CIT Denies Injunction Bid Pending Appeal in Attorney Misconduct Case

The Court of International Trade in a Dec. 20 opinion denied an injunction bid pending appeal from certain plaintiffs in an attorney conflict-of interest suit. After recently rejecting the plaintiffs' motion for a preliminary injunction for lack of subject matter jurisdiction, Judge Gary Katzmann this time rejected the injunction motion pending appeal since the appeal to the U.S. Court of Appeals for the Federal Circuit "has not yet been noticed," but even if it had, the injunction "is unwarranted." Katzmann said that the plaintiffs fail to both show a "strong showing of success on the merits" and prove that they will suffer irreparable harm without the injunction.

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. Plaintiff Amsted Rail Co. is a U.S. producer and importer of freight rail couplers, and originally employed Wiley Rein, where Daniel 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.

In that investigation, during which Pickard moved from Wiley to Buchanan Ingersoll, the ITC unanimously ruled the U.S. industry was not materially harmed. 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. 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. Katzmann, in a November decision, agreed with the defendants and dismissed the action (see 2211160057).

The judge said that the court does not have the jurisdiction to hear the claim under Section 1581(i), the court's "residual" jurisdiction, though the plaintiffs could refile the case under Section 1581(c) once the claim was ripe. Certain plaintiffs then filed for an injunction pending an appeal of the decision. Katzmann again ruled against the plaintiffs, finding that the second injunction bid was premature since a notice of appeal has yet to be filed. The judge also said that the plaintiffs have not shown that they are likely to succeed on the merits of the case -- one of the factors that must be proved to be granted an appeal.

Typically, this factor is cleared if a plaintiff raises a substantial enough question in the case. Katzmann, though, said that while the case raises "sensitive and time-honored questions of federal jurisdiction and agency power, protection of confidential information, and professional responsibility," the court's previous opinion focused on the fight to establish jurisdiction at the court. "Having considered the relevant facts and case law, the court concluded that 'Plaintiffs’ allegations of attorney misconduct in this case, just like their APO breach allegations, are too threadbare to meet the more specific showing [of] manifest inadequacy under § 1581(i),'" the opinion said.

The plaintiffs said the November opinion amounted to a "reversible error" since it shifted the burden to ARC to identify instances it shared confidential information with its former counsel. The plaintiffs urged the trade court to take up the approach in Makita Corp. v. U.S., in which the trade court said that it will assume that confidences were disclosed during the course of the former representation between a client and its former counsel. Katzmann said that this argument of jurisdiction fails to establish a likelihood of success since the court did not shift the burden to the plaintiffs since they had the burden "in the first place." Establishing Section 1581(i) jurisdiction "is a difficult task ... and for good reason," the judge said.

"The court, without speculating about fact patterns that would or would not meet the manifest inadequacy standard, reasoned that 'manifest inadequacy under § 1581(i)' required 'a more specific showing' than the facts before it," the opinion said. "Put simply, the burden, which was always Plaintiffs’ to meet, was not satisfied." Katzmann further found the reliance on Makita to be "similarly unsatisfying" since the Makita court never meant to make a jurisdictional analysis. The judge added that the plaintiffs will not be harmed absent the injunction since the ITC already released the confidential information in the preliminary determinations, and that no more confidential information will be released for months.

(Amsted Rail Co. v. United States, Slip Op. 22-147, CIT #22-00307, dated 12/20/22, Judge Gary Katzmann. Attorneys: Brian Perryman for Faegre Drinker for plaintiffs ARC and ASF-K; Rya Proctor of Jones Day for plaintiff Wabtec Corp.; Ned Marshak of Grunfeld Desiderio for plaintiff Strato; James Smith of Covington Burling for plaintiff TTX Co.; Andrea Casson for defendant U.S. government; Daniel Pickard of Buchanan Ingersoll for defendant-intervenor Coalition of Freight Rail Producers)