Opinion ID: 622473
Heading Depth: 3
Heading Rank: 3

Heading: Ninestar's Constitutional Arguments

Text: The Commission states that Ninestar waived any constitutional arguments, for they were not presented during the enforcement proceeding. Ninestar responds that constitutional issues were not raised to the Commission because the Commission has no authority to declare its governing statute unconstitutional. Although we agree that these issues are tardily raised, constitutional challenges should not be deemed waived when they relate to the foundations of governmental process. Courts of appeal have the discretion to consider issues not raised below as justice may require, Hormel v. Helvering, 312 U.S. 552, 555-59, 61 S.Ct. 719, 85 L.Ed. 1037 (1941); and waiver is inapplicable to significant questions of general impact or of great public concern, Interactive Gift Express, Inc. v. Compuserve Inc., 256 F.3d 1323, 1345 (Fed.Cir.2001). See Singleton v. Wulff, 428 U.S. 106, 121, 96 S.Ct. 2868, 49 L.Ed.2d 826 (1976) (Waiver is not jurisdictional but a prudential concern left primarily to the discretion of the courts of appeals, to be exercised on the facts of individual cases.). Thus we have considered Ninestar's constitutional arguments.
Ninestar argues that a non-judicial body cannot be assigned authority to issue a punitive penalty for violation of an administrative order. Ninestar argues that the statutory penalty is of such magnitude as to be criminal in nature and that a procedure whereby an administrative agency levies a criminal penalty is an unconstitutional violation of separation of powers. Ninestar states that before a penalty of the magnitude authorized in Section 337(f) can be imposed, Ninestar must be tried in an Article III court with the safeguards to which criminal defendants are entitled, including the right not to provide adverse testimony and entitlement to proof beyond a reasonable doubt. Ninestar cites United Mine Workers v. Bagwell, 512 U.S. 821, 114 S.Ct. 2552, 129 L.Ed.2d 642 (1994), in which the Court stated that a monetary penalty is akin to criminal contempt, for in cases [w]here a fine is not compensatory, it is civil only if the contemnor is afforded an opportunity to purge. Id. at 829, 114 S.Ct. 2552. In Bagwell the Court held that a contempt fine of $52 million against the United Mine Workers for violation of a labor injunction was criminal in nature and required a jury trial. See also United States v. Dixon, 509 U.S. 688, 696, 113 S.Ct. 2849, 125 L.Ed.2d 556 (1993) (holding that constitutional protections afforded criminal defendants through the Sixth Amendment apply in nonsummary criminal contempt prosecutions just as they do in other criminal prosecutions). In Hudson v. United States, 522 U.S. 93, 99, 118 S.Ct. 488, 139 L.Ed.2d 450 (1997) the Court explained that whether a particular punishment is criminal or civil is... a matter of statutory construction, citing Helvering v. Mitchell, 303 U.S. 391, 399, 58 S.Ct. 630, 82 L.Ed. 917 (1938), and that a court must ascertain whether the legislature, in establishing the penalizing mechanism, indicated either expressly or impliedly a preference for one label or the other, citing United States v. Ward, 448 U.S. 242, 248, 100 S.Ct. 2636, 65 L.Ed.2d 742 (1980). The Court elaborated: Even in those cases where the legislature has indicated an intention to establish a civil penalty, we have inquired further whether the statutory scheme was so punitive either in purpose or effect, Ward, 448 U.S. at 248-49 [100 S.Ct. 2636], as to transfor[m] what was clearly intended as a civil remedy into a criminal penalty, Rex Trailer Co. v. United States, 350 U.S. 148, 154 [76 S.Ct. 219, 100 L.Ed. 149] (1956). Hudson, 522 U.S. at 99, 118 S.Ct. 488. Ninestar draws analogy to the criminal statutes of the Internal Revenue Service, where criminal penalties against individuals require litigation in federal district court with the right to a jury trial, citing 26 U.S.C. §§ 7401-7402. Ninestar also relies on the Seventh Amendment and cites the Securities and Exchange Commission civil penalty provisions of 15 U.S.C. §§ 78u(d)(3), 78aa and the Federal Trade Commission civil penalty provisions of 15 U.S.C. § 45(m) as establishing that only the district courts, not the administrative agencies, have authority to assess a civil penalty. Ninestar Reply Br. 3. Thus Ninestar argues that the International Trade Commission does not have constitutional authority to levy and enforce the civil penalty of Section 337(f). Ninestar states that it is entitled to a jury trial, by constitutional right and Supreme Court precedent, and that since a jury trial is impossible in a Commission proceeding, the entire congressional scheme is invalid. Ninestar Br. 49. Ninestar calls the International Trade Commission statute an unconstitutional monstrosity, Br. 47, and urges that [t]his court should strike down the ability of the ITC to impose financial punishments on those who violate their orders, Br. 50. The Commission responds that it is beyond challenge that administrative agencies may by legislation be assigned the authority to impose penalties or sanctions for violation of their