Judge halts Defense Department from barring lobbyists

E-commerce giant Alibaba is allowed to retain lobbyists and contract with the department under an injunction granted by a federal judge.SAN JOSE, Calif. (CN) — A federal judge has ordered the U.S. Department of Defense to stop enforcing a legal code that prohibits the department from contracting with any entity that retains the same lobbyists as companies designated “Chinese military companies.”U.S. District Judge Eumi Lee granted a preliminary injunction motion on Monday for the large Chinese e-commerce company Alibaba Group, enjoining the department from barring Alibaba from employing lobbyists to further its interests in Washington, lobbyists who may also do business with designated companies.“The court finds that Alibaba has met its initial burden to raise a colorable claim that Section 4663 infringes Alibaba’s First Amendment rights to speech and to petition the government,” the Joe Biden appointee wrote in her 26-page order.“The court finds that defendants have failed to meet their burden — whether under strict or intermediate scrutiny — given the absence of evidence provided by defendants to justify such a restriction.”In February, the department designated Alibaba as a Chinese military company, and in June, Section 4663 was added to statutory law.Alibaba and other designated Chinese companies sued the department, arguing Section 4663 cost them lobbyists who feared losing other clients that could contract with the department if they kept representing the designated companies. Alibaba argued the department violated the First Amendment, the due process clause and the Administrative Procedure Act.The department describes an entity as a Chinese military company if it is “directly or indirectly owned by, controlled by, or beneficially owned by, affiliated with or in an official or unofficial capacity acting as an agent of” Chinese military, security and industrial organs, including the People’s Liberation Army, the Ministry of Industry and Information Technology and the State-Owned Assets Supervision and Administration Commission.Additionally, it could be “identified as a military-civil fusion contributor to the Chinese defense industrial base” — a category that in turn includes entities “managed, overseen, supervised by, otherwise under the control of or affiliated with (including by means of formal participation in research partnerships and projects)” the ministry, among others. According to the government, Alibaba falls into this category.Other large Chinese companies, such as internet services company Baidu and Chinese carmaker BYD, are also listed under the designation.At an August hearing on the motion for a preliminary injunction, Alibaba attorney Chris Eiswerth said the government hadn’t met its burden to show that the risk is a “real issue or problem.”He argued that by disallowing companies such as Alibaba from choosing their own lobbyists — because, Eiswerth noted, if a lobby firm must choose between working with one client under the U.S.’ designation or “thousands of other companies” that contract with the department, lobbyists would choose companies not blacklisted — the government was impinging on its political speech.Department of Justice attorney Stephen Tagert said the statute didn’t infringe on speech rights; instead, it “forecloses a type of relationship” between the government and companies designated as Chinese military companies.While Lee blocked the department from enforcing Section 4663, she stopped short of vacating Alibaba’s designation.“The Court finds it premature to summarily vacate Alibaba’s [Chinese military company] designation without reviewing the administrative record,” she wrote, citing another case which concluded “the realities of the foreign policy and national security concerns asserted by the secretary in support of those designations” still needed to be considered.Attorneys representing Alibaba and the Department of Defense did not immediately respond to requests for comment.Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads