Schaeffler Group USA, Inc. v. United States , 786 F.3d 1354 ( 2015 )

United States Court of Appeals
for the Federal Circuit
______________________
SCHAEFFLER GROUP USA, INC.,
Plaintiff-Appellant
v.
UNITED STATES, UNITED STATES CUSTOMS
AND BORDER PROTECTION, INTERNATIONAL
TRADE COMMISSION, THE TIMKEN COMPANY,
MPB CORPORATION,
Defendants-Appellees
______________________
2012-1269
______________________
Appeal from the United States Court of International
Trade in Nos. 06-CV-0432, 07-CV-0064, 07-CV-0477, 08-
CV-0387, 10-CV-0048, Judge Gregory W. Carman.
______________________
Decided: May 19, 2015
______________________
MAX FRED SCHUTZMAN, Grunfeld Desiderio Lebowitz
Silverman & Klestadt LLP, New York, NY, argued for
plaintiff-appellant. Also represented by ANDREW THOMAS
SCHUTZ, KAVITA MOHAN, Washington, DC.
MARTIN M. TOMLINSON, Commercial Litigation
Branch, Civil Division, United States Department of
Justice, Washington, DC, argued for defendants-appellees
United States, United States Customs and Border Protec-
2 SCHAEFFLER GROUP USA, INC. v. US
tion. Also represented by JOYCE R. BRANDA, JEANNE E.
DAVIDSON, FRANKLIN E. WHITE, JR.; JESSICA MILLER,
SUZANNA HARTZELL-BALLARD, Office of Assistant Chief
Counsel, United States Customs and Border Protection,
Indianapolis, IN.
PATRICK VINCENT GALLAGHER, JR., Office of the Gen-
eral Counsel, International Trade Commission, Washing-
ton, DC, argued for defendant-appellee International
Trade Commission. Also represented by DOMINIC L.
BIANCHI, ROBIN LYNN TURNER, JAMES M. LYONS, NEAL J.
REYNOLDS.
TERENCE PATRICK STEWART, Stewart & Stewart,
Washington, DC, argued for defendants-appellees The
Timken Company, MPB Corporation. Also represented by
GEERT M. DE PREST, PATRICK JOHN MCDONOUGH.
______________________
Before NEWMAN, O’MALLEY, and WALLACH, Circuit
Judges.
Opinion for the court filed by Circuit Judge
O’MALLEY.
Concurring opinion filed by Circuit Judge WALLACH.
O’MALLEY, Circuit Judge.
The Continued Dumping and Subsidy Offset Act of
2000 (“CDSOA”) provided for the distribution of anti-
dumping duties collected by the United States to “affected
domestic producers” (“ADPs”) of the dumped goods. See
Pub. L. No. 106–387, §§ 1001–03, 114 Stat. 1549, 1549A–
72 to –75 (codified at 19 U.S.C. § 1675c (2000)), repealed
by Deficit Reduction Act of 2005, Pub. L. No. 109–171,
§ 7601, 120 Stat. 4, 154 (Feb. 8, 2006). Schaeffler Group
USA, Inc. (“Schaeffler”) appeals from the decision of the
Court of International Trade (“CIT”) dismissing
Schaeffler’s challenge to the constitutionality of the
SCHAEFFLER GROUP USA, INC. v. US 3
CDSOA under the Due Process Clause of the Fifth
Amendment of the U.S. Constitution. Schaeffler Grp.
USA, Inc. v. United States, 808 F. Supp. 2d 1358 (Ct. Int’l
Trade 2012). Because we find that Congress had a ra-
tional basis justifying the retroactive application of the
petition support requirement of the CDSOA, we affirm.
BACKGROUND
I
Much of the background regarding how the CDSOA
applies to producers of dumped goods has been explained
in detail in SKF USA, Inc. v. U.S. Customs & Border
Protection, 556 F.3d 1337 (Fed. Cir. 2009) (“SKF”). As in
SKF, this appeal involves the petition support require-
ment of the now-repealed CDSOA. In an antidumping
investigation, the International Trade Commission
(“ITC”) must determine if the dumping of certain imports
has materially injured or threatened material injury to
the domestic industry. 19 U.S.C. § 1673 (2012). To assess
material injury, the ITC sends questionnaires to foreign
producers and exporters, as well as members of the do-
mestic industry, seeking production and financial data.
SKF, 556 F.3d at 1341. These questionnaires include a
specific question asking the respondent to indicate wheth-
er they support, oppose, or take no position on the peti-
tion. Id. Relying on the information provided in these
questionnaires, the ITC and the Department of Commerce
(“Commerce”) make final determinations that potentially
lead to the imposition of an antidumping order. Id. The
antidumping order imposes a duty on imported merchan-
dise “in an amount equal to the amount by which the
normal value exceeds the export price (or the constructed
export price) for the merchandise,” and the United States
Customs and Border Protection (“Customs”) agency
collects these duties. 19 U.S.C. § 1673.
Under the CDSOA, rather than keep the collected
duties in the United States Treasury, Customs distribut-
4 SCHAEFFLER GROUP USA, INC. v. US
ed the duties to eligible ADPs within the particular do-
mestic industry at issue. 19 U.S.C. § 1675c(a),(e) (2000),
repealed by Pub. L. No. 109–171, § 7601, 120 Stat. at 154.
Only members of the domestic industry that qualified as
ADPs were eligible to receive the CDSOA distributions.
Id. § 1675c(b)(1). The CDSOA defined “affected domestic
producer” as:
[A]ny manufacturer, producer, farmer, rancher or
worker representative (including associations of
such persons) that—(A) was a petitioner or inter-
ested party in support of the petition with respect
to which an antidumping duty order, a finding
under the Antidumping Act of 1921, or a counter-
vailing duty order has been entered, and (B) re-
mains in operation.
Id. (emphasis added) (“petition support provision”). The
CDSOA required the ITC to provide Customs with a list of
all “petitioners and . . . persons” that indicated support for
all antidumping orders in effect as of January 1, 1999. Id.
§ 1675c(d)(1). The CDSOA also required the ITC to
provide Customs with the names of any petitioners that
indicated support for antidumping orders issued after
enactment of the CDSOA. Id. Customs then published
annual lists of ADPs, including instructions for how
eligible ADPs could make a claim for CDSOA distribu-
tions. SKF, 556 F.3d at 1345. Producers who were not on
Customs’ annual list of ADPs could still seek CDSOA
distributions, and Customs retained discretion over
approval of such requests. The CDSOA applied to all
antidumping and countervailing duties assessed and
collected on entries between October 1, 2000, and October
1, 2007, when Congress repealed the CDSOA. Deficit
Reduction Act of 2005, Pub. L. No. 109–171, § 7601, 120
Stat. at 154. Importantly, the repeal of the CDSOA was
not retroactive—Congress stated that “[a]ll duties on
entries of goods made and filed before October 1, 2007 . . .
SCHAEFFLER GROUP USA, INC. v. US 5
shall be distributed as if [the CDSOA] had not been
repealed.” Id. § 7601(b).
II
Commerce initiated an antidumping investigation on
antifriction bearings and parts thereof from the Federal
Republic of Germany, France, Italy, Japan, Romania,
Singapore, Sweden, Thailand, and the United Kingdom
on April 27, 1988. Antifriction Bearings (Other than
Tapered Roller Bearings) and Parts Thereof from France:
Initiation of Antidumping Duty Investigation, 53 Fed.
