United States Court of Appeals for the Federal Circuit
05-1209
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.
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.
Appealed from: United States Court of International Trade
Senior Judge Richard W. Goldberg
United States Court of Appeals for the Federal Circuit
05-1209
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.
_________________________
DECIDED: June 28, 2005
_________________________
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, ¶¶ 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 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
05-1209 2
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.
1
Executive Order 11651 was amended on other grounds by Executive
Order 11951, 42 Fed. Reg. 1453 (Jan. 6, 1977), and Executive Order 12188, 45 Fed.
Reg. 989 (Jan. 2, 1980).
05-1209 3
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
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
05-1209 4
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).
In this case, we need not, and thus do not, resolve the dispute over the legal
standard applicable in the Federal Circuit because we hold, as described in detail
below, that the Association did not meet even the less demanding fair chance standard
for proving the likelihood of success prong. We note, however, that even assuming the
fair chance standard to be the correct standard, the trial court’s interpretation of this
standard was incorrect. On the Association’s claim that “CITA’s acceptance of threat-
based requests violates its own regulations and the APA [Administrative Procedure
Act],” the trial court held that “[t]his allegation raises questions as to the applicability of
APA rulemaking procedures” that “[were] not addressed by the Court’s opinion in Mast
Industries, Inc. v. Regan, 8 CIT 214, 596 F. Supp. 1567 (1984).” USA-ITA, 350 F.
05-1209 5
Supp. 2d at 1350. On the Association’s claim that “CITA has exceeded its delegated
authority,” the trial court held that this “is a novel question.” Id.
The error in the trial court’s analysis is in holding that mere novelty is sufficient to
demonstrate a fair chance of success. Instead, the movant’s evidence and arguments
must actually be weighed against those of the non-movant to determine whether the
movant’s likelihood of success meets the applicable standard, whatever that standard
may be.2 See, e.g., Atari Games, 897 F.2d at 1577-78 (reversing a district court’s grant
of a preliminary injunction based on the fair chance standard because the district court
had failed properly to weigh the evidence presented by the parties); Vehicular Techs.
Corp. v. Tital Wheel Int’l, Inc., 141 F.3d 1084 (Fed. Cir. 1998) (considering in detail the
evidence and arguments raised by the parties in reversing the district court’s grant of a
preliminary injunction); Mikohn Gaming, 165 F.3d at 895 (defining “serious questions . .
. as questions which cannot be resolved one way or the other at the hearing” (internal
quotations omitted)).
Thus, we turn to the arguments and evidence presented by the Association in
support of its claims to determine whether the Association has demonstrated a fair
chance of success and whether the trial court clearly erred in finding that it had.
A
The government first contends that the Association is unlikely to succeed
because jurisdiction is lacking over each of the four claims in the complaint. Before the
2
Although the trial court addressed the novelty of the Association’s
authority argument “both as a matter of first impression and in light of express
Congressional action to delegate the administration of other aspects of China’s
Accession Agreement to the International Trade Commission,” USA-ITA, 350 F. Supp.
2d at 1350, the allusion to a single argument in a single claim is not a sufficient
weighing of the evidence and arguments.
05-1209 6
trial court, the government simultaneously opposed the Association’s motion for a
preliminary injunction and moved to dismiss on jurisdictional grounds. USA-ITA, 350 F.
Supp. 2d at 1348. The trial court declined to rule “on defendant’s motion to dismiss until
briefing on the issues raised therein [was] complete.” Id. at 1344 n.1. We see no abuse
of discretion in the trial court’s decision to delay consideration of the government’s
motion to dismiss until briefing was completed. We disagree, however, that the
jurisdictional arguments could be ignored in ruling on the Association’s preliminary
injunction motion. The question of jurisdiction closely affects the Association’s
likelihood of success on its motion for a preliminary injunction. Failing to consider it was
legal error.
The government argues that jurisdiction is lacking over each of the Association’s
claims on ripeness grounds because CITA’s decision to consider whether to
recommend a request for consultations with China is not a final agency action. It is
undisputed that the Association’s four claims are based upon the APA. Under a
provision of the APA, 5 U.S.C. § 704, a “final agency action” is required before judicial
review is appropriate. Other agency actions, such as “[a] preliminary, procedural, or
intermediate agency action or ruling,” are “subject to review on the review of the final
agency action.” Id.
