Importer Seeks Class Certification at CIT to Get IEEPA Tariff Refunds for All Importers
Chapter1, a small Nevada-based importer represented by boutique litigation firm Gerstein Harrow, filed a case at the Court of International Trade on May 29 seeking class certification for all importers that have paid tariffs recently invalidated by the trade court. The suit, if successful in challenging the tariffs and establishing class certification, would provide refunds for all companies that have paid tariffs imposed under the International Emergency Economic Powers Act (Chapter1 v. United States, CIT # 25-00097).
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On May 28, CIT ruled that President Donald Trump exceeded his authority in IEEPA by imposing reciprocal tariffs and tariffs on China, Canada and Mexico (see 2505280068). However, the ruling was temporarily stayed while the U.S. Court of Appeals for the Federal Circuit considers the government's emergency stay motion on the ruling (see 2505290039).
After the decision, Chapter1 brought its own case against the tariffs, arguing that all elements for the trade court's rules for class certification as laid out in Rule 23(a) and (b)(3) are met. The importer argued that hundreds of thousands of companies "have exactly the same claim, based on exactly the same legal theory, against the United States: Each importer has a claim against the United States for repayment of the tariffs it paid."
Under CIT Rule 23(a), a class will be certified only if the parties are so numerous that joining them to the case is "impracticable," there are questions of law or fact common to the class, the claims of the parties are typical of the class' claims, and the representative parties will "fairly and adequately protect the interests of the class." Chapter1 argued that all four elements are met here.
While it's unclear exactly how many importers have paid tariffs since "Liberation Day," April 2, CBP said it processed over 21 million entry summaries this year, indicating they were paid by thousands of importers, the brief said. This figure is "far too many for joinder to be practicable."
Chapter1 said all members of the class also share "common questions of fact," including whether trade deficits are "unusual" and "extraordinary" under the meaning of IEEPA, and "common questions of law," such as whether IEEPA allows for tariffs at all and, if it does, whether that authority is unlimited. The importer added that it will "adequately protect the interests of the class," since it has "no known conflicts of interest and its claims" are "identical to those of the class and subclass."
Under CIT Rule 23(b)(3), a class can be certified where the court finds the questions of law or fact common to the class to be predominant over any questions only affecting individual members and that class is superior to other available methods of resolving the case. The importer said "common questions will vastly outweigh individual ones in this matter," since the only individual questions are how much money each company owes, which is "easily resolvable using CBP data."
Chapter1 added that "membership in the class will be trivially easy to ascertain," since class membership is "ascertainable from data in CBP's sole possession."
The importer then sought to distinguish the trade court's decision in Baxter Healthcare v. U.S., which denied importers seeking refunds of harbor maintenance taxes class certification. In Baxter, CIT said Rule 23 wasn't met, since an administrative refund procedure was already in place, many parties had already sued and taxes were enacted under a statute passed by Congress, making the court wary of establishing a recovery process for small claims "without Congressional action."
Chapter1 argued that, here, all of these factors weigh in favor of class certification this time around. "The core difference between Baxter and this case is that here the repayment of small claims that would otherwise be impracticable to bring individually is affirmatively favored by Congressional policy," the brief said. "Congress did not create the tariffs at issue in this case, and if this Court has already concluded that Congress did not authorize the President to impose those tariffs." In contrast, Congress told CIT to "order repayment of illegally exacted tariffs through its rulemaking authorization," the brief said.
The importer bringing the suit is a sole proprietorship owned by Ali Shaubzada, an individual who created two skin care products. The company's complaint alleged that creating these products required a special machine that isn't made in the U.S. Shaubzada identified a Chinese company that makes the machine, and he sought to purchase the machine for $15,830. The complaint said Shaubzada drained his savings and business lines of credit to buy the machine only to get hit with a $26,911 tariff bill, $22,953.50 of which is attributable to the now-invalidated tariff orders.