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`Case 1:20-cv-01214-N/A Document 2 Filed 09/18/20 Page 1 of 18
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`UNITED STATES COURT OF INTERNATIONAL TRADE
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`BCFOODS, INC.
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`Plaintiffs,
`
`v.
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`
`
`
`
`
`
`UNITED STATES OF AMERICA; ROBERT E.
`LIGHTHIZER, IN HIS OFFICIAL CAPACITY AS
`UNITED STATES TRADE REPRESENTATIVE;
`OFFICE OF THE UNITED STATES TRADE
`
`REPRESENTATIVE; MARK A. MORGAN, IN HIS
`OFFICIAL CAPACITY AS ACTING
`
`
`COMMISSIONER OF U.S. CUSTOMS & BORDER
`PROTECTION; U.S. CUSTOMS & BORDER
`
`PROTECTION
`
`
`
`
`
`Defendants.
`
`:
`:
`:
`:
`:
`:
` :
`:
`:
`:
`:
`:
`:
`:
`:
`:
`:
`:
`
`Court no. 20-01214
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`COMPLAINT
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`Plaintiff, BCFOODS Inc. (“BCFOODS”), by and through its attorneys, alleges and states
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`as follows:
`
`1.
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`This action concerns Defendants undertaking of a trade war not authorized by the
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`narrow parameters of U.S. statutory authority found at section 301 of the Trade Act of 1974
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`(“Trade Act”).
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`2.
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`The escalation of the trade war through the imposition of a third round of tariffs
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`was unauthorized on products covered by the so-called “List 3.” See, Notice of Modification of
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`Section 301 Action: China’s Acts, Policies, and Practices Related to Technology Transfer,
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`Intellectual Property, and Innovation, 83 Fed. Reg. 47,974 (Sept. 21, 2018).
`
`3.
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`Section 304 of the Trade Act (19 U.S.C. § 2414) required USTR to determine what
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`Case 1:20-cv-01214-N/A Document 2 Filed 09/18/20 Page 2 of 18
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`action to take, if any, within 12 months after initiation of that investigation.
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`4.
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`The Office of the United States Trade Representative (“USTR”) conducted an
`
`investigation into China’s unfair intellectual property policies and practices pursuant to Section
`
`301 of the Trade Act (19 U.S.C. § 2411). The investigation was initiated on August 18, 2017.
`
`5.
`
`6.
`
`7.
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`The list 3 tariffs were implemented on September 21, 2018.
`
`USTR therefore failed to issue List 3 and List 4 within that one year window.
`
` “Modification” authority under Section 307 of the Trade Act (19 U.S.C. § 2417)
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`to salvage List 3 does not permit USTR to expand the imposition of tariffs to other imports from
`
`China for reasons that are unrelated to the scope of the investigation.
`
`8.
`
`USTR did however alter the tariffs in List 3 and List 4. These decisions to impose
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`and then alter the tariff rates were in response to China’s retaliatory duties and other issues
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`unrelated to the original grounds for the Section 301 measures.
`
`9.
`
`The arbitrary manner in which Defendants implemented the List 3 and List 4 tariff
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`action also violates the Administrative Procedure Act (“APA”).
`
`10.
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`USTR failed to provide sufficient opportunity for comment. Interested parties were
`
`required to simultaneously submit affirmative and rebuttal comments.
`
`11.
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`USTR failed to consider factors that were required by statute, such as the quantified
`
`burden imposed on U.S. commerce by China’s unfair policies.
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`12.
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`USTR also failed to adequately respond to the over 6,000 sincere comments
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`received.
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`13.
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`Therefore, this complaint asks that the Court set aside Defendants’ actions as ultra
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`vires and contrary to law. Defendants should be required to refund all tariffs collected under Lists
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`3 and 4 as applicable to Plaintiff, including interest accrued.
