65 F.4th 1364
Fed. Cir.2023Background
- Commerce initiated an antidumping duty review of tapered roller bearings (TRBs) from the PRC for the 2016–2017 period; PRC is treated as a non-market economy (NME) and NME producers receive a single country-wide rate unless they rebut de jure and de facto government control.
- Zhejiang Machinery Import & Export Corp. (ZMC) sought a company-specific (separate) rate. ZMC is wholly owned by Zhejiang Sunny I/E Corp. (Sunny); Sunny’s legal majority shareholder is Sunny’s labor union, and Sunny is partly (minority) owned by a SASAC-controlled entity.
- Sunny’s employee stock-ownership committee (ESOC) consists of employees who overlap with labor-union membership (including one union official); ZMC argued the ESOC—not the union—exercises actual voting rights.
- Commerce preliminarily and finally found ZMC failed to rebut the presumption of de facto government control, relying on: (a) the legal majority status of the labor union; (b) overlapping union/ESOC membership; and (c) the NME Status Memorandum describing ACTFU/CCP control over Chinese unions.
- The Court of International Trade remanded after finding Commerce erred in rejecting a revised translation of the ESOC Articles; on remand Commerce considered that translation but again found de facto control and denied a separate rate.
- The Federal Circuit affirmed, holding Commerce’s de facto control determination was reasonable and supported by substantial evidence based on the union’s majority status, overlapping membership with the ESOC, and the governance documents.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ZMC rebutted the presumption of de facto GOC control to obtain a separate rate | ZMC: the union is a nominal shareholder; true voting power lies with the ESOC employees who cannot be controlled by the GOC | Commerce/Govt: the labor union is the legal majority shareholder and, under the ACTFU/CCP framework and overlapping membership, has potential to exercise control | Court: Affirmed Commerce—substantial evidence supports finding potential/ de facto control; separate rate denied |
| Whether Commerce properly considered ZMC’s revised ESOC Articles translation | ZMC: Commerce initially rejected the translation as untimely and that warranted remand relief | Commerce/Govt: on remand Commerce considered the translation and explained why ESOC did not displace union’s control | Court: Remand was adequate; Commerce’s reconsideration and continued denial upheld |
| Whether Commerce reasonably relied on union membership and agency practice in de facto analysis | ZMC: precedents where SASAC minority ownership alone was insufficient should control; ESOC structure is different | Commerce/Govt: agency practice treats ACTFU-affiliated unions as government actors; union membership and overlapping roles are relevant indicia of control | Court: Commerce’s consistent practice is permissible and its application here was reasonable |
Key Cases Cited
- Sigma Corp. v. United States, 117 F.3d 1401 (Fed. Cir. 1997) (explains standard for individual separate rates in NME cases and burden to rebut de jure and de facto government control)
- Diamond Sawblades Mfrs. Coal. v. United States, 866 F.3d 1304 (Fed. Cir. 2017) (describes antidumping duty framework and injury requirement)
- NEXTEEL Co. v. United States, 28 F.4th 1226 (Fed. Cir. 2022) (standard of review for CIT judgments reviewing Commerce determinations)
- SeAH Steel VINA Corp. v. United States, 950 F.3d 833 (Fed. Cir. 2020) (defines substantial evidence review for Commerce factual findings)
- Save Domestic Oil, Inc. v. United States, 357 F.3d 1278 (Fed. Cir. 2004) (agency must follow its routine practice or reasonably explain departures)
- An Giang Fisheries Imp. & Exp. Joint Stock Co. v. United States, 284 F. Supp. 3d 1350 (Ct. Int’l Trade 2018) (addresses when minority government ownership combined with other indicia can support de facto control)