NLMK PENNSYLVANIA, LLC v. UNITED STATES STEEL CORPORATION

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF PENNSYLVANIA

NLMK PENNSYLVANIA, LLC and NLMK

INDIANA, LLC

Plaintiffs, Civil Action No. 2:21-cv-273

v. Hon. William S. Stickman IV

UNITED STATES STEEL CORPORATION,

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.

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 vy. United States, Ct. Int’] 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 NUMK’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.

i. 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)@)-Gii).

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.” Jd. 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)@Hi).

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.”? President Trump then requested an expeditious investigation, with

considerations and recommendations concerning the nation’s security.>

Upon finishing his investigation, the Secretary of Commerce sent his report to the

President.t 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.* He found that “the present quantities and circumstance of steel imports are ‘weakening

' Notice Request for Public Comments and Public Hearing on Section 232 National Security

Investigation of Imports of Steel, 82 Fed. Reg. 19,205, 19,205 (Apr. 26, 2017).

2 Letter from the Secretary of Commerce to the Secretary of Defense (Apr. 19, 2017) (on file with

the Department of Commerce).

3 Administrative Memorandum from Administration of Donald J. Trump to the Secretary of

Commerce on Steel Imports and Threats to National Security DCPD201700259 (Apr. 20, 2017)

(on file with the Government Publishing Office).

4 Publication of a Report on the Effect of Imports of Steel on the National Security: An

Investigation Conducted Under Section 232 of the Trade Expansion Act of 1962, as Amended, 85

Fed. Reg. 40,202, 40,202 (Jul. 6, 2020) (hereinafter Steel Report); see also Adjusting Imports of

Steel Into the United States, Proclamation 9705 of March 8, 2018, 83 Fed. Reg. 11,625, 11,625

(Mar. 8, 2018) (hereinafter Proclamation 9705).

> Steel Report at 40,204.

our internal economy’ and threaten to impair the national security as defined in Section 232.”° The

Secretary of Commerce highlighted that “[nJumerous 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.””’ Excessive imports were

further reducing U.S. steel production capacities to an economically unsustainable position.’ The

Secretary of Commerce determined that U.S. steel producers would “face increasing competition

from imported steel as other countries export more steel to the United States to bolster their own

economic objectives and offset loss of markets to Chinese steel exports.”? He concluded “that the

only effective means of removing the threat of impairment is to reduce imports to a level that

should, in combination with good management, enable U.S. steel mills to operate at 80 percent or

more of their rated production capacity.”!°

To accomplish that goal, the Secretary of Commerce presented two options. The first was

for the President to impose either a global quota limiting steel imports to 63% of 2017 imports or

a global tariff of 24% on all steel imports.!' The second was for the President to impose a 53%

tariff on Brazil, South Korea, Russia, Turkey, India, Vietnam, China, Thailand, South Africa,

Egypt, Malaysia and Costa Rica, as well as limit imports from other countries to their 2017 levels.!”

6 Id.

8 Id.

Id.

0 Td.

1 Id. at 40,205.

2 Td.

The Secretary of Commerce recommended that the President consider an exemption process from

the options above premised “on an overriding economic or security interest of the United States.”

13 He additionally recommended “an appeal process by which affected parties could seek an

exclusion from the tariff or quota imposed.”'* Under that process, the Secretary of Commerce

“would grant exclusions based on a demonstrated: (1) lack of sufficient U.S. production capacity

of comparable products; or (2) specific national security[-]based considerations.”!> If an exclusion

was granted, the Secretary of Commerce “would consider at the time whether the quota or tariff

for the remaining products needs to be adjusted to increase U.S. steel capacity utilization to a

financially viable target of 80 percent.”!®

The President agreed with the findings of the Secretary of Commerce, and after considering

the recommendations, initially elected “to adjust the imports of steel articles by imposing a 25

percent ad valorem tariff on steel articles . . . imported from all countries except Canada and

Mexico.”!7 The President authorized Commerce to exclude certain steel articles from the

imposition of tariffs where those articles are “determined not to be produced in the United States

in a sufficient and reasonably available amount or of a satisfactory quality and [Commerce] is also

authorized to provide such relief based upon specific national security considerations.”!® The

President also ordered the Secretary of Commerce to continually monitor steel imports, consult

3 Td.

4 Td. at 40,206.

5 Td.

16 Td.

7 Proclamation 9705 at 11,626.

8 Td. at 11,627.

various officials, review imports for national security and inform the President of any

circumstances requiring further actions or circumstances indicating the duty rate is no longer

necessary.!°

Commerce subsequently published an interim final rule interpreting Proclamation 9705

and establishing the procedures and methods for obtaining exclusions from the imposition of tariffs

on certain steel articles.2° Under that rule, “directly affected individuals or organizations located

in the United States may submit an exclusion request.””! “An individual or organization is ‘directly

affected’ if they are using steel in business activities (e.g., construction, manufacturing, or

supplying steel product to users) in the United States.””? Individuals or organizations are required

to submit exclusion requests, objections to exclusion requests, rebuttals, and surrebuttals to an

online web portal.”

Commerce requires separate exclusion requests to be submitted for steel products

(including products falling into more than one ten-digit Harmonized Tariff Schedule of the United

States (“HTSUS”) statistical reporting number) “with chemistry by percentage breakdown by

weight, metallurgical properties, surface quality (e.g., galvanized, coated), and critical dimensions

‘9 Td. at 11,628. The President subsequently issued a number of Proclamations adjusting tariffs,

quotas and exemptions for various countries. The substance of those Proclamations, however, is

not material here.

20 See generally Requirements for Submissions Requesting Exclusions from the Remedies

Instituted in Presidential Proclamations Adjusting Imports of Steel Into the United States and

Adjusting Imports of Aluminum Into the United States; and the Filing of Objections to Submitted

Exclusion Requests for Steel and Aluminum, 83 Fed. Reg. 12,106, 12,110 (Mar. 19, 2018)

(currently codified at 15 C.F.R. pt. 705, Supp. 1 (2020)).

2115 C.E.R. pt. 705, Supp. 1, § (c)(1).

22 Td.

3 Id. at § (b).

covered by a common HTSUS statistical reporting number.”** Commerce “will approve

exclusions on a product basis, and the approvals will be limited to the individual or organization

that submitted the specific exclusion request, unless Commerce approves a broader application . .