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`Case 1:20-cv-01214-N/A Document 2 Filed 09/18/20 Page 3 of 18
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`JURISDICTION
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`14. Subject matter jurisdiction exists in this action under 28 U.S.C. § 1581(i)(1)(B). Said
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`provision confers exclusive jurisdiction to the Court over “any civil action commenced against the
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`United States, its agencies, or its officers, that arises out of any law of the United States providing
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`for . . . tariffs, duties, fees, or other taxes on the importation of merchandise for reasons other than
`
`the raising of revenue.” See, 28 U.S.C. § 1581(i)(1)(B).
`
`
`
`PARTIES
`
`15.
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`Plaintiff was and is an importer of various goods subject to section 301 tariffs on
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`list 3 and/or list 4a.
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`16.
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`Defendant United States of America imposed, assessed and collected the disputed
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`tariffs and is the statutory defendant under 5 U.S.C. § 702 and 28 U.S.C. § 1581(i)(1)(B).
`
`17.
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`The Office of the USTR is an executive agency of the United States charged with
`
`investigating a foreign country’s trade practices under Section 301 of the Trade Act and
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`implementing “appropriate” responses, subject to the direction of the President. USTR conducted
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`the Section 301 investigation at issue and made numerous decisions regarding Lists 3 and 4.
`
`18.
`
`Defendant U.S. Customs & Border Protection (“CBP”) collects duties on imports.
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`CBP collected payments made by Plaintiff to account for the tariffs imposed by USTR under Lists
`
`3 and 4.
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`STANDING
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`
`
`
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`
`
`
`
`19.
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`Plaintiff holds standing to sue because it was “adversely affected or aggrieved by
`
`agency action within the meaning of” the APA per 5 U.S.C. § 702.
`
`20.
`
`Title 28 U.S.C. § 2631(i) states that “[a]ny civil action of which the Court of
`
`International Trade has jurisdiction . . . may be commenced in the court by any person adversely
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`Case 1:20-cv-01214-N/A Document 2 Filed 09/18/20 Page 4 of 18
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`affected or aggrieved by agency action within the meaning of Section 702 of title 5.”).
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`21.
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`The tariffs imposed by Defendants pursuant to Lists 3 and 4A adversely affected
`
`and aggrieved Plaintiff by requiring the payment of unlawful duties.
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`TIMELINESS OF THE ACTION
`
`22.
`
`A plaintiff must commence an action “within two years after the cause of action
`
`first accrues” pursuant to 28 U.S.C. § 2636(i). Such action here takes place under 28 U.S.C. §
`
`1581(i)(1)(B).
`
`23.
`
`This lawsuit contests Defendants’ action in imposing section tariffs in List 3 and
`
`List 4. The earliest of these, List 3, was implemented on September 21, 2018. See, Notice of
`
`Modification of Section 301 Action: China’s Acts, Policies, and Practices Related to Technology
`
`Transfer, Intellectual Property, and Innovation, 83 Fed. Reg. 47,974 (Sept. 21, 2018).
`
`24.
`
`Plaintiffs’ claims therefore accrued at the earliest on September 21, 2018, when
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`USTR published notice of List 3 in the Federal Register. Id. Plaintiffs have therefore timely
`
`filed this action within 2 years of that date.
`
`
`
`
`
`RELEVANT LAW
`
`25.
`
`Section 301 of the Trade Act authorizes USTR to investigate a foreign country’s
`
`trade practices for “unreasonable or discriminatory” practices. See, 19 U.S.C. § 2411(b).
`
`26.
`
`Once an investigation shows such practices exist, the USTR may imposing
`
`appropriate tariffs on imports as a direct remedy to that unfair practice. See also, § 2411(b),
`
`(c)(1)(B).
`
`27.
`
`USTR is required under Section 304 of the Trade Act to determine its course of
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`action within 12 months after the initiation of the underlying investigation. Id. § 2414(a)(1)(B),
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`Case 1:20-cv-01214-N/A Document 2 Filed 09/18/20 Page 5 of 18
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`(2)(B).
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`28.
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`Thereafter, Section 307 of the Trade Act allows USTR to “modify or terminate”
`
`actions already taken under Section 301, when the “burden or restriction on United States
`
`commerce” imposed by the foreign country’s practice has either “increased or decreased” or when
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`the action “is no longer appropriate.” See, § 2417(a)(1)(B), (C). No such “modification” decision
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`was ever published.
