FedEx Rebuts Commerce's Request to Dismiss Export Control Suit

FedEx urged a court to deny the Commerce Department’s motion to dismiss FedEx’s June lawsuit against the agency, saying Commerce’s points were invalid, court records show. FedEx’s original suit alleged Commerce’s export controls were “unconstitutional,” “impossible to comply with” and placed an “overbroad, disproportionate burden” on FedEx (see 1906250030). Commerce responded in September by asking the court to dismiss the suit because it said it was a political matter, was precluded from judicial review under the Export Control Reform Act, and that FedEx did not raise a “patent violation” and did not meet the conditions to file a due process claim (see 1909110073).

FedEx responded in an Oct. 8 filling that its allegations don’t “involve a political question” but instead call for a “very straightforward review” of how Commerce is regulating the activities of a U.S. corporation. “That is not a political question; it is precisely the type of issue that the federal courts can and do address every day,” FedEx said. “The judiciary is exclusively responsible to reign in an ‘administrative state’ that has strayed beyond its Congressional mandate, as is the case here.”

Commerce’s assertion that FedEx’s claims are political “is premised on a fundamental misreading of FedEx’s complaint,” the company said. “Commerce may not punish unknowing transferring, transporting, or forwarding. The federal judiciary routinely addresses such statutory concerns.”

FedEx also said that ECRA does not preclude judicial review, saying the statute “confirms that FedEx’s ... claim is justiciable.” The shipping company said Commerce is failing to “engage with FedEx’s ultra vires argument in any substantive way” and is trying to “avoid judicial review altogether.”

The shipping company also denied Commerce’s claim that FedEx does not “allege a patent violation,” saying Commerce’s violation “is apparent on the face of the regulation and clearly supports an ultra vires claim.” Commerce’s export controls force FedEx to be “strictly liable” for other parties’ violations of the Export Administration Regulations, FedEx said. This occurs because, under the EAR, FedEx’s customers are only held liable if they “knowingly” export an item illegally, while the shipping company is held liable for a different standard, FedEx said. “Thus, FedEx may be held liable for customer violations in situations where the customer itself would not be found liable,” FedEx said. The company said it cannot police the contents of packages if it does not know what they contain.

“This result is over-inclusive and fails to withstand constitutional scrutiny,” FedEx said. “Holding FedEx strictly liable for other parties’ violations of the EAR fails to further the legitimate interest of national security and foreign policy interests.”

FedEx included a quote from a Fox Business interview with Commerce Secretary Wilbur Ross in which Ross said the agency would not penalize FedEx for unknowingly allowing a customer to ship an illegal export. “We are not asking [FedEx] or anyone else to be a policeman,” Ross said, according to the court records. “We are just asking them not to conspire with people to avoid [the regulations].”

But FedEx said the EAR does not follow Ross’ logic. “If the regulatory scheme under the EAR followed the common sense approach suggested by the Secretary, this litigation would not have been necessary: Knowledge is what ECRA requires, but Commerce does not enforce the regulations in this manner,” FedEx said. “Instead, Commerce holds common carriers liable for causing a violation of the General Prohibitions, even without knowledge.”

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