Michaels Stores, Inc. v. United States
2013 Ct. Intl. Trade LEXIS 114
Ct. Intl. Trade2013Background
- Michaels imported cased pencils from PRC producers (China First, Three Star, Rongxin) during 2008–2009 and 2009–2010 PORs but received the goods through PRC exporters that did not seek separate-rate status.
- Commerce's cash-deposit instructions stated that if entries were exported by firms other than listed exporters, Customs should apply (1) an exporter-specific separate rate if one exists, or (2) the PRC‑wide rate for exporters not assigned a separate rate.
- Michaels paid cash deposits based on the producers’ company-specific rates; Commerce later issued liquidation instructions directing Customs to liquidate entries at the PRC‑wide rate (114.90%), resulting in supplemental duties assessed against Michaels.
- Rongxin received a producer rate of 0.17% for 2008–2009, but entries of Rongxin‑produced pencils exported by other PRC exporters were liquidated at the PRC‑wide rate because those exporters lacked separate-rate status.
- Michaels challenged Commerce’s liquidation instructions (and, implicitly, the incorporated cash-deposit instructions) arguing liquidation should have followed producers’ rates; Commerce argued the PRC‑wide rate lawfully applied to non‑separate exporters under its NME methodology.
- The Court treated the challenge as valid for summary judgment (28 U.S.C. § 1581(i)) and held that Commerce lawfully applied the PRC‑wide rate to the subject exporters because they were part of the PRC‑wide entity and had not established separate‑rate status.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Michaels may challenge cash‑deposit instructions via a challenge to liquidation instructions | Michaels argued liquidation instructions were improper and thus could challenge the incorporated cash‑deposit interpretation | U.S. argued Michaels failed to plead/was time‑barred and failed to exhaust remedies regarding cash‑deposit instructions | Court: complaint gave fair notice; claim timely (liquidation and assessment triggered accrual); exhaustion not required here |
| Whether Commerce must apply producer‑specific rates when exporter is a nonproducing trading company | Michaels: liquidation should follow producer rates assigned in reviews | U.S.: for NME exporters that lack separate‑rate status, Commerce lawfully applies exporter/PRC‑wide rate to prevent circumvention | Court: Commerce lawfully treated non‑separate exporters as part of PRC‑wide entity and applied PRC‑wide rate under 19 C.F.R. § 351.107 and NME policy |
| Whether Commerce’s treatment is an unlawful post‑hoc rationalization | Michaels argued Commerce’s interpretation was a post‑hoc change or inconsistent with regulations | U.S.: interpretation flows from longstanding NME policy and § 351.107 read with § 351.107(d) | Court: Commerce’s approach is consistent with its NME methodology and is not an impermissible post‑hoc rationalization |
| Whether Commerce should have issued exporter/producer combination rates for unlisted exporters | Michaels: unreviewed exporters should receive rates tied to producers to avoid overassessment | U.S.: presuming state control, exporters bear burden to seek separate rates; listing all possible exporters is impracticable and would undermine AD enforcement | Court: upheld Commerce’s practice of assigning the PRC‑wide (noncombination) rate to exporters that did not obtain separate‑rate status |
Key Cases Cited
- Yangzhou Bestpak Gifts & Crafts Co. v. United States, 716 F.3d 1370 (Fed. Cir. 2013) (describing separate‑rate practice and calculation of separate‑rate "all others" rates for NME respondents)
- Transcom, Inc. v. United States, 294 F.3d 1371 (Fed. Cir. 2002) (affirming consequences of failing to rebut NME presumption of state control)
- Sigma Corp. v. United States, 117 F.3d 1401 (Fed. Cir. 1997) (explaining Commerce’s presumption that PRC exporters are under state control in NME cases)
- Consol. Bearings Co. v. United States, 348 F.3d 997 (Fed. Cir. 2003) (distinguishing challenges to final results of review from challenges to liquidation instructions)
- Sterling Fed. Sys. v. Goldin, 16 F.3d 1177 (Fed. Cir. 1994) (standards for agency abuse of discretion review)
- Gerritsen v. Shirai, 979 F.2d 1524 (Fed. Cir. 1992) (articulating factors for arbitrary or capricious review)
- Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1986) (summary judgment standard and allocation of burdens)
- Chevron U.S.A., Inc. v. Nat'l Res. Def. Council, 467 U.S. 837 (U.S. 1984) (agency gap‑filling deference)