`
`I.
`
`USTR’s Investigation
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`PROCEDURAL HISTORY
`
`29.
`
`On August 14, 2017, President Trump directed Ambassador Lighthizer to consider
`
`initiating an investigation pursuant to Section 301(b) of the Trade Act. The investigation
`
`concerned China’s laws, policies, practices, and actions related to intellectual property, innovation,
`
`and technology. See, Addressing China’s Laws, Policies, Practices, and Actions Related to
`
`Intellectual Property, Innovation, and Technology, 82 Fed. Reg. 39,007 (Aug. 17, 2017).
`
`30.
`
`The issue was therefore stated as whether Chinese laws and actions on intellectual
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`property, innovation, and technology may “inhibit United States exports, deprive United States
`
`citizens of fair remuneration for their innovations, divert American jobs to workers in China,
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`contribute to our trade deficit with China, and otherwise undermine American manufacturing,
`
`services, and innovation.” Id.
`
`31.
`
`On August 18, 2017, USTR formally initiated its investigation into “whether acts,
`
`policies, and practices of the Government of China related to technology transfer, intellectual
`
`property, and innovation are actionable under [Section 301(b) of] the Trade Act.” See, Initiation of
`
`Section 301 Investigation; Hearing; and Request for Public Comments: China’s Acts, Policies, and
`
`Practices Related to Technology Transfer, Intellectual Property, and Innovation, 82 Fed. Reg.
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`Case 1:20-cv-01214-N/A Document 2 Filed 09/18/20 Page 6 of 18
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`40,213 (Aug. 24, 2017).
`
`32.
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`On March 22, 2018, USTR announced the results of its investigation and concluded
`
`that certain “acts, policies, and practices of the Chinese government related to technology transfer,
`
`intellectual property, and innovation are unreasonable or discriminatory and burden or restrict U.S.
`
`commerce.” See, OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE, Findings of
`
`the Investigation Into China’s Acts, Policies, And Practices Related to Technology Transfer,
`
`Intellectual Property, and Innovation Under Section 301 of The Trade Act of 1974 (Mar. 22, 2018).
`
`33.
`
`USTR based these findings on a host of factors. USTR did not however quantify
`
`the burden or restriction imposed on U.S. Commerce by the investigated practices.
`
`34.
`
`In March 2018, USTR stated that it would “propose additional tariffs” of 25% ad
`
`valorem “on certain products of China, with an annual trade value commensurate with the harm
`
`caused to the U.S. economy resulting from China’s unfair policies.” See Actions by the United
`
`States Related to the Section 301 Investigation of China’s Laws, Policies, Practices, or Actions
`
`Related to Technology Transfer, Intellectual Property, and Innovation, 83 Fed. Reg. 13,099 (Mar.
`
`27, 2018).
`
`II.
`
`Lists 1 & 2
`
`
`
`
`
`35.
`
`Defendants then undertook a series of actions to remedy the harm to the U.S.
`
`economy caused by the investigated unfair practices. The U.S. government imposed section 301
`
`tariffs on imports from China covered by the so- called Lists 1 and 2.
`
`36.
`
`On April 6, 2018, USTR published notice of its intent to pursue tariffs the first
`
`tranche of merchandise (List 1) subject to an additional duty of 25 percent. See, Notice of
`
`Determination and Request for Public Comment Concerning Proposed Determination of Action
`
`Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer,
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`Case 1:20-cv-01214-N/A Document 2 Filed 09/18/20 Page 7 of 18
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`Intellectual Property, and Innovation, 83 Fed. Reg. 14,906, 14,907 (Apr. 6, 2018).
`
`37.
`
`The products on the so-called List 1 covered “approximately $50 billion in terms of
`
`estimated annual trade value for calendar year 2018.” Id. at 14,907.
`
`38.
`
`USTR explained that $50 billion “commensurate with an economic analysis of the
`
`harm caused by China’s unreasonable technology transfer policies to the U.S. economy, as covered
`
`by USTR’s Section 301 investigation.”
`
`39.
