US Asks for CIT Order Blocking Paper Exporters From Entering Goods Into US
The U.S. on Feb. 9 moved for default judgment against affiliated German paper exporters Koehler Oberkirch and Koehler Paper after the companies refused to participate in the discovery phase of a customs penalty suit against the exporters. The government asked the court for an order barring the companies from importing paper into the U.S. after the companies made it clear "they will refuse to pay their outstanding liabilities to the United States or even identify domestic assets that could satisfy that judgment" (United States v. Koehler Oberkirch, CIT # 24-00014).
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The motion came in the government's case against Koehler Oberkirch and Koehler Paper seeking nearly $200 million in outstanding antidumping duties. Previously in the lawsuit, the companies unsuccessfully challenged the government's claim of personal jurisdiction over the companies (see 2410250028).
Following the Court of International Trade's resolution of the dispute on jurisdiction, the parties exchanged initial disclosures and the government served a series of discovery requests. Thirty days after the U.S. served its first discovery requests, the companies said that they "will not respond to these discovery requests and will not participate in any future discovery in this case.”
The U.S. said the companies didn't raise any specific objections to the discovery requests, and instead broadly invoked "due regard for German sovereignty and German law, the European Union’s General Data Privacy Regulation (GDPR), and international comity.” However, the companies failed to state they were barred from responding to the discovery requests "due to foreign law or any other reason." Instead, the companies said "U.S.-style discovery" would pose "unspecified 'insurmountable challenges for German companies with German employees, especially with respect to the GDPR,'" the government noted.
The government then issued another round of requests for admission, which sought to establish the Koehler companies' liability through deemed admissions if they again refused to answer. However, the companies again said they will not respond to the discovery requests for the reasons they cited in their initial refusal.
During a phone call with DOJ attorneys, the companies "suggested that the Government 'simply move for judgment on the pleadings or default judgment, rather than force the parties and Court to devote unnecessary time and resources litigating a motion to compel,'" the U.S. said.
As a result, the U.S. moved for default judgment against the companies, arguing that the exporters "have made their willful default clear." The government said "the Court need not engage in the pointless exercise of first compelling the defendants to respond."
The court should also then take the "rare" step of enjoining the companies from importing goods into the U.S., the government said. "The defendants have made clear that they will not pay any money judgment issued by this Court -- they are refusing to participate in this case and have not paid any of their bills resulting from this Court’s judgments upholding the antidumping duties in the first place," the brief said.
The government said the companies "continue to actively end-run this Court's judgments" and the remedy the AD upheld by those judgments were "statutorily intended to provide," by "altering their business model to continue to sell merchandise in the U.S. market through a third-party affiliate." Coercive relief is needed to encourage compliance and also to promote the "rule of law and the fairness of our markets," the U.S. said.