[00:00:00] Speaker 02:
You ready?

[00:00:01] Speaker 02:
I am.

[00:00:02] Speaker 02:
You may proceed.

[00:00:05] Speaker 00:
May it please the court, the trial court's judgment should be reversed and remanded.

[00:00:10] Speaker 00:
The trial court made one primary error that then infected a series of subsidiary legal errors that although stand on their own, really are part of a whole incorrect decision.

[00:00:21] Speaker 00:
The trial court applied the wrong standard to the government's burden.

[00:00:26] Speaker 02:
The government, as the Supreme Court has held in theory... It seems to me that the court may have misstated the standard of review in the standard of review section, but I want you to show me how it applied the wrong standard of review.

[00:00:44] Speaker 00:
Well, certainly ICP concedes that the court misstated, at the very least, the standard of review and argues that it was harmless because really,

[00:00:56] Speaker 00:
the court in effect applied the correct standard.

[00:00:59] Speaker 00:
And what I'd like to point out is that the court did two things.

[00:01:02] Speaker 00:
First, it cited the clearly reasonable language that everyone agrees is the incorrect standard.

[00:01:08] Speaker 00:
And to be candid, this is not the first time that the Court of International Trade has done that, and it's not the first time that the Court of Federal Claims has done it.

[00:01:16] Speaker 00:
But the court took an additional step and stated that this standard means something, quote, slightly more stringent

[00:01:25] Speaker 00:
than simple reasonableness.

[00:01:27] Speaker 00:
So it's a more explained standard of review that then is applied throughout the opinion.

[00:01:33] Speaker 00:
Now, it's true that when the Court of International Trade made its actual findings, it used the word reasonableness and didn't restate the clearly reasonableness standard or restate the slightly more stringent standard.

[00:01:49] Speaker 00:
But if standards of review are to mean anything, then we have to take

[00:01:54] Speaker 00:
as truth that the court believed that it was applying the standard of review that it laid out.

[00:01:59] Speaker 00:
And given the fact that this is not the first time that the Court of International Trade has done this, or the first time that the Court of Federal Claims has done it, we think that it's time for this court to correct the error.

[00:02:15] Speaker 02:
The trial court also incorrectly... Can we make that type of correction in an affirmance?

[00:02:22] Speaker 02:
Why would we have to reverse in order to make that correction?

[00:02:26] Speaker 00:
Well, we have no idea whether if using the correct... I mean, if you believe what I'm saying, which is that it's not just a boilerplate error, it actually infected the reasoning of the court, or could have infected the reasoning of the court, then affirmance wouldn't be appropriate.

[00:02:45] Speaker 00:
There would have to be an instruction to reconsider the substantial justification decision.

[00:02:50] Speaker 02:
The court characterizes its standard in other parts of its opinion, and that characterization is correct.

[00:02:57] Speaker 02:
It's the correct standard.

[00:02:59] Speaker 02:
So I wonder whether the court made the mistake in its articulation under the standard to review, but yet applied the correct standard.

[00:03:10] Speaker 02:
And if its analysis is correct, and if that's true, then that could be harmless there, especially under our standard to review.

[00:03:18] Speaker 02:
which is discretionary or an abuse of discretion.

[00:03:22] Speaker 00:
Right.

[00:03:22] Speaker 00:
So if this panel decides that the Court of International Trade just made a mistake, then I suppose you'd have a couple of options.

[00:03:32] Speaker 00:
You could instruct the court to correct the mistake and do nothing else.

[00:03:36] Speaker 02:
Not a mistake, a harmless error.

[00:03:38] Speaker 02:
Let's say a harmless error.

[00:03:39] Speaker 00:
OK.

[00:03:40] Speaker 00:
So yeah, certainly the court could do that.

[00:03:43] Speaker 00:
There are other legal errors in the decision, though, that we believe stand on their own.

[00:03:48] Speaker 00:
and also have to be corrected.

[00:03:49] Speaker 00:
So I'll move on to those.

[00:03:52] Speaker 00:
The trial court also incorrectly weighed the government's decision not to appeal.

[00:03:58] Speaker 00:
So in a couple of instances, the trial court mentioned it, but the most egregious, in our opinion, concerns the primary issue in the case, which was whether customs believed that the white sauce didn't conform to the ruling letter.

[00:04:16] Speaker 00:
The trial court found, as a matter of fact, based upon testimony, that customs actually did believe that it conformed to the ruling letter.

[00:04:24] Speaker 00:
That's what the whole trial was about, and we lost the issue.

