Can I Still File a Court Challenge Against the Section 301 List 3 Tariffs?

You may have asked yourself, “can I still file a court challenge against the Section 301 List 3 tariffs?” after learning that over 3,500 importers filed cases at the Court of International Trade (CIT) challenging the so-called “List 3” Section 301 duties assessed on certain Chinese-origin imports. If you have not yet filed a List 3 case at the CIT, read on for information on a theory that may support filing a case at this time.

As we advised in our September 15, 2020 client alert, a lawsuit (HMTX Industries LLC et al. v. United States (Court No. 20-00177)) was filed at the CIT on September 10, 2020 challenging the U.S. Trade Representative’s (USTR) authority to assess Section 301 List 3 duties (a substantive claim under the Trade Act of 1974), as well as the USTR’s procedural steps to implement those duties (a procedural claim under the Administrative Procedures Act (APA)). Thousands of importers have now filed “me-too” lawsuits challenging the List 3 Section 301 duties on the same grounds as HMTX, hoping to benefit if the lead case is successful, but without incurring the large expense of fully litigating their own claims.

Over the course of the past few weeks, there has been some disagreement on the filing deadline for a List 3 challenge at the CIT with some recommending that a “me-too” lawsuit be filed by September 21, 2020 or September 24, 2020. The varying dates stem from different theories regarding when the cause of action “accrues” for purposes of the two-year statute of limitations asserted in the HMTX Industries case. Given the uncertainty surrounding the date of accrual, importers have filed (and continue to file) “me-too” lawsuits based on one of three statute of limitations theories (briefly summarized below):

• Date of Publication of List 3 in the Federal Register.The vast majority of the “me-too” lawsuits (over 3,300 cases) were filed by September 21, 2020, which was two years after the USTR published List 3 in the Federal Register. This was the most conservative approach for avoiding a statute of limitations defense, as this is arguably the deadline for the APA procedural claim in the HMTX Industries case.
• Date of Initial Collection of List 3 Duties. Over 100 additional “me-too” suits were filed from September 22 to September 24, 2020, alleging that the cause of action “accrued” on September 24, 2018, the date the government first collected List 3 duties.
• Continuing Claim Theory. There is also an argument that the cause of action for a substantive challenge to List 3, as opposed to a procedural challenge to its method of promulgation, accrues each time List 3 duties are assessed on an aggrieved importer. Under this “continuing claim theory” an importer may have the opportunity to file a “me-too” lawsuit based on each entry subject to Section 301 List 3 duties. Therefore, a lawsuit filed today may be considered timely for List 3 duties paid within two years prior to the filing of the action. A few cases filed after September 25, 2020 appear to rely on this theory.

Although an importer may be time-barred from asserting a procedural claim under the APA (based on the Date of Publication theory), there is an argument that a “me-too” lawsuit asserting a substantive challenge to List 3 duties may still be timely. While we continue to believe the pending HMTX Industries case is a long shot and the timeliness considerations discussed herein present a further challenge for importers filing after September 21, 2020, the relatively minimal cost of filing suit, coupled with the potentially significant relief at issue, presents a low-risk/high-reward scenario for most importers impacted by Section 301 List 3 duties.

If you are still interested in filing a “me-too” lawsuit to try to preserve your rights to potential List 3 duty refunds, or if you have any questions about this pending litigation (including alternative options for relief, such as intervening in the pending HMTX Industries case or filing administrative protests), please contact one of the Faegre Drinker professionals below.

Note: The information above concerns a challenge to List 3 duties. As discussed in our September 24, 2020 client alert, the HMTX Industries lawsuit was amended to include a request for relief from List 4A duties. Since USTR published List 4A in the Federal Register on August 20, 2019, the two-year statute of limitations for filing a List 4A “me-too” lawsuit arguably does not expire until August 20, 2021 based on the Date of Publication theory.