Dive Brief:
- Over a dozen companies including e-commerce giant Amazon, and wholesale club retailer Costco are fighting a bid to centralize at least 25 lawsuits filed by customers to recover tariff refunds, according to a motion jointly filed by the companies this month with the U.S. Judicial Panel on Multidistrict Litigation and a separate motion filed by Amazon.
- Attorneys for the companies asserted that efficiencies will not be gained from moving the cases to the same court because the details of the suits vary greatly. Companies represented range from manufacturers to online or brick-and-mortar retailers selling a wide range of goods from apparel to food.
- “Each importer of record who paid tariffs under the International Emergency Economic Powers Act (“IEEPA”) made different decisions based on different factors as to whether, when, and how much to adjust prices,” the joint motion states. “There is no alleged coordination, common supplier, uniform representation, or industry-wide pricing decision tying the defendants together.”
Dive Insight:
The companies behind the joint motion included Adidas America, Costco Wholesale, Walmart, Microsoft, Sony Interactive Entertainment, PUMA United North America, PUMA North America, United Legwear Company, Shein Distribution, Shein US Services, Shein Technology and Canon U.S.A. Amazon and Costco also filed separate motions in opposition to the move.
The actions come as finance leaders have been grappling with — and sometimes come under fire for — decisions around how best to use refunds that have begun to flow to companies tied to invalidated IEEPA-related Trump administrative tariffs.
The refunds have sparked a groundswell of customers to separately file proposed class action suits seeking a share of the money through refunds.
Last month customers who separately sued Amazon and Target to recoup higher costs filed an amended motion to transfer and centralize the suits in the U.S. District Court for the Northern District of Illinois where there are actions pending against Costco, Shein, Temu and JM Smucker, CFO Dive previously reported.
The customers argued that the actions were similar in that the companies had been “unjustly enriched” by putting the burden for the tariffs on customers and that centralizing the cases would result in more “consistent law” and be more efficient.
But in the subsequent Sept. 10 motion, the companies argued that centralization won’t streamline matters because the facts of the cases are so varied. They said the move would instead increase the “burden and complexity of discovery,” especially when it comes to company pricing matters.
“Each defendant’s pricing decisions and agreements with distributors and retailers is highly sensitive and confidential trade secret information,” the companies’ motion states. “Centralized discovery would put the confidentiality of that information at risk, without any countervailing gains in efficiency.”
As did some of the other companies, Costco also independently filed a separate independent motion on opposing the proposed “sweeping, cross-industry MDL.” It states the first of three tariff cases pending against Costco in federal district courts has been fully briefed and a decision is awaited.
“If successful, Costco’s motions would dispose of the Costco Actions entirely, leaving nothing to centralize,” Costco’s attorneys wrote in its Sept. 11 filing.
The proposed class action lawsuit against Costco was filed in March by Matthew Stockov, an Illinois customer. The original complaint rejected Costco’s stated commitment to return any potential refunds through lower pricing, asserting that reimbursing future shoppers would not make the specific shoppers who paid higher prices in the past whole.
The Multidistrict Litigation Act of 1968 set up a system whereby a judicial panel could authorize the transfer of cases that have “one or more common questions of fact,” according to a client note published by the Crowell law firm.
While multidistrict litigation can be advantageous because it can prevent inconsistent rulings, it can also encourage weak legal claims and give plaintiffs more leverage to push defendants to settle, according to Crowell.
