From the CAFC web site:

The court's jurisdiction consists of administrative law cases (55%), intellectual property cases (31%), and cases involving money damages against the United States government (11%). The administrative law cases consist of personnel and veterans claims. Nearly all of the intellectual property cases involve patents. Suits for money damages against the United States government include government contract cases, tax refund appeals, unlawful takings, and civilian and military pay cases.

Stepping outside this blog's coverage of patent cases for an entry, the CAFC just ruled on an interesting case of nincompoopery at the Court of International Trade ("Trade Court").

Home Products v. United States and Since Hardware (CAFC 2010-1184) precedential

Home Products took a dumping complaint against Since Hardware to the ITC. Since Hardware, situated in Gouangzhou province in the People's Republic of China, took to selling ironing boards to U.S. consumers on the cheap, against the law for selling goods at "less than fair value." So the ITC found in its antidumping order.

The Commerce Department then calculated dumping margins for Since Hardware, based upon documentation submitted by Since Hardware.

Dumping occurs when a foreign firm sells a product in the United States at a price lower than the product's normal value ("NV"); the amount by which NV exceeds the U.S. price (the "export price") is the "dumping margin." See 19 U.S.C. § 1673.

Two reviews were made before Home Products got uppity.

Commerce calculated dumping margins for Since Hardware of 0.45 percent and 0.34 percent respectively. Because the agency considers dumping margins of less than 0.5 percent to be de minimis, Commerce accordingly did not impose any antidumping duties on Since Hardware for these review periods.

Dissatisfied, Home Product challenged the Commerce Department's second finding before the Trade Court.

The sole issue raised in Home Products' complaint was whether Commerce had erred in using a surrogate manufacturer's outdated financial statements to value Since Hardware's factory overhead, administrative expenses, and profit.

While Home Products' challenge to the second administrative review was pending in the Trade Court, Commerce was conducting its third administrative review of the same antidumping order.

During that proceeding, new evidence was brought to light that indicated Since Hardware had submitted falsified documents to Commerce during the third administrative review. Commerce concluded that the documents were unreliable and inaccurate.

Home Product contended that the falsified documents "likely allowed Since Hardware to obtain a decreased dumping margin."

As described by Commerce in the third administrative review, the evidence of misrepresentations by Since Hardware in the third administrative review is quite substantial.

Because Since Hardware had "failed to cooperate to the best of its ability with respect to its obligation to provide accurate information concerning its market economy purchases," Commerce applied adverse facts available and significantly increased Since Hardware's dumping margin.

Government sloth, oblivious to justice, ambles on stage.

In May 2009, in light of the results of the third administrative review--and in particular Commerce's apparent agreement that the same discrepancies appeared on certificates Since Hardware submitted during the second administrative review--Home Products moved the Trade Court to amend its complaint in its challenge to the second administrative review. It requested that the court remand the case to Commerce for reconsideration in light of the newly discovered evidence of falsification in the second administrative review. The government opposed, arguing that "Home Products' contention that 'newly discovered evidence' exists is not relevant" because "judicial review of antidumping duty administrative reviews is limited to 'review upon the basis of the record made before the agency which issued the decision.'" Def.'s Resp. to Pl.'s Mot. to Remand, J.A. 1096 (citation omitted).

The Trade Courtesans, dressed in very sheer dresses, waltz in the mud.

In denying the motions, the Trade Court agreed with the government and "decline[d] Home Products' invitation to go beyond the administrative record under review." Trade Court Order, at 10. While its opinion is not entirely clear, it appears that the court was operating under the theory that, because the remand request was not made by Commerce itself, the court was limited to considering evidence found in the record of the second administrative review--the proceeding from which Home Products appealed. Id. at 10-11. This necessarily excluded from consideration Commerce's subsequent findings made during the third administrative review and the documents contained in the record of the third administrative review. (The allegedly falsified documents in the second administrative review were, of course, in the second administrative review record.)

The Trade Court further noted that, even if extrarecord evidence were to be considered, it disagreed with Home Products' characterization of the third administrative review.

Home Products appealed to the CAFC.

The question presented here is whether the Trade Court is obligated to remand a decision to Commerce for reconsideration when new evidence comes to light that the agency proceedings under review were tainted by material fraud.

In Tokyo Kikai Seisakusho, Ltd. v. United States, 529 F.3d 1352, 1360 (Fed. Cir. 2008), we held that Commerce itself has the authority to reopen a proceeding if it later discovers evidence of fraud in the original proceeding. Section 751(b) of the Tariff Act of 1930, codified at 19 U.S.C. § 1675(b), provides for what is known as a "changed circumstances" review. Under that section, Commerce has the statutory authority to reconsider its decisions whenever the agency "receives information . . . which shows changed circumstances sufficient to warrant a review." 19 U.S.C. § 1675(b)(1); see also 19 C.F.R. § 351.216.

The Trade Court [in the Tokyo Kikai case] sustained Commerce's authority to reopen the proceeding, and we affirmed. Id. We agreed that new evidence of fraud did not fit neatly into the category of "changed circumstances," because in such cases "the circumstances that led to the determination have 'changed' only because the true circumstances, previously concealed by fraud, have come to light." Id. at 1360. Nonetheless, we held that "administrative agencies possess inherent authority to reconsider their decisions, subject to certain limitations, regardless of whether they possess explicit statutory authority to do so." Id. Furthermore, we noted that "[a]n agency's power to reconsider is even more fundamental when, as here, it is exercised to protect the integrity of its own proceedings from fraud." Id. at 1361.

Thus, Tokyo Kikai established that Commerce has inherent authority to reopen a case to consider new evidence that its proceedings were tainted by fraud.

That puts paid to the notion that the Trade Court could not pursue justice.

We see no reason why similar principles should not govern when fraud is discovered while the agency proceeding is on appeal.

While in this case it was Home Products--rather than Commerce--that requested a remand, we see no reason why parties other than the administrative agency cannot also request reopening or a remand for the consideration of new and material evidence. It is well established that, when an administrative agency denies a party's petition which seeks to "reopen[ a case] on the basis of new evidence or changed circumstances," that decision is reviewable on appeal, and "abuse of discretion is the standard." Interstate Commerce Comm'n v. Bhd. of Locomotive Eng'rs, 482 U.S. 270, 284 (1987).11 So too, a decision of the Trade Court denying a motion by an interested party to remand is subject to judicial review under the abuse of discretion standard. Diamond Sawblades Mfrs. Coal. v. United States, 612 F.3d 1348, 1355-56 (Fed. Cir. 2010); Altx, Inc. v. United States, 370 F.3d 1108, 1117 (Fed. Cir. 2004). The Trade Court has considerable discretion as to whether to order a remand in the particular circumstances of any individual case. That discretion, however, is not unlimited. We hold that, where a party brings to light clear and convincing new evidence sufficient to make a prima facie case that the agency proceedings under review were tainted by material fraud, the Trade Court abuses its discretion when it declines to order a remand to require the agency to reconsider its decision in light of the new evidence. The Trade Court's reasons for refusing to remand here do not withstand analysis.

An interesting poke at the Commerce Department's lawyers on the case:

While the agency's counsel in this appeal has opposed reopening, the views of Commerce must be expressed by the agency itself, not by litigating counsel. See Abbott Labs. v. United States, 573 F.3d 1327, 1332-33 (Fed. Cir. 2009) ("[W]e owe deference only to those considered agency judgments as to the issue directly involved in the litigation, not to the views of litigation counsel."); see also Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 213 (1988) ("Deference to what appears to be nothing more than an agency's convenient litigating position would be entirely inappropriate."). A remand is necessary to secure the views of the agency itself. If Commerce decides not to reopen, that decision may in turn be reviewed by the Trade Court and, if necessary, by our court.

Reversed and remanded.