NLMK Pennsylvania, LLC v. United States Steel Corporation

• Decision Date: 22 March 2022
• Docket Number: Civil Action No. 2:21-cv-273
• Citation: 592 F.Supp.3d 432
• Parties: NLMK PENNSYLVANIA, LLC and NLMK Indiana, LLC, Plaintiffs, v. UNITED STATES STEEL CORPORATION, Defendant.
• Court: U.S. District Court — Western District of Pennsylvania

592 F.Supp.3d 432

NLMK PENNSYLVANIA, LLC and NLMK Indiana, LLC, Plaintiffs,

v.UNITED STATES STEEL CORPORATION, Defendant.

Civil Action No. 2:21-cv-273

United States District Court, W.D. Pennsylvania.

Signed March 22, 2022

Sanford M. Litvack, Pro Hac Vice, Andrew Poplinger, Pro Hac Vice, Gretta Walters, Pro Hac Vice, Chaffetz Lindsey LLP, New York, NY, William Pietragallo, II, Pietragallo Gordon Alfano Bosick & Raspanti, LLP, Pittsburgh, PA, Robert Matthew Burke, Pro Hac Vice, Chaffetz Lindsey LLP, Manhattan, NY, for Plaintiffs.

Andrew R. Stanton, Andy Stanton, Leon F. DeJulius, Roy A. Powell, Tarek Abdalla, Simone N. Dejarnett, Jones Day, Pittsburgh, PA, Kelly Holt, Pro Hac Vice, Jones Day, New York, NY, for Defendant.

OPINION

WILLIAM S. STICKMAN IV, United States District Judge

I. INTRODUCTION

Congress empowers the Secretary of Commerce, in conjunction with the President of the United States and the Secretary of Defense, to investigate the impact of foreign imports on the national security of the United States. If that impact is found to be harmful, the President is authorized to impose a tariff on designated imported goods. After such an investigation, in 2017, President Donald J. Trump imposed a 25% tariff on certain imported steel products. Under the rules implementing the tariff, an impacted company could request an exemption from the tariff, and domestic producers could then object to the exemption request. That is what happened here. Plaintiffs NLMK Pennsylvania, LLC, and NLMK Indiana, LLC (collectively "NLMK"), requested exemptions from the tariff and, in response, Defendant United States Steel Corporation ("U.S. Steel") objected to every request. After the Department of Commerce ("Commerce") ruled in favor of U.S. Steel's objections, NLMK lodged an appeal pursuant to the designated procedure. NLMK received a $97 million dollar refund under a settlement approved by the United States Court of International Trade. NLMK Indiana LLC v. United States , Ct. Int'l Trade, No. 1:20-cv-00050.

Claiming that it was not made completely whole through Commerce's appeal process, NLMK filed a one-count Complaint in the Court of Common Pleas of Allegheny County, Pennsylvania, on January 22, 2021, asserting a state-law unfair competition claim. (ECF No. 1-2). The Complaint alleges that NLMK submitted exclusion requests to Commerce and that U.S. Steel engaged in unfair competition by making various misrepresentations to Commerce during its evaluation. NLMK contends that these misrepresentations resulted in the wrongful imposition of tariffs on its products, which caused direct and indirect economic damages. In other words—NLMK claims that U.S. Steel lied in its objections to the exemption requests to harm NLMK, its competitor, and that U.S. Steel's lies are actionable under Pennsylvania common law.

U.S. Steel removed the case to the United States District Court for the Western District of Pennsylvania on February 25, 2021 (ECF No. 1), and the Court found removal to be proper on August 18, 2021, when it denied NLMK's motion to remand. (ECF Nos. 34, 35). U.S. Steel has now moved to dismiss NLMK's unfair competition claim under Federal Rule of Civil Procedure ("Rule") 12(b)(6). (ECF No. 39). U.S. Steel argues that NLMK's Complaint does not assert a cognizable substantive claim because no Pennsylvania case has applied the unfair competition claim cause of action to a situation remotely similar to the one here—to make actionable alleged misrepresentations to government regulators or other public officials. But even if the claim is actionable, U.S. Steel argues that there are multiple legal impediments to recovery, including federal preemption, immunity under the federal Noerr-Pennington doctrine and judicial immunity under Pennsylvania law.

