Justia Aerospace/Defense Opinion Summaries

A technology company, along with its U.S. subsidiary, was designated by the Secretary of Defense as a “Chinese military company” under Section 1260H of the National Defense Authorization Act. This listing, published annually in the Federal Register, leads to significant legal consequences, including prohibitions on entering into certain federal contracts and receiving federal funds or support. The designation also carries reputational harm, as it publicly identifies the company as having ties to the Chinese military. The company develops and sells LiDAR products primarily used in advanced driver-assistance and autonomous vehicle systems.After being listed in January 2024, the company sued the Department of Defense in the United States District Court for the District of Columbia, challenging both the original and an October 2024 redesignation under the Administrative Procedure Act and the Fifth Amendment’s Due Process Clause. The company argued that it was not provided notice of the unclassified evidence relied upon or a meaningful chance to respond before the designation was finalized. The district court granted summary judgment to the government, upholding the designation and concluding that any due process violation was harmless because the company did not show prejudice.On appeal, the United States Court of Appeals for the District of Columbia Circuit held that the company had a protected liberty interest under the “stigma-plus” doctrine, as the designation combined reputational harm with formal exclusion from government contracting opportunities. The Court ruled that the Constitution required the Secretary to provide notice of the unclassified evidence and a meaningful pre-deprivation opportunity to respond. The Secretary’s failure to do so was not harmless error. The appellate court reversed the district court’s judgment and remanded with instructions to remand to the Secretary for further proceedings, but did not vacate the designation pending remedial process. View "Hesai Technology Co., Ltd v. DOD" on Justia Law

A Chinese drone manufacturer and its subsidiary challenged their designation by the U.S. Secretary of Defense as a “Chinese military company” under Section 1260H of the National Defense Authorization Act. The designation, which is published annually, restricts the company from contracting with certain government agencies and can damage its business reputation. DJI was added to the list in 2022 and again in 2024 and 2025 without prior notice. DJI petitioned for removal, which was denied, and subsequently received a report explaining the designation, though portions of the rationale were redacted.DJI filed suit in the United States District Court for the District of Columbia, alleging violations of the Fifth Amendment’s Due Process Clause and the Administrative Procedure Act. The company argued that it was denied due process, that there was insufficient evidence for the designation, that the agency failed to explain disparate treatment compared to other companies, and that the Secretary’s finding that DJI “contributes” to the Chinese defense industrial base was unsupported. The district court granted summary judgment against DJI, relying solely on the unclassified administrative record and declining to review the classified materials.On appeal, the United States Court of Appeals for the District of Columbia Circuit reviewed the case de novo. The appellate court affirmed the district court’s rejection of DJI’s due process, evidentiary, and disparate treatment claims, holding that DJI failed to show deprivation of a protected liberty or property interest, and that sufficient evidence supported the finding that DJI received government assistance. However, the appellate court reversed the district court’s conclusion regarding DJI’s “contribution” to the Chinese defense industrial base, finding that the lower court improperly relied on post hoc agency arguments and failed to review the classified record. The case was remanded for further proceedings on that issue. View "SZ DJI Technology Co., Ltd. v. DOD" on Justia Law