fedex truck Federal Express Truck. Photo: John Disney/ALM.

FedEx Corp. has tapped longtime counsel Baker McKenzie to represent it in a lawsuit against the U.S. Department of Commerce—the second high-profile suit filed in four days against the government over its trading ban of Huawei Technologies Co. Ltd.

On Monday, the company filed its lawsuit in the U.S. District Court for the District of Columbia, challenging the constitutionality of the Commerce Department and its Bureau of Industry and Security's (BIS) enforcement of the Export Administration Regulations (EAR). The company argued that the regulations create a substantial burden that deprives FedEx of substantive due process under the Fifth Amendment of the U.S. Constitution.

The lawsuit came as FedEx has been caught in the crossfire of the Trump administration's series of enforcement actions against Huawei, and as the U.S. company is facing possible retaliation actions from the Chinese government.

Baker McKenzie's Washington, D.C. partners Maurice Bellan and Kenneth Quinn and Dallas partner Kimberly Rich are representing FedEx. Bellan is the vice-chair of the firm's North America litigation and government enforcement practice. Quinn is a specialist in aviation and transportation law. He led the firmwide practice for Pillsbury Winthrop Shaw Pittman before joining Baker McKenzie in 2017.

FedEx's lawsuit did not name Huawei, but the filing comes as the U.S. courier failed to make two deliveries involving the Chinese telecom company's products after the Commerce Department banned Huawei from trading with U.S. businesses in May.

Immediately after Huawei's addition to the so-called Entity List, two FedEx packages destined for Huawei's Chinese addresses were "rerouted" to the United States, and two additional packages destined for the company's other Asian addresses were about to be rerouted when discovered. FedEx later apologised and said the redirecting was an error.

But the incident did not sit well with the Chinese government, which has launched a formal investigation into FedEx's delivery failure. Meanwhile, China also said it will start to compile its own "Unreliable Entities List" of foreign companies and individuals deemed damaging to Chinese interests. The list is not yet published, but China has threatened to put FedEx at the top of that list.

A second failed delivery happened just last week, when a package containing a Huawei smartphone destined for a non-Huawei address in New York was returned to a sender in London due to what FedEx called a "U.S. government issue". FedEx later again called the returning a mistake.

In its lawsuit, FedEx said that despite a sophisticated process screening senders' and receivers' names and address, it is practically impossible to comply with the BIS's Entity List, which imposes an "overbroad and disproportionate" burden on FedEx.

FedEx said the majority of packages are pre-sealed and the EAR essentially want FedEx to police the contents of the millions of packages it ships everyday. "Doing so is a virtually impossible task, logistically, economically and, in many cases, legally," and that it is not a reasonable ask of a transporter for the public, it said.

FedEx said the export regulations, as they stand now, give the company two options: "Continue to operate under threat of imminent enforcement actions, or cease operations that may conceivably lead to enforcement and face possible legal consequences from customers and foreign governments."

"The language of the EAR imposes a constitutionally unsupportable choice for FedEx," the company said, adding that it's certain to find itself in violation of the EAR.

The Fifth Amendment provides that "no person shall… be deprived of life, liberty, or property, without due process of law". FedEx said the EAR deprive it of liberty and property by "arbitrarily and irrationally precluding [the company] from carrying out the basic functions of its business as a common carrier".

FedEx asked the district court to declare the BIS's enforcement of the EAR on the courier unlawful and order the government to cease enforcement actions.

In addition to Huawei, on June 21 the BIS added five more Chinese supercomputer and microchip designers and manufacturers to the Entity List.

The FedEx case follows Huawei's lawsuit, filed on June 21 in the same court, against the Commerce Department. The Chinese company is seeking a resolution of a shipment of equipment detained by the BIS in 2017 prior to its addition to the Entity List.

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