German Exporter Says CIT Has No Personal Jurisdiction Over It in Customs Penalty Suit

The government's service of German exporter Koehler on its U.S. counsel in a customs penalty suit was "improper and insufficient," leaving the Court of International Trade without personal jurisdiction over the company, Koehler argued in an Oct. 24 motion to dismiss. The company added that even if service was sufficient, the court has no personal jurisdiction over the company anyway, since it's a German firm and the U.S. allegations don't relate to any activity by the company in the U.S. (United States v. Koehler Oberkirch GmbH, CIT # 24-00014).

The suit is seeking over $193 million in unpaid antidumping duties with interest on paper entries from November 2009 through October 2011. The goods were imported by Papierfabrik August Koehler AG, which "converted corporate forms" in 2012 to Papierfabrik August Koehler SE. The company in 2021 then became Koehler Oberkirch via a "statutory conversion" in which the entity remained the same.

To serve the company, the U.S. sent a copy of the summons and complaint to Koehler's U.S. counsel -- a move the exporter contested as insufficient. The trade court rejected this notion and found alternative service in this fashion to be proper, allowing the case to proceed (see 2408210016).

Nonetheless, Koehler included the insufficient service issue in its motion to dismiss "as a matter of precaution to avoid any appearance of waiver of this defense."

And the company said that even with proper service, CIT doesn't have personal jurisdiction over the company. The court doesn't have "general" personal jurisdiction over the company since it's incorporated in Germany and has its principal place of business there, the brief said.

"Specific" jurisdiction, on the other hand, exists where a defendant exploited "a market in the forum State" or entered into a "contractual relationship centered there," and the claims "arise out of or relate to" the company's contacts with the forum.

Koehler rooted its claim that the trade court doesn't have specific jurisdiction over it in the Supreme Court's decision in Ford Motor Co. v. Montana 8th Judicial Dist. In that case, the court found personal jurisdiction over Ford in Minnesota and Montana in a case stemming from car accidents, because even though Ford didn't design, make or sell the vehicles in either state, the company served the markets there. Ford advertised the car models at issue using "every means imaginable" in the two states, the court said.

The exporter said the U.S. "has pleaded no similar facts in relation to Koehler Paper" and that the allegations actually stand in contrast to the facts in Ford. The company said the allegations are that Koehler Oberkirch and not Koehler Paper imported the subject entries and that the U.S. made "no allegations as to Koehler Paper." Most of the government's allegations only relate to the "creation of Koehler Paper" and not to any actions the company took in the U.S.

The remaining allegations pertain to Koehler Oberkirch's and Koehler Paper's financial statements and balance of the companies' assets, revenues and liabilities, the brief said. None of these allegations pertain to any action by Koehler Paper in the U.S., stripping the court of personal jurisdiction, the exporter argued.