In Re Section 301 Cases
Case Information
*1 Slip Op 21-81
UNITED STATES COURT OF INTERNATIONAL TRADE
Before: Mark A. Barnett, Claire R. Kelly and IN RE SECTION 301 CASES
Jennifer Choe-Groves, Judges OPINION
[Granting Plaintiffs’ motions for leave to file a reply and for a preliminary injunction. Chief Judge Barnett dissents from the entry of a preliminary injunction.]
Dated: July 6, 2021 Matthew R. Nicely and Pratik A. Shah, Akin Gump Strauss Hauer & Feld LLP, of Washington, DC, argued for plaintiffs HMTX Industries LLC, Halstead New England Corporation, Metroflor Corporation, and Jasco Products Company LLC. With them on the brief were James E. Tysse, Devin S. Sikes, Daniel M. Witkowski, and Sarah B. W. Kirwin.
Jamie L. Shookman, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of New York, NY, argued for defendants. Also on the brief were Brian M. Boynton, Acting Assistant Attorney General, Jeanne E. Davidson, Director, L. Misha Preheim, Assistant Director, Justin R. Miller, Attorney- In-Charge, International Trade Field Office, and Sosun Bae, Senior Trial Counsel, and Ann C. Motto, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC. Of Counsel on the brief were Megan Grimball, Associate General Counsel, Philip Butler, Associate General Counsel, and Edward Marcus, Assistant General Counsel, Office of the U.S. Trade Representative, of Washington, DC, and Paula Smith, Assistant Chief Counsel, Edward Maurer, Deputy Assistant Chief Counsel, and Valerie Sorensen-Clark, Attorney, Office of the Assistant Chief Counsel, International Trade Litigation, U.S. Customs and Border Protection, of New York, NY.
Kelly, Judge: Plaintiffs HMTX Industries LLC, Halstead New England Corporation, Metroflor Corporation, and Jasco Products Company LLC commenced the first of approximately 3,600 cases (the “Section 301 Cases”) contesting the imposition of a third and fourth round of tariffs by the Office of the United States Trade Representative (“USTR”) pursuant to Section 301 of the Trade Act of 1974, 19 U.S.C. § 2411, et seq. (“the Trade Act”). See generally Am. Compl., HMTX Indus. LLC v. United States, Court No. 20-cv-00177 (CIT Sept. 21, 2020), ECF No. 12 (“20- 177 Am. Compl.”). Plaintiffs now move the court for a preliminary injunction pursuant to U.S. Court of International Trade (“CIT”) Rule 65(a) suspending liquidation of unliquidated entries subject to the contested tariffs. [1] Pls.’ Mot. for Prelim. Inj. Limited to Suspension of Liquidation, April 23, 2021, ECF No. 287 (“Pls.’ Mot.”). Plaintiffs request that any injunction extend to all Section 301 Cases “subject to an opt-out mechanism” for individual plaintiffs. Pls.’ Mot. at 2. Defendants United States, et al. (“the Government”) oppose the motion. Defs.’ Opp’n to Pls.’ Mot. for Prelim. Inj. Limited to Suspension, May 14, 2021, ECF No. 304 (“Defs.’ Opp’n”). Plaintiffs further move for leave to file a reply to the Government’s opposition. Pls.’ Mot. for Leave to File a Reply in Supp. of a Prelim. Inj. Limited to Suspension of Liquidation, May 20, 2021, ECF No. 307; see also Proposed Reply in Supp. of Pls.’ Mot. for Prelim. Inj. Limited to Suspension of Liquidation, May 20, 2021, ECF No. 307-1 (“Pls.’ Reply”). The Government defers to the court’s discretion as to acceptance of Plaintiffs’ Reply. Defs.’ Resp. to Pls.’ Mot. for Leave to File a Reply in Supp. of a Prelim. Inj. Limited to Suspension of Liquidation, May 26, 2021, ECF No. 309. For the reasons set forth below, both of Plaintiffs’ motions are granted. [2]
BACKGROUND
On August 14, 2017, the President issued a memorandum instructing the USTR to consider, consistent with Section 302(b) of the Trade Act, initiating an investigation addressing the Government of the People’s Republic of China’s (“China”) “laws, policies, practices, or actions that may be unreasonable or discriminatory and that may be harming American intellectual property rights, innovation, or technology development.” Addressing China’s Laws, Policies, Practices, and Actions Related to Intellectual Property, Innovation, and Technology, 82 Fed. Reg. 39,007 (Aug. 17, 2017). The USTR initiated an investigation on August 18, 2017. Initiation of Section 301 Investigation; Hearing; and Request for Public Comment: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation , 82 Fed. Reg. 40,213 (Aug. 24, 2017). On March 22, 2018, the USTR published a report announcing the results of its investigation. O FFICE OF THE U NITED S TATES T RADE R EPRESENTATIVE , F INDINGS OF THE I NVESTIGATION INTO C HINA ’ S A CTS , P OLICIES , A ND P RACTICES R ELATED TO T ECHNOLOGY T RANSFER , I NTELLECTUAL P ROPERTY , AND I NNOVATION U NDER S ECTION T RADE A CT (2018), OF THE OF https://ustr.gov/sites/default/files/Section%20301%20FINAL.PDF.
On June 20, 2018, the USTR published notice of a final list of products covering
818 tariff subheadings that would be subject to an additional duty of 25 percent ad
of Homeland Sec.,
valorem. Notice of Action and Request for Public Comment Concerning Proposed Determination of Action Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 83 Fed. Reg. 28,710 (June 20, 2018) (“List 1”). On August 16, 2018, the USTR published notice of an additional list of products covering 279 tariff subheadings that would be subject to an additional duty of 25 percent ad valorem. Notice of Action Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 83 Fed. Reg. 40,823 (Aug. 16, 2018) (“List 2”). During the time period between the USTR’s finalization of List 1 and List 2, the USTR indicated its intent to modify the action by imposing an additional duty of 10 percent ad valorem on another list of products imported from China. Request for Comments Concerning Proposed Modification of Action Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 83 Fed. Reg. 33,608 (July 17, 2018). On September 21, 2018, the USTR published final notice of new duties with an effective date of September 24, 2018. Notice of Modification of Action Pursuant to Section 301 Action: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 83 Fed. Reg. 47,974 (Sept. 21, 2018) (“List 3”). The rate of additional duty on products covered by List 3 was set to increase to 25 percent ad valorem on January 1, 2019. Id. After several extensions of the date of implementation of the List 3 tariffs issued in connection with ongoing trade negotiations, on May 10, 2019 (or June 15, 2019, depending on the date of export), List 3 duties increased to 25 percent ad valorem. Notice of Modification of Section 301 Action: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 84 Fed. Reg. 20,459 (May 9, 2019); Implementing Modification to Section 301 Action: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 84 Fed. Reg. 21,892 (May 15, 2019); Additional Implementing Modification to Section 301 Action: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 84 Fed. Reg. 26,930 (June 10, 2019). The USTR subsequently established an exclusion procedure pursuant to which importers could request exclusion of their products from List 3 duties. Procedures for Requests to Exclude Particular Products From the September 2018 Action Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 84 Fed. Reg. 29,576 (June 24, 2019). Plaintiffs obtained exclusions for certain of their imports, effective September 24, 2018, through August 7, 2020. Notice of Product Exclusions: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 84 Fed. Reg. 61,674 (Nov. 13, 2019); Notice of Product Exclusions: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 84 Fed. Reg. 69,012 (Dec. 17, 2019); Notice of Product Exclusions: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 85 Fed. Reg. 549 (Jan. 6, 2020); Notice of Product Exclusions: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 85 Fed. Reg. 9921 (Feb. 20, 2020).
