Opinion ID: 2801753
Heading Depth: 3
Heading Rank: 2

Heading: Other Conceivable Purposes

Text: Considering the equal protection guarantees of the Fifth Amendment’s Due Process Clause, the Supreme Court has explained “it is entirely irrelevant for constitutional 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 legitimate governmental interest supports the contested ordinance, 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 enumerated 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 legitimate 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 government’s substantial interest in trade law enforcement.” Id. at 1355 (emphasis added). This analysis conflates rewarding past action with incentivizing present or future action, as reflected in the inconsistent tenses used by the SKF court in its reasoning. 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 enforcing 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 government policy” such as “in actions under Title VII.” Id. at 1356. Payments in these actions are provided to relators, whistleblowers, or litigants who know of the reward in advance. They are therefore analogous to the prospective 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 furthers 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 population turnover in the state.” Id. at 61 n.7. In distinguishing 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 dividend 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 contributions” “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 proSCHAEFFLER 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 incentivizing particular conduct.” Pat Huval Rest. & Oyster Bar, Inc. v. Int’l Trade Comm’n, No. 2012-1250, 2015 WL 2108514, at  (Fed. Cir. May 7, 2015). By way of example, 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 enactment 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  (“Nothing in Zobel suggests that its analysis is so broad as to render illegitimate any legislative action designed to reward conduct that preceded the enactment of the legislation.”) (emphases added), with Zobel, 457 U.S. at 63 (“The last of the State’s objectives—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 environmentally 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 utilities . . . contributed to the contamination” and the “utilities 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 opinion . . . 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 irrational manner” that “[gave] an unfair competitive advantage 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 multiemployer pension plan beginning during the approximately five-month period before the statute was enacted into law. 467 U.S. at 725. Unlike the present case, the retroactive provisions in Gray were intended to address Congress’s concern “that employers would have an even greater incentive to withdraw if they knew that legislation 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 underlying interest in “ensur[ing] that employees and their beneficiaries would not be deprived of anticipated retirement 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 rationally 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 substantially 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 “responsivity 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 justified fear that a government once formed to protect expectations 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 [Company (“Timken”), MPB Corporation (a subsidiary of Timken), and the Torrington Company (acquired by Timken in 2003)], received nearly half of the total [CDSOA] payments, or about $486 million,” while the remaining half was distributed among 765 beneficiaries. See GAO-05SCHAEFFLER 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 therefore 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 Constitutionality of Retroactive Legislation, 73 Harv. L. Rev. 692, 693 (1960)). Because the SKF court incorrectly applied the rational 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 Statements 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).