In June 2013, the International Trade Commission (“ITC” or “the Commission”) announced that it had launched a pilot program to test whether early rulings on certain dispositive issues in some Section 337 investigations could limit unnecessary litigation and conserve the resources of the Commission and litigants (the “Pilot Program”). Prior to even announcing the Pilot Program, the Commission employed elements of the Pilot Program in Certain Products Having Laminated Packaging, Laminated Packaging, and Components Thereof (Certain Products Having Laminated Packaging), terminating the investigation six months after institution. This month, the Commission handed down its opinion in that investigation, reaffirming its authority to institute the Pilot Program in section 337 investigations and potentially changing the landscape of such investigations.
ITC Pilot Program
Under the Pilot Program, the Commission will identify, at institution, investigations that are likely to present a potentially dispositive issue that is amenable to early resolution. Examples of such issues include lack of domestic industry, importation or standing. The Commission will then direct the assigned Administrative Law Judge (“ALJ”) to issue an early initial determination (“ID”) within a shortened time, typically within 100 days after institution of the investigation.
In these Pilot Program investigations, the Commission will set forth timelines for the issuance of an early ID and expedited Commission review in the Notice of Institution. To help manage the process, the presiding ALJ may limit or stay discovery on issues other than the potentially dispositive issue before the early evidentiary hearing. An extension of the deadlines set forth by the Commission may only be granted with good cause shown.
Once the ALJ issues the early ID, the parties have five calendar days to file a petition for review. Replies to such petitions are due three business days following service. The Commission will determine whether to review the early ID within 30 days.
Certain Products Having Laminated Packaging
The Commission employed the Pilot Program on March 22, 2013 when it instituted Certain Products Having Laminated Packaging, Inv. No. 337-TA-874. There, in addition to the usual language instituting the investigation, the Notice of Institution stated something very new:
Notwithstanding any Commission Rules that would otherwise apply, the presiding Administrative Law Judge shall hold an early evidentiary hearing, find facts, and issue an early decision, as to whether the complainant has satisfied the economic prong of the domestic industry requirement. Any such decision shall be in the form of an initial determination (“ID”). Petitions for review of such an ID shall be due five calendar days after service of the ID; any replies shall be due three business days after service of a petition. The ID will become the Commission’s final determination 30 days after the date of service of the ID unless the Commission determines to review the ID. Any such review will be conducted in accordance with Commission Rules 210.43, 210.44, and 210.45, 19 CFR 210.43, 210.44 and 210.45.
The Commission then set forth a deadline for the early disposition phase of the investigation, requiring the issuance of an early ID within 100 days of institution.
On March 28, 2013, the presiding ALJ, Judge Essex, issued an order requiring the parties to meet and confer toward establishment of a procedural schedule. The ALJ’s suggested schedule provided two weeks for fact discovery, 11 days for expert discovery, three days to draft prehearing briefs and prepare exhibits for the hearing, four days for pre-hearing motions, and two days for the hearing. While expressing sympathy for the parties, the ALJ noted in a footnote that the Commission’s “decision to depart from its own rules and regulations” was “of questionable legality.”
Prior to the hearing, complainant filed an objection to the Commission’s Notice of Institution, arguing that the order was “arbitrary and capricious” and not in accordance with the law. The ALJ conducted a hearing on May 16-17, 2013. The ALJ overruled the objection, but invited Staff and respondents to offer comments on the legal propriety of expedited proceedings. Staff and respondents both submitted briefs in support of the Commission’s authority to direct the ALJ to issue an early ID.
On July 5, 2013, Judge Essex issued an ID. In the ID, the ALJ changed his ruling on complainant’s objection to the expedited proceedings. In a detailed analysis, the ALJ found the Commission’s directive in the Notice of Institution violated the Administrative Procedures Act (“APA”) and deprived complainant of due process under the 5th and 14th amendments to the Constitution. The ALJ stated: “[T]he Commission has sought to deviate from its rules to achieve a desired result; however the Commission has not articulated what the desired result is … Absent the instructions contained in the Notice in this matter, the judge would find the proceedings as conducted to be in violation of law and would proceed to hearing consistent with the rules of the ITC and APA.”
Despite the ALJ’s finding about the validity of the expedited proceeding, on the merits, the ALJ found the complainant failed to satisfy the economic prong of the domestic industry requirement.
On August 7, 2013, the Commission issued its Notice of Commission Decision to Review an Initial Determination, in which it terminated the investigation on the basis that there was no violation of Section 337 due to the complainant’s failure to establish domestic industry. The Commission issued its Opinion on September 3, 2013, which explained its reasoning underlying its decision to end the investigation. In its Opinion, the Commission rejected the ALJ’s constitutional arguments, reasoning that the ID failed to provide any authority to support its conclusion that a complainant in a Section 337 investigation has a constitutionally protected interest in obtaining a hearing to address all the issues presented in an investigation. The Commission likewise rejected the ALJ’s reliance on the APA, noting that procedural rules have always been exempt from the APA requirement of informal rulemaking.
The Commission’s Opinion and the ITC’s Pilot Program sends a clear message to all prospective complainants: be prepared to prove your case immediately.
On domestic industry, in particular, the ITC has stated that “[w]hile some complainants rely on licensees’ activities to satisfy the domestic industry requirement, such complainants should have acquired the necessary information from licensees prior to filing the complaint and have a well-developed plan for obtaining any necessary discovery immediately upon institution.” The well-prepared complainant will heed such advice with respect to all potentially dispositive issues amenable to early resolution, and be prepared to identify witnesses, conduct discovery and prepare for hearing promptly following institution of the investigation.