Sunday, November 23, 2014

The Tale of Tenacious and Sigma-Tau

I skipped a post on a prior case from the Court of International Trade called United States v. Tenacious Holdings, Inc., on the grounds that it seemed to be a one-off without a lot of general applicability. I appear to have been wrong. There is already a new case along similar line. That case is Sigma-Tau Health Science, Inc. v. United States.

Both cases involve a motion to have a case referred to Mediation. In Tenacious, the Court of International Trade granted the motion. In Sigma-Tau, the Court denied the motion.

As background, you need to understand that the Court of International has a process called Court Annexed Mediation under Rule 16.1. The idea is that before a case moves to a trial or motion for summary judgment, the judge assigned the case can ask a different judge to take a look at the case as a judge-mediator. The goal is to promote the settlement of cases. But, the process does not happen particularly often at the CIT. There may be lots of reasons for that, but in classification cases, it is hard to mediate between two opposing tariff classifications. The imported item is usually X or Y and there is no middle on which to settle. But, in penalty cases, mediation may be more useful. Also, the United States can settle cases involving the collection of lawfully owed duties. So, maybe there should be more mediation.

Tenacious was a penalty case brought by the United States to collect duties and penalties on improperly classified work gloves. The amount in controversy was relatively small and the 2009 tariff classification was no longer in use. Thus, any decision in the case would be non-precedential. Also, in a penalty case, it is largely up to the Court to decide whether the defendant acted negligently and to determine an appropriate penalty. Thus, the Court decided that the potential benefit of settlement outweighed any risks associated with mediation and the Court ordered mediation.

Sigmau-Tau is different. For starters, it is not a penalty case. Second, the amount in controversy is unknown and the decision will have precedential value. Given these facts, the Court found mediation to be more risky than its possible rewards and denied the motion.

I don't know enough about Sigma-Tau, to have a view on whether that is the right decision. This is entirely up to the discretion of the judge, so there really in no right decision. Nevertheless, it seems to be me that mediation may be a useful tool to move cases along by having a knowledgeable third party shine a little reality into the case.

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