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 Industries lawsuit. 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 Industries lawsuit 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.

If you are interested in filing a lawsuit to preserve your rights for potential duty refunds on List 4A goods, or if you have any questions about this matter, please contact one of the Faegre Drinker professionals below.