Ninestar Corp. v. United States

666 F.Supp.3d 1351

NINESTAR CORPORATION, Zhuhai Ninestar Information Technology Co., Ltd.,Zhuhai Pantum Electronics Co., Ltd., Zhuhai Apex Microelectronics Co., Ltd.,Geehy Semiconductor Co., Ltd., Zhuhai G&G Digital Technology Co., Ltd.,Zhuhai Seine Printing Technology Co., Ltd.,and Zhuhai Ninestar Management Co., Ltd., Plaintiffs, v. UNITED STATES of America; Department of Homeland Security;United States Customs and Border Protection;Forced Labor Enforcement Task Force;Alejandro Mayorkas, in his official capacity as the Secretaryof the Department of Homeland Security;Troy A. Miller, in his official capacity as the Senior Official Performingthe Duties of the Commissioner for U.S. Customs and Border Protection;and Robert Silvers, in his official capacityas Under Secretary for Office of Strategy, Policy,and Plans and Chair of the Forced Labor Enforcement Task Force, Defendants.

Slip Op. 23-169 Court No. 23-00182

United States Court of International Trade

November 30, 2023

Gordon D. Todd, Michael E. Murphy, Michael E. Borden, Cody M. Akins, Sidley Austin LLP, of Washington, D.C., for Plaintiffs Ninestar Corporation, Zhuhai Ninestar Information Technology Co., Ltd., Zhuhai Pantum Electronics Co., Ltd., Zhuhai Apex Microelectronics Co., Ltd., Geehy Semiconductor Co., Ltd., Zhuhai G&G Digital Technology Co., Ltd., Zhuhai Seine Printing Technology Co., Ltd., and Zhuhai Ninestar Management Co., Ltd.

Monica P. Triana, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of New York, N.Y., for Defendant United States. With her on the brief were Brian M. Boynton, Principal Deputy Assistant Attorney General, Patricia M. McCarthy, Director, Claudia Burke, Deputy Director, Justin R. Miller, Attorney-In-Charge International Trade Field Office, and Guy Eddon, Trial Attorney.

OPINION

Katzmann, Judge:

Plaintiffs Ninestar Corporation and its corporate affiliates are Chinese companies—specifically, manufacturers and sellers of laser printers and printer-related products—who initiated this suit against Defendants the United States and various federal agencies and officials before the U.S. Court of International Trade ("CIT"). Plaintiffs challenge a decision by the inter-agency Forced Labor Enforcement Task Force ("FLETF") to add Plaintiffs to the Entity List of the Uyghur Forced Labor Prevention Act ("UFLPA"). See Pub. L. No. 117-78, 135 Stat. 1525 (2021); see also Notice Regarding the Uyghur Forced Labor Prevention Act Entity List, 88 Fed. Reg. 38080, 38082 (Dep't Homeland Sec. June 12, 2023) ("Listing Notice"). In particular, Plaintiffs allege that the FLETF's decision to add Plaintiffs to the Entity List was arbitrary and capricious under the Administrative Procedure Act, 5 U.S.C. § 706(2)(A), because the FLETF failed to adequately explain its decision. See Compl. ¶¶ 57-62, Aug. 22, 2023, ECF No. 8.

Following reports of forced labor and ongoing genocide in the Xinjiang Uyghur Autonomous Region of the People's Republic of China ("China"), Congress passed the UFLPA. Per the text of the statute, the UFLPA is designed to "strengthen the prohibition against the importation of goods made with forced labor, including by ensuring that the Government of the People's Republic of China does not undermine the effective enforcement of section 307 of the Tariff Act of 1930." Pub. L. 177-78, § 1(1), 135 Stat. at 1525. Section 307 of the Tariff Act, moreover, prohibits the importation of merchandise created wholly or in part by forced labor. See 19 U.S.C. § 1307. The FLETF's decision to add Plaintiffs to the Entity List of the UFLPA presumptively prohibits, under section 307, the importation of any goods produced by Plaintiffs. See Pub. L. 177-78, § 3(a), 135 Stat. at 1529.

That prohibition is now in effect. Plaintiffs have filed the instant Motion for Preliminary Injunction, which asks the court to (1) stay the FLETF's decision to add Plaintiffs to the Entity List and (2) prevent Defendants from taking any action predicated on the Listing Decision against the importation of Plaintiffs' goods. See Mot. for Prelim. Inj. at 17, Aug. 22, 2023, ECF No. 9 ("PI Mot."). Among other defenses to Plaintiffs' Motion for Preliminary Injunction, Defendants argue that the CIT lacks subject matter jurisdiction over Plaintiffs' challenge to the FLETF's listing decision. See Defs.' Mot. to Dismiss & Resp. to Mot. for Prelim. Inj. at 15-18, Oct. 3, 2023, ECF No. 24 ("Defs.' Br.").

