CIT Denies Amsted Rail Co. Section 1581(i) Jurisdiction in Conflict-of-Interest Case

The Court of International Trade on Nov. 16 released the public version of its Nov. 15 opinion dismissing a conflict-of-interest suit filed by plaintiffs led by Amsted Rail Company seeking to removeDaniel Pickard and his firm Buchanan Ingersoll from an International Trade Commission injury proceeding for lack of subject matter jurisdiction. Judge Gary Katzmann ruled that while the court does have the jurisdiction to review the ITC's decision to grant Pickard and Buchanan access to business proprietary information (BPI), it does not have this jurisdiction under Section 1581(i) -- the court's "residual" jurisdiction. The judge left the door open for the plaintiffs to refile their case under Section 1581(c) "once a claim under" this provision "is ripe."

"We’re obviously pleased with the Court’s well-reasoned decision to dismiss the appeal," Pickard told Trade Law Daily in an email. "Most importantly, our client is eager to return to pursuing its claim that dumped imports are injuring the domestic industry and its workers. The Court’s decision that the allegations were 'too threadbare' to establish jurisdiction under the law was wholly consistent with the ITC’s previous determination.

"The Court determined that, based upon Plaintiff’s threadbare allegations, it did not have jurisdiction to disrupt the Commission’s on-going investigation especially after the plaintiffs already had an opportunity to have their allegations weighed by the Commission," Pickard said. "In the court’s words, because plaintiffs already had their bite at the apple before the Commission, they would not get a second bite with the court now."

The case concerns a past ITC injury investigation on freight rail couplers and parts thereof from China and a present injury investigation on the same goods from China and Mexico. ARC is a U.S. producer and importer of freight rail couplers, and originally employed Wiley Rein, where Pickard was a partner at the time, to represent it. Pickard filed an antidumping and countervailing duty petition on behalf of ARC and McConway and Torley (M&T) to start the prior injury investigation. ARC then withdrew from the petition, leaving M&T and a labor union as the two petitioners.

In that investigation, the ITC unanimously ruled the U.S. industry was not materially harmed. During the inquiry, Pickard moved from Wiley to Buchanan. Days later, Buchanan filed a petition to start another injury investigation on the freight rail couplers, this time including Mexican imports as well as Chinese ones, with M&T and the union standing as the two petitioners. Mexican imports were included in the petition, despite the fact that the only Mexican imports came from ARC's affiliate ASF-K, a maquiladora factory and fellow plaintiff in the court action.

Describing this as a "betrayal," ARC took to the ITC, then the CIT, to argue that Pickard and Buchanan should be disqualified from the proceeding and dismissed from the APO. The ITC ruled against the plaintiffs, refusing to initiate an investigation of the alleged misconduct. At the trade court, ARC argued that the ITC's decision to give business proprietary information access to Buchanan violated the Administrative Procedure Act and its Fifth Amendment rights (see 2210170084). Pickard and the ITC moved to toss the case on jurisdictional grounds, among other claims (see 2210250026). Katzmann, in the Nov. 15 decision, agreed with the defendants and dismissed the action.

However, the judge first held that the plaintiffs' claims are not completely removed from the court's jurisdiction. The ITC argued that Section 1677f(c)(2) prevents the trade court from hearing the claims since it it is limited to judicial review of denials, and not decisions to grant, access to BPI. Katzmann said that the principle of statutory construction, which favors judicial review, can only be overcome by clear evidence of congressional intent. The evidence in this case "falls far short of" this standard, the judge ruled. The text and structure of Section 1581 counsels against the ITC's reading of the law since Section 1581 allows for the judicial review of actions that provide for the administration and enforcement of processes related to tariffs, duties, fees or other tax matters.

The bulk of Katzmann's opinion, though, was spent discussing the prospect of jurisdiction under Section 1581(i), which the judge held was improper since Section 1581(c) is not "manifestly inadequate." Katzmann found two U.S. Court of Appeals for the Federal Circuit opinions instructive in this finding since he viewed them as two sides "of the same jurisdictional coin." The first, Shakeproof Industrial Products Division of Illinois Tool Works v. U.S., saw the plaintiff's objection to a law firm's access and participation in an AD review since a partner at the firm served as assistant secretary of commerce for import administration at the time the original AD investigation started. While the appellate court did not make a hard ruling on whether jurisdiction under Section 1581(i) existed since it found the plaintiff was not entitled to relief, the court did question the basis for this jurisdiction.