`
`On June 20, 2018, USTR finalized List 1 subject to an additional duty of 25%. See,
`
`Notice of Action and Request for Public Comment Concerning Proposed Determination of Action
`
`Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer,
`
`Intellectual Property, and Innovation, 83 Fed. Reg. 28,710 (June 20, 2018).
`
`40.
`
`USTR also announced that it intended to impose a 25% ad valorem duty on List 2
`
`Chinese products, in order to “maintain the effectiveness of [the] $50 billion trade action”. Id. at
`
`28,712.
`
`41.
`
`On August 16, 2018, USTR published the final List 2 of products subject to an
`
`additional duty of 25% ad valorem in List 2. See, Notice of Action Pursuant to Section 301: China’s
`
`Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation,
`
`83 Fed. Reg. 40,823, 40,823-24 (Aug. 16, 2018).
`
`III. List 3 and List 4
`
`A.
`
`List 3
`
`42.
`
`Shortly after President Trump directed USTR in April 2018 to consider imposing
`
`duties on $50 billion in Chinese products, China promptly threatened to impose retaliatory duties
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`on the same value of imports from the United States.
`
`43.
`
`President Trump then instructed the USTR to consider whether $100 billion of
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`Case 1:20-cv-01214-N/A Document 2 Filed 09/18/20 Page 8 of 18
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`additional tariffs would be appropriate under Section 301 due to China’s unfair retaliation. See,
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`THE WHITE HOUSE, Statement from Donald J. Trump on Additional Proposed Section 301
`
`Remedies (Apr. 5, 2018).
`
`44.
`
`On June 18, 2018, President Trump acknowledging that China’s threatened
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`retaliatory “tariffs on $50 billion worth of United States exports” motivated his decision,
`
`instructed USTR to consider imposing additional duties on products from China with an
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`estimated trade value of $200 billion—despite USTR having not yet implemented List 1 and List
`
`2. See, THE WHITE HOUSE, Statement from the President Regarding Trade with China (June
`
`18, 2018).
`
`45.
`
`USTR then stated that it would design the newly proposed duties to address China’s
`
`threatened retaliatory measures, rather than to specifically address any the harms identified in its
`
`Section 301
`
`investigation. See, OFFICE OF THE UNITED STATES TRADE
`
`REPRESENTATIVE, USTR Robert Lighthizer Statement on the President’s Additional China
`
`Trade Action (June 18, 2018).
`
`46.
`
`USTR Robert Lighthizer then stated that although Lists 1 and 2 “were proportionate
`
`and responsive to forced technology transfer and intellectual property theft by the Chinese”, the
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`proposed duties for List 3 products were necessary to respond to the retaliatory and “unjustified
`
`tariffs” that China may impose to target “U.S. workers, farmers, ranchers, and businesses”.
`
`47.
`
`China retaliated by imposing 25% ad valorem tariffs on $50 billion in U.S. goods
`
`implemented in two stages of $34 billion and $16 billion on the same dates the United States began
`
`collecting its own 25% tariffs under List 1 (July 6, 2018) and List 2 (August 23, 2018).
`
`48.
`
`On July 17, 2018, USTR published notice of its proposal to “modify” the action by
`
`maintaining the original $34 billion and $16 billion actions, and by taking “supplemental action”
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`in the form of “an additional 10 percent ad valorem duty on [a list of] products [from] China with
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`Case 1:20-cv-01214-N/A Document 2 Filed 09/18/20 Page 9 of 18
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`an annual trade value of approximately $200 billion.” See, Request for Comments Concerning
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`Proposed Modification of Action Pursuant to Section 301: China’s Acts, Policies, and Practices
`
`Related to Technology Transfer, Intellectual Property, and Innovation, 83 Fed. Reg. 33,608, 33,608
`
`(July 17, 2018).
`
`49.
`
`50.
`
`In this publication, the USTR invoked Section 307(a)(1)(C) of the Trade Act.
`
`USTR initially set a deadline of August 17, 2018 for initial comments; August 20-
`
`23, 2018 for a public hearing; and August 30, 2018 for rebuttal comments. Id. at 33,608.
