Be Careful What You Consent To - A Closer Look At The 1123 Investigation
Written by Hayley M. Ostrin and David H. Hollander
Time to read: 3 mins
In Certain Carburetors & Prods. Containing Such Carburetors (Inv. No. 337-TA-1123) respondent Fujian Hulaong Carburetor Co., Ltd. (“Fujian”) moved for and was granted termination from the investigation on the basis of a consent order. The investigation continued against other respondents, until, almost a year after the Fujian consent order issued, the Commission upheld a finding of no violation of Section 337 based on Walbro’s failure to satisfy the economic prong of the domestic industry requirement.
Fujian petitioned the Commission to rescind the consent order issued against it. Fujian argued that the Commission’s determination of no domestic industry was a changed condition warranting rescission, and that upholding consent orders when a complainant cannot show domestic industry is against the public interest. Complainant Walbro and the Office of Unfair Import Investigations (“OUII”) both opposed Fujian’s petition.
The Commission issued a brief Notice denying Fujian’s petition. Comm’n Notice (Feb. 26, 2020). The Commission determined, without further explanation, that rescission was not warranted because the failure of Walbro to satisfy the domestic industry requirement was not shown to constitute a changed condition of law or fact justifying rescission, and because Fujian had not shown that rescission was required on public interest grounds. The Commission also noted that the consent order contained no language providing for rescission in the event of a finding of no domestic industry. Fujian appealed this denial at the Federal Circuit.
Out of the Boilerplate Contract and into the Fire
By relying on the absence of language providing for rescission in the event of a finding of no domestic industry, the Commission essentially held Fujian to the terms of the consent order that it agreed to. This is consistent with the principle that consent orders are in the nature of contracts. See DeLorme Publ’g Co., Inc. v. Int’l Trade Comm’n, 805 F.3d 1328, 1333-34 (Fed. Cir. 2015) (consent orders “have attributes both of contracts and judicial decrees”).
However, there is an important distinction between ordinary contracts and ITC consent orders, namely that the ITC rules leave little, if any, flexibility regarding a consent order’s language. Commission Rule 210.21 lists the required elements of a consent order, and states that the Commission “will not issue consent orders with terms beyond” or “inconsistent with” the Rule. 19 C.F.R. 210.21(c)(4). Thus, an attempt to include language in a consent order providing for rescission upon the complainant’s failure to show a domestic industry would likely result in denial of the consent order, as this language is beyond the scope of Commission Rule 210.21. See e.g., Certain Modular LED Display Panels & Components Thereof, Inv. No. 337-TA-1114, Order No. 14 at 2 (Aug. 20, 2018) (denying motion for termination because proposed consent order added qualifiers that exceeded the bounds of Commission Rule 210.21); Certain Elec. Skin Care Devices, Brushes & Chargers Therefor, & Kits Containing Same, Inv. No. 337-TA-959, Order No. 26 at 3 (Nov. 10, 2015) (prohibiting a consent order from including a clause that allowed for a 180-day “wind-down” period).
Consequently, respondents should weigh the risk of remaining subject to a consent order, even if the complainant cannot establish a domestic industry, against the benefit of terminating the investigation early.
June 23, 2020