Litigation Highlights

 This is going to be my first catchup post and will hit the most salient points from some of the CIT and CAFC decision of the last six months. I may not cover everything, but as long as I am trying to read them, I may as well give you at least a blurb. You should read the full cases for details and keep in mind that the details matter.

Vietnam Finewood Company Ltd. involved a challenge to an ongoing enforcement action under the Enforce and Protect Act, 19 USC 1517. Under this law, U.S. Customs and Border Protection is obligated to investigate allegations that an importer has avoided the payment of antidumping or countervailing duties through "evasion." In this context, evasion is the use of "any document or electronically transmitted data or information, written or oral statement, or act that is material and false, or any omission that is material, and that results in any cash deposit or other security or any amount of applicable antidumping or countervailing duties being reduced or not being applied with respect to the merchandise." Customs must act within the statutory time frames. Specifically, it has 15 days after an allegation to decide whether to initiate an investigation. Once initiated, CBP has a maximum of 360 days to complete the investigation. 19 USC 1517(c)(1).  But, if CBP cannot determine whether the merchandise is covered by an AD or CV duty order, it can make a referral to Commerce seeking a determination on that issue. Neither the regulations nor the statute specify the time in which CBP can make a referral. Here, CBP did that in draft form, but still calling it a formal referral, about three weeks prior to the end of the 360-day period. CBP then followed up with a formal referral on the 360th day. Thereafter, the plaintiffs commenced a case challenging CBP's interim enforcement measures arguing that it failed to timely complete the investigation and that the referral was unreasonably delayed. Rather than bring the case as a challenge to the evasion determination (which had not yet happened), plaintiffs brought it under the Court's residual jurisdiction. The government moved to dismiss on jurisdictional grounds. The Court held that the referral to Commerce was timely and that it tolled the running of the 360-day period. As a result, plaintiff has a remedy available in the form of a challenge to the final evasion determination, when that happens. As a result, the case was not properly before the Court and was dismissed.

JSW Steel (USA) Inc. is a procedural decision in a challenge to the denial of exclusions from Section 232 duties on steel products. These challenges are brought to the Court of International Trade for review on the agency record. As a result, the record the agency presents to the Court must contain the information that the agency considered in making its decision, unless an exception applies. For example, privileged communications and documents showing the internal deliberations are not part of the record. The problem for the Court is that Commerce's denials of the requested exclusions are all lacking any explanation of what information the agency considered and how it informed the determinations. According to the decision, "The court cannot be certain what record evidence, if any, Commerce relied upon when both the BIS decision memoranda and ITA recommendation memoranda do not explain what information the sub-agencies considered, how it was weighed, or why the evidence compelled denial." In some cases, Commerce (through the Bureau of Industry and Security) stated that the requesting party had mis-identified the tariff classification of the merchandise. But, the Court noted, "BIS’s unsupported conclusion does not apprise the court of the reason why the HTSUS statistical reporting number was incorrect or how CBP reached that finding. . . . Nor does BIS indicate why an incorrect HTSUS statistical reporting number interferes with its ability to consider the substance of the request or why it does not ask for clarification as to the correct statistical reporting number." Due to the limited information contained in the record and statements from BIS acknowledging that some documents were lacking and that BIS had engaged in ex parte communications with domestic objectors, the Court ordered BIS to certify to the Court the steps it would take to show that the record is complete including how it identified any missing documents and the extent to which any ex parte communications affected the determination. After this order, the parties settled and the United States agreed to reliquidate the entries without the 232 duties. That is a win for the importers and a strong indication that BIS had not created an adequate record that would have supported the denial of the requested exclusions. 

One unique part of practicing before the Court of International Trade is the formal process (under Rule 83) to declare a matter a "test case" and then suspend similar cases pending the outcome of the test case. Ideally, the decision in the test case will result in the resolution of the suspended cases. This is distinct from the process of consolidating two or more cases into a single action under Rule 42. Consolidation results in a single action that will resolve all the claims in one judgment. That is distinct from a test case in which all the suspended cases retain their separate identities and can be litigated separately if the test case does not resolve the issue. In Danze Inc. The Court had to decide which procedure to apply to a group of cases challenging the classification of toilets. The government objected to the test case designation because these cases had previously been suspended under another test case that had been decided in favor of the classification CBP applied. Thus, according to the government, the motion to designate a new test cases and suspend the remaining cases again was an effort to re-litigate the already decided matter. The Court noted that consolidation is more appropriate than a test case where the issued presented are nearly identical and consolidating does not unduly complicate discovery. This would be the case where, for example, there are many variations in the merchandise that may impact classification. In those cases, a test case may resolve the salient legal question without getting bogged down in factual distinctions. Here, the fact of the prior test case and suspension did not bode well for that process resolving the case and the differences in merchandise appear to be limited. The Court, therefore, denied the motion for test case designation and suspension. Instead, it ordered that the cases be consolidated into three distinct groups of similar cases and a fourth group stayed. The fact of the prior test case may make this a special case. It is also possible that this signals greater scrutiny by the Court of the management of customs cases with an emphasis on efficient resolutions. Overall, if that is happening, that may be a good thing.