Reg. 15,074 (Apr. 27, 1988). The ITC instituted a mate-
rial injury investigation on April 11, 1988. Antifriction
Bearings (Other Than Tapered Roller Bearings) and Parts
Thereof From the Federal Republic of Germany, France,
Italy, Japan, Romania, Singapore, Sweden, Thailand,
and the United Kingdom, 53 Fed. Reg. 11,917 (Apr. 11,
1988). Schaeffler’s predecessor corporate entities INA
USA Corp. (“INA”) and FAG Bearings Corp. (“FAG”)
participated in the investigations, but did not support the
petition for any countries involved. The ITC eventually
found a material injury to domestic industry, Views of the
Commission, Antifriction Bearings (Other Than Tapered
Roller Bearings) and Parts Thereof from the Federal
Republic of Germany, France, Italy, Japan, Romania,
Singapore, Sweden, Thailand, and the United Kingdom,
USITC Pub. 2185 (May 1989), and Commerce instituted
antidumping orders against certain classes of the relevant
merchandise, Antidumping Duty Orders: Ball Bearings,
Cylindrical Roller Bearings, and Spherical Plain Bearings
and Parts Thereof From the Federal Republic of Germany,
54 Fed. Reg. 20,900–11 (May 15, 1989).
The initial ITC list of qualifying ADPs sent to Cus-
toms included the antifriction bearings antidumping order
issued on May 15, 1989. Customs then published its first
notice of intent to distribute CDSOA funds on August 3,
2001. Distribution of Continued Dumping and Subsidy
6 SCHAEFFLER GROUP USA, INC. v. US
Offset to Affected Domestic Producers, 66 Fed. Reg. 40,782,
40,788, 40,796 (Aug. 3, 2001). Schaeffler, INA, and FAG
were not identified as eligible ADPs on either the ITC list
or Customs notice because INA and FAG failed to indicate
their support for the petition in the questionnaires they
submitted during the ITC’s material injury investigation.
Schaeffler also did not appear as an ADP on any of the
later notices of intent issued by Customs.
Schaeffler filed a written request with the ITC on May
4, 2007, seeking to be included as an ADP. Before receiv-
ing a response from the ITC, Schaeffler also filed a certifi-
cation request with Customs on July 30, 2007, this time
seeking a CDSOA distribution for fiscal year 2007. The
ITC denied Schaeffler’s request on August 2, 2007, and
Customs denied Schaeffler’s request on September 28,
2007. Schaeffler again petitioned Customs for CDSOA
distributions for fiscal years 2008 and 2009, and Customs
denied both requests.
Schaeffler also filed a series of complaints in the CIT
between 2006 and 2009 seeking review of the determina-
tions of the ITC and Customs, as well as challenging the
constitutionality of the CDSOA. Schaeffler Grp., 808 F.
Supp. 2d at 1359–60. The court stayed Schaeffler’s com-
plaints pending resolution of the constitutional issues
raised in Pat Huval Restaurant & Oyster Bar, Inc. v.
United States. Schaeffler Grp., 808 F. Supp. 2d at 1359–
60. After we issued our decisions in SKF and P.S. Chez
Sidney v. U.S. International Trade Commission, 409 F.
App’x 327 (Fed. Cir. 2010), upholding the constitutionality
of the CDSOA against First Amendment and equal pro-
tection challenges, the CIT consolidated Schaeffler’s
complaints. The ITC and intervenors Timken Company
and MPB Corporation (“Timken”) then moved to dismiss
the complaints and sought judgment on the pleadings.
Schaeffler Grp., 808 F. Supp. 2d at 1359–60.
SCHAEFFLER GROUP USA, INC. v. US 7
Schaeffler challenged the petition support require-
ment of the CDSOA under three provisions of the Consti-
tution: (1) the free speech clause of the First Amendment
as applied against Schaeffler; (2) the equal protection
guarantees of the Due Process Clause of the Fifth
Amendment as applied against Schaeffler; and (3) the
substantive guarantees of the Due Process Clause of the
Fifth Amendment. Id. at 1361. The CIT first held that
Schaeffler failed to plead facts sufficient to distinguish its
First Amendment and equal protection claims from those
alleged and rejected in SKF. Id. at 1362–63. The CIT
also concluded that the Supreme Court’s then-recent
decisions in Snyder v. Phelps, 562 U.S. 443 (2011), and
Citizens United v. Federal Election Commission, 558 U.S.
310 (2010), did not undermine our analysis in SKF.
Schaeffler Grp., 808 F. Supp. 2d at 1362–63. Schaeffler
has not appealed the CIT’s First Amendment and equal
protection determinations.
The CIT further concluded that the CDSOA petition
support requirement is not impermissibly retroactive
under the Due Process Clause. Id. at 1363. Relying on its
recent decision in New Hampshire Ball Bearing, Inc. v.
United States, 815 F. Supp. 2d 1301 (Ct. Int’l Trade 2012),
the court found “that ‘it would not be arbitrary or irra-
tional for Congress to conclude that the legislative pur-
pose of rewarding domestic producers who supported
antidumping petitions . . . would be ‘more fully effectuat-
ed’ if the petition support requirement were applied both
prospectively and retroactively.’” Id. (quoting N.H. Ball
Bearing, 815 F. Supp. at 1309). Concluding that the
retroactive reach of the petition support requirement in
the CDSOA was “justified by a rational legislative pur-
pose,” the court dismissed Schaeffler’s due process cause
of action for failure to state a claim upon which relief can
be granted. Id.
Schaeffler filed a timely notice of appeal on March 14,
2012, challenging only the CIT’s Due Process Clause
8 SCHAEFFLER GROUP USA, INC. v. US
ruling. 1 We have jurisdiction pursuant to 28 U.S.C.
§ 1295(a)(5).
DISCUSSION
I
We review issues of constitutional interpretation de
novo. Ashley Furniture Indus., Inc. v. United States, 734
F.3d 1306, 1309 (Fed. Cir. 2013) (citations omitted).
Economic legislation “come[s] to the Court with a pre-
sumption of constitutionality,” Concrete Pipe & Prods. of
Cal., Inc. v. Constr. Laborers Pension Trust for S. Cal.,
508 U.S. 602, 637 (1993), which is “extremely difficult to
overcome,” Wheeler v. United States, 768 F.2d 1333, 1337
(Fed. Cir. 1985); see also Commonwealth Edison Co. v.
United States, 271 F.3d 1327, 1338 (Fed. Cir. 2001) (en
banc).
This is not the first appeal where our court has con-
sidered the constitutionality of the petition support re-
quirement of the CDSOA. In SKF, the petitioner argued
that the CDSOA violated the First Amendment because it
authorized impermissible viewpoint discrimination, and
violated the equal protection guarantees of the Due
Process Clause because there was “no rational basis for
distributing antidumping duties only to domestic produc-
ers who supported an antidumping petition, and exclud-
ing similarly situated domestic producers who opposed or
took no position on a petition.” SKF, 556 F.3d at 1346.
The SKF majority first concluded that the petition sup-
port provision was valid under the First Amendment. Id.
at 1349–60. Applying the doctrine of constitutional
1 We stayed Schaeffler’s appeal pending the appeal
in Ashley Furniture Industries, Inc. v. United States, 734
F.3d 1306 (Fed. Cir. 2013). Upon our resolution of Ashley
Furniture, we lifted the stay of Schaeffler’s appeal on
February 20, 2014.
SCHAEFFLER GROUP USA, INC. v. US 9
avoidance, the majority found that “the purpose of the
[CDSOA’s] limitation of eligible recipients was to reward
injured parties who assisted government enforcement of
the antidumping laws by initiating or supporting anti-
dumping proceedings,” and that “the reward construction
of the [CDSOA] is reasonable.” Id. at 1352–53. The
majority determined that SKF’s responses to the ITC
questionnaires are protected speech, and analyzed the
“reward rationale” for the CDSOA under the commercial
speech test outlined in Central Hudson Gas & Electric
Corp. v. Public Service Commission of New York, 447 U.S.
557, 461 (1980). SKF, 556 F.3d at 1354–60. Under the
intermediate scrutiny of the Central Hudson test, the
majority held that “the government has a substantial
interest in rewarding those who assist in the enforcement
of government policy” and that domestic industry partici-
pants that oppose petitions but still respond to the ques-
tionnaire provide information to the ITC and Commerce,
but it was “rational for Congress to conclude that those
who did not support the petition should not be rewarded,”
in successful enforcement actions. Id. at 1357–59.