`
`51.
`
`In its notice, USTR confirmed that it had relied on China’s decision to impose
`
`“retaliatory duties” as the primary basis for its proposed action. Id. at 33,609
`
`52.
`
`USTR explicitly tied the $200 billion in its proposed action to the level of retaliatory
`
`duties imposed by China on U.S. imports. See id.
`
`53.
`
`Although it pointed to China’s retaliatory measures, USTR did not identify any
`
`increased burdens or restrictions on U.S. commerce resulting from the unfair practices that USTR
`
`had investigated. See id.
`
`54.
`
`On July 10, 2018, Ambassador Lighthizer stated that the proposed action came
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`“[a]s a result of China’s retaliation and failure to change its practice.” OFFICE OF THE UNITED
`
`STATES TRADE REPRESENTATIVE, Statement by U.S. Trade Representative Robert Lighthizer
`
`on Section 301 Action (July 10, 2018).
`
`55.
`
`On July 10, 2018, President Trump suggested that the United States’ trade
`
`imbalance with China supported the decision.
`
`56.
`
`Ambassador Lighthizer announced that, in light of China’s retaliatory duties, USTR
`
`would propose to increase the additional duty from 10% to 25% ad valorem. See, OFFICE OF
`
`THE UNITED STATES TRADE REPRESENTATIVE, Statement by U.S. Trade Representative
`
`Robert Lighthizer on Section 301 Action (Aug. 1, 2018).
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`Case 1:20-cv-01214-N/A Document 2 Filed 09/18/20 Page 10 of 18
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`57.
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`Rather than asserting that the tariffs related to the Section 301 investigation,
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`Ambassador Lighthizer stated that China “[r]egrettably . . . illegally retaliated against U.S. workers,
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`farmers, ranchers and businesses.”
`
`58.
`
`On Aug. 7, 2018, USTR then proposed “raising the level of the additional duty in
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`the proposed supplemental action from 10 percent to 25 percent.” See, Extension of Public
`
`Comment Period Concerning Proposed Modification of Action Pursuant to Section 301: China’s
`
`Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation,
`
`83 Fed. Reg. 38,760, 38,760 (Aug. 7, 2018). USTR also set new dates for a public hearing over six
`
`days ending on August 27, 2018. See id.; see also OFFICE OF THE UNITED STATES TRADE
`
`REPRESENTATIVE, Public Hearings on Proposed Section 301 Tariff List (Aug. 17, 2018)
`
`(modifying hearing schedule).
`
`59.
`
`USTR adjusted the deadlines for the submission of written comments, setting
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`September 6, 2018, as the new deadline for both initial and rebuttal comments from the public. 83
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`Fed. Reg. at 38,761.
`
`60.
`
`That adjustment prevented both USTR and the public from considering initial
`
`comments at the hearing, and left insufficient time for interested parties to review and respond to
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`the initial comments filed by other parties.
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`61.
`
`Eleven days after receiving thousands of final comments from the public, President
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`Trump announced that he had directed USTR “to proceed with placing additional tariffs on roughly
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`$200 billion of imports from China.” See, THE WHITE HOUSE, Statement from the President
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`(Sep. 17, 2018).
`
`62.
`
`In these remarks dated September 17, 2018, the President made clear that China’s
`
`response to the $50 billion tariff action (i.e., List 1 and List 2 duties) motived his decision and he
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`immediately promised to proceed with “phase three” of the plan—an additional $267 billion tariff
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`action—“if China takes retaliatory action against our farmers or other industries.” Id.
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`63.
`
`On September 21, 2018, USTR announced that List 3 products would be subject to
`
`an additional tariffs. See, 83 Fed. Reg. at 47,974.
`
`64.
`
`The tariffs began at 10% ad valorem tariff that was set to rise automatically to 25%
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`on January 1, 2019. Id.
`
`65.
`
`USTR did not respond to any of the over 6,000 comments that it received or any of
`
`the testimony provided by roughly 350 witnesses.
`
`66.
