Justia International Trade Opinion Summaries

Following a request from ICP, Customs issued a Ruling Letter, classifying ICP’s white sauce as “sauces and preparations therefor” under the Harmonized Tariff Schedule of the United States (HTSUS) 2103.90.9060. Years later, Customs issued a Notice of Action reclassifying pending and future entries of white sauce as “[b]utter and . . . dairy spreads” under HTSUS 0405.20.3000, which increased the tariff by approximately 2400%. After protesting and paying duties on a single entry, ICP filed a claim in the Court of International Trade, alleging the Notice of Action improperly revoked the Ruling Letter without following the procedures required by 19 U.S.C. 1625(c). Since ICP filed its first action in 2005, the CIT has issued five separate opinions on the matter, two of which were appealed to the Federal Circuit. In awarding ICP attorney fees, the Trade Court found that “The record ... establishe[d] that the goverment position was rooted in a desire to avoid the timely revocation process” by using the Notice of Action, rather than following the procedures of 1625(c)(1). The Federal Circuit affirmed the award under the Equal Access to Justice Act, 28 U.S.C. 2412(d)(1)(A), upholding the Trade Court’s analysis of whether the government’s conduct was “substantially justified.” View "International Custom Products, Inc. v. United States" on Justia Law

Kyocera manufactures solar panels in Mexico and imports them to the U.S. The panels incorporate crystalline silicon photovoltaic (CSPV) cells from Taiwan, which are strung together, sealed, and framed to make solar modules. CSPV cells are the main electricity-generating component of solar modules, which were subject to an antidumping duty investigation into CSPV products from China and Taiwan. The Department of Commerce defined the investigation’s scope to include cells and modules produced in Taiwan and certain modules “completed or partially manufactured” in other countries. Kyocera unsuccessfully challenged Commerce’s scope determination, requesting that it exclude solar modules produced in Mexico, including modules using CSPV cells manufactured in Taiwan. Using Commerce’s scope determination, the International Trade Commission determined that an industry within the U.S. had been materially injured by imports of CSPV products from Taiwan. The ITC declined to conduct a separate negligibility analysis under 19 U.S.C. 1677(24), stating that the Commission must defer to Commerce’s definition of the scope of the merchandise subject to these investigations. The Trade Court agreed. The Federal Circuit affirmed, rejecting an argument section 1677(24)’s definition of negligible merchandise directs the Commission to consider whether “imports from a country” are negligible so that imports from Mexico could be considered separately. View "Kyocera Solar, Inc. v. United States International Trade Commission" on Justia Law

NMEPT, a joint venture, was formed to sell environmental equipment in China. Nalco owned 55% of the venture, Chen 40%, and a third party 5%. When NMEPT encountered business problems, Nalco paid its creditor and sued Chen for his 40% share of the outlay. The district court awarded Nalco more than $2 million, rejecting Chen's counterclaim that Nalco’s subsidiary, NMI, had caused the joint venture to borrow $300,000 without Chen's approval, even though the agreement required all investors’ consent for borrowing. Chen also claimed that the creditor petitioned the joint venture into bankruptcy under Chinese law, on behalf of NMI, in an effort to avoid a clause requiring the investors’ unanimous consent for bankruptcy proceedings. Nalco wanted to wind up the unprofitable venture, but Chen preferred to keep it alive (if dormant) to protect its intellectual property. Chen did not appeal, but filed a new suit in China, against Mobotec. The Seventh Circuit affirmed an injunction, prohibiting Chen from pursuing the Chinese litigation. Rejecting an argument that Mobotec was not a party to and could not benefit from the Illinois judgment, the court stated: “That would be a questionable proposition even if Mobotec were a distinct entity, for federal courts no longer require mutuality in civil litigation.” The district court found that NMI and Mobotec are the same entity. View "Nalco Co. v. Chen" on Justia Law