The SKF panel similarly analyzed the “reward ra-
tionale” under SKF’s equal protection challenge. Id. at
1360. Applying rational basis review, the panel found
“that the [CDSOA] is rationally related to the govern-
ment’s legitimate purpose of rewarding parties who
promote the government’s policy against dumping.” Id.
Judge Linn wrote a lengthy dissent disagreeing with the
majority’s First Amendment analysis. Id. at 1361–78
(Linn, J., dissenting). Judge Linn, however, agreed with
the majority that the CDSOA would survive rational basis
review. Id. at 1378 n.8 (“I agree with the majority’s
conclusion that, if the [CDSOA] were subject to rational
basis review under the Equal Protection Clause, it would
survive—though I do so for different reasons. Though the
petition support requirement is not a good proxy for the
seriousness of a domestic producer’s injury, I would not
10 SCHAEFFLER GROUP USA, INC. v. US
conclude, as the Court of International Trade did, that it
is an irrational proxy.”). We affirmed in PS Chez Sidney
that “SKF is controlling with regards to all constitutional
issues presented.” 409 F. App’x at 329; see also Ashley
Furniture, 734 F.3d at 1310 (“SKF resolved the facial
First Amendment challenge presented in these cases. We
are bound to follow this precedent . . . .”).
As mentioned, the CIT previously upheld the petition
support requirement as constitutional in the face of a Due
Process Clause challenge in New Hampshire Ball Bearing.
815 F. Supp. 2d at 1306–09. The CIT found that the
petition support requirement had retroactive effect “in
that it conditions the receipt of distributions on support
decisions including support decisions that were made
before the statute was passed.” Id. at 1307. Applying
Supreme Court precedent from Usery v. Turner Elkhorn
Mining Co., 428 U.S. 1, 15 (1976), and Pension Benefit
Guaranty Corp. v. R.A. Gray & Co., 467 U.S. 717, 729
(1984), the CIT concluded that the petitioner could not
“meet the burden of showing that Congress acted arbi-
trarily and without a rational legislative purpose in
retroactively applying the petition support requirement in
the CDSOA.” N.H. Ball Bearing, 815 F. Supp. 2d at 1309.
The CIT found that the “reward rationale” identified by
the SKF panel justified the retroactive application of the
CDSOA petition support requirement, even though the
analysis in SKF did not separately address retroactivity.
Id. The court determined that because “Congress provid-
ed a reward mechanism that was considerably more
comprehensive than the one based only on a prospective
scheme,” the “retroactive reach of the petition support
requirement . . . is justified by a rational legislative
purpose . . . .” Id.; see also id. (“It was not arbitrary or
irrational for Congress to conclude that the legislative
purpose of rewarding domestic producers who supported
antidumping petitions . . . would be more fully effectuated
if the petition support requirement were applied both
SCHAEFFLER GROUP USA, INC. v. US 11
prospectively and retrospectively.” (internal citation
omitted)).
II
A
As an initial matter, the ITC argues that the CDSOA
was not retroactive legislation under the test set out in
Princess Cruises, Inc. v. United States, 397 F.3d 1358
(Fed. Cir. 2005). The ITC states that, under the three-
factor test described in Princess Cruises, the CDSOA did
not impose any new duty or disability on Schaeffler’s past
actions, Schaeffler could not have had settled expectations
that it would receive distributions prior to enactment of
the CDSOA, and there was an insufficient degree of
connection between the CDSOA and Schaeffler’s past
conduct. ITC Br. at 18–21. Schaeffler, Customs, and
Timken, on the other hand, all agree that the CDSOA
applied retroactively.
We agree with Schaeffler, Customs, and Timken that
the CDSOA applied retroactively. See Pat Huval Rest. &
Oyster Bar, Inc. v. Int’l Trade Comm’n, No. 2012-1250,
2015 WL 2108514, at *3–4 (Fed. Cir. May 7, 2015) (hold-
ing that the CDSOA is “retroactive in effect”). The court
in Princess Cruises adopted the test for retroactivity from
the Supreme Court’s opinion in Landgraf v. USI Film
Products, 511 U.S. 244 (1994). The Landgraf court made
clear, however, that when Congress “expressly prescribed
the statute’s proper reach . . . . there is no need to resort
to judicial default rules.” Id. at 290; see also id. at 264 (In
other words, “[w]here the congressional intent is clear, it
governs.”). When a statute, on its face, applies retroac-
tively, it is unnecessary for us to rely on the factors identi-
fied by Landgraf and Princess Cruises.
Section 1675c(d)(1) states that the ITC must forward
a list of ADPs to Customs “in the case of orders or findings
in effect on January 1, 1999.” SKF, 556 F.3d at 1341 n.3.
12 SCHAEFFLER GROUP USA, INC. v. US
Commerce then used this list to determine the parties
eligible for the initial CDSOA distributions based on their
response to questionnaires predating the CDSOA. Id.
Congress passed the CDSOA on October 28, 2000, thus it
is clear on the face of the statute that the petition support
requirement applied to conduct (i.e., responses to a ques-
tionnaire question) that occurred prior to enactment of
the statute. The statute expressly has retroactive effect,
so we need not rely on the Princess Cruises analysis to
conclude that the CDSOA petition support requirement
applies retroactively. Because this provision has retroac-
tive effect, we must continue our analysis to determine if
that retroactive effect violates the Due Process Clause of
the Fifth Amendment.
B
Schaeffler argues that the petition support require-
ment of the CDSOA violated the Due Process Clause by
being impermissibly retroactive. In response, Customs
and Timken first question whether Schaeffler established
that it had any property interest protected by the Due
Process Clause. Customs Br. at 19–23. Customs and
Timken contend that, to succeed on a Due Process Clause
challenge, the petitioner must first demonstrate that it
has a protected property interest. Customs and Timken
claim that Schaeffler has only shown that it had a reli-
ance interest in the pre-CDSOA antidumping laws re-
maining unchanged, or that it had a protected interest in
the government not providing substantial economic
assistance to its competitors—neither of which, according
to Customs and Timken, is a sufficient property interest
protected by the Due Process Clause. Schaeffler responds
that it has a protected property interest because, when it
checked the box to oppose a petition, it believed that it
would not be subjecting itself to competitive harm
through the aggrandizement of its competitors. Reply Br.
at 2–6.
SCHAEFFLER GROUP USA, INC. v. US 13
We recently addressed a similar dispute involving a
Due Process Clause challenge to the retroactive effect of
an amendment to the Tariff Act of 1930 regarding non-
market economies. GPX Int’l Tire Corp. v. United States,
780 F.3d 1136 (Fed. Cir. 2015). In GPX, the government
similarly alleged that the petitioner lacked a vested right
protected by the Due Process Clause, which, it argued,
precluded us from having to perform a rational basis
analysis. We recognized that “the outcome of the due
process analysis [does not] depend[] upon a determination
that a vested right exists,” and that, although the “vested
right analysis . . . may be relevant to the due process
analysis, it is not a threshold test.” Id. at 1141 (citing
Weaver v. Graham, 450 U.S. 24, 29–30 (1981) (“Evaluat-
ing whether a right has vested is important for claims
under the Contracts or Due Process Clauses, which solely
protect pre-existing entitlements.”)). Similarly, here,
although the vested rights analysis requested by the
government may be “relevant to the due process analysis,”
we choose not to reach that question because we find that
Congress had a rational basis for the retroactive effect of
the petition support requirement. See Pat Huval, 2015
WL 2108514, at *4 n.2 (declining to address “whether the
competitive injury [under the CDSOA] claimed by the
appellants constitutes a deprivation of a cognizable prop-
erty interest of the sort sufficient to trigger procedural
due process rights”). We, thus, assume without deciding,
for purposes of our analysis, that Schaeffler had a pro-
tected property interest implicating the Due Process
Clause. See, e.g., Dist. Attorney’s Office for the Third
Judicial Dist. v. Osborne, 557 U.S. 52, 67 (2009) (assum-
ing without deciding that the respondent “invoked the
proper federal statute in bringing his claim,” because the
Court’s “resolution of [respondent’s] claim does not re-
quire us to resolve this difficult issue”).