On May 17, 2019, the USTR announced its intent to again modify the action to impose additional duties up to 25 percent ad valorem on another list of products imported from China. Request for Comments Concerning Proposed Modification of Action Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 84 Fed. Reg. 22,564 (May 17, 2019). On August 20, 2019, the USTR announced that it was imposing additional duties of 10 percent ad valorem on products identified in the May 17, 2019 request for comments. Notice of Modification of Section 301 Action: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 84 Fed. Reg. 43,304 (Aug. 20, 2019) (“List 4”). List 4 was further categorized into List 4A and List 4B. Id.
Thereafter, the USTR provided notice of its intent to increase the additional duty rate applicable to List 4A and List 4B from 10 percent ad valorem to 15 percent ad valorem. Notice of Modification of Section 301 Action: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 84 Fed. Reg. 45,821 (Aug. 30, 2019). On December 18, 2019, the USTR indefinitely suspended the additional duties of 15 percent ad valorem on List 4B, but not List 4A. Notice of Modification of Section 301 Action: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 84 Fed. Reg. 69,447 (Dec. 18, 2019).
On January 22, 2020, the USTR halved the additional duty on products covered by List 4A from 15 percent to 7.5 percent ad valorem. Notice of Modification of Section 301 Action: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 85 Fed. Reg. 3741 (Jan. 22, 2020).
On September 10, 2020, Plaintiffs commenced an action challenging the Section 301 duties imposed pursuant to List 3 and List 4A. Compl., HMTX Indus. LLC v. United States, Court No. 20-cv-00177 (CIT Sept. 10, 2020), ECF No. 2; see also 20-177 Am. Compl. Count one alleges a violation of the Trade Act based on Plaintiffs’ view that the USTR’s imposition of the List 3 and List 4A duties was not authorized by the USTR’s modification authority under Section 307 of the Trade Act and seeks a declaratory judgment to that effect. 20-177 Am. Compl. ¶¶ 63–70. Count two alleges violations of the Administrative Procedure Act (“APA”). Id. ¶¶ 71–75.
On February 5, 2021, Plaintiffs’ action, among others, was assigned to this panel. See, e.g., Order, HMTX Indus. LLC v. United States, Court No. 20-cv-00177, (CIT Feb. 5, 2021), ECF No. 43. On February 10, 2021, the panel designated a “master case” under the name “In Re Section 301 Cases” to function as the primary vehicle by which the court would manage the litigation of the Section 301 Cases. Std. Procedural Order No. 21-01 (Feb. 10, 2021), ECF No. 1. After receiving input from the parties, on March 31, 2021, the court designated Plaintiffs’ case as “the sample case for purposes of the court’s initial consideration and resolution of Plaintiffs’ claims.” Std. Procedural Order 21-04 (Mar. 31, 2021), ECF No. 267. The court stayed all other Section 301 Cases and appointed a Plaintiffs’ Steering Committee to aid the court’s adoption of case management procedures and coordinate the preparation of consolidated briefs and court submissions. Id.; see also Std. Procedural Order 21-02 (Feb. 16, 2021), ECF No. 82 (explaining the duties of the steering committee). On April 12, 2021, the parties filed a Joint Status Report with a proposed briefing schedule governing disposition of the merits of the sample case. Joint Status Report, Apr. 12, 2021, ECF No. 274 (“Jt. Status Report”). The parties explained their respective positions on the issue of relief in the event Plaintiffs prevail. Id. at 4–9. The following day, the court entered a Scheduling Order. See Scheduling Order, Apr. 13, 2021, ECF No. 275.
Plaintiffs filed the instant motion on April 23, 2021. See Pls.’ Mot. The Government responded and, as noted, the court will accept Plaintiffs’ Reply. See Defs.’ Opp’n; Pls.’ Reply. A remote oral argument on the motion was held on June 17, 2021. Docket Entry, June 17, 2021, ECF No. 327, available at https://www.cit.uscourts.gov/sites/cit/files/061721-21-00052-3JP.mp3 (“Oral Arg.”).
JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction pursuant to 28 U.S.C. § 1581(i)(1)(B) (2018), which grants the court “exclusive jurisdiction of any civil action commenced against the United States . . . that arises out of any law of the United States providing for . . . tariffs, duties, fees, or other taxes on the importation of merchandise for reasons other than the raising of revenue.” “The Court of International Trade shall possess all the powers in law and equity of, or as conferred by statute upon, a district court of the United States.” 28 U.S.C. § 1585.
“A preliminary injunction is an extraordinary remedy never awarded as of
right.” Winter v. Nat. Res. Def. Council, Inc.
,
555 U.S. 7, 24 (2008). To obtain a
preliminary injunction, a party must demonstrate “(1) likelihood of success on the
merits, (2) irreparable harm absent immediate relief, (3) the balance of interests
weighing in favor of relief, and (4) that the injunction serves the public
interest.” Silfab Solar, Inc. v. United States, 892 F.3d 1340, 1345 (Fed. Cir.
2018) (citing Winter,
The Court of Appeals for the Federal Circuit has historically applied a “sliding
scale” approach. See Qingdao Taifa Grp. Co. v. United States,
DISCUSSION
Plaintiffs have established their entitlement to a preliminary injunction. Here,
Plaintiffs demonstrated they will likely suffer irreparable harm because their entries
of subject merchandise will liquidate absent an injunction. Moreover, Plaintiffs
persuasively argue that there is sufficient uncertainty as to the availability of relief
under Shinyei Corp. of America v. United States,
I. Irreparable Harm
For the reasons that follow, the liquidation of Plaintiffs’ entries constitutes
irreparable harm in this case because it may foreclose Plaintiffs’ ability to challenge
the Government’s imposition of duties paid or have those duties returned.
Irreparable harm is a “viable threat of serious harm which cannot be undone,” Zenith
Radio Corp. v. United States,
Liquidation, as the final computation of duties, will constitute irreparable harm unless an importer can obtain refunds or reliquidation because it cuts off judicial review and eliminates any chance of recovery of unlawful exactions. See Zenith, 710 F.2d at 810. In Zenith, the Court of Appeals held that liquidation of entries moots the action with respect to those entries and constitutes irreparable harm. Id. The Court of Appeals explained that liquidation would not only involve economic harm, but also the “statutory right to obtain judicial review of the determination.” Id. Here, without reliquidation or refunds, Plaintiffs will be denied meaningful judicial review for each entry that liquidates. The denial of judicial review is irreparable harm.
Further, although the CIT is granted broad statutory authority to order appropriate relief, the Court of Appeals has cast sufficient doubt as to the scope of that authority to create a likelihood of irreparable harm. “The Court of International Trade shall possess all the powers in law and equity of, or as conferred by statute upon, a district court of the United States.” 28 U.S.C. § 1585. [6] “The Court of International Trade may enter a money judgment for or against the United States in any civil action commenced under section 1581 or 1582 of this title.” Id. § 2643(a)(1). Moreover, the CIT can order “any other form of relief that is appropriate in a civil action, including, but not limited to, declaratory judgments, orders of remand, injunctions, and writs of mandamus and prohibition.” Id. § 2643(c)(1). Given this seemingly broad statutory authority to fashion appropriate relief, the court would like to agree with the Dissent that we have the clear power to order reliquidation in the event Plaintiffs are ultimately successful, as we view the statute as providing this Court with the explicit power to order reliquidation and refunds where the government has unlawfully exacted duties. [7]
However, the Court of Appeals has explicitly and implicitly called the breadth of the CIT’s statutory authority into question. For example, in Shinyei, the Court of Appeals did not simply hold that the CIT had the authority to order reliquidation based on the plain language of the statute, but rather went on to state that reliquidation was appropriate in that case because to hold otherwise “would preclude enforcement of court orders as to duty determinations as soon as entries subject to those orders are liquidated.” Shinyei, 355 F.3d at 1312. Arguably, the holding of Shinyei is that the Court of Appeals “decline[d] to find that the statute as a whole was intended to preclude judicial enforcement of court orders after liquidation.” Id. One view of Shinyei would be that it confirmed the CIT’s power to order money judgment in Section 1581 actions and to order reliquidation if necessary; however, subsequent cases suggest that the holding in Shinyei was a narrow one.
In Ugine, an importer challenged Commerce’s liquidation instructions on the
grounds that the instructions “for entries imported prior to the fourth administrative
review are inconsistent with Commerce’s determination in the subsequent fourth
administrative review.”
key consideration in Shinyei to be that the importer “was complaining that Commerce’s instructions . . . did not reflect the results of the administrative review that covered those entries,” and found that because that was not the exact theory propounded by the importer in Ugine that the “difference between the two cases— and the possibility that Shinyei will not be interpreted to encompass the sort of claim at issue here—raises doubt whether [Plaintiffs] will have the opportunity to obtain reliquidation once [their] entries are liquidated.” Id. By describing Shinyei in such narrow terms—suggesting that a different type of challenge to Commerce’s liquidation instructions might lead to a different result and failing to even mention the CIT’s statutory authority to fashion relief—Ugine casts doubt as to the availability of reliquidation and refunds in this case.
Similarly, the Court of Appeals in American Signature held that Shinyei relief
was in doubt where an importer challenged Commerce’s attempt to correct an error
contained in the final results of its administrative review of an antidumping duty.
Court of Appeals continued to cast Shinyei in an extremely narrow light. Rather than interpreting Shinyei as setting forth the CIT’s broad remedial powers based on clear, wide-ranging statutory authority, the Court of Appeals limited Shinyei relief to an undefined set of “certain circumstances” only where a preliminary injunction had been sought and denied. Id. American Signature did not address the statutory framework in its discussion of irreparable harm and did not provide any further clarification as to when Shinyei applies. Id. at 828–29.
Finally, in Sumecht, when affirming the denial of a preliminary injunction
because irreparable harm could not be shown, the Court of Appeals did not stop with
the statutory language, but rather went on to cast doubt upon the applicability of
Shinyei in 1581(i) cases.
Thus, despite the broad statutory language granting the Court authority to
order whatever relief is appropriate, the Court of Appeals has consistently refrained
from relying on that language in finding the CIT has authority to order reliquidation
or refunds in 1581(i) cases and has raised doubts about the CIT’s authority to do so.
It may be that on appeal the Court of Appeals will make clear that 28 U.S.C. §§ 1585
and 2643 empower the CIT to “enter a money judgment . . . against the United States
in any civil action commenced under section 1581” for the return of unlawfully
collected duties, 28 U.S.C. § 2643(a)(1), or “may . . . order any other form of relief”
including reliquidation, id. § 2643(c)(1), but, until it does, we must conclude that
liquidation will result in irreparable economic harm. The Government does not
argue that liquidation is not a harm, nor does it argue that it is a harm that can be
remedied. Defs.’ Opp’n at 34–42. Instead, the Government relies upon the truism
that financial harm alone is not irreparable. Id. at 34 (arguing the court “repeatedly
has declined to find irreparable harm based merely on claims of financial losses”).
The Government’s argument elides the sine qua non of reparability in this case,
namely the availability of reliquidation or refund. Indeed, instead of arguing that
Plaintiffs’ alleged irreparable harm is reparable (because the court can order
reliquidation or refund), the Government asserts the opposite proposition, i.e., that
the court cannot order reliquidation or refunds. See Defs.’ Opp’n at 41. Thus, the
Government’s position is that any duties paid are permanently unrecoverable
regardless of whether they may have been collected unlawfully. Id. at 42. According
to Plaintiffs, the Government would stand to gain an undue windfall of “at least
hundreds of millions of dollars and probably billions.” Pls.’ Reply at 20. The
Government’s position, if correct, concedes irreparable harm. See Ohio Oil Co. v.
Conway,
Shandong Huarong General Group Corp. v. United States, 24 CIT 1286 (2000), is
misplaced. See Defs.’ Opp’n at 34. Unlike here, where Plaintiffs only seek limited
relief, i.e., the suspension of liquidation, both cases involved motions seeking to enjoin
the Government from the collection of duties. See Corus Grp., 26 CIT at 938;
Shandong Huarong,
II. Likelihood of Success on the Merits
Plaintiffs raise sufficiently serious and substantial questions as to the proper interpretation of Section 307 of the Trade Act to warrant injunctive relief in this case. Plaintiffs argue that Sections 307(a)(1)(B)–(C) of the Trade Act limit the President’s and the USTR’s authority to increase tariffs in the context of Section 301(b). Pls.’ Reply at 6–11. Defendants defend the President’s authority based upon, inter alia, the plain language of the statute. Defs.’ Opp’n at 21–22. Plaintiffs’ interpretation of the statute raises serious and substantial questions about the scope of the USTR’s statutory authority to act, which should be resolved via full litigation of the merits of these claims.
Plaintiffs need only demonstrate a fair chance of success on the merits because,
as discussed, the factor of irreparable harm weighs sharply in favor of granting a
preliminary injunction. See Qingdao,
Where it is clear that the moving party will suffer substantially greater harm by the denial of the preliminary injunction than the non-moving party would by its grant, it will ordinarily be sufficient that the movant has raised serious, substantial, difficult and doubtful questions that are the proper subject of litigation.
Id. (internal quotation marks omitted) (quoting Ugine-Savoie Imphy v. United States,
Section 301 of the Trade Act authorizes the President and the USTR to take
action to eliminate certain acts, policies, or practices of a foreign government that
burden U.S. commerce. See 19 U.S.C. § 2411. As relevant here, the USTR may
exercise discretionary authority when the USTR determines “an act, policy, or
practice of a foreign country is unreasonable or discriminatory and burdens or
restricts United States commerce” and action by the United States is appropriate. Id.
§ 2411(b)(1). Section 307(a)(1) of the Trade Act provides the USTR authority to
“modify” an action commenced under Section 301 under certain enumerated
1381–82. The Court of Appeals’ statement in Silfab, that it was “not deciding”
whether the sliding scale approach was still good law, falls far short of overruling
prior precedent. 892 F.3d at 1345. Therefore, until the Federal Circuit states
otherwise, the sliding scale approach as articulated in Qingdao remains good law in
courts bound by Court of Appeals for the Federal Circuit precedent. See generally,
circumstances. See id. § 2417(a)(1). At issue here are the conditions and scope of permissible modifications.
Section 307 provides, in relevant part,
(a) In general
(1) The Trade Representative may modify or terminate any action, subject to the specific direction, if any, of the President with respect to such action, that is being taken under section 2411 of this title [Section 301] if—
(A) any of the conditions described in section 2411(a)(2) of this title [Section 301(a)(2)] exist,
(B) the burden or restriction on United States commerce of the denial rights, or of the acts, policies, and practices, that are the subject of such action has increased or decreased, or
(C) such action is being taken under section 2411(b) of this title [Section 301(b)] and is no longer appropriate.
Id. § 2417(a).
Plaintiffs contend that the text of Sections 307(a)(1)(B) and 307(a)(1)(C), both of which Defendants claim as authority for promulgating the List 3 and List 4A duties, limit the USTR’s authority to either reduce or terminate Section 301(b) tariffs, or to increase the tariffs in limited circumstances not applicable here. Pls.’ Reply at 6–11. Plaintiffs argue the clause, “that are the subject of such action,” in Section 307(a)(1)(B) requires that any increase in an action relate to the same conduct that formed the basis of the USTR’s initial action. Id. at 7. Moreover, Plaintiffs contend that Section 307(a)(1)(C), when read as a counterpart to Section 307(a)(1)(A), must be interpreted as only providing the President and the USTR with the authority to “reduce or terminate” a Section 301(b) action when the USTR finds such action is “no longer appropriate.” Id. at 9.