[00:04:28] Speaker 00:
We decided not to appeal that factual issue.

[00:04:32] Speaker 00:
We appealed the other main issue in the case, which was the legal question, as to whether the statute required customs to follow the notice and comment procedures, whether this was in fact a revocation that required

[00:04:45] Speaker 00:
compliance with the statute.

[00:04:47] Speaker 00:
That's the issue that we appealed.

[00:04:48] Speaker 00:
It's traditional for the Department of Justice to take into consideration all of the matters that can be appealed.

[00:04:58] Speaker 00:
And it's also traditional for us to focus on the legal appeals.

[00:05:01] Speaker 00:
And these are careful decisions that are made in conjunction with the Solicitor General's office.

[00:05:06] Speaker 00:
And we decided to appeal just the legal issue, which is not a concession by any means that we believed that factual matter to be true.

[00:05:16] Speaker 00:
And of course, this court also characterized our decision not to appeal as a concession, but I think it did it in a slightly different way.

[00:05:25] Speaker 02:
Does the court say in a situation involving summary judgment, when you leave that type of issue behind, then you're not setting it up for the court to decide whether there's a material effected at issue in controversy.

[00:05:46] Speaker 02:
Why would the court be wrong in that type of analysis?

[00:05:54] Speaker 00:
Are you asking whether the court correctly considered the fact that the government survives summary judgment?

[00:06:02] Speaker 02:
Well, if you're not appealing a material issue, and this was a material issue, correct,

[00:06:13] Speaker 00:
It was a material issue, although this was an issue that went through trial.

[00:06:18] Speaker 00:
This was not an issue that was resolved on summary judgment.

[00:06:21] Speaker 00:
This is an issue that we actually survived.

[00:06:24] Speaker 00:
It was the main issue that we survived summary judgment on.

[00:06:26] Speaker 00:
And I'll get to the court's error on that in a little bit.

[00:06:29] Speaker 00:
But this is the issue we survived summary judgment on.

[00:06:32] Speaker 00:
We went to trial.

[00:06:32] Speaker 00:
There was a five-day trial where the Court of International Trade heard testimony

[00:06:37] Speaker 00:
from several government witnesses and company witnesses about this very question.

[00:06:42] Speaker 00:
And it made a factual determination that we're not challenging.

[00:06:45] Speaker 00:
We're suggesting that the only reason that, or one of the only reasons that the court gave for its substantial justification determination was that we conceded this issue on appeal.

[00:07:02] Speaker 00:
And what the court does is it links our concession

[00:07:05] Speaker 00:
to the finding of fact that it made regarding CBP.

[00:07:10] Speaker 00:
And it called it, I'm quoting, a gradual process by which the government moved from defending its actions to conceding error.

[00:07:19] Speaker 00:
And we dispute that characterization.

[00:07:22] Speaker 00:
We defended the action all along from CBP's determination at the administrative level all the way through the litigation.

[00:07:32] Speaker 00:
And the fact that we chose not to appeal it does not mean

[00:07:36] Speaker 00:
that we conceded error.

[00:07:38] Speaker 00:
When we concede error, we make a pretty big deal out of it, and everybody knows that we're conceding error because we actually use that language.

[00:07:47] Speaker 00:
So I'll move on to the summary judgment analysis.

[00:07:51] Speaker 00:
As I said, the court incorrectly or really didn't consider at all the fact that we survived summary judgment on the major factual issue that was concerned.

[00:08:05] Speaker 00:
And we've pointed out a couple of seven circuit cases that talk about giving a presumption to a party when they survive summary judgment.

[00:08:16] Speaker 00:
Those cases talk about the reality that it could be that at trial, it's revealed that the government had no case at all.

[00:08:25] Speaker 00:
But that is absolutely not the case here.

[00:08:29] Speaker 00:
The summary judgment decision here was that there was a genuine issue of material fact

[00:08:35] Speaker 00:
as to whether the product conformed to the ruling letter.

[00:08:40] Speaker 00:
And what the court says is that defendant presented several pieces of information that call into question that the product is the same.

[00:08:50] Speaker 00:
And the court cites all of the information that we appended to our emotion.

[00:08:55] Speaker 00:
And that is the reason why we survived summary judgment.

[00:08:57] Speaker 00:
Now, of course, it's true that at trial there was testimony that in the court's view

[00:09:03] Speaker 00:
outweighed that documentary evidence.

