Case 1:20-cv-01800-N/A Document 2 Filed 09/19/20 Page 1 of 10
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`UNITED STATES COURT OF INTERNATIONAL TRADE
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`KW FOOD INC.,
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` Plaintiff,
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`v.
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`UNITED STATES OF AMERICA; OFFICE OF
`THE UNITED STATES TRADE
`REPRESENTATIVE; ROBERT E. LIGHTHIZER,
`U.S. TRADE REPRESENTATIVE; U.S.
`CUSTOMS & BORDER PROTECTION; MARK
`A. MORGAN, U.S. CUSTOMS & BORDER
`PROTECTION ACTING COMMISSIONER,
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` Defendants.
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`COMPLAINT
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`Court No. 20-01800
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`Plaintiff, KW Food Inc. (“KWF”), by and through its attorneys ACI LAW GROUP, PC,
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`states the following claims against the defendants as follows:
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`1.
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`The claim challenges the imposition of duties on merchandise imported from the People’s
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`Republic of China pursuant to Section 301 of the Trade Act of 1974, 19 U.S.C. § 2411. The
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`Trade Act of 1974 (“Trade Act”) did not confer authority on Defendants to arbitrarily conduct a
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`trade war at their sole discretion, for an extended period of time. The arbitrary manner in which
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`the Defendants implemented the tariff actions violate the Administrative Procedures Act (“APA).
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`Plaintiff alleges that Defendants’ additional imposition and collection of duties on products, also
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`known as List 3 and List 4, are not authorized under the ACT, violate the APA because they are
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`inconsistent with the findings of the underlying USTR report and are otherwise contrary to law.
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`Case 1:20-cv-01800-N/A Document 2 Filed 09/19/20 Page 2 of 10
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`PARTIES
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`2.
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`KWF is an importer of dried foods and related products. Its tariff classifications
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`applicable to its products that appear on “List 3” are the following: 0712.90.8580, 0712.39.1001,
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`0712.90.1000, 0712.90.4040, 0712.90.8580, 0712.20.4000, and 1212.21.0000. Its tariff
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`classifications applicable to its products that appear on “List 4” are the following: 0910.91.0000,
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`0904.22.7600, and 2103.90.9091.
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`3.
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`Defendant United States of America received the disputed tariffs and is the statutory
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`defendant under 5 U.S.C § 702 and 28 U.S.C. § 158(i)(1)(B).
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`4. The United States Trade Representative is an exclusive agency of the United States charged
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`with investigating a foreign nation’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.
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`5. All other Defendants are also named in their official capacity as the decision makers of the
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`agencies responsible for, investigating and implementing, the arbitrary trade practices.
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`STANDING
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`6.
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`Plaintiff is an American importer, has paid duties as a result of additional tariffs illegally
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`imposed pursuant to List 3 and List 4. In addition, plaintiff is adversely affected or aggrieved by
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`agency actions within the meaning of the Administrative Procedures Act. 5 U.S.C. § 702 and 28
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`U.S.C. § 2631(i). Additional tariffs imposed by Defendants pursuant to List 3 and List 4A
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`adversely affected and aggrieved Plaintiff because it has compelled Plaintiff to pay these
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`unlawful duties. Therefore, Plaintiff has standing to bring this claim.
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`JURISDICTION
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`7.
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`This claim action is initiated against the United States, its agencies, or its officers and
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`arises out of a law providing for tariffs, duties, fees, or other taxes on the importation of
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`Case 1:20-cv-01800-N/A Document 2 Filed 09/19/20 Page 3 of 10
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`merchandise for reasons other than the raising of revenue. As such, the Court has subject matter
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`jurisdiction over this action pursuant to 28 U.S.C. § 1581(i)(1)(B), which confers exclusive
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`jurisdiction to the Court.
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`TIMELINESS OF THE ACTION
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`8.
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`An action brought under 28 U.S.C. § 1581(i)(1)(B) is timely if commenced “within two
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`years after the cause of action first accrues.” 28 U.S.C. § 2636(i).
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`9.
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`List 3 was published on September 21, 2018 as Notice of Modification of Section 301
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`Action: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual
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`Property, and Innovation, 83 Fed. Reg. 47,974 (Sept. 21, 2018). The earliest date on which
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`Plaintiff’s right to bring an action may have accrued is the date of publication. The action is,
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`therefore, timely.
