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SNEAKER CIRCUS, INC. v. CARTER

September 20, 1978

SNEAKER CIRCUS, INC., Blazer Sports International, Inc., and Bob Wolf Associates, Inc., Plaintiffs,
v.
Jimmy CARTER, President of the United States, Robert S. Strauss, Special Representative for Trade Negotiations, Stephen J. Lande, Deputy Special Representative for Trade Negotiations, and United States International Trade Commission, Defendants



The opinion of the court was delivered by: COSTANTINO

MEMORANDUM DECISION

This is an action to set aside two Orderly Marketing Agreements ("OMAs") negotiated by the Special Trade Representative ("STR") pursuant to the Trade Act of 1974, Pub. L. 93-618, Jan. 3, 1975, 88 Stat. 1978, 19 U.S.C. § 2101 Et seq. ("the Act"). The agreements were negotiated with the governments of Taiwan and South Korea, and they deal with the number of pairs of non-rubber athletic footwear that those two countries will export to the United States.

 The plaintiffs are, respectively, a retailer, wholesaler and importer of the type of footwear covered by the OMAs. They originally brought this action in June of 1977, seeking injunctive relief to enjoin the signing of the OMAs. By Memorandum and Order dated June 10, 1977, this court dismissed the case for lack of subject matter jurisdiction, finding that exclusive jurisdiction over the controversy lay with the Customs Court. The United States Court of Appeals for the Second Circuit reversed that determination and remanded the case for further proceedings. Sneaker Circus, Inc. v. Carter, 566 F.2d 396 (2d Cir. 1977). *fn1"

 In accordance with the Court of Appeals decision, this court held a hearing, the initial purpose of which was to determine standing and ripeness *fn2" and whether preliminary injunctive relief should be granted. Just prior to the close of plaintiffs' case, the court, pursuant to Rule 65(a), Fed. R. Civ. P., consolidated the hearing on standing, ripeness and the preliminary injunction with the trial on the merits.

 Plaintiffs allege three general grounds to set aside the OMAs. They claim that (1) the International Trade Commission ("ITC"), in making its "good cause" determination, failed to comply with § 201 of the Act, 19 U.S.C. § 2251; *fn3" (2) that the President failed to comply with §§ 202 and 203 of the Act, 19 U.S.C. §§ 2252 and 2253; and (3) that the OMAs violate the Treaties of Friendship, Commerce and Navigation between the United States and the Republic of Korea, entered into force November 7, 1957. 8 U.S.T. 2217, TIAS No. 3974, and the United States and the Republic of China, entered into force November 30, 1948, 63 Stat. 1300, TIAS No. 1871, *fn4" the General Agreement on Tariffs and Trade, entered into force for the United States January 1, 1948, 61 Stat. Parts 5 and 6, TIAS 1700, and § 1 of the Sherman Act. Before reaching the merits of plaintiffs' claims, the court must decide three preliminary issues: (1) whether the plaintiffs have standing to maintain this lawsuit; (2) whether the action is ripe for adjudication; and (3) whether the court has personal jurisdiction over the defendants. *fn5"

 I. Standing

 In Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 151, 90 S. Ct. 827, 829, 25 L. Ed. 2d 184 (1970) ("Data Processing "), the Supreme Court recognized that "generalizations about standing to sue are largely worthless as such." The one generalization that the Court found to be valid, however, is that under Article III of the Constitution, the federal judicial power is limited to "cases" and "controversies." In terms of the Article III case or controversy requirement, the question with respect to standing is whether the plaintiffs have "alleged such a personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues" to the court. Baker v. Carr, 369 U.S. 186, 204, 82 S. Ct. 691, 703, 7 L. Ed. 2d 663 (1962). *fn6" Put another way, "when a plaintiff's standing is brought into issue the relevant inquiry is whether, assuming justiciability of the claim, the plaintiff has shown an injury to himself that is likely to be redressed by a favorable decision." Simon v. Eastern Kentucky Welfare Rights Organization, 426 U.S. 26, 38, 96 S. Ct. 1917, 1924, 48 L. Ed. 2d 450 (1976) ("Simon "). See also Warth v. Seldin, 422 U.S. 490, 95 S. Ct. 2197, 45 L. Ed. 2d 343 (1975). The injury which must be shown is some "threatened or actual injury" to the plaintiff, Linda R. S. v. Richard D., 410 U.S. 614, 617, 93 S. Ct. 1146, 35 L. Ed. 2d 536 (1973), which "Fairly can be traced to the challenged action of the defendant," Simon, supra, 426 U.S. at 41, 96 S. Ct. at 1926 (emphasis added). The test articulated in these cases has been referred to as "injury in fact," See, e.g., Data Processing, supra, 397 U.S. at 152, 90 S. Ct. 827, and it is clear that these plaintiffs have shown such injury.