Two cases are of primary importance in resolving the parties’ dispute as to
ripeness: Abbott Laboratories v. Gardner, 387 U.S. 136 (1967), and Federal Trade
Commission v. Standard Oil Co., 449 U.S. 232 (1980). Abbott Laboratories involved a
regulation requiring prescription drug manufacturers to accompany the brand name of
the drug with the government-established name every time the brand name was used
05-1209 7
on the packaging. 387 U.S. at 138-39. A group of drug manufacturers brought suit,
claiming that this regulation conflicted with the statute the regulation was designed to
implement. The Supreme Court recited two factors in determining whether the APA suit
was ripe, “the fitness of the issues for judicial decision and the hardship to the parties of
withholding court consideration.” Id. at 149. Under the first factor, the Court stated that
the question in the case was “purely legal,” id., and then determined that the action at
issue was a final agency action because the regulation was “quite clearly definitive,” id.
at 151. Under the second factor, the Court concluded that the regulations have “a direct
effect on the day-to-day business of all prescription drug companies . . . . Either they
must comply with the every time requirement and incur the costs of changing over their
promotional material and labeling or they must follow their present course and risk
prosecution.” Id. at 152 (internal quotation omitted). Accordingly, the Supreme Court
concluded that the regulation was a final agency action and, therefore, the case was
ripe for review.
In Standard Oil, the Federal Trade Commission (“FTC”) issued an administrative
complaint against a group of oil companies under authority requiring it to have a “reason
to believe” that a violation of the Federal Trade Commission Act (“FTCA”) had occurred
before a complaint may be issued. 449 U.S. at 234-35. Before the administrative
resolution of the FTC’s complaint, one of the oil companies filed a complaint in federal
district court, alleging that the FTC had issued its complaint without sufficient reason to
believe that a violation of the FTCA had occurred.
The Standard Oil Court applied the Abbott Laboratories factors and concluded
that the claim was not ripe. Under the first factor, the Supreme Court held that although
05-1209 8
the FTC’s decision to issue a complaint was “definitive” in the sense that the FTC had
firmly decided that it had reason to believe and such a decision was a prerequisite to
further agency action, the issuance of a complaint was merely a “threshold
determination that further inquiry [was] warranted” and, therefore, not “definitive” as
required by Abbott Laboratories. Id. at 241.
Under the second factor, the Standard Oil Court held that the mere issuance of a
complaint had “no legal force comparable to that of the regulation at issue in Abbott
Laboratories, nor any comparable effect upon [Standard Oil’s] daily business.” Id. at
242. The Court distinguished the “serious criminal and civil penalties” associated with a
failure to comply with the regulation in Abbott Laboratories from the mere “burden of
responding to the charges made against” the oil companies resulting from the complaint
by the FTC, noting that “[a]lthough this burden [of responding] certainly is substantial, it
is different in kind and legal effect from the burdens attending what heretofore has been
considered to be final agency action.” Id. (internal quotation omitted). The Standard Oil
Court also noted that “unlike the review in Abbott Laboratories, judicial review to
determine whether the Commission decided that it had the requisite reason to believe
would delay resolution of the ultimate question whether the Act was violated.” Id. at
242-43.
We find Standard Oil to be the governing precedent in this case. Under the first
factor, which addresses the fitness of the issues for judicial review, CITA’s decision to
consider whether to suggest that consultations be requested in this case is more
analogous to the “threshold determination” warranting further investigation in Standard
Oil, id. at 241, than to the issuance of a formal regulation after notice and comment
05-1209 9
constituting a final agency action in Abbott Laboratories, 387 U.S. at 138-39. The
Association counters that this case is fit for judicial review because “this lawsuit is a
challenge to CITA’s re-interpretation of its regulations to authorize ‘threat-based’
safeguard requests, not a challenge to a specific safeguard determination,” and,
therefore, the question in the case is “purely legal.” This argument is unpersuasive
because pleading a legal question, by itself, is not sufficient to establish fitness for
judicial review in this case. In the APA context, the first Abbott Laboratories factor
addresses not only the type of challenge being raised but also, and more importantly,
the type of decision being challenged. See 387 U.S. at 151 (addressing not only the
legal nature of the issue in the case but also the definitive nature of the regulation being
challenged). Thus, even assuming that a so-called “purely legal” challenge to an
agency action has been pled, the decision being challenged must still be a final agency
action. See 5 U.S.C. § 704 (providing that legal challenges to threshold decisions are
“subject to review on the review of the final agency action”). In this case, because the
decision being challenged is, at most, merely a threshold determination, if anything
more than a recommendation, the Association did not meet the first factor, regardless
whether it can properly characterize its challenge as “purely legal.”