`
`As a masked legal support for its action, USTR for the first time cited to Section
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`307(a)(1)(B) of the Trade Act, which provides that USTR “may modify or terminate any action,
`
`subject to the specific direction . . . of the President . . . taken under Section 301 if . . . the burden
`
`or restriction on United States commerce of the denial of rights, or of the acts, policies, or practices,
`
`that are the subject of such action has increased or decreased.” Id. (brackets omitted).
`
`67.
`
`USTR concluded that the relevant burden “continues to increase, including
`
`following the one-year investigation period.”
`
`68.
`
`USTR also concluded that “China’s unfair acts, policies, and practices include not
`
`just its specific technology transfer and IP polices referenced in the notice of initiation in the
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`investigation, but also China’s subsequent defensive actions taken to maintain those policies.” Id.
`
`69.
`
` USTR also cited Section 307(a)(1)(C) of the Trade Act, arguing that China’s
`
`response to the $50 billion tariff action “has shown that the current action no longer is appropriate”
`
`because “China openly has responded to the current action by choosing to cause further harm to
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`the U.S. economy, by increasing duties on U.S. exports to China.” See, Id. at 47,975.
`
`70.
`
`In December 2018, and again in February 2019, the Administration announced that
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`it would delay the scheduled increase in the List 3 duty rate from 10 to 25%. See, Notice of
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`Modification of Section 301 Action: China’s Acts, Policies, and Practices Related to Technology
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`Transfer, Intellectual Property, and Innovation, 83 Fed. Reg. 65,198 (Dec. 19, 2018); Notice of
`
`Modification of Section 301 Action: China’s Acts, Policies, and Practices Related to Technology
`
`Transfer, Intellectual Property, and Innovation, 84 Fed. Reg. 7,966 (Mar. 5, 2019).
`
`71.
`
`In May 2019, USTR announced its intent to raise the tariff rate on List 3 goods to
`
`25%. See Notice of Modification of Section 301 Action: China's Acts, Policies, and Practices
`
`Related to Technology Transfer, Intellectual Property, and Innovation, 84 Fed. Reg. 20,459 (May
`
`9, 2019) (“List 3 Rate Increase Notice”); see also Implementing Modification to Section 301
`
`Action: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property,
`
`and Innovation, 84 Fed. Reg. 21,892 (May 15, 2019).
`
`72.
`
`The May 15, 2019 notice cited to China’s decision to “retreat from specific
`
`commitments agreed to in earlier rounds” of negotiations as the basis for the increase in the duty
`
`rate. List 3 Rate Increase Notice, 84 Fed. Reg. at 20,459.
`
`73.
`
`As a deviation from past practice, USTR did not seek public comment but rather
`
`simply announced that the increase would occur. Id.
`
`74.
`
`The duties imposed on products covered by List 3 remain in effect as of the date of
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`this Complaint.
`
`B. List 4
`
`
`
`
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`75.
`
`On May 17, 2019, USTR announced its intent to proceed with List 4 at an
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`additional duty of 25% ad valorem on products worth $300 billion. See, Request for Comments
`
`Concerning Proposed Modification of Action Pursuant to Section 301: China's Acts, Policies, and
`
`Practices Related to Technology Transfer, Intellectual Property, and Innovation, 84 Fed. Reg.
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`22,564, 22,564 (May 17, 2019).
`
`76.
`
`USTR explained that its decision was motivated by China’s retreat from negotiated
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`trade commitments, and China’s further retaliatory action against U.S. commerce.
`
`77.
`
`Nearly 3,000 comments were filed in Docket No. USTR-2019-0004, without time
`
`for meaningful review.
`
`78.
`
`On August 1, 2019, President Trump announced that the List 4 tariffs would
`
`become effective September 1, 2019 at a rate of 10% ad valorem. As a basis, the President cited
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`to China’s failure to abide with agricultural purchases and the failure to reduce exports of fentanyl.
`
`79.
`
`On August 20, 2019, USTR implemented List 4 in two separate tranches. See,
`
`Notice of Modification of Section 301 Action: China’s Acts, Policies, and Practices Related to
`
`Technology Transfer, Intellectual Property, and Innovation, 84 Fed. Reg. 43,304 (Aug. 20, 2019).
