CAFC Splits on Deference Owed to Trade Court
An otherwise routine order exposed a split at the Court of Appeals for the Federal Circuit on how it should review decisions by the Court of International Trade. The appeals court on Oct. 25 rejected a request to rehear an antidumping duty case where CAFC in May effectively reinstated AD duties on ball bearings from The United Kingdom and Japan (see 13051716). In its May decision, CAFC reversed a series of CIT decisions going back seven years. CAFC Chief Judge Randall Rader, along with Judges Evan Wallach and Jimmie Reyna -- both of whom have trade law experience -- dissented from CAFC’s decision not to rehear the case. They said CAFC should depart from its current standard of how it reviews CIT decisions, and defer more to the lower court’s expertise on trade. But the majority of five CAFC judges disagreed. A stricter standard of review would run contrary to how every other federal appeals court looks at district court cases, they said.
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In antidumping and countervailing duty disputes, CIT applies a “substantial evidence” standard, where it looks at the record and decides whether the Commerce Department or International Trade Commission adequately justified its determinations. If the CIT decision is then appealed to CAFC, the appeals court reviews the dispute “de novo.” That means it takes a fresh look directly at the Commerce or ITC determination to see if it was supported by substantial evidence, rather than deciding whether CIT’s decision was justified.
Judges Rader, Wallach and Reyna argued that CAFC’s fresh look is a waste of resources that deprives litigants of the lower court’s expertise on trade. CIT specializes completely in trade issues, and has to stay abreast of developments in both domestic and international trade law. CAFC, on the other hand, hears a wide range of cases, with only 6 percent of its cases revolving around trade issues, the dissenters said. CIT also plays a special, “active role” in antidumping and countervailing duty cases, they said. “The CIT is not simply a subject-specialty court; it also has a unique role in the litigation process.” Unlike in other settings, agency remand redeterminations return to CIT and even to the same judge for reexamination, creating a multi-year, iterative process of repeated remands until CIT is satisfied that the Commerce or ITC determination is supported by substantial evidence. “Therefore, by the time a case is finally appealed to this court, the length and complexity of the case history make true ‘de novo’ review wasteful and impracticable.”
The dissent cited this case as a perfect example. The ITC in a 2006 sunset review found injury to U.S. industry from Japanese and UK ball bearings, meaning AD duties would remain in place. But in a series of six decisions, CIT “reviewed thousands of pages of record evidence, identified gaps in the ITC’s findings, and ordered a series of targeted remands to resolve the insufficiencies,” which ultimately resulted in the ITC reversing itself, finding no injury, and assenting to revocation of the Japan and UK ball bearings orders in 2011. On appeal, CAFC reversed the series of CIT decisions, and effectively ordered reinstatement of the AD duty orders. It purportedly took a fresh look at the thousands of pages of record evidence, and again applied a “substantial evidence” analysis. “It did so with five and a half pages of analysis, and in one fell swoop, it reversed and vacated the CIT’s orders … seven years into litigation,” the dissent said.
Instead, the court should apply the same standard used by the Supreme Court when it reviews appeals court cases, said Judges Rader, Wallach, and Reyna -- CAFC should only reverse if CIT “misapprehended or greatly misapplied” the substantial evidence standard. “Deferential review is appropriate because of the CIT’s unique appellate role and its institutional expertise in trade matters,” they said.
Judge Wallach was previously a CIT judge for over 15 years, while Judge Reyna was a private practice international trade lawyer prior to his appointment to CAFC.
The majority, comprising Judges Lourie, Dyk, Prost, Moore, and O’Malley, said taking a more deferential approach would go against the way the entire legal system is organized, and create problems in other CAFC cases. Every federal appeals court reviews takes a fresh look at district court rulings, they said. And if the court adopted a more deferential legal standard when reviewing at CIT decisions, it would have to do the same for the other courts and agencies it reviews, like the Merit Systems Protection Board, Court of Federal Claims, and the Court of Appeals for Veterans Claims.
Congress in effect mandated the current system of CAFC review when it declined to make laws requiring the appeals court to give CIT more deference, the majority said. Congress made no law that specifically requires de novo review of CIT decisions, they conceded. But CAFC’s predecessor reviewed CIT decisions de novo when Congress created the current system, and Congress was silent on the issue, indicating that it didn’t want it to change, they said. “The dissenters argue that in light of the special expertise of the Court of International Trade, it would be sound policy to defer to the Court of International Trade’s substantial evidence decisions,” the majority said. “Whether that is so or not, it is not the system that Congress created in 1979. Under these circumstances, a change in our review process is a matter that is appropriately left to legislative action, not judicial modification.”
(NSK Corporation v. ITC, CAFC No. 11-1362, dated 10/25/13, NONPRECEDENTIAL)