Ninestar Corp. v. United StatesNinestar Corp. v. United States
OPINION
[ Plaintiffs are likely to establish that the court has subject matter jurisdiction over this action. ]
Dated: November 30, 2023
Monica P. Triana, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of New York, N.Y., for Defendant United States. With her on the brief were Brian M. Boynton, Principal Deputy Assistant Attorney General, Patricia M. McCarthy, Director, Claudia Burke, Deputy Director, Justin R. Miller, Attorney-In-Charge International Trade Field Office, and Guy Eddon, Trial Attorney.
Katzmann, Judge: Plaintiffs Ninestar Corporation and its corporate affiliates are Chinese companies—specifically, manufacturers and sellers of laser printers and printer-related products—who initiated this suit against Defendants the United States and various federal agencies and officials before the U.S. Court of International Trade (“CIT“). Plaintiffs challenge a decision by the interagency Forced Labor Enforcement Task Force (“FLETF“) to add Plaintiffs to the Entity List of the Uyghur Forced Labor Prevention Act (“UFLPA“). See
Following reports of forced labor and ongoing genocide in the Xinjiang Uyghur Autonomous Region of the People‘s Republic of China (“China“), Congress passed the UFLPA. Per the text of the statute, the UFLPA is designed to “strengthen the prohibition against the importation of goods made with forced labor, including by ensuring that the Government of the People‘s
That prohibition is now in effect. Plaintiffs have filed the instant Motion for Preliminary Injunction, which asks the court to (1) stay the FLETF‘s decision to add Plaintiffs to the Entity List and (2) prevent Defendants from taking any action predicated on the Listing Decision against the importation of Plaintiffs’ goods. See Mot. for Prelim. Inj. at 17, Aug. 22, 2023, ECF No. 9 (“PI Mot.“). Among other defenses to Plaintiffs’ Motion for Preliminary Injunction, Defendants argue that the CIT lacks subject matter jurisdiction over Plaintiffs’ challenge to the FLETF‘s listing decision. See Defs.’ Mot. to Dismiss & Resp. to Mot. for Prelim. Inj. at 15–18, Oct. 3, 2023, ECF No. 24 (“Defs.’ Br.“).
Focusing only on the threshold issue of jurisdiction, the court concludes that Plaintiffs are likely to establish subject matter jurisdiction. Because the UFLPA is a law providing for embargoes within the meaning of
BACKGROUND
I. Legal Background
Federal law has long prohibited the importation of foreign goods made by forced labor. Section 307 of the Tariff Act of 1930 states in relevant part:
All goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in any foreign country by . . . forced labor . . . shall not be entitled to entry at any of the ports of the United States, and the importation thereof is hereby prohibited . . . .
In the United States-Mexico-Canada Agreement Implementation Act of 2020, Congress directed the President to establish a Forced Labor Enforcement Task Force (the “FLETF“) “to monitor United States enforcement of the prohibition under sеction 307 of the Tariff Act of 1930.”
In December 2021, Congress passed and the President signed into law the UFLPA,
The UFLPA implements those policies mainly in two parts. First, the UFLPA requires that the FLETF “develop a strategy for supporting enforcement of Section 307 of the Tariff Act of 1930 (
(i) a list of entities in the Xinjiang Uyghur Autonomous Region that mine, produce, or manufacture wholly or in part any goods, wares, articles and merchandise with forced labor;
(ii) a list of entities working with the government of the Xinjiang Uyghur Autonomous Region to recruit, transport, transfer, harbor or receive forced labor or Uyghurs, Kazakhs, Kyrgyz, or members of other рersecuted groups out of the Xinjiang Uyghur Autonomous Region;
. . .
(iv) a list of entities that exported products described in clause (iii) from the People‘s Republic of China into the United States; [and]
(v) a list of facilities and entities, including the Xinjiang Production and Construction Corps, that source material from the Xinjiang Uyghur Autonomous Region or from persons working with the government of the Xinjiang Uyghur Autonomous Region or the Xinjiang Production and Construction Corps for purposes of the “poverty alleviation” program or the “pairing-assistance” program or any other government labor scheme that uses forced labor . . . .
Second, the UFLPA requires Customs to presumptively prohibit, under section 307 of the Tariff Act, the imports of entities on the Entity List. The statute reads in relevant part:
(a) In General.—[Customs] shall, except as provided by subsection (b), apply a presumption that, with respect to any goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in the Xinjiang Uyghur Autonomous Region of the People‘s Republic of China or produced by an entity on a list required by clause (i), (ii), (iv) or (v) of section 2(d)(2)(B)—
(1) the importation of such goods, wares, articles, and merchandise is prohibited under section 307 of the Tariff Act of 1930 (
19 U.S.C. 1307 ); and(2) such goods, wares, articles, and merchandise are not entitled to entry at any of the ports of the United States.
