Commerce Doesn't Consider Conflict of Interest Claims Against AD/CVD Petitions, US Says

In response to a motion for judgment filed by an importer of Mexican rail couplers, the U.S. and a petitioner each said Oct. 25 that the Commerce Department doesn't have to consider conflict of interest claims in antidumping duty investigations. The importer brought a conflict of interest suit against the petitioner in an AD investigation, saying that the petitioner relied on evidence from an attorney it itself had once hired (see 2407160060) (Amsted Rail Co. v. U.S., CIT # 23-00242).

Importer Amsted Rail Co. and its Mexican maquiladora affiliate ASF-K Mexico argued in their motion for judgment that their former counsel, now-Buchanan Ingersoll partner Daniel Pickard, had used for the petition confidential information including Amsted’s own “legal strategy for prosecuting” AD investigations and confidential information “regarding the domestic like product, the domestic industry, and the conditions of competition."

Pickard had previously been a partner at Wiley. Amsted hired his firm to petition the International Trade Commission to start antidumping and countervailing duty investigations on freight rail couplers from China.

But the Commerce Department was right to ignore Amsted’s disqualification request “based on an alleged conflict of interest,” the U.S. said in its Oct. 25 motion. It said Commerce’s refusal to “entertain” Amsted’s disqualification request was “consistent with the regulatory preamble” for AD/CVD investigations.

The alleged conflict is based on state ethics rules, and Commerce determined when drafting its regulations that it wouldn’t “delve into complex conflict-of-interest matters in which it does not possess expertise,” it said. It cited the Supreme Court case Vermont Yankee, which held that a lower court had wrongly overturned an agency action when it only found a “failure to employ procedures beyond those required by the statute.”

Amsted argued that it had no other recourse than Commerce for the conflict of interest, but Commerce is allowed to establish its own procedures, it said, “and has discretion not to use its limited resources to police state ethics rules that are outside of Commerce’s expertise."

The department has its own rules of procedure, the government said. It said that under these, the department may bar attorneys or other company representatives on a showing of good cause, it said, but it generally “allows both attorneys and non-attorney representatives” to participate in AD/CVD proceedings.

When Commerce drafted its procedures, it noted that its ability to bar attorneys for good cause doesn’t “cover ethical conflicts uniquely within the province of local Bar authorities,” the U.S. said. Specifically, it noted that it wouldn’t consider a party’s claim that a former counsel had moved on to represent the party’s opposition, the government said.

Rather, “to the extent a law firm or individual attorney believes that an ethical breach is occurring or has occurred, they should follow the appropriate professional responsibility guidelines and ethical canons,” the U.S. said.

Amsted also argued that Commerce regularly ranges beyond its area of expertise when it makes rulings on complex matters in AD/CVD proceedings; but the complexity of AD/CVD proceedings “supports, rather than undermines,” the department’s refusal to consider conflict-of-interest matters, the government claimed. It said that complexity is the reason Commerce was granted the ability to outline its own procedures, as it could draft them in such a way that would “enable it to ‘discharge [its] multitudinous duties.’”

And the U.S. called disqualifications for conflicts of interest “high stakes,” carrying substantial “potential for abuse.” It said that an incorrect disqualification could delay or even “derail" AD/CVD investigations, as well as have “immediate, severe, and often irreparable consequences” for the attorney that was disqualified or the party they represented.

But Amsted can seek relief elsewhere, the U.S. added. It said the importer could file a legal malpractice suit against the firm and its former attorney or appeal to the District of Columbia Bar.

Domestic producers and petitioners led by the Coalition of Freight Rail Coupler Producers argued in turn in their own brief that Amsted had failed to exhaust its conflict of interest claims before appealing to the Court of International Trade.

The coalition said that “perhaps the clearest example of new facts” being offered by Amsted that wasn’t included in the administrative record of the AD investigation was a declaration from a professor, but it claimed that there “are several other portions of Plaintiffs’ Complaint that arguably contain factual assertions that were not part of the agency record below,” too.

It also cited new legal arguments it said Amsted had failed to raise during the investigation, such as a claim that “any prior joint representation does not eliminate the conflict.”