United States Court of International Trade

Clarification Provided in Remand Issues for Multilayered Wood Flooring Case

In Fine Furniture (Shanghai) Limited, et al. v. United States, et al., Court No 14-135, Slip Op. 17-80, defendant United States moved for clarification of an aspect of the court’s previous opinion and order, Fine Furniture (Shanghai) Ltd. v. United States, 40 CIT __, 182 F. Supp. 3d 1350 (2016) (“Fine Furniture”). Def.’s Partial Consent Mot. for Clarification or, in the Alternative, Mot. for Voluntary Remand 1 (Nov. 18, 2016), ECF No. 327 (“Mot. for Clarification”).  Specifically, defendant would like a clarification in regards to what should be reconsidered in the determination of the normal value of Fine Furniture’s merchandise and Commerce’s choice of financial statements of companies in the chosen surrogate country, Philippines, for calculating surrogate values for Fine Furniture’s factory overhead expenses, selling, general administrative and interest expenses and for Fine Furniture’s profit.    According to the Court, “the record contains financial statements of four Philippine plywood manufacturers: Tagum PPMC Wood Veneer, Inc. (“Tagum”), Richmond Plywood Corporation (“RPC”), Philippine Softwoods Products, Inc. (“PSP”), and Mount Banahaw Industries, Inc. (“Mount Banahaw”), that Commerce considered to satisfy its criteria for use in calculating financial ratios because they “were specific to the product in question, contemporaneous with the period of review, complete, accurate, and otherwise reliable.”” Slip Op. pg. 5. However, Fine Furniture argued that RPC is not an integrated producer of the subject merchandise, i.e., multilayered wood flooring, and also challenged Commerce’s finding that Mount Banahaw was not an integrated producer. Fine Furniture also argued that Commerce erred in rejecting other financial statements for the other Philippine companies.

Defendant, in the clarification motion asks whether the remand was limited to the issue of Mount Banahaw’s status as an integrated producer, or whether the Commerce should reconsider its selection of surrogate financial statements as a whole.   The Court ordered that Commerce reconsider its selection of surrogate financial statements of RPC and Tagum and did not limit the remand to the status of Mount Banahaw as an integrated producer. Moreover, no voluntary remand was necessary for Commerce to reconsider Fine Furniture’s argument regarding the accuracy and completeness of the RPC statement.

Remand Issued in Light of Mid Continent Decision

In Beijing Tianhai Industry Co., Ltd., v. United States, and Norris Cylinder Company, Slip Op. 17-79, Court No. 12-00203 (July 5, 2017) the Court examined the second remand results of the Court’s order in the case and decided a Rule 54(b) motion seeking to revise the Courts previous decision in light of a new decision from the Court of Appeals of the Federal Circuit (CAFC). In May of 2012, Commerce found that Beijing Tianhai Industry, Co., Ltd. (“BTIC”) has engaged in targeted dumping in 10 transactions and used an “average to transaction” (A-T) method with zeroing applied to all of BTIC’s US sales to calculate a dumping rate. High Pressure Steel Cylinders from PRC, 77 Fed. Reg. 37,377 (Dep’t Commerce June 21, 2012) (antidumping order). Plaintiff filed this case to argue that Commerce should only have applied the A-T method to the 10 transactions identified. Commerce’s practice of applying A-T method was limited by 19 C.F.R. § 1677(d)(1)(B), which states “the secretary will minimally limit the application of the A-T method to those sales that constitute target dumping.” Beijing Tianhai Industry Co., Ltd. at 3.  In 2008, Commerce attempted to withdraw the regulation, which was the subject of litigation. In 2013, the Court held in a separate case, that Commerce’s withdrawal of the regulation violated the APA. Based on the decision, this Court ruled that Commerce’s error in procedure was harmless for the plaintiff, and Commerce was not bound by the decision in this case.

In 2017, the CAFC held that the regulation was in place during the time period of this suit. Mid Continent Nail Corp. v. United States, 846 F.3d 1364 (Fed. Cir. 2017). The CAFC in Mid Continent determined that Commerce’s failure to comply with notice-and-comment rulemaking invalidated the withdrawal of the Limiting Regulation under the APA and that this failure to comply was not excusable as harmless error. See Mid Continent, 846 F.3d at 1386 (“Commerce failed to comply with notice-and-comment rulemaking under the APA by repealing the Limiting Regulation in [the] Withdrawal Notice, [and] that its failure cannot be excused for good cause or harmless error . . . .”). Plaintiff argued that the interlocutory case should be binding on this case. Defendant argued plaintiff waived the right to use the cases because the issues were not raised in the plaintiff’s initial briefs. For the following reasons, the Court agreed with the plaintiff and remands the case to Commerce to reconsider using the interlocutory case.

