Lawsuit Addresses Gender-Related Tariff Rates

By Liza Casabona, Women’s Wear Daily, February 26, 2007

Accepted wisdom has it that women often pay more for purchases and services than men. But gender discrepancies should not extend to federal taxes, according to a recently filed lawsuit.

The suit, filed by Neville Peterson LLP on behalf of Totes-Isotoner Corp. against the U.S., challenges the customs duty rate for men’s leather gloves, which is 14 percent; the rate for women’s and children’s gloves is 12.6 percent.

The lawsuit, filed in the U.S. Court of International Trade, raises the broader question of whether different tariff rates for men’s and women’s apparel violate Constitutional equal protection provisions, “Plaintiff [Totes-Isotoner] seeks recovery of duties that were assessed against it on the basis of provisions of the Harmonized Tariff Schedule of the United States, or HTS, which provisions unlawfully and unconstitutionally discriminate on the basis of gender or age, “ the complaint asserted.

“This isn’t the same as women’s haircuts and dry cleaning being more expensive. Private [companies] have flexibility in determining price points, but here, it’s the government,” said Michael Cone, an attorney with Neville Peterson who is affiliated with the case.

Other lawyers agreed. Lisa Pennington, global employment attorney at law firm Baker Hostetler LLP, which is not involved in the case, said it was the state’s involvement that puts the case on par with other discrimination cases. Private companies often charge women higher rates, she said, “but it’s a whole different story when it’s the government doing it.” Discrimination concepts are well entrenched in current federal laws.

Many provisions for wearing apparel under the Harmonized Tariff Schedule and older tariff laws hinge on gender and age, said Mark Joye, import and export attorney at Baker Hostetler. That provides a good context for addressing the tariff structure from the perspective of discrimination laws, he said.

The potential damages that could be recovered by apparel, footwear and glove importers are calculated to be in the neighborhood of $300 million a year, Cone said. If the case takes four years to litigate and other companies file lawsuits as well, both of which the firm expects, the potential damages, with interest, could reach as high as $1.5 billion.

“Totes-Isotoner was the opening salvo across the government’s ship. We are going to file soon on behalf of other importers of apparel and footwear,” Cone said.

The suit seeks to level tariff schedules by moving the rates in line with the lowest rate in each category. Raising duty rates would violate World Trade Organization agreements, he said.

The government could decide to fight the case in court or settle. If the case is litigated all the way through the Supreme Court, it could take as long as five years, said Curtis Knauss, another lawyer with Neville Peterson.

In the international trade court, there’s also a special procedural consideration. Test cases, or lead cases, are tried in situations like this when a number of companies could file lawsuits, Cone said. If other importers file similar cases, the judge appointed would determine which of the cases best represented the argument being made, and that case would be tried while the others were put on hold.

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