413 F.3d 1344 (Fed. Cir. 2005), 051209, United States Ass'n of Importers of Textiles and Apparel v. United States Dept. of Commerce

Docket Nº:051209.
Citation:413 F.3d 1344
Party Name:U.S. ASSOCIATION OF IMPORTERS OF TEXTILES AND APPAREL, Plaintiff-Appellee, v. UNITED STATES, DEPARTMENT OF COMMERCE, Carlos M. Gutierrez, Secretary of Commerce, Department of State, Condoleezza Rice, Secretary of State, Department of the Treasury, John W. Snow, Secretary of the Treasury, Office of the U.S. Trade Representative, Peter F. Allgeier, A
Case Date:June 28, 2005
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit
 
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413 F.3d 1344 (Fed. Cir. 2005)

U.S. ASSOCIATION OF IMPORTERS OF TEXTILES AND APPAREL, Plaintiff-Appellee,

v.

UNITED STATES, DEPARTMENT OF COMMERCE, Carlos M. Gutierrez, Secretary of Commerce, Department of State, Condoleezza Rice, Secretary of State, Department of the Treasury, John W. Snow, Secretary of the Treasury, Office of the U.S. Trade Representative, Peter F. Allgeier, Acting U.S. Trade Representative, Department of Labor, Elaine Chao, Secretary of Labor, and Committee for the Implementation of Textile Agreements, Defendants-Appellants.

No. 051209.

United States Court of Appeals, Federal Circuit

June 28, 2005

Page 1345

Brenda A. Jacobs, Sidley Austin Brown & Wood LLP, of Washington, DC, argued for plaintiff-appellee. With her on the brief were Neil R. Ellis, David J. Ludlow, and Sharon H. Yuan.

Jeanne E. Davidson, Deputy Director, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendants-appellants. With her on the brief were Stuart E. Schiffer, Deputy Assistant Attorney General; David M. Cohen, Director; and Michael D. Panzera, Trial Attorney. Of counsel on the brief were Jason Kearns, Attorney, Office of the United States Trade Representative, of Washington, DC; Ada E. Bosque, Attorney, United States Department of Commerce, of Washington, DC; Matthew P. Levin, Attorney, United States Department of Labor, of Washington, DC; Meha A. Shah, Attorney, Office of the Legal Adviser, United States Department of State, of Washington, DC; and John G. Murphy, Jr., Senior Counsel, United States Department of the Treasury, of Washington, DC. Of counsel was Arnold I. Havens, General Counsel.

Before MICHEL, Chief Judge, MAYER and LOURIE, Circuit Judges.

MICHEL, Chief Judge.

The United States and the above-listed federal entities and officials (collectively, the "government") appeal from the December 30, 2004, decision by the United States Court of International Trade ("trial court") granting the motion for a preliminary injunction filed by the U.S. Association of Importers of Textiles and Apparel ("Association"). U.S. Ass'n of Imps. of Textiles & Apparel v. United States, 350 F.Supp.2d 1342 (Ct. Int'l Trade 2004) (" USA-ITA "). This case was submitted after oral argument on May 5, 2005.

In May 2003, the inter-agency Committee for the Implementation of Textile Agreements ("CITA") published the Procedures for Considering Requests from the Public for Textile and Apparel Safeguard Actions on Imports from China, 68 Fed.Reg. 27,787 ("procedures"). The procedures allow private parties to petition the government to request consultations with China under a "safeguard provision" regarding the importation of textiles in the terms of China's accession to the World Trade Organization ("WTO"). See Protocol on the Accession of the People's Republic of China, § 1.2, WT/L/432 (Nov. 23, 2001) (" Accession Agreement "); Report of the Working Party on the Accession of China, pp 241-42, WT/ACC/CHN/49 (Oct. 1, 2001) (" Accession Report ").

In late 2004, the Association filed suit, alleging, inter alia, that CITA's acceptance for consideration of certain petitions was arbitrary and capricious in that it conflicted with its published procedures. The trial court held that the procedures do not allow CITA to consider petitions based solely on data suggesting a threat of market disruption ("threat-based petitions"); instead, data describing current market

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disruption is required. Accordingly, the trial court enjoined the government "from accepting, considering, or taking any further action" on threat-based petitions. The trial court further enjoined the government from "self-initiating consideration" whether to take action under the safeguard based on data suggesting merely a threat of market disruption. Because the Association failed to show even a fair chance of success on the merits, we hold that the trial court abused its discretion in granting the preliminary injunction and so we reverse.

