United States Court of International Trade

Trade Readjustment Case Transferred to District Court in Connecticut

In Former Employees of Drive Sol Global Steering, Inv. v. United States, Court No. 15-172, Slip Op. 16-98 (October 13, 2016), the court denied the motion to dismiss for lack of subject matter jurisdiction and transferred case to the U.S. District Court.  Before the court was plaintiff’s cause of action pursuant to USCIT Rule 12(b)(1) for lack of subject matter jurisdiction or, in the alternative, pursuant to USCIT Rule 12(b)(6) for failure to state a cause of action. Plaintiff brought this action to challenge the failure to disburse all Trade Readjustment Allowance (“TRA”) benefits available under §§ 231 through 234 of the Trade Act of 1974 by the State of Connecticut Department of Labor (“CT Labor”) acting as agent of the U.S. Department of Labor (“Labor”) administering the Trade Adjustment Assistance (“TAA”) program.  Plaintiff also contended that Labor failed to properly oversee federal TRA funds on behalf of all workers and that the State of Connecticut misallocated federal funds.

Plaintiff was a former employee of Drive Sol Global Steering, Inc. (“Drive Sol”), Compl. 9, 15, who is a member of the worker group certified by Labor as eligible to receive Worker Adjustment Assistance and Alternative Trade Adjustment Assistance. When the plant closed down on February 19, 2009, plaintiff filed for benefits under TAA. While plaintiff was initially granted benefits, those benefits were later denied because plaintiff failed to meet the state of Connecticut’s “work search” requirement for unemployment benefit eligibility. He appealed to the Employment Appeals Division Board of Review and to the Connecticut Superior Court. He further appealed to the Office of the Attorney General for Connecticut, the United States Attorney, and the Representatives in both Houses of Congress. Plaintiff initiated this action challenging CT Labor’s actions, as agent of Labor, depriving him of his full TRA benefits in violation of federal law and Labor’s mismanagement and misapplication of the TAA program.

The court found that it did not have jurisdiction to hear this case. It stated, “Eligibility for TRA benefits of an individual member of a group that has been certified is a separate act from certification of a worker group, and that act is not reviewable under § 1581(d)(1).” Slip Op., pg. 9.  The Court has exclusive jurisdiction to review Labor’s final group certification determinations. 19 U.S.C. §§ 2395(a), (c); 28 U.S.C. § 1581(d)(1).  Plaintiff’s complaint does not challenge any aspect of certification, but rather challenges his individual eligibility determination for TRA benefits.  The court further held that to the extent Plaintiff has a claim that the CT Labor misapplied the eligibility requirements as to all the former employees of Drive Sol in contravention of federal law, then he may pursue that challenge in federal district court.  Finally, there is no 1581(i) jurisdiction where an individual’s eligibility is questioned rather than the group certification of a worker group. 

In regards to transferring the case to District Court, defendant pointed to no authority for the notion that Plaintiff’s claim that Labor and CT Labor are operating the TRA program in contravention of state law, is barred from review in federal court. The court in the interests of justice transferred Plaintiff’s claim because it will facilitate a prompt hearing of Plaintiff’s claim in a court that arguably has jurisdiction to hear that claim.

Commerce’s Final Determination Remanded in Silicon Photovoltaic Cells Case

In SolarWorld Americas, Inc. v. United States, Court No. 15-232, Slip Op. 16-99 (October 14, 2016), plaintiff challenged the U.S. Department of Commerce’s (“Department” or “Commerce”) determination in the first administrative review of the countervailing duty order covering crystalline silicon photovoltaic cells, whether or not assembled into modules, from the People’s Republic of China (“China”). See Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled Into Modules From the People’s Republic of China, 80 Fed. Reg. 41,003 (Dep’t Commerce July 14, 2015) (final results of countervailing duty administrative review).  SolarWorld challenged Commerce’s determination to countervail the China Ex-Im Bank’s Export Buyer’s Credit Program at an AFA rate of 5.46 percent as unsupported by substantial evidence and otherwise contrary to law. SolarWorld argued that Commerce unreasonably selected an AFA rate of 5.46 percent in this review when it applied an AFA rate of 10.45 percent to the same program in the original investigation

