US Says CIT Has Personal Jurisdiction Over Successor That Owes Nearly $200M in Duties
The Court of International Trade has personal jurisdiction over exporter Koehler Oberkirch in the government's customs penalty suit against the exporter, since it's a successor to the company that owes nearly $200 million in unpaid antidumping duties, the U.S. said. Responding to Koehler's motion to dismiss, the U.S. said Koehler doesn't question that its allegations establish that Koehler Oberkirch's "spin-off" to Koehler Paper was "done to escape paying" the duties (United States v. Koehler Oberkirch, CIT # 24-00014).
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The U.S. named both Koehler Oberkirch and Koehler Paper as defendants in the action. The defendants moved to dismiss the suit for lack of personal jurisdiction, claiming that the U.S. failed to plead that Koehler Paper has sufficient contacts in the U.S. to establish jurisdiction (see 2410250028).
The suit is seeking around $193 million in unpaid AD with interest on paper entries from 2009 through 2011. The goods were imported by Papierfabrik August Koehler AG, which "converted corporate forms" in 2012 to Papierfabrik August Koehler SE, the company said. In 2021, the company then became Koehler Oberkirch via a "statutory conversion."
The government alleged that Koehler Oberkirch dumped thermal paper into the U.S. and admittedly engaged in a transshipment scheme. Instead of paying the duties it owed, the company "understated its debts to Customs" and then "siphoned away most of its assets" to Koehler Paper, a new parent company with the same address and management, "leaving Koehler Oberkirch undercapitalized," the brief said. The government alleged that this "spin-off" was done to avoid paying CBP, "making Koehler Paper a successor-in-interest to Koehler Oberkirch."
Fending off a bid to dismiss the case for lack of personal jurisdiction, the U.S. said CIT has jurisdiction for two reasons: Koehler Paper is subject to this court's jurisdiction as a "successor-in-interest to Koehler Oberkirch," and Koehler Paper has consented to the court's jurisdiction by bringing a separate suit before the court challenging its AD rate.
The company "cannot have it both ways: it cannot invoke this Court’s jurisdiction to attack antidumping duties and subsequently claim that this Court lacks the power to order it to pay antidumping duties," the government said.
The U.S. noted that Koehler Paper doesn't dispute that Koehler Oberkirch has "sufficient minium contacts" with the U.S. so that CIT can constitutionally exercise its jurisdiction over the company, nor does Koehler Paper dispute that the government's allegations establish that Koehler Oberkirch's "spin-off" to Koehler Paper deems it a successor-in-interest to Koehler Oberkirch. The government said these two points together "are fatal to Koehler Paper’s argument that this Court lacks personal jurisdiction over it."
The government added that establishing jurisdiction over Koehler Paper here doesn't "offend due process," since were this not the case, a company could just transfer legal ownership of its assets "from one shell corporation to another in a different jurisdiction, putting a party whose initial suit satisfied the jurisdictional requirements to the immense burden of chasing the involved assets from courtroom to courtroom."