One of the primary and completely legitimate purposes of incorporating is to limit or eliminate the personal liability of corporate principals and employees. Under New York state law, corporate veil piercing principles or legal entity disregarding principles involve several factor analysis. Piercing the corporate veil requires a showing that: (1) the owners exercised complete domination of the corporation in respect to the transaction attacked; and (2) that such domination was used to commit a fraud or wrong against the plaintiff which resulted in plaintiff’s injury. Morris v. New York State Dep’t of Taxation & Fin., 82 N.Y.2d 135, 141, 623 N.E.2d 1157, 1160–61 (1993). So fraud automatically pierces corporate veil, it is given. What about negligence? Well, the negligence must equate to abuse of the privilege of doing business in the corporate form to perpetrate a wrong or injustice against that party. Id. In one case, New York’s Appellate court declined to pierce corporate veil in a negligence claim finding no “fraud or wrong.” Mistrulli v. McFinnigan, Inc., 39 A.D.3d 606, 607, 834 N.Y.S.2d 271, 272 (2d Dept. 2007). This means that negligence, would not automatically serve as an entitlement to corporate veil piercing in New York state courts. Same…
Court of International Trade (CIT) decision in Zojirushi v. U.S. (CIT 2016) is a great jurisdictional monologue explaining how and when 28 U.S.C. § 1581 can be invoked when challenging Customs and Border Protection (CBP) protest. In Zojirushi, CBP did not approve nor deny protestant’s GSP claim, but instead checked the box on CBP Form 19 “rejected as non-protestable.” Protestant brought action against CBP in CIT under 28 U.S.C. § 1581(i), which is a residual jurisdictional subdivision. CIT declined jurisdiction under 28 U.S.C. § 1581(i), saying that for this type of action, jurisdiction pursuant to 28 U.S.C. § 1581(a) should be invoked, which explicitly provides for protests. (The Court of International Trade shall have exclusive jurisdiction of any civil action commenced to contest the denial of a protest, in whole or in part, under section 515 of the Tariff Act of 1930) However, the problem here was that CBP had neither denied nor approved the protest, but rather “rejected” the document. According to CIT, this problem is easily corrected through “accelerated disposition” clause under 19 U.S.C. § 1515(b). In other words, before showing up to court, protestant should request accelerated disposition. Then wait thirty (30) for “deemed” denial. And only then,…
On August 24, 2016, in Otter Products v. US, Court of Appeals for the Federal Circuit (CAFC) agreed with the Court of International Trade (CIT) decision that protective cases for smartphones that are specifically designed to fit these smartphones are not classifiable under HTSUS heading 4202. For Otter Products, LLC this decision lowered duty from 20% to 5.3%, allowing them to use HTSUS 3926.90.99 (other articles of plastic provision). Perhaps more interesting, if not important, outcome of the opinion is the analysis and well-reasoned attack on the part of both plaintiff and defendant. HTSUS 4202 heading provides for: Trunks, suitcases, vanity cases, attache cases, briefcases, school satchels, spectacle cases, binocular cases, camera cases, musical instrument cases, gun cases, holsters and similar containers; traveling bags, insulated food or beverage bags, toiletry bags, knapsacks and backpacks, handbags, shopping bags, wallets, purses, map cases, cigarette cases, tobacco pouches, tool bags, sports bags, bottle cases, jewelry boxes, powder cases, cutlery cases and similar containers, of leather or of composition leather, of sheeting of plastics, of textile materials, of vulcanized fiber or of paperboard, or wholly or mainly covered with such materials or with paper: Since smartphone cases are not specifically provided under heading notes,…
Read More HTSUS 4202 Interpretative Methodology under Otter Products
In the Corning Gilbert Inc. v. U.S., importer asked the Court of International Trade for an opinion about Customs and Border Protection (CBP) role in enforcing decisions of other agencies. The specific issue concerned general exclusion order issued by International Trade Commission (ITC) in the patent infringement investigation for coaxial cable connectors. Exercising ITC’s authority under 19 U.S.C. § 337(d)(2)(a), the Commission directed CBP to exclude all unlicensed “coaxial cable connectors that infringe claim 1 and/or claim 2 of U.S. Patent 6,558,194.” Id. Since the patent in question has only two claims, the ITC’s decision essentially concerned the whole patent. Now here is the interesting part: when deciding whether or not to exclude the merchandise, can CBP rely on interpretations of the ITC, or should CBP make its own inquiry? In Corning Gilbert, CBP thought that reliance on ITC’s interpretation would suffice. The Court, however, disagreed and requested CBP to exercise its own discretion: “Customs may have to go beyond the mechanical application of the ITC’s Section 337. It may have to look at evidence and analyze whether the importer, particularly a non-party such as Corning Gilbert, has established non-infringement.” Id. This holding is significant in light of CBP’s peculiar role as…
Read More CBP Can’t Hide Behind Ministerial Shield… sometimes
Court of International Trade published opinion earlier this month, laying down the HTSUS classification principles for 3-D printing technology (or “laser sintering” / “additive manufacturing” machines, using the court’s terminology). The 46 page opinion – EOS of North America, Inc. v. US – lays rest to rumors and ambiguities of how this increasingly popular technology should be classified. Classification principles can change if the case is appealed, but Judge Stanceau did a fine job of explaining the position of the court. Members of international trade community had divergent views about the appropriate classification of the product. Some even expressed views that 3-D printers should be classified as domestic appliances (HTSUS heading 8509), reasoning that the 3-D technology is cost effective and is becoming a household item. Other, more reasonable propositions entertained classification in the machine tools category (HTSUS heading 8463) and laser welding machines (HTSUS heading 8515). The opinion, at least for now, settled this controversial question. Court concluded that 3-D printers, such as described below, designed to work with plastic materials are classified under 8477.80.00, which provides for “Machinery for working plastics … Other.” However, if the 3-D printers can work with materials such as metals, instead of or…
This is an odd case because both parties seem to agree on the end result: when Commerce publishes amended results (for antidumping review), the six month operation of law liquidation period begins from the date of the publication of the amended results, as opposed to the date of preceding “final review.” Even the judge could not help but notice: “In losing the battle, however, Plaintiff in fact wins the war.” I wonder what really went on behind the scenes?
Read More Am. Furniture Mfrs. Comm. for Legal Trade v. United States
Wilton Industries Inc., v. United States case caused a great deal of excitement in the import and legal communities. After all, provided that certain criteria are met, utilitarian articles were eligible for duty free treatment all these years, and the CBP official interpretation was, at best, misleading? The practical benefits, usually coming in the form of duty refunds, are marginal for those importers that are/were not directly involved in these cases. The commodities addressed in Wilton, would not qualify for chapter 95 if entered after February 3rd, 2007, the time when chapter 95 note 1 (v) came in force. Then, one has to consider limitation of Park B. Smith invoked by CBP on April 5th, 2006. It is very important to note, that the question of limitation had almost no mention in Wilton. In the slip opinion it is briefly noted that “neither party has relied in any way on Customs’ recent action seeking to limit the application of Park B. Smith to the entries before the courts in that case.” There are good reasons for no mention: your protests are likely to be denied on the basis of that limitation. With this in mind, the procedural timeline does not…