14 SCHAEFFLER GROUP USA, INC. v. US
C
Schaeffler challenges the retroactive application of the
petition support requirement of the CDSOA as a violation
of the Due Process Clause. “It is by now well established
that legislative Acts adjusting the burdens and benefits of
economic life come to the Court with a presumption of
constitutionality, and that the burden is on one complain-
ing of a due process violation to establish that the legisla-
ture has acted in an arbitrary and irrational way.” Usery,
428 U.S. at 15. Specifically, retroactive legislation is “not
unlawful solely because it upsets otherwise settled expec-
tations . . . even though the effect of the legislation is to
impose a new duty or liability based on past acts.” Id. at
16.
The retrospective aspects of an Act of Congress must,
however, meet the requirements of due process—the
justification for the Act “must take into account the
possibility that the [plaintiffs] may not have known of the
danger . . . and that even if they did know of the danger
their conduct may have been taken in reliance upon the
current state of the law.” Id. at 17. Based on these
considerations, the Supreme Court has established a test
for analyzing retroactive economic legislation under the
Due Process Clause—“the retroactive application of a
statute” must be “supported by a legitimate legislative
purpose furthered by rational means.” Gray, 467 U.S. at
729; see also General Motors v. Romein, 503 U.S. 181, 191
(1992). The burden placed on retroactive legislation “is
met simply by showing that the retroactive application of
the legislation is itself justified by a rational legislative
purpose.” Id. at 730.
Under this analysis, the Supreme Court has, for ex-
ample, upheld a retroactive requirement that mine own-
ers provide compensation to former employees disabled
due to black lung disease “bred during employment” as a
“rational measure to spread the costs of the employees’
SCHAEFFLER GROUP USA, INC. v. US 15
disabilities,” Usery, 428 U.S. at 15–18; upheld retroactive
amendments to ERISA enacted to prevent employers from
withdrawing early from multiparty pension plans due to
pending changes in the law that would impose larger
contributions from the employer as a rational means of
preventing employers from “taking advantage of the
lengthy legislating process,” Gray, 467 U.S. at 729–32;
upheld a retroactive statute passed by the Michigan
legislature to “correct[] the unexpected results of the
Michigan Supreme Court’s . . . opinion” involving pay-
ment of workers’ compensation benefits, Romein, 503 U.S.
at 191; and upheld a retroactive change to an estate tax
deduction as a rational approach taken to “correct what
[Congress] reasonably viewed as a mistake” in the origi-
nal provision of the Tax Code granting the deduction,
United States v. Carlton, 512 U.S. 26, 31–34 (1994). See
also Commonwealth Edison, 271 F.3d at 1344–45 (listing
examples where the Supreme Court upheld retroactive
legislation against a Due Process Clause challenge). And,
as mentioned, we recently upheld a retroactive change to
how antidumping and countervailing duties are applied to
non-market economies under the Tariff Act of 1930
against a Due Process Clause challenge. GPX Int’l, 780
F.3d at 1142–44 (noting five “considerations” relevant to
the rational basis analysis under the Due Process Clause).
Schaeffler thus has the burden to establish that
Congress “acted in an arbitrary and irrational way” when
it applied the petition support requirement of the CDSOA
to conduct pre-dating the Act. Usery, 428 U.S. at 15.
Schaeffler argues that the retroactive application of the
CDSOA could not support a “legitimate legislative pur-
pose,” Gray, 467 U.S. at 729, because rewarding speech
that predated the Act would not assist the government in
preventing dumping at the time of the CDSOA—the
“reward rationale” would only support prospective appli-
cation of the petition support requirement because a
reward can only affect conduct once the industry had
16 SCHAEFFLER GROUP USA, INC. v. US
notice of the effect of choosing to support or not support a
petition. Appellant Br. at 24–25. Schaeffler further
argues that, in SKF, the panel explained that the petition
support requirement incentivized, rather than rewarded,
domestic producers to support petitions. Reply Br. at 7–
12. And, because an incentive can only affect parties with
notice of the incentive, the retroactive effect of the
CDSOA’s petition support requirement would not be
justified by a rational basis. Id. In response, Customs,
the ITC, and Timken all argue that the rational basis
identified in SKF is sufficient to justify retroactive appli-
cation of the petition support requirement, and that the
SKF majority clearly explained that the purpose of the
petition support requirement was to reward support of
petitions, not merely to incentivize future conduct.
Rational basis review of economic legislation under
the Due Process Clause is highly deferential to Congress,
and we hold that Schaeffler has failed to demonstrate
that the retroactive application of the petition support
requirement was not “supported by a legitimate legisla-
tive purpose furthered by rational means.” Gray, 467
U.S. at 729; see also Pat Huval, 2015 WL 2108514, at *4–
6 (determining that “[t]he SKF court’s conclusion that the
statute promoted a substantial governmental interest in a
rational manner . . . is nonetheless squarely applicable
here”). It is true that SKF involved a prospective equal
protection challenge, and the scope of the rational basis
analysis under the Equal Protection Clause may not
always be coextensive with the rational basis analysis
under the substantive component of the Due Process
Clause, especially “[w]hen a law exhibits . . . a desire to
harm a politically unpopular group.” See Lawrence v.
Texas, 539 U.S. 558, 580–82 (2003) (O’Connor, J., concur-
ring in the judgment) (noting that the government’s
interest in promoting morality was considered a sufficient
justification to uphold a state law criminalizing sodomy
under a due process challenge in Bowers v. Hardwick, 478
SCHAEFFLER GROUP USA, INC. v. US 17
U.S. 186 (1986), but not for rational basis review under
the Equal Protection Clause). For review of the petition
support requirement, however, we find that the rational
basis justification identified by the SKF panel in its equal
protection analysis also provides a sufficient rational
basis under a due process challenge. See, e.g., Armour v.
City of Indianapolis, 132 S. Ct. 2073, 2080 (2012) (citing
to both due process and equal protection challenges in
explaining the thrust of rational basis review); Zablocki v.
Redhail, 434 U.S. 374, 407 (1978) (Rehnquist, J., dissent-
ing) (same). And Schaeffler has failed to demonstrate that
a prospective analysis of the petition support requirement
under rational basis review pursuant to equal protection
grounds would differ from rational basis review under the
substantive aspects of the Due Process Clause in this
case. The only question remaining is if the rational basis
identified by the SKF panel justifies retroactive applica-
tion of the petition support requirement under the Due
Process Clause.
Schaeffler claims that the SKF panel found the peti-
tion support requirement justified because it acted as an
incentive for domestic parties to support an antidumping
petition. But nowhere in the SKF opinion did the court
state that the petition support requirement acted as an
incentive—the panel bluntly stated that “the purpose of
the Byrd Amendment’s limitation of eligible recipients
was to reward injured parties who assisted government
enforcement of the antidumping laws . . . .” SKF, 556
F.3d at 1352; see also id. at 1353 (referring to its approach
as the “reward justification,” and stating that “the lan-
guage of the [CDSOA] is easily susceptible to a construc-
tion that rewards action . . . .”). The panel later reiterated
that the “government has a substantial interest in re-
warding those who assist in the enforcement of govern-
ment policy.” Id. at 1355. Although Schaeffler is correct
that the panel’s comparisons to qui tam and whistleblow-
er actions may also potentially support an incentive
18 SCHAEFFLER GROUP USA, INC. v. US
justification for the CDSOA, these references, alone, do
not abrogate the clear language of SKF, concluding that a
“reward justification” provides the necessary rational
basis to justify the petition support requirement under an
equal protection challenge to the CDSOA. See Pat
Huval, 2015 WL 2108514, at *6–7 (holding the reward
justification to be a valid legislative purpose). We are
bound by that unequivocal holding. Deckers Corp. v.