[00:09:05] Speaker 00:
But the question has to be whether the government has shown such relevant evidence as a reasonable mind might accept as adequate to support that factual conclusion.

[00:09:15] Speaker 00:
And it has to be that if we survive summary judgment and the court characterized that evidence as enough to survive summary judgment, that that is enough evidence that a reasonable mind might accept as adequate to support

[00:09:30] Speaker 02:
Is it possible for an unreasonable factual situation to survive summary judgment?

[00:09:36] Speaker 00:
Yeah, right.

[00:09:37] Speaker 00:
So I think it is possible.

[00:09:39] Speaker 00:
And it is what the Seventh Circuit identifies.

[00:09:42] Speaker 00:
The Seventh Circuit says that it's possible that after the trial, it could be revealed that the government had no case at all.

[00:09:51] Speaker 00:
And that's not the indication that we got from the trial court's decision.

[00:09:56] Speaker 00:
This was a five-day trial.

[00:09:57] Speaker 00:
It was quite detailed.

[00:09:58] Speaker 00:
There were two rounds of supplemental briefing after the trial, including specific questions from the trial judge.

[00:10:06] Speaker 00:
There was a nine-month decision period before the decision was issued, and there was no indication in the actual trial decision that we had brought anything even close to a frivolous claim.

[00:10:23] Speaker 02:
The last issue that I'll discuss... Could you address the issue of substantially justified?

[00:10:29] Speaker 00:
Yes.

[00:10:31] Speaker 02:
I can discuss just in general what it means and then... I want you to tell me if the CIT abuses discretion with respect to its determination on whether your position was substantially justified.

[00:10:46] Speaker 00:
Well, we think it did.

[00:10:48] Speaker 00:
The Court of International Trade

[00:10:53] Speaker 00:
made I'd say one, two, three, four, five or six factual findings that we think were incorrect simply as a matter of fact and that the government was in fact substantially justified.

[00:11:06] Speaker 00:
What we've done in our appeal is point out the primary legal errors that we think that the court should consider and instruct the trial court to reconsider

[00:11:15] Speaker 00:
Because once those legal issues are reconsidered, I think the substantial justification decision really has to come out the other way.

[00:11:24] Speaker 00:
Because if substantial justification is what the Supreme Court says it is, which is such relevant evidence as a reasonable mind might accept as adequate, it has to be that the government's position on the legal question about 1625 was adequate.

[00:11:38] Speaker 00:
And it has to be that the government's position on the factual question of whether the product conformed

[00:11:46] Speaker 00:
was substantially justified.

[00:11:50] Speaker 00:
And I'd like to talk about the legal question just for a little bit, which is something that we did appeal.

[00:11:56] Speaker 00:
And we do concede that we lost.

[00:12:00] Speaker 00:
But the Court of International Trade held that it was not a novel issue.

[00:12:06] Speaker 00:
Now, whether it's a novel issue goes both to the substantial justification question and to whether there is a special circumstance.

[00:12:13] Speaker 00:
But it's essentially the same discussion.

[00:12:16] Speaker 00:
The only reason that the court gave for why it was not a novel issue was its own decision when ICP initially brought the claim under section 1581 I. That decision, as we know, was vacated.

[00:12:33] Speaker 00:
And we think that as a matter of law, it's incorrect for the court to have considered that.

[00:12:38] Speaker 00:
And since there's no other rationale given for why this is not a novel issue, we think that the court really has to reconsider it without

[00:12:46] Speaker 00:
acknowledging its prior decision.

[00:12:48] Speaker 00:
And I'll make a couple of points about it.

[00:12:51] Speaker 00:
It's not that there can't be a series of decisions that might make something not new.

[00:12:59] Speaker 00:
But when the Supreme Court talks about that situation, they talk about a string of decisions.

[00:13:05] Speaker 00:
Here, we had one decision by the same trial court judge that has no legal effect.

[00:13:10] Speaker 00:
So it's certainly not a string of decisions, and it doesn't have the force of law.

[00:13:15] Speaker 00:
And obviously it wouldn't have been binding anyway.

[00:13:19] Speaker 00:
And the court itself acknowledged, the trial court acknowledged that this appellate court had never opined upon the issue in the first instance.

[00:13:28] Speaker 00:
And when this court did opine upon the merits, it certainly didn't say that there was anything frivolous, not that that's the standard, but that there was anything untoward about the government's position.

[00:13:39] Speaker 00:
And in fact, it went so far as to say that on the legal question of whether you can use a notice of action to revoke a ruling, it went so far as to say, we're not deciding that question for all time.