Each exclusion request must “specify the business activities in the United States within which

the requester is engaged that qualify the individual or organization to be directly affected and thus

eligible to submit an exclusion request.””° Each request “should clearly identify, and provide

support for, the basis upon which the exclusion is sought.””’ “An exclusion will only be granted

if an article is not produced in the United States in a sufficient and reasonably available amount,

is not produced in the United States in a satisfactory quality, or for specific national security

considerations.”*

The interim final rule made provisions for third parties to object to exclusion requests. Any

objections submitted in opposition to exclusion requests must:

clearly identify, and provide support for, its opposition to the proposed exclusion,

with reference to the specific basis identified in, and the support provided for, the

submitted exclusion request. If the objector is asserting that it is not currently

producing the steel or aluminum identified in an exclusion request but can produce

the steel or aluminum and make that steel or aluminum available “immediately” in

accordance with the time required for the user of steel or aluminum in the United

States to obtain the product from its foreign suppliers, the objector must identify

how it will be able to produce and deliver the quantity of steel or aluminum needed

either within eight weeks, or if after eight weeks, by a date which is earlier than the

named foreign supplier would deliver the entire quantity of the requested

product. It is incumbent on both the exclusion requester, and objecting producers,

to provide supplemental evidence supporting their claimed delivery times. This

4 Td. at § (c)(2).

23 Id

6 Id. at § (c)(5).

2 Id

28 Td.

requirement includes specifying in writing to the Department of Commerce as part

of the objection, the timeline the objector anticipates in order to start or restart

production of the steel included in the exclusion request to which it is objecting.”

After the submission process is complete (including the submission of any remaining

rebuttals or surrebuttals), Commerce “reviews the complete exclusion requests to determine

whether the article described in the request meet[s] any of three criteria, namely ‘the article is not

produced in the United States in a sufficient and reasonably available amount, is not produced in

the United States in a satisfactory quality, or for specific national security concerns.’” JSW Steel,

466 F. Supp. 3d at 1324 (quoting 15 C.F.R. pt. 705, Supp. 1, {§ (c)(6), (h)(2)).°° Commerce defines

both quantity and quality as follows:

The exclusion review criterion “Not produced in the United States in a sufficient

and reasonably available amount” means that the amount that is needed by the end

user requesting the exclusion is not available immediately in the United States to

meet its specified business activities. Available “immediately” means that a

product (whether it is currently being produced in the United States, or could be

produced in the United States) can be delivered by a U.S. producer “within eight

weeks,” or, if that is not possible, by a date earlier than the time required for the

requester to obtain the entire quantity of the product from the requester's foreign

supplier. Furthermore, to the extent that an objector can produce and deliver a

portion, which is less than 100 percent, but ten percent or more, of the amount of

steel or aluminum needed in the business activities of the user in the United States

described in the exclusion request, the Department of Commerce may deny a

requested exclusion for that percentage of imported steel or aluminum. It is

> Td. at § (d)(4).

30 Although Commerce has since amended its original interim final rule, the substantive process

remains the same. Commerce may grant exclusions “to ‘directly affected individuals or

organizations located in the United States ... . [who use steel or aluminum] in business activities’

and [it] retain[s] ‘the discretion to make exclusion requests available to all importers if [it] find[s]

the circumstances so warrant.’” Thyssenkrupp Materials NA Inc. y. United States, 498 F. Supp.

3d 1372, 1376 n.1 (C.LT. 2021) (citing various amendments to the interim final rule); see also

Submissions of Exclusion Requests and Objections to Submitted Requests for Steel and

Aluminum, 83 Fed. Reg. 46,026, 46,048-46,053 (Sept. 11, 2018); Implementation of New

Commerce Section 232 Exclusions Portal, 84 Fed. Reg. 26,751, 26,753, 26,757—26,760 (Jun. 10,

2019); Section 232 Steel and Aluminum Tariff Exclusions Process, 85 Fed. Reg. 81,060, 81,069—

81,071 (Dec. 14, 2020).

10

incumbent upon both the exclusion requester, and objecting producers, to provide

supplemental evidence supporting their claimed delivery times.

OK

The exclusion review criterion “not produced in the United States in a satisfactory

quality” does not mean the steel or aluminum needs to be identical, but it does need

to be equivalent as a substitute product. “Substitute product” for purposes of this

review criterion means that the steel or aluminum being produced by an objector

can meet “immediately” (see paragraph (c)(6)(i) of this supplement) the quality

(e.g., industry specs or internal company quality controls or standards), regulatory,

or testing standards, in order for the U.S.-produced steel to be used in that business

activity in the United States by that end user.?!

In addition to the determination of whether a product is produced in the United States in a sufficient

and reasonable quantity and to an acceptable level of quality, the Secretary of Commerce is

required to make a separate determination on the national security implications of each exclusion

request:

The exclusion review criterion “or for specific national security considerations” is

intended to allow the U.S. Department of Commerce, in consultation with other

parts of the U.S. Government as warranted, to make determinations whether a

particular exclusion request should be approved based on specific national security

considerations.*”

Commerce will typically issue its decision within 106 days of the exclusion request being

posted to the online portal, and Commerce “will grant properly filed exclusion requests which

meet the requisite criteria, receive no objections, and present no national security concerns.”*? If

no objections are submitted, the Bureau of Industry and Security “will immediately assess the

request for any national security concerns.’”** If the Bureau of Industry and Security “identifies no

3115 CFR. pt. 705, Supp. 1, (c)(6)@-(ii).

32 Td. at FF (c)(6)(aii).

Id, at $§ (h)(2)Gi), (AY).

34 Td, at J (h)(2)(ii).

11

national security concerns, it will post a decision granting the exclusion request in the...

[p]ortal.”?>

B. Factual Background

NLMK supplies steel sheet and coil to the construction, automotive, pipe and tube, and

heavy equipment industries. (ECF No. 1-2, 4 21). NLMK and U.S. Steel directly compete with

one another for customers in various markets, including pipe and tube, service center, yellow

goods, agricultural, construction and coated conversion products. (ECF No. 1-2, 4 12). To fulfill

the orders of customers, NLMK typically imports ten-inch and eight-inch steel slab feedstock to

construct finished products. (ECF No. 1-2, 13, 22-23, 29-30). NLMK has limited capacity to

produce eight-inch slab, and only one domestic producer is capable of producing ten-inch slab—

ArcelorMittal—which retains all of its ten-inch slab in furtherance of its own operations. (ECF

No. 1-2, 23, 29-30).

NLMK alleges that, seeking to exploit its need for imported steel slab, “U.S. Steel hatched

a scheme to prevent its competitors from obtaining . . . tariff exemptions . . . . forc[ing] NLMK to

pay unwarranted tariffs, thereby driving up NLMK’s costs, unfairly limiting its ability to...

participate in the market, .. . meet contractual obligations to .. . its customers, . . . maintain sales

volume,]... compete with U.S. Steel on price[,] . . . and make substantial investments to increase

its capacity ....” (ECF No. 1-2, 9 46). NLMK alleges that U.S. Steel “objected to every one of

NLMK’s requests covering steel slab from both Russia and Brazil.” (ECF No. 1-2, 36).

NLMK claims that U.S. Steel’s objections to its exclusion requests for ten-inch steel slab

included various fraudulent misrepresentations to Commerce, including: (1) falsely answering that

it manufactured, or could manufacture within eight weeks, ten-inch steel slab; (2) falsely

35 Td.

12

answering that it could supply one hundred percent of NLMK’s tonnage requirements in a timely

manner; (3) falsely representing that it could sufficiently satisfy NLMK’s orders for ten-inch steel

slab; (4) falsely indicating that it is capable of producing ten-inch steel slab; (5) falsely providing

that it could make an identical product in place of ten-inch steel slab; and (6) falsely representing

that it engaged in multiple exchanges and proposals with NLMK for the sourcing of ten-inch steel

slab. (ECF No. 1-2, {| 50-67). U.S. Steel’s objections to NLMK’s exclusion requests for eight-

inch steel slab allegedly included false representations to Commerce that it was able to

manufacture and supply all of the volume cited in the exclusion requests and that it had capacity

to supply those amounts. (ECF No. 1-2, { 68).