Under the second factor, which addresses the potential for hardship to the
parties if a decision is not rendered quickly, the facts of Standard Oil also align more
closely with the facts of this case. In Standard Oil, the Supreme Court emphasized that
the FTC’s filing of a complaint in that case did not have “legal force” comparable to the
regulation in Abbott Laboratories and reasoned that the burdens of responding to the
complaint were, therefore, “different in kind and legal effect” from the burdens in Abbott
05-1209 10
Laboratories. Standard Oil, 449 U.S. at 242. In this case, the Association cites a
number of actions taken by its members allegedly in response just to CITA’s decision to
consider the twelve petitions. These actions were based on the businesses’ perceived
uncertainty concerning whether, when, and to what extent import relief might be
imposed in the future, but not on any legally binding requirement presently imposed by
CITA or the government. In contrast, Abbott Laboratories involved a mandatory
regulation with binding legal effect that was issued after formal notice and comment and
that was utterly unambiguous. Thus, following Standard Oil, we hold that any business
uncertainty associated with awaiting a final decision from an agency is different in kind
and legal effect from the hardship identified in Abbott Laboratories and insufficient to
turn a threshold agency decision into a final agency action ripe for review.
Accordingly, the government’s arguments as to jurisdiction demonstrate that the
Association is not likely to succeed in this litigation, even assuming that the fair chance
standard applies.3
B
1
Even were we to disregard the government’s jurisdictional arguments, however,
we would conclude that the Association has failed to demonstrate even a fair chance of
success on any of its four claims in the complaint. The Association’s first claim is that
CITA acted arbitrarily and capriciously in allegedly reinterpreting its published
procedures to allow consideration of petitions based on data suggesting a threat of
3
Because we find the government’s argument as to ripeness sufficient to
demonstrate that the Association does not have even a fair chance of success, we do
not reach the government’s jurisdictional argument based on exhaustion.
05-1209 11
market disruption, rather than data describing current market disruption. It is
undisputed that the petitions in question contain data suggesting only a threat of market
disruption.
The Association contends that the “plain language and meaning” of the
procedures requires data suggesting current market disruption, not merely a threat of
market disruption. As noted above, CITA’s procedures were adopted to aid in
implementing textile and apparel safeguard actions under paragraph 242. 68 Fed. Reg.
at 27,787. Paragraph 242 provides, in part:
In the event that a WTO Member believed that imports of Chinese origin of
textiles and apparel products covered by the ATC as of the date the WTO
Agreement entered into force, were, due to market disruption, threatening
to impede the orderly development of trade in these products, such
Member could request consultations with China with a view to easing or
avoiding such market disruption. The Member requesting consultations
would provide China, at the time of the request, with a detailed factual
statement of reasons and justifications for its request for consultations with
current data which, in the view of the requesting Member, showed: (1) the
existence or threat of market disruption; and (2) the role of products of
Chinese origin in that disruption.
Accession Report at ¶ 242(a) (emphasis added).
CITA’s procedures closely mirror the language of paragraph 242. Indeed, the
first sentence of the body of CITA’s procedures is a nearly verbatim quotation from
paragraph 242:
The Accession Agreement textile and apparel safeguard allows the United
States and other World Trade Organization Member countries that believe
imports of Chinese origin textile and apparel products are, due to market
disruption, threatening to impede the orderly development of trade in
these products to request consultations with China with a view to easing
or avoiding such market disruption.
68 Fed. Reg. at 27,787-88 (emphasis added).
05-1209 12
The primary focus of the Association’s argument is on the language from the
procedures -- “due to market disruption, threatening to impede the orderly development
of trade in these products.” The Association contends that this language requires that
data describing current market disruption be presented before CITA can lawfully
consider whether to request consultations with China.
The Association’s argument is unpersuasive because it would require us to read
this language out of context. CITA’s procedures and paragraph 242 both follow the
disputed language with a description of the stated purpose of the paragraph 242
safeguard, which is “easing or avoiding such market disruption.” 68 Fed. Reg. at
27,788; Accession Report at ¶ 242(a). The word “avoiding” shows that current market
disruption is not a prerequisite for action under either the procedures or paragraph 242
because “such market disruption” cannot be “avoid[ed]” if it has already occurred.
