According to the majority decision by the U.S. Court of Appeals for the Federal Circuit in the case of Totes-Isotoner Corp. v. U.S., (Slip. Op. 09-1113) on February 5, 2010, the government has broad power to discriminate when it comes to tariffs, similar to that in taxation. [p. 17]
Totes unsuccessfully attempted to pursue and prevail on an Equal Protection claim, asserting that because different tariff rates were imposed on “men's” gloves versus “other” gloves, the Harmonized Tariff Schedule of the U.S. (HTSUS) unconstitutionally and unlawfully discriminated on the basis of age or gender.
The Court first discussed the “Article III standing” requirements, which are set forth in Article III of the U.S. Constitution, and whether Totes had a viable “case or controversy” for which the Court could provide a remedy. If no finding of standing were found, the Court would not have been able to hear the case.
To est. Art. III standing, a plaintiff must demonstrate that
1. It has suffered an injury-in-fact
2. There is a causal connection between the government's conduct and it's injury-in-fact
3. Its injury is redressable by the court
The court did find Art. III standing by way of “jus tertii (Latin, for “third party rights”) standing,” which is found when a third party, such as Totes, can demonstrate:
1. a close relationship to the party whose right it (Totes) is asserting;
2. that an injury-in-fact has been suffered by the jus tertii; and,
3. that the “first party” is hindered from filing its own claim.
In addition to standing, Totes needed to demonstrate it also had “prudential” standing, which was defined by the Court as meaning that the “interests of the affected parties must also arguably be within the zone of interests to be protected or regulated by the statue or constitutional guarantee in question.” Totes-Isotoner Corp., supra, at p. 7 (citing, Clarke v. Sec. Indus. Ass'n, 479 U.S. 388, 396 (1987).
After a long discussion regarding the development of today's HTSUS and how it is the result of multilateral agreements, negotiations, and trade concessions, the Court stated that it could not assume there was an intent to impose gender based discrimination between one article (men's gloves) versus another (“other” gloves, which women's gloves would fall into) from the mere fact of a disparate impact, as opposed to a showing of a Congressional intent to discriminate.
To support this claim, the Court reflected on how variations in duty rates may come from the product type and country of origin, the impact on the domestic industry of the place where it is manufactured, or the result of concessions made for other unrelated trade advantages.
In addition to this, the Court eluded to not wanting to open up a “Pandora's Box” of tax claims ranging from sales, income, and property taxes, the last of which may have been placed on “items which are discriminately consumed by any identifiable group,” such as in the case of Bray v. Alexandria Women's Health Clinic, 506 U.S. 263, 270 (1993), wherein it was discussed that “a tax on wearing yarmulkes is a tax on Jews...[and that] some activities may be such an irrational object of disfavor that if they are targeted, and if they also happen to be engaged in exclusively or predominantly by a particular class of people, an intent to disfavor that class can be readily presumed.” Id. at 18.
Unlike the Bray case, the provisions challenged by Totes in this case were found not to be facially discriminatory and that Totes failed to make a sufficient allegation of the government's intent to discriminate between male and female users. By merely claiming that there was a disparate impact, Totes' complaint had failed to state an equal protection claim.
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