I

Pursuant to the Agreement on Textiles and Clothing ("ATC"), previously existing quotas on the importation of textiles and apparel products made in WTO member countries were to be gradually phased out by January 1, 2005. See Agreement Establishing the World Trade Organization, Apr. 15, 1994, Annex 1A. In 2001, as part of China's accession to the WTO, a specific textile safeguard provision was included in paragraph 242 of the Accession Report to provide temporary relief against market disruption caused or threatened by influxes of Chinese imports of textiles and apparel.

CITA helps administer the paragraph 242 safeguard in the United States under its general authority to "supervise the implementation of all textile trade agreements." Exec. Order 11651, 37 Fed.Reg. 4699 (Mar. 3, 1972) 1. As noted above, to aid in implementing the safeguard, CITA published procedures describing how petitions from the public for requests under the safeguard would be considered. 68 Fed.Reg. at 27,787-89. The mechanics of the procedures are described in more detail in the trial court's opinion. USA-ITA, 350 F.Supp.2d at 1344-46.

This case relates to twelve petitions filed after October 2004 that have been accepted for consideration by CITA, which has authority and discretion not to consider defective petitions. See USA-ITA, 350 F.Supp.2d at 1344-46 (citing the Federal Register notices associated with these petitions). These petitions claimed generally that the January 1, 2005, expiration of the ATC would cause a surge in Chinese imports of textile products, creating market disruption. Because the ATC had not yet expired when the petitions were filed, the petitions were based solely on data suggesting a threat of market disruption and not data describing current market disruption.

The Association filed suit and simultaneously moved for a preliminary injunction preventing CITA from taking any further action on the twelve threat-based petitions. In an order and opinion dated December 30, 2004, the trial court granted the motion for a preliminary injunction and the government appealed. We have jurisdiction under 28 U.S.C. § 1292(c)(1).

II

Four factors are weighed in considering a motion for a preliminary injunction: (1) immediate and irreparable injury to the movant; (2) the movant's likelihood of success on the merits; (3) the public interest; and (4) the balance of hardship on all the parties. Zenith Radio Corp. v. United States, 710 F.2d 806, 809 (Fed.Cir.1983). We review the grant of a preliminary injunction by the trial court for abuse of discretion. Id.

III

Beginning with the likelihood of success prong, the trial court held that it was

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sufficient for the Association to demonstrate merely "serious, substantial, difficult, and doubtful questions" regarding the merits to meet this prong. USA-ITA, 350 F.Supp.2d at 1350 (internal quotation omitted). This holding was based, in part, on the trial court's conclusion that the Association had demonstrated that it would "suffer substantially greater harm by the denial of the preliminary injunction than the non-moving party would by its grant." Id. (internal quotation omitted).

The parties dispute whether the trial court's interpretation of the standard for the likelihood of success prong is consistent with our case law. The Association defends the trial court's use of the "serious, substantial, difficult, and doubtful question" standard. In the Ninth Circuit, among others, the likelihood of success and harm-related prongs are viewed as a "continuum in which the required showing of harm varies inversely with the required showing of meritoriousness." Mikohn Gaming Corp. v. Acres Gaming, Inc., 165 F.3d 891, 895 (Fed.Cir.1998) (applying Ninth Circuit law) (internal quotation omitted). Even if the balance of harms tips sharply in favor of the movant, however, the movant must demonstrate at least a "fair chance of success on the merits" for a preliminary injunction to be appropriate. See Atari Games Corp. v. Nintendo of Am., Inc., 897 F.2d 1572, 1577 (Fed.Cir.1990) (applying Ninth Circuit law); Mikohn, 165 F.3d at 895 (describing the fair chance minimum as a "pole" of the continuum). The government argues that, in the Federal Circuit, the fair chance standard is applicable only if "a plaintiff's right to judicial review would be rendered 'meaningless.' " The government also argues that the fair chance standard cannot be applied in actions in which an injunction against the government is sought, citing Second Circuit precedent, such as Wright v. Giuliani, 230 F.3d 543 (2d Cir.2000).

...

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