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Huawei Motions for Summary Judgement in Complaint Against US Government

On May 28, 2019, Huawei Technologies Co., Ltd., a Chinese telecommunications company, and its US-based affiliate, Huawei Technologies USA, Inc. (collectively “Huawei”), filed a Motion for Summary Judgment. (See Plaintiffs’ Motion for Summary Judgment, Huawei Technologies USA, Inc. et al v. United States of America, et al, No. 4-19-cv-159-ALM (E.D. Tex. filed May 28, 2019) (hereinafter Mot. Summ. J.).) The Motion for Summary Judgment is based on the Complaint Huawei filed on March 6, 2019 against the US Government in the United States District Court for the Eastern District of Texasalleging that Section 889 of the John S. McCain National Defense Authorization Act for Fiscal Year 2019, Pub. L. No. 115-232, 132 Stat. 1636 (2018)(NDAA), which restricts government contractors or agencies from dealing with certain Huawei products or services, violates the United States Constitution. (See Mot. Summ. J., at 2-3.) 

The NDAA was signed into law by President Donald J. Trump on August 13, 2018. Id. at 7. Section 889 of the NDAA restricts federal agencies from: 1) procuring covered Huawei telecommunications and video equipment or services; contracting with third parties that use covered Huawei equipment or services; or 3) awarding grants or loans used to procure covered Huawei equipment or services. (See § 889(a)(1), (b)(1); see also § 889(f)(3)(A), (C).) The first prohibition will go into effect in August 2019, with other prohibitions by August 2020. (Id. § 889(c).)

Huawei is raising three constitutional arguments. (See Mot. Summ. J.,  at 3.) First, Huawei contends the prohibitions violate the Constitution’s Bill of Attainder Clause, see U.S. Const. art. I, § 9, cl. 3, by explicitly singling out Huawei and prohibiting it from conducting business and finding that Huawei is “owned or controlled by, or otherwise connected to,” the government of the People’s Republic of China (PRC) via legislative fiat as opposed to an adjudicative process subject to judicial review. (NDAA, at § 889(f)(3)(D); see Mot. Summ. J., at 15-28.) Second, Huawei contends the Section 889 violates the Due Process Clause of the Fifth Amendment, see U.S. Const. amend. V, by, among other claims, inhibiting Huawei’s ability to conduct business in the US without a fair hearing or the opportunity to refute the allegations against it. (See Mot. Summ. J., at 31-32.) That is, the statute applies the prohibitions to Huawei even if evidence definitively proves it is not “owned or controlled by, or otherwise connected to,” the Chinese government. (NDAA, at § 889(f)(3)(D); see Mot. Summ. J., at 31-32.) Lastly, Huawei argues that Section 889 violates the Vesting Clauses, see U.S. Const. art. I, § 1; id. art. II, § 1, cl. 1; id. art. III, § 1, by creating prohibitions and findings against Huawei in the statute (through the legislative branch), as opposed to an Executive finding that would be reviewable by the judiciary. (See Mot. Summ. J., at 34-35.)

Huawei is claiming damages for economic and reputational injuries. (See id. at 9.) Pursuant to the April 30, 2019 Scheduling Order, the U.S. Government has until July 3, 2019 to respond to Huawei’s Complaint. The Court has scheduled oral arguments for September 19, 2019.

Preceding Huawei’s Motion for Summary Judgment, the Trump Administration added the company and affiliates to the Department of Commerce, Bureau of Industry & Security’s Entity List and subsequently granted a temporary license on limited terms; and issued an Executive Order (EO) to protect US telecom supply chain. The EO has been interpreted to imply that Chinese companies like Huawei are impairing US national security.

 

© Copyright 2019 Squire Patton Boggs (US) LLP

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