Plaintiffs’ proffered interpretation of the phrase “that are the subject of” the Section 301 action undeniably raises a serious and substantial question as it would limit the President’s ability to increase a Section 301 action only when there is a change in the conduct giving rise to the Section 301 action, not when a country retaliates against the Section 301 action by taking action that is adverse to U.S. commerce, but not, at least superficially, the type of action that the initial Section 301 action sought to remedy. Id. at 6–8. If Plaintiffs’ interpretation is correct, the USTR’s modification of the Section 301(b) action falls outside the scope of delegated authority. Plaintiffs’ interpretation of Section 307(a)(1)(B) is a plausible literal reading of the statute raising a serious and substantial question. Thus, Plaintiffs have demonstrated a fair chance of success that their interpretation of Section 307(a)(1)(B) prevents the USTR from increasing a Section 301(b) action in response to retaliatory, but superficially unrelated, tariffs.
That Plaintiffs’ interpretation is plausible does not diminish Defendants’ argument that “the increase in the tariffs was necessary to further encourage China to eliminate the unfair policies identified in the USTR’s investigation (that List 1 and List 2 had demonstrably failed to do), and thus to further support the effectiveness of the initial section 301 action.” Defs.’ Opp’n at 22. Likewise, Defendants’ position that China’s retaliatory tariffs were enacted with the goal of pressuring the President and the USTR to drop the Section 301 action so that China could continue its unfair practices is a compelling argument. Id. According to Defendants, the USTR’s List 3 and List 4A tariffs do constitute a modification of the Section 301(b) action in response to an increased burden of the acts, policies, and practices that are the subject of the action on U.S. Commerce. Id. However, at this stage of the proceedings without full briefing, Defendants’ position is not so clearly correct as to prevent Plaintiffs from preserving the status quo pending the resolution of the merits of the parties’ claims.
Likewise, Plaintiffs’ argument that Section 307(a)(1)(C) fails to supply the needed authority in this case is not without merit and it too raises a difficult and substantial question. Plaintiffs claim that Section 307(a)(1)(C) must be read as a mirror of Section 307(a)(1)(A), but while Section 307(a)(1)(A) deals with modification of mandatory actions commenced under Section 301(a), Section 307(a)(1)(C) deals with modification of discretionary actions commenced under Section 301(b). Pls.’ Reply at 8–10. According to Plaintiffs, the circumstances in which Section 307(a)(1)(A) permits “modification” make clear that only a reduction or termination of the Section 301(a) action is permitted. Id. Thus, Plaintiffs urge the court to interpret Section 307(a)(1)(C) as similarly limiting the USTR when it finds a Section 301(b) action to “no longer be appropriate.” Id. Although Defendants argue that nothing in the plain text of Section 307(a)(1)(C) limits the USTR’s authority to “modify” a Section 301(b) action when the USTR finds that action is “no longer appropriate,” see Defs.’ Opp’n at 22–24, given that “[i]t is a fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme,” Lal v. M.S.P.B., 821 F.3d 1376, 1378 (Fed. Cir. 2016) (citations omitted), and that neither party has cited any case in which the Government has increased an action under Section 301(b) under the claimed authority of Section 307(a)(1)(C), Plaintiffs at this stage of the proceedings raise substantial and serious questions, which should be determined after full briefing.
Finally, Plaintiffs assert a plausible APA claim on which they have a fair chance of success on the merits. Plaintiffs assert that the USTR failed to provide an adequate opportunity to comment on its determination to implement the List 3 and List 4A duties. See Pls.’ Reply at 16. The Government asserts that the action was that of the President, rather than the USTR, and thus not subject to the APA. Defs.’ Opp’n at 26–27. Neither party adequately addresses the question of whether the court should consider List 3 and List 4A the products of Presidential action or USTR action. See Pls.’ Reply at 18–19; Defs’ Opp’n at 26. Further, the Government claims that even if the challenged action is that of the USTR, the USTR provided adequate opportunity to comment. Defs.’ Opp’n at 28. Both parties’ treatment of this issue is cursory at best. Plaintiffs allege that “initial and rebuttal List 3 comments were due simultaneously, while List 4 rebuttal comments were due just days after the hearing (with over 300 witnesses) concluded.” Pls.’ Reply at 16. Plaintiffs also claim that the USTR announced the imposition of List 3 duties “mere days after the comment period ended,” which they suggest is evidence that the USTR did not consider the comments prior to implementing the duties. Id. The Government contends that the USTR imposed the duties “following seven weeks of public notice, hearings, and extensive opportunities for comment.” Defs.’ Opp’n at 12. Defendants further assert that they “provided sufficient notice,” “solicited comments from the public,” and “held a public hearing, even though none was required.” Id. at 28. Neither party offers dispositive evidence or argumentation on the adequacy of the comment period, so the court concludes that Plaintiffs raise a serious question that warrants meaningful review. Regardless, the amount of time given for interested parties to comment as well as the amount of time the USTR had to consider public comments suggest that Plaintiffs have a fair chance of success in their APA claim should the court conclude that the APA applies. Pls.’ Reply at 16.
Although Defendants’ position as to the President’s and the USTR’s authority
to act under the statute may ultimately prevail, it is not “so clear-cut” as to foreclose
Plaintiffs’ ability to fully litigate the matter. See Ugine,
III. Balance of the Equities
The balance of the equities tips in Plaintiffs’ favor. Plaintiffs seek narrow relief, the suspension of liquidation. Although the administrative burden on the Government to effectuate the suspension of liquidation is not insignificant, see Decl. of Thomas Overacker in Supp. of Defs.’ Opp’n to Pls.’ Mot. for a Prelim. Inj., May 13, 2021, ECF No. 304-1 (“Overacker Decl.”), ¶¶ 4–12, the court can fashion an injunction which allows the Government to minimize that burden.
Plaintiffs’ request for relief is narrow; Plaintiffs ask for the suspension of liquidation. Pls.’ Mot. at 1. Suspension of liquidation maintains the status quo: the Government will still collect the duties pending the merits determination, but as liquidation is the final computation of duties, their finality is delayed. If Plaintiffs are unsuccessful in their challenge, the Government will not lose any revenue.
Undeniably, implementing the stay will impose a burden on the Government. [16] Defendants explain that suspending liquidation for millions of entries is an enormous task. [17] See Overacker Decl. ¶¶ 4–12. To effectuate liquidation, each affected importer would have to be identified by its importer number. Defs.’ Opp’n at 30–32; Overacker Decl. ¶ 7. U.S. Customs and Border Protection would then need to identify the relevant Customs Center for each importer. Overacker Decl. ¶ 7. Alternatively, a task force could be established to handle mass suspensions. Id. A report would need to be generated for each importer to identify any unliquidated entries subject to the challenged tariffs. Id. The Government claims that it would have to run over 6,500 reports just to identify the unliquidated entries filed by each individual importer. Id. Each entry would then need to be suspended, which could be complicated by the fact that some entries may already be suspended. Id. ¶ 8. We agree that the Government’s resources are not unlimited, and personnel required to effectuate the suspension will necessarily be unable to perform other duties that are important. Nonetheless there is a solution to these competing interests.
Plaintiffs argue that the Government could avoid the burden of suspending
liquidation during the pendency of these proceedings simply by conceding that the
court has the power to order refunds or reliquidate any liquidated entries.
[18]
Pls.’
Reply at 1, 2, 24. Indeed, the Government has avoided the need to suspend
liquidation by conceding the availability of refunds. Sumecht,
Therefore, the court will fashion an order that relieves some of the burden imposed upon the Government while maintaining the status quo, i.e., preserving a remedy for unliquidated entries subject to the challenged tariffs. It is within the court’s power to issue an injunction that requires the Government to suspend liquidation for each entry unless the Government opts to stipulate that it will refund the unlawfully collected duties for that specific entry. Consequently, the Government will not be conceding the availability of refunds for all Section 301 duties paid as a result of List 3 and List 4A, rather it will be stipulating that it will refund only unlawful duties paid in connection with entries for which it refuses to suspend liquidation. Such an order maintains the status quo, preserves the Government’s ability to challenge the Court’s power to refund or order reliquidation, and offers the Government, at its option, a route to avoid the administrative burden of suspending liquidation on millions of entries.