Moreover, the sentence in paragraph 242 containing the disputed language is
immediately followed by a requirement that the entity requesting consultations provide
China with a “detailed factual statement of reasons and justifications” based on “current
data” that shows either “the existence or threat of market disruption.” Accession Report
at ¶ 242(a) (emphasis added). The language “existence or threat of market disruption”
provides context to the disputed language “due to market disruption, threatening to
impede the orderly development of trade in these products,” demonstrating that current
data showing current market disruption is not required.
Indeed, the Association does not dispute that data suggesting merely a threat of
market disruption suffices under paragraph 242 but contends only that paragraph 242 is
“irrelevant” because “CITA is bound to follow its own regulations.” Even assuming
05-1209 13
arguendo (although it is doubtful) that the procedures are binding as “regulations” and
that CITA, as an intra-agency advisory committee, is an APA “agency” that issues “final
agency actions,” we disagree that paragraph 242 is irrelevant in interpreting the
procedures. The express purpose of the procedures is to implement the paragraph 242
safeguard and the language “due to market disruption, threatening to impede the
orderly development of trade” in the procedures is a direct quotation from paragraph
242. Thus, a further reason for rejecting the Association’s interpretation of the allegedly
“plain language” of the procedures is that it would require us to interpret identical
language differently when it is used in paragraph 242 from when it is used in the
procedures, despite the fact that the express purpose of the procedures is to aid in
implementing paragraph 242.
In addition to focusing on the language “due to market disruption, threatening to
impede the orderly development of trade in these products,” the Association also quotes
from other portions of the procedures, although without much elaboration. These
quotations, however, do not demonstrate that data describing current market disruption
is required in every case. Instead, the quotations merely identify examples of data that
could or, in most cases, should be submitted with a petition. An example is the
language emphasized by the Association that “[t]he data should demonstrate that
imports . . . are increasing rapidly in absolute terms.” 68 Fed. Reg. 27,788 (emphasis
added). The use of the term “should,” rather than “shall” or “must,” confirms that data
demonstrating a rapid increase in imports is not required.
Finally, the Association cites several news stories suggesting that some of
CITA’s personnel have previously made informal statements that seemed to interpret
05-1209 14
the procedures as prohibiting the consideration of threat-based petitions. See, e.g.,
Industry Warns of New China Textile Threat Cases, Commerce Position Unclear,
ChinaTradeExtra.com (Sept. 1, 2004) (quoting an “informed government source” as
saying that “it is still an open question whether Commerce can prosecute” threat-based
petitions and that an amendment to the procedures would be required to allow
consideration of threat-based petitions).4 The Association argues that the alleged
“interpretations” by these CITA personnel are inconsistent with CITA’s current
interpretation as reflected in CITA’s express decision to accept the threat-based
petitions at issue here and the litigation position advanced by the government in this
case.
To the extent that the Association is arguing that no deference should be given to
CITA’s current interpretation of its procedures, the argument is irrelevant because no
deference is required where, as here, the procedures themselves are clear. To the
extent that the Association is arguing that the prior statements of interpretation were
somehow binding, we disagree. Although some of these interpretations were offered by
high-ranking officials at CITA, these interpretations did not represent the formal position
of CITA. We, therefore, find utterly unpersuasive the Association’s reliance on these
news stories.
4
The Association also cites to a letter from James Leonard, Chairman of
CITA, dated August 13, 2003, rejecting a petition. In this letter, Leonard states “Imports
of woven cotton and man-made fiber gloves from China are subject to specific limits
through December 31, 2004. CITA will not take action under the China textile
safeguard on products that are subject to specific limits, as imports of such products
from China are already limited.” We disagree with the Association’s argument that this
letter suggests CITA would not consider threat-based petitions because this letter states
only that “CITA will not take action” before January 1, 2005. The letter, therefore, does
not suggest that CITA is barred from considering beforehand whether to take action
after January 1, 2005.
05-1209 15
Accordingly, we hold that as a matter of law, the Association failed to
demonstrate even a fair chance of success on the first claim in the complaint. To the
extent the trial court made findings of fact on the likelihood of success prong, these
were both infected by legal error and clearly erroneous as a factual matter.
2
The second claim in the Association’s complaint is that CITA’s failure to publish
in the Federal Register its “reinterpretation” of the procedures violated 5 U.S.C.
§ 552(a)(1). Similarly, the third claim is that CITA reinterpreted its procedures without
complying with the formal rulemaking requirements of 5 U.S.C. § 553. Each of these
claims relies on the premise that CITA’s “reinterpretation” is inconsistent with the
procedures. Because we hold that the Association has failed to demonstrate a
likelihood of success in showing that CITA’s current interpretation is inconsistent with
the procedures, we also hold that the Association has failed to demonstrate a likelihood
of success as to the second and third claims.