"Guided by Shakeproof’s 'serious doubts,' the court holds that Plaintiffs here fail to meet their 'burden to show how that remedy would be manifestly inadequate,'" Katzmann said. "The antidumping and countervailing duty investigations are still underway before the Commission and Commerce, and neither agency has yet issued a reviewable determination under 19 U.S.C. § 1516a. It is still entirely possible that the Commission may even reach a negative injury determination, in which case Plaintiffs would likely lack standing to bring their claims."

The other Federal Circuit opinion the judge discussed, championed by the plaintiffs, is NEC Corp. v. U.S., in which NEC wanted the court to enjoin an AD investigation since Commerce allegedly was a "partisan ally" of NEC's competitor during the injury determination, given the agency's involvement in the National Science Foundation's contract award to the competitor. In this case, the appellate court upheld the trial court's denial of the motion to dismiss for lack of jurisdiction, finding that requiring NEC to appeal after the conclusion of an investigation that was allegedly preordained due to "impermissible prejudgment is a classic example of a remedy that was 'manifestly inadequate.'"

Katzmann ruled that the NEC ruling was based on Commerce's authority to bring the investigation, while Shakeproof did not consider the agency's decision not to look into a "naked assertion of an ethical issue" to rise to the level of cases that requires an interlocutory review. The question then becomes which remedies are available under Sections 1581(i) and 1581(c) and the "nature of the harm in waiting for review to ripen under" Section 1581(c). With this distinction in mind, the judge then discussed the plaintiffs' two "separate but interrelated theories" of why relief under Section 1581(c) is manifestly inadequate.

The first says that because the plaintiffs want to block disclosure of BPI to an attorney accused of misconduct, "any rights of a party injured by either advertent or inadvertent use of confidential information in violation of a protective order could not redress that particular, irreparable harm." The second says that since the plaintiffs are looking to disqualify a firm due to an ongoing ethical violation, allowing the firm's continued participation would bring the very "evil" which the ruling would prevent and a later reversal could not undo the damage caused by this decision. Katzmann found that the plaintiffs' reading of the past court decisions underpinning these arguments "is ultimately overbroad."

For instance, the plaintiffs relied on Hyundai Pipe v. Commerce in which Commerce released BPI before making a decision over whether APO breach allegations had merit. CIT in that case said the plaintiffs are faced with the immediate threat of harm and that enough misconduct existed to constitute a threat. The plaintiffs said this irreparable harm language should play into the current inquiry, though Katzmann deemed that a too expansive reading of the case. Unlike in Hyundai Pipe, the plaintiffs already had the chance to have their evidence reviewed by the ITC. "Put simply, the respondents in Hyundai Pipe asked for just one bite at the apple. Plaintiffs today ask for two," the judge said.

Katzmann also held that Section 1581(i) jurisdiction could have existed but once the ITC decided not to investigate, the plaintiffs amended their complaint and sought broader relief, stripping jurisdiction away. "Finally, as a prudential matter, the court ultimately struggles to differentiate between (1) the immediate harm alleged by Plaintiffs in this case and (2) the immediate harm that could be alleged by a hypothetical party in a Commission investigation that raises threadbare accusations of APO breach and attorney misconduct," the opinion said.

(Amsted Rail Company v. United States, Slip Op. 22-124, CIT #22-00307, dated 11/15/22, Judge Gary Katzmann. Attorneys: Brian Perryman of Faegre Drinker for plaintiffs ARC and ASF-K; Ryan Proctor of Jones Day for plaintiff Wabtec Corp.; Ned Marshak of Grunfeld Desiderio for plaintiff Strato Inc.; James Smith of Covington & Burling for plaintiff TTX Co.; Andrea Casson for defendant U.S. government)