United States, 752 F.3d 949, 959 (Fed. Cir. 2014) (“In this
Circuit, a later panel is bound by the determinations of a
prior panel, unless relieved of that obligation by an en
banc order of the court or a decision of the Supreme
Court.”).
Under the “reward justification” developed in SKF, we
find that the retroactive application of the petition sup-
port requirement of the CDSOA is “supported by a legiti-
mate legislative purpose furthered by rational means.”
Gray, 467 U.S. at 729. Congress could have rationally
decided to reward those parties that supported antidump-
ing orders entered both before and after Congress enacted
the CDSOA. See N.H. Ball Bearing, 815 F. Supp. 2d at
1309 (“It was not arbitrary or irrational for Congress to
conclude that the legislative purpose of rewarding domes-
tic producers who supported antidumping petitions . . .
would be more fully effectuated if the petition support
requirement were applied both prospectively and retro-
spectively.” (internal citation omitted)). Producers that
supported antidumping petitions before and after the
CDSOA contributed equally to eventual antidumping
orders, making it rational for Congress to have treated
these two groups similarly when providing rewards.
Congress could have rationally envisioned the petition
support requirement as a means of granting a reward to
those parties that supported antidumping petitions even
before Congress enacted the CDSOA. We conclude that
the retroactive application of the petition support re-
quirement of the CDSOA is justified by a rational basis
SCHAEFFLER GROUP USA, INC. v. US 19
sufficient to meet the requirements of the Due Process
Clause of the Fifth Amendment.
CONCLUSION
Because we conclude that the retroactive application
of the petition support requirement of the CDSOA ration-
ally relates to the government’s interest in rewarding
members of the domestic industry that supported anti-
dumping petitions, we affirm the CIT’s determination
that the petition support requirement does not violate the
Due Process Clause of the Fifth Amendment.
AFFIRMED
United States Court of Appeals
for the Federal Circuit
______________________
SCHAEFFLER GROUP USA, INC.,
Plaintiff-Appellant
v.
UNITED STATES, UNITED STATES CUSTOMS
AND BORDER PROTECTION, INTERNATIONAL
TRADE COMMISSION, THE TIMKEN COMPANY,
MPB CORPORATION,
Defendants-Appellees
______________________
2012-1269
______________________
Appeal from the United States Court of International
Trade in Nos. 06-CV-0432, 07-CV-0064, 07-CV-0477, 08-
CV-0387, 10-CV-0048, Judge Gregory W. Carman.
______________________
WALLACH, Circuit Judge, concurring.
I agree the district court correctly dismissed the chal-
lenge of Schaeffler Group USA, Inc. (“Schaeffler”), under
the Fifth Amendment’s Due Process Clause, to the Con-
tinued Dumping and Subsidy Offset Act of 2000
(“CDSOA”), Pub. L. No. 106-387, §§ 1001–03, 114 Stat.
1549, repealed by Deficit Reduction Act of 2005, Pub. L.
No. 109-171, § 7601(a), 120 Stat. 4, 154 (2006). This
court’s precedent requires that outcome. See SKF USA,
Inc. v. U.S. Customs & Border Prot., 556 F.3d 1337, 1360
(Fed. Cir. 2009) (holding the petition support requirement
of the CDSOA was constitutional under both the First
2 SCHAEFFLER GROUP USA, INC. v. US
Amendment and Equal Protection Clause because it
“furthers the government’s substantial interest in enforc-
ing the trade laws”). I write separately because, in my
view, SKF incorrectly concluded the retroactive applica-
tion of the CDSOA rationally furthers a legitimate gov-
ernment interest, and SKF should therefore be overruled
by this court sitting en banc. See Fed. Cir. R. 35(a)(1)
(“[O]nly the court en banc may overrule a binding prece-
dent.”).
I. UNDER THE DUE PROCESS CLAUSE, THE RETROACTIVE
APPLICATION OF A STATUTE MUST BE SUPPORTED BY A
LEGITIMATE PURPOSE FURTHERED BY RATIONAL MEANS
The Constitution’s Due Process Clause provides that
“[n]o person shall . . . be deprived of life, liberty, or prop-
erty, without due process of law.” U.S. Const. amend. V.
The Due Process Clause guarantees both “substantive due
process” and “procedural due process.” United States v.
Salerno, 481 U.S. 739, 746 (1987). Only substantive due
process is at issue in this appeal.
The Supreme Court has explained that the guarantee
of substantive due process prevents the government from
engaging in conduct, such as the enactment of legislation,
“that ‘shocks the conscience,’ or interferes with rights
‘implicit in the concept of ordered liberty.’” Id. (quoting
Rochin v. California, 342 U.S. 165, 172 (1952); Palko v.
Connecticut, 302 U.S. 319, 325–26 (1937)). Where no
fundamental right is at issue, legitimate government
action will normally be upheld so long as there is a ra-
tional basis for it. See Lawrence v. Texas, 539 U.S. 558,
588 (2003) (Scalia, J., dissenting) (“[O]nly fundamental
rights which are deeply rooted in this Nation’s history and
tradition qualify for anything other than rational-basis
scrutiny under the doctrine of substantive due process.”)
(internal quotation marks omitted). Specifically, “in the
field of national economic policy,” the Court has held the
Due Process Clause will not serve to invalidate a retroac-
SCHAEFFLER GROUP USA, INC. v. US 3
tive statute so long as “the retroactive application of [the]
statute is supported by a legitimate legislative purpose
furthered by rational means.” Pension Benefit Guar.
Corp. v. R.A. Gray & Co., 467 U.S. 717, 729 (1984) (em-
phases added).
II. THE CDSOA’S RETROACTIVE APPLICATION IS NOT
SUPPORTED BY A LEGITIMATE LEGISLATIVE PURPOSE
FURTHERED BY RATIONAL MEANS
A. Stated Legislative Purpose
When Congress enacted the CDSOA in 2000, it ex-
plained the purpose of the legislation in a section titled
“Findings of Congress”:
Congress makes the following findings:
(1) Consistent with the rights of the United States
under the World Trade Organization, injurious
dumping is to be condemned and actionable sub-
sidies which cause injury to domestic industries
must be effectively neutralized.
(2) United States unfair trade laws have as their
purpose the restoration of conditions of fair trade
so that jobs and investment that should be in the
United States are not lost through the false mar-
ket signals.
(3) The continued dumping or subsidization of im-
ported products after the issuance of antidumping
orders or findings or countervailing duty orders
can frustrate the remedial purpose of the laws by
preventing market prices from returning to fair
levels.
(4) Where dumping or subsidization continues,
domestic producers will be reluctant to reinvest or
rehire and may be unable to maintain pension
and health care benefits that conditions of fair
trade would permit. Similarly, small businesses
4 SCHAEFFLER GROUP USA, INC. v. US
and American farmers and ranchers may be una-
ble to pay down accumulated debt, to obtain work-
ing capital, or to otherwise remain viable.
(5) United States trade laws should be strength-
ened to see that the remedial purpose of those laws
is achieved.
Pub. L. No. 106–387, § 1002, 114 Stat. 1549 (2000) (codi-
fied at 19 U.S.C. § 1675c (2000)) (emphases added)
(“CDSOA Findings”). These findings indicate the stated
purpose of the CDSOA is to “strengthen[]” the trade laws
so they may achieve their “remedial purpose,” CDSOA
Findings ¶ 5, and that the purpose of United States unfair
trade laws generally is “the restoration of conditions of
fair trade,” id. ¶ 2; see also Gov’t Accountability Office,
GAO-05-979, Issues and Effects of Implementing the
Continued Dumping and Subsidy Offset Act 3 (2005),
available at http://www.gao.gov/new.items/d05979.pdf
(explaining that “in passing CDSOA, Congress aimed to
strengthen the remedial nature of U.S. trade laws”).
