Kyocera Document Sols. Am. v. Div. of Admin.
| Docket Number | Civil Action 23-4044 (RK) (TJB) |
| Decision Date | 22 December 2023 |
| Parties | KYOCERA DOCUMENT SOLUTIONS AMERICA, INC, Plaintiff, v. DIVISION OF ADMINISTRATION, NEW JERSEY DEPARTMENT OF THE TREASURY, AMANDA TRUPPA, in her Official Capacity as Director of the Division of Administration, DIVISION OF PURCHASE AND PROPERTY, NEW JERSEY DEPARTMENT OF THE TREASURY, and AMY F. DAVIS, in her Official Capacity as Acting Director of the Division of Purchase and Property, Defendants. |
| Court | U.S. District Court — District of New Jersey |
Beginning in 2014 and carrying through to literally the date of this Opinion,[1] Congress has enacted and the President has promulgated and enforced a network of targeted sanctions against Russia in response to Russia's efforts to undermine the government of Ukraine, culminating more recently in the February 2022 invasion and attempt to annex its territory. Shortly after Russia invaded Ukraine, New Jersey enacted a procurement statute (the “Russia Act”) that prohibits New Jersey political subdivisions from doing business with entities that the state determines are carrying out “prohibited activities” in Russia or Belarus. See N.J. Stat. Ann. § 52:32-60.1-60.4.
Kyocera Document Solutions America, Inc. (“Plaintiff') is a United States corporation that has been headquartered in New Jersey for forty years. Plaintiff, which has over 200 employees in New Jersey, does significant business in this state, including providing office equipment and supplies to New Jersey agencies for more than a decade. Plaintiff does not conduct, and Defendants do not suggest that it ever has conducted, business of any kind in Russia or Belarus, or with any Russian or Belarussian company. While Plaintiff complies with the federal sanctions regime against Russia, it violates the expansive scope of New Jersey's Russia Act because a distant Russian company, with which Plaintiff does no business, is nonetheless owned by the same Japanese parent company.
After receiving notification that its contract with New Jersey would not be renewed and that it would be imminently added to a list of entities conducting “prohibited activities” with Russia, Plaintiff filed this case against two New Jersey agencies and their directors responsible for enforcing the Russia Act.[2] Plaintiff seeks declaratory and injunctive relief on the grounds that New Jersey's Russia Act is unconstitutional as applied to Plaintiff because it is preempted by federal law and violates the Foreign Commerce Clause. Currently before the Court are the parties' crossmotions for summary judgment. (ECF Nos 3, 21.)
New Jersey's Russia Act emerged at a time of shared national horror at Russia's “military advances and the brutalities against Ukraine” documented and condemned by the federal government.[3] However, whatever the earnest motive, the Russia Act intrudes on the exclusive province of the federal government to speak for the country in foreign affairs in seeking to influence Russia's conduct. Accordingly, for the reasons set forth below, the Court GRANTS Plaintiff's motion for summary judgment, (ECF No. 3), DENIES Defendants' cross-motion for summary judgment, (ECF No. 21), declares the Russia Act unconstitutional as applied to Plaintiff, and permanently enjoins New Jersey from designating Plaintiff as an entity conducting “prohibited activities” under the Russia Act.
Through the International Emergency Economic Powers Act of 1977 (“IEEPA”), Congress conferred the President with broad authority to regulate an array of economic transactions upon the President's declaration of a foreign-based “unusual and extraordinary threat... to the national security, foreign policy, or economy of the United States . . . .” 50 U.S.C. § 1701 (a). Under IEEPA, the President may impose economic-based sanctions on foreign states, governments, and individuals. See id. § 1702(a)(1)(B).[4]
Over the past decade, Congress has repeatedly charged the President with enforcing, and three presidential administrations have enforced, a regime of economic sanctions against specific Russian government actors, entities, and transactions tied to Russia's actions on the international stage. Shortly after Russia's February and March 2014 invasion and annexation of Crimea, Congress passed the Support for the Sovereignty, Integrity, Democracy, and Economic Stability of Ukraine Act of 2014, which set out a national policy for the United States' interaction with Russia and instructed the President how to execute it. See Pub. L. No. 113-95, 128 Stat. 1088 (2014) (). Specifically, Congress condemned Russia's “political, economic, or military aggression against Ukraine” and declared the United States' intent:
22 U.S.C. § 8902(1), (3)-(4). In setting out these priorities, Congress directed the President to use his authority under IEEPA to “block and prohibit all transactions in all [United States] property and interests in property” of any person the President determines “has perpetrated, or is responsible for ordering, controlling, or otherwise directing, significant acts that are intended to undermine the peace, security, stability, sovereignty, or territorial integrity of Ukraine.” Id. § 8907(a)(2), (b)(1)(A).
