CIT Covers Importer's Attorney Fees in Tariff Classification Case
The Court of International Trade on Sept. 18 ordered the government to pay for an importer’s legal fees incurred in a drawn-out and ultimately successful legal challenge to the tariff classification of its tobacco products. Shah Bros. sought compensation under the Equal Access to Justice Act after the government allowed litigation to proceed even though it had conceded in a case involving identical merchandise four years earlier. The trade court found no justification for the delay and ordered the government to pay the importer’s legal fees at rates determined by a survey of several customs law firms.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
The original dispute revolved around CBP’s classification of Shah Bros.’ “gutkha,” a tobacco product from India. Although CBP had originally classified the gutkha as snuff, the government in 2009 conceded that it should have instead been classified as chewing tobacco. But in the meantime, Shah Bros. had entered more gutkha and had again protested CBP’s classification as snuff. Despite having conceded the court case, CBP in 2010 denied Shah Bros. protest and the importer filed suit. The government allowed the case to proceed until 2013 before conceding that the second group of entries should also have been classified as chewing tobacco (see 13122721).
Under the Equal Access to Justice Act, the winner of a lawsuit against the government can get their legal fees covered if the government’s position in the case isn’t justified and special circumstances don’t exist. Here, CIT found that there was no justification for denying Shah Bros.’ protest and affirming classification of the gutkha as snuff after the government had already told CIT that identical merchandise should have been classified as chewing tobacco. And although the classification was particularly complicated, no special circumstances prevented the government from following its own logic when it decided the protest months later.
Turning to the amount of fees, CIT noted that Equal Access to Justice Act fees are limited to $125 per hour unless there are “special factors,” like difficulty in finding an attorney to handle the case. Here, Shah Bros. not only required specialized customs lawyers, but also customs lawyers that had knowledge of the facts of the first gutkha classification case, resulting in an “extremely limited availability” of qualified lawyers.
Shah Bros. requested attorney’s fees ranging from $375 to $595 per hour. CIT surveyed lawyers from three customs law firms, who attested that there are about 200 customs law practitioners in the U.S. that charge rates ranging from about $300 to $700 per hour. Some associates charge less, and some partners bill at rates as high as $900 per hour, the surveyed lawyers said. But without any evidence that the case was so complex that the highest rates would apply, CIT limited the award to $300 per hour for work done by attorneys with less than ten years of experience, and $450 per hour for work done by the most experienced lawyers.
(Shah Bros., Inc. v. U.S.; CIT Slip Op. 14-109, CIT No. 10.00205, dated 09/18/14, Judge Pogue)
(Attorneys: Elon Pollack of Stein Shostak for plaintiff Shah Bros., Inc.; Edward Kenny for defendant U.S. government)