[00:13:50] Speaker 00:
We're only deciding it with respect to this particular situation.

[00:13:55] Speaker 02:
OK.

[00:13:55] Speaker 02:
You're into your rebuttal time.

[00:13:57] Speaker 00:
Thank you.

[00:14:03] Speaker 02:
Mr. Twofold, is that correct?

[00:14:05] Speaker 02:
That is correct.

[00:14:06] Speaker 01:
Good job.

[00:14:07] Speaker 01:
Not everyone pronounces that one correctly.

[00:14:11] Speaker 01:
I should say there's probably not one correct pronunciation, but that's the one my family uses.

[00:14:18] Speaker 01:
They have pleased the court.

[00:14:19] Speaker 01:
As you mentioned, I am Greg Tufel here on behalf of International Custom Products, and I'll be referring to them as ICP throughout.

[00:14:27] Speaker 01:
So having been driven out of business by the government's illegal actions and the false allegations of fraud, the now penniless ICP begs its court to

[00:14:37] Speaker 01:
uphold the attorney fee award and expenses award in this case.

[00:14:41] Speaker 01:
This is not a close case.

[00:14:44] Speaker 01:
And there is absolutely no reason to believe that if the court below had realized it had made a mistake in its articulation of the standard review at the beginning of the opinion, that it would have been decided any differently.

[00:14:57] Speaker 01:
In fact, the standard could be bad faith.

[00:15:01] Speaker 01:
And we would have clearly had a ruling in favor of awarding fees

[00:15:05] Speaker 01:
to icp in this case this situation it's not a close call that the the government's position as a whole was not substantially justified was not founded on a reasonable basis in both law and fact was not justified to a reasonable to a degree that could satisfy a reasonable person a reasonable person would not think that the government's position was correct why not because the government deliberately chose not to follow the law in this case

[00:15:34] Speaker 01:
no reasonable person would approve of the disregard of the law.

[00:15:39] Speaker 01:
In addition, the government took factual positions that its own evidence and its own lab reports contradicted.

[00:15:46] Speaker 01:
Frankly, the court in its opinion, which I will walk through a little bit in this portion, just to highlight how this is not a close call.

[00:15:55] Speaker 01:
I think the court went easy on the government in its description of how weak the government's position was at trial, and we can talk about that as well.

[00:16:03] Speaker 02:
So if you look through the... Let's go back a little bit.

[00:16:07] Speaker 02:
If the court articulates, says, I'm going to review this case under the standard review, and we all acknowledge that that was an incorrect standard, it was too stringent.

[00:16:18] Speaker 02:
Correct.

[00:16:19] Speaker 02:
Then how do we know, how can we tell that the rest of the opinion wasn't affected by that?

[00:16:24] Speaker 01:
Two ways, Your Honor.

[00:16:26] Speaker 01:
One is you can look at the actual analysis and the opinion and see that he was relying instead on a simple articulation of reasonableness in his analysis throughout his opinion.

[00:16:36] Speaker 01:
And second is you can look at the weight of the evidence generally and say, no matter how the standard was articulated, it would have come out the same way.

[00:16:45] Speaker 01:
So we know it didn't infect the decision to make it.

[00:16:47] Speaker 02:
So if you don't adopt your position, then what would be the recourse to vacate and remand

[00:16:53] Speaker 02:
consideration under the appropriate standard?

[00:16:55] Speaker 01:
That's highly unnecessary.

[00:16:57] Speaker 01:
And all the court would do... I know that's not what you want to happen.

[00:17:01] Speaker 01:
Yeah.

[00:17:01] Speaker 01:
No.

[00:17:01] Speaker 01:
But if this court were to affirm a state... The standard was incorrectly articulated.

[00:17:07] Speaker 01:
It's harmless error because, in this case, it's clearly the position of the government was not substantially justified under the correct standard.

[00:17:14] Speaker 01:
This is not a close call.

[00:17:15] Speaker 01:
And it'd be pointless exercise to send it back down to have the exact same award reinstated.

[00:17:20] Speaker 01:
under the correct articulation of the standard.

[00:17:23] Speaker 02:
But can we decide that in the first instance?

[00:17:28] Speaker 01:
Well, I don't think the court needs to decide it in the first instance because the language of the opinion throughout decides that under the correct articulation of what is reasonable.

[00:17:37] Speaker 01:
And again, I just want to point out some of the language in that opinion so the court can focus on that.

