Huawei Files Lawsuit Against U.S. Government Over Equipment, Services Ban

Photo Credit: Paco Freire/SOPA Images/Shutterstock
March 6, 2019
Updated 1mo ago

By Hope King

Huawei filed a lawsuit against the U.S. government Wednesday night, alleging that federal actions to block the Chinese company from selling equipment or services to the government or any related entities are unconstitutional.

The Chinese telecommunications giant filed its claims in the Eastern District of Texas Wednesday night. Huawei's U.S. headquarters are in Plano, Texas.

Specifically, Huawei in its 59-page suit alleges that certain parts of section 889 of the 2019 National Defense Authorization Act (NDAA) singles out the company and bars it from doing business with the U.S. government in an overly broad way.

"It bars use (by government contractors) or purchase (by government grant and loan recipients) of Huawei equipment and services even where Huawei equipment or services are not being used to support a government-related function," the suit reads.

Julian Ku, a professor and Academic Dean at Hofstra Law, says this is a "smart lawsuit" that also allows Huawei to double down on its ambitions to grow its business outside China ー even if the suit is not ultimately successful.

"It should make federal agencies and the Congress as a whole pause before they again single out Huawei by name for a particular ban or prohibition," Ku told Cheddar Wednesday night. "It also will allow Huawei to argue in court that there is really no U.S. government evidence of their alleged Chinese government connection. And it will show its customers that it is serious about staying in the U.S. and other Western markets."

Huawei has been trying to fight back against growing global suspicion about a range of alleged improper conduct.

The company's CFO Meng Wanzhou was arrested in Canada in December on suspicion of activity violating U.S. sanctions against Iran. The company has been accused of stealing trade secrets from U.S. companies and has also been blocked from conducting some of its businesses in Australia. Germany and the U.K. have also been debating action against Huawei.

Huawei's constitutional argument is threefold: the company believes that an unconstitutional "bill of attainder" unfairly singles out the company for punishment"; that it violates its right of due process under the Fifth Amendment; and that it is a violation of separation of powers.

The due process argument is based on "selectively depriving" the company's "liberty ー severely curtailing its freedom to do business, stigmatizing it by effectively branding it a tool of the Chinese government and a risk to U.S. security."

The separation of powers argument relies on the grounds that Congress has the power to make general rules, but not the power to pass judgment ー that power is given to the judicial branch ー or to enforce judgments, which is a power given to the executive branch.

"The Constitution’s Vesting Clauses and resulting separation of powers grant Congress only limited, enumerated 'legislative powers,' and place the 'executive' and 'judicial' powers in the President and the courts, respectively," Huawei says in its suit.

By singling out the company, alleging it to be connected to the Chinese government, and banning business with government and related organizations, section 889 of the NDAA "usurps functions properly committed to the Executive and Judiciary, and deprives Huawei of the structural protections available when such functions are exercised by their constitutionally-assigned branches, such as opportunities for executive consultation and subsequent judicial review, and the possibility of reconsideration," according to the claims.

Ku said Huawei's main legal argument is that Congress is “legislatively punishing” it, but he cast doubt on its chance of success.

"They are not challenging an executive order or administrative regulation," Ku says. "They are trying to get a U.S. court to overturn a law enacted by Congress and the president acting together and with broad bipartisan support."

Huawei's suit also names specific members of President Trump's Cabinet as defendants, including Secretary of Veterans Affairs Robert Wilkie, Secretary of Agriculture Sonny Perdue and Secretary of Education Betsy DeVos.

Each of these as official defendants has been asked by Huawei "to take or refrain from taking certain actions with regard to the procurement of certain equipment, systems, or services produced or provided by Huawei" on behalf of their corresponding departments and related organizations.

In total Huawei lists seven individuals: Emily Webster Murphy, Administrator of the General Services Administration; Alexander Acosta, Secretary of Labor; Alex Azar II, Secretary of Health and Human Services; Betsy DeVos, Secretary of Education; Sonny Perdue, Secretary of Agriculture; Robert Wilkie, Secretary of Veterans Affairs; and David L. Bernhardt, Acting Secretary of the Interior.

Huawei says the company's U.S. arm in October of 2018 sent letters to DeVos, Perdue, and Wilkie asking for "guidance" in how they enforced the 2019 NDAA.

"The letters specifically requested a response as soon as possible, and in any event no later than November 15, 2018," the suit says. "As of March 5, 2019, no substantive response has been received."

Their failure to respond, Huawei argues constitutes a "failure to act" under certain federal regulations related to their argument.

Andy Purdy, the chief security officer for Huawei's U.S. business, defended the company in an interview with Cheddar in January, saying that "no government has ever asked us to spy" and calling the accusations part of a "drumbeat of anti-Huawei criticism."

"Blocking Huawei is not going to make America or anybody else safer," he said.

During Huawei's Thursday morning press conference executives reiterated the company's commitment to upholding consumer data privacy and said they "believe the solution to cybersecurity comes from openness ... and [international] collaboration."