For the reasons explained below, the Court will dismiss NLMK's Complaint. It is skeptical that NLMK has asserted a cognizable claim under Pennsylvania's common law of unfair competition. Even if it had, NLMK's state law claim is preempted by the broad Constitutional and statutory grant of power over national security, foreign trade and foreign relations to the federal government. In this case, the statutory and administrative framework governing the imposition of the tariff and the process for adjudicating an exemption request is so pervaded by critical federal interests that it leaves no room for state involvement. Preemption bars NLMK's state law unfair competition claim.

II. BACKGROUND

A. Statutory and Administrative Background

Under Section 232 of the Trade Expansion Act of 1962, Pub. L. No. 87-794, 76 Stat. 872, 877 (1962) (codified as amended at 19 U.S.C. § 1862 ) (hereinafter Section 232), Congress authorized and empowered the President, upon receipt and agreement with specific findings of an executive officer, to take actions necessary to address national security threats posed by imported goods. Under the statute, upon receiving a "request of the head of any department or agency, upon application of an interested party, or upon his own motion," the Secretary of Commerce must "initiate an appropriate investigation to determine the effects on the national security of imports of the article which is the subject of such request, application, or motion." 19 U.S.C. § 1862(b)(1)(A). At the same time, "the Secretary [of Commerce] shall immediately provide notice to the Secretary of Defense of any investigation initiated ...." 19 U.S.C. § 1862(b)(1)(B). The Secretary of Commerce's investigation is informed and advised by various officers of the United States—most notably the Secretary of Defense on "methodological and policy questions"—and "if it is appropriate and after reasonable notice, [the Secretary shall] hold public hearings or otherwise afford interested parties an opportunity to present information and advice relevant to [the] investigation." 19 U.S.C. § 1862(b)(2)(A)(i)–(iii).

Upon completion of the investigation, the Secretary of Commerce must submit a report detailing the findings "with respect to the effect of the importation of such article in such quantities or under such circumstances upon national security" and provide recommendations for action or inaction of the President. 19 U.S.C. § 1862(b)(3)(A). Further, if the Secretary of Commerce determines that an "article is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security, the Secretary shall so advise the President in such report." Id. Thereafter, the President shall "determine whether [he] concurs with the finding of the Secretary, and if the President concurs, determine the nature and duration of the action that, in the judgment of the President, must be taken to adjust the imports of the article and its derivatives so that such imports will not threaten to impair the national security." 19 U.S.C. § 1862(c)(1)(A)(i)–(ii).

Congress also provided various considerations that both the President and the Secretary of Commerce must consider in making their determinations:

the Secretary and the President shall, in the light of the requirements of national security and without excluding other relevant factors, give consideration to domestic production needed for projected national defense requirements, the capacity of domestic industries to meet such requirements, existing and anticipated availabilities of the human resources, products, raw materials, and other supplies and services essential to the national defense, the requirements of growth of such industries and such supplies and services including the investment, exploration, and development necessary to assure such growth, and the importation of goods in terms of their quantities, availabilities, character, and use as those affect such industries and the capacity of the United States to meet national security requirements. In the administration of this section, the Secretary and the President shall further recognize the close relation of the economic welfare of the Nation to our national security, and shall take into consideration the impact of foreign competition on the economic welfare of individual domestic industries; and any substantial unemployment, decrease in revenues of government, loss of skills or investment, or other serious effects resulting from the displacement of any domestic products by excessive imports shall be considered, without excluding other factors, in determining whether such weakening of our internal economy may impair the national security.

19 U.S.C. § 1862(d).

The specific tariffs underlying the dispute in this case arose after the Secretary of Commerce initiated an investigation to determine the effects of steel imports on national security on or about April 26, 2017.¹ The Secretary of Commerce notified the United States Secretary of Defense, James N. Mattis, of his "investigation to determine the effects of imported steel on national security."² President Trump then requested an expeditious investigation, with considerations and recommendations concerning the nation's security.³

Upon finishing his investigation, the Secretary of Commerce sent his report to the President.⁴ The Secretary of Commerce found that domestic steel production was essential to national security, and more specifically, that the importation of foreign flat, long, semi-finished, pipe and tube, and stainless steel were adversely impacting both national security and the steel industry.⁵ He found that "the present quantities and circumstance of steel imports are ‘weakening our internal economy’ and threaten to impair the national security as defined in Section 232."⁶ The Secretary of Commerce highlighted that "[n]umerous U.S. steel mill closures, a substantial decline in employment, lost domestic sales and market share, and marginal annual net income for U.S.-based steel companies illustrate the decline of the U.S. steel industry."⁷ Excessive imports were further reducing U.S. steel production capacities...