German Exporter Contests US Bid to Serve Company's US Counsel in Nearly $200M AD Penalty Case

German paper exporters Koehler Oberkirch and Koehler Paper on May 13 opposed the government's bid to serve the companies' U.S.-based counsel in a separate case, claiming that the rules don't "permit such service." The exporters said service instead should be effectuated through diplomatic channels, as contemplated by the rules, as this would "respect international comity and due process principles" (U.S. v. Koehler Oberkirch GmbH, CIT # 24-00014).

The U.S. brought suit in January seeking over $193 million in unpaid antidumping duties for 1,462 entries of lightweight thermal paper entered from 2009 to 2011. The Commerce Department found that Koehler Oberkirch transshipped its entries by hiding reportable home market sales, ultimately subjecting the firm to a 75.36% dumping rate.

Last month, the government sought an order from the Court of International Trade allowing the U.S. to effect service through the companies' U.S. counsel of record in Matra Americas v. U.S.

Koehler filed its opposition, claiming that service on U.S. counsel doesn't fall under CIT Rule 4(e) for "serving an individual in a foreign country." The exporter cited various district court opinions -- including in the Southern District of New York, Southern District of Florida and Eastern District of Michigan -- all which said requests to effectuate service on a foreign defendant via U.S. counsel "runs squarely up against the language" of Federal Rule 4(f) and the "structure" of this rule as a whole.

The trade court's rule doesn't refer to an individual or corporation outside the U.S. "but rather the place of service." In this case, because the government is proposing that the place of service be in the U.S., "Rule 4(e) does not apply."

Koehler invoked a German court decision, which said that U.S. requests for service should be made via "diplomatic channels, so that the relevant administrative authorities can take action if necessary." Ignoring this decision "would violate principles of international comity, which requires that foreign and public international law be given effect in U.S. courts," the brief said.

The exporter said the suit presents "serious issues of international relations," given it would apply a "punitive tariff rate in connection with an allegedly unfair trade practice spanning a relatively short period of time." A judgment for the U.S. would involve the payment of nearly $200 million -- a judgment the German government "is likely to view as disproportionate," the company said.

As a result, CIT "should not accept the U.S. government's invitation to bypass diplomatic channels by means of alternative service, and thereby deprive the German government of an opportunity to assess whether it might have a beneficial role to play in helping to negotiate an equitable resolution of the dispute, without the necessity of prolonged litigation before this Court."

Koehler concluded by saying the government has "made no showing of the need for judicial intervention."

In a text-only order, Judge Gary Katzmann allowed the government to file a reply to the exporter's response. In addition, Koehler filed a motion for oral argument on the motion for alternative service. The motion was held in abeyance pending the U.S. response brief.