The consequences of this order sufficiently balance the equities. If Plaintiffs are successful with their Section 301 challenge as well as their claim that the Court has the power to order refunds or liquidation, then no harm will have been done. If Plaintiffs are successful with their Section 301 challenge and not with their claim that the Court has the power to order a refund and re-liquidation, then again no harm will have been done because this order will have prevented the unlawful collection of duties without a refund possibility, a clear irreparable harm. If Defendants are successful in their defenses, then the Government will collect all the duties to which it is entitled regardless of the Court’s power to refund or order reliquidation. Thus, the only objection Defendants could have to the court issuing its order would be that Defendants would potentially forgo a windfall of unlawfully paid and irrecoverable duties. It is both inequitable and against the public interest for the Government to retain unlawfully collected duties. At the same time, the order will allow the Government to avoid the burden of effectuating suspension of liquidation for as many entries as it wishes without conceding the issue of the Court’s power to order refund or reliquidation.
IV. Public Interest
The Government’s argument that there should be no stay of liquidation and
that there is no right to refund would effectively deny judicial review of the imposition
of the Section 301 duties on liquidated goods. Short-circuiting judicial review violates
the public interest. Neo Solar Power Corp. v. United States,
The Government argues that the public interest is the “policy underlying the
specific legislation.” Defs.’ Opp’n at 30. Even accepting Defendants’ position as
correct, the issuance of an injunction does not undermine that interest, it merely
maintains the status quo. See Ugine,
CONCLUSION
In sum, the court will grant Plaintiffs’ motion for leave to file a reply and Plaintiffs’ motion for a preliminary injunction. Moreover, to give the parties time to implement appropriate procedures, gather pertinent information, and otherwise take necessary action to comply with this order, the court will temporarily restrain liquidation of any unliquidated entries of merchandise imported from China by any plaintiffs in the Section 301 Cases which are subject to List 3 or List 4A duties.
/s/ Claire R. Kelly Claire R. Kelly, Judge /s/ Jennifer Choe-Groves Jennifer Choe-Groves, Judge Dated: Tuesday, July 6, 2021
New York, New York
Barnett, Chief Judge, dissenting:
I must dissent from my colleagues’ grant of the preliminary injunction. While I agree with much of their analysis, there is a critical area of disagreement between us: namely, I find that Plaintiffs have failed to establish a likelihood of irreparable harm and this failure is fatal to their motion for a preliminary injunction.
The four-factor test the court considers in evaluating a motion for a
preliminary injunction is well established.
See Winter v. Nat. Res. Def. Council,
Inc
.,
Regardless of the continuing validity of the sliding scale approach as it is
typically applied in trade cases post-
Winter
,
[1]
Winter
establishes that it is not
enough for a plaintiff to identify irreparable harm as a
possible
outcome of the
denial of the motion for a preliminary injunction. Instead, a plaintiff must establish
that any irreparable harm is
likely
. In this case, I cannot find that there is a
likelihood of irreparable harm when my colleagues and I agree that any harm
arising from liquidation would be reparable by the court by means of an order of
reliquidation or a money judgment pursuant to 28 U.S.C. § 2643(a)(1) or (c)(1).
See
Sampson v. Murray
,
and doubtful.’”
Kwo Lee, Inc. v. United States
,
The scope of the court’s powers in law and equity [2] are not often at issue given the unique jurisdiction of the U.S. Court of International Trade (“CIT”), which typically involves addressing customs protest challenges, reviewing administrative determinations in unfair trade or evasion cases, and presiding over enforcement actions against importers. See generally 28 U.S.C. §§ 1581, 1582 (stating the court’s jurisdictional bases). This case generally, and Plaintiffs’ motion for a preliminary injunction specifically, [3] requires the court to consider the scope of its remedial powers in the context of alleged injury arising from liquidation. Notwithstanding the investiture of broad equitable powers in the CIT, Congress also enacted specific statutory provisions pursuant to which liquidation that is final and conclusive precludes the court from awarding relief. While the vast majority of actions before the CIT arise in connection with the statutory provisions for which Congress has expressly spoken with respect to the effect of liquidation, this case arises under the court’s residual jurisdiction provision, pursuant to which the court retains all its powers in law and equity to provide relief consistent with 28 U.S.C. § 2643.
In cases arising pursuant to the court’s jurisdiction under 28 U.S.C. § 1581(a), the finality of liquidation is governed by 19 U.S.C. § 1514(a). That provision provides:
[D]ecisions of the Customs Service . . . as to . . . (2) the classification and rate and amount of duties chargeable; [or] . . . (5) the liquidation or reliquidation of an entry . . . shall be final and conclusive upon all persons . . . unless a protest is filed in accordance with this section, or unless a civil action contesting the denial of a protest, in whole or in part, is commenced in the [CIT].
19 U.S.C. § 1514(a)(2), (5). Thus, section 1514(a) precludes the CIT from reviewing
a challenge to—and ordering reliquidation based on—an erroneous decision by U.S.
Customs and Border Protection (“Customs” or “CBP”) unless the statutory protest
requirements are met.
See, e.g.
,
Juice Farms, Inc. v. United States
,
In litigation under 28 U.S.C. § 1581(c) seeking to challenge an antidumping or countervailing duty determination, the finality of liquidation is governed by a different statutory provision, 19 U.S.C. § 1516a. That provision indicates that liquidation in accordance with the agency determination is generally final and conclusive unless an interested party secures a statutory injunction to ensure liquidation in accordance with any final court decision reviewing the agency determination. See 19 U.S.C. § 1516a(c), (e). This statutory scheme was addressed by the Federal Circuit at length in Zenith Radio Corp. v. United States , 710 F.2d 806 (Fed. Cir. 1983).
In
Zenith
, the appellate court reversed the CIT’s denial of a preliminary
injunction to suspend the liquidation of entries subject to an administrative review
conducted by the U.S. Department of Commerce (“Commerce”) under 19 U.S.C.
§ 1675.
U.S.C. § 1516a(a)(2)(B)(iii). While this discussion of the finality of liquidation was critical to the Zenith
opinion, that court’s finding of irreparable harm was based on the court’s finding that the plaintiff’s entire case would be mooted by the combination of the finality of (footnote continued)
Id.
;
cf. Mid Continent Steel & Wire, Inc. v. United States
,
Zenith
, however, is limited to actions reviewable pursuant to 19 U.S.C.
§ 1516a and is not applicable to an action under the Administrative Procedure Act
(“APA”).
Shinyei Corp. of Am. v. United States
,
In contrast with the foregoing caselaw, this case implicates the court’s
jurisdiction pursuant to 28 U.S.C. § 1581(i), whereby the court is within its
authority to order reliquidation or other appropriate relief. Specifically, the court’s
remedial authority is set forth in 28 U.S.C. § 2643. The statute provides,
inter
alia
, that the CIT “may enter a money judgment . . . for or against the United States
in any civil action commenced under section 1581 or 1582 of this title,” 28 U.S.C.
the liquidation of prior entries and the inability of any final court decision to
provide prospective relief because future entries could be subject to future
administrative review determinations.
1980, Pub. L. No. 96–417, 94 Stat. 1727 (1980).
§ 2643(a)(1),
[8]
and, with exceptions not relevant here,
[9]
may “order
any other form of
relief
that is appropriate in a civil action, including, but not limited to, declaratory
judgments, orders of remand, injunctions, and writs of mandamus and prohibition,”
id.
§ 2643(c)(1) (emphasis added).
