CIT Finds Personal Jurisdiction Over US Claim for Unpaid Duties Against German Exporter
The Court of International Trade denied March 27 a German thermal paper exporter’s and its affiliate’s motion to dismiss the case brought against it seeking payment of nearly $200 million in outstanding duties. In doing so, CIT Judge Gary Katzmann ruled that the trade court has personal jurisdiction over exporter Koehler Oberkirch and its affiliate, Koehler Paper.
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The test for specific personal jurisdiction in cases that don’t “concern imports into any particular state” is whether the exporter has had the “minimum jurisdictional ‘contacts with the nation as a whole,’” he explained.
Koehler Oberkirch and Koehler Paper argued that the court lacked specific personal jurisdiction over the latter entity because it hadn’t ever “taken any action in the United States” related to the U.S.’s charges (see 2410250028). The unpaid duties, it said, were owed by a prior company, Papierfabrik August Koehler AG. But Papierfabrik had undergone restructuring -- spinning off one entity, Koehler Paper, and transferring some of its assets and liabilities to Koehler Paper, then undergoing a “statutory conversion” and becoming Koehler Oberkirch.
The government, on the other hand, argued that Koehler Paper is the successor-in-interest to Koehler Oberkirch because it has “voluntarily inherited the jurisdictional contacts of Koehler Oberkirch.” Koehler Oberkirch, meanwhile, is the successor-in-interest to Papierfabrik, it said. In the alternative, it said Koehler Paper had consented to the trade court’s jurisdiction by filing a prior claim with it in 2021. The court didn’t reach this second argument, however.
Katzmann first agreed that Koehler Oberkirch “undisputedly has sufficient jurisdictional contacts" with the U.S. He then noted that Koehler Paper had claimed to be Koehler Oberkirch’s successor-in-interest in its 2021 filing, which judicially estopped it from claiming otherwise.
He went on to say that the government had also made an adequate “prima facie showing” that Koehler Paper was the successor-in-interest of Koehler Oberkirch. The U.S. alleged that Papierfabrik’s spin-off had been motivated “by intent to defraud Customs,” and “fraud against a creditor is one of the bases for imputing a debt to a successor entity,” he said.
The two Koehler entities also argued that, even if Koehler Paper was Koehler Oberkirch’s successor-in-interest, that didn’t mean the trade court had personal jurisdiction over it. They challenged U.S. citations of cases from “the U.S. Courts of Appeals for the Fourth, Fifth, Sixth, Seventh, and Tenth Circuits, that with only slight variation state the general principle that ‘the jurisdictional contacts of a predecessor corporation may be imputed to its successor corporation without offending due process,’” Katzmann said.
The “kernel” of this argument was that those cases provide only “a closed universe of scenarios” in which a successor-in-interest inherits its “predecessor’s jurisdictional contacts,” the judge said -- not including situations such as fraud. But “Defendants propose a distinction without a difference,” he said, and, with the “great weight of persuasive authority” against them, they fail.
“On a basic level, accepting Defendants’ argument would create a fraud exception to the general rule that successor liability begets successor jurisdiction,” he said. “This exception would reward the very mischief that the rule exists to stamp out.”
The judge also dismissed the two entities' argument that the case should be dismissed due to insufficient service. He noted that he had previously done so in an earlier opinion (see 2408210016), and “Defendants do not offer any reason why the court should repastinate that element of its opinion.”
(United States v. Koehler Oberkirch, Slip Op. 25-31, CIT # 24-00014, dated 083/27/25; Judge: Gary Katzmann; Attorneys: Luke Mathers for plaintiff U.S. government; John Wood of Holland & Knight for defendant Koehler Oberkirch)