To the extent CDSOA distributions “restor[e] . . . con-
ditions of fair trade,” CDSOA Findings ¶ 2, they do so
differently than the antidumping and countervailing
duties from which they are drawn. Antidumping duties
by statute must be imposed “in an amount equal to the
amount by which the normal value exceeds the export
price (or the constructed export price) for the merchan-
dise.” 19 U.S.C. § 1673; see also 19 U.S.C. § 1671(a)
(Countervailing duties are to be imposed in an amount
“equal to the amount of the net countervailable subsidy.”).
By imposing a duty in an amount that offsets unlawfully
low prices, these orders serve to “neutralize[]” the effects
of dumping or actionable subsidies. See CDSOA Findings
¶ 1. Because they apply generally to imported goods that
compete with domestically produced goods, the duties
serve to remedy harm to the domestic industry as a
whole.
SCHAEFFLER GROUP USA, INC. v. US 5
By contrast, CDSOA subsidies are drawn from the an-
tidumping duties collected by United States Customs and
Border Protection and redistributed to only those mem-
bers of industry who supported the antidumping petition.
See SKF, 556 F.3d at 1341–42; id. at 1351 (The CDSOA
“did not compensate all injured domestic producers.”).
Because antidumping and countervailing duties already
help to restore conditions of fair trade by raising the price
of imported goods to their fair value, an argument could
be made that CDSOA distributions do not promote the
restoration of fair trade but instead constitute a double
remedy, an issue not addressed by the SKF court. 1
1 The extent to which the CDSOA promotes fair
trade was called into question by the report of the World
Trade Organization’s Appellate Body, which found the
CDSOA “inconsistent with certain [United States treaty
obligations under] the Anti-Dumping Agreement and the
[Agreement on Subsidies and Countervailing Measures].”
World Trade Organization, Report of the Appellate Body,
United States—Continued Dumping and Subsidy Offset
Act of 2000, WT/DS234/AB/R ¶ 318(b) (Jan. 16, 2003)
(“Appellate Body Report”); see also Giorgio Foods, Inc. v.
United States, No. 2013-1304, 2015 WL 1865702, at *14
(Fed. Cir. Apr. 24, 2015) (Reyna, J., dissenting)
(“[P]etition support expressions, in [U.S. International
Trade Commission] questionnaire responses, do not
further the enforcement of antidumping laws.”). The
Appellate Body stated that “[o]ffset payments to ‘affected
domestic producers’ when combined with anti-dumping
duties operate to impose a double remedy in respect of
dumped goods.” Appellate Body Report ¶ 43. The
CDSOA was repealed after the Appellate Body’s ruling.
Deficit Reduction Act of 2005, Pub. L. No. 109-171,
6 SCHAEFFLER GROUP USA, INC. v. US
There is little doubt that restoring conditions of fair
trade is a legitimate government interest. However, even
assuming the CDSOA as a whole promotes this interest,
to survive substantive due process scrutiny the legitimate
interest must be rationally furthered not only by the
legislation as a whole, but also by the retroactive portion
of the legislation. Gray, 467 U.S. at 730 (“‘The retroactive
aspects of legislation, as well as the prospective aspects,
must meet the test of due process, and the justifications
for the latter may not suffice for the former.’” (quoting
Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 17
(1976)); Landgraf v. USI Film Prods., 511 U.S. 244, 266
(1994) (“[A] justification sufficient to validate a statute’s
prospective application under the [Due Process] Clause
may not suffice to warrant its retroactive application.”)
(internal quotation marks and citation omitted).
The problem with the CDSOA is that the asserted ex-
planation of how the retroactive portion of the legislation
rationally furthers the government’s legitimate interest in
restoring conditions of fair trade borders on the frivolous.
In SKF, the government asserted the retroactive aspect of
the CDSOA promotes the restoration of fair trade by
compensating those who were injured by dumping, and
petition support is merely a surrogate for injury. See
SKF, 556 F.3d at 1351. In the government’s view, those
members of the domestic industry that supported the
petition are assumed to have suffered the greatest injury.
Id. Although the SKF court upheld the law and agreed
the CDSOA as a whole “was designed to compensate
domestic producers injured by dumping,” the court reject-
ed the government’s argument that the petition support
requirement served only to identify those suffering the
§ 7601(a), 120 Stat. 4, 154 (Feb. 8, 2006; effective Oct. 1,
2007).
SCHAEFFLER GROUP USA, INC. v. US 7
greatest injury, finding this rationale “simply implausible
in light of . . . the absence of any evidence in the legisla-
tive history that the support requirement was designed as
a proxy for injury, and the availability of far more direct
and accurate methods of measuring injury.” Id. at 1350,
1351.
The restoration of conditions of fair trade might have
been rationally furthered by the retroactive portion of the
CDSOA had Congress chosen to either compensate all
injured industry members or allocate funds in some
colorable relation to injury. However, petition support as
a proxy for injury is far too inaccurate a measure if indeed
it relates to injury at all. As explained by the dissent in
SKF, “[A] domestic producer might oppose a petition to
protect business relationships in foreign countries having
nothing to do with the domestic market, or it might
decline to support a petition for fear of retaliation in
export markets.” SKF, 556 F.3d at 1374 (Linn, J., dis-
senting). Indeed, although not controlling on the issue of
congressional intent, id. at 1352, the United States took
the position before the World Trade Organization that
“[t]he amount of the [CDSOA] distributions have [sic]
nothing to do with the injury to the domestic producer or
the recovery of ‘damages’ by the domestic producer.”
World Trade Organization, Report of the Panel, United
States—Continued Dumping and Subsidy Offset Act of
2000, WT/DS217/R, WT/DS234/R ¶ 4.502 (Sept. 16, 2002),
aff’d, Appellate Body Report (emphasis added).
While “under the deferential standard of review ap-
plied in substantive due process challenges to economic
legislation there is no need for mathematical precision in
the fit between justification and means,” Concrete Pipe &
Prods. of Cal., Inc. v. Constr. Laborers Pension Trust for
S. Cal., 508 U.S. 602, 639 (1993), an inappropriate means
must, at some point, become unconstitutionally arbitrary,
Washington v. Glucksberg, 521 U.S. 702, 735 (1997)
(finding the means employed by the government to be “at
8 SCHAEFFLER GROUP USA, INC. v. US
least reasonably related” to “unquestionably important
and legitimate” interests); see also Reno v. Flores, 507
U.S. 292, 305 (1993) (The Due Process Clause “demands
no more than a reasonable fit between government pur-
pose . . . and the means chosen to advance that purpose.”)
(internal quotation marks omitted) (emphasis added); cf.
FCC v. Beach Comm’cns, Inc., 508 U.S. 307, 313–14
(1993) (stating that a statutory classification will be
upheld “if there is any reasonably conceivable state of
facts that could provide a rational basis for [it]”) (empha-
sis added); Nordlingher v. Hahn, 505 U.S. 1, 11 (1992)
(“[T]he relationship of the classification to its goal” must
not be “so attenuated as to render the distinction arbi-
trary or irrational.”). The due process right may not
require that Congress’s actions reflect “mathematical
exactitude” in fitting means to ends, City of New Orleans
v. Dukes, 427 U.S. 297, 303 (1976), but the connection
between means and ends must be grounded on something
more than an unreasonable, hypothetical connection that
the United States has expressly disclaimed in related
proceedings.
