On October 25, 2013, the United States Court of Appeals for the Federal Circuit declined to adopt a new rule by which it would give deference to Court of International Trade (CIT) decisions in antidumping and countervailing duties cases. Instead, a plurality of the Federal Circuit decided that it would continue its existing practice of conducting de novo review of such decisions. A dissent, joined by Chief Judge Randall Rader, argued that the existing practice is outdated and inefficient, allowing a generalist court to overturn the decisions of the CIT’s expert judges.

What is de novo review?

An appellate court reviewing a lower court decision can apply various levels of scrutiny. It can review the lower court decision deferentially by looking at the court’s findings and factual support and determining whether the facts provide a reasonable basis for the court’s conclusions. Or, the appellate court can give no deference to the lower court decision and instead conduct its own analysis of the record. The former type of review is called review for “substantial evidence.” The latter type of review is called review de novo, or “from the start.”

In an antidumping or countervailing duty case, the CIT reviews the International Trade Commission’s decisions and the administrative record under the deferential “substantial evidence” standard. In other words, if the CIT finds that the Commission’s final determination of dumping, for instance, is supported by substantial evidence in the record, then the CIT will uphold the Commission’s decision.

In Atlantic Sugar v. United States, 744 F.2d 1556 (1984), the Federal Circuit determined that it also must apply the substantial evidence standard to the Commission’s decision and the administrative record. Thus, the Federal Circuit conducts the same kind of review of the agency decision as the CIT already conducts. Therefore, under the logic of Atlantic Sugar, the Federal Circuit grants no deference to the decision of the CIT when that decision is properly appealed to the Federal Circuit.

What did the Federal Circuit decide in NSK Corp v. USITC?

In NSK Corp. v. USITC, the plaintiff NSK Corporation asked the Federal Circuit for a rehearing to consider whether the court should change the manner in which it reviews CIT decisions. Specifically, NSK Corporation asked the Federal Circuit to adopt a deferential standard of review for CIT decisions in antidumping and countervailing duties cases. A plurality of the Federal Circuit refused to modify its existing practice of conducting de novo review.

The dissent sided with NSK Corporation. Judge Wallach, joined by Chief Judge Randall Rader and Circuit Judge Jimmie Reyna, argued that the Federal Circuit’s existing practice is duplicative and inefficient. Judge Wallach argued that the CIT is a specialized court with extensive expertise in trade matters. By contrast, a mere six percent of the Federal Circuit’s docket is comprised of trade cases. In addition, the Federal Circuit has developed a hard-to-apply and inconsistent jurisprudence regarding when to conduct the de novo review. Specifically, when the CIT remands a case to the ITC for additional explanation, that decision is reviewed by the Federal Circuit for abuse of discretion; but when the CIT remands a case for additional factual findings, that decision is reviewed de novo. The dissent argued that there is no significant legal or practical basis to distinguish the two situations.

The dissent further argued that, in practice, the Federal Circuit usually gives the CIT’s decisions some unspecified level of deference even when it is conducting de novo review. Judge Wallach pointed to two examples: in Cleo Inc. v. United States, 501 F.3d 1291 (Fed. Cir. 2007), the court gave “great weight” to the CIT’s decision, and in Taiwan Semiconductors Indus. Assoc. v. Int’l Trade Comm’n, 266 F.3d 1339 (Fed. Cir. 2001), it gave the CIT’s decision “due respect.” Judge Wallach argued that this practice fails to provide guidance to parties considering the wisdom of appealing an adverse CIT decision.

Would a Deferential Standard Be Better for Litigants?

While the existing de novo standard has some benefits, it carries significant risks as well. Under the de novo standard, an unsuccessful plaintiff has a chance, at least in theory, to convince the Federal Circuit to overturn an unfavorable CIT decision. However, an appeal under the de novo standard provides at least as strong a motivation to unhappy defendants seeking to change a pro-plaintiff CIT decision. Thus, within the existing system, CIT litigants more often confront lengthy, expensive and risky appeals.

The theory driving the dissent is that a deferential standard will provide greater certainty for litigants who have an antidumping or countervailing duty case before the CIT. They know at the outset that if they win or lose at the CIT, that decision is unlikely to be overturned by the Federal Circuit. Depending on the facts of the case, this knowledge could help parties budget for litigation and develop an efficient settlement strategy.

It is important to note, however, that the Federal Circuit in practice already gives some degree of deference to CIT decisions. In light of that, perhaps litigants already reap the benefits of the proposed change without having to change the mind of the Federal Circuit.