[00:17:44] Speaker 01:
At A7 in the record, just for later reference, the court states,

[00:17:50] Speaker 01:
The government took the position that we don't have the time to go through the 1625C procedures.

[00:17:56] Speaker 01:
The government took the position that the ruling letter did not apply because the imports were used to make cheese and not sauce.

[00:18:05] Speaker 01:
That was at A9, the judge referenced that.

[00:18:09] Speaker 01:
The Notice of Action, of course, though, doesn't mention use.

[00:18:13] Speaker 01:
And the government claimed that the Notice of Action was not an interpretive ruling or a decision.

[00:18:19] Speaker 01:
The government claimed also that ICP made material misrepresentations and omissions to obtain the ruling.

[00:18:25] Speaker 01:
Those were the positions of the government.

[00:18:27] Speaker 01:
But the government never did a class and kind analysis regarding the white sauce.

[00:18:33] Speaker 01:
They never determined what class and kind ICP's white sauce belonged to.

[00:18:37] Speaker 01:
The government contended that the white sauce didn't conform, but its own laboratory tests, if you look at A13 in the appendix, its own laboratory tests confirmed that white sauce did

[00:18:49] Speaker 01:
conform to the ruling.

[00:18:53] Speaker 01:
Considering the entirety of the record and the positions taken as a whole, the court found the position not to be substantially justified.

[00:19:00] Speaker 01:
The government likes to take out individual positions they took and say, well, this was novel and this might have been justified, but the court

[00:19:07] Speaker 01:
quite correctly, under the standard, looked at their position as a whole.

[00:19:10] Speaker 01:
And I do not want this court to overlook the many unreasonable positions the government took along the way, and the actual justification originally for the action taken by the government, and then the post hoc rationalizations in attempt to justify what the government knew it could not justify on the basis of the actual reasons it took the action.

[00:19:30] Speaker 01:
Note that the classification at issue is a principal use provision.

[00:19:34] Speaker 01:
And so whether White Sauce or a particular entry is

[00:19:37] Speaker 01:
correctly classified under the provision at issue is based on the typical use of the class and kind of goods generally, not on the actual use of those imports.

[00:19:48] Speaker 01:
Although it's relevant what the actual use is, it's not determinative.

[00:19:51] Speaker 01:
Well, in this case, the government acted as if the only thing that matters is the use of the import.

[00:19:58] Speaker 01:
And if the use is inconsistent with the principal use of the classification, the use of the import, then aha, we gotcha.

[00:20:06] Speaker 01:
U.O.S.

[00:20:07] Speaker 01:
$300 million.

[00:20:07] Speaker 01:
And that was totally unreasonable.

[00:20:10] Speaker 01:
Of course, the government did not attempt in this litigation to defend that position.

[00:20:14] Speaker 01:
Instead, they grasped at any other possible justification they could find for why what they did, although not for the right reasons, might have still have been an okay thing to do.

[00:20:24] Speaker 01:
So they started to scrutinize, well, did this entry conform to the ruling?

[00:20:29] Speaker 01:
Is there anything we can assert that isn't conforming with this ruling?

[00:20:33] Speaker 01:
How about the fact content?

[00:20:35] Speaker 01:
you know, the fat content has to be 77 percent or lower, or it doesn't conform.

[00:20:40] Speaker 01:
Of course, the court found that position was not reasonable, and it found that the test results and the information evidence in the case didn't support a belief that the fat was even beyond that range.

[00:20:51] Speaker 01:
In addition, they said, well, how about, what if it didn't contain the thickeners that are stated in the ruling?

[00:20:57] Speaker 01:
And the government went on to, you know, and they highlight in their reply brief, well, we had great evidence.

[00:21:05] Speaker 01:
Dr. Bradley, a witness that testified that it might not contain thickeners.

[00:21:08] Speaker 01:
And we had Diane Cuttscholl, an employee of ICP, that testified that this was all a scheme to bring butter into the country.

[00:21:17] Speaker 01:
They omit to mention, Your Honor.

[00:21:18] Speaker 01:
And I would point, Your Honors, to the record as to Dr. Bradley from pages A7600 through A7602 and as to Diane Cuttscholl from A7615 through A7617.

[00:21:31] Speaker 01:
that both of these witnesses were found not credible.

[00:21:34] Speaker 01:
The government's position at trial was so weak, they put up not one, but two witnesses found not credible, which is obviously not a common occurrence at trial.

[00:21:43] Speaker 01:
In addition, their expert was found not qualified and to have no basis to give the opinions he gave.

