CAFC Dissent Makes Case for Increased Deference to CIT

News & Insights
Oct 29, 2013

Last week the U.S. Court of Appeals for the Federal Circuit issued an order denying a petition for en banc reconsideration of its decision in NSK Corp. v. United States.  In that case, the CAFC reversed the U.S. Court of International Trade on the issue of whether the U.S. International Trade Commission properly assessed injury to the domestic industry in the sunset review of the antidumping duty orders on ball bearings.  In a vigorous dissent to the decision to deny en banc review, Judge Evan J. Wallach – the only CAFC jurist who has served on the CIT – urged his brethren to revisit the standard of review applied in trade cases.

The CAFC currently employs a de novo standard when reviewing CIT decisions in antidumping and countervailing duty cases.  While this standard is statutorily mandated for CIT review decisions by ITC and the U.S. Department of Commerce, there is no analogous statutory provision providing the applicable standard for CAFC review of CIT decisions.  The CAFC has reviewed CIT decisions in AD/CVD cases using a de novo standard since articulating that approach in Atlantic Sugar, Ltd. v. United States, 744 F.2d 1556, 1559 n. 10 (Fed. Cir. 1984).  The de novo standard comes from the Administrative Procedure Act, as emphasized in the concurring opinion by CAFC judges who agreed to both deny en banc review and maintain the de novo review standard.

Judge Wallach’s dissent advocates replacing the de novo standard articulated in Atlantic Sugar with the much more deferential “misapprehended or grossly misapplied” standard announced by the U.S. Supreme Court in Universal Camera Corp. v United States, 340 U.S. 474, 491 (1951). He is joined in his dissent by CAFC Chief Judge Radar as well as Judge Reyna – the only CAFC jurist with experience as a trade litigator. To support the view that the de novo standard is not required by statute, Judge Wallach points to the lack of statutory basis for CAFC’s current use of an abuse of discretion standard when reviewing CIT remands for agency explanation.  While the concurrence belabors the slippery slope of applying a standard other than de novo, the dissent emphasizes the CIT’s “unique role” in shepherding trade cases that often results in multiple opinions and a supplemented administrative record. Deferring to the CIT is an idea whose time has come.  Judge Wallach observes that the de novo review standard is “inefficient and wasteful” given the specialized experience and trade acuity of the CIT.  By contrast with the CAFC, where trade cases comprise only a small fraction of the docket, the CIT exclusively resolves such disputes.  As a result, the CIT jurists must closely follow the “near-constant developments in that area” both domestically and abroad.  The dissent thereby correctly notes that the de novo standard “renders the CIT’s review superfluous and deprives litigants of the benefits of the CIT’s subject-expertise, as well as its case-specific experience.”

While the CAFC did not grant en banc review in NSK, the CIT standard of review controversy has just been ignited.  Judge Wallach, Judge Reyna, and Chief Judge Radar appear intent on continuing their efforts until the CAFC grants en banc review to reconsider Atlantic Sugar, which is characterized as “bad law.”  It remains to be seen whether they will persuade enough colleagues to change the de novo standard as a means of promoting judicial economy and facilitating consistent trade law application.  These benefits would flow directly to the international trade community, which would be better able to predict and evaluate appeals.  The CAFC currently functions as a “wild card” in trade cases, with years of specialized administrative and judicial proceedings reviewed on a blank slate by a court principally occupied with intellectual property appeals.  Judge Wallach’s position would positively minimize such uncertainty and enhance the orderly administration of our international trade laws.