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CIT Grants Preliminary Injunction in Section 301 Litigation

Great news out of the CIT!

Earlier this week, on July 6, the Court of International Trade granted the Section 301 Plaintiffs’ motion for a preliminary injunction. The granting of the preliminary injunction suspending liquidation of unliquidated entries subject to the contested tariffs is an important victory for all the Section 301 plaintiffs. The preliminary injunction and the requirements set forth therein apply to all Section 301 plaintiffs.

The three-judge panel weighed four factors to reach its outcome:

(1) likelihood of success on the merits;
(2) irreparable harm absent immediate relief;
(3) the balance of interests weighing in favor of relief; and
(4) the public interest.

In the Court’s Opinion, written by Judge Kelly, the liquidation of Plaintiffs’ entries over the course of litigation coupled with the potential unavailability of reliquidation or refund, even if successful in their suit, constituted irreparable harm. Notably, the Government’s position is that “any duties paid are permanently unrecoverable regardless of whether they may have been collected unlawfully.” (Slip Op 21-81 at 17).

Since the judges found there was a potential for irreparable harm if the liquidation of entries was not suspended, the Plaintiffs only needed to demonstrate a fair chance of success on the merits rather than a likelihood of success on the merits. The CIT found that the Plaintiffs raise “sufficiently serious and substantial questions as to the proper interpretation of Section 307 to warrant injunctive relief.” (Id. at 18).

The factor “balance of the equities” tipped in favor of the Plaintiffs. Although the Government will face an administrative burden as a result of the preliminary injunction, if the preliminary injunction were not granted and the government refuses to liquidate or refund the entries, and the court is not found to have the authority to so order, then the Plaintiffs would be left without a remedy. That would be evidently inequitable. 

In considering the fourth factor (public interest), the Court found that the Government’s position that liquidation should not be suspended and that there is no right to refund would effectively short-circuit judicial review as it pertains to the imposition of the Section 301 tariffs on the liquidated entries. Importers will continue to pay those duties, and the Plaintiffs’ request for relief is narrow and seeks to maintain the status quo. The order also criticizes the Government’s argument: “If the Government’s argument is that it serves the public’s interest to retain duties ultimately determined to be unlawful, to render meaningless a determination as to lawfulness, the Government is mistaken.”

Chief Judge Barnett dissented, citing that he believed the Plaintiffs failed to establish a likelihood of irreparable harm.

The Court’s Order gives Defendants and the Steering Committee 7 days to meet and confer regarding the establishment of a repository by Defendants for Plaintiffs to identify any unliquidated entries of merchandise imported from China on Lists 3 and/or 4A by the named Plaintiffs or any plaintiffs whose actions have been stayed pursuant to In re Section 301 Cases. 

It also gives Defendants 14 days to establish a repository in which Plaintiffs can identify any such entries and provide (i) its full and correct Importer of Record (IOR) number(s); the Court Number and filing date of the litigation in which it is a party, as well as its Center and team assignment, if known; and (iii) the entry number and date of entry for each entry for which liquidation is to be suspended in accordance with this order.

The case is still developing. The Parties will appear before the court on July 13 for a Status Conference. We will continue to monitor and report on the case.

We are happy to answer any questions you may have regarding the recent developments.

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