                                          Slip Op. 16-15

                UNITED STATES COURT OF INTERNATIONAL TRADE


 UNITED STATES,

                        Plaintiff,                   Before: Timothy C. Stanceu, Chief Judge

                   v.                                Court Nos. 13-00084, 13-00085,
                                                     13-00086, 13-00087, 13-00088,
 LINCOLN GENERAL INSURANCE                           13-00089, 13-00090, 13-00091,
 COMPANY,                                            and 13-00092

                        Defendant.


                                     OPINION AND ORDER

[Ordering stay of litigation in nine actions following liquidation of defendant by order of the
Commonwealth Court of Pennsylvania]

                                                                     Dated: February 18, 2016

        Beverly Farrell, Civil Division, U.S. Department of Justice, of New York, NY, argued
for plaintiff United States. With her on the brief were Amy Rubin, Assistant Director, and
Benjamin Mizer, Principal Deputy Assistant Attorney General. Of counsel on the brief were
Edward Maurer and Michael Heydrich, Office of Assistant Chief Counsel, U.S. Customs and
Border Protection.

       T. Randolph Ferguson, Sandler Travis & Rosenberg, P.A., of San Francisco, CA, and
Frederick L. Ikenson, Blank Rome LLP, of Washington DC, for defendant Lincoln General
Insurance Co. (In Liquidation). With them on the brief was Kierstan L. Carlson, Blank Rome
LLP, of Washington DC.

       Stanceu, Chief Judge: Plaintiff United States initiated the nine above-captioned actions to

recover from defendant Lincoln General Insurance Company (“Lincoln”) supplemental

antidumping duties and accrued interest claimed to be owing on various entries secured by

customs bonds. The entries at issue, which were made between May 1, 2002 and

October 31, 2002, covered imports into the United States of garlic from the People’s Republic

of China.
Consol. Court No. 06-00250                                                            Page 2

       Before the court are plaintiff’s motions to stay the above-captioned actions in light of the

recent liquidation of Lincoln by order of the Commonwealth Court of Pennsylvania, issued

November 5, 2015 (“Liquidation Order”). Pl.’s Mot. to Stay 1 (Nov. 11, 2015), ECF No. 66

(“Pl.’s Mot.”); see also, id. at Attach. 1 (IN RE: Lincoln General Insurance Company In

Liquidation, No. 1 LIN 2015) (“Liquidation Order”).1 Defendant Lincoln General Insurance

Company (In Liquidation), successor in interest to Lincoln General Insurance Company

(collectively, “LGIC”), opposes the stays.2 Def.’s Resp. in Opp’n to Pl.’s Mot. to Stay

(Nov. 16, 2015), ECF No. 67 (“Def.’s Opp’n”). For the reasons discussed herein, the court will

grant plaintiff’s motions to stay these cases.

       Under the terms of the Liquidation Order, LGIC is to be liquidated pursuant to Article V

of the Insurance Department Act of 1921 (the “Act”), 40 Pa. Stat. §§ 221.1–.63 (governing the

liquidation of insolvent insurers under Pennsylvania law). Liquidation Order 1. Plaintiff points

out that the Liquidation Order sets a deadline of July 6, 2016 for filing of proof of claims against

LGIC’s estate, adding that “[i]t will not be known until after all proofs of claims are received and

evaluated whether the estate will be in any position to make good on the Government’s

claims . . . .” Pl.’s Mot. 2; see also Liquidation Order ¶ 13; 40 Pa. Stat. §§ 221.37–.38.

       Section 221.44 of the Act establishes the following classes of priority for claims against

an insolvent insurer:




       1
           Pursuant to the court’s April 3, 2014 order granting plaintiff’s consent motion for leave
to file single, representative submissions for the nine above-captioned actions, all citations to the
parties’ court filings are to the docket for Court No. 13-00084.
       2
         LGIC is under the control of Teresa D. Miller, Insurance Commissioner of the
Commonwealth of Pennsylvania, in her official capacity as Liquidator of LGIC. Liquidation
Order 1.
Consol. Court No. 06-00250                                                             Page 3

        (a) administrative claims; (b) claims under policies of insurance;
        (c) claims of the federal government; (d) certain debts due employees;
        (e) the claims of general creditors, including simple contract creditors;
        (f) claims for unearned premium or premium refunds; (g) claims of local
        and state governments; and (h) all other claims.