Moreover, the problem the government was facing
was not one that “may justify, if . . . not require, rough
accommodations.” Heller v. Doe, 509 U.S. 312, 321 (1993)
(quoting Metropolis Theatre Co. v. Chicago, 228 U.S. 61,
69–70 (1913)). To the extent Congress’s purpose was to
restore conditions of fair trade by neutralizing the effects
of injurious dumping and actionable subsidies, “far more
direct and accurate methods of measuring injury” were
readily available to it. SKF, 556 F.3d at 1351. The pre-
sent case is nothing like cases upholding acts of Congress
as rationally related to a legitimate government interest
despite the fact that the law was “not made with mathe-
matical nicety.” City of Dallas v. Stanglin, 490 U.S. 19,
21, 26 (1989) (internal quotation marks and citation
omitted) (upholding a law restricting admission to certain
dance halls to persons between the ages of fourteen and
SCHAEFFLER GROUP USA, INC. v. US 9
eighteen to protect them from “detrimental influences of
older teenagers and young adults”); Vance v. Bradley, 440
U.S. 93 (1979) (upholding a law imposing mandatory
retirement at age sixty for certain employees but not
others); Dandridge v. Williams, 397 U.S. 471 (1970)
(upholding a law limiting welfare benefits to $250 per
month regardless of family size).
Instead, it bears a closer resemblance to cases such as
Plyler v. Doe, in which the Supreme Court found irration-
al a law that purportedly furthered a state’s interest in
protecting itself from an influx of illegal immigrants by
denying a free education to undocumented children. 457
U.S. 202 (1982). The Court explained that because “[t]he
dominant incentive for illegal entry into the State of
Texas is the availability of employment,” charging tuition
to undocumented children “constitutes a ludicrously
ineffectual attempt to stem the tide of illegal immigration,
at least when compared with the alternative of prohibit-
ing the employment of illegal aliens.” Id. at 228–29
(internal quotation marks and citation omitted).
B. Other Conceivable Purposes
Considering the equal protection guarantees of the
Fifth Amendment’s Due Process Clause, the Supreme
Court has explained “it is entirely irrelevant for constitu-
tional purposes whether the legislature was actually
motivated by the conceived reason for the challenged
distinction.” Beach Comm’cns, 508 U.S. at 315; see also
id. at 313 (Legislation will be upheld “if there is any
reasonably conceivable state of facts that could provide a
rational basis” for it.). To the extent this principle applies
to the substantive due process context, other conceivable
10 SCHAEFFLER GROUP USA, INC. v. US
government interests must be considered. 2 See, e.g.,
Crider v. Bd. of Cnty. Comm’rs, 246 F.3d 1285, 1290 (10th
Cir. 2001) (stating, in the context of a substantive due
process challenge, that “under rational basis analysis, we
look only to whether a reasonably conceivable rational
basis exists”) (internal quotation marks and citation
omitted); 37712, Inc. v. Ohio Dep’t of Liquor Control, 113
F.3d 614, 620 (6th Cir. 1997) (“[I]f any conceivable legiti-
mate governmental interest supports the contested ordi-
nance, that measure is not ‘arbitrary and capricious’ and
hence cannot offend substantive due process norms.”);
California v. FCC, 905 F.2d 1217, 1238 (9th Cir. 1990)
(“[U]nder the due process and equal protection clauses,”
agency action will be upheld “if it has any conceivable
rational basis.”).
Although the “restoration of conditions of fair trade”
by remedying unfair trade practices and neutralizing
illegal dumping or subsidies may have been the stated
purpose of Congress in enacting the CDSOA, it is not the
only conceivable legitimate government interest that may
be served by the CDSOA. The SKF court, for example,
framed the legitimate interest somewhat differently,
stating “the purpose of the [CDSOA’s] limitation of eligi-
2 It is not clear other conceivable purposes must be
considered where, as here, the legislature has expressly
stated the purposes of the law. See Zobel v. Williams, 457
U.S. 55, 61 n.7 (1982) (The law’s “purposes were enumer-
ated in the first section of the Act creating the dividend
distribution plan . . . . Thus we need not speculate as to
the objectives of the legislature.”). However, even if other
conceivable reasons are considered, as they have been by
the SKF court and the majority today, the retroactive
portion of the CDSOA does not rationally further a legit-
imate government interest.
SCHAEFFLER GROUP USA, INC. v. US 11
ble recipients was to reward injured parties who assisted
government enforcement of the antidumping laws by
initiating or supporting antidumping proceedings.” SKF,
556 F.3d at 1352 (emphases added). The court explained
that “by rewarding injured parties who assist in this
enforcement,” the CDSOA “directly advances the govern-
ment’s substantial interest in trade law enforcement.” Id.
at 1355 (emphasis added).
This analysis conflates rewarding past action with in-
centivizing present or future action, as reflected in the
inconsistent tenses used by the SKF court in its reason-
ing. Although the creation of a prospective incentive that
rewards those who assist by providing petition support
might be rationally expected to further the goal of enforc-
ing trade policy, rewarding the pre-enactment choice of
those who assisted by supporting a petition is gratuitous
and unrelated to this goal, and thus arbitrary within the
meaning of the Due Process Clause.
The error in the SKF court’s reasoning is reflected in
its comparison of CDSOA distributions to payments in qui
tam or whistleblower actions and to the awarding of
attorney fees to successful plaintiffs “who vindicate gov-
ernment policy” such as “in actions under Title VII.” Id.
at 1356. Payments in these actions are provided to rela-
tors, whistleblowers, or litigants who know of the reward
in advance. They are therefore analogous to the prospec-
tive payments available under the CDSOA. However, the
payments in these comparison actions are unlike the
retroactive CDSOA distributions because the former
operate as incentives to induce future activity that fur-
thers the government’s legitimate interest. By contrast,
the ex post provision of a reward for activity already
undertaken cannot in any meaningful way further the
government’s interest in enforcement of the trade laws.
To the extent SKF held the reward itself (as distinct
from any object sought to be achieved via the provision of
12 SCHAEFFLER GROUP USA, INC. v. US
the reward) is a legitimate purpose, see SKF, 556 F.3d at
1352 (“[T]he purpose . . . was to reward.”), the Supreme
Court has foreclosed this theory, see Zobel v. Williams,
457 U.S. 55 (1982) (rejecting the argument that a bare
reward that operates retrospectively and is unrelated to
any present or future incentive effect rationally furthers a
legitimate state interest). In Zobel, the Court considered
a 1980 Alaska law that distributed state oil revenues to
residents in proportion to “each year of residency [in
Alaska] subsequent to 1959.” Id. at 57. Among the stated
purposes of the legislation was “to encourage persons to
maintain their residence in Alaska and to reduce popula-
tion turnover in the state.” Id. at 61 n.7. In distinguish-
ing the possible prospective incentive (based on the
duration of residency following enactment) from the
retroactive reward (based on the duration of residency
prior to enactment), the Court first held there was no
rational connection between the retroactive reward and
the asserted interest:
Assuming, arguendo, that granting increased div-
idend benefits for each year of continued Alaska
residence might give some residents an incentive
to stay in the State in order to reap increased div-
idend benefits in the future, the State’s interest is
not in any way served by granting greater divi-
dends to persons for their residency during the 21
years prior to the enactment.
Id. at 62 (emphasis added).
The Court then considered whether the reward itself,
irrespective of any relationship to a present or future
incentive, could constitute a legitimate interest. Citing
precedent, the Court concluded that “[t]he last of the
State’s objectives—to reward citizens for past contribu-
tions” “is not a legitimate state purpose.” Id. at 63. In a
concurring opinion, Justice O’Connor explained that “[t]he
Court’s opinion . . . insures that any governmental pro-
SCHAEFFLER GROUP USA, INC. v. US 13
gram depending upon a ‘past contributions’ rationale will
violate the Equal Protection Clause [because it does not
further a legitimate purpose].” 3 Id. at 73.