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`10.
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`List 4 was published on May 17, 2019 as Request for Comments Concerning Proposed
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`Modification of Action Pursuant to Section 301: China's Acts, Policies, and Practices Related to
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`Technology Transfer, Intellectual Property, and Innovation, 84 Fed. Reg. 22,564, 22,564 (May
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`17, 2019). The earliest date on which Plaintiff’s right to bring an action may have accrued is the
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`date of publication. The action is, therefore, timely.
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`RELEVANT LAW
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`11.
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`19 U.S.C. § 2411(b), “Section 301,” and 19 U.S.C. § 2412 authorize the United States
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`Trade Representative (“USTR”) to investigate whether a foreign country has engaged in an
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`“unreasonable or discriminatory” practice that burdens or restricts U.S commerce.
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`12.
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`Pursuant to 19 U.S.C. § 2411(c)(1)(B), if the investigation reaches an affirmative
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`determination, the USTR may impose duties on imports from the offending country.
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`Case 1:20-cv-01800-N/A Document 2 Filed 09/19/20 Page 4 of 10
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`13.
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`Pursuant to 19 U.S.C. § 2414(a)(2)(B), USTR must determine what, if any, action to take
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`within 12 months after the initiation of the investigation.
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`14.
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`Section 307 of the Trade Act (in pertinent part) allows USTR to modify or terminate an
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`action taken in furtherance of Section 301 when the burden or restriction on United States
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`commerce imposed by the investigated foreign country’s practice has increased or decreased
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`when the action is no longer appropriate. 19 U.S.C. § 2417(a)(1)(B)-(C).
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`FACTS AND PROCEDURAL HISTORY
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`15. Under the direction of President Trump, USTR initiated its investigation into Chinese
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`technology transfer and intellectual property practices on August 18, 2017. Initiation of Section
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`301 Investigation; Hearing; and Request for Public Comments: China’s Acts, Policies, and
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`Practices Related to Technology Transfer, Intellectual Property, and Innovation, 82 Fed. Reg.
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`40,213 (Aug. 24, 2017).
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`16. On March 22, 2018, USTR published a report announcing the results of its investigation
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`in OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE, Findings of the
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`investigation Into China’s Acts, Policies, And Practices Related to Technology Transfer,
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`Intellectual Property, and Innovation Under Section 301 of The Trade Act of 1974 (Mar. 22,
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`2018).
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`• https://ustr.gov/sites/default/files/Section%20301%20FINAL.PDF. The report concludes
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`that the investigated practices of the Chinese government are unreasonable and
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`discriminatory and burden or restrict U.S. commerce. Id. at 47.
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`17. On June 20, 2018, USTR published Notice of Action and Request for Public Comment
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`Concerning Proposed Determination of Action Pursuant to Section 301: China’s Acts, Policies,
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`and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 83 Fed.
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`Case 1:20-cv-01800-N/A Document 2 Filed 09/19/20 Page 5 of 10
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`Reg. 28,710 (June 20, 2018), imposing an addition 25% ad valorem duty on selected products of
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`China. This is the so-called “List 1.”
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`18.
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`On August 16, 2018, USTR published Notice of Action Pursuant to Section 301: China’s
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`Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and
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`Innovation, 83 Fed. Reg. 40,823, 40,823-24 (Aug. 16, 2018), imposing an additional 25% ad
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`valorem duty on selected products of China. This is the so-called “List 2.”
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`19.
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` China retaliated by imposing additional ad valorem tariffs on $50 billion of U.S. goods
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`in response to U.S. actions collecting 25% tariffs under List 1 and List 2.
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`20.
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` In immediate response to China’s retaliation and without reference to China’s
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`technology transfer, intellectual property, or innovation policies, the USTR proposed to impose
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`duties on additional Chinese-origin products. Request for Comments Concerning Proposed
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`Modification of Action Pursuant to Section 301: China’s Acts, Policies, and Practices Related to
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`Technology Transfer, Intellectual Property, and Innovation, 83 Fed. Reg. 33,608, 33,609 (July
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`17, 2018).
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`• Statement by U.S. Trade Representative Robert Lighthizer on Section 301 Action (July
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`10, 2018), available at https://ustr.gov/about-us/policy-offices/press-office/press-
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`releases/2018/july/statement-us-trade-representative.
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`21.
