Section 301 Plaintiffs Satisfy Bar for Liquidation Injunction: Akin Gump

The government’s response is due May 14 to Akin Gump’s motion April 23 on behalf of Section 301 sample case plaintiffs HMTX Industries and Jasco Products for a “protective preliminary injunction” freezing the liquidation of unliquidated customs entries from China with lists 3 and 4A tariff exposure unless DOJ agrees to a stipulation that refund relief would be available to the importers if they prevail in the litigation (see 2104230069). Akin Gump asked for the opportunity to file a reply brief “no longer than half the length” of DOJ’s May 14 response, and offered to voluntarily withdraw the motion if the government dropped its opposition and agreed to the refund stipulation.

The motion formed the backdrop of the status conference on procedural issues convened April 26 by the three-judge panel at the Court of International Trade, giving both sides the opportunity to air their arguments on the liquidated refunds issue. Akin Gump weighed the option of seeking a declaratory judgment from the panel that the court has the authority to order the refunds. It decided instead on seeking the injunctive relief based “upon further consideration” of the government’s position and “the need to preserve the status quo” of customs entries that haven’t yet liquidated, the filing said. An April 26 filing confirmed that the status conference took place via Webex, but said nothing about its outcome. Little movement on the refunds issue is expected before DOJ files its response to the injunctive relief motion.

Liquidations become final and nonrefundable after a year if uncontested. “If injunctive relief is denied, and sums associated with liquidated entries become nonrefundable,” the filing said, the Section 301 plaintiffs “collectively stand to lose hundreds of millions of dollars in duties” determined to be unlawful under the 1974 Trade Act and the 1946 Administrative Procedure Act. Unmentioned in the filing was another Akin Gump rationale for bypassing the declaratory judgment option -- its perceived risk that a favorable ruling from the three-judge panel could be overturned on appeal, leaving importers in the lurch with no available refund recourse.

Going into the status conference, DOJ has resisted plaintiffs’ calls for the refund relief stipulation on grounds that the court lacks the authority to order refunds on liquidated entries and that the issue of relief should be resolved only when and if HMTX-Jasco prevail on the merits of the case. DOJ also argues that an injunction would impose extraordinary burdens on an already-stretched-thin CBP by requiring the agency to maintain open status in its Automated Commercial Environment database on many thousands of customs entries from China that ordinarily would liquidate and their status closed in the normal course of business.

Akin Gump countered Friday that any such burden would be of DOJ’s “own making.” The government “could avoid that burden by simply agreeing (as it has done at least twice in recent prior cases) that refunds are available” should the plaintiffs win the litigation, it said. DOJ didn’t respond to questions.

The government’s “litigating position” makes plaintiffs’ irreparable harm likely for “preliminary injunction purposes,” Akin Gump said. If the court agrees with DOJ’s arguments, then plaintiffs’ irreparable harm “is clear and unmistakable, and the need for a preliminary injunction designed to preserve the status quo is evident,” it said. “Even deferring resolution until a ruling on the merits makes irreparable harm obvious, given that entries are liquidating with every day that passes.”

Plaintiffs already have demonstrated the “likeliness of success on the merits,” satisfying a second condition for a preliminary injunction, Akin Gump said. “That standard is easily met here.” The roughly 3,700 related complaints “have set forth a strong legal claim,” it said. “This litigation presents the question of whether Defendants are free to prosecute a trade war under Section 301 for however long, and by whatever means they choose -- or whether Congress imposed meaningful limitations on their power through the Trade Act of 1974.”

The “balance of the equities” and the public interest ramifications also “weigh in plaintiffs’ favor,” satisfying the remaining two conditions for winning injunctive relief, Akin Gump said. HMTX-Jasco seek only “narrow relief” that’s “tailored to avoid the specific irreparable harm threatened” by the DOJ’s litigating position, not a “broad injunction” depriving the government of collecting the lists 3 and 4A tariffs, it said. “Whatever the public interest in imposing tariffs on imports under List 3 and List 4A, that interest necessarily evaporates if the Government exceeds its statutory authority or acts in an arbitrary and capricious manner.”