Focusing only on the threshold issue of jurisdiction, the court concludes that Plaintiffs are likely to establish subject matter jurisdiction. Because the UFLPA is a law providing for embargoes within the meaning of 28 U.S.C. § 1581(i), challenges to agency action implementing the UFLPA fall within the CIT's exclusive jurisdiction. All other contentions are left to further proceedings regarding Plaintiffs' Motion for Preliminary Injunction.

BACKGROUND

I. Legal Background

Federal law has long prohibited the importation of foreign goods made by forced labor. Section 307 of the Tariff Act of 1930 states in relevant part:

All goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in any foreign country by . . . forced labor . . . shall not be entitled to entry at any of the ports of the United States, and the importation thereof is hereby prohibited . . . .

19 U.S.C. § 1307; see also infra note 11 (tracing the prohibition on importing goods made with involuntary labor to 1890). Section 307 further defines forced labor as "all work or service which is exacted from any person under the menace of any penalty for its nonperformance and for which the worker does not offer himself voluntarily" and includes forced child labor. 19 U.S.C. § 1307.

In the United States-Mexico-Canada Agreement Implementation Act of 2020, Congress directed the President to establish a Forced Labor Enforcement Task Force (the "FLETF") "to monitor United States enforcement of the prohibition under section 307 of the Tariff Act of 1930." Pub L. No. 116-113, § 741(a), 134 Stat. 11, 88 (2020) (codified at 19 U.S.C. § 4681). Per the statute and the President's subsequent Executive Order, the FLETF is chaired by the Secretary of the Department of Homeland Security ("DHS") and comprises seven member agencies: DHS, the U.S. Trade Representative, and the Departments of Justice, Labor, State, Treasury, and Commerce. See 19 U.S.C. § 4681(b)(1); Executive Order No. 13923 § 2, 85 Fed. Reg. 30587, 30587 (May 20, 2020).¹ The FLETF also includes six observer agencies: the Departments of Energy and Agriculture, the U.S. Agency for International Development, the National Security Council, Customs, and U.S. Immigration and Customs Enforcement Homeland Security Investigations. Listing Notice, 88 Fed. Reg. at 38081.

In December 2021, Congress passed and the President signed into law the UFLPA, Pub. L. No. 117-78, 135 Stat. 1525. Congress declared that it was the policy of the United States to "strengthen the prohibition against the importation of goods made with forced labor, including by ensuring that the Government of the People's Republic of China does not undermine the effective enforcement of section 307 of the Tariff Act of 1930 (19 U.S.C. § 1307)." UFLPA, Pub. L. 177-78, § 1(1), 135 Stat. 1525, 1525 (2021). Other aims that Congress identified included "to lead the international community in ending forced labor practices . . . by stopping the importation of any goods made with forced labor"; "to actively work to prevent, publicly denounce, and end human trafficking including with respect to forced labor"; "to regard the prevention of atrocities as it is in the national interest of the United States, including efforts to prevent torture, enforced disappearances, severe deprivation of liberty, including mass internment, arbitrary detention, and widespread and systematic use of forced labor, and persecution targeting any identifiable ethnic or religious group"; and "to address gross violations of human rights in the Xinjiang Uyghur Autonomous Region." Id. § 1(2), (4)-(6), 135 Stat. at 1525.

The UFLPA implements those policies mainly in two parts. First, the UFLPA requires that the FLETF "develop a strategy for supporting enforcement of Section 307 of the Tariff Act of 1930 (19 U.S.C. 1307) to prevent the importation into the United States of goods mined, produced, or manufactured wholly or in part with forced labor in the People's Republic of China." Id. § 2(c), 135 Stat. at 1526. The FLETF published this strategy in June 2022. See DHS, Strategy to Prevent the Importation of Goods Mined, Produced, or Manufactured with Forced Labor in the People's Republic of China (2022) ("FLETF Strategy").² As part of that strategy, the FLETF must create and update four statutory sub-lists:

(i) a list of entities in the Xinjiang Uyghur Autonomous Region that mine, produce, or manufacture wholly or in part any goods, wares, articles and merchandise with forced labor;

(ii) a list of entities working with the government of the Xinjiang Uyghur Autonomous Region to recruit, transport, transfer, harbor or receive forced labor or Uyghurs, Kazakhs, Kyrgyz, or members of other persecuted groups out of the Xinjiang Uyghur Autonomous Region;

. . .

(iv) a list of entities that exported products described in clause (iii) from the People's Republic of China into the United States; [and]

(v) a list of facilities and entities, including the Xinjiang Production and Construction Corps, that source material from the Xinjiang Uyghur Autonomous Region or from persons working with the government of the Xinjiang Uyghur Autonomous Region or the Xinjiang Production and Construction Corps for purposes of the "poverty alleviation" program or the "pairing-assistance" program or any other government labor scheme that uses forced labor . . . .

UFLPA, Pub. L. 177-78, § 3(d)(2)(B), 135 Stat. at 1527; see also FLETF Strategy, supra, at 22-25. The UFLPA Entity List refers to "a consolidated register of the above...