November 5, 2020

Section 301 Litigation: Is It Too Late to Seek Refunds?

Holland & Knight Alert
Ronald A. Oleynik | Andrew K. McAllister | Francisco J. Sanchez | Sophie Jin | Dariya V. Golubkova

Highlights

  • The U.S. Court of International Trade's docket is brimming these days, all thanks to importers who have initiated more than 3,500 actions to date challenging the Trump Administration's use of Section 301 of the Trade Act of 1974 (the Act) to impose tariffs on Chinese-origin goods appearing on the so-called Lists 3 and 4A.
  • Plaintiffs challenge the Trump Administration's use of Section 301 to impose tariffs on Lists 3 and 4A goods as untimely and, as such, not authorized by the Act and otherwise in violation of the Administrative Procedure Act.
  • This Holland & Knight alert details next steps and what's ahead for importers of Chinese-origin goods covered by Lists 3 and/or 4A.

The U.S. Court of International Trade's (CIT) docket is brimming these days, all thanks to importers who have initiated more than 3,500 actions to date challenging the Trump Administration's use of Section 301 of the Trade Act of 1974 (the Act) to impose tariffs on Chinese-origin goods appearing on the so-called Lists 3 and 4A. As detailed in Holland & Knight's previous trade alert, plaintiffs argue that the Trump Administration, acting through the U.S. Trade Representative, waited too long to impose tariffs on Lists 3 and 4A goods, thereby taking an action not authorized by the Act and otherwise in violation of the Administrative Procedure Act.

If you are an importer of Chinese-origin goods covered by Lists 3 and/or 4A, here is what you need to know.

Background and Timing Constraints

Lawsuits challenging the Trump Administration's use of Section 301 are being filed under the CIT's residual jurisdiction provision — 28 U.S.C. § 1581(i)(1)(B).1 Actions filed thereunder must be, per 28 U.S.C. § 2636(i), commenced "within two years after the cause of action first accrues."2 An issue on everyone's mind is — how will the CIT determine the date of "first" accrual? Some may argue that the date of first accrual is importer-specific and depends on when the importer first entered and had additional Section 301 tariffs assessed on its imported List 3 and/or 4A Chinese-origin goods. Others may point to the U.S. Court of Appeals for the Federal Circuit and Ninth Circuit precedent that differentiates between actions challenging an agency's rulemaking on substantive versus procedural grounds and, as such, starts the clock at a different point.3 Notwithstanding the competing interpretations of the relevant legal text, it is recommended that importers preserve their right to a refund of duties paid by commencing an action at the CIT.

Where Do the 3,500-Plus Cases Stand Today?

The CIT has yet to designate a "test" case or cases; finalize the form and format of the associated briefing schedule; or determine whether a single judge or a panel of three will hear the designated case(s). The reason — an ongoing battle over whether the U.S. Department of Justice (representing all of the U.S. Government Defendants) deprived the majority of plaintiffs of notice by filing a motion to adopt case management procedures solely on the docket of HMTX Industries LLC v. United States (the grandfather of the Section 301 actions); prematurely selected who among the plaintiffs' attorneys will represent that group's interests before the CIT; and proposed an unreasonable briefing schedule.4 Further, and importantly, the United States has yet to respond to Plaintiffs' request for a stipulation that all eligible entries, notwithstanding liquidation status, would be eligible for refunds should they prevail. Barring Defendants formally requesting permission to file a reply or the court affirmatively seeking such a filing, Defendants' motion will be decision-ready on Nov. 10, 2020.5 The CIT's Chief Judge is likely to resolve all nondispositive challenges within 30 days thereafter.

Conclusion

The bottom line is that the wheels of justice turn slowly, but there is still time to preserve your right to a refund. For assistance initiating an action at the CIT or for more information, please contact the authors or another member of Holland & Knight's International Trade Group.


Notes

1 Conferring upon the CIT "exclusive jurisdiction of any civil action commenced against the United States, its agencies, or its officers, that arises out of any law of the United States providing for . . . tariffs, duties, fees, or other taxes on the importation of merchandise for reasons other than the raising of revenue[.]" 28 U.S.C. § 1581(i)(1)(B).

2 Explaining that a civil action commenced at the CIT under its residual jurisdiction provision "is barred unless commenced in accordance with the rules of the court within two years after the cause of action first accrues." 

3 Hyatt v. United States Patent and Trademark Office, 904 F.3d 1361, 1372 (Fed. Cir. 2018); Wind River Mining Corp. v. United States, 946 F.2d 710, 714–16 (9th Cir. 1991).

4 The United States filed two motions for case management procedures. Copies thereof are available at ECF Nos. 20 and 30 on the docket of HMTX Industries LLC v. United States, Ct. No. 20-00177 (USCIT filed Sept. 10, 2020). 

5 See USCIT R. 7 (allowing a reply only for dispositive motions).


Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.


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