[00:21:49] Speaker 01:
So yes, they got past summary judgment, Your Honor, but they didn't get past summary judgment as a plaintiff, showing that it has enough evidence to prove its claim at trial,

[00:21:58] Speaker 01:
you know, that a reasonable person could, they got to court and pass summary judgment as a defendant, which is very different from the cases they cite, which suggests that you should take heavy account of someone's surviving motion for summary judgment.

[00:22:11] Speaker 01:
Just because ICP didn't marshal sufficient evidence at the summary judgment stage to prove its case beyond any issue of fact, when the government is asserting misrepresentation and factual issues, it's very hard to win

[00:22:25] Speaker 01:
Summary judgment, when there are allegations of factual issues, as a plaintiff to conclusively disprove on summary judgment, just because we couldn't marshal enough evidence to win the case at summary judgment, doesn't mean that the government's position was reasonable and substantially justified, even within the litigation.

[00:22:42] Speaker 01:
And remember, we're talking about the whole position.

[00:22:44] Speaker 01:
What did they do before the litigation, and then what did they do during?

[00:22:47] Speaker 01:
And the language is harsh.

[00:22:49] Speaker 01:
If you look at page A15 of the record,

[00:22:51] Speaker 01:
The court cites the government, CBP, knew it was effectively revoking the ruling and unreasonably ignored the requirements that the ruling letter governs liquidations until it's revoked.

[00:23:03] Speaker 01:
At A-15, the judge characterized the government's fraud allegations as speculation, not strong, not well-founded, borderline frivolous, speculative.

[00:23:16] Speaker 01:
At A17, the court notes, the government's position was rooted in a desire to avoid the revocation process that CBP knew revocation could not be properly avoided.

[00:23:27] Speaker 01:
And the whole government position as a whole was a post hoc justification for a position that the government knew to be improper.

[00:23:35] Speaker 01:
The government acted in this case in a way it knew was improper.

[00:23:39] Speaker 01:
ICP could not merely meet a reasonableness standard, it could meet an intentional misconduct

[00:23:46] Speaker 01:
So given these circumstances, the overwhelming evidence that the court cites throughout its opinion, and that I refer to you in the record of its opinion actually as the bench opinion after the trial,

[00:24:01] Speaker 01:
Yes, on summary judgment, ICP couldn't adequately demonstrate how bad the government's case was.

[00:24:06] Speaker 01:
It took trial for ICP to get its act together and truly lay out all the information and demonstrate how unreasonable, how baseless, how meritless the government's factual and legal positions were.

[00:24:17] Speaker 03:
Now, what is your response to the government's argument that the court erred as a matter of law when it states that because the government didn't appeal,

[00:24:31] Speaker 03:
It has conceded error.

[00:24:34] Speaker 01:
You know, the court did not, as the government's attorney describes, did not say, well, because they didn't appeal, that means their position wasn't substantially justified.

[00:24:46] Speaker 01:
The court noted that as one factor.

[00:24:49] Speaker 01:
And this is an equitable determination where the court is considering the totality of the circumstances.

[00:24:54] Speaker 01:
There is no case that says that a court cannot even consider the fact that a major position was abandoned on appeal.

[00:25:01] Speaker 01:
It is a difference to a trial court deciding whether to award fees or not.

[00:25:04] Speaker 03:
A court can consider that.

[00:25:07] Speaker 03:
But that's a far cry from a court saying that, well, when the government doesn't appeal, it has conceded error.

[00:25:15] Speaker 01:
I would argue merely semantics when it describes conceded error.

[00:25:19] Speaker 01:
I don't think it's earth-shaking whether the court describes that as a concession of error.

[00:25:22] Speaker 01:
The court understands it's a decision not to appeal.

[00:25:26] Speaker 01:
The court is well aware of how appeals work.

[00:25:29] Speaker 01:
how litigation works, and that a party is not declaring its position was unreasonable just because it didn't appeal.

[00:25:34] Speaker 01:
And the court doesn't hold that in its opinion.

[00:25:36] Speaker 01:
It doesn't say, and because they didn't appeal, I find that a conclusive factor is why their position was not substantially justified.

[00:25:43] Speaker 01:
It merely notes it.

[00:25:44] Speaker 01:
It says, this is among the many factors in this case.

[00:25:47] Speaker 01:
If they were so sure of that, if that was a truly strong position, it would be a stronger position if they had appealed it.