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` On August 1, 2018, USTR announced that it would impose an additional 25% ad
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`valorem duty on selected products of China.
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`•
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` Statement by U.S. Trade Representative Robert Lighthizer on Section 301 Action (Aug.
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`1, 2018) https://ustr.gov/about-us/policy-offices/press-office/press-
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`releases/2018/august/statement-us-trade-representative.
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`22. On September 17, 2018, President Trump announced that he had directed USTR to
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`impose 10% additional tariffs on $200 billion of imports from China.
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`• THE WHITE HOUSE, Statement from the President (Sep. 17, 2018),
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`https://www.whitehouse.gov/briefings-statements/statement-from-the-president-4/. The
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`additional tariffs were explicitly linked to China’s decision to “impose new tariffs in an
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`effort to hurt the United States economy.”
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`23. On September 21, 2018, USTR published the final list of affected products subject to the
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`additional duties, known as “List 3,”. Notice of Modification of Section 301 Action: China's Acts,
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`Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation,
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`83 Fed, Reg, 47,974 (Sep. 21, 2018).
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`24.
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`In the Notice, USTR justified the action as a modification of the existing Section 301
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`action because the burden on United States commerce had continued to increase, citing 1
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`“Section 307(a)(1)(B),” 9 U.S.C. § 2417(a)(1)(B). USTR also stated that Chinese retaliation
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`made the existing action no longer “appropriate,” citing “Section 307(a)(1)(C),” 19 U.S.C. §
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`2417(a)(1)(C).
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`25. On May 17, 2019, USTR announced its intention to proceed with the implementation of
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`Section 301 duties on additional products known as “List 4.” Request for Comments Concerning
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`Proposed Modification of Action Pursuant to Section 301: China's Acts, Policies, and Practices
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`Related to Technology Transfer, Intellectual Property, and Innovation, 84 Fed. Reg. 22,564,
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`22,564 (May 17, 2019). However, the rationale for List 4 was not China’s policies with respect
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`to technology transfer, intellectual property, or innovation. It was simply to punish China for its
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`failure to meet specific commitments made in prior negotiations and its further retaliation against
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`the U.S.
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`Case 1:20-cv-01800-N/A Document 2 Filed 09/19/20 Page 7 of 10
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`26. On August 20, 2019, USTR announced that it would implement List 4 in two phases.
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`Notice of Modification of Section 301 Action: China’s Acts, Policies, and Practices Related to
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`Technology Transfer, Intellectual Property, and Innovation, 84 Fed. Reg. 43,304 (Aug. 20,
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`2019). USTR again relied on Section 307(a)(1)(B) and (C) for authority to modify its prior
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`action. Nevertheless, the Notice does not identify intellectual property, technology transfer or
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`innovation as the reasons for List 4. Rather, the Notice refers to China’s defensive actions
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`including retaliatory tariffs. This publication was more than 12 months after the initiation of the
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`investigation on August 24, 2017.
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`27.
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`On August 30, 2019, USTR published a notice with its decision to increase the tariff rate
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`applicable to goods covered by List 4A and List 4B from 10% to 15%. 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, 84 Fed. Reg. 45,821 (Aug. 30, 2019). Again, USTR
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`rationalized tariff rate increases shortly after USTR finalized List 4A and List 4B as being a
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`result of Chinese response.
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`28. On December 18, 2019, as a result of successfully negotiating a limited trade deal with
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`China, USTR published a notice that USTR would “suspend indefinitely the imposition of
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`additional duties of 15 percent on products of China covered by” List 4B. 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. 69,447, 69,447 (Dec. 18, 2019). USTR also
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`revealed its intent to reduce the tariff rate applicable to products covered by List 4A, id., which
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`ultimately became effective on February 14, 2020, when USTR halved the applicable duty rate,
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`Notice of Modification of Section 301 Action: China’s Acts, Policies, and Practices Related to
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`Technology Transfer, Intellectual Property, and Innovation, 85 Fed. Reg. 3,741 (Jan. 22, 2020).
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`Case 1:20-cv-01800-N/A Document 2 Filed 09/19/20 Page 8 of 10
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`29.
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` Further, the United States and China implemented the limited trade deal that was
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`negotiated for toward the end of 2019. OFFICE OF THE UNITED STATES TRADE
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`REPRESENTATIVE, United States and China Reach Phase One Trade Agreement (Dec. 13,
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`2019), https://ustr.gov/about-us/policy-offices/press-office/press-releases/2019/december/united-
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`states-and-china-reach.
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`30. Duties imposed on products under List 4A still remain in effect to this date. .
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`STATEMENT OF CLAIMS
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`COUNT ONE
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`DECLARATORY JUDGMENT
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`31.
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`Paragraphs 1 through 30 above are reincorporated by reference.
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`32.
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`The Court may “declare the rights and other legal relations of any interested party
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`seeking such declaration, whether or not further relief is or could be sought.” 28 U.S.C. §
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`2201(a).
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`33.
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`The Trade Act of 1974 does not authorize the actions taken by Defendants that resulted in
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`the List 3 and List 4A tariffs.
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`34. USTR failed to base the imposition of Section 301 duties on Chinese products covered by
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`List 3 and List 4 on the acts or policies found to in its report to “burden or restrict” U.S.
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`commerce as required by 19 U.S.C. § 2411(b)(1).
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`35.
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`USTR may “modify or terminate” a Section 301 action when the burden on U.S.
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`commerce from the investigated unfair policies or practices investigated increases or decreases.
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`USTR may not increase the duties assessed in furtherance of Section 301 for reasons other than
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`the acts, policies, or practices that were found to burden U.S. Commerce.
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`Case 1:20-cv-01800-N/A Document 2 Filed 09/19/20 Page 9 of 10
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`36.
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`Section 301 actions may be modified or terminated when no longer appropriate. 19
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`U.S.C. § 2417(a)(1)(C). This authorization does not permit USTR to increase an existing remedy
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`action. Rather, it is the authorization to decrease, remove, or pause the action.
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`37.
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`Therefore, Plaintiff is entitled to a declaratory judgment as a result of Defendants’ actions
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`giving rise to List 3 and List 4 which are ultra vires and contrary to law.
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`COUNT TWO
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`VIOLATION OF THE ADMINISTRATIVE PROCEDURES ACT
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`38.
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`Paragraphs 1 through 37 above are reincorporated by reference.
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`39.
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`The Administrative Procedure Act requires that this Court hold unlawful and set aside
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`agency action that is “(A) arbitrary, capricious, an abuse of discretion, or otherwise not in
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`accordance with law; (B) contrary to constitutional right, power, privilege, or immunity; (C) in
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`excess of statutory jurisdiction, authority, or limitations, or short of statutory right; (D) without
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`observance of procedure required by law; [or] (E) unsupported by substantial evidence.” 5
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`U.S.C. § 706(2).
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`40.
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`USTR’s imposition of List 3 and List 4 duties more than 12 months after the initiation of
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`the investigation is excess of statutory authority and is without the observance of procedure
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`required by law.
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`41. Defendants exceeded their authority under the Trade Act promulgating List 3 and List 4
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`and acted not in accordance with the law. USTR’s imposition of List 3 and List 4 duties for
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`reasons other than China’s policies relating to technology transfer, intellectual property, and
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`innovation is in excess of statutory authority and is arbitrary, capricious, and abuse of discretion.
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`Wherefore, Plaintiff respectfully requests that this Court:
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`PRAYER FOR RELIEF
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`Case 1:20-cv-01800-N/A Document 2 Filed 09/19/20 Page 10 of 10
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`1. Declare the imposition and collection of List 3 duties to be contrary to the law and,
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`therefore, in violation of the APA;
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`2. Declare the imposition and collection of List 4 duties to be contrary to the law and,
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`therefore, in violation of the APA;
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`3. Vacate the List 3, and List 4 rulemaking;
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`4. Order Defendants to refund, with interest as provided by law, any duties paid by
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`Plaintiff in accordance with List 3 and List 4;
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`5. Permanently enjoin Defendants from collecting further duties on importations by
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`Plaintiff of merchandise from China that is included in List 3 and List 4;
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`6. Award Plaintiff its costs and reasonable attorneys’ fees; and
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`7. Grant such other relief as may be just and proper.
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`Respectfully submitted,
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`Dated: September 17, 2020
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`/s/ Jin J. Kim______
`Jin J. Kim
`ACI LAW GROUP, PC
`6 Centerpointe Drive, Suite 630
`La Palma, CA 90623
`pa@acilawgroup.com
`714-522-3300
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`Counsel to KW Food Inc.
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