3
The Association’s fourth and final claim in its complaint is that CITA lacks the
authority to aid in the administration by the President of the paragraph 242 safeguard.
This claim makes no distinction between threatened and current market disruption.
The Association first states that CITA has “assumed authority over the
administration of the textile safeguard provision in China’s Accession Agreement, even
though its mandate only permitted CITA to supervise the implementation of all textile
trade agreements.” It appears that the Association is arguing that the paragraph 242
safeguard is outside CITA’s authority because Executive Order No. 11651 limits CITA
05-1209 16
“to supervis[ing] the implementation of all textile trade agreements” and neither the
paragraph 242 safeguard nor the China accession agreement qualifies as a “textile
trade agreement.” The problem with this argument is that the Association does not
support its assertion that neither the paragraph 242 safeguard nor the China Accession
Agreement qualifies as a textile trade agreement with any reasoning, evidence, or
precedent. In any event, the argument utterly fails to persuade if indeed it is not also
frivolous.
The Association next claims that the question of CITA’s authority as to the
paragraph 242 safeguard is “a situation never considered by a court of law.” As we held
above, however, mere novelty is insufficient to establish a fair chance of prevailing.
We also note that the preliminary injunction was not based on the fourth claim
because the preliminary injunction enjoined only threat-based considerations. If the trial
court had relied on the fourth claim, it would have enjoined CITA from considering
petitions without distinguishing current from threatened market disruption. Indeed, the
trial court recognized as much in its analysis of the balance of hardships factor,
concluding that granting relief on the Association’s fourth claim would require
invalidating the procedures altogether, not merely interpreting them not to include
consideration of threat-based petitions. USA-ITA, 350 F. Supp. 2d at 1350 (“Whether a
WTO accession agreement is a ‘textile agreement’ . . . is a question of first impression.
If plaintiff is fully successful on the merits of the case, CITA's China Textile Safeguard
Regulations will be invalidated in toto.”).
05-1209 17
Accordingly, the Association failed to establish even a “fair chance” of
succeeding on its fourth claim and, in any event, the fourth claim does not appear to
have been a basis for the preliminary injunction.
C
In sum, due to the jurisdictional and merits-based considerations discussed in
detail above, the Association has failed to demonstrate even a fair chance of success
on the likelihood of success prong as to any of the four claims.
IV
Turning briefly to the remaining prongs of the preliminary injunction test, even
assuming that each of these prongs weighs in the Association’s favor, it was an abuse
of discretion for the preliminary injunction to be granted. Regardless whether the fair
chance standard or a more demanding standard applies to the likelihood of success
prong, the Association did not establish even a fair chance of success on the merits
and, therefore, a preliminary injunction was not warranted. See Mikohn Gaming, 165
F.3d at 895 (holding that, regardless of other factors as to harms, a movant’s likelihood
of success “must carry at least a fair chance of success on the merits in order to warrant
interim relief” (internal quotation omitted)).
We note, however, our disagreement with the trial court’s wholesale rejection of
the harms claimed by the government. The trial court reasoned that the government
would “not suffer any cognizable harm by issuance of the requested injunction” because
it could still act on data suggesting current market disruption. USA-ITA, 350 F. Supp.
2d at 1349-50. This reason is insufficient to demonstrate that the government would not
be harmed by a preliminary injunction because, as noted by the government, the
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prohibition from acting on data suggesting a threat of market disruption prevents the
government from avoiding market disruption before it occurs and may affect the
duration and magnitude of the relief that can be unilaterally imposed by the government.
See Accession Report at ¶ 242 (providing that the maximum amount that a WTO
member can unilaterally restrict, in general, is 7.5% multiplied by the level of imports in
the first twelve of the fourteen months preceding the request and that any import relief
imposed under paragraph 242 terminates at the end of the calendar year in which the
request for consultation was made unless the request occurred in the final three months
of the year).
Accordingly, because the trial court erred in its legal analysis and clearly erred in
its fact-finding, it, therefore, abused its discretion in granting the Association’s motion for
a preliminary injunction and so we reverse.5
REVERSED
5
Because we hold that the trial court’s grant of a preliminary injunction was
an abuse of discretion, we need not reach the government’s contention that the scope
of the injunction was overly broad.
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