CIT Denies Injunction Bid on Section 232 'Derivatives' Tariffs
The Court of International Trade on June 2 denied a bid by two nail importers for a preliminary injunction barring the government from collecting Section 232 tariffs on their steel “derivatives” imports. J. Conrad and Metropolitan Staple did not show they would be irreparably harmed if tariff collections proceed, so they didn’t meet at least one of four factors required for the court to issue a preliminary injunction, CIT said.
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Specifically, the injunction sought by J. Conrad and Metropolitan Staple would have resulted in suspension of liquidation of entries covered by the Section 232 tariffs on steel “derivatives,” announced in February (see 2001250003), as well as a halt in collections of cash deposits to cover the tariffs and a bond requirement so the government would be assured of its revenue in the event the importers lost their case. The government had previously agreed to equivalent arrangements with PrimeSource and Oman Fasteners, two other importers that have filed similar lawsuits (see 2002210050).
According to court documents filed in early April, the government refused to agree to the same deal with J. Conrad and Metropolitan Staple. It told the court that the PrimeSource and Oman Fasteners lawsuits had been filed much earlier, with an expedited schedule; J. Conrad and Metropolitan Staple had filed their lawsuit later, and the increased length of time “would erode the effectiveness of the section 232 remedy imposed by the President,” the government said.
“The schedules for these cases are more than two months behind Primesource, and thus, any injunction would likely undermine the section 232 national security measure for a longer period of time than in the earlier cases,” the government said.
Instead, the government offered the same deal it had made with New Supplies and GJ Burkart in two other similar cases, wherein it agreed to suspend liquidation but still collect cash deposits (see 2003030048). New Supplies and GJ Burkart had been happy to take that deal out of concerns about the amount of bond collateral required under the PrimeSource consent order. J. Conrad and Metropolitan Staple apparently stuck to their guns, proceeding with their motion for an injunction in the face of the government’s new position. Their attorneys did not immediately comment.
The standard for courts to issue a preliminary injunction includes four factors: a likelihood to succeed on the merits in the case, irreparable harm in the absence of the preliminary injunction, that the balance of equities is in favor, and that the injunction is in the public interest.
CIT ultimately found that their arguments that they would be irreparably harmed in the absence of the injunction were too “conclusory.” Affidavits from company executives from J. Conrad and Metropolitan Staple about their inability “to pass on the tariff-induced cost increases to their customers are too conclusory to independently support any factual finding to that effect.” Likewise, the affidavits' assertions that the importers’ “higher costs will severely affect cash flow and profitability are likewise too conclusory to support such a finding.”
“More importantly, Plaintiffs have not alleged, let alone established a likelihood through the submission of evidence, that any inability to pass along their higher costs would produce business failure or other harm that could not be remedied by a refund of duties,” CIT said. “Economic loss does not constitute irreparable harm when plaintiffs can be made whole by a money judgment at the litigation’s conclusion.”
Email ITTNews@warren-news.com for a copy of the government’s April responses to court questions.
(J. Conrad Ltd. v. U.S., Slip Op. 20-79, CIT # 20-00052, dated 06/01/12, Judges Stanceu, Choe-Groves and Baker)
(Metropolitan Staple Corp. v. U.S., Slip Op. 20-79, CIT # 20-00053, dated 06/01/12, Judges Stanceu, Choe-Groves and Baker)
(Attorneys: Jeffrey Neely for plaintiffs J. Conrad and Metropolitan Staple; Stephen Tosini for defendant U.S. government)