Impasse Nears End in Section 301 Litigation’s Liquidation Squabble

That was after the government reversed course Aug. 31 (see 2108310041) and said it now supports a refund stipulation for all eligible liquidated entries at the end of the trial if the importer plaintiffs prevail on the merits of the case. Swaying the government's reversal, it said, was that suspending liquidations en masse through CBP's ACE database would be an impossible task.

The parties appeared to clear a final hurdle Sept. 1 when lead DOJ trial attorney Jamie Shookman told the court the government neither supports nor opposes the plaintiffs’ proposal to kill the CBP repository imposed in the July 6 preliminary injunction (PI) order for importers to request liquidation suspensions on an entry-by-entry basis. Akin Gump lawyers for sample case plaintiffs HMTX Industries and Jasco Products had argued Aug. 31 that the repository and submissions to it were now unnecessary, given that the government agreed all customs entries could now liquidate in their "ordinary course."

A Sept. 3 deadline still looms for CBP to activate the repository and for both sides to file their final proposed modifications to the PI order. Chief Judge Mark Barnett and Judge Claire Kelly instructed plaintiffs and defendants to confer to resolve any remaining disagreements over wording or language, and to file a joint status report in the next two days. Barnett also said he favors a one-week delay in the repository deadline. DOJ’s Shookman said CBP has the repository ready to go. Lead Akin Gump attorney Matt Nicely said activating the repository would send importers confusing signals. Left unmentioned in the Sept. 1 discussion was the Oct. 2 expiration of the PI order’s temporary restraint period when no lists 3 or 4A customs entries can liquidate, with or without the repository.

Defendants “ultimately defer to the court” to modify the PI order “to no longer require plaintiffs to submit lists of their subject entries right now,” Shookman said. Her revelation seemed to take Kelly by pleasant surprise. “Just so we understand, you’re not averse to the plaintiffs’ proposal that they do not need to submit lists?” the judge asked Shookman. “We don’t support it and we don’t object to it,” the DOJ attorney replied. “If the court were to modify the order to not require plaintiffs to submit lists of entries, there would no longer be the record-retention question.” The government agrees the repository also would no longer be needed, Shookman said.

Kelly expressed trepidation, as Barnett had at previous status conferences, that deferring the recordkeeping of lists 3 and 4A customs entries to the end of the trial could be problematic for doling out tariff refunds if importers win the case and the duties were declared unlawful violations of the 1974 Trade Act. “The problem that I would see from a court perspective -- and this is something we need to talk about -- we can get to the end of this litigation and, should the plaintiffs be successful, it could be a mess, in terms of parties getting their money,” the judge said. “But that could be a mess now, too, in terms of getting the information together” for the repository, she said.

Plaintiffs are “obviously sensitive to the case management concerns” that Judges Kelly and Barnett have “articulated over the last few sessions,” Akin Gump lawyer Pratik Shah said. Plaintiffs “have made significant headway” with the government the past two months “in coming up with ways that we will be able to deploy if we prevail in this litigation,” he said. “If there is still that case management concern, we’re happy to continue to work with the government so that we can come up with technical solutions, and we don’t have to wait for the end of the litigation.”

CBP has now figured out a way to create a new report within ACE “that streamlines things,” Shah said. “So if we’re not jumping several months ahead to the end of this litigation, we think there will be even more things that can be done that we’ve already been discussing with the government to simplify this.” Akin Gump predicts “you will have very motivated plaintiffs to identify all of their entries” for which refunds would be due, he said. “All of us are much more up to speed on what that task is going to take to identify the entries for each plaintiff, and it’s getting simpler by the day, as the ACE functionality improves.”

Barnett responded with apparent skepticism that he was “always concerned” that if plaintiffs prevailed in the litigation, he would be “sitting around,” well into his “senior status” on the bench, “working with everybody, trying to resolve how much of a refund goes back to plaintiffs in these various cases.” In his history, even when “a very limited number of cases and a limited number of entries” were at play, “it has taken years for the parties” to resolve “how much money goes back,” he said.

With the Section 301 litigation, “we’re talking about something that is on a scale that’s disproportionate to all those other cases -- combined probably -- in terms of just the sheer volume,” Barnett said. He cited the Aug. 30 declaration of AnnMarie Highsmith, executive assistant commissioner in CBP's Office of Trade, in which she estimated more than 15.1 million entries with List 3 or List 4A tariff exposure were made through Aug. 12 by all importers, not just the 6,700+ that have filed complaints. CBP collected more than $81 billion in List 3 and List 4A tariffs through Aug. 12, she said, about the date when the agency surpassed $100 billion in tariff collections for all four rounds of Section 301 duties on Chinese imports. Total Section 301 tariff collections on Chinese goods dating to July 2018 surpassed $101.7 billion on Aug. 26, the agency reported.