rulings and orders, citing the monetary penalties routinely imposed by the Internal Revenue Service. The Court in Ward, supra , listed various criteria relevant to the objective evaluation of a legislated civil penalty, including: [w]hether the sanction involves an affirmative disability or restraint, whether it has historically been regarded as a punishment, whether it comes into play only on a finding of scienter, whether its operation will promote the traditional aims of punishment-retribution and deterrence, whether the behavior to which it applies is already a crime, whether an alternative purpose to which it may rationally be connected is assignable for it, and whether it appears excessive in relation to the alternative purpose assigned. Ward, 448 U.S. at 248 n. 7, 100 S.Ct. 2636 (citing Kennedy v. Mendoza-Martinez, 372 U.S. 144, 168-69, 83 S.Ct. 554, 9 L.Ed.2d 644 (1963)). The Court cautioned, however, that these factors must be considered in relation to the statute on its face. Mendoza-Martinez, 372 U.S. at 168, 83 S.Ct. 554. The Court advises that only the clearest proof will suffice to override legislative intent and transform what has been denominated a civil remedy into a criminal penalty. Ward, 448 U.S. at 249, 100 S.Ct. 2636. We do not discern such proof in this case. There is no issue here of criminal contempt or double jeopardy, as existed in Hudson, or of a fine that is highly disproportionate to the monetary value of the offense, as in Bagwell. In considering Seventh Amendment rights in the context of the administrative state, in Atlas Roofing Co. v. Occupational Safety & Health Review Commission, 430 U.S. 442, 97 S.Ct. 1261, 51 L.Ed.2d 464 (1977) the Court explained: [W]hen Congress creates new statutory `public rights,' it may assign their adjudication to an administrative agency with which a jury trial would be incompatible, without violating the Seventh Amendment's injunction that jury trial is to be `preserved' in `suits at common law.' ... This is the case even if the Seventh Amendment would have required a jury where the adjudication of those rights is assigned instead to a federal court of law instead of an administrative agency. Id. at 455, 97 S.Ct. 1261. International Trade Commission proceedings are within this category, for Congress created a new cause of action, and remedies therefor, unknown to the common law, and placed their enforcement in a tribunal supplying speedy and expert resolutions of the issues involved. The Seventh Amendment is no bar to the creation of new rights or to their enforcement outside the regular courts of law. Id. at 460-61, 97 S.Ct. 1261. The jury aspect of administrative processes was again discussed in Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 55 n. 10, 109 S.Ct. 2782, 106 L.Ed.2d 26 (1989): Those cases in which Congress may decline to provide jury trials are ones involving statutory rights that are integral parts of a public regulatory scheme and whose adjudication Congress has assigned to an administrative agency or specialized court of equity. See Akzo N.V. v. U.S. Int'l Trade Comm'n, 808 F.2d 1471, 1488 (Fed. Cir.1986) (stating that [a]lthough it is true that private rights may be affected by section 337 determinations, the thrust of the statute is directed toward the protection of the public interest from unfair trade practices in international commerce). Section 337 proceedings are integral to the control of unfair competition in trade, and the provision of a civil penalty is within regulatory authority and is appropriately assigned to the administrative agency.
Ninestar also argues that the Commission's cease and desist order is unconstitutional on its face because it is unclear in that it does not identify the specific ink cartridges and model numbers that are affected. Ninestar Br. 22. The Commission responds that the affected products were before the ALJ and the full Commission and were known to Ninestar, and that Ninestar witnesses conceded that no change was made in the products after the Commission's order. The Commission directs attention to its procedure for obtaining an advisory opinion if an order is unclear or if a product is changed: 19 C.F.R. § 210.79. Upon request of any person, the Commission may ... issue an advisory opinion as to whether any person's proposed course of action or conduct would violate a Commission exclusion order, cease and desist order, or consent order. Ninestar did not invoke this procedure or otherwise request clarification, or suggest a modified course of action. The Commission found that the Ninestar Respondents knew that their conduct was prohibited, Final Det'n 17, and that Ninestar did not simply ignore or disregard the Commission's orders; they deliberately evaded the orders, Final Det'n 35. These findings were supported by substantial evidence. It is also relevant that decisions of the Commission are subject to judicial review, as a safeguard against administrative excess. We discern no violation of constitutional structure in the Commission's authority to levy a civil penalty, and no violation of constitutional protections in the procedures followed and the penalty assessed.