According to the court, Commerce has considerable discretion to develop a methodology for calculating an AFA rate derived from one of the sources listed in the statute. An AFA rate selected by Commerce must also reasonably balance the objectives of inducing compliance and determining an accurate rate. However, the court held that Commerce’s AFA rate selection hierarchies in investigations and administrative reviews both must balance these same interests, and thus, Commerce must provide a reasonable explanation for implementing different hierarchies in reviews than in investigations. Because Commerce did not provide a sufficient explanation for varying rates from the investigation to the review, Commerce’s decision regarding the AFA rate was remanded to Commerce for such an explanation.   More specifically, “to the extent that Commerce balances the interests of rate accuracy with inducing compliance differently in reviews versus investigations, Commerce must explain on remand why that discrepancy is reasonable or it must reconsider its methodology.” Slip Op. pg. 14. For these reasons, Commerce’s determination in this review was remanded.

Panel Vans Upgraded to Motorhomes Do Not Qualify for HTS Subeading 9802.00.40/50 “Repair or Alterations” Treatment.

Daimler/Chrysler “Sprinter” Panel Vans, exported to Canada for upfitting into Class B motorhomes, do not qualify for duty-free “repairs and alterations” treatment when re-imported into the United States, according to a decision by the U.S. Court of International Trade.

In Pleasure-Way Industries Inc. v. United States, Slip Op. 16-100 (October 8, 2016), a Saskatchewan-based company purchased finished Sprinter panel vans from dealers in the United States. In Canada, the vans were fitted with beds, cooking appliances, a washroom and other creature comforts, and were sold as motorhomes. The operations in Canada did not change the vans’ power train, wheelbase, suspension or other mechanical features, and the vehicles retained their initial vehicle identification numbers (VINs), vehicle registrations, and original manufacturer warranty.

In holding the upfitted vans did not qualify for “repair and alterations” treatment, the Court first held that the vans, as exported from the United States, did not qualify as “finished” or “completed” goods, eligible for such treatment. The court held that whether an exported article was a finished good must be determined from the intent of the person performing the alterations abroad – a formulation which, essentially, means that no product altered abroad could ever qualify for “repair or alterations” treatment.

Second, the court held that the Canadian operations changed the “essential characteristics” of the vans, mainly by eliminating their capacity to carry “cargo” by putting furnishings in the cargo bed area. The court held that the operations converted the vans from vehicles designed for the transport of goods, into vehicles designed for the transport of persons. [The furnishings in the cargo area apparently do not constitute “goods” in the court’s view].

This was the first decision involving the NAFTA regulation defining what constitutes a “repair or alteration”, 19 C.F.R. §181.64, and while the Court mentioned the regulation, it did not analyze it in any detail.

Canadian International Trade Tribunal

Vanities With Sinks Classified as “Ceramic Articles” Rather than Furniture

Imported vanities, featuring a wooden cabinet designed to be attached to the wall, and a ceramic sink, are more properly classifiable as “ceramic” articles of HS Chapter 69 rather than as Furniture of Chapter 94, the Canadian International Trade Tribunal recently held.

In Globe Union (Canada) v. President, Canada Border Services Agency, AP 2014-024 (October 3, 2016), the Tribunal, following a 2015 decision in a case brought by The Home Depot, held that, although the vanities were fastened to the wall in the manner of a cupboard, and contained a cabinet for storing towels, soaps, medicines and the like, it did not meet the definition of “furniture” set out in the Explanatory Notes to HS Chapter 94. While agreeing with the CBSA that the vanities had many of the characteristics of a cupboard, the Tribunal held that it could not disregard the presence of the sink, which is essential to the consumer decision to purchase a vanity. Fixed to the wall, the vanity is not a moveable article of furniture, and the connection of the sink to a plumbing system cements the nature of the product as a ceramic article.