Commerce Asks CIT to Toss Conflict-of-Interest Suit on Jurisdictional Grounds

The case concerns past AD/CVD investigations on freight rail couplers and parts thereof from China and present AD/CVD investigations on the same goods from China and Mexico. ARC is a U.S. producer and importer of the subject merchandise, and is affiliated with a maquiladora factory, ASF-K -- the only Mexican producer of the freight rail coupler systems. ARC originally employed Wiley Rein, where Daniel Pickard worked as a partner, to represent it. Pickard filed an AD/CVD petition on behalf of ARC and McConway and Torley (M&T) to start the investigations.

ARC subsequently withdrew from the petition, leaving Pickard to carry on with M&T and a new arrival: a labor union in the industry. An administrative protective order (APO) in this investigation was then issued. Until its withdrawal, ARC disclosed confidential information to Pickard to help prepare his case.

In the prior injury investigation, the International Trade Commission unanimously voted that the U.S. industry was not materially harmed by imports of the subject merchandise from China. But during the investigation, Pickard had moved from Wiley Rein to Buchanan Ingersoll. The ITC issued its injury determination in June, when the APO only covered Pickard and two non-attorneys at Wiley Rein. After the determination, in July 2022, Buchanan then filed an amendment to the APO, adding seven attorneys and two non-attorney personnel from Buchanan.

Days later, Buchanan filed a petition to start another injury investigation and other AD/CVD investigations on the freight rail couplers, this time adding Mexico, concurrently filing an APO application covering the same Buchanan lawyers and staff made party to the previous APO. These Buchanan lawyers, including Pickard, who represented ARC, included Mexican imports knowing that the only Mexican imports came from ARC's affiliate. Describing this as a "betrayal," ARC originally took to the ITC and Commerce to argue that Pickard and Buchanan should be disqualified from the proceeding and booted from the APO (see 2210120062). The plaintiffs then went to the trade court over the ITC's failure to toss Buchanan and Pickard from the APO (see 2210170084).

The plaintiffs, led by ARC, filed another case at CIT, this time looking to get the trade court to have Commerce disqualify Buchanan from the AD/CVD investigations. In the proceedings, the agency said it wouldn't make a finding as to whether this firm should be barred from further participation. ARC then filed a motion for a preliminary injunction against Pickard and Buchanan's participation in the proceedings, leading the U.S. to file its opposition.

In its brief, the U.S. said that the court does not have jurisdiction to hear the case under Section 1581(i) and that the PI request "should be denied as moot." Since the plaintiffs failed to show that jurisdiction under Section 1581(c) would be manifestly inadequate, jurisdiction under Section 1581(i) cannot stand, the brief said. The U.S. further argued that the plaintiffs have not proven that they will likely succeed on the merits. In declining to boot Pickard and Buchanan from the proceeding based on the conflict of interest, "Commerce reasonably followed its own regulations and internal guidance, in an area over which it possesses substantial discretion," the brief argued.

"Plaintiffs are incorrect, moreover, that Commerce’s proceedings will unlawfully deprive them of a protected privacy interest in confidential information," the U.S. said. "This due process argument misunderstands that, pursuant to the applicable statutory framework, plaintiffs are not required to share business proprietary information with other interested parties. Failure to do so simply prevents Commerce from considering that information, and may result in a less favorable result in the antidumping or countervailing duty proceeding. Because parties have no due process right to a particular duty when engaging in international trade, however, this framework causes no deprivation of due process."

The government filed a motion to dismiss along with its opposition to the PI. This brief, filed a day before the PI opposition, parroted many of the same jurisdictional claims in the PI motion. In addition, the U.S. said that "[e]ntertaining this action would undermine Congress's carefully crafted statutory scheme for resolving alleged APO violation" in AD/CVD proceedings. Commerce has a "comprehensive framework" for AD/CVD investigations that leaves "no room" for interlocutory proceedings before the CIT, so allowing this case to proceed "would disrupt these important and time-sensitive agency deliberations required by Congress," the U.S. said.

Commerce further stated that the plaintiffs failed to make a claim for which relief can be granted. ARC raised two issues in the case -- the regulation of attorney conduct and APO administration -- both of which are areas where agencies exert broad discretion, the brief said. "Plaintiffs fail to plausibly allege that, in addressing plaintiffs’ challenges on these issues, Commerce has acted contrary to law, acted arbitrarily or capriciously, or otherwise abused its discretion."