Last month, the Supreme Court released its decision in Learning Resources, Inc. v. Trump, holding that the International Emergency Economic Powers Act (“IEEPA”) does not give the President authority to impose tariffs. In the wake of that case, thousands of companies have filed actions in the U.S. Court of International Trade seeking reliquidation and refunds (with interest) of unlawfully collected IEEPA duties as well as related injunctive relief.
The amounts potentially at issue are astronomical. Data from U.S. Customs and Border Protection show that IEEPA duty collections reached $133.5 billion through December 14, 2025. These refund efforts are creating a secondary litigation risk for companies that passed tariff-related costs through to consumers. Plaintiffs’ firms have begun advertising for, and in some instances filing, consumer class actions.
Supreme Court Strikes Down IEEPA Tariffs
The Learning Resources case asked the Court to consider whether Section 1702 of IEEPA—which permits the President to “regulate…importation”—also permits the President to impose tariffs. A six-justice majority held that it does not, but split on the rationale: Chief Justice Roberts (joined by Justices Gorsuch and Barrett) relied on the major questions doctrine, while Justice Kagan (joined by Justices Sotomayor and Jackson) relied on standard tools of statutory interpretation and concluded that the application of the major questions doctrine was “unnecessary.” In dissent, Justice Kavanaugh argued that the statutory phrase “regulate…importation” has traditionally included the authority to impose tariffs. He criticized the majority for leaving unresolved “whether, and if so how,” the Government should “return[] the billions of dollars it has collected,” a process he said “is likely to be a mess.”
Resulting Litigation
Since the Supreme Court first agreed to hear the Learning Resources case, more than 2,000 companies have filed refund-related complaints before the Court of International Trade. Across the pleadings, these companies generally allege that they have paid unlawful IEEPA-based tariffs, and ask the court to declare the relevant tariff orders unlawful as applied to them, order refunds of any IEEPA tariffs paid (with interest), and enjoin any further assessment and collection of IEEPA-based tariffs. These issues are the subject of a previous Covington alert.
Importers must also prepare to defend against suits brought by consumers alleging that they are entitled to share in any refunds that importers either receive or should pursue. We are seeing plaintiff recruitment efforts, and several lawsuits have already been filed—in the Northern District of Georgia, the Southern District of Florida, and the Eastern District of New York. In these actions, plaintiffs allege that importers are legally obligated to refund any tariff surcharges passed on to consumers in response to the IEEPA tariffs. Their alleged causes of action include common law restitution claims (unjust enrichment, money had and received) and breach of contract claims, as well as state law claims under unfair and deceptive practices statutes.
Looking Forward
Ongoing Litigation Risks
While the Supreme Court’s invalidation of the IEEPA tariff regime has created a legal basis for importers to eventually obtain refunds from the federal government, it has simultaneously created meaningful and growing risks of derivative consumer litigation. As the first few class action complaints demonstrate, companies that paid IEEPA-related tariffs should expect heightened scrutiny over whether they passed those charges through and, if so, whether they are obligated to seek refunds and/or pass them on if refunds are obtained.
The complaints filed to date raise several theories likely to be replicated in future filings. Contract-based claims will assert that provisions allowing companies to pass through “duties, taxes or governmental charges” implicitly exclude charges later declared unlawful, even if they were imposed pursuant to then-operative executive orders. Restitution-based claims will contend that companies are unjustly enriched by retaining refunds (or avoiding refunds) where consumers allegedly bore the economic burden of the tariffs. And consumer protection claims will challenge alleged failures to disclose the contingent or refundable nature of tariff-related charges or to characterize tariff-driven price increases as misleading since the underlying tariffs have been invalidated. Even the decision whether to seek a refund may generate the risk of shareholder derivative suits seeking to force a company’s board of directors to seek IEEPA-related refunds.
Potential Litigation Strategies
While evaluating and responding to litigation risk—either in anticipation of or after the filing of a lawsuit—will require a highly fact-specific analysis, many of these actions are likely to face substantial threshold challenges on standing and ripeness grounds, particularly when they are filed before the U.S. Government has committed to pay any refunds to importers, or while importer refund litigation remains pending before the Court of International Trade. In many cases, plaintiffs allege injury based on the possibility that a company may obtain a refund in the future and may retain some or all of that recovery. Courts may view such claims as premature because the alleged harm is contingent on multiple unresolved events, including whether the importer ultimately prevails in securing a refund from the government. Today, of course, not a single dollar has been refunded, and the Administration has taken the position that no refunds will be paid to any importers until a court orders the government to do so.
Justiciability defenses, particularly in cases seeking nationwide relief based on hypothetical future refunds, may provide an early and effective basis for narrowing or dismissing claims before reaching more fact-intensive questions regarding pass-through, pricing, or unjust enrichment. These actions are also likely to raise complex issues relating to arbitration provisions and class-action waivers in companies’ terms of use.
Beyond justiciability and arbitration, companies facing refund-related consumer class actions may have several potential substantive defenses on the merits. For example, contract-based claims may be vulnerable to arguments that retail purchases are governed by a contract at a specific price and the tariffs were lawful when assessed and collected (i.e., at the time of the transaction). Retail prices fluctuate based on a wide range of circumstances. Restitution theories may be particularly vulnerable where tariff-related charges were fully disclosed and paid voluntarily, or where plaintiffs rely on generalized price-inflation theories without alleging an explicit tariff surcharge. Finally, consumer-protection claims will face challenges where companies accurately described tariff-related charges or pricing, particularly because there is no affirmative duty to disclose the contingent possibility that a tax might later be invalidated.
Importer risk profiles may ultimately be highly variable and depend on the nuances of each company’s import practices, contracts with customers, prior choices on pass through of tariffs, and choices with respect to pursuing tariff refunds (or not). Because of this potential for uncertainty, any companies that paid IEEPA-related tariffs may wish to assess their own refund claim strategy, potential pass-through exposure, relevant consumer disclosures, and applicable arbitration provisions in anticipation of potential litigation.
If you have any questions concerning the material discussed in this client alert, please contact the members of our Class Actions and International Trade Practices practice.
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