United States: Federal Circuit—The CIT Need Not Issue Multiple Injunctions Barring Liquidation Of The Same Imports

The U.S. Court of International Trade (CIT), like most other federal courts, may issue an injunction to afford equitable relief to the parties that appear before it. Those injunctions typically bar the federal government from taking specific action. For example, the CIT may enjoin U.S. Customs and Border Protection (“Customs”) from liquidating specific imports subject to a particular duty, such as an antidumping duty.

What happens if imports face multiple, distinct duties? After all, imports may be subject to a combination of different duties (i.e., customs duties, antidumping and countervailing duties, national security tariffs, etc.), depending on the imports’ tariff schedule classification and country of origin. If a party wants to challenge the application of these distinct duties to the imports, must the CIT enter separate injunctions addressing each of the duties in dispute? In its recent decision in Sumecht NA, Inc. v. United States, the U.S. Court of Appeals for the Federal Circuit answered that question with a resounding “no.”

Legal Framework

The CIT does not simply enter an injunction on demand. A party seeking injunctive relief from the CIT must address whether (1) it will likely succeed on the merits of its claim; (2) it will likely suffer irreparable harm in the absence of an injunction; (3) the balance of the hardships tips in its favor; and (4) an injunction serves the public interest. Silfab Solar, Inc. v. United States, 892 F.3d 1340, 1345 (Fed. Cir. 2018). The party need not prove each of these elements, but its satisfaction of the first and second prongs generally leads to an injunction.

A party may satisfy the irreparable harm element by showing that it will suffer financial hardship, such as lost sales, decreased revenue, a reduction in its workforce and/or a loss of customer goodwill. But in the specific context of international trade litigation, a party may also establish irreparable harm by pointing to the threat that Customs may liquidate its imports, because liquidation moots the dispute once it occurs. Under Customs’s regulations, “[l]iquidation means the final computation or ascertainment of duties on entries for consumption.” 19 C.F.R. § 159.1.

The Decision

Sumecht adds a new wrinkle to already complex jurisprudence on irreparable harm in international trade disputes. It addresses the unusual situation in which an injunction already bars Customs from liquidating the imports at issue, albeit for a reason different from what led the CIT to enter the initial injunction. Sumecht holds that the CIT may properly find a lack of irreparable harm in the limited circumstances where an injunction already prevents Customs from liquidating the imports, even if the CIT entered the injunction for a different purpose.

The Sumecht decision stems from messy facts. The CIT had enjoined Customs from liquidating certain imports in a separate lawsuit that challenged the U.S. Department of Commerce’s (“Commerce”) final determination in an administrative review of the countervailing duty order on crystalline silicon photovoltaic cells from China. In Sumecht, Sumecht NA, Inc. (“Sumecht”) sought an injunction barring Customs from liquidating the same imports, though for a different reason: Sumecht contested Commerce’s application of antidumping duties to those imports pursuant to the antidumping duty order on crystalline silicon photovoltaic cells from China.

In seeking an injunction from the CIT, Sumecht advanced two irreparable harm arguments. First, Sumecht alleged that it would suffer financial loss if forced to pay the contested duties. Second, Sumecht argued that it would suffer irreparable harm because it is unclear whether Customs possesses the authority to reliquidate its imports (i.e., recalculate duties owed on those imports). The CIT denied Sumecht’s request to enter a separate injunction barring Customs from liquidating the imports.

The Federal Circuit upheld the CIT’s decision not to issue a second, overlapping injunction covering the same imports. Writing on behalf of the majority, Judge Wallach explained that the initial injunction already prevented Customs from liquidating the imports. He also observed that precedent did not require a second injunction and that imposing such a requirement would cabin the CIT’s discretion to issue injunctions. Finally, Judge Wallach explained that nothing would prevent Sumecht from seeking injunctive relief if the first injunction dissolves.

In reaching this conclusion, the Federal Circuit also addressed in dicta whether the potential reliquidation of Sumecht’s imports necessarily defeats Sumecht’s irreparable harm claim. Judge Wallach did not squarely answer the question. Instead, he acknowledged that the Federal Circuit’s decisions on whether (and, if so, when) Customs may reliquidate imports that are not “model[s] of clarity.” Nevertheless, he explained that those decisions do not “creat[e] a presumption that, in the preliminary injunction context,” Customs may not do so because the CIT always retains the authority to order Customs to reliquidate the imports. In any event, Judge Wallach found those decisions inapposite because the government conceded that Customs would reliquidate the imports if it lost the litigation on the merits.

Bottom Line

The principal holding in Sumecht contains a straightforward lesson: the CIT enjoys broad discretion when addressing requests for injunctive relief, and nothing compels the CIT to enter multiple injunctions on the same imports. As a consequence, importers in litigation must remain on high alert and obtain a new injunction when others dissolve.

Sumecht also leaves an important question unanswered: does Customs’s authority to reliquidate imports defeat a party’s claim of irreparable harm? Instead of squarely answering that question, the Federal Circuit simply confirmed that the CIT possesses the remedial authority to order reliquidation and judicial estoppel would bar the government from taking a different position. No doubt, this issue will arise anew.

Regardless of how federal courts resolve this unanswered question on the interplay between reliquidation and irreparable harm, parties in trade litigation may still prove irreparable harm the traditional way: showing that they will suffer financial hardship in the absence of an injunction.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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