In 2004-2006 Tyco imported 42 models of liquid-filled glass bulbs, commonly used as a temperature-dependent trigger component of fire sprinkler heads. When the sprinkler head is exposed to fire, the bulb is heated and the liquid inside the bulb expands until the bulb shatters. When the bulb breaks, the valve of the sprinkler system opens and releases a shower of water to extinguish the fire. The bulbs can also be used in water heaters. The bulbs break at different temperatures, depending on the liquid. Tyco used 39 models in fire sprinkler systems and three models as thermal release devices in water heaters. Customs and Border Protection classified the bulbs as “other articles of glass” under the Harmonized Tariff Schedule of the United States (HTSUS) subheading 7020.00.60, which has a 5% rate of duty. Tyco protested, asserting that the bulbs would be more properly classified under subheading 8424.90.90, which includes “Other” “Parts” of goods classified under heading 8424 and is duty-free. Customs denied Tyco’s protest. The Trade Court upheld the ruling, finding that the bulbs are “of glass.” The Federal Circuit affirmed. While the liquid component is “the brains behind the operation,” the essential character of the product is glass. View "Tyco Fire Products, L.P. v. United States" on Justia Law

The U.S. Department of Commerce reconducted a fourth administrative review of the antidumping duty order on certain frozen warm-water shrimp from Vietnam. The Trade Court upheld Commerce’s decision to refuse Grobest’s request to terminate the individual examination of Grobest and Commerce’s decision to assign a 25.76% antidumping duty rate using adverse facts available after Grobest failed to cooperate with the examination. The Federal Circuit affirmed. Given Grobest’s failure to cooperate in the examination and the lack of any specific challenge to Commerce’s corroboration analysis, the application of the Vietnam-wide rate was amply supported by the record. Commerce was reasonable in treating Grobest as a mandatory respondent with no right to escape review once it was selected for individual examination pursuant to the Trade Court’s Final Judgment. Nor was Commerce required by any statutory or regulatory authority to rescind the court-ordered individual examination simply because Grobest no longer wished to proceed, regardless of the timing of its rescission request. View "Viet I-Mei Frozen Foods Co. v. United States" on Justia Law

Magnesium metal is produced using the “Pidgeon” process, which involves stainless steel reaction vessels called retorts. After approximately 60 days of use in multiple cycles of manufacturing, retorts become unsuitable for the production of magnesium and are recycled; the recycled steel is used to produce new retorts. In 1995, the Commerce Department entered an antidumping order on magnesium metal from China. In 2010, Commerce provided notice of an opportunity to seek review of the order. TMI, a foreign exporter of magnesium produced in China, and USM, a domestic producer, requested review of TMI’s sales. Commerce solicited information, including TMI’s business records, surrogate value and country selection, and freight rates, then constructed a normal value for magnesium by creating surrogate values for the raw materials used in the manufacturing process. It did not include a surrogate value for steel retorts, treating retorts as indirect materials and accounting for their cost as overhead. Commerce explained that “retorts are not physically incorporated into the final product” and “are more similar to a kiln or furnace.” Retorts are reusable and “are not replaced so regularly as to represent a direct factor rather than overhead.” Following remand, Commerce affirmed its finding that retorts are properly treated as factory overhead. The Trade Court affirmed. The Federal Circuit affirmed. The relative cost of retorts provides no reason to reject Commerce’s findings as unsupported by substantial evidence. View "US Magnesium, LLC v. United States" on Justia Law

CFI, comprised of former insiders from the pipe fitting industry, brought a False Claims Act qui tam action against Victaulic, a global manufacturer and distributor of pipe fittings. The complaint alleged that Victaulic, for many years, imported millions of pounds of improperly marked pipe fittings without disclosing that the fittings are improperly marked, thereby avoiding paying marking duties. CFI alleged that Victaulic imported approximately 83 million pounds of fittings from overseas, 2003-2013, and a miniscule fraction of Victaulic’s fittings for sale in the U.S. bear any indication of their foreign origin, with an even smaller percentage bearing country of origin markings required by 19 U.S.C. 1304. The district court dismissed with prejudice, rejecting Victaulic’s jurisdictional argument that CFI’s complaint was based primarily on publicly available information, but finding that it failed to cross the threshold from possible to plausible. The court stated that it believed the FCA’s reverse false claims provision did not cover failure to pay marking duties, but declined to rule on those grounds because the complaint was based on legal conclusions unsupportable by the facts alleged. The Third Circuit vacated. Failure to pay marking duties may give rise to reverse false claims liability. CFI’s complaint contains enough reference to hard facts, combined with other allegations and an expert’s declaration, to allege a plausible course of conduct by Victaulic to which liability would attach. View "Customs Fraud Investigations LLC v. Victaulic Co." on Justia Law