NLMK avers that the above representations were false because, among other things, U.S.

Steel is neither capable of producing ten-inch steel slab, nor has it sold ten-inch steel slab to

anyone. (ECF No. 1-2, 9 57). Moreover, NLMK avers that U.S. Steel never had the capacity to

produce the eight-inch steel slab quantities specified in NLMK’s exclusion requests because U.S.

Steel was not operating at full capacity because of planned outages at its facilities—potentially

stemming from unplanned outages and product delays—and even if it could operate at full capacity

(normally steel mills max out at eighty to eighty-five percent capacity), its production capacity

would represent roughly one percent of the domestic market—far less than required by NLMK’s

exclusion requests. (ECF No. 1-2, {9 74-76). U.S. Steel’s capability of producing and supplying

sufficient quantities of eight-inch steel slab is allegedly substantiated because U.S. Steel

announced, during the relevant time, that it was going to be importing steel articles from its

facilities in Europe to finish its own products. (ECF No. 1-2, {| 77-79).

NLMK avers that U.S. Steel’s false representations to Commerce resulted in the unfair

denial of tariff exclusion requests for ten-inch and eight-inch steel slab. (ECF No. 1-2, ¢ 81). It

13

claims that due to those increased trade costs, “NLMK’s costs have been artificially inflated,

impeding its ability to compete for new business... .” (ECF No. 1-2, { 82). That includes a

planned capital investment of more than $680 million to expand facilities and increase capacities,

cancellation of contracts with customers, and the idling of approximately 550 steelworkers in

Western Pennsylvania. (ECF No. 1-2, J 82-84).

Based on its allegations relating to U.S. Steel’s misrepresentations, NLMK brought a single

cause of action for “unfair competition” under Pennsylvania law, requesting compensatory and

punitive damages alleging that U.S. Steel knowingly and willfully made misrepresentations to

Commerce to secure denials of numerous tariff exclusion requests, and those denials resulted in

the unfair interference and obstruction with NLMK’s business relationships, as well as its ability

to competitively compete in the steel market. (ECF No. 1-2, 86-90).

TI. STANDARD OF REVIEW

A motion to dismiss filed under Rule 12(b)(6) tests the legal sufficiency of the complaint.

Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993). A plaintiff must allege sufficient facts that,

if accepted as true, state a claim for relief plausible on its face. See Bell Atl. Corp. v. Twombly,

550 U.S. 544, 555 (2007); see also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A court must

accept all well-pleaded factual allegations as true and view them in the light most favorable to a

plaintiff. See Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009); see also DiCarlo v.

St. Mary Hosp., 530 F.3d 255, 262-63 (3d Cir. 2008). Although a court must accept the allegations

as true, it is “not compelled to accept unsupported conclusions and unwarranted inferences, or a

legal conclusion couched as a factual allegation.” Baraka v. McGreevey, 481 F.3d 187, 195 (3d

Cir. 2007) (citations omitted).

The “plausibility” standard required for a complaint to survive a motion to dismiss is not

akin to a “probability” requirement but asks for more than sheer “possibility.” Iqbal, 556 U.S. at

14

678 (citing Twombly, 550 U.S. at 556). In other words, the complaint’s factual allegations must

be enough to raise a right to relief above the speculative level on the assumption that all the

allegations are true even if doubtful in fact. Twombly, 550 U.S. at 555. Facial plausibility is

present when a plaintiff pleads factual content that allows a court to draw the reasonable inference

that a defendant is liable for the misconduct alleged. Jgbal, 556 U.S. at 678. Even if the

complaint’s well-pleaded facts lead to a plausible inference, that inference alone will not entitle a

plaintiff to relief. Jd. at 682. The complaint must support the inference with facts to plausibly

justify that inferential leap. Jd.

IV. ANALYSIS

A. Whether NLMK has pled a viable unfair competition claim is unclear

in light of the current state of Pennsylvania law.

NLMK’s Complaint asserts a single cause of action—unfair competition under

Pennsylvania common law. U.S. Steel moves to dismiss NLMK’s claim, arguing that, as a

threshold matter, it fails to plead a recognized cause of action or, more correctly, the cause of

action it asserts does not apply to the facts pled.

NLMK argues that Pennsylvania’s common law tort of unfair competition applies to the

situation underlying its claim. It contends that Pennsylvania courts will permit an unfair

competition claim to compensate for harm caused by “the misappropriation for the commercial

advantage of one person of a benefit ... belonging to another.” See e.g., Miracle Indus., Inc. v.

Getty Petroleum Corp., 1992 WL 121723, at *4 (E.D. Pa. May 20, 1992); see also Testing Sys.,

Inc. v. Magnaflux Corp., 251 F. Supp. 286, 289 (E.D. Pa. 1966). (ECF No. 47, p. 12). NLMK

also argues that even if U.S. Steel’s conduct raised a novel factual basis for an unfair competition

claim under Pennsylvania law, dismissal would be inappropriate because this court can develop

the common law tort by applying it to novel situations—such as U.S. Steel’s alleged misconduct.

15

In other words, NLUMK asks the Court to essentially predict that Pennsylvania courts would apply

the unfair competition cause of action to U.S. Steel’s conduct. It contends that in Pennsylvania,

when there is an unsettled question of law, courts decline to dismiss the case if there is “case law

supporting the prediction that the Pennsylvania Supreme Court would recognize [the] claim|[.]”

Id.

U.S. Steel argues that NLMK’s complaint would require the Court to create a new type of

unfair competition claim under Pennsylvania law. (ECF No. 40, p. 10). U.S. Steel posits that the

United States Court of Appeals for the Third Circuit cautions that district courts should not be too

bold in making the Erie guess in areas of unsettled state law and that federal courts must look at

the current contours of state law, and “should be reluctant to expand the common law.” Lexington

Nat. Ins. Corp. v. Ranger Ins. Co., 326 F.3d 416, 420 (3d Cir. 2003). (ECF No. 55, p. 6). U.S.

Steel also argues that the Court ought not “act as a judicial pioneer” when applying state law and

instead must “permit state courts to decide whether and to what extent they will expand state

common law.” Leo v. Kerr-McGee Chem. Corp, 37 F.3d 96, 101 (Gd Cir. 1994). CECF No. 55,

p. 6).

