Eighth Amendment Challenge to EAPA Unique Among Recent Lawsuits

Among the recent plethora of lawsuits filed in the Court of International Trade challenging the constitutionality of the Enforce and Protect Act process for investigating evasion of antindumping and countervailing duty orders (see 2106070011), at least one invokes the Eighth Amendment, a rarely litigated part of the U.S. Constitution. Filed by trade lawyer David Craven on behalf of Global Aluminum Distributor, the lawsuit challenges EAPA penalties based on the amendment's prohibition on excessive fines.

The lawsuit centers on an EAPA case related to evasion of duties on aluminum extrusions from China by way of a transshipment scheme through the Dominican Republic. Craven's Eighth Amendment claim of excessive fines involves the practice of applying adverse facts available in an antidumping or countervailing duty proceeding. When a determination of evasion is made, CBP applies the countrywide AD/CVD rate to the imports based on the country in which the goods were evaded. However, the countrywide rate for China, as was the case in Craven's lawsuit, was determined through AFA.

Since Global Aluminum Distributor, the plaintiff in the case, fully complied with all proceedings, the use of AFA via the evasion finding constitutes an excessive fine, the argument goes. "The amount of any fine that falls under the 8th Amendment must be reasonably related to the conduct of the importer," the April 28 complaint said. "There is no showing of any bad conduct on the part of the importers which would justify a fine on the importer."

Craven remains hopeful for the prospect of success, basing this optimism on a Supreme Court of the U.S. case in 1993, United States v. Bajakajian, even though there is scant additional case law on the amendment, he said in an interview. The case involved the discovery of $350,000 in undeclared cash on a passenger of an international flight. The government sought to seize the entire amount, raising the issue of whether this was a reasonable amount to forfeit in relation to the crime. In a 5-4 opinion, the court ruled that the Eighth Amendment "limits the government’s power to extract payments, whether in cash or in kind, as punishment for some offense." It was the court's first application of the Excessive Fines Clause of the Eighth Amendment.

Another lawyer involved in EAPA litigation, Mary Hodgins of Morris Manning, sees validity in the theory, but also considers it an uphill battle. Seeing as the ultimate bad actor in these proceedings is China, Hodgins said, the China-wide AD/CVD rate is sky-high. A small or medium-sized importer may not be able to stomach the large fines that come with the China-wide rates, opening the door for an Eighth Amendment challenge. However, the same excessive fine claims are not being brought against the China-wide rates themselves, making the application to the evasion duties dubious, Hodgins said. "There’s no Eighth Amendment claim against Commerce imposing those AD/CVD rates, and so if you’re supposed to pay them, you’re supposed to pay them," she told Trade Law Daily.

Federal courts tend to avoid litigating matters on constitutional issues when other avenues of resolution exist, so for a case to proceed to litigation over the Eighth Amendment, it will need a willing judge and a perfect set of circumstances, Craven said. "I’ve raised it a couple of times at the Commerce Department, but the thing is ... you never decide a constitutional argument if you can decide it on other grounds," Craven said. "... I think the case to win it is going to have a perfect fact pattern, and I have to determine when that perfect fact pattern’s been reached."