United States Court of International Trade

Results Remanded for Third Time

In Gold East Paper (Jiangsu) Co., Ltd. et al. v. U.S. et al., Court No. 10-371, Slip Op. 15-37 (April 22, 2015), the court reviewed the second Final Results of Redetermination Pursuant to Court Remand (“RR2”) concerning the antidumping duty investigation into Certain Coated Paper from the PRC, Certain Coated Paper Suitable for High-Quality Print Graphics Using Sheet-Fed Presses from the People’s Republic of China, 75 Fed. Reg. 59217 (Sept. 27, 2010), PDoc 360, as amended by Certain Coated Paper Suitable for High-Quality Print Graphics Using Sheet-Fed Presses from the People’s Republic of China: Amended Final Determination of Sales at Less than Fair Value and Antidumping Order, 75 Fed. Reg. 70203 (Nov. 17, 2010) (“Final Determination”), and accompanying issues and decision memorandum (“IDM”).  The court held that it must be remanded a third time due to arguments over (1) the use of market economy purchase prices for certain inputs procured by/for the plaintiffs (herein “APP-China”) from the Kingdom of Thailand (“Thailand”) and (2) the targeted dumping methodology utilized on second remand.

As to the issues of input distortion and the existence of subsidies influencing the inputs, Commerce was asked to provide substantial evidence of the subsidies.  Past case law suggested that Commerce must demonstrate by specific and objective evidence that “(1) subsidies of the industry in question existed in the supplier countries during the period of investigation; (2) the supplier in question is a member of the subsidized industry or otherwise could have taken advantage of any available subsidies; and (3) it would have been unnatural for a supplier to not have taken advantage of such subsidies.” Fuyao Glass Indus. Group Co. v. United States, 29 CIT 109 (2005) (“Fuyao II”). Thus the court asked for further evidence on the subsidies to show there was a price input distortion.

As to targeted dumping methodology, the petitioners argued that because the target dumping was so pervasive that it was appropriate to apply average to transaction (A-T) methodology to all of APP-China’s sales based on a Cohen’s d test which measured intensity of the dumping. Commerce however maintained that APP-China’s U.S. sales did not present an abnormal situation that warranted the application of the A-T methodology to all sales because neither of the listed circumstances occurred here.  The court determined that Commerce must provide further explanation of its use of average to average (A-A) methodology, and why the Steel Nails test required use of this methodology.  See Certain Steel Nails from the People’s Republic of China: Final Determination of Sales at Less Than Fair Value and Partial Affirmative Determination of Critical Circumstances, 73 Fed.Reg. 33977 (June 16, 2008).

Final Results Sustained

In Zhejiang Sanhua Co., Ltd. v. United States, Court No. 14-77, Slip Op.15-38 (April 24, 2015), Plaintiff Zhejiang Sanhua Co., Ltd.’s (“Sanhua”) moved for judgment on the agency record, involving an administrative review conducted by the U.S. Department of Commerce (“Commerce”) of the antidumping duty order covering frontseating service valves from the People’s Republic of China. See Frontseating Service Valves from the People’s Republic of China, 78 Fed. Reg. 73,825 (Dep’t of Commerce Dec. 9, 2013) (final results admin. review) (“Final Results”). Sanhua challenged Commerce’s use of facts available to calculate Sanhua’s brass and copper byproduct offsets, Commerce’s rejection of Sanhua’s ministerial error submission, and Commerce’s 15-day liquidation policy.

Firstly, Commerce calculates dumping margins by determining “the amount by which the normal value exceeds the export price or constructed export price of the subject merchandise.” 19 U.S.C. § 1677(35)(A). Although Commerce makes certain adjustments, there is no statutory analysis for byproducts. Commerce as a matter of policy, however, offsets normal value for the sale of byproducts generated during production of the subject merchandise during the period of review. However, because Sanhua did not calculate what byproducts are generated in production, Commerce used a formula to account for the offset. Sanhua argued that Commerce’s scrap offset calculation unreasonably failed to “take into account all the factors that generate scrap, caused distortions[,] and was not supported by company records.” Specifically, Sanhua contended that Commerce unreasonably relied on the full standard input and output weight described in certain technical drawings when calculating the yield loss adjustment.  However, according to Commerce, Sanhua’s own formula derived offsets in part from inputs unrelated to scrap, potentially overstated the amount of copper scrap produced for certain models, and did not reflect differences in production yields between models. Commerce at verification observed that Sanhua’s formula in fact produced “higher scrap offsets than the yields reflected in the technical drawings of the components made of brass or copper inputs” for “most” of the products evaluated by Commerce.  In those instances, where Commerce may not verify Sanhua’s information, according to the court, it must use facts available. In the court’s view, Commerce analyzed the available record information and reasonably adjusted Sanhua’s offset reporting methodology.