Unfair competition has not been firmly defined by Pennsylvania courts and they have

struggled to determine to which sorts of situations it will apply. In Checker Cab Philadelphia,

Inc. v. Uber Techs., Inc., 689 F. App'x 707 Gd Cir. 2017), the Third Circuit recently observed the

confused state of Pennsylvania unfair competition law:

We have noted that the contours of Pennsylvania unfair competition law are not

entirely clear. See Granite State Ins. Co. v. Aamco Transmissions, Inc., 57 F.3d

316, 319 (3d Cir. 1995); see also Giordano vy. Claudio, 714 F.Supp.2d 508, 521

(E.D. Pa. 2010). But all unfair competition claims recognized by Pennsylvania

courts involve some accusation of “passing off’ of one’s own product as another,

or a false or dishonest statement, or tortious interference with contract, or

intellectual property theft. See Peek v. Whittaker, 2014 WL 2154965, at *10 (W.D.

Pa. May 22, 2014) (‘[Unfair competition] contextually is limited to claims designed

16

to protect a business from another’s misappropriation of its business organization

or its expenditure of labor, skill, or money....” (quotation and citation omitted)); see

also Granite State, 57 F.3d at 319. Here, Checker has only alleged violation of state

licensing regulations for taxi cabs as unfair competition. This in no way resembles

the unfair competition claims recognized by Pennsylvania courts.

In Peek v. Whittaker, 2014 WL 2154965 (W.D.Pa. May 22, 2014), United States District Judge

Mark R. Hornak summarized different types of conduct to which Pennsylvania courts applied the

cause of action:

At Pennsylvania common law, unfair competition is customarily defined as “the

‘passing off of a rival's goods as one's own.” Giordano y. Claudio, 714 F.Supp.2d

508, 521 (E.D.Pa.2010) (citing Scanvec Amiable Ltd. v. Chang, 80 Fed. Appx. 171,

180 (3d Cir.2003)). However, unfair competition is not limited to that definition.

Carl A. Colteryahn Dairy, Inc. v. Schneider Dairy, 415 Pa. 276, 203 A.2d 469, 473

(Pa.1964), Instead, “Pennsylvania courts have recognized a cause of action for the

common law tort of unfair competition where there is evidence of, among other

things, trademark, trade name, and patent rights infringement, misrepresentation,

tortious interference with contract, improper inducement of another's employees,

and unlawful use of confidential information.” Synthes (U.S.A.) v. Globus Med.

Inc., 2005 WL 2233441, at *8 (E.D.Pa. Sept.14, 2005) (citations omitted). “The

phrase contextually is limited to claims designed to protect a business from another's

misappropriation of its business organization or its expenditure of labor, skill, or

money, Le., injury to reputation, product, manner of doing business, identification

and so forth.” USX Corp. v. Adriatic Ins. Co., 99 F.Supp.2d 593, 620 (W.D.Pa.2000)

(citing Granite State Ins. Co. v. Aamco Transmissions, Inc., 57 F.3d 316, 320 Gd

Cir.1995)). Unfair competition may not be used as “a virtual catch-all for any

form of wrongful business conduct.” /d. at 619.

Peek at *10 (emphasis added).

Under Pennsylvania unfair competition law, the cause of action evades a single definition

susceptible to distillation into universally applied elements. However, none of the cases cited by

NLMK and none located by the Court are remotely similar to NLMK’s claim here. None arise

from one competitor making alleged misstatements about its own products or business to a non-

consumer, much less to a government regulator, resulting in the imposition of some detriment to

its competitor and/or its competitor’s products. At oral argument, the Court asked NLMK if it

could identify a single Pennsylvania-law case arising from these circumstances. It identified only

17

American Home Products Corp. v. Johnson & Johnson Corp., 1994 WL 46522 (Feb. 15, 1994).

(ECF No. 54, pp. 2-3). This case—an unpublished memorandum opinion denying a motion for a

new trial—is far from convincing. It suggests that the trial court permitted an unfair competition

claim based upon the alleged filing of a patent infringement action in bad faith to go to the jury.

But the opinion does not specify that the claim was asserted under Pennsylvania law. An

examination of the unpublished decision of the United States Court of Appeals for the Federal

Circuit reviewing the case on appeal offers no deeper insight. Neither opinion supports a

contention that the Pennsylvania tort may encompass the type of conduct at issue here. The fact

that American Home Products is the only case from a court sitting in Pennsylvania that NUMK

was able to identify only highlights the lack of authority supporting the extension of the

Pennsylvania unfair competition claim to U.S. Steel’s alleged conduct here.

NLMK argues that even if Pennsylvania law has not yet expressly extended the unfair

competition cause of action to the conduct at issue here, the Court may do so through the common

law process. In Checker Cab Philadelphia, the Third Circuit observed the confused state of

Pennsylvania unfair competition law and expressed reluctance to extend it by predicting that the

Pennsylvania Supreme Court would not adopt the formulations of the claim outlined in the

Restatement (Third) of Unfair Competition:

Unsurprisingly, Checker urges that we expand the definition of unfair

competition. More specifically, it argues that we should “forecast” that the

Pennsylvania Supreme Court would embrace a Restatement (Third) of Unfair

Competition (1995) definition. It claims that the Restatement (Third) definition

would bring the alleged regulatory violations under the umbrella of unfair

competition.

We disagree that the Supreme Court would embrace the Restatement

(Third) of Unfair Competition as setting forth the Pennsylvania law. The

Pennsylvania Supreme Court has in fact said it is “difficult to imagine a modern

court simply adopting something so broad-based and legislative in character as an

outside organization’s Restatement of Law.” Tincher v. Omega Flex, Inc., 628 Pa.

296, 104 A.3d 328, 353 (2014). Furthermore, no Pennsylvania appellate court has

18

embraced a Restatement (Third) definition of unfair competition. See Bldg.

Materials Corp. of Am. v. Rotter, 535 F.Supp.2d 518, 526 n.4 (E.D. Pa. 2008).

In this case, the Court is similarly hesitant to blaze new trails for Pennsylvania’s unfair

competition law. NLMK’s claim is of a categorically different nature vis-a-vis the conduct alleged

than the existing body of caselaw where Pennsylvania courts have applied the tort. The Court is

skeptical, therefore, that Pennsylvania courts would extend the unfair competition cause of action

to the conduct of U.S. Steel alleged in the Complaint. Ultimately, however, the Court is not

required to decide the merits of this unsettled issue of state law. As explained below, even if

NLMK had asserted a viable state-law claim, it would be barred by federal law. Thus, out of

respect for the authority of Pennsylvania courts over the development of the common law of the

Commonwealth, the Court will refrain from unnecessarily making a substantive call on this issue.

B. NLMK’s state law cause of action is preempted by federal law.

Under the Supremacy Clause of the United States Constitution, “the Laws of the United

States...shall be the supreme Law of the Land.” U.S. Const. art. VI, cl. 2. Therefore, when state

and federal laws conflict, federal law preempts state law. Altria Grp. Inc. v. Good, 555 U.S. 70,

76 (2008). There are three ways by which federal law may preempt state law: (1) express

preemption, (2) field preemption, and (3) conflict preemption. Farina v. Nokia, 625 F.2d 97, 115

(3d Cir. 2010). The Third Circuit defined the three types of preemption as follows:

Express preemption applies where Congress, through a statute’s express language,

declares its intent to displace state law. Field preemption applies where the federal

interest is so dominant that the federal system will be assumed to preclude

enforcement of state laws on the same subject. Conflict preemption nullifies state

law inasmuch as it conflicts with federal law, either where compliance with both

laws is impossible or where state law erects an obstacle to the accomplishment and

execution of the full purposes and objectives of Congress.

