On February 5, 2010, the US Court of Appeals for the Federal Circuit (CAFC) affirmed the US Court of International Trade’s (CIT’s) decision in Totes-Isotoner Corporation v. United States. In the underlying dispute, Plaintiff Totes-Isotoner Corporation (Totes) alleged that the HTSUS unconstitutionally denies equal protection of the law by imposing different rates of duty on seamed leather men’s gloves (dutiable at 14 percent ad valorem) and seamed leather gloves for other persons (dutiable at 12.6 percent ad valorem), thereby discriminating on the basis of gender or age. The CIT found, and the CAFC agreed, that Totes failed to state an equal protection claim where the challenged tariff provisions were not facially discriminatory, and where Totes failed to plead facts sufficient to establish a governmental intent to discriminate between male and other users.
In reaching its decision, the CAFC evaluated Totes’ disparate impact argument—that the higher duty applicable to gloves imported for use by men is a discriminatory duty on men for purposes of equal protection. The CAFC considered whether the mere allegation of disparate impact of the tariff provisions with respect to male glove users was sufficient to create an equal protection claim. First, the CAFC found that—in the context of tariff classification—the fact that disparate impact exists alone could not form the basis for a conclusion that US Congress intended to discriminate against men under the HTSUS. The CAFC explained that rates of duty applicable to different classifications resulted from complex multilateral international trade negotiations, and that the reasoning for such different rates varied based on country of origin, product type, circumstances of importation, and/or state of the domestic manufacturing industry. The CAFC further explained that it was likely the disparate rates could be attributed to the fact that men’s and other gloves were, in fact, different products, “manufactured by different entities in different countries with differing impacts on domestic industry.” Second, the CAFC cited the broad authority the US Government has in establishing classifications for the purposes of taxation. Thus, the CAFC concluded that—in the tax and tariff context—more than disparate impact is required to establish a discriminatory purpose for the purposes of stating an equal protection claim. The CAFC determined that the same rationale applied to Totes’ age discrimination claim, which was subject to the less stringent rational basis test. Because the CAFC found that Totes did not meet its burden to allege facts sufficient to infer a governmental intent to discriminate, it affirmed the CIT’s judgment that Totes failed to state an equal protection claim.