On March 6, 2014, President Obama declared a national emergency under IEEPA in response to the assertion of “governmental authority in the Crimean region without the authorization of the Government of Ukraine.” Exec. Order No. 13,660, 79 Fed.Reg. 13,493 (Mar. 6, 2014). The Executive Order authorized sanctions against the United States property of, inter alia, persons “responsible for or complicit in” the political and territorial interference with Ukraine. 79 Fed.Reg. at 13,493. Throughout 2014, the President repeatedly relied on IEEPA to expand the scope of the national emergency declared in Executive Order 13,660 and apply economic sanctions to an expanded group of individuals and entities associated with the Russian leadership, military, and invasion efforts in Crimea. See Exec. Order No. 13,661, 79 Fed.Reg. 15,535 (Mar. 16, 2014) (); Exec. Order No. 13,662, 79 Fed.Reg. 16,169 (Mar. 20, 2014) ()[5]; Exec. Order 13,685, 79 Fed.Reg. 77,357 (Dec. 19, 2014) ().
Three years later, Congress passed and President Trump signed into law the Countering Russian Influence in Europe and Eurasia Act of 2017, Pub. L. 115-44, Tit. II, §§201 et seq., 131 Stat. 886, 898-940 (2017) (codified at 22 U.S.C. §§ 9501 et seq.). In addition to reiterating its intent for the President to work with other governments to “vigorously enforce” sanctions against Russia “in response to the crisis in eastern Ukraine,” 22 U.S.C. § 9502,[6] Congress codified the sanctions President Obama imposed pursuant to IEEPA through the 2014 Executive Orders targeting Russia, id. § 9522. Congress also directed the President to impose sanctions pursuant to his IEEPA authority on foreign persons the President determined were responsible for “serious human rights abuses in any territory forcibly occupied or otherwise controlled by [Russia].” Id. § 8910. Under both the 2014 and 2017 laws, Congress authorized the President to waive or terminate the sanctions upon certifying that certain conditions have been met. 22 U.S.C. § 9522(b), (d); id. § 8907(c)-(d); id. § 8910(e).
In April 2021, President Biden issued another Executive Order declaring a national emergency in response to further Russian acts of aggression and interference against the United States and its allies. Exec. Order No. 14,024, 86 Fed.Reg. 20,249 (Apr. 15,2021). The 2021 Order prevented all United States property belonging to any “political subdivision, agency, or instrumentality of the Government of the Russian Federation” or “owned or controlled by . . . the Government of the Russian Federation” from being “transferred, paid, exported, withdrawn, or otherwise dealt in[.]” 86 Fed.Reg. at 20,249-50.
The federal government escalated its sanctions after Russia invaded Ukraine on February 24, 2022. On March 8, 2022, the President issued an Executive Order condemning Russia's war against Ukraine and expanding the national emergency under IEEPA declared in Executive Order 14,024. Exec. Order 14,066, 87 Fed.Reg. 13,625 (Mar. 8, 2022). The Executive Order prohibited the importation into the United States of energy products from Russia and “new investment in the energy sector in the Russian Federation by a United States person, wherever located.” 87 Fed.Reg. at 13,625. The President issued other Executive Orders in 2022 extending sanctions against economic transactions related to specific Russian entities, economic sectors, or occupied territories.[7] In announcing the 2022 restrictions, the President stated that the United States' sanctions were part of a multi-state regime implemented by “a coalition of partners representing well more than half of the global economy.”[8]
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