`
`80.
`
`List 4A was announced as a 10% ad valorem duty effective September 1, 2019.
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`List 4B was announced as a 10% ad valorem duty effective December 15, 2019. Id. at 43,305.
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`81.
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`USTR did not address any of the nearly 3,000 comments submitted or any of the
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`testimony provided by witnesses. USTR did however claim that its determination “takes account
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`of the public comments and the testimony.” Id.
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`82.
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`USTR cited to Section 307(a)(1)(B) and (C) of the Trade Act as legal authority for
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`its action. USTR claimed that it was modifying its prior action taken pursuant to Section 301 of the
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`Trade Act but failed to identify any increased burden on U.S. commerce from the practices that
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`were the subject of USTR’s investigation. Instead USTR pointed to “China’s subsequent
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`“defensive actions” taken to maintain those unfair acts, policies, and practices as determined in
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`that investigation.
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`83.
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`On August 30, 2019, USTR published notice of its decision to increase the tariff
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`rate applicable to goods covered by List 4A and List 4B from 10% to 15%. Notice of Modification
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`of Section 301 Action: China’s Acts, Policies, and Practices Related to Technology Transfer,
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`Intellectual Property, and Innovation, 84 Fed. Reg. 45,821 (Aug. 30, 2019).
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`84.
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`In the August 30, 2019 publication, USTR explained that it increased the tariff rate
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`because, shortly after it finalized List 4A and List 4B, “China responded by announcing further
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`tariffs on U.S. goods.” Id. at 45,822.
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`85.
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`In the August 30, 2019 publication, USTR also cited to China’s retreat from its
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`negotiation commitments and devaluation of its currency as grounds for the action. Id.
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`86.
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`On December 18, 2019, USTR published notice that it would suspend List 4B tariffs.
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`87.
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`88.
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`On February 14, 2020, when USTR halved the applicable duty rate on List 4A.
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`In the months that followed, the United States and China implemented the limited
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`trade deal that they negotiated near the end of 2019.
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`89.
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`The duties imposed on products covered by List 3 and List 4A remain in effect as
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`of the date of this Complaint.
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`90.
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`Plaintiff later imported goods subject to the tariffs and was thereby directly
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`damaged by the tariffs.
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`STATEMENT OF CLAIMS
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`COUNT ONE
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`(DECLARATORY JUDGMENT—VIOLATION OF THE TRADE ACT OF 1974)
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`91.
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`92.
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`Paragraphs 1 through 90 are incorporated by reference.
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`The Declaratory Judgment Act authorizes any court of the United States to “declare
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`the rights and other legal relations of any interested party seeking such declaration, whether or not
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`further relief is or could be sought.” See, 28 U.S.C. § 2201(a).
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`93.
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`The actions taken by Defendants in the implementation and assessment of List 3
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`and List 4 tariffs was not authorized by law under the Trade Act of 1974.
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`94.
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`Section 301 of the Trade Act would have only authorized the 301 tariffs if USTR
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`Case 1:20-cv-01214-N/A Document 2 Filed 09/18/20 Page 15 of 18
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`determined that “an act, policy, or practice of a foreign country is unreasonable or discriminatory
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`and burdens or restricts United States commerce, and action by the United States is appropriate.”
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`See, 19 U.S.C. § 2411(b). USTR failed to predicate its actions giving rise to List 3 and List 4 on
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`any such determination.
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`95.
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`The USTR was required to determine what action to take within “12 months after
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`the date on which the investigation is initiated.” 19 U.S.C. § 2414(a)(1)(B), (2)(B).
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`96.
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`USTR initiated the underlying Section 301 investigation on August 18, 2017 and
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`took action against List 3 more than a year later, on September 21, 2018.
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`97.
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`USTR is authorized under Section 307 of the Trade Act to “modify or terminate” a
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`section 301(b) tariff action when the burden imposed on U.S. commerce from the foreign country’s
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`investigated unfair acts, policies, or practices increases or decreases. See, 19 U.S.C. §
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`2417(a)(1)(B).
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`98.
