NLMK's Section 232 Exclusion Objections Suit to Stay in Pennsylvania Federal Court

Russian steel importer NLMK's lawsuit against U.S. Steel alleging the Pittsburgh-based company misled the Commerce Department when it objected to NLMK's Section 232 exclusion requests will stay in Pennsylvania federal court, per an Aug. 19 ruling from the U.S. District Court for the Western District of Pennsylvania. Judge William Stickman IV denied NLMK's motion to keep the case in the Court of Common Pleas of Allegheny County, where it was originally filed, finding that the case raises federal issues including recreating Commerce's thought process in examining the exclusion requests (NLMK Pennsylvania, LLC, et al. v. United States Steel Corporation, W.D. Pa. #21-00273).

Since 2018, NLMK has submitted 162 exclusion requests, largely for its 10- and 8-inch steel slab imports, the Russian company said. These requests were either fully or partially denied on the word of companies such as U.S. Steel, which claimed it could meet foreign supply subject to the tariffs. However, U.S. Steel does not have a single domestic facility capable of making any 10-inch steel slab and gave NLMK only a fraction of its ordered 8-inch slabs, NLMK said in its original complaint (see 2101270034). Due to these circumstances, NLMK paid over $200 million in tariffs on imported slabs ordered to fill purchase orders, it said.

NLMK filed its suit arguing in part that U.S. Steel engaged in unfair competition in violation of Pennsylvania's unfair competition laws. Despite being premised on a state law, there are certain cases for which federal jurisdiction applies. NLMK's suit fits the bill, necessitating its stay in federal court, Stickman said.

To find if a state-law claim raises a stated federal issue that a federal court may hear without disrupting any conceived federal-state judicial balance, the court must find that the federal issue is "(1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress," the opinion said. Going through each qualifier, Stickman found that NLMK's case needed federal jurisdiction. The case will involve the discussion of Commerce's discretion to grant tariff exclusions. "There is no question, then, that the disposition of the critical causation element of NLMK’s state-law claim will necessarily turn on some construction of federal law," Stickman said.

However, the presence of federal law is not enough to stick it in a federal venue. A case needs "something more" to find that it is of substantial value to be included in a federal court. "That 'something more' is present in this case," the judge said. "What sets this case apart, however, is that the primary question of law necessary to establish the causation prong of NLMK’s action -- i.e., the scope of the Secretary’s and the Department of Commerce’s discretion to grant or deny exclusion requests --is one that is created and regulated by federal statutes and regulations and would require a probing examination of the unsettled question of why the Department of Commerce denied NLMK’s exclusion request."