[00:25:56] Speaker 01:
And I think that's at least a fair factor for a court to take into account.

[00:26:00] Speaker 01:
Could a court say conclusively every time a government does an appeal, that means whatever position they did in an appeal wasn't substantially justified?

[00:26:06] Speaker 01:
Absolutely not.

[00:26:07] Speaker 01:
And that's not what the court did here.

[00:26:09] Speaker 01:
The court merely referenced it among the totality of the case and the totality of the position of the government throughout the litigation and didn't put undue weight or emphasis on that issue.

[00:26:20] Speaker 01:
In addition,

[00:26:24] Speaker 01:
The court, just because the novelty issue, I wanted to address that as well.

[00:26:33] Speaker 01:
The court did not say the issue wasn't novel.

[00:26:36] Speaker 01:
The court merely said that the novelty of the issue was diminished, and this is at page A19 in the record, by the fact that, and mind you, even though there was a vacated decision on the basis of jurisdiction,

[00:26:49] Speaker 01:
There was a complete analysis of the government's legal position, with respect to whether the Notice of Action constituted a revocation of a ruling or not, provided to the government before they even started their position in this case.

[00:27:01] Speaker 01:
Despite that full legal analysis, which wound up being the legal analysis applied by the CIT and this court, the government disregarded and persisted.

[00:27:09] Speaker 01:
They'd been given a serious heads up, so to speak, that their position was not going to succeed.

[00:27:14] Speaker 01:
The court did not say, because of this vacated decision, the position wasn't novel.

[00:27:18] Speaker 01:
It just said that its novelty is diminished.

[00:27:19] Speaker 01:
It's not like you were operating on a completely blank slate.

[00:27:23] Speaker 01:
The government had a strong reason to believe that that novel position wasn't going to carry the day.

[00:27:29] Speaker 03:
Is it proper for a court to make reference to a vacated opinion for anything?

[00:27:36] Speaker 01:
I would say yes, solely for this purpose, to say that the legal analysis related to that issue was provided to the government.

[00:27:42] Speaker 03:
But once it's vacated, it has

[00:27:45] Speaker 03:
It's gone.

[00:27:46] Speaker 03:
It has no impact, no effect.

[00:27:48] Speaker 03:
It's of no consequence.

[00:27:50] Speaker 01:
It is of no consequence in this way, Your Honor.

[00:27:53] Speaker 01:
It can't be relied upon as precedent, and it didn't foreclose the government's ability to continue making the same legal arguments.

[00:27:59] Speaker 03:
And it doesn't necessarily mean that that analysis has any effect whatsoever.

[00:28:06] Speaker 01:
Right.

[00:28:06] Speaker 01:
No legal effect, Your Honor.

[00:28:07] Speaker 01:
But it is at least as good as a law review article to say, here's a complete analysis

[00:28:11] Speaker 01:
of your legal position and why it's not likely to succeed.

[00:28:14] Speaker 01:
The court just said its novelty is diminished.

[00:28:16] Speaker 01:
It didn't say from a legal standpoint you're unable to make the argument or it's not still, it's not novel.

[00:28:21] Speaker 03:
Do you have any basis of saying that a vacated opinion is at least as worthy of note as a law review article?

[00:28:32] Speaker 01:
I don't have a case that says that, Your Honor.

[00:28:34] Speaker 03:
I don't think you'd find one.

[00:28:36] Speaker 01:
I'll concede that, Your Honor.

[00:28:38] Speaker 01:
The court did not give undue weight to its vacated decision in the analysis of the overwhelming weight of the evidence and the totality of the government's position.

[00:28:48] Speaker 01:
It merely noted that the novelty is diminishing.

[00:28:52] Speaker 01:
It still considered the possibility from an equity standpoint of taking into account the novelty of it.

[00:28:57] Speaker 01:
By the way, there's a number two part of that, which is the court said that a novel position is not a basis in equity

[00:29:04] Speaker 01:
When it comes in, this introduction of a novel issue comes in as a post hoc rationalization of what the government knew was clearly illegal conduct.

[00:29:12] Speaker 01:
And so there's two aspects, the novel decision portion of this case, Your Honor.

[00:29:17] Speaker 01:
And of course, the government completely ignores the latter one I just referenced.

[00:29:21] Speaker 01:
So that is not the totality of the position of the government in this litigation, the position that was rejected in the vacated decision.

[00:29:28] Speaker 01:
That is one of many positions, and it hardly describes the totality of the government's decision.

[00:29:32] Speaker 01:
Any concluding thoughts?