[10]
The statute confers “broad remedial powers” on
the CIT,
Shinyei
,
In keeping with that view, the court has recognized its authority to order the
remedy of reliquidation when appropriate.
See, e.g.
,
PrimeSource Building Prods.,
Inc. v. United States
,
The authority to order reliquidation was expressly addressed by the Federal
Circuit in
Shinyei
.
Shinyei
addressed a challenge to Commerce’s liquidation
instructions issued after litigation regarding an administrative review of the
antidumping duty order.
See Shinyei
,
The CIT dismissed Shinyei’s complaint for lack of subject matter jurisdiction based on the court’s view that liquidation of the subject entries mooted Shinyei’s action under the APA. Id. at 1304. On appeal, the Federal Circuit held that the CIT retained jurisdiction pursuant to 28 U.S.C. § 1581(i) over an APA cause of action challenging Commerce’s liquidation instructions notwithstanding Customs’ liquidation of the subject entries. Id. at 1305–12. The appellate court reasoned, inter alia , that the finality of liquidation provided for in 19 U.S.C. § 1514(a) is inapplicable when “the alleged agency error [is] on the part of Commerce, not Customs.” Id. at 1311 (further stating that section 1514(a) “is not . . . fairly construed to prohibit reliquidation in all cases”). Further, in recognition of the CIT’s “broad remedial powers,” id. at 1312 (citing 28 U.S.C. § 2643 (2000)), the Federal Circuit concluded that, in that case, reliquidation was “easily construed” as an appropriate form of relief, id. More recently, in Sumecht NA, Inc. v. United States , the Federal Circuit affirmed the CIT’s denial of preliminary relief because Sumec North America (“Sumec”) failed to demonstrate irreparable harm. 923 F.3d 1340, 1347–48 (Fed. Cir. 2019). The appellate court based its decision, at least in part, on its previous recognition of the CIT’s equitable power to order reliquidation in section 1581(i) actions. Id. at 1347. [13]
Consistent with these opinions, I find that the court possesses the authority to order reliquidation and, if Plaintiffs prevail, reliquidation constitutes at least one type of “relief that [would be] appropriate in [this] civil action.” See 28 U.S.C. § 2643(c)(1). [14]
Although Plaintiffs largely agree with this view,
see
Pls.’ Mot. for Prelim. Inj.
Limited to Suspension of Liquidation (“Pls.’ Mot.”) at 6–9, ECF No. 287, they rely on
the Federal Circuit’s grant of preliminary relief in
Ugine & Alz Belgium v. United
States
,
Ugine
addressed an importer’s challenge to Commerce liquidation
instructions.
The Federal Circuit reversed the CIT’s denial of a preliminary injunction. Id. at 1290. As to irreparable harm, the Federal Circuit recognized that although “ Shinyei appears to provide [the importer] with an avenue for seeking a judicial remedy even if liquidation occurs,” there remained “the possibility that Shinyei will not be interpreted to encompass the sort of claim at issue” in Ugine . Id. at 1296 (observing that the importer challenged Commerce’s liquidation instructions for earlier review periods as inconsistent with the more recent, fourth, review with respect to country of origin).
Notably, in Ugine , the CIT had not addressed Shinyei and the parties had not fully briefed it before the Federal Circuit. Id. at 1296–97. Thus, “[r]ather than deciding the scope of Shinyei in a preliminary injunction context, without a decision by the trial court or briefing by two of the three parties, [the appellate court] conclude[d] that the issue [was] sufficiently complex that we should resolve it only in a setting in which it has been litigated by the parties and decided by the trial court.” Id. at 1297. As a result, Ugine is distinguishable based on the nature of the underlying claim and the lack of this court’s insight into the scope of its remedial authority pursuant to 28 U.S.C. § 2643 in the event the importer prevailed on that claim. Perhaps of most significance for this case, Ugine predates Winter by more than two years and therefore lacks the benefit of the appellate court reconciling the possibility of Shinyei relief with the Supreme Court’s clarification of the requisite showing of a likelihood of irreparable harm.
In
American Signature
, the Federal Circuit also reversed the CIT’s denial of a
preliminary injunction in a case challenging Commerce’s liquidation instructions.
The Federal Circuit has since said that it does not interpret “
Ugine
and
American Signature
as creating a presumption that, in the preliminary injunction
context,
Shinyei
relief is uncertain for purposes of irreparable harm in [section]
1581(i) actions because such a presumption runs counter to
Shinyei
’s holding that
the CIT has ‘broad remedial powers,’ including the ability to order reliquidation.”
Sumecht
,
The Government’s preservation of its right to appeal any determination that
reliquidation is an appropriate remedy fails to inject enough uncertainty into the
issue to render any irreparable harm likely.
See
Defs.’ Opp’n at 42 (preserving its
right to appeal); Pls.’ Mot. at 11–12 (arguing that the uncertainty generated by the
Government’s litigating position and preservation of its right to appeal establishes
irreparable harm). “Critically, irreparable harm may not be speculative.”
Comm.
Overseeing Action for Lumber Int’l Trade Investigations or Negots. v. United States
,
The Government first points to language in 19 U.S.C. § 1514(a) concerning
the finality of liquidation to assert that, “[o]nce a liquidation becomes final and
conclusive, generally neither CBP nor the Courts may alter or set aside the
transaction, including the assessment of duties.” Defs.’ Opp’n at 37. The
Government omits that section 1514(a) refers to “decisions of the Customs Service”
as the decisions that are “final and conclusive” barring a protest and action
commenced pursuant to 28 U.S.C. § 1581(a). 19 U.S.C. § 1514(a);
see also, e.g.
,
Shinyei
,
The Government next relies on Zenith to argue that “the rule of finality of liquidations is not limited to Customs decisions that can be protested pursuant to 19 U.S.C. § 1514(a).” Defs.’ Opp’n at 37. According to the Government, Zenith demonstrates that, absent an injunction suspending liquidation, “an entry will liquidate in the normal administrative course and that liquidation will become final and conclusive.” Id. at 38. While acknowledging the distinct jurisdictional bases, the Government argues, in effect, that if finality attaches to liquidations that are not protested and subject to judicial review pursuant to 28 U.S.C. § 1581(a) and finality attaches to the liquidation of entries covered by a determination reviewable pursuant to 28 U.S.C. § 1581(c) unless it is enjoined, then “reliquidation should not be available upon a successful challenge under [28 U.S.C. §] 1581(i) either.” Id.
In making this argument, the Government overlooks the distinctions between
the statutory bases that govern the finality of liquidation in the context of actions
implicating the court’s jurisdiction under section 1581(a) and (c). As set forth above,
Zenith
is limited to actions arising under 19 U.S.C. § 1516a and “is inapplicable” to
“an action under the APA.”
Shinyei
,
The Government also attempts to limit the court’s authority to order reliquidation to situations in which it is “necessary to protect a judgment of [the CIT], rather than authority for reliquidation as a garden variety remedy in any case brought pursuant to section 1581(i).” Defs.’ Opp’n at 40. The Government relies on the following language from Shinyei :
[T]o accept the government’s argument would preclude enforcement of court orders as to duty determinations as soon as entries subject to those orders are liquidated, even where liquidation was under erroneous instructions that fail to reflect the amended administrative review results implementing the courts’ determinations, as required by section 1675(a)(2)(C).
Id.
(quoting
Shinyei
,
The Government omits, however, the immediately preceding paragraph, in
which the Federal Circuit explained that “the [CIT] has been granted broad
remedial powers.”
Shinyei
,
Government in an action commenced under 28 U.S.C. § 1581, id. (citing 28 U.S.C. § 2643(a)(1)), and can “order any other form of relief that is appropriate in a civil action,” id. (quoting 28 U.S.C. § 2643(c)(1)). The Federal Circuit thus found that “[t]he absence of an express reliquidation provision should not be read as a prohibition of such relief when the statute provides the [CIT] with such broad remedial powers” and, in that case, reliquidation was “easily construed” as an appropriate form of relief. Shinyei does not, therefore, support the Government’s suggested limitation on the court’s authority to provide appropriate relief. Nevertheless, a finding by this court that it has the authority to order reliquidation as a possible form of relief in this case, specifically, would not constrain the court’s discretion in subsequent cases brought under the court’s residual jurisdiction to determine what “relief . . . is appropriate.” 28 U.S.C. § 2643(c)(1).