Farina, 625 F.3d at 115. (internal citations omitted). While these are convenient categories for

the purpose of analysis, the Supreme Court has cautioned against treating the distinction between

19

them too rigidly. Virginia Aluminum, Inc. v. Warren, 139 8.Ct 1894, 1901 (2019) (This Court

has sometimes used different labels to describe the different ways in which federal statutes may

displace state laws—speaking, for example, of express, field, and conflict preemption. But these

categories ‘are not rigidly distinct’”). Regardless of the classification, the preemption analysis

requires a probing examination of the relationship between the federal and state interests

implicated in the controversy.

‘Federal regulations preempt state laws in the same fashion as congressional statutes.” Jd.

(quoting Fellner v. Tri-Union Seafoods, LLC, 539 F.3d 237, 243 (3d Cir. 2008) (“Where Congress

has delegated the authority to regulate a particular field to an administrative agency, the agency’s

regulations issued pursuant to that authority have no less preemptive effect than federal statutes,

assuming those regulations are a valid exercise of the agency’s delegated authority.”)). Critical to

the analysis of this case “[p]reemption can apply to all forms of state law, including a civil action

based on state law. Farina, at 115 (citing Holk v. Snapple Beverage Corp. 575 F.3d 329, 331 Gd

Cir. 2009)). The critical question in this case is whether the process relating to the imposition of

tariffs (including objections to a competitor’s exclusion request, the ultimate determination of the

Secretary of Commerce and any post-determination appeal) precludes the inquiry associated with

NLMK’s state law cause of action.

1. The presumption against preemption does not apply.

Out of respect for the sovereignty of the states, there is a presumption against preemption.

Farina, at 116 (citing Wyeth v. Levine, 555 U.S. 555, 565, n.3 (2009) (“We rely on the presumption

[against preemption] because respect for the States as independent sovereigns in our federal system

leads us to assume that Congress does not cavalierly pre-empt state-law causes of action.”’)

(internal citations omitted)). The presumption against preemption will not apply, however, in areas

where state regulation has been historically absent. Farina, at 116 (citing Buckman v. Plaintiff's

20

Legal Comm., 531 U.S. 341, 347 (2001) (rejecting the presumption for state law fraud claims

premised on allegedly fraudulent statements made to the FDA because “the relationship between

a federal agency and the entity it regulates . . . originates from, is governed by, and terminates

according to federal law.”)). To be clear, “the presence of federal regulations, however

longstanding, does not by itself defeat the application of the presumption. Rather, its application

accounts for the historic presence of state law, but does not rely on the absence of federal

regulation.” Jd. at 116. In other words, the presumption against preemption will not be vitiated

by a history of federal regulation, alone, but rather, by the absence of a history of state regulation.

Nevertheless, in areas where there has been “a history of significant federal presence,” it may

evidence a corresponding and comparative absence of state regulation. See United States v. Locke,

529 U.S. 89, 108 (2000).

While, as NLMK correctly argues, the states have historically regulated unfair and

anticompetitive business practices, that is too broad of a characterization of what this case is about.

Specifically, this case calls into question a very specific type of conduct—alleged

misrepresentations made to Commerce in the determination of whether a tariff should be imposed

upon imported goods. It is difficult for NLMK to prevail on any claim that its cause of action falls

within a type of conduct traditionally regulated by the states when it is far from clear that it has

even asserted a tenable cause of action under state law. Moreover, as addressed at length below,

the statutory and regulatory framework governing the tariff exclusion process includes an

independent national security component that is part of each and every determination. The states

have no history of regulation in the fields of tariffs on foreign goods or national security. Rather,

these areas have, from the time the Constitution was ratified, been viewed as inherently federal in

nature.

21

The Supreme Court’s decision in Buckman is instructive as to the presumption against

preemption. There, the plaintiffs brought state law fraud claims against the manufacturer of

medical screws alleging that it made fraudulent representations to the Food and Drug

Administration (FDA) to obtain regulatory approval for the screws. The plaintiffs argued that

“such representations were at least a ‘but for’ cause of injuries that plaintiffs sustained from the

implantation of these devices. Had the representations not been made, the FDA would not have

approved the devices, and the plaintiffs would not have been injured.” Buckman, 531 U.S. at 344.

The Supreme Court explored the statutory and regulatory framework for approval of medical

devices. It then characterized the essence of plaintiffs’ claims as essentially seeking redress for

misrepresentations made to federal agencies in the approval process. It concluded:

Policing fraud against federal agencies is hardly “a field in which the States have

traditionally occupied,” Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67

S.Ct. 1146, 91 L.Ed. 147 (1947), such as to warrant a presumption against finding

federal pre-emption of a state-law cause of action. To the contrary, the relationship

between a federal agency and the entity it regulates is inherently federal in character

because the relationship originates from, is governed by, and terminates according

to federal law. Cf. Boyle v. United Technologies Corp., 487 U.S. 500, 504-505, 108

S.Ct. 2510, 101 L.Ed.2d 422 (1988) (allowing pre-emption of state law by federal

common law where the interests at stake are “uniquely federal” in nature). Here,

petitioner’s dealings with the FDA were prompted by the MDA, and the very

subject matter of petitioner’s statements were dictated by that statute’s provisions.

Accordingly—and in contrast to situations implicating “federalism concerns and

the historic primacy of state regulation of matters of health and safety, Medtronic,

518 US., at 485, 116 S.Ct. 2240—no presumption against pre-emption [applies] in

this case.

Id. at 347-48.

The conduct complained of by NLMK is substantially similar to that in Buckman—alleged

misrepresentations made to a federal regulatory agency which were alleged to be a but for cause

of the plaintiffs’ alleged injuries. Just as the Buckman Court rejected any contention that

misrepresentations concerning medical devices fall within the scope of the states’ traditional

22

authority over matters of health and safety, so too does the Court reject the contention that the

gravamen of this action implicates the authority of the states’ (in particular, Pennsylvania) to police

unfair business practices. Rather, the core of NLMK’s action is the series of alleged

misrepresentations made by U.S. Steel to Commerce. As in Buckman, this Court holds that

“Tplolicing fraud against federal agencies is hardly a field in which the States have traditionally

occupied.” Jd. at 347. This point is highlighted here, where Pennsylvania state law is not clear

that the unfair competition cause of action will even apply to misrepresentations made to a

government actor about a competitor. Conversely, there is no question that issues relating to

international trade, tariffs and national security have long been the exclusive domain of the federal

government, rather than the several states. Therefore, the Court holds that the presumption against

preemption does not apply in this case.

2. NLMK’s claim is preempted by the preeminent federal interests

that pervade the tariff exclusion process.

