Section 301 Plaintiffs Face ‘Sliding Scale’ of Statute of Limitations Options: Lawyer

Grunfeld Desiderio counseled clients in the Section 301 litigation to consider a “sliding scale” of options on filing timely complaints within the two-year statute of limitations window that qualifies importers to recover duties paid if the suits are successful, partner Ned Marshak said in an Oct. 19 interview. The firm filed more than 800 of the nearly 3,600 complaints inundating the Court of International Trade. Its Sept. 16 complaint on behalf of YC Rubber was the first to follow Akin Gump's suit for lead plaintiff HMTX Industries.

All the complaints seek to have the 2018 lists 3 and 4A tariff rulemakings vacated and the duties refunded (see 2009110005). The federal statute governing CIT procedures requires plaintiffs to file their actions within two years “after the cause of action first accrues.” But there’s a diversity of legal opinion about when the two-year statute of limitations runs out. Akin Gump took the most conservative approach, filing its HMTX action Sept. 10 and tying the timeliness argument to Sept. 21, the two-year anniversary of the Office of the U.S. Trade Representative List 3 Federal Register notice. Holland & Knight in mid-September warned importers who didn't file challenges by Sept. 24, the two-year anniversary of List 3 taking effect, that they risked the statute of limitations “foreclosing their ability to seek refunds.”

Yet importers filed 53 complaints after Sept. 24, and Grunfeld Desiderio brought more than a third of them as of Oct. 13, a Roll & Harris spreadsheet shows. “We know that if we file by Sept. 21, there is no question that you’re OK on the statute of limitations, you’re not going to get kicked out,” Marshak said. “If you don’t make the 21st, the next argument is that the cause of action accrues on the effective date,” he said. “But if you file by the 24th, you’re taking a chance. If you could file by the 21st, there is no way that you’re going to advise a client not to worry, they can file by the 24th. You’re just not going to do it. It’s not worth the risk.”

Nevertheless, a “very strong line of cases” supports a “continuing violation exception” to the statute of limitations, which means every time an importer makes an entry, “there’s a new violation,” Marshak said. “We think there’s strong case law that you can file anytime within two years of entry. Can we lose that? Yes.” Grunfeld Desiderio is telling clients “there’s no downside in filing, but we absolutely can‘t guarantee this,” he said. There’s “actually language” in at least one case, French Feast v. United States, decided by the CIT in December 2011, saying the “key date” when the cause of action accrues is the “date of liquidation,” he said.

One of the first key case management issues to be resolved in the Section 301 litigation is whether the Department of Justice will agree “there can be recovery” of tariffs paid “on all entries, even if liquidation of the entries is final,” Marshak said. “It’s our opinion that you can recover, and that there’s strong case law supporting that, but we can’t guarantee that.” DOJ told Grunfeld Desiderio “it absolutely can’t take a position” on refunds until the CIT establishes a steering committee, he said. DOJ didn’t respond to questions.

Grunfeld Desiderio expects DOJ may seek dismissal of the HMTX complaint on grounds that USTR's decision to impose the tariffs isn't subject to review by the courts, Marshak said. Asked if he thinks DOJ will make that argument Nov. 9 when its HMTX response is due, Marshak said: “I think they’re going to ask for an extension.” Marshak can’t see DOJ “getting their act together” by early November to file a reply, he said. “This is such a big case,” he said. “My guess is, without knowing anything, that decisions in this case are going to be made at a very high level at the DOJ because of the amount of money involved and the potential political issues involved.” Marshak assumes any CIT decision will be appealed to the U.S. Court of Appeals for the Federal Circuit, possibly to the Supreme Court, but “God knows what the Supreme Court would do with this,” he said. “This case is right in the Federal Circuit’s wheelhouse.”

If clients “pushed” Grunfeld Desiderio for an opinion handicapping the odds of importers prevailing in the Section 301 litigation, “we'd say about 25%, with a lot of leeway on either side,” Marshak said. The odds are less than 50/50, “but a lot more than 'it's not worth the risk,'” he said. “There's an excellent, excellent legal argument here. The problem is the degree of deference that the court is going to give to the Trump administration. It's always this balance between deference and legitimacy of the argument. Do we think we're right? We're absolutely correct. But when you're looking at deference, there's a big issue, and sometimes it depends on what judge you get, and how much the particular judge defers.”