As for the ministerial error submission, Sanhua challenged Commerce’s rejection of three documents submitted regarding the surrogate value for bras scrap.  By Sanhua’s own admission, the information on the first rejected page came from the record of a prior administrative review, not this administrative review. Furthermore, the other two pages did not contain information differing merely in format or unit of measure. Instead, the two other pages contained information that differs in substance from what appears on this administrative record.  Therefore, according to the court, Commerce reasonably concluded that the three pages contained “new” information that did not warrant consideration as part of Plaintiff’s request for a ministerial error correction.

Lastly, Sanhua challenged Commerce’s 15-day liquidation policy as Sanhua argued that SKF USA, Inc. v. United States, 33 CIT 1866, 1883-91, 675 F. Supp. 2d 1264, 1280-86 (2009), after remand, 34 CIT ___, Slip Op. 10-76 (2010) (“SKF II”), and Tianjin Mach. Imp. & Exp. Corp. v. United States, 28 CIT 1635, 1649-51, 353 F. Supp. 2d 1294, 1309-10 (2004) (“Tianjin”) renders Commerce’s 15-day liquidation policy unlawful.  However, because there was no in depth argument or analysis of authority to explain reasons for the challenge, the court deemed the argument waived.  The court stated, “It is well established that arguments that are not appropriately developed in a party’s briefing may be deemed waived,” citing United States v. Great Am. Ins. Co., 738 F.3d 1320, 1328 (Fed. Cir. 2013); see also Carducci, 714 F.2d at 177.  For all these reasons, the court sustained the Final Results.

Preliminary Injunction Granted

In Zhejiang Native Produce & Animal By-Products Import & Export Corp. et al., v. United States et al., Court No. 02-64, Slip Op. 15-39 (April 27, 2015),  plaintiffs sought to enjoin liquidation of any unliquidated entries subject to the antidumping duty order on honey from the People’s Republic of China (“PRC”) until the final resolution of all appellate review proceedings in this action, which challenges certain aspects of the International Trade Commission’s (“ITC”) affirmative material injury determination.  In deciding whether to grant a motion for a preliminary injunction and thus enjoin liquidation, the court considered the following factors: (1) whether the movant “is likely to suffer irreparable harm in the absence of preliminary relief”; (2) whether the movant “is likely to succeed on the merits”; (3) whether “the balance of equities tips in . . . favor” of the movant; and (4) whether “an injunction is in the public interest.” Wind Tower, 741 F.3d at 95 (quoting Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008)) (internal quotation marks omitted).

First, the court held despite defendant-intervenor’s arguments that the motion was untimely, there was good cause for such a preliminary injunction.  Liquidation of the subject entries had no longer been enjoined as a result of the Federal Circuit’s mandate issued on October 10, 2014, following a final decision in plaintiffs’ challenge to Commerce’s less-than-fair-value (“LTFV”) determination.  Moreover, the court held that the plaintiffs have standing to assert the motion where defendant has not produced any evidence or affidavits that suggest that the plaintiffs are not exporters, importers, or trade associations with importers of the honey subject to the antidumping duty order.

Furthermore, the court found for the requisite factors supporting a preliminary injunction.  Plaintiffs would be irreparably harmed if their entries liquidated at rates between 25.88 to 183.80 percent, and if they win the lawsuit, their only remedy –liquidation at the normal rate–  would be lost, where the subject entries may not be reliquidated.  Moreover, because plaintiffs raised serious questions about the ITC’s material injury determination, and defendant-intervenors have not provided any evidence to the contrary, the court held in favor of plaintiffs on likelihood of success factor. The balance of equities and public policy, according to the court, also tip in plaintiffs’ favor as accurate dumping duties will be assessed at the conclusion of the case, and liquidation of this stage would rob plaintiffs of any meaningful relief. 

Finally, the court found no reason why plaintiffs should post security as there was no proof submitted that plaintiffs would escape payment of additional duties or that any plaintiffs would go out of business. For these reasons, the court granted the motion for preliminary injunction.