Having determined that there is no presumption against preemption applicable in this case,

the Court must determine whether any of the three classes of preemption apply. There is no

language in either the relevant statute or the regulations that expressly preempt state causes of

action relating to conduct in the tariff exemption process. Express preemption is not, therefore,

implicated in this case. Whether field preemption or conflict preemption applies requires a deeper

examination. Because it is broader in scope, the Court examined field preemption first. Because

it has determined that field preemption applies, it is unnecessary to address conflict preemption.

The Third Circuit has summarized the definition of field preemption as follows:

The doctrine of field preemption applies where “the scheme of federal regulation is

sufficiently comprehensive to make reasonable the inference that Congress ‘left no

room’ for supplementary state regulation” or where “the field is one in which ‘the

federal interest is so dominant that the federal system will be assumed to preclude

enforcement of state laws on the same subject.” Hillsborough Cnty., 471 U.S. at

713, 105 S.Ct. 2371 (quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230,

23

67 S.Ct. 1146, 91 L.Ed. 1447 (1947)). “The question whether the regulation of an

entire field has been reserved by the Federal Government is, essentially, a question

of ascertaining the intent underlying the federal scheme.” Jd. at 714, 105 S.Ct. 2371.

With respect to agency regulations, “we must consider whether the regulations

evidence a desire to occupy a field completely.” RJ. Reynolds Tobacco Co. v.

Durham Cnty.479 U.S. 130, 149, 107 S.Ct. 499, 93 L.Ed 2d 449 (1986). “Pre-

emption should not be inferred, however, simply because the agency’s regulations

are comprehensive.” Jd.

Farina, 625 F.3d at 121. Field preemption will apply where “the federal regulation is so sweeping

that no state law can occupy that field.” Donn v. A.W. Chesterton Co., Inc., 842 F. Supp. 2d 803,

807 (E.D. Pa. 2012).

The first task of the Court in determining whether field preemption applies is “ascertaining

the intent underlying the federal scheme.” /d. (citing Hillsborough Cnty., 471 U.S. at 714). “When

Congress intends federal law to ‘occupy the field’ state law in that area is preempted.” Crosby □□

National Foreign Trade Council, 530 U.S. 363, 372 (2000). The Supreme Court explained:

For when the question is whether a Federal act overrides a state law, the entire

scheme of the statute must, of course, be considered, and that which needs must

be implied is of no less force than that which is expressed. If the purpose of the act

cannot otherwise be accomplished—fits operation within its chosen field else must

be frustrated and its provisions be refused their natural effect—the state law must

yield to the regulation of Congress within the sphere of its delegated power.

Savage v. Jones, 225 U.S. 501, 533 (1912) (emphasis added). The surest indicator of the intent

underlying the federal scheme at issue here is the language of the enabling statute itself—19 U.S.C.

§1862. Gov't of Virgin Islands v. Knight, 989 F.2d 619, 633 (3d Cir. 1993); see also Pennsylvania

Dep’t of Pub. Welfare v. Davenport, 495 U.S. 552, 557-58 (1990); Consumer Product Safety

Comm’n v. GTE Sylvania, Inc., 447 U.S. 102, 108 (1980)). First, the statute is entitled

“Safeguarding national security.” And this is not an empty title, but rather, it aptly captures a

pervasive national security focus underlying each section of the statute. By way of example, the

statute provides:

24

(b) Investigations by Secretary of Commerce to determine effects on national

security of imports of articles; consultation with Secretary of Defense and

other officials; hearings; assessment of defense requirements; report to

President; publication in Federal Register; promulgation of regulations

(1)(A) Upon request of the head of any department or agency, upon application of

an interested party, or upon his own motion, the Secretary of Commerce (hereafter

in this section referred to as the “Secretary”) shall immediately 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.

(B) The Secretary shall immediately provide notice to the Secretary of Defense of

any investigation initiated under this section.

(2)(A) In the course of any investigation conducted under this subsection, the

Secretary shall—

(i) consult with the Secretary of Defense regarding the methodological and policy

‘questions raised in any investigation initiated under paragraph (1),

(ii) seek information and advice from, and consult with, appropriate officers of the

United States, and

(iii) if it is appropriate and after reasonable notice, hold public hearings or otherwise

afford interested parties an opportunity to present information and advice relevant

to such investigation.

19 U.S.C.A. § 1862. Specifically relevant to the claim in this case, the statute further states:

(d) Domestic production for national defense; impact of foreign competition

on economic welfare of domestic industries

For the purposes of this section, 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

25

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.A. § 1862. Finally, under the interim final rule enacted by the Secretary of Commerce

pursuant to the authority conferred by §1862, the Secretary’s determination of each and every

tariff exclusion request includes an independent national security inquiry:

The exclusion review criterion “or for specific national security considerations” is

intended to allow the U.S. Department of Commerce, in consultation with other

parts of the U.S. Government as warranted, to make determinations whether a

particular exclusion request should be approved based on specific national security

considerations.

15 C.F.R. pt. 705, Supp. 1, (c)(6)Gii). It is important to highlight that, even if no objection to

an exclusion request is lodged, the Secretary will still conduct a national security assessment of

the request. Jd. at § (h)(2)(i1) (“[If] no objections have been submitted, BIS will immediately assess

the request for any national security concerns.”).

The statutory and regulatory scheme at issue combines two areas which have traditionally

been viewed as presenting uniquely federal interests—the imposition of tariffs on foreign

commerce and national security. The federal preeminence in each of these fields originates in the

Constitution itself and has been long recognized by Congress and the courts.

Federal authority over the imposition of tariffs and the regulation of commerce with foreign

nations is established by two separate provisions of Article I, § 8:

The Congress shall have the Power To lay and collect Taxes, Duties, Imposts and

Excises...

U.S. Const. Art. I, § 8, cl. 1; and

To regulate Commerce with foreign Nations, and among the several States, and

with the Indian Tribes.

U.S. Const. Art. I, § 8, cl. 3. These clauses have long been interpreted as conferring broad federal

authority inherent in the preeminent role played by the national government with respect to foreign

26

trade and relations and that this authority was a necessary component of the federal system

established in the Constitution. In Brown v. Maryland, 25 U.S. 419, 438-39 (1827), Chief Justice

John Marshall explained that the bestowal upon Congress of the power to tax foreign commerce

corrected a weakness of the Articles of Confederation:

From the vast inequality between the different States of the confederacy, as to

commercial advantages, few subjects were viewed with deeper interest, or excited

more irritation, than the manner in which the several States exercised, or seemed

disposed to exercise, the power of laying duties on imports. From motives which

were deemed sufficient by the statesmen of that day, the general power of taxation,

indispensably necessary as it was, and jealous as the States were of any

encroachment on it, was so far abridged as to forbid them to touch imports or

exports, with the single exception which has ben noticed. Why are they restrained

from imposing these duties? Plainly, because, in the general opinion, the interest

of all would be best promoted by placing that whole subject under the control of

Congress.