In light of the CIT’s broad remedial authority, the court asked the Parties to
identify any cases in which “the Federal Circuit found that the CIT erred in its
exercise of discretion as to appropriate relief.” Letter from the Court at 1 (June 14,
2021), ECF No. 321. Plaintiffs pointed to
Co-Steel Raritan, Inc. v. Int’l Trade
Comm’n
,
None of the identified cases suggest that the court would overstep its authority to order reliquidation to prevailing Plaintiffs in this case. Co-Steel Raritan recognized the CIT’s general authority to remand an agency determination pursuant to 28 U.S.C. § 2643(c)(1) while finding that the CIT erred in ordering a remand to the U.S. International Trade Commission to reconsider a negative preliminary material injury determination in an antidumping investigation to in the imposition of List 3 and List 4A duties on Plaintiffs’ entries, Plaintiffs are entitled to a judgment ordering reliquidation exclusive of duties. Nothing in Shinyei II suggests that the Shinyei court’s statement concerning the preclusion of judicial enforcement of court orders consisted of anything more than a rejection of the Government’s argument as opposed to a limitation on its holding.
account for subsequent developments.
§ 1516a(e).
The Government’s reliance on
National Corn Growers
also is inapposite.
While the Government sought to rely on that case for the proposition that the CIT
cannot award monetary damages in a section 1581(i) case in circumvention of a
statutory limit on reliquidation authority,
see Nat’l Corn Growers
,
In sum, given the CIT’s broad remedial authority and the absence of any
explicit disagreement from my colleagues concerning the court’s authority to order
reliquidation as a remedy in this case, I conclude that Plaintiffs’ showing of
irreparable harm is speculative, at best. My reading of the Federal Circuit
precedent does not allow me to conclude that Plaintiffs have established a likelihood
of irreparable harm. In the absence of such a showing, I would deny the motion for
a preliminary injunction without reaching the other requirements for issuing such
an injunction. Because I do not believe that Plaintiffs are entitled to the
“extraordinary remedy” of preliminary relief,
see Winter
,
/s/ Mark A. Barnett Mark A. Barnett, Chief Judge
Notes
[1] Plaintiffs do not seek to enjoin the collection of List 3 and List 4A duties (as defined below). Pls.’ Mot. at 1.
[2] Absent leave of court, parties may not file a reply brief in further support of a non- dispositive motion. See CIT Rule 7(d); Retamal v. U.S. Customs & Border Prot., Dep’t (footnote continued)
[3] Approximately 3,600 Section 301 Cases were assigned to this panel.
[4] Liquidation is defined as “the final computation or ascertainment of duties.” 19 C.F.R. § 159.1.
[5] As to the deprivation of judicial review, at oral argument Defendant argued that
Zenith’s concern regarding the availability of judicial review might not be present in
this case. Oral Arg. at 00:22:13. Although Zenith involved a domestic producer’s
claim that antidumping duties imposed on an importer’s entries should be higher, the
facts of this case suggest that mootness is a concern here. The importers here may
have multiple entries that may be subject to the 301 duties, but each entry is its own
transaction and occurrence giving rise to its own cause of action. See United States
v. Stone & Downer Co.,
[6] The legislative history of the Customs Courts Act of 1980, Pub. L. No. 96–417, 94 Stat. 1727 (1980), supports the broad interpretation of Congress’ grant of authority to the CIT. See, e.g., 126 Cong. Rec. H9333–49, at H9342–43 (daily ed. Sept. 22, 1980) (statement of Rep. Rodino) (“Another essential provision in this legislation is proposed section 1585. This section removes any doubt that the [CIT] has authority to award the relief necessary to remedy an alleged injury in a civil action before the court. The committee intends to make it clear that the court possesses all plenary powers in law and equity, thereby completing the full transformation of the court to article III status.” (emphasis added)).
[7] The Government specifically asks this court not to reach the issue for the purposes of this motion. Defs.’ Opp’n at 42 (asking the court to deny Plaintiff’s motion “without reference to the availability, or not, of reliquidation as a remedy at the end of the case.”). Opting not to assert a serious challenge to the reparability of the undeniable harm of liquidation, the Government is left to argue that Plaintiffs’ delay in seeking (footnote continued)
[9] The Dissent notes that in Ugine the CIT did not analyze Shinyei in its denial of a
preliminary injunction, and that the Court of Appeals declined to decide whether
Shinyei relief would be available absent a ruling from the CIT or briefing from two of
the three parties. Dissent at 40–41. That the Court of Appeals in Ugine declined to
decide whether Shinyei relief was available and held that uncertainty over such relief
constitutes irreparable harm weigh strongly in favor of granting preliminary relief
here. The Dissent also states that the nature of the relief sought in Ugine
(challenging Commerce’s liquidation instructions) differs from the relief sought in
this case, and that Ugine was decided prior to Winter. Id. at 41. However, Ugine,
American Signature, and this case were all commenced under 28 U.S.C. § 1581(i), so
the court’s statutory authority for granting relief is the same, making the differing
theories of harm immaterial. See Ugine,
[10] We cannot disagree with our colleague in the Dissent that “
Winter
establishes that
it is not enough for a plaintiff to identify irreparable harm as a
possible
outcome of
the denial of the motion for a preliminary injunction.” Dissent at 30–31. However,
in Winter the Court took note that the government “strongly dispute[s]” the harm
alleged. Winter,
[12] Although Defendants assert that the Court of Appeals’ “sliding scale” approach may
have been overruled by Winter, the Supreme Court did not expressly prohibit a
sliding scale approach in all circumstances, and instead found that the Ninth
Circuit’s diminished irreparable harm requirement was inappropriate. See Winter,
[14] Here, Plaintiffs assert that the USTR’s stated justification for promulgating the List 3 and List 4A tariffs was an increased burden on U.S. commerce resulting from China’s retaliatory tariffs, which were not the subject of the initial Section 301(b) action.
[15] Defendants also raise a number of defenses to Plaintiffs’ action that they plan to address more fully in the briefing on the merits and which they fault Plaintiffs for not fully addressing. These defenses include: that the President is not subject to the APA; that the determination was a non-justiciable political question; that the determination falls in the foreign affairs function exception; and that even if the APA applies, the USTR’s actions were not arbitrary and capricious. Defs.’ Opp’n at 25. It is unclear at this stage in the proceedings whether any of these defenses may ultimately prevail and none is so clear cut as to defeat the fair chance that Plaintiffs may prevail.
[16] As of March 31, 2021, there had been approximately 12.7 million entries of subject merchandise since the USTR commenced the Section 301(b) action. See Overacker Decl. ¶ 4. There are approximately 6500 individual importers that would be subject to this injunction. Id. ¶ 7(a). Customs would need to identify imports that are subject to both the Section 301 tariffs and the injunction on a rolling basis and take the administrative actions described in the Overacker Decl. in an expedient manner given that without intervening action, entries will generally liquidate by operation of law one year after entry. See 19 U.S.C. § 1504(a); 19 C.F.R. § 159.11.
[17] Although Plaintiffs argue that the task of suspending liquidation is a routine burden and is a fairly straightforward task, see Oral Arg. at 00:43:54, even the simplest task can be overwhelming if one has to do it millions of times.
[18] The Government has admitted that the CIT can order reliquidation and stipulated
to such relief in the past. See Sumecht,
[19] Plaintiffs do not dispute that the Government can change its position. See generally, Pls.’ Mot. at 8–12.
