Late last month, the Supreme Court issued two opinions which seemingly shook up the field of administrative law. As explained in this article, however, while both decisions bear significantly on certain administrative agencies, neither of these decisions are likely to present significant changes to Section 337 practice at the International Trade Commission.
- Jarkesy and the ITC
In SEC v Jarkesy, the Court held that a defendant is entitled to a jury trial when the SEC seeks civil penalties for violating antifraud provisions of the Securities Act, Securities Exchange Act, and the Investment Advisers Act. SEC v Jarkesy, 219 L.Ed.2d 650 (June 27, 2024).
Jarkesy involved a challenge to civil penalties imposed by the Securities and Exchange Commission based on an agency finding of violations of antifraud provisions of the Securities Act, Securities Exchange Act, and the Investment Advisers Act. Mr. Jarkesy argued that by proceeding to issue these civil penalties administratively (with an initial ruling by an administrative law judge, subject to review by the SEC), the agency violated his Seventh Amendment right to a jury trial. The Supreme Court agreed, finding that the Seventh Amendment is applicable in this case because claims of securities fraud are in the nature of a "suit at common law" and civil penalties are in the nature of "monetary relief" akin to a remedy at common law.
While the holding in Jarkesy may have important implications for other agencies in addition to the SEC, it does not appear likely to have a significant impact to practice at the ITC. For example, contrary to the SEC and many other agencies, the ITC's principal penalty for violation of its statute is non-monetary in nature; the ITC is authorized to impose relief that is injunctive in nature, i.e., exclusion orders and cease-and-desist orders. As explained in Jarkesy, the Seventh Amendment applies to a statutory claim if it is "legal in nature," and the most important consideration in distinguishing legal claims from equitable claims is remedy. See id., 219 L.Ed.2d at 666 ("money damages are the prototypical common law remedy"). Given the nature of the injunctive remedies imposed at the ITC, the right to a jury trial does not appear to be implicated by Section 337 proceedings.
While the ITC does have the authority to impose monetary penalties in one context: as a civil penalty for violations of its orders (see, e.g., 19 U.S.C. § 1337(f)(2) (authorizing civil penalties for violating ITC cease-and-desist orders)), these penalties are akin to contempt penalties imposed for violating injunctions in District Court. As there is no right to a jury trial with respect to such contempt penalties, it is likely that there will be no such right with respect to penalties imposed by the ITC for violations of ITC injunctions.
In addition, ITC Section 337 proceedings may fall within the "public rights" exception to the Seventh Amendment right to a jury trial, which the Court in Jarkesy stated has not been eliminated. See id. at 671-78 (citing Ex parte Bakelite Corp, 279 U.S. 438 (1929) as upholding a precursor of Section 337 that authorized the President to imposes tariffs on goods imported by "unfair methods of competition," or even to exclude such goods altogether, without the right to a jury trial)); see also Ninestar Technology v. ITC, 667 F.3d. 1373, 1384 (Fed. Cir. 2012) (finding Section 337 proceedings within the category of statutory "public rights").
- Suprema after Loper
In Loper Bright Enterprises v Raimondo, the Court overruled the long-standing "Chevron doctrine," under which courts were instructed to give deference to agencies' interpretations of ambiguous provisions in their enabling statutes. See Loper Bright Enterprises v Raimondo, 2024 U.S. LEXIS 2882 (June 28, 2024), overruling Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).
The Chevron doctrine played an important role in one of most-discussed and controversial Section 337 cases at the Federal Circuit. In Certain Biometric Scanning Devices, Components Thereof, Associated Software, and Products Containing the Same, Inv. No. 337-TA-720, the ITC found a violation of Section 337 based on the importation of scanners which were used in an infringing manner after software was added to the devices after being imported into the United States. The ITC relied on the theory of post-importation induced infringement – i.e., it found that the maker of the scanners had collaborated with the software maker to cause direct infringement after importation. On appeal, a CAFC panel held, by a 2-1 vote, that the ITC had exceeded its authority in finding a violation, holding that "the statutory grant of authority in § 337 cannot extend to the conduct proscribed in § 271(b) [governing induced infringement] where the acts of underlying direct infringement occur post-importation." Suprema, Inc. v. ITC, 724 F.3d 1350, 1360 (Fed. Cir. 2013).
The Federal Circuit subsequently, however, granted en banc rehearing, vacated the panel decision, and ruled, by a 6-4 vote, in favor of the Commission's interpretation of its statute. See Suprema v ITC, 796 F.3d. 1338, 1340-41 (Fed. Cir. 2015) (en banc) ("the Commission's interpretation of Section 337 is entitled to Chevron deference [and] is reasonable because it is consistent with Section 337 and Congress' mandate to the Commission to safeguard United States commercial interests at the border").
In the wake of Chevron's demise, one might think that the holding of Suprema is no longer good law. Indeed, in Google's recent appeal from a violation finding against it in Inv. 337-TA- 1191, in which a Federal Circuit panel rejected certain of Google's arguments as contrary to the holding of Suprema, Google has requested a rehearing for reconsideration of that holding. However, even presuming that Loper overturned Suprema's holdings, it is far from certain that the Federal Circuit would agree to reconsider Suprema, much less reverse it. The Supreme Court in Loper explicitly stated:
we do not call into question prior cases that relied on the Chevron framework. The holdings of those cases that specific agency actions are lawful—including the Clean Air Act holding of Chevron itself—are still subject to statutory stare decisis despite our change in interpretive methodology. Mere reliance on Chevron cannot constitute a " 'special justification' " for overruling such a holding, because to say a precedent relied on is, at best, "just an argument that the precedent was wrongly decided." That is not enough to justify overruling a statutory precedent.
Loper, 2024 U.S. LEXIS 2882 at *60-61 (citations omitted).
Thus, the mere fact that Chevron has been reversed is insufficient grounds to conclude that a majority of the Federal Circuit judges would disagree with the ITC's interpretation of the statute even absent the Chevron deference framework.
A decision on Google's en banc rehearing petition is likely to issue later this summer.
- Conclusion
In sum, both Loper and Jarkesy have received great attention for potentially significant implications across U.S. administrative agencies. However, it is important to consider that, given the nature of the ITC's procedures, Section 337, and Federal Circuit precedent, those implications that may affect other agencies are not likely to present significant changes to Section 337 practice at the International Trade Commission.
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