Sigma-Tau imported two chemical products, both stabilized forms of the compound carnitine. Carnitine is a naturally occurring amino acid derivative and an important nutrient in the human body, where it serves to transport long-chain fatty acids into mitochondria, the centers for energy production within each cell. Our bodies obtain carnitine exogenously, from food, and also produce it endogenously, by breaking down and reforming protein. United States Customs and Border Protection initially classified the products under a subheading of the Harmonized Tariff Schedule of the United States (HSTUS) that carries a duty. Sigma-Tau protested, arguing that the products should be classified under HTSUS heading 2936 (which encompasses “provitamins and vitamins”), subheading 2936.29.50, a duty-free classification. The Court of International Trade concluded that Sigma-Tau’s products should be classified under a different subheading, 2923.90.00, making them ineligible for duty-free treatment. The Federal Circuit reversed, agreeing with Sigma-Tau that its carnitine products are properly classified under that heading, because carnitine is a vitamin in neonates. View "Sigma-Tau Healthscience, Inc. v. United States" on Justia Law

OtterBox imports protective cases designed for smartphones. The Customs Department classified the cases as “similar containers” under the Harmonized Tariff Schedule (HTSUS) subheading 4202.99.00 with a duty rate of 20% ad valorem. OtterBox paid duties at the 20% rate, and the goods were liquidated. OtterBox’s protest was deemed denied. In the Court of International Trade, Otterbox cited 19 U.S.C. 1515, alleging that the merchandise should have been classified as “other articles of plastics” under HTSUS subheading 3926.90.99, at a duty rate of 5.3% ad valorem. The Trade Court agreed, and the Federal Circuit affirmed,finding that the cases are not classifiable as “similar containers” under Heading 4202, but are properly classified under Heading 3926, as other articles of plastics. To fall under the general phrase “similar containers,” the merchandise must possess the same essential characteristics or purposes that unite the exemplars and noted that four characteristics unite the exemplars of Heading 4202: organizing, storing, protecting, and carrying. The Otterbox products “allow an article to be placed inside them and/or taken out without much effort by opening or closing the receptacle” and do not organize, store, or carry. While the listed examples “are not ones which permit the use of the enclosed item,” the electronic devices enclosed by the OtterBox merchandise “retain their full, 100 percent functionality while inside an OtterBox.” View "Otter Prods, LLC v. United States" on Justia Law

The defendant companies, based in China, produce conventional solar energy panels. Energy Conversion and other American manufacturers produce the newer thin-film panels. The Chinese producers sought greater market shares. They agreed to export more products to the U.S. and to sell them below cost. Several entities supported their endeavor. Suppliers provided discounts, a trade association facilitated cooperation, and the Chinese government provided below-cost financing. From 2008-2011, the average selling prices of their panels fell over 60%. American manufacturers consulted the Department of Commerce, which found that the Chinese firms had harmed American industry through illegal dumping and assessed substantial tariffs. The American manufacturers continued to suffer; more than 20 , including Energy Conversion, filed for bankruptcy or closed. Energy Conversion sued under the Sherman Act, 15 U.S.C. 1, and Michigan law, seeking $3 billion in treble damages, claiming that the Chinese companies had unlawfully conspired “to sell Chinese manufactured solar panels at unreasonably low or below cost prices . . . to destroy an American industry.” Because this allegation did not state that the Chinese companies could or would recoup their losses by charging monopoly prices after driving competitors from the field, the court dismissed the claim. The Sixth Circuit affirmed. Without such an allegation or any willingness to prove a reasonable prospect of recoupment, the court correctly rejected the claim. View "Energy Conversion Devices Liquidation Trust v. Trina Solar Ltd." on Justia Law