CAFC Upholds Dismissal of Rack Room Test Case on Gender Discrimination in Tariff Schedule
The U.S. Court of Appeals for the Federal Circuit upheld the dismissal of a test case on gender and age discrimination by Harmonized Tariff Schedule provisions for footwear and apparel. Rack Room, Skiz Imports, and Forever 21 argued that different duty rates for men’s, women’s and children’s footwear and apparel violate the equal protection clause of the constitution. According to the appeals court ruling, the outcome of 171 lawsuits depended on the result of this test case. As had the Court of International Trade in 2012, CAFC decided the companies failed to demonstrate Congressional intent to discriminate, and so failed to prove a violation of the equal protection clause.
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Test Case Follows Failure of Totes Challenge
The saga of tariff gender discrimination cases dates back to 2007, when Totes-Isotoner filed suit at CIT challenging HTS duty rates on gloves (see 07080725). CIT dismissed the challenge in 2008, finding the duty rates weren’t explicitly (“facially”) discriminatory, because they applied to products, and not people (see 08070905). The tariff schedule doesn’t require the imported goods to be used by a particular gender, so while classification of goods as "for" men may suggest discrimination, it does not "show" it, CIT said. CAFC affirmed the dismissal in 2010, holding that because the tariff provisions weren’t explicitly discriminatory, Totes-Isotoner had to show the duty rates resulted in discrimination, and that this discrimination was intended by Congress (see 10021020). Totes-Isotoner appealed to the Supreme Court 10051864, but the high court denied review (see 10100602).
In the meantime, Rack Room, Skiz, and Forever 21 had filed their own complaints on tariff gender discrimination. Each of these complaints covered swathes of the tariff schedule, instead of the more specific challenge on gloves in the Totes case. In light of the failure of the Totes challenge, each company added allegations of discriminatory intent by Congress to its complaint. CIT consolidated the three suits into the Rack Room case, and stayed 171 similar cases depending on the outcome.
In February 2012, CIT dismissed the case (see 12022102), finding that Rack Room didn’t demonstrate Congress intended to discriminate. Then, in June of that same year, CIT denied a motion to rehear the case (see 12060409). Rack Room, Skiz, and Forever 21 appealed (see 12101223 for Rack Room’s brief, and 13012321 for the government’s).
CAFC Finds No Intent, Dismisses
On June 12, CAFC affirmed the lower court’s dismissal. Because it was making an equal protection challenge, Rack Room needed to show both a disproportionately adverse effect on a group of people, as well as Congressional intent to discriminate. Rack Room again argued that Congress showed intent by choosing to enact tariffs based on gender, despite a menu of other options. Congress could have classified footwear and apparel in a way that didn't discriminate, but chose not to. But according to CAFC, inferring discriminatory intent on that basis would “eviscerate” the Congressional intent requirement of equal protection cases.
Turning to Rack Room’s argument that CIT should have examined each tariff provision at issue to see if it was explicitly discriminatory, the appeals court said CIT did examine the 157 challenged tariff headings, and found that none differed in that respect from the headings at issue in Totes. Finally, CAFC dismissed Skiz Imports’ case on the basis of a lack of standing to challenge the tariff provisions. While Rack Room and Forever 21 were at least connected to the men and women that buy the apparel and footwear at issue, Skiz was created only for the purpose of bringing this case, and never sold the merchandise it imported to consumers. On that basis, it couldn’t argue third-party standing as the other two companies had done.
(Rack Room Shoes v. U.S., CAFC Nos. 12-1391, 12-1392, and 12-1439, dated 06/12/13, Judges Reyna, Moore, and Clevenger)
(Attorneys: John Peterson of Neville Peterson for plaintiff-appellant Rack Room Shies; Damon Pike of The Pike Law Firm for plaintiff-appellant Forever 21; Michael Cone of FisherBroyles for plaintiff-appellant Skiz Imports; Jeanne Davidson for defendant-appellee U.S. government)