 In addition to the fact that the allegations in the complaint are sufficient to establish the standing of these plaintiffs to maintain this action, See Second Amended Complaint PP 3-5, 29, the evidence offered at trial fairly supports those allegations. Plaintiffs have shown that since the effective date of the OMAs they have been unable to have orders filled in Korea and Taiwan because the monthly factory quotas of their manufacturers had already been filled, as a result of which orders placed with the plaintiffs by their customers have been cancelled. See, e.g., Transcript at 29-35, 230, 390-92. Plaintiffs have also shown that after the effective date of the OMAs the cost to them of the footwear increased rather substantially, See, e.g., Transcript at 38, 258.

 Plaintiffs have therefore shown the requisite injury to establish standing, especially in light of the statement by the Supreme Court that " "an identifiable trifle is enough for standing . . .,' " United States v. SCRAP, 412 U.S. 669, 689, 93 S. Ct. 2405, 2417, 37 L. Ed. 2d 254 n. 14 (1973), quoting from Davis, Standing : Taxpayers and Others, 35 U. Chi. L. Rev. 601, 613. In addition, the injury which plaintiffs have shown can fairly be traced to the challenged actions of the defendants. See Simon, supra, 426 U.S. at 41, 96 S. Ct. 1917. Indeed, the injury shown here is far more direct than the injury in other cases in which plaintiffs have been found to have standing. See, e.g., Planned Parenthood of Central Missouri v. Danforth, 428 U.S. 52, 96 S. Ct. 2831, 49 L. Ed. 2d 788 (1976); United States v. SCRAP, supra. Moreover, the injury shown is likely to be redressed by a favorable decision, Simon, supra, 426 U.S. at 38, 96 S. Ct. 1917, since if the court sets the OMAs aside, the quotas established thereunder would likewise be set aside and the plaintiffs would once again be able to obtain as much footwear as they desire. Thus it is clear that plaintiffs meet the traditional "injury in fact" test for standing.

 All parties here assert that in addition to an injury in fact, plaintiffs must show that they are "arguably within the zone of interests to be protected or regulated by the statute or constitutional guarantee in question," Data Processing, supra, 397 U.S. at 153, 90 S. Ct. at 830, before they can be found to have standing. Notwithstanding the fact that all parties urge the application of the "zone of interests" test to this case, the court concludes that to apply it here would be inappropriate.

 Data Processing, supra, the case in which the "zone of interests" test was first enunciated, was a suit brought pursuant to § 10 of the Administrative Procedure Act, 5 U.S.C. § 701 ("APA"). It is clear, both from Data Processing and subsequent cases that the test established therein applies to cases brought under the APA. See Simon, supra, 426 U.S. at 38, 96 S. Ct. 1917; Id. at 65, 96 S. Ct. 1917 (concurring opinion of Brennan, J.,); Sierra Club v. Morton, 405 U.S. 727, 733, 92 S. Ct. 1361, 31 L. Ed. 2d 636 (1972). Since the instant action is not brought pursuant to the APA, see Second Amended Complaint P 1, the court need not apply the "zone of interests" test. *fn7"