[1] In trade cases, it is often the situation that liquidation leads to irreparable harm such that, in the context of evaluating a preliminary injunction motion, the court has applied a sliding scale approach to analyzing the likelihood of success on the merits. The sliding scale requires a plaintiff to demonstrate a “fair chance of success on the merits” by raising “questions which are ‘serious, substantial, difficult (footnote continued)
[2] Pursuant to 28 U.S.C. § 1585, the CIT “shall possess all the powers in law and equity of, or as conferred by statute upon, a district court of the United States.”
[3] The Government asserts that the court need not reach the issue of refunds or reliquidation because, according to the Government, the motion may be denied on other grounds. See Defs.’ Opp’n to Pls.’ Mot. for Prelim. Inj. Limited to Suspension (“Defs.’ Opp’n”) at 35, 42, ECF No. 304. The Government’s reluctance in this regard likely stems from its precarious legal position. The Government’s position regarding the lack of an available remedy for liquidated entries effectively amounts to an argument against its position on the likelihood of irreparable harm, leaving it to instead rely on assertions of undue delay and the insufficiency of economic harm to undermine Plaintiffs’ case. See id. at 33–35. As discussed herein, however, the Government’s arguments that the court lacks the authority to order reliquidation are unpersuasive. Notwithstanding the Government’s suggestion, see infra note 8, further briefing on remedy is not necessary at this time. The issue here is only whether the court could provide a remedy—an issue plainly in play based on Plaintiffs’ motion. The Government will have an opportunity to brief various options for appropriate remedies, if necessary, when the court reaches the merits.
[4] Section 1581(c) also confers exclusive jurisdiction on the CIT to review civil actions commenced pursuant to 19 U.S.C. § 1517, pursuant to which CBP investigates allegations of evasion of antidumping and countervailing duty orders. That section also provides for judicial review of Customs’ determinations in those investigations. While the Government has consented to the entry of preliminary injunctions suspending liquidation of entries subject to those determinations, see, e.g. , Consent Mot. for a Prelim. Inj., Royal Brush Mfg., Inc. v. United States , Court No. 19-cv- 00198 (CIT Nov. 26, 2019), the status of the court’s remedial authority in such cases (footnote continued)
[8] At oral argument, the Government represented that the CIT lacks the authority in this case to order a money judgment pursuant to 28 U.S.C. § 2643(a)(1) and requested the opportunity to further brief the issue. Oral Arg. 07:40–08:20, 45:45– 47:15, available at https://www.cit.uscourts.gov/sites/cit/files/061721-21-00052- 3JP.mp3 (last visited July 6, 2021) (approximate time stamp from the recording). As discussed supra note 3, further briefing at this time is unnecessary given my clear view that relief would be available to prevailing Plaintiffs pursuant to 28 U.S.C. § 2643(c)(1).
[9] While the exceptions are not germane to this case, Congress’s enumeration of
specific exceptions to the CIT’s broad remedial authority further indicates that
Congress did not intend the court to read additional exceptions into the statute
absent contrary congressional intent.
See, e.g.
,
United States v. Brockamp
, 519 U.S.
347, 352 (1997) (declining to read an equitable exception into the detailed statutory
time limitations set forth in 26 U.S.C. § 6511 given Congress’s “explicit listing of
exceptions”);
United States v. Smith
,
[10] The list is not exhaustive. Moreover, the term “injunction” may include an
affirmative injunction compelling agency action.
See generally Home Prods. Int’l,
Inc. v. United States
,
[11] Section 2643 of Title 28 complements section 1585. According to the legislative history, section 1585 was enacted to “remove[] any doubt” as to the scope of the CIT’s remedial powers and “make it clear that the [CIT] possesses all plenary powers in law and equity, thereby completing the full transformation of the court to article III status.” 126 Cong. Rec. 26,554–55 (1980) (statement of Rep. Rodino); see also H.R. Rep. No. 96–1235, at 50 (1980) (“It is the Committee’s intent to make clear that the [CIT] does possess the same plenary powers as a federal []district court.”).
[12] I agree with the Majority that the Government is entitled to change its position and litigate its new position. However, as a matter of statutory interpretation, I believe this court may resolve the issue consistent with Federal Circuit precedent and deny the motion for preliminary injunction.
[13] The court also noted that Sumec’s entries were covered by a statutory injunction
in a separate case,
Sumecht
,
[14] What constitutes “appropriate relief” is a case-specific determination. The Government has not directly argued that reliquidation (and a corresponding refund of List 3 and List 4A duties) would not be “appropriate” if Plaintiffs prevail on the merits. However, in light of the Government’s arguments regarding the balance of equities and public interest factors, the Government may, in fact, prefer a monetary judgment to reliquidation to minimize the burden on the Government in such a circumstance.
[15] While the
Ugine
court found a “strong showing of irreparable harm,” that showing
appeared to be based on the notion “that the denial of a preliminary injunction
could
result in denying [the importer] its opportunity for a decision on the merits of
its claim regarding the duties for merchandise imported” prior to the fourth
administrative review.
[16] The Majority asserts that “the differing theories of harm” alleged in Ugine and American Signature are “immaterial” to the question of remedy because both cases arose under the court’s section 1581(i) jurisdiction and therefore implicate the same statutory remedial authority. Maj. Op. at 15 n.9. The differing theories of harm are relevant, however, because reliquidation would only be available when it constitutes an “appropriate” form of relief in the particular action. See 28 U.S.C. § 2643(c)(1). Accordingly, such differences must be considered in order to ascertain the degree to which Ugine and American Signature compel the entry of an injunction.
[17] By seeking to tie the court’s authority to order reliquidation to section 1514(a), the Government implies the presence of a protestable Customs decision. In so doing, the Government argues against the position it has taken in Koch Supply & Trading, LP v. United States , Court No. 20-cv-00063 (“ Koch Supply ”). There, an importer asserted jurisdiction pursuant to 28 U.S.C. § 1581(a) and (i) to challenge the lawfulness of section 232 duties (under section 1581(i)) and a denied protest contesting Customs’ collection of the allegedly unlawful duties (under section 1581(a)). Compl., Koch Supply (CIT Mar. 23, 2020). Customs denied the protest shortly after it was filed as non-protestable. Id. ¶ 28. In a consent motion to stay the case, the Government represented that the court lacked jurisdiction pursuant to 28 U.S.C. § 1581(a) to review the denied protest claim. Consent Mot. to Stay Proceedings at 3, Koch Supply (CIT May 19, 2020). The Government’s position in Koch Supply is inconsistent with its position here as to whether Customs collection of section 232 or 301 duties is protestable and, therefore, a possible basis for jurisdiction under 28 U.S.C. § 1581(a).
[18] The Government’s attempt to characterize Shinyei as in conflict with Zenith fails. See Defs.’ Opp’n at 41. Moreover, the Government’s assertion that “no statutory provision allows the liquidation of entries to be enjoined by the [c]ourt in section 1581(i) actions, and the liquidation of any entries at issue in the section 301 cases should therefore be held to be final and conclusive,” id. at 41–42, lacks merit. The Government does not seriously contest the court’s authority to enter the requested injunction upon the requisite showing, see id. at 17–18 (summarizing the standard (footnote continued)
[20] While not expressly agreeing with the Government’s interpretation of the holding
of
Shinyei
, the Majority opines that the Government’s interpretation arguably is
correct. Maj. Op. at 13 & n.8. I disagree. The Federal Circuit’s observation
concerning the logical extent of the Government’s argument in that case was not
essential to the appellate court’s finding that reliquidation was authorized under
the CIT’s remedial statute and would be an appropriate remedy in the event
Shinyei established that its entries liquidated at rates that were inconsistent with
Commerce’s liquidation instructions. Such statements are not controlling.
See, e.g.
,
K-Tech Telecomms., Inc. v. Time Warner Cable, Inc.
,