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`USTR was not authorized to increase the tariffs for reasons that were unrelated to
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`the acts, policies, or practices that USTR investigated pursuant to Section 301 of the Trade Act
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`within the context of an open-ended trade war.
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`99.
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`Since the actions to impose, and then increase the section 301 tariffs were ultra
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`vires and contrary to law, the Plaintiff is entitled to declaratory judgment in its favor.
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`COUNT TWO
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`(VIOLATION OF THE ADMINISTRATIVE PROCEDURE ACT)
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`100. Paragraphs 1 through 99 are incorporated by reference
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`101. The Court may pursuant to the APA hold unlawful and set aside any agency action
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`that is: “(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;
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`(B) contrary to constitutional right, power, privilege, or immunity; (C) in excess of statutory
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`jurisdiction, authority, or limitations, or short of statutory right; (D) without observance of
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`procedure required by law; [or] (E) unsupported by substantial evidence.” 5 U.S.C. § 706(2).
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`102.
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`In the course of implementation of List 3 and List 4a, the government committed
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`all of those acts enumerated in A, C, D and E and therefore exceeded its authority as delegated
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`under the Trade Act.
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`103. The government has acted “not in accordance with the law” and “in excess of
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`statutory authority” for the reasons set forth in Count One.
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`104. No legitimate statutory basis was presented to support the “increased burden”
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`presented by China’s intellectual property policies and practices as were the subject of USTR’s
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`Section 301 investigation.
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`105. Defendants promulgated List 3 and List 4a in an arbitrary and capricious manner
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`because they did not provide a sufficient opportunity for comment, failed to meaningfully consider
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`relevant factors when making their decisions, and failed to adequately explain their rationale.
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`* * *
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`Case 1:20-cv-01214-N/A Document 2 Filed 09/18/20 Page 17 of 18
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`PRAYER FOR RELIEF
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`Wherefore, Plaintiff respectfully requests that this Court
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`(1)
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`declare that the section 301 tariffs that were assessed on products of List 3 and
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`(2)
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`(3)
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`(4)
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`List 4a were unauthorized by the Trade Act and are void in abnitio;
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`declare that Defendants unlawfully promulgated List 3 in violation of the APA;
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`vacate the List 3 and List 4A rulemaking;
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`order refunds with interest accrued, of any section 301 tariffs paid by Plaintiff
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`under USTR section 301 List 3 or List 4A;
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`(5)
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`permanently enjoin the government from applying List 3 or List 4A against
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`Plaintiff and from collecting any additional such tariffs from Plaintiff;
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`award Plaintiff its costs and reasonable attorney fees; and
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`grant such other and further relief as may be just and proper.
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`(6)
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`(7)
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`Dated: September 18, 2020
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`Respectfully submitted,
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` /s/ Matt Nakachi
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`Junker & Nakachi, P.C.
`One Market Street
`Spear Tower; Suite 3600
`San Francisco, CA 94105
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`Counsel to BCFOODS Inc.
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`Case 1:20-cv-01214-N/A Document 2 Filed 09/18/20 Page 18 of 18
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`CERTIFICATE OF SERVICE
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`Pursuant to U.S. Court of International Trade Rule 4(b) and (h), I hereby certify that on
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`September 18, 2020, copies of Plaintiff’s Summons and Complaint were served on the following
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`parties by certified mail, return receipt requested:
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`Attorney-In-Charge
`International Trade Field Office
`Commercial Litigation Branch
`U.S. Department of Justice
`26 Federal Plaza
`New York, NY 10278
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`Attorney-In-Charge
`Commercial Litigation Branch
`U.S. Department of Justice
`1100 L Street, NW
`Washington, DC 20530
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`General Counsel Joseph L. Barloon
`Office of the General Counsel
`Office of the U.S. Trade Representative
`600 17th Street, NW
`Washington, DC 20006
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`Chief Counsel Scott K. Falk
`Office of Chief Counsel
`U.S. Customs & Border Protection
`1300 Pennsylvania Ave., NW
`Washington, DC 20229
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` /s/ Matt Nakachi
`Matt Nakachi
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