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'Exploded the Guardrails'

Trade Lawyer Gives Section 301 Litigation 25% ‘Chance of Success’

It could take two-to-three years to resolve the massive Section 301 litigation now before the U.S. Court of International Trade, especially since it’s “highly likely” the losing side will appeal the case, Sandler Travis trade expert David Cohen, told his law firm's webinar Tuesday. Roughly 3,800 importers are suing the government to declare the Lists 3 and 4A tariffs on Chinese goods unlawful and get the money refunded.

There’s “consensus” in the trade law community that “we lay out a strong argument invalidating” the Lists 3 and 4A tariffs because they run afoul of the 1974 Trade Act and 1946 Administrative Procedure Act, said Cohen. Plaintiffs have no quarrel that the Lists 1 and 2 tariffs were implemented lawfully, he said. But President Donald Trump’s retaliatory Lists 3 and 4A tariffs “exploded the guardrails” of presidential authority under Section 301, he said.

Cohen conceded the courts give “broad deference” to presidential authority and that invalidating the Trump tariffs would be “a tall order.” He argued that “our chances are considerably better” than buying a winning lottery ticket. He gives plaintiffs a 25% “chance of success,” he said. “We’re very transparent when we’ve spoken to potential clients about the difficult hill to climb. The cost is relatively modest to join the suit, and the outcome for many companies could be overwhelming.”

The Section 301 litigation “is not a sprint, it’s a marathon,” said Cohen. “This case will go through months of briefing, and there likely will be oral argument on some or many of the issues.” The two-to-three-year time frame is “our best guess” on how long the litigation will take to resolve, he said. “We’re crossing our fingers that we might get a decision in 2022 out of the Court of International Trade. We think that’s realistic, but we also think it’s realistic that that decision will be appealed.”

It's possible that the case could go to the Supreme Court, said Cohen. “We hope it doesn’t go beyond the Court of Appeals for the Federal Circuit.” Assigning the litigation to a three-judge panel, as the CIT did in February (see 2102050038), means an appeal could go directly to the Supreme Court, without stopping first at the Federal Circuit, but it doesn’t need to, lawyers told us.

Importers that have not yet filed a Section 301 complaint seeking to vacate the Lists 3 and 4A tariffs on Chinese imports “should strongly consider joining this litigation” if they paid any duties, said Cohen. Sandler Travis represents more importers than any other law firm in the massive Section 301 litigation inundating the CIT, he said.

The webinar served as a tutorial on the litigation, plus a sales pitch to sign on new Section 301 clients. “Our fee structure is set at a point where really any company can join,” said Cohen. Sandler Travis charges $3,500 to file the complaint at the CIT, plus an additional $3,500 fee if the case goes to appeal, he said. It plans eventually to pocket a 10% “contingency” share of all tariffs that are refunded if Lists 3 and 4A are declared unlawful, he said.