Thursday, May 25, 2006

Caution: Courts at Work

A couple interesting decisions have come out recently. Well, I read them recently.

In Gilda Indus. v. United States, the Federal Circuit had to deal with a motion to dismiss a case for failure to state a cause of action for which relief can be granted. The underlying question was whether the Court of International Trade can give any relief to a company that wants its product, imported toasted bread (really), removed from the list of products from the E.U. subject to retaliatory duties. The duties were imposed to compensate the U.S. for the E.U. policy on meat raised with the use of hormones.

There are a bunch of good issues in the case, but a few are worthy of note. First, once again, the CAFC has reminded practitioners that a protest is not the only way into Court to challenge a liquidation. In this case, Customs had no authority to decline to collect the retaliatory duties imposed by the USTR. So, the Court reminds us, there was no point in filing a protest. This is the same reasoning the CAFC used for Harbor Maintenance Tax cases.

On the substance, the plaintiff did not have much luck proving, as a matter of law, that its product should not be on the retaliation list. But, it did show that there is a fact question about whether the USTR had properly invoked an exception to the requirement that the list change periodically. Under the exception, the USTR can hold off changing the list if it believes a resolution of the dispute is imminent. So, the CAFC send the case back to determine whether a resolution is, in fact, imminent.

Along the way, the CAFC pointed out that retaliatory duties need not affect merchandise similar to that affected by the measure found to violate the WTO. Another point was that the U.S. can collect retaliatory duties in excess of the WTO recommendation because the WTO decision is not binding on the Court.

But, the thing that caught my eye was a whether the plaintiff had standing to sue at all. Standing is a constitutional requirement for getting into federal court. Basically, the requirement is that the plaintiff be the person really hurt by whatever they are suing about. So, if your neighbor's house burns down, you don't get to sue the incompetent electrician who did their wiring. Here, the CAFC asked whether the plaintiff was the kind of person Congress intend ever be allowed to get into court on this question. Were they in the "zone of interest." After all, the whole point of these retaliatory duties is to hurt importers and, indirectly, exporters, and, even more indirectly, the exporters' home country. Why let the importer get out from under the duties by going to court?

For lawyers, this brings to mind Long Island railroads, boxes of fireworks, depot scales, and one strange accident. Unfortunately, that is another story entirely.

In the end, the CAFC raised this interesting issue and then said they need not decide it because the government did not raise it. You know what that it? It is a heads up to government to look for that issue and raise it the next time it comes up.

The other interesting case is United States v. Optrex America from the Court of International Trade. This is interesting only in that it is basically a list of ways a company can get in trouble with Customs. Here, as a service to my loyal reader, is the lesson to take from Optrex:
  1. If you get legal advice on something, follow it. If you don't like it, get a second opinion.
  2. If you have a ruling on something, follow it. If you don't like it, go for a new ruling or go to court.
  3. If you get a question from Customs during an investigation, answer it truthfully. Don't spin the facts because the agent will not appreciate it.
  4. Saying you are cooperating is not the same as actually cooperating.
  5. Your internal "expert" better know what he or she is doing.
Lastly, the Court made it very clear that "reasonable care" requires more than just asking a lawyer or a broker, or having a procedure. It is a combination of expertise, policies, procedures, and communication building toward a reliable, if not necessarily correct, conclusion.

Both cases are worth reading.

1 comment:

Anonymous said...

Optrex...a/k/a marketing tool for customs lawyers