An affected importer may rebut the UFLPA‘s presumption and demonstrate the admissibility of the merchandise. The UFLPA requires Customs to enforce the presumption unless it determines:
(1) that the importer of record has—
(A) fully complied with [guidance in the FLETF Strategy] and any regulations issued to implement that guidance; and
(B) completely and substantively responded to all inquiries for information submitted by the Commissionеr to ascertain whether the goods were mined, produced, or manufactured wholly or in part with forced labor; and
(2) by clear and convincing evidence, that the good, ware, article, or merchandise was not mined, produced, or manufactured wholly or in part by forced labor.
Id. § 3(b), 135 Stat. at 1529. Customs has a process for requesting an exception to the rebuttable presumption and for furnishing information that would meet the UFLPA‘s
II. Factual Background and Procedural History
The court recounts only those assertions pleaded in the Complaint that are relevant to assessing subject matter jurisdiction. As has been noted, Plaintiff Ninestar Corporation is a Chinese company that manufactures and sells laser printers, integrated circuit chips, and printer consumables such as toner and inkjet cartridges. Compl. ¶¶ 7, 33. All of the other plaintiffs are corporate affiliates of Ninestar. Id. ¶¶ 8–14. Together, Plaintiffs manufacture and sell, or support the manufacture and sale of, products directly and indirectly to numerous U.S.-based customers. Id. ¶ 34. According to the Complaint, prior to June 2023, Customs did not communicate to Plaintiffs that any of Plaintiffs’ products violate section 307 of the Tariff Act. See id. ¶ 37.
On June 9, 2023, the FLETF announced that Plaintiffs would be added to the UFLPA‘s Entity List.4 Three days later, DHS, on behalf of the FLETF, published an updated Entity List in the Federal Register (the “Listing Decision“). See Listing Notice, 88 Fed. Reg. at 38082. Specifically, Plaintiffs were added to the second sub-list pursuant to section 2(d)(2)(B)(ii) of the UFLPA, which contains the entities determined to be working with the Government of the Xinjiang Uyghur Autonomous Region to “recruit, transport, transfer, harbor or receive forced labor or Uyghurs, Kazakhs, Kyrgyz, or members of other persecuted groups out of the Xinjiang Uyghur Autonomous Region.” See id. Plaintiffs allege that the listing was accompaniеd by no further explanation. Plaintiffs received public notice of a process to request the FLETF for removal from the Entity List, see id., but Plaintiffs did not submit such a removal request, see Compl. ¶ 45.
On August 22, 2023, Plaintiffs filed the Complaint initiating this action before the CIT. See id. Plaintiffs allege that they are “unaware of any facts relating to their respective businesses or otherwise supporting such an allegation,” and that “[w]ithout learning the bases upon which Defendants added Plaintiffs to the UFLPA Entity List, Plaintiffs are unable meaningfully to seek removal from the list or otherwise challenge this final agency action.” See id. ¶ 45. The Complaint pleads one cause of action for arbitrary and сapricious agency action violating the Administrative Procedure Act,
On the same day, Plaintiffs also filed a motion for preliminary injunction requesting that the court (1) stay the Listing Decision and (2) prevent Defendants from
Defendants have also filed a confidential administrative record that Plaintiffs may review under the terms of a judicial protective order, along with a privilege log documenting Defendants’ reasons for redaction. Sеe Conf. Admin. R., Oct. 24, 2023, ECF No. 41; Am. Protective Order, Oct. 24, 2023, ECF No. 40; Privilege Redaction Log, Oct. 26, 2023, ECF No. 43. Pursuant to
STANDARD OF REVIEW
A preliminary injunction is an extraordinary remedy that is “never awarded as of right.” Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 24 (2008) (citing Munaf v. Geren, 553 U.S. 674, 689–90 (2008)); see also Invenergy Renewables LLC v. United States, 44 CIT __, 422 F. Supp. 3d 1255, 1280 (2019). The court weighs four factors in ruling on a motion for preliminary injunction: (1) whether the plaintiff is likely to succeed on the merits; (2) whether the plaintiff would suffer irreparable harm without the preliminary injunction; (3) whether the balance of hardships favors the plaintiff; and (4) whether the preliminary
Naturally, questions of jurisdiction “closely affect[]” the first prong: a plaintiff‘s likelihood of success on the merits of a case. U.S. Ass‘n of Imps. of Textiles & Apparel v. U.S. Dep‘t of Com., 413 F.3d 1344, 1348 (Fed. Cir. 2005). Where there is no jurisdiction, a plaintiff is unable to succeed on the merits, and a preliminary injunction cannot issue. Cf. Amsted Rail Co. v. U.S. Int‘l Trade Comm‘n, 46 CIT __, 600 F. Supp. 3d 1308, 1319 (2022), appeal dismissed, No. 2023-1355, 2023 WL 4346710 (Fed. Cir. July 5, 2023). Moreover, where a court resolves а motion for preliminary injunction before a motion to dismiss is fully briefed, the court must evaluate subject matter jurisdiction in ruling on the preliminary injunction motion. See U.S. Ass‘n, 413 F.3d at 1348; see also, e.g., Comm. Overseeing Action for Lumber Int‘l Trade Investigations or Negots. v. United States, 43 CIT __, 393 F. Supp. 3d 1271, 1273 n.3 (2019); Int‘l Custom Prods., Inc. v. United States, 30 CIT 21, 21 n.1, 31 (2006).
