Read the Federal Circuit’s decision [PDF 131 KB]
The importers of shoes filed an action in the U.S. Court of International Trade alleging that various classifications in the HTSUS discriminated on the basis of age or gender in violation of the equal protection component of the Due Process Clause. The trade court dismissed these complaints for failure to state a claim.
Noting that this case has its genesis in the 2010 decision in Totes-Isotoner Corp. v. United States, the Federal Circuit explained that in Totes, an importer challenged a tariff classification on men’s gloves because the HTSUS assigned a rate of 14% ad valorem to men’s gloves and 12.6% ad valorem for all other gloves, including women’s and children’s gloves. The trade court dismissed the Totes complaint for failure to state a claim, and the Federal Circuit in 2010 affirmed.
In Totes, the Federal Circuit found that:
- Because the challenged provisions of the HTSUS are not “facially discriminatory,” an importer was required to allege facts sufficient to establish a governmental purpose to discriminate.
- While men had been disparately affected by the HTSUS rate, such “disparate impact” standing alone does not establish a violation of equal protection.
- The compliant needed to allege facts sufficient to establish a governmental purpose to discriminate between male and female users.
After certiorari was denied in Totes, the trade court allowed other importers, whose complaints had been suspended pending the outcome in Totes, to amend their claims to assert disparate impact and purposeful discrimination.
In this action, the importers each added additional allegations to their complaints in an effort to show discriminatory purpose in the HTSUS classification for men’s footwear and footwear for other persons (with men’s footwear assessed at a rate ranging from 1.5% to 4.3% lower than the tariff rate imposed on women’s footwear).
The Federal Circuit today dismissed one complaint for lack of standing, and affirmed the trade court’s dismissal of the other importers’ complaints for failure to state a claim.
For more information, contact a professional with KPMG’s Trade & Customs practice:
John L. McLoughlin
Todd R. Smith
Luis A. Abad
Or your local KPMG Trade & Customs professional.