CIT Blocks Section 232 'Derivatives' on Another Importer; 10 Importers Seek to Join Lawsuit

The Court of International Trade on Feb. 21 issued an order blocking Section 232 “derivatives” tariffs on a second importer. The preliminary injunction stops CBP from collecting the tariffs on Oman Fasteners, and also sets bond requirements similar to those found in another preliminary injunction CIT recently issued for another importer, PrimeSource (see 2002140040). CIT Chief Judge Timothy Stanceu, who is also judge in the PrimeSource case, issued the order.

Meanwhile, a group of 10 importers now seeks to join PrimeSource’s lawsuit. Filed Feb. 20, their motion to intervene says they “have been severely and adversely impacted by the imposition of the additional tariffs, without any opportunity to provide input into the decision.” SouthernCarlson, Building Material Distributors, Continental Materials, WEXCELL, Fanaco Fasteners, S.T.O. Industries, PT Global, Inc., Building Products of America, Kratos Building Products, and DC International filed the motion.

While PrimeSource was able to secure an injunction to stop the tariffs on its entries, whether any intervenors can get the same is not a settled question, said Devin Sikes of Akin Gump. “Normally, an intervenor can’t get any relief beyond what the plaintiff seeks.” Issuing injunctions to intervenors in antidumping and countervailing duty cases is common, but that precedent has not been established for a broader procedural and constitutional challenge like PrimeSource’s, Sikes said.

Nonetheless, should the intervenors request it, the court could draw on some of those AD/CVD cases to find precedent for extending the injunction issued to PrimeSource to the 10 newcomers, said Larry Friedman of Barnes Richardson, whose firm is working with other clients who are considering their options to fight the tariffs.

Says Friedman: "Intervention is permitted where the party seeking to intervene has a claim or defense that shares with the main action a common question of law or fact.” That’s clearly the case here, where all of the importers involved say the 232 tariffs on derivatives violated processes established by law, he said.

“The question of whether they get to share in the relief granted in the main case is more complicated,” Friedman said. In a 2016 court case involving antidumping duties and an importer named Fine Furniture, CIT found a set of importers intervening in the challenge could get an injunction, despite the government’s arguments that the injunction improperly “extended the relief to entries not covered by the complaint,” Friedman said. The court “held that the intervenors were not seeking to enlarge the complaint because simply adding entries does not alter the issues before the Court.”

The Fine Furniture case “involved dumping investigation in which the intervenor was a participant, so its relationship to the case and the desired relief was more easily established. Nevertheless, Fine Furniture seems to point toward allowing intervenors to benefit from the injunction in the Primesource case,” Friedman said.

Even if importers can’t get an injunction as intervenors in these Section 232 cases on derivatives, there could be another way for importers that don’t file their own lawsuits to get their tariffs refunded, Sikes said. Borusan filed a rare CIT class action lawsuit in January seeking refunds of all Section 232 tariffs (see 2001240036). Its case is tied to the fate of an appeal by the American Institute of International Steel that’s currently at the Court of Appeals for the Federal Circuit (see 1903250032). Such a class action, tied to a case like PrimeSource’s, could be an avenue for all importers affected by the tariffs on “derivatives” to benefit if PrimeSource prevails in its case, said Sikes.