CAFC Rules Against Totes- Isotoner Gender/Age Discrimination Claim on Glove Duty Rates
In Totes-Isotoner Corporation v. U.S., the Court of Appeals for the Federal Circuit affirmed the Court of International Trade's judgment that Totes-Isotoner Corporation, which had challenged the constitutionality of different U.S. tariff rates for men's and other gloves, had standing to bring its claims but did not plead sufficient facts to state a claim of unconstitutional discrimination.
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(Totes-Isotoner had challenged the constitutionality of applying a different rate of duty to gloves "for men", than that which applied to gloves "for other persons."1)
Although the U.S. argued that the CIT lacked jurisdiction under Section 1581(i) to entertain this case, the CAFC disagreed, ruling that the CIT has exclusive jurisdiction of any civil action commenced that arises out of any law of the U.S. providing for revenue from imports and their administration.
The CAFC ruled that Totes had met Article III of the Constitution's requirements for standing.2. .The CAFC noted that Totes had suffered an injury-in-fact by the payment of customs duties at the 14 percent rate, that the injury was caused by the government's alleged discriminatory tariff rates, and that it sought refunds of the excess duty paid
The U.S. argued that since all importers of "men's" gloves, including Totes, pay the same tariff rate, there was no discriminatory treatment, and Totes suffered no injury-in-fact. The CAFC ruled that this argument was frivolous, since equal protection requirements still apply even though everyone in the targeted group is targeted equally. Further, the U.S. argued that if there was any discrimination, it was against the purchasers of gloves, and not the importers of gloves. The CAFC stated that the Supreme Court had held that a vendor may indeed be the proper plaintiff where the vendor itself is injured by the alleged discrimination, even though the vendor is not the object of the discrimination.
The U.S. also argued that the subject matter of Totes' complaint (the constitutionality of the use of gender in tariff classification), is not appropriate for judicial resolution because the formation and adoption of tariff provisions involves the negotiation of agreements with foreign governments. The CAFC ruled that the review of statutory provisions, such as the HTS, using constitutional standards, is properly within the scope of the judiciary.
On Totes' primary argument, the CAFC ruled that a dissimilar treatment in the tariff does not, by itself, establish a violation of equal protection. The rates of duty applicable to different classifications are the result of multilateral international trade negotiations and reflect reciprocal trade concessions and special trade preferences. The mere existence of dissimilar treatment is not enough to demonstrate a violation of equal treatment--absent a showing that Congress intended to discriminate against one gender over another in the tariff schedule. In addition, the existence of dissimilar duties being assessed is not, by itself, sufficient to establish that the government's purpose for these different rates of duty was to discriminate.
The CAFC affirmed CIT's judgment that Totes had not provided sufficient facts to establish that the government's purpose for dissimilar treatment was to discriminate; therefore, Totes failed to state an equal protection claim either by gender or age.
1When imported for men, the subject gloves are classified under HTS 4203.29.30 at a duty rate of 14%. However, when not imported for men, the gloves are classified under HTS 4203.29.40 at a duty rate of 12.6%.
2To establish a sufficient stake for purposes of Article III "standing," plaintiffs must demonstrate (1) that they have suffered some injury-in-fact; (2) that there is a causal connection between the defendant's conduct and this injury-in-fact; and (3) that this injury is redressable by the court.
(See ITT's Online Archives or 07/09/08 news: 08070905, for BP summary of CIT ruling (Slip Op. 08-73), which dismissed Totes-Isotoner Gender/Age Discrimination Claim on Glove Duty Rates.)
CAFC 09-1113 (dated 02/05/10) available at http://www.cafc.uscourts.gov/opinions/09-1113.pdf