 Assuming Arguendo that the "zone of interests" test does apply to this case, the plaintiffs here would still have standing. The test, as set forth in Data Processing, supra, 397 U.S. at 153, 90 S. Ct. at 830, is whether plaintiffs are "arguably within the zone of interests to be protected Or regulated " (emphasis added) by the statute in question. Whatever may be said about whether plaintiffs' interests are within the zone to be Protected by the Trade Act, See Plaintiffs' Memorandum Concerning Plaintiffs' "Standing to Sue" and Whether This Action is "Ripe for Adjudication" at 22-29; Intervenor Defendant's Reply to Plaintiffs' Memorandum on Standing and Ripeness and Opposition to Plaintiffs' Motion for a Preliminary Injunction at 7-13, it is clear that those interests are arguably within the zone to be Regulated by the Act. The Act in general, and § 2251 Et seq. in particular, are specifically aimed at regulating imports in order to benefit domestic industry. See 19 U.S.C. § 2102 (4). The plaintiffs, as stated at the outset, are directly involved in the business of selling imported non-rubber footwear and are clearly in the "marketing chain" of such footwear. Cf. Harry H. Price & Sons, Inc. v. Hardin, 425 F.2d 1137, 1140 (5th Cir. 1970). The court therefore is satisfied that these plaintiffs would meet the "zone of interests" test were that test applied to this case.

 In light of the foregoing discussion, the court concludes that plaintiffs have standing to maintain this action.

 II. Ripeness

 With respect to whether the instant case is ripe for adjudication, all parties direct the court's attention to Abbott Laboratories v. Gardner, 387 U.S. 136, 87 S. Ct. 1507, 18 L. Ed. 2d 681 (1967) *fn8" for the appropriate standard to be applied. While Abbott Laboratories and its companion case, Toilet Goods Association, Inc. v. Gardner, 387 U.S. 158, 87 S. Ct. 1520, 18 L. Ed. 2d 697 (1967), deal with the ripeness of cases brought pursuant to § 10 of the APA and therefore may not be totally applicable to this case, those decisions do apply here insofar as they stand for the proposition that federal courts will not undertake to decide the propriety of governmental action unless such action "has been formalized and its effects felt in a concrete way by the challenging party." Abbott Laboratories, supra, 387 U.S. at 148-49, 87 S. Ct. at 1515. Put more generally, " "the question in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.' " Golden v. Zwickler, 394 U.S. 103, 108, 89 S. Ct. 956, 959, 22 L. Ed. 2d 113 (1969), Quoting from Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S. Ct. 510, 85 L. Ed. 826 (1941).

 Whatever the result might have been when this suit was commenced in June 1977 prior to the signing of the OMAs, the relevant inquiry for the court is whether the requisite "controversy" existed at the time of the trial following the remand from the Court of Appeals. Golden v. Zwickler, supra, 394 U.S. at 108, 89 S. Ct. 956. At that time, the OMAs had been in effect for approximately six months and the plaintiffs had had orders turned down by their Korean and Taiwanese manufacturers, and consequently had lost orders from their customers. See Transcript at 29-35, 230, 390-92. The court concludes that the case is ripe for adjudication, since the challenged action has been felt by the plaintiffs in a concrete way and the issues presented are appropriate for judicial determination. See Abbott Laboratories, supra, 387 U.S. at 149, 87 S. Ct. 1507.

 III. Personal Jurisdiction

 In addition to moving to dismiss this action on the grounds that plaintiffs lack standing and that the case is not ripe for adjudication, defendants move to dismiss on the grounds that they are not amenable to suit. They argue that the suit is in effect one against the United States rather than against the individual named defendants and, as such, is an unconsented suit against the sovereign which is barred by the doctrine of sovereign immunity. *fn9" They also argue that the ITC is not capable of being a party defendant in this or any other proceeding.

 The defendants' contention that the suit is actually against the United States is without merit. It may be true that as a general rule a suit which is nominally against an officer of the government will be deemed a suit against the sovereign if the relief sought would operate against the sovereign by either restraining the government from acting or compelling it to act. Hawaii v. Gordon, 373 U.S. 57, 83 S. Ct. 1052, 10 L. Ed. 2d 191; Dugan v. Rank, 372 U.S. 609, 83 S. Ct. 999, 10 L. Ed. 2d 15 (1963); Larson v. Domestic & Foreign Commerce Corp., 337 U.S. 682, 69 S. Ct. 1457, 93 L. Ed. 1628 (1949). The defendants argue that because the effect of the relief sought by the plaintiffs would be to restrain the government from proceeding with its program of relief for the domestic footwear industry, the action is against the United States rather than the named defendants. Defendants' Proposed Findings of Fact and Conclusions of Law at 64-65. Defendants argument, however, fails to take into account the exception enunciated by the Supreme Court in Larson v. Domestic & Foreign Commerce Corp., supra to the general rule stated above. The Court there stated that

