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Latest Development in Court Case Challenging Validity of Section 301 Tariffs; Opportunity to Add Challenge to List 4A to Complaints

As we discussed in a September 15 client alert, a lawsuit was filed at the U.S. Court of International Trade (CIT) on September 10, 2020, challenging the U.S. Trade Representative’s (USTR) authority to assess Section 301 duties against so-called “List 3” imports of a wide range of products from China, as well as the procedural steps taken by USTR to implement those duties. HMTX Industries LLC et al. v. United States (Court No. 20-00177).

Background

The original HMTX Industries complaint focused only on Section 301 duties levied against List 3 imports. As of September 21, 2020, well over 3,300 “me-too” lawsuits had been filed, challenging the Section 301 duties on the same grounds as the HMTX Industrieslawsuit. The vast majority of the “me-too” lawsuits were filed by September 21, 2020, which was two years after the USTR published List 3 in the Federal Register. Over 100 additional “me-too” suits have been filed since September 21, 2020, alleging that the cause of action stems from the date that the government first collected List 3 duties on September 24, 2018.

The strategy behind a “me-too” lawsuit is to file suit and then move to consolidate with the HMTX Industries case or stay the lawsuit pending the CIT’s disposition of the HMTX case. This strategy will allow the “me-too” importers to benefit if the HMTX Industrieslawsuit is successful without incurring the large expenses of fully litigating their claims.

HMTX Industries’ Amended Complaint

On September 21, 2020, HMTX Industries amended its CIT complaint to include a challenge to Section 301 duties on “List 4A” imports. List 4A was published in the Federal Register on August 20, 2019 and includes as separate group of products from China that are subject to additional duties under Section 301. The nature of the challenge to List 4A is essentially the same as the challenge to List 3.

Opportunity for Importers That Paid Section 301 List 4A Duties

In our September 15 alert, Faegre Drinker advised clients not to file “me-too” suits challenging the tariffs on List 4A products, since the original HMTX Industries complaint did not contain a request for relief from these duties. This strategy was to mitigate the risk that the CIT might treat a “me-too” lawsuit with a List 4A claim as the “lead” lawsuit for this issue rather than the HMTX Industries case. Now that HMTX Industries has amended its complaint to include List 4A claims, other importers can piggy-back on this lead case for List 4A claims as well.

Because USTR published List 4A in the Federal Register on August 20, 2019, the two-year statute of limitations for filing a List 4A lawsuit based on publication date does not expire until August 20, 2021. This means importers that did not import products from China under List 3 (or chose not to file a List 3 lawsuit now) have an opportunity to file a “me-too” lawsuit for imported Chinese products subject to duties under List 4A.

Mollie D. Sitkowski contributed to this article. 

© 2020 Faegre Drinker Biddle & Reath LLP. All Rights Reserved.National Law Review, Volume X, Number 268
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Douglass Heffner, International trade lawyer, Drinker Biddle
Partner

Douglas J. Heffner litigates customs and international trade matters including antidumping duty, countervailing duty and safeguard cases. He represents foreign companies in Canada, Europe, Japan and Mexico, as well as domestic producers in industries that range from high-tech to heavy industry, to consumer and industrial goods. He also represents trade associations, government agencies and embassies in a broad range of matters.

202-230-5802
Carolyn Bethea Corporate Attorney Drinker Biddle Law Firm
Associate

Carolyn M. Bethea advises clients at both the administrative and appellate level on a wide variety of customs and international trade matters, particularly involving antidumping and countervailing duty proceedings, safeguard proceedings, and export compliance.

Before joining Drinker Biddle, Carrie was a senior international trade compliance analyst at the U.S. Department of Commerce, International Trade Administration in Washington, D.C., where she administered U.S. trade remedy laws via the conduct of antidumping and countervailing duty proceedings. While at the Department of Commerce, Carrie was recognized with several awards for her noteworthy contributions to the agency. Carrie also previously worked at a boutique international trade law firm where she gained litigation experience on matters involving the Anti-Injunction Act, the Administrative Procedure Act, Customs and Border Protection regulations, and Alcohol, Tobacco and Trade Bureau regulations.

202-230-5330
Richard P Ferrin, International Trade Lawyer, Drinker Biddle
Counsel

Richard P. Ferrin advises clients about international trade regulations, particularly antidumping and countervailing duty proceedings at both the administrative and appellate levels. He advocates for his client in global “safeguards” proceedings and on customs matters involving classification issues and country-of-origin determinations. Richard has represented foreign manufacturers, foreign exporters, and U.S. importers in antidumping and countervailing duty proceedings before the U.S. International Trade Commission, and in judicial review of...

202-230-5803
Nicholas Guzman, Drinker Biddle Law Firm, Chicago, Trade Law Attorney
Associate

Nicolas Guzman assists his clients in all aspects of international trade laws and regulations. Nick has experience helping clients with a variety of import issues, including import tariff classification, valuation, country of origin determination and marking issues, and eligibility determinations under various free trade agreements and duty preference programs.

Nick assists clients with establishing import operations, from the development of internal controls through the planning and execution of post-entry audit processes. He...

202-230-5436
William Rucker, Drinker Biddle Law Firm, International Trade and Customs Specialist
Partner

William R. “Randy” Rucker assists clients with all aspects of U.S. Customs law, including the classification and valuation of merchandise, country of origin and marking determinations, quantitative import restraints, duty-preference and savings programs, understanding and receiving the benefits of free trade agreements, compliance audits, enforcement actions and other trade-related matters.

In order to assist clients with their compliance efforts and satisfy "reasonable care" requirements, Randy frequently performs reviews of companies' internal...

312-569-1157
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