Section 301 Plaintiffs Threaten April 22 Motion to Stop Import Liquidations

Broad disagreement separates the HMTX-Jasco plaintiffs from the government over whether importers who prevail on the merits of the massive Section 301 litigation would be entitled to tariff refunds on customs entries whose liquidations are final, according to a joint status report (in Pacer) filed Monday with the U.S. Court of International Trade. The HMTX-Jasco first-filed complaint sparked a deluge of roughly 3,700 cases, all seeking to get the Section 301 List 3 and 4A tariffs vacated due to alleged violations of the 1974 Trade Act and 1946 Administrative Procedure Act.

The continuing impasse has HMTX-Jasco attorneys from Akin Gump warning they will move April 22 for a declaratory judgment that the court has the authority to order refunds of liquidated entries if the plaintiffs win. They alternatively threaten to seek a court injunction to suspend liquidations on all goods from China with List 3 and 4A tariff exposure until the litigation is resolved.

DOJ emailed plaintiffs April 7 “representing for the first time their view that this Court lacks the power to order refunds for liquidated entries at the close of the litigation,” said Akin Gump. “The government is unwilling to represent that refunds would be available for any liquidated entries and believes that such refunds should not be provided as a matter of law,” even if the plaintiffs “prevail in full” on their claims that the List 3 and 4A tariffs are unlawful, it said. “Thus, under Defendants’ position, Plaintiffs are accruing unrecoverable monetary amounts every day with each liquidation.”

The “urgent nature of the issue” leaves plaintiffs “no choice” but to ask the court to order DOJ to respond to the April 22 injunction motion by May 3 and for plaintiffs to file their reply a week later, said Akin Gump. Defendants “do not agree” to respond to the motion in 11 days, but want three weeks, to May 13, said DOJ. “We disagree that any such motion would be ‘urgent,’ it said. HMTX and Jasco “waited nearly two years” from the imposition of Lists 3 and 4A to challenge the tariffs’ lawfulness, and “another seven months have passed since they filed their complaint,” said the government.

DOJ also disagrees with Akin Gump’s “suggestion that the law clearly allows reliquidation of liquidated entries in the circumstances presented here,” it said. “While Plaintiffs focus on their perceived harms from paying duties they did not timely challenge, a request for an injunction suspending liquidation would impose an extraordinary and potentially impossible burden on Customs and Border Protection, at a time when its resources are already stretched to the limit.” CBP didn’t respond to questions Tuesday. DOJ thinks the issue of a refund remedy “should be resolved only if and when Plaintiffs prevail on the merits,” it said.

Plaintiffs maintain “a strong interest in faster resolution” of the HMTX-Jasco “sample case,” said Akin Gump. “The tariffs at issue affect over $500 billion in imports” from China, it said. “The payment of those unlawful duties inflicts ongoing and accruing harm on Plaintiffs (and thousands of others who filed related Section 301 cases) in terms of lost profits, customers, and market share, including to foreign competitors not subject to the tariffs; damage to consumer goodwill and innovation; permanent closure of facilities and layoffs; and the like.”

Akin Gump proposed scheduling the end of briefings for late September, but “in the spirit of compromise,” bowed to DOJ’s requests for more time and now supports ending briefings by Nov. 15, said the joint status report. But DOJ said it wants the final deadline extended to Dec. 23 because it will need to respond to “an unknown number” of amicus briefs from lawyers whose cases were stayed after the court picked the first-filed HMTX-Jasco complaint as the sample case. “Plaintiffs delayed almost two years after issuance of Lists 3 and 4A to initiate a judicial challenge,” said DOJ. “Although we believe their challenge to be meritless, they chose to pay the lawfully imposed duties rather than bringing a prompt legal challenge. Neither the Court nor the Government should be rushed now because of Plaintiffs’ delay.” Akin Gump said it has “no reason to expect a deluge of amicus filings.”