United States Court of Appeals for the Federal Circuit

Affirmed CIT Decision to Dismiss Byrd Amendment Claims

In Giorgio Foods, Inc. v. United States et al., Court No. 2013-1304 (April 24, 2015) Giorgio Foods, Inc. (“Giorgio”) appealed a judgment of the Court of International Trade (“CIT”) dismissing its claims for compensation under the Continued Dumping and Subsidy Offset Act (“the Byrd Amendment” or “CDSOA”).  The court affirmed the CIT’s decision because Giorgio failed to indicate support for the antidumping petition as required by the Byrd Amendment.  On January 6, 1998, the Coalition for Fair Preserved Mushroom Trade (“the Coalition”) filed an antidumping petition (“the petition”) alleging that domestic producers of preserved mushrooms were being injured by imports of certain preserved mushrooms from Chile, China, Indonesia, and India (collectively, “the subject countries”) that were being sold in the United States at less than fair value. See 19 U.S.C. § 1673. At the time of the petition, Giorgio was the largest domestic producer of preserved mushrooms, accounting for approximately one half of total United States production, but was neither a member of the Coalition nor a petitioner. On January 16, 1998, the International Trade Commission (“ITC”) initiated a material injury investigation concerning imports from the subject countries. As part of that investigation, the ITC issued questionnaires to domestic producers of preserved mushrooms, including Giorgio. Giorgio’s response to the support question did not check any of the boxes, but responded in narrative form as follows: “We take no position on Chile, China and Indonesia[.] We oppose the petition against India.” Giorgio brought suit in the Trade Court on May 23, 2003, challenging the ITC’s refusal to include it on the list of affected domestic producers for the preserved mushroom antidumping orders and alleging that the ITC’s refusal to include it on the list violated the First Amendment. The case was stayed pending this court’s decisions in SKF USA, Inc. v. United States Customs & Border Protection, 556 F.3d 1337 (Fed. Cir. 2009), and PS Chez Sidney, L.L.C. v. United States International Trade Commission, 684 F.3d 1374 (Fed. Cir. 2012).

Giorgio argued that, although it stated in its questionnaire response that it opposed the petition against India and took no position with respect to Chile, China, and Indonesia, its petition response “as a whole,” combined with its other actions in support of the petition, satisfied the Byrd Amendment’s support requirement.  Giorgio argued that because it provided support for the petition “behind the scenes,” it should be treated as a “latent petitioner.”  Thus, the question here was whether a statement of support is necessary to secure compensation under the Byrd Amendment. In SKF, PS Chez Sidney, and Ashley Furniture Indus., Inc. v. United States, 734 F.3d 1306, 1309 (Fed. Cir. 2013), cert. denied, 135 S. Ct. 72 (2014), this court held that there had to be affirmative support for a petition in order for a domestic producer to gain Byrd Amendment funds. In all those cases, the plaintiff either provided no support or took no position, and therefore was not qualified for Byrd Amendment proceeds. Even accepting Giorgio’s allegations in the complaint as true, financial and other forms of support for the petitioners were not the same as “indicat[ing] support of the petition by letter or through questionnaire response.” 19 U.S.C. § 1675c(d)(1) (emphasis added). As Ashley held, forms of support other than explicit statements of support in the petition were irrelevant in determining whether a producer satisfied the support requirement. See Ashley, 734 F.3d at 1311.

According to the Federal Circuit, there was nothing in the Byrd Amendment, or its legislative history, that indicated congressional intent to compensate all parties, including those who did not make an explicit statement of support for the petition.

Giorgio also argued that requiring a statement of support of a petition violates First Amendment rights. This argument was also foreclosed by Ashley, which held that such a requirement does not violate the First Amendment as applied to a producer that failed to indicate support. 734 F.3d at 1310–11. A statement of support was not an abstract statement of viewpoint, but rather one that has consequences. First, statements of support for the petition or the lack of such statements can be, and in this case were, taken into account by Commerce in determining whether the statutory support requirements for the petition were satisfied. Second, in applying the threat of material injury standard, the ITC was required in every case to take account of the publicly stated support, opposition, or no position responses in the ITC questionnaire as stated in Suramerica de Aleaciones Laminadas, C.A. v. United States, 44 F.3d 978, 984 (Fed. Cir. 1994).

