered the government to refund, with interest, the 100 percent ad valorem duty that Gilda paid on products imported after the retaliatory duties expired.*fn1 We affirm the judgment.



The retaliatory measures at issue here were first imposed on July 28, 1999. The measures were implemented in response to an import ban adopted by the European Community ("EC") targeting meat products from the United States. Our prior decision on Gilda's earlier challenge to these measures provides a detailed history:

In December 1985 the European Community prohibited imports of the meat of animals that had been treated with hormones. The United States attempted to negotiate a change in the EC's policy. When those efforts failed, the United States invoked formal dispute settlement proceedings before the World Trade Organization challenging the EC's ban on hormone-treated meat. In 1997 a WTO panel issued a report concluding that the EC's ban was contrary to its WTO obligations because the ban was not based on scientific evidence. The WTO's Dispute Settlement Body subsequently adopted the panel's report. Nevertheless, the EC did not implement the panel's recommendations. As a result, in 1999 the United States requested suspension of the duty concessions that WTO countries are obligated to grant to one another. The EC objected, and the matter was referred for arbitration. On July 12, 1999, the WTO arbitrator determined that the United States had suffered impairment as a result of the EC's ban and therefore authorized the United States to increase its duties on EC products.

Pursuant to section 301 of the Trade Act of 1974, the United States Trade Representative has authority to take certain retaliatory measures when this country's trade rights are violated by another country. In particular, 19 U.S.C. § 2416 authorizes the Trade Representative to create "retaliation lists," which subject certain products of the target countries to increased duties. On March 25, 1999, the Trade Representative published notice of his intention to implement retaliatory measures against the EC pursuant to the WTO dispute settlement agreement. Implementation of WTO Recommendations Concerning EC-Measures Concerning Meat and Meat Products (Hormones), 64 Fed. Reg. 14,486 (Mar. 25, 1999). After a notice and comment period for the proposed retaliatory measures, the Trade Representative adopted a retaliation list and subjected all the products on the list to a 100 percent ad valorem duty. Among the listed products were those falling under [Harmonized Trade Schedule of the United States] subheading 9903.02.35, which encompasses "[r]usks, toasted bread and similar products."

Gilda Indus., Inc. v. United States, 446 F.3d 1271, 1274--75 (Fed. Cir. 2006) ("Gilda I").

Gilda imports toasted breads from Spain, and has been paying the retaliatory duty on these imports since 1999. This court has explained that 19 U.S.C. §2417(c)(1) "provides that actions taken under section 2411 (e.g., implementation of a retaliation list) terminate after four years unless a representative of the domestic industry 'which benefits from' the action submits a written request for continuation of the action." Gilda I, 446 F.3d at 1277--78. Prior to the end of the first four-year period in 2003, representatives of the domestic beef industry submitted written requests for continuation of the list. Gilda brought suit to challenge the retaliation list. Gilda argued that despite the beef indus-try's request for continuation of the retaliation list, the list nonetheless terminated because the domestic beef industry "is not an industry 'which benefits from' the retaliation list. Gilda contend[ed] that the domestic beef industry cannot be said to be a beneficiary of the retaliation list unless and until the EC responds to the retaliatory measure by complying with the WTO settlement agreement." Id. at 1278. This court rejected that argument in Gilda I, and held that the requests for continuation of the retaliatory action by representatives of the United States beef industry prevented termination of the retaliation under §2417(c). Id.


Gilda brought the present action against the United States in December 2007, after another four-year period had passed since the implementation of the retaliatory list. No requests for continuation of the retaliatory action were received by the Trade Representative during this second four-year period. Thus, Gilda argued that the retaliation had terminated pursuant to 19 U.S.C. §2417(c) on July 29, 2007. The government moved to dismiss Gilda's case for failure to state a claim upon which relief could be granted. The government argued that §2417(c) applied only to the first four-year period after imposition of retaliatory duties. Specifically, the government contended that §2417(c)(1)(A)'s phrase "a particular action . . . under section 2411" referred only to the initial "action" undertaken by the Trade Representative to impose the retaliation list, and that "actions taken pursuant to section 2411 do not include the continuation of a particular action under section 2411." Gilda Indus., Inc. v. United States, 556 F. Supp. 2d 1366, 1377 (Ct. Int'l Trade 2008) ("Order on Motion to Dismiss"). Because the Trade Representative had taken no action during the second four-year period other than to continue the retaliation list, the government argued that there was no action to terminate under §2417(c). The Court of International Trade rejected this argument and denied the government's motion to dismiss. The court found no support in the text of the statute for the government's interpretation, and found that the legislative history supported a contrary interpretation.

The court also reasoned that "[b]ecause an action cannot terminate unless the action is somehow continuing, the court is unable to accept that the 'action' to which the statute refers is not a continuing one." Id. at 1378. The government has not appealed this ruling by the trial court.

After the denial of the government's motion to dismiss, Gilda moved for summary judgment on its claim. Before considering the motion, the Court of International Trade granted the government's request for a remand to the Trade Representative to re-evaluate its position in view of the court's interpretation of §2417(c) in the Order on Motion to Dismiss. The Trade Representative determined that the retaliation list did not terminate because the Trade Representative had not complied with 19 U.S.C. §2417(c)(2), which requires the Trade Representative to notify representatives of the domestic industry of any impending termination under §2417(c)(1) at least 60 days before termination. The Trade Representative ...

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