Groundbreaking Ruling for Chinese Client DJI Makes Quinn Emanuel Partner Litigator of the Week
Quinn Emanuel is known for its tireless and fearless advocacy, and a groundbreaking decision from the federal appeals court in Washington reflects that reputation, winning the firm its fifth Litigator of the Week award this year.
Our client in the case is Chinese drone manufacturer DJI, the world's leading commercial and recreational drone maker. It was in a tough spot. The U.S. Department of Defense had designated it a “Chinese military company,” posing a risk to its reputation and business and barring work as a federal contractor.
Last Friday’s appellate decision is the first to address the Chinese military company provision, and comes as many of Quinn Emanuel’s competitors have retreated from the Chinese market.
The 2021 provision defines the term to include companies owned by arms of the Chinese military, for example, or that contribute to the Chinese defense industrial base. The year after it passed into law, the U.S. put DJI on the list, without giving it any warning or chance to defend itself.
Our client sued, arguing that the designation violated its due process rights, lacked evidentiary support, and was inadequately explained. DJI has spent years trying to meet with DoD, learn why it was designated, obtain the underlying record, and supply proof that it is not a Chinese military company – all to no avail.
Undeniable Record
The record is clear. DJI is still owned and controlled by the three childhood friends and university professor who founded it. It makes only commercial and recreational drones used by first responders, corporations, and hobbyists, and it has strict policies prohibiting the use of its drones in combat. In short, it doesn’t meet the statutory definition of a Chinese military company.
Quinn Emanuel, which took the case while it was already in progress, stressed that the Defense Department’s entire rationale in the administrative record for concluding that DJI contributed to the Chinese defense industrial base – literally every word of it – was classified. So neither DJI nor the district court itself had ever seen it.
In the end, a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit reversed in part and remanded a ruling by the D.C. District Court that had narrowly upheld the government’s designation.
“Imagine, for example, that in the redacted portion of the report, the agency’s rationale had nothing at all to do with the facts that the Secretary’s attorneys now highlight in court,” the panel wrote in its opinion. “As things stand, we do not know whether the Secretary considered any of that evidence, much less why he believed the evidence supported his determination.”
DJI’s challenge now returns to the lower court, where our client may even be permitted to review never-yet-seen classified evidence purportedly justifying the listing.
Litigator of the Week
In recognition of the firm’s extraordinary achievement in securing the pivotal decision, Law.com named Partner Derek Shaffer Litigator of the Week, along with James Tysse of Akin Gump for a second case involving the Chinese military company designation.
“When I stood before Judge Garcia and the other panel members, I couldn’t know how they’d decide the case,” Shaffer told Law.com. “But I had every confidence that they’d do so with fidelity to the principles and precedents DJI was invoking.” He added: “I feel extremely fortunate that we can count on our courts to keep calling balls and strikes no matter the parties, the issues, or the stakes, as these cases demonstrate.”
Representing a Chinese drone maker these days isn’t the easiest choice, but for us it was the only choice. And as always with Quinn Emanuel, a robust and nimble trial team was behind the win.
Shaffer, Co-Chair of the Government & Regulatory Litigation and National Appellate Litigation practices, led the team, whose members praised his oral arguments in the district court and at the circuit. Partner Sam Williamson showed extraordinary insight into the legal and political challenges of the case. Associate Tracy Gao immediately took command of the administrative record and ensured we had fluency in both English and Chinese documents.
In addition, Partner Mark Tung spotted and pursued the opportunity through every twist and turn of the litigation, and Partner Sam Nitze helped the team identify the strategic edge, particularly in challenging DoD’s reliance on unseen classified evidence. Associate Alex Van Dyke played a leading role in developing our winning arguments and briefing.
Our work on the case, and our dedication to the China practice, continue undiminished.