Important issues of first impression and concerns of judicial economy counsel the court‘s review of subject matter jurisdiction now rather than later. Neither the CIT nor any other federal court has yet issued a decision involving the UFLPA. Defendants—the federal agencies and officials implementing Congress‘s directives combatting the trade of merchandise produced with forced labor—have taken the position that this сase‘s challenge to agency action administering the UFLPA is not within the CIT‘s exclusive jurisdiction. See Defs.’ Br. at 15. The matter has been fully briefed in the context of Plaintiffs’ Motion for Preliminary Injunction. In any event, because the “court may and should raise the question of its jurisdiction sua sponte at any time it appears in doubt,” Arctic Corner, Inc. v. United States, 845 F.2d 999, 1000 (Fed. Cir. 1988); see also Amsted Rail, 600 F. Supp. 3d at 1319, and because the question presented implicates weighty principles of CIT jurisdiction, the court exercises its discretion to review the issue of jurisdiction before the preliminary injunction hearing. Moreover, addressing subject matter jurisdiction now is consistent with treating jurisdiction as a threshold matter before the merits, see Steel Co. v. Citizens for a Better Env‘t, 523 U.S. 83, 94–95 (1998), and will promote judicial economy in narrowing the issues for any further proceedings regarding Plaintiffs’ Motion for Preliminary Injunction.
DISCUSSION
Plaintiffs request a preliminary injunction to stay the Listing Decision and to prevent Defendants from taking any action predicated on the Listing Decision against the importation of Plaintiffs’ goods. See PI Mot. at 17. Defendants oppose, alleging among other arguments that the court lacks subject matter jurisdiction to hear Plaintiffs’ challenge to the UFLPA Listing Decision. See Defs.’ Br. at 15–18. Reviewing that argument as part of the Motion for Preliminary Injunction, the court concludes that Plaintiffs are likely to establish subject matter jurisdiction because the UFLPA is a law providing for embаrgoes within the meaning of
Plaintiffs plead
As an initial matter, the text of the UFLPA clearly imposes an embargo within the meaning оf
Defendants argue that Plaintiffs’ addition to the Entity List does not establish an embargo because the UFLPA‘s prohibition of imports is a presumption that may be rebutted. See Defs.’ Br. at 15–18. Specifically, the rebuttable presumption makes the UFLPA “strictly qualitative,” rather than quantitative. Id. at 18. But the CIT has exercised its
The broader issue with Defendants’ reading is that it creates a jurisdictional barrier between the UFLPA and section 307 when Congress was clear that the two statutes do not operate independently from one another. See Pls.’ Reply at 2–3. To the contrary, as noted above, the UFLPA was passed “to strengthen the prohibition against the importation of goods made with forced labor, including by ensuring that the Government of the People‘s Republic of China does not undermine the effective enforcement of section 307.”
In short, if challenges to agency action implementing section 307 sit comfortably within
Here, the subject matter of the underlying statute—a prohibition on goods produced with forced labor—falls comfortably within the CIT‘s expertise. Such prohibitions have a long history in U.S. trade and customs law. The first such prohibition in federal law, limited to imports made with convict labor, dates to the McKinley Tariff Act of 1890. See
That all goods, wares, articles, and merchandise manufactured wholly or in part in any foreign country by convict labor, shall not be entitled to entry at any of the ports of the United States, and the importation thereof is hereby prohibited, and the Secretary of the Treasury is authorized to prescribe such regulations as may be necessary for the enforcement of this provision.
Id.
Section 307 of the Tariff Act of 1930 expanded that prohibition to any products of convict, forced, and indentured labor. See
CONCLUSION
Because the UFLPA is a “law . . . providing for . . . embargoes,”
Dated: November 30, 2023
New York, New York
/s/ Gary S. Katzmann
Gary S. Katzmann, Judge