Circuit Judge Reyna respectfully dissented as he believed the issue to be whether the claimant is an affected domestic producer and the statute does not require a response to a questionnaire to be the only indication whether a domestic producer shows support. To qualify as an affected domestic producer (“ADP”), a producer must have been a “petitioner or interested party in support of the petition.” 19 U.S.C. § 1675c(b)(1)(A). The CDSOA directs the United States International Trade Commission (“ITC” or “Commission”) to forward to U.S. Customs and Border Protection (“Customs”) a list of ADPs. 19 U.S.C. § 1675c(d)(1). Customs then distributes the collected antidumping duties to listed ADPs who have provided the requisite certifications. 19 U.S.C. § 1675c(d)(3). The CDSOA does not specify which agency’s questionnaire responses must include the indication of support. Nor does it specify whether the questionnaire is the preliminary questionnaire or the final questionnaire. Most important, the CDSOA does not specify how a producer must indicate support—it only requires that the producer “indicate” support through the questionnaire response. The CDSOA did not provide any consequences for checking or not checking a support box or providing no checked boxes at all. Reyna stated that it was unjust to penalize a producer like Giorgio who submitted a questionnaire before CDSOA was enacted, and had no idea at the time, what a questionnaire response meant to a CDSOA distribution. Thus, Reyna believed that Giorgio stated a legitimate claim as an ADP.

CIT’s Dismissal of CDSOA Claims Affirmed

In Tampa Bay Fisheries, Inc. and Singleton Fishers, Inc. v. United States et al., Court No. 2012-1419 (April 29, 2015), Appellants Tampa Bay Fisheries, Inc. (“Tampa Bay”) and Singleton Fisheries, Inc. (“Singleton”) (collectively, “Appellants”) appealed the final judgment of the United States Court of International Trade (“CIT”) which dismissed their complaint for failure to state a claim. On November 14, 2008, Tampa Bay and Singleton filed suit against the ommission and Customs, challenging the Commission’s failure to add Tampa Bay and Singleton to the list of affected domestic producers and Customs’ decision not to make a distribution to Tampa Bay or Singleton for fiscal years 2006, 2007, and 2008. While neither Tampa Bay nor Singleton alleged that they expressed support for the 2003 petition in their questionnaire responses or through a letter, they asserted that they supported the petition in other ways. They also argued that, it was unconstitutional to construe the Byrd Amendment to require a show of support via a particular form of expression—i.e., checking a box on a questionnaire or writing a letter. Following this court’s decision in SKF USA Inc. v. United States Customs & Border Protection, 556 F.3d 1337 (Fed. Cir. 2009), which both construed the Byrd Amendment to require both a show of support via a questionnaire response or a letter and other affirmative efforts to aid the investigation, and upheld the constitutionality of the Byrd Amendment as so construed, the CIT issued an order asking Tampa Bay and Singleton to show cause why their case should not be dismissed in light of SKF.   Upon review of their response, the CIT allowed Appellants to file an amended complaint.  The CIT then dismissed all five counts in the amended complaint for failure to state a claim.

The Federal Circuit affirmed this decision.  In this case, Tampa Bay and Singleton’s statutory and constitutional claims were foreclosed by the Federal Circuit’s decisions in SKF, PS Chez Sidney, LLC v. United States International Trade Commission, 684 F.3d 1374 (Fed. Cir. 2012), and Ashley Furniture Industries, Inc. v. United States, 734 F.3d 1306 (Fed. Cir. 2013). In SKF, the Federal Circuit found that the statute unambiguously required, among other things, a show of support for the investigation via questionnaire response or a letter and that, in the absence of such statements of support, other efforts which might happen to assist an investigation were insufficient to qualify an entity as an affected domestic producer under the Act.

Thus, support via questionnaire response did not violate First Amendment rights, where the purpose of the statute was to compensate those parties who assisted with the government’s trade investigations.  The support requirement, according to the Federal Circuit, should be treated like commercial speech, as is the case when the government commercially contracts with a party for their assistance in a government function. The Federal Circuit also rejected any Equal Protection challenge as in SKF, finding that “the Byrd Amendment [was] rationally related to the government’s legitimate purpose of rewarding parties who promote the government’s policy against dumping.” Finally, contrary to Appellants’ claims, and as stated in past cases, simply responding to a questionnaire or providing financial support was not enough to satisfy the Byrd Amendment requirement for support, as the court held that affirmative written support for an investigation must be given by letter or questionnaire response.