(emphasis added). Likewise, the decision to place all authority over foreign commerce in the

hands of Congress—to the exclusion of the states—also arose from the weakness of the

decentralized approach preceding ratification of the Constitution:

The oppressed and degraded state of commerce previous to the adoption of the

constitution can scarcely be forgotten. It was regulated by foreign nations with a

single view to their own interests; and our disunited efforts to counteract their

restrictions were rendered impotent by want of combination. Congress, indeed,

possessed the power of making treaties; but the inability of the federal government

to enforce them had become so apparent as to render that power to a great degree

useless. Those who felt the injury arising from this state of things, and those who

felt the injury arising from this state of things, and those who were capable of

estimating the influence of commerce on the prosperity of nations, perceived the

necessity of giving the control over this important subject to a single government.

It may be doubted whether any of the evils proceeding from the feebleness of the

federal government, contributed more to that great revolution which introduced the

present system, than the deep and general conviction, that commerce ought to be

regulated by Congress. It is not, therefore, matter of surprise, that the grant should

be as extensive as the mischief, and should comprehend all foreign commerce, and

all commerce among the States. To construe the power so as to impair its efficacy,

would tend to defeat an object, in the attainment of which the American public took,

and justly took, that strong interest which arose from a full conviction of its

necessity.

27

Brown, 25 U.S. at 445-46. More recently, the Supreme Court stated:

Foreign commerce is pre-eminently a matter of national concern. In international

relations and with respect to foreign intercourse and trade the people of the United

States act through a single government with unified and adequate national power.

Although the Constitution, Art. I, §8, cl. 3, grants Congress power to regulate

commerce “with foreign Nations” and “among the several States” in parallel

phrases, there is evidence that the Founders intended the scope of the foreign

commerce power to be greater. Cases of this Court, stressing the need for

uniformity in treating with other nations, echo this distinction.

Japan Line, Ltd. v. County of Los Angeles, 441 U.S. 434, 448 (1979) (internal citations omitted).

In general, there is little doubt that the power to regulate international commerce and to

impose tariffs on imported goods are powers which have been constitutionally entrusted to the

federal government and admit little room for state interference—and even there in only the most

collateral of situations. The Court will examine whether this case presents one of those situations

or whether it falls within the broad field of federal interests which will preempt state interference.

The Court’s analysis does not stop with foreign trade because the tariffs at issue in this case

were not merely revenue-raising measures. Rather, the plain and pervasive language of the statute

expresses Congress’s intent in enacting 19 U.S.C. § 1862 was, as it said, to “safeguard [ ] national

security.” It did so by vesting the President and the Secretary of Commerce with the authority to,

respectively, commission a study of the national security implications of foreign imports, issue a

proclamation imposing a tariff, and issue rules providing for an exemption process—including an

individualized examination of the national security implications of each exemption request and

challenges thereto. With the congressional purpose of the Statute so clearly expressed, the Court

may move on to the next question—whether the federal interest in that purpose is so pervasive as

to exclude any state regulation even through an examination of actions occurring in the course of

the tariff exclusion process through state law causes of action.

28

Questions of foreign relations and national security are textually committed by the

Constitution to the federal government in a number of places. To Congress is entrusted the

authority “to declare war,” “to raise and support Armies,” “to provide and maintain a navy,” “to

make Rules for the Government and Regulation of the land and naval Forces,” “to provide for

calling forth the Militia to execute the Laws of the Union, suppress Insurrections and repel

Invasions,” and “to provide for organizing, arming, and disciplining, the Militia, and for governing

such Part of them as may be employed in the Service of the United States, reserving to the States

respectively, the Appointment of the Officers, and the Authority of training the Militia according

to the discipline prescribed by Congress.” U.S. Const. Art. I, § 8, cl. 11-16. The Constitution vests

the President with broad authority relating to national security and foreign relations. The President

is the commander in chief of the armed force, has the authority to appoint and receive ambassadors

and can make treaties (with approval by two-thirds of the Senate). U.S. Const. Art. IL.

There is no question that the framers of the Constitution viewed the textual conferral of

national security and foreign affairs powers upon the federal government as broad and exclusive.

The Federalist No. 4 extolled the Constitution’s unified front approach to foreign relations and

national security as a deterrent against foreign aggression and internal division. It observed:

Leave America divided into thirteen or, if you please, into three of four independent

governments—what armies could they raise and pay—what fleets cold they ever

hope to have? If one was attacked, would the others fly to its succor, and spend

their blood and money in its defense?

HK ok

If they [foreign governments] see that our national government is well

administered, our trade prudently regulated, our militia properly organized and

disciplined, our resources and finances discreetly managed, our credit re-

established, our people free, contented, and united, they will be much more

disposed to cultivate our friendship than provoke our resentment.

29

The Federalist No. 4 (John Jay). Likewise, The Federalist No. 42 reasoned, with respect to foreign

relations:

The second class of powers, lodged in the general government, consists of those

which regulate the intercourse with foreign nations, to wit: to make treaties; to send

and receive ambassadors, other public ministers, and consuls; to define and punish

piracies and felonies committed on the high seas, and offenses against the law of

nations; to regulate foreign commerce, including a power to prohibit, after the year

1808, the importation of slaves, and to lay an intermediate duty of ten dollars per

head, as a discouragement to such importations. This class of powers forms an

obvious and essential branch of the federal administration. If we are to be one

nation in any respect, it clearly ought to be in respect to other nations. The powers

to make treaties and to send and receive ambassadors, speak their own propriety.

Both of them are comprised in the articles of Confederation, with this difference

only, that the former is disembarrassed, by the plan of the convention, of an

exception, under which treaties might be substantially frustrated by regulations of

the States; and that a power of appointing and receiving "other public ministers and

consuls," is expressly and very properly added to the former provision concerning

ambassadors.

The Federalist No. 42 (James Madison) (emphasis added).

The Supreme Court has long recognized that foreign relations and national security are

preeminently federal concerns that are exclusive of state regulation. In Hines v. Davidowitz, 312

U.S. 52, 62 (1941), the Supreme Court held that “the supremacy of the national power in the

general field of foreign affairs...is made clear by the Constitution, was pointed out by authors of

The Federalist in 1787, and has since been given continuous recognition by this Court.” In finding

a Pennsylvania alien registration statute preempted by the exclusive federal authority to control

alienage and immigration, the Supreme Court related it to the foreign affairs powers of the United

States and explained:

The Federal Government, representing as it does the collective interests of the forty-

eight states, is entrusted with full and exclusive responsibility for the conduct of

affairs with foreign sovereignties. For local interests the several states of the Union

exist, but for national purposes, embracing our relations with foreign nations, we

are but one people, one nation, one power. Our system of government is such that

the interest of the cities, counties and states, no less than the interest of the people

30

of the whole nation, imperatively requires that federal power in the field affecting

foreign relations be left entirely free from local interference.

Hines, 312 U.S. at 63.

More recently, the Supreme Court has preempted a number of state laws that cross into the

authority over foreign relations textually committed by the Constitution to the federal government.

In Crosby v. National Foreign Trade Council, 530 U.S. 363 (2000), the Supreme Court held that

a Massachusetts statute restricting state agencies from purchasing goods and services from

companies doing business with Burma (Myanmar) was preempted by the federal law—

specifically, a federal act imposing sanctions on Burma and empowering the President to monitor

the situation in that nation and impose further sanctions subject to certain conditions. In finding

preemption, the Supreme Court focused on the preeminence of federal law over foreign relations

and national security, explaining:

This express investiture of the President with statutory authority to act for the

United States in imposing sanctions with respect to the Government of Burma,

augmented by the flexibility to respond to a change by suspending sanctions in the

interest of national security, recalls Justice Jackson’s observations in Youngstown

Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 635, 72 S.Ct. 863, 96 L.Ed. 1153

(1953): “When the President acts pursuant to an express or implied authorization

of Congress, his authority is at its maximum, for it includes all that he possesses

in his own right, plus all that Congress can delegate.” See also, id. at 635-36 n.2,

72 S.Ct. 863 (noting that the President’s power in the area of foreign relations is

least restricted by Congress and citing United States v. Curtiss-Wright Export

Corp., 299 U.S. 304, 57 S.Ct. 216, 81 L.Ed. 255 (1936)). Within the sphere defined

by Congress, then, the statute has placed the President in a position with as much

discretion to exercise economic leverage against Burma, with an eye toward

national security, as our law will admit. And it is just this plenitude of Executive

authority that we think controls the issue of preemption here. The President has

been given this authority not merely to make a political statement but to achieve a

political result, and the fullness of his authority shows the importance in the

congressional mind of reaching that result. It is simply implausible that Congress

would have gone to such lengths to empower the President if it had been willing

to compromise his effectiveness by deference to every provision of state statute or

local ordinance that might, if enforced, blunt the consequences of discretionary

Presidential action.

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Crosby, 530 U.S. at 375-76.

The federal government’s authority over foreign trade, foreign relations and national

security is firmly rooted in the plain language of the Constitution and is confirmed by our

constitutional history. This authority is among the broadest possessed by the federal government.

It is against this backdrop that Congress passed 19 U.S.C. § 1862, which purports, in its very title,

to serve the interest of “protecting national security.” It specifically empowers the President, the

Secretary of Commerce and the Secretary of Defense to explore the impact of foreign imports on

the national security of the United States and, if necessary to promulgate a remedy to protect

domestic manufacturing when required to protect that interest. After the statutory prescribed

study, and using the broad authority conferred by 19 U.S.C. § 1862, President Trump issued

Proclamation 9705, which imposed a 25% tariff on imported steel articles (with certain designated

exceptions). The Secretary of Commerce used his authority to promulgate rules interpreting and

implementing Proclamation 9705 and designating a process for submitting exclusion requests,

objections to those requests, and for the adjudication of any such request. Critically, with or

without an objection lodged, the Secretary of Commerce was required to make an independent

national security inquiry in determining each and every exclusion request. Every step of the

process underlying the specific exclusion requests at issue in this case—from the initial exploration

of the need for a tariff, to its imposition, to the creation and maintenance of an exemption and

objection process, to the Secretary of Commerce’s ultimate determination—is an exercise in

authority which is overwhelmingly exclusively federal in nature. Each step of the process falls

squarely within areas of authority which have long been recognized as belonging to the federal

government, and the federal government alone.

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NLMK argues that the Court can avoid interfering with areas of exclusive federal authority

by limiting its inquiry to the narrow state law cause of action asserted—looking only to U.S. Steel’s

alleged misrepresentations in the exemption process. The Court disagrees. This position does not

account for the fact that each and every exclusion determination included an examination of the

national security implications of the request (even without an objection). There is no way for

NLMK’s state law cause of action to avoid treading on ground that is held exclusively by the

federal government. Federal considerations which are framed and regulated by the statute,

Proclamation and rules relating to the tariff leave no room for state intrusion into the process.

In amore general sense, the Court holds that the process created by Congress and entrusted

to the administrative authority of the President and the Secretary of Commerce to determine

whether tariffs are warranted and to examine any exemption requests is so pervaded by issues

which are in the exclusive authority of the federal government as to preempt any inquiry by the

states—either by affirmative legislation and regulation or by the operation of state law causes of

action.*© Indeed, this case presents a classic instance of field preemption. Congress—through the

enactment of 19 U.S.C. § 1862——has created a process dealing with uniquely federal concerns and

places all determinations relating to the implementation of and exemption from tariffs firmly

within the discretion of federal executive officials. The nature and structure of 19 U.S.C. § 1862

36 The determination that field preemption bars scrutiny into the tariff exemption process does not

leave a party, like NLMK, wholly without a means of seeking redress. Rather, as explained above,

there is a process where one can challenge Commerce’s determinations. This is consistent with

the recognition that in many cases where field preemption is found, there will be a substituted

federal remedy. See, e.g., Saleh v Titan Corp., 580 F.3d 1, 31 (D.C. Cir. 2009) (Garland, J.,

dissenting) (“As Boyle [v. United Technologies, 487 U.S. 500 (1988)] explained “where the federal

interest requires a uniform rule, the entire body of state law applicable to the area conflicts [with]

and is replaced by federal rules.” Accordingly, where the Supreme Court finds field preemption

appropriate, it does not simply leave the field vacant. Instead, it substitutes a federal common law

regime.”). Here, the federal remedy was clearly established and, indeed, NLMK availed itself of

it.

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and its attendant regulations at issue convey an unmistakable intention, in light of our

constitutional history and the plain language of the statute itself, to so thoroughly occupy the field

(i.e., the determinations relating to the imposition of and exemption from tariffs imposed

thereunder) “as to make reasonable the inference that Congress left no room for the States to

supplement it.?’ Farina, at 121 (quoting Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516

(1992)). This Court will not open the doors of the courthouse to NLMK’s Pennsylvania law cause

of action which would require the Court to apply state law standards to the exclusively federal

considerations encapsulated in the tariff exemption process. NLMK’s state law cause of action is

preempted.

37 Not only do the tariff imposition and exemption process established by 19 U.S.C. § 1862,

Proclamation 9705 and the Secretary of Commerce’s rules present issues which are traditionally

left to the authority of the federal government alone, but there is a corresponding absence of any

history of state regulation on these topics. Broadly, as explained above, areas of foreign

commerce, foreign relations and national security have not been topics historically regulated by

the states. More narrowly, NLMK cannot identify, and the Court cannot find, a single case where

its novel unfair competition claim was applied to communications made to a governmental agency

or in the course of some adjudicatory process. There is no longstanding tradition of state unfair

competition law regulating representations made by business competitors to governmental

actors—much less in situations relating to foreign trade and national security.

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V. CONCLUSION

For these reasons, United States Steel Corporation’s Motion to Dismiss under Federal Rule

of Civil Procedure 12(b)(6) will be granted. (ECF No. 39). An Order of Court will follow.

BY THE COURT:

AAA & Bet

WILLIAM S. STICKMAN IV

UNITED STATES DISTRICT JUDGE

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Dated

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