Section 301 Plaintiffs Seek Injunction to Bar Liquidation of Lists 3, 4A Goods

HMTX Industries and Jasco Products, plaintiffs in the massive Section 301 litigation’s sample case, moved Friday in the U.S. Court of International Trade for a “protective preliminary injunction” to suspend liquidation of all unliquidated customs entries imported from China with Lists 3 and 4A tariff exposure. The Akin Gump motion (in Pacer) on behalf of HMTX-Jasco came days before the court’s three-judge panel convenes a status conference, in which plaintiffs are expected to air their demands for stipulated refunds of all liquidated entries if they prevail in the litigation.

The motion appears aimed at coalescing the plaintiffs' arguments before the judges entering Monday morning's status conference. Those familiar with the work of the 15-member steering committee told us that plaintiffs opted for the protective injunction over their alternate strategy -- seeking a declaratory judgment that the court has the authority to order refunds -- because they feared a declaratory ruling could be overturned on appeal, leaving importers with no refund recourse as a backup. The steering committee communicated to the hundreds of lawyers representing the 3,700-plus complainants days ago about Akin Gump’s intentions to file for the protective injunction, we’re told. Akin Gump didn’t comment.

The motion doesn’t seek to “enjoin or otherwise limit” collection of the Lists 3 and 4A tariffs, said Akin Gump's filing. “Rather, akin to the ‘statutory injunction’ routinely entered during the litigation of antidumping/countervailing duty cases, Plaintiffs seek a protective injunction merely to preserve the status quo with respect to liquidation until final judgment.” The law firm wants the court to grant the same relief in all 3,700 cases, subject to an “opt-out mechanism,” to prevent thousands of similar motion filings inundating the judges.

Seeking the protective injunction “should not have been necessary,” said the firm. DOJ, breaking from “recent precedent and past practice,” claimed the court “lacks the power to order refunds on liquidated entries,” it said. “That position is as inequitable as it is incorrect.” DOJ’s contention is that duty payments “would become permanently unrecoverable, at least with regard to liquidated entries, should Plaintiffs prevail in proving the Section 301 duties unlawful,” Akin Gump said.

But DOJ refuses to act “to avoid that untenable result and oppose relief narrowly tailored to preserving Plaintiffs’ rights should Plaintiffs prevail on the merits,” said Akin Gump. The government also urged the court to postpone resolution of the refund relief issue until HMTX-Jasco ultimately “prevail on the merits,” it said. “The official litigating position of the Government is that U.S. importers’ entitlement to refunds of illegally collected tariffs should turn on the happenstance of whether and when associated entries are liquidated pending final judgment in this case.” DOJ didn’t respond to questions.

HMTX-Jasco “easily satisfy the factors for a preliminary injunction,” especially considering the “limited, protective relief” they seek, said Akin Gump. Judging from the “unprecedented magnitude of this litigation involving the filing of over 3,700 similar complaints adopting the same core legal theory,” HMTX-Jasco “have already demonstrated a likelihood of success -- or at least a serious question -- on the merits,” it said. The “balance of the equities and the public interest” -- other bars that must be overcome in winning an injunction -- also “overwhelmingly weigh” in the plaintiffs’ favor, it said. Since the government will continue collecting the Lists 3 and 4A tariffs, “this protective injunction merely maintains the status quo to protect those sums from becoming irretrievably lost if the Section 301 tariffs are deemed unlawful but the refund remedy is deemed available only with respect to unliquidated entries,” it said.

On meeting the injunction’s bar of proving irreparable harm, if the court agrees with DOJ that refunds on liquidated entries are unavailable, “immediate need for a preliminary injunction to suspend liquidation is self-evident,” said Akin Gump. Plaintiffs “are entitled to a limited injunction regardless,” it said. DOJ’s litigating position “has placed the ultimate availability of refunds on liquidated entries -- including after potential appeals to the Federal Circuit or U.S. Supreme Court -- into serious doubt,” it said.

The lawyers will “voluntarily withdraw this motion” if DOJ agrees to an “acceptable stipulation” of refund relief “sufficient to protect all Section 301 Plaintiffs’ rights with respect to liquidated entries should Plaintiffs prevail on the merits.” If not, the firm said the court “should follow Federal Circuit precedent in finding irreparable harm in this circumstance, and enter limited relief to maintain the status quo while this important litigation runs its course.”