[00:29:34] Speaker 01:
Just that, Your Honor, this has been a long, hard road.

[00:29:37] Speaker 01:
My client, ICP, was victimized by the government's illegal conduct, suffered substantial damages, remanding for the pointless exercise and what would inevitably result in reinstatement of the award will delay further and put unnecessary hardship on my client to await the inevitable result in this case.

[00:29:56] Speaker 01:
It's any error that occurred, we acknowledge.

[00:29:59] Speaker 01:
It is harmless, and we urge this court

[00:30:01] Speaker 01:
to uphold and affirm the award while correcting the standard.

[00:30:06] Speaker 01:
Thank you.

[00:30:10] Speaker 02:
Ms.

[00:30:10] Speaker 02:
Burke, we'll put you back in three minutes.

[00:30:12] Speaker 00:
Thank you.

[00:30:14] Speaker 00:
I'd like to talk about two legal issues and then address some of the facts that ICP just raised.

[00:30:19] Speaker 00:
First, on the question of whether it's a novel issue, ICP points out something that we actually probably should have pointed out and didn't really focus on, is that the court conceives it's a novel issue but says that the novelty is diminished.

[00:30:31] Speaker 00:
Once you take out that cause for diminishment, then I think we're back to it being a novel issue.

[00:30:38] Speaker 00:
The second thing is that ICP, I think, suggested that it's okay to consider as a factor whether the government chooses not to appeal as a factor.

[00:30:57] Speaker 00:
And as long as it's not the only factor.

[00:30:59] Speaker 00:
And I think that Pierce actually, it doesn't speak to this particular issue, but in spirit, actually says the exact opposite.

[00:31:06] Speaker 00:
It says 10 different ways.

[00:31:08] Speaker 00:
You cannot take anything from the fact that the government loses.

[00:31:12] Speaker 00:
So the fact that the government loses and chooses not to appeal is the same as if the government loses and chooses to appeal.

[00:31:18] Speaker 00:
And I'd like to just touch on some of the factual overstatements that I heard ICP make.

[00:31:23] Speaker 00:
First, and this gets back to Judge Raina's question about whether there was substantial justification, on the legal question, the record is full of the back and forth that CBP entered into to figure out whether it had the authority to do what it did.

[00:31:40] Speaker 00:
It's absolutely true that the trial court disagreed, but what the record reflects is careful consideration by the agency

[00:31:48] Speaker 00:
as to whether it had the authority.

[00:31:50] Speaker 00:
And it determined that it did.

[00:31:52] Speaker 00:
And there was no evidence of bad faith on the part of the government.

[00:31:56] Speaker 00:
And this is getting down a little bit into the weeds, but on the documentary evidence, and I want to remind the court of the standard.

[00:32:04] Speaker 00:
The standard is not what the trial court believes the documentary evidence and the trial showed.

[00:32:11] Speaker 00:
It's not about the trial court's factual holdings.

[00:32:14] Speaker 00:
We understand that we didn't prevail.

[00:32:17] Speaker 00:
on the facts in this case.

[00:32:19] Speaker 00:
The question is whether the government put forth such relevant evidence as a reasonable mind might accept as adequate to support the conclusion.

[00:32:27] Speaker 00:
And the government put forth documentary evidence from ICP's own clients about a couple of really important things.

[00:32:35] Speaker 00:
The content of the product, the content was being, at least according to the documents, was being changed to remove some of the elements that make something more like a sauce

[00:32:47] Speaker 00:
and less like butter.

[00:32:48] Speaker 00:
And if you remove some of those elements, it becomes more like a butter spread and less like the sauce.

[00:32:55] Speaker 00:
We also put forth documentary evidence about the role of the percentage of milk fat.

[00:33:01] Speaker 00:
Now, ICP makes it seem like this is totally unimportant, but if you look at the documents, the percentage of milk fat is actually really, really important.

[00:33:08] Speaker 00:
And there's all kinds of documents between ICP and its customers about what the precise

[00:33:15] Speaker 00:
percentage of milk fat is going to be and whether it's going to change the price.

[00:33:19] Speaker 00:
And the point being that the government put forth relevant evidence, reasonable evidence that got us past the summary judgment phase.

[00:33:28] Speaker 00:
The fact that the trial court didn't buy it does not mean that we were not substantially justified.

[00:33:33] Speaker 02:
Thank you.

[00:33:33] Speaker 02:
Okay.

[00:33:33] Speaker 02:
Thank you very much.