Id. § 221.44. Section 221.44 further provides that “[e]very claim in each class shall be paid in

full or adequate funds retained for such payment before the members of the next class receive

any payment.” Id. In seeking the stays, plaintiff submits that LGIC’s estate may be partially or

entirely depleted of funds before reaching plaintiff’s creditor class. Plaintiff argues, further, that

continuing litigation of the nine pending actions at this time could further diminish the estate’s

limited assets, increasing the likelihood that plaintiff would be unable to collect on successful

claims, and that denying the requested stays could encumber both parties with unnecessary

litigation costs.

        “[T]he power to stay proceedings is incidental to the power inherent in every court to

control the disposition of the causes on its docket with economy of time and effort for itself, for

counsel, and for litigants.” Landis v. North American Co., 299 U.S. 248, 254 (1936) (“Landis”).

The decision of when and how to stay a proceeding rests “within the sound discretion of the trial

court.” Cherokee Nation of Okla. v. United States, 124 F.3d 1413, 1416 (Fed. Cir. 1997)

(citations omitted). In making this decision, the court is to “weigh competing interests,”

including those of judicial economy and efficiency, “and maintain an even balance.” Landis,

299 U.S. at 257. Where a stay might damage another party, the moving party “must make out a

clear case of hardship or inequity in being required to go forward, if there is even a fair

possibility that the stay for which he prays will work damage to someone else.” Id. at 255.

        Judicial economy and efficiency favor a stay of proceedings in the above-captioned

actions. According to the parties, the appointed liquidator of LGIC’s estate advised LGIC’s
Consol. Court No. 06-00250                                                             Page 4

counsel in writing that she would like to proceed with these actions. Pl.’s Mot. 1; Def’s Opp’n 7.

The reasons the liquidator wishes to continue litigation are not stated in the letter to LGIC’s

counsel. See Def. Lincoln Gen. Insurance Co.’s Post-Oral Argument Br. on Jurisdiction, Ex. 2,

Appx. B (Nov. 9, 2015), ECF No. 62 (liquidator’s November 9, 2015 letter).

       A stay of the above-captioned actions pending the receipt and evaluation of submissions

in the statutory proof of claim process may avoid the needless adjudication of claims in the

pending cases. As plaintiff points out, some or all of these claims could be rendered moot by

creditor priority provisions and the limited assets of LGIC’s estate.

       In opposing plaintiff’s motions, defendant argues that proceeding to litigate these cases at

this time “will not pointlessly deplete the assets of LGIC’s estate” because it “will aid the

Liquidator in determining the amount of assets available for distribution,” Def.’s Opp’n 10, as

well as “LGIC’s liability to the United States,” id. at 8. Defendant, however, does not state why

the requested stays would be prejudicial to it, and the court has no basis upon which to conclude

that any such prejudice would occur. The court concludes that the benefits to judicial economy

and efficiency occasioned by the requested stays outweigh any benefits that would result from

continuing to litigate these actions in the short term. See USCIT R. 1. Accordingly, the court is

granting plaintiff’s motions.

       The court concludes, further, that prompt reporting by the parties concerning the status of

the proof of claim process is appropriate so that the court may review the need for any

continuation of the stays. For this reason, the court is ordering the parties to file a status report

on or before August 31, 2016.
Consol. Court No. 06-00250                                                         Page 5


                                            ORDER

       Upon consideration of plaintiff’s motions to stay, defendant’s response in opposition, and

all other papers and proceedings herein, and upon due deliberation, it is hereby

       ORDERED that plaintiff’s motions to stay be, and hereby are, granted; it is further

       ORDERED that the nine above-captioned actions are stayed; and it is further

        ORDERED that the parties shall provide the court with a status report concerning the
proof of claim process pertaining to Lincoln General Insurance Company (In Liquidation) and
any related issues on or before August 31, 2016.


                                                            /s/ Timothy C. Stanceu
                                                            Timothy C. Stanceu
                                                            Chief Judge

Dated: February 18, 2016
       New York, New York