3 In a related appeal, this court states “a legislative
purpose to reward particular conduct is valid for its own
sake, not just because it may have the effect of incentiviz-
ing particular conduct.” Pat Huval Rest. & Oyster Bar,
Inc. v. Int’l Trade Comm’n, No. 2012-1250, 2015 WL
2108514, at *6 (Fed. Cir. May 7, 2015). By way of exam-
ple, it explains that “a legislative program retroactively
providing benefits to veterans is justified as a reward to
the veterans for their service; its rationality does not
depend on whether the program induces others to join the
military.” Id. The analogy fails. The veteran has a
reasonable expectation that his services will be rewarded,
as do employees generally. Until the CDSOA, there was
no similar expectation that petition support would be
rewarded, making the retroactive change capricious. This
distinction is consonant with Zobel, in which the residents
of Alaska could not have known, years before the enact-
ment of the retroactive legislation, that a benefit would be
forthcoming. Moreover, concerns of legislative favoritism
are significantly diminished where benefits are dispersed
evenly and widely across large numbers of individuals,
rather than concentrated in a small number of large
corporations. See infra note 4 and accompanying text.
The attempt in Pat Huval to distinguish Zobel collides
with the latter’s express language. Compare Pat Huval,
2015 WL 2108514, at *5 (“Nothing in Zobel suggests that
its analysis is so broad as to render illegitimate any
legislative action designed to reward conduct that preced-
ed the enactment of the legislation.”) (emphases added),
with Zobel, 457 U.S. at 63 (“The last of the State’s objec-
tives—to reward citizens for past contributions” “is not a
14 SCHAEFFLER GROUP USA, INC. v. US
Cases cited by the majority where courts have upheld
retroactive rewards (or the imposition of retroactive
liability) as rationally related to a legitimate government
interest are distinguishable. In Commonwealth Edison
Co. v. United States, this court upheld as constitutionally
permissible a portion of the Energy Policy Act of 1992
that retroactively imposed “special monetary assessments
on domestic utilities for the remediation of environmen-
tally contaminated uranium processing facilities owned
by the United States.” 271 F.3d 1327, 1329 (Fed. Cir.
2001). The monetary assessments rationally furthered
the legitimate interest of environmental cleanup. In
addition, “Congress reasonably concluded that the utili-
ties . . . contributed to the contamination” and the “utili-
ties could have reasonably expected to be liable for a
share of the remediation costs.” Id. at 1330; see also id. at
1332 (“[T]here is no question that the processing of the
utilities’ uranium caused . . . contamination . . . .”). In
contrast to the undoubted environmental harm caused by
the past actions of the utilities in Commonwealth Edison,
no harm to trade law enforcement resulted from the past
nonsupport of Schaeffler in any case where CDSOA
distributions are at issue, since those distributions will be
made only where an antidumping petition was successful
notwithstanding Schaeffler’s failure to support it.
In Turner Elkhorn, coal mine operators challenged
the constitutionality of the Federal Coal Mine Health and
Safety Act of 1969, which imposed potential liability on
legitimate state purpose.”) (emphases added), and id. at
73 (O’Connor, J., concurring) (“The Court’s opin-
ion . . . insures that any governmental program depending
upon a ‘past contributions’ rationale will violate the Equal
Protection Clause” because, according to the Court, it
lacks “any legitimacy.”) (emphases added).
SCHAEFFLER GROUP USA, INC. v. US 15
the operators for black lung disease “caused by long-term
inhalation of coal dust.” 428 U.S. at 6. The operators
argued the law “spread[] costs in an arbitrary and irra-
tional manner” that “[gave] an unfair competitive ad-
vantage to new entrants into the industry.” Id. at 18.
The Court held it was “for Congress to choose” how to
allocate the financial burden and that it was sufficient
that the law “approache[d] the problem of cost spreading
rationally.” Id. at 18–19. Unlike the law at issue in
Turner Elkhorn, the purported rationality of the CDSOA
is not based on Congress’s decision to impose liability on
“those who have profited from the fruits of” activities that
contributed to a societal problem. Id. at 18. There is
nothing in the record demonstrating harm, caused by
Schaeffler’s nonsupport, that the retroactive aspect of the
CDSOA remedies.
In Gray, Congress imposed retroactive “withdrawal
liability” on employers who withdrew from a multi-
employer pension plan beginning during the approximate-
ly five-month period before the statute was enacted into
law. 467 U.S. at 725. Unlike the present case, the retro-
active provisions in Gray were intended to address Con-
gress’s concern “that employers would have an even
greater incentive to withdraw if they knew that legisla-
tion to impose more burdensome liability on withdrawing
employers was being considered.” Id. at 730–31. That is,
the retroactivity was intended to induce employers to take
the present action (or inaction) of remaining within the
multi-employer pension plan, during the pendency of the
legislation, in order to further the government’s underly-
ing interest in “ensur[ing] that employees and their
beneficiaries would not be deprived of anticipated retire-
ment benefits by the termination of pension plans before
sufficient funds have been accumulated in the plans.” Id.
at 720.
In contrast to Gray, in which a present incentive ra-
tionally furthered a legitimate legislative purpose, the
16 SCHAEFFLER GROUP USA, INC. v. US
retroactive portion of the CDSOA creates no present
incentive to support government enforcement of the trade
laws. Moreover, unlike the disadvantaged groups in
Commonwealth Edison, Turner Elkhorn, and Gray, the
group disadvantaged by the retroactive portion of the
legislation in the present matter did not cause the harm
remedied by the retroactive application of the legislation.
In instances where CDSOA distributions are made, it is
not clear there is any petition-related harm to remedy.
Given the context of the CDSOA, which diverges sub-
stantially from past cases in which government action has
been upheld under rational basis scrutiny, this court must
remain vigilant to the possibility that Congress’s “respon-
sivity to political pressures poses a risk that it may be
tempted to use retroactive legislation as a means of
retribution against unpopular groups or individuals” or of
favoritism toward preferred groups. Landgraf, 511 U.S.
at 266; see also E. Enters. v. Apfel, 524 U.S. 498, 549
(1998) (Kennedy, J., concurring in the judgment and
dissenting in part) (“Groups targeted by retroactive laws,
were they to be denied all protection, would have a justi-
fied fear that a government once formed to protect expec-
tations now can destroy them.”); United States v. Carlton,
512 U.S. 26, 32 (1994) (upholding a retroactive law where
“[t]here [was] no plausible contention that [Congress]
acted with an improper motive”).
According to the Government Accountability Office
(“GAO”), “[f]ive companies, including [the] Timken [Com-
pany (“Timken”), MPB Corporation (a subsidiary of Tim-
ken), and the Torrington Company (acquired by Timken
in 2003)], received nearly half of the total [CDSOA] pay-
ments, or about $486 million,” while the remaining half
was distributed among 765 beneficiaries. See GAO-05-
SCHAEFFLER GROUP USA, INC. v. US 17
979, at 29 & n.39. 4 Since the GAO report, over $100
million in additional CDSOA funds were received by
Timken alone. See The Timken Co., Annual Report at 88
(Form 10-K) (Dec. 31, 2014) ($112.8 million in CDSOA
distributions received for years 2006 through 2010). It is
a simple matter to determine which companies “checked
the box” in support of a past petition, and this case there-
fore presents a situation where a retroactive statute “‘may
be passed with an exact knowledge of who will benefit
from it.’” Landgraf, 511 U.S. at 267 n.20 (quoting Charles
B. Hochman, The Supreme Court and the Constitutionali-
ty of Retroactive Legislation, 73 Harv. L. Rev. 692, 693
(1960)).
Because the SKF court incorrectly applied the ration-
al basis test to the facts before it, that case should be
overruled en banc.
4 It may not be coincidental that the original House
and Senate sponsors of the CDSOA were Rep. Ralph
Regula and Sen. Mike DeWine, both of Ohio, where
Timken has been incorporated since 1904. See State-
ments on Introduced Bills and Joint Resolutions, 145
Cong. Rec. S497-01 (Jan. 19, 1999) (statement of Sen.
Mike DeWine); The Timken Co., Annual Report (Form 10-
K) (Dec. 31, 1999). Rep. Nancy Johnson of Torrington, CT
was a co-sponsor of the House bill. 146 Cong. Rec. H9708
(Oct. 11, 2000) (statement of Rep. Nancy Johnson).