“Generally… when a court decides upon a rule of law. That decision should continue to govern the same issues in subsequent stages in the same litigation.” Beijing Tianhai Industry Co., Ltd. at 15.  However, the Court points out there are exceptions to this rule. A Court is not precluded “from revisiting an issue on which it has ruled in an earlier stage … where controlling authority has since made a contrary decision.” Id. at 15. The Court stated that in light of Mid-Continent, the previous ruling on the harmless error can no longer hold, and that the new decision should be the controlling authority. The Court then discusses if the plaintiffs waived their argument about the interlocutory decision by not raising them in the initial briefs. The Court says “the doctrine of waiver is a prudential rule and considerations of litigation fairness and procedure may guide.” Id. at 16.  The Court stated that this is not a case of new legal theory, and that the defendant was not deprived of a fair opportunity to respond. The plaintiff raised the substantive issue that the regulation deals with in its first brief, and addressed the cases promptly in its reply briefs. The Court says “there can be no serious dispute that all parties have had an opportunity to be heard on the 2008 withdrawal,” therefore the issue has not been waived. Id. at 17. The Court ordered a remand back to Commerce to consider the case in light of Mid Continent.

Decision Remanded in Part Frozen Fish Case

In An Giang Fisheries Import and Export Joint Stock Co. et al., and Vietnam Association of Seafood Exporters and Producers et al., v. United States and Catfish Farmers of America et al., Slip Op. 17-82, Court No. 14-00109 (July 10, 2017), the Court examined Commerce’s determination from a previous remand. The Court had previously remanded Commerce’s Final Results in the ninth antidumping review of frozen fish fillets from the Socialist Republic of Vietnam (Vietnam) for further explanation or reconsideration for the use of Indian HTS data as a surrogate value for plaintiff’s rice husk, the use of constructive value as opposed to surrogate value for plaintiff’s fish oil, and the recalculation of plaintiff’s margins. On remand, Commerce decided that it had not used the best available information to calculate the rice husk surrogate value and adjusted anti-dumping duties. Commerce also decided that the use of constructed value for the fish oil was proper. For the following reasons, the Court sustained Commerce’s decision on the surrogate value of rice husk, and the recalculated margins, but remanded for further explanation Commerce’s use of constructed value as opposed to surrogate value for fish oil.

In the ninth annual review, Commerce used Indonesian import data under HTS 1213.00 for rice husk as a surrogate value for the NME of Vietnam. Surrogate values must be the best available information available, and cannot be aberrational. The Court felt that Commerce needed to further explain detracting evidence about the Indonesian HTS data. On remand, Commerce decided that the import data was not the best available and decided to use Indonesian ICBS data instead, calling it the best available information. Commerce adjusted dumping margins accordingly. Further, Commerce determined that it should recalculate respondent Vinh Hoan Corporation’s margins using a net weight denominator. Commerce concluded it should use a net weight denominator because, although Vinh Hoan reported its U.S. sales database on a mixture of a net weight and gross weight basis, most of Vinh Hoan’s sales were reported on a net weight basis. No party contested these actions and the Court sustained them.

The next issue was Commerce’s use of constructed value in determining the price of fish oil used by the plaintiff. There was a preference for the use of surrogate values in calculating dumping margins from NME. However, if all data is aberrational Commerce must explain why it chose to use constructed value. The Court stated that the Commerce has not adequately explained why it chose to use constructed value over surrogate values. The Court remanded to Commerce for further explanation or reconsideration of the constructed value.    

Importer’s Ruling Challenge Up in Smoke for Lack of Jurisdiction

An importer seeking pre-importation judicial review of a Customs ruling excluding a cannabis-vaporizing “CannaCloud” device from entry into the United States was turned away from the Court of International Trade for failing to show that it would be “irreparably harmed” if forced to exhaust post-importation protest remedies, according to a recent decision from Judge Mark Barnett.

In CannaKorp, Inc.. v United States, Slip Op. 17-83 (July 11, 2017) the importer, a start-up company, sought a ruling from Customs that the CannaCloud could be imported into certain states which had legalized marijuana, without being subject to restrictions under the Controlled Substances Act. Customs ruled that the goods were prohibited entry as drug paraphernalia under the Act and would be turned away at the border. The importer asked the CIT to conduct pre-importation review of the ruling, to determine whether it was arbitrary, capricious, an abuse of discretion or not otherwise in accordance with law.  

The CIT’s governing jurisdictional statute, 19 U.S.C. §1581(h), allows pre-importation review of rulings only if the plaintiff can show that it would be “irreparably harmed” if forced to follow normal post-importation protest procedures. Surprisingly, CannaKorp’s challenge foundered because the affidavits and other information it provided were conflicting and contradictory on the question of whether the company would suffer irreparable harm, and what kind of harm would have been suffered. The company gave conflicting stories about whether it would run out of operating capital, and whether it had obtained new sources of funding; whether its foreign manufacturer would declare it to be in default of contracts, and would break down production equipment; and how the financial health of the company was affected by the ruling. CannaKorp was offered an evidentiary hearing on these issues, but declined.  A frustrated court held that CannaKorp had not shown irreparable harm by clear and convincing evidence, and dismissed the case for lack of jurisdiction.

One thing the plaintiff did not argue was that it might have faced irreparable harm if forced to exercise post-importation remedies because the importation of the CannaCloud might have subjected it to criminal prosecution. This argument, if made, might have carried the day for the plaintiff. [Ask Tommy Chong].