 
(t)here may be, of course, suits for specific relief against officers of the sovereign which are not suits against the sovereign. If the officer purports to act as an individual and not as an official, a suit directed against that action is not a suit against the sovereign. . . . On a similar theory, Where the officer's powers are limited by statute, his actions beyond those limitations are considered individual and not sovereign actions. The officer is not doing the business which the sovereign has empowered him to do or he is doing it in a way which the sovereign has forbidden. His actions are Ultra vires his authority and therefore may be made the object of specific relief. It is important to note that in such cases the relief can be granted, without impleading the sovereign, only because of the officer's lack of delegated power. A claim of error in the exercise of that power is therefore not sufficient. And, since the jurisdiction of the court to hear the case may depend . . . upon the decision which it ultimately reaches on the merits, it is necessary that the plaintiff set out in his complaint the statutory limitation on which he relies.

 337 U.S. at 689-90, 69 S. Ct. at 1461 (emphasis added)

 This case falls squarely within the quoted exception to the general rule of sovereign immunity. Plaintiffs here claim that the President and the ITC exceeded their Specific statutorily delegated authority by failing to comply with the provisions of the Trade Act, and they specify the statutory limitations upon which they rely. If the plaintiffs are successful on the merits and the court finds that the statutory provisions were not complied with, then the actions of the ITC and the President would not be actions of the sovereign, since they would have been performed without authority. *fn10" Accordingly, the suit is not one against the United States and it is not barred by the doctrine of sovereign immunity.

 Nor would the doctrine of executive immunity bar this suit. It is clear that executive action may be restrained indirectly by enjoining a cabinet member from enforcing an executive order found to violate the law. Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 72 S. Ct. 863, 96 L. Ed. 1153 (1952); Atlee v. Nixon, 336 F. Supp. 790, 792 (E.D.Pa.1972). And "(t)here is not the slightest hint in any of the Youngstown opinions that the case would have been viewed differently if President Truman rather than Secretary Sawyer had been the named party." Nixon v. Sirica, 159 U.S.App.D.C. 58, 67, 487 F.2d 700, 709 (1973); National Treasury Employees Union v. Nixon, 160 U.S.App.D.C. 321, 345, 492 F.2d 587, 611 (1974).

 The Youngstown case has been characterized as exemplifying "the Judicial power, by compulsory process or otherwise, to prohibit the Executive from engaging in actions contrary to the law. Youngstown represents the principle that no man, cabinet minister or Chief Executive himself, is above the law; . . ." Nixon v. Sirica, supra at 793 (Wilkey, J., dissenting) (footnote omitted). If judicial review was appropriate to decide the propriety of the executive order in Youngstown, it is certainly appropriate in the instant case where Congress has established specific statutory procedures which must be followed by those to whom it has delegated power. Indeed, the Court of Appeals for the Second Circuit has already made it clear that the question of compliance with the statutory procedures is "within the proper supervision of the federal courts", Sneaker Circus v. Carter, supra at 402.

 Defendants also argue that the ITC is not a suable entity. That argument is likewise without merit. The ITC has been sued in cases such as Import Motors, Ltd. v. United States International Trade Commission, 63 C.C.P.A. 56, 530 F.2d 940 (C.C.P.A.1976), and SCM Corporation v. United States International Trade Commission, 179 U.S.App.D.C. 110, 549 F.2d 812 (1977). The SCM case was an action to compel the ITC to set aside a negative determination of injury under the Antidumping Act of 1921. This case is, in effect, an action to compel the ITC to set aside an affirmative determination of good cause under the Trade Act of 1974. If the ITC was suable in a case such as SCM, supra, it is certainly also suable here.

 The court accordingly finds that it has personal jurisdiction over these defendants.

 IV. The Merits

 The court now turns to a consideration of the merits of ...


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