US Steel Moves to Dismiss NLMK's Section 232 Exclusion Objection Suit

The case against United States Steel Corporation alleging that the Pittsburgh-based company misled the Commerce Department when it objected to Russian importer NLMK's Section 232 exclusion argues an unrecognized category of "unfair competition," U.S. Steel said in an Aug. 30 motion to toss the case. In a brief filed in the lawsuit at the U.S. District Court for the Western District of Pennsylvania, U.S. Steel said that it is immune to any liability stemming from its petitioning of the government and that NLMK's suit is barred by federal law (NLMK Pennsylvania, LLC, et al. v. United States Steel Corporation, W.D. Pa. #21-00273).

Beginning with the Section 232 tariffs' implementation in 2018, NLMK submitted 162 exclusion requests, largely for its 10- and 8-inch steel slab imports. The requests were either fully or partially denied by Commerce on the word of companies such as U.S. Steel, which claimed it could meet foreign supply for goods subject to the tariffs. But, in the original complaint in the district court, NLMK alleged that 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 (see 2101270034). Subsequently, NLMK forked over $200 million in tariffs on its slab imports to the federal government, the company said.

NLMK then launched its suit in the district court alleging, in part, that U.S. steel engaged in unfair competition in violation of Pennsylvania's unfair competition laws. But NLMK's complaint attempts to bring these state laws into new territory, well beyond what any court has previously allowed, U.S. Steel argued. NLMK's definition of "unfair competition" asserts that an alleged misrepresentation about a defendant's own product to a government regulator, resulting in injury caused by the regulator, was also proximately caused by the defendant, U.S. Steel said.

"No Pennsylvania court has ever countenanced such a convoluted and attenuated theory of common law unfair competition, and this Court should not create new Pennsylvania common law by doing so now," the motion said. Instead, Pennsylvania state unfair competition laws operate on a principle of "passing off," U.S. Steel urged. The state courts have only ever recognized unfair competition where one has passed off their product as another's or issued a false or dishonest statement or stolen intellectual property, U.S. Steel argued.

"Nothing like that is alleged here. At best, NLMK has alleged that U.S. Steel provided inaccurate information about its own steel production capabilities, and that Commerce (a third party government regulator) denied NLMK relief from tariffs as a result," the motion said. "No Pennsylvania court has suggested, let alone held, that such statements rise to the level of tortious unfair competition."

U.S. Steel also argued that NLMK's claims are barred by federal law since a showing of cause would amount to "second-guessing" Commerce's decision to reject the exclusion request. U.S. Steel cites the court's recent ruling keeping the case in federal court (see 2108230067) to back this claim. Judge William Stickman IV denied NLMK's motion to keep the case in the Court of Common Pleas of Allegheny County in Pennsylvania since it involves a discussion of Commerce's decision-making process. Such a "collateral review" of the agency's decision-making is impermissible under federal law, U.S. Steel argued. "As with other forms of collateral attacks on agency decisions, state-law fraud-on-a-federal-agency claims are preempted by federal law," the motion said.

The Pittsburgh company also held that it had immunity for engaging in the Section 232 exclusion process. "Under the long-standing doctrine of Noerr-Pennington immunity, a 'party who petitions the government for redress generally is immune' from resulting liability," the defendant explained succinctly. Further, U.S. Steel's statements during the objection process are "absolutely privileged," the steelmaker said. Since judicial privilege in Pennsylvania is extended to all "proceedings in which an officer or tribunal exercises official functions," U.S. Steel has the legal cover it needs when engaging in the exclusion process, it said.