HUBSCHER RIBBON CORP., LTD., Plaintiff, v. UNITED STATES, Defendant.
Court No. 13-00071
United States Court of International Trade
April 15, 2014
Slip Op. 14-43
III. Conclusion
Based on the foregoing, Defendant‘s Motion to Exclude (Doc. 18) is granted in part and denied in part. Dr. Rosen may not testify concerning his opinions that the condition of Park Avenue Bank‘s walkway violated the International Building Code or the Americans with Disabilities Act, that hip fractures commonly occur in individuals who are more than fifty years old, or that Plaintiff Janice Daugharty was in good physical health at the time of her fall. However, he may testify as an expert witness regarding his opinions that the Bank‘s walkway was a substantial tripping hazard, that no act or omission by Mrs. Daugharty caused her accident or injuries, and that her injuries were of a type that would be consistent with a trip and fall.
Ryan M. Majerus, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for Defendant United States. With him on the briefs were Stuart F. Delery, Assistant Attorney General, Jeanne E. Davidson, Director, Patricia M. McCarthy, Assistant Director. Of counsel on the briefs was Scott D. McBride, Senior Attorney, U.S. Department of Commerce, Office of the Chief Counsel for Import Administration, of Washington, DC.
Gregory C. Dorris, Pepper Hamilton, LLP, of Washington, DC, for Defendant-Intervenor Berwick Offray, LLC.
OPINION
GORDON, Judge:
This action involves an administrative review conducted by the U.S. Department of Commerce (“Commerce“) of the antidumping duty order covering narrow woven ribbons with woven selvedge from the People‘s Republic of China. See Narrow Woven Ribbons with Woven Selvedge from the People‘s Republic of China, 78 Fed. Reg. 10,130 (Dep‘t of Commerce Feb. 13, 2013) (final results admin. review) (“Final Results“); see also Issues and Decision Memorandum for the Final Results of the Antidumping Duty Administrative Review on Narrow Woven Ribbons with Woven Selvedge from the People‘s Republic of China, A-570-952 (Dep‘t of Commerce Feb. 5, 2013) (“Decision Memorandum“), available at http://enforcement.trade.gov/frn/summary/prc/2013-03236-1.pdf (last visited this date). Before the court is Plaintiff Hubscher Ribbon Corp., Ltd.‘s (“Hubscher“) motion for judgment on the agency record challenging Commerce‘s assignment of a total adverse facts available (“AFA“) rate of 247.65%. See Pl.‘s R. 56.2 Mem. in Supp. of Mot. for J. on the Agency R. at 3, ECF No. 33 (“Pl.‘s Br.“). The court has jurisdiction pursuant to
I. Background
During the less than fair value (“LTFV“) investigation, Commerce assigned dumping margins of 0.00% to Yama Ribbons and Bows Co., Ltd. (“Yama“), the sole cooperative mandatory respondent, 123.83% for the separate rate respondents, and 247.65% as total adverse facts available (“AFA“) for (1) the China-wide entity and (2) the uncooperative mandatory respondent Ningbo Jintian Import & Export Co., Ltd. (“Ningbo“). Narrow Woven Ribbons with Woven Selvedge from the People‘s Republic of China, 75 Fed. Reg. 41,808, 41,811 (Dep‘t of Commerce July 19, 2010) (final determ.) (“LTFV Final Results“).
The separate rate of 123.83% was the subject of interesting litigation. One of the separate rate respondents, Yangzhou Bestpak Gifts & Crafts Co. (“Bestpak“), challenged the reasonableness of the 123.83% separate rate, which Commerce derived by simply averaging Yama‘s de minimis rate and Ningbo‘s total AFA rate (which was derived from the petition). The U.S. Court of International Trade (“CIT“) was initially skeptical that such a simple average constituted a “reasonable method” to derive the separate rate, assuming there might be other options from the administrative record, and remanded to Commerce for further consideration. Yangzhou Bestpak Gifts & Crafts Co. v. United States, 35 CIT —, —, 783 F.Supp.2d 1343, 1350-53 (2011), after remand, 36 CIT —, 825 F.Supp.2d 1346 (2012), vacated by 716 F.3d 1370 (Fed. Cir. 2013). On remand, Commerce explained that there was very limited data upon which to determine the commercial reality of the separate rate respondents. Bestpak, 36 CIT at —, 825 F.Supp.2d at 1350-51. The CIT acknowledged the limited record data and sustained Commerce‘s explanation as reasonable (supported by substantial evidence), albeit reluctantly. It explained the challenges that limited data pose for Commerce, the interested parties, and the court, especially when drawing conclusions about what constitutes a reasonable measure for the separate rate. Id., 36 CIT at —, 825 F.Supp.2d at 1350-53.
On appeal the U.S. Court of Appeals for the Federal Circuit (“Federal Circuit“) rejected the reasonableness of Commerce‘s simple average that incorporated a total AFA rate for otherwise cooperative, separate rate respondents, noting that Commerce was to blame for the limited record, having had ample time to select another mandatory respondent when Ningbo withdrew its participation. Bestpak, 716 F.3d at 1378-80. On remand Commerce chose to review Bestpak individually and calculate its actual rate. Despite Bestpak maintaining through the course of the litigation that it deserved a zero percent rate, Bestpak, 35 CIT at —, 825 F.Supp.2d at 1350 (“Bestpak, for its part, requests an order from the court directing Commerce to assign Bestpak a 0% rate.“), 716 F.3d at 1381-82 (“Bestpak argued that the sample invoice was evidence of its commercial behavior and strongly supported a determination that Bestpak was entitled to a zero dumping rate.“), Bestpak voluntarily dismissed the litigation rather than be individually reviewed, conceding that all its entries would be covered by the 123.83% separate rate. See Form 8 Notice of Dismissal, Yangzhou Bestpak Gifts & Crafts Co. v. United States, No. 10-00295 (USCIT Nov. 13, 2013), ECF No. 76 (“Yangzhou Bestpak will remain subject to the antidumping duty order on narrow woven rib-
In the subsequent first administrative review Commerce selected and examined Hubscher, an exporter, as the only mandatory respondent. No other respondents were individually reviewed. Narrow Woven Ribbons with Woven Selvedge from the People‘s Republic of China, 77 Fed. Reg. 47,363, 47,363-64 (Dep‘t of Commerce Aug. 8, 2012) (prelim. results admin. review) (“Preliminary Results“). Hubscher at first cooperated, reporting among its questionnaire responses that Yama produced all of the subject merchandise that Hubscher imported during the period of review. When it came time to submit its cost information, however, Hubscher withdrew from the administrative review. Hubscher Letter Re: Withdrawal from Administrative Review, at 1-2 (Dep‘t of Commerce May 29, 2012), PD 68.2
Commerce then applied total AFA to Hubscher. Preliminary Results, 77 Fed. Reg. at 47,367; Decision Memorandum at 2. Commerce selected 247.65%, “the highest rate alleged in the petition,” as the total AFA rate. Preliminary Results, 77 Fed. Reg. at 47,368 (“To determine the relevance of the petition margin, we placed the model-specific rates calculated for the respondents in the LTFV investigation on the record of this segment of the proceed-ing and compared the 247.65 percent rate with those model-specific rates.“); see also Final Results, 78 Fed. Reg. at 10,133; Decision Memorandum at 8-10 & n. 26; Comments and Departmental Position Containing Proprietary Information (Dep‘t of Commerce Feb. 5, 2013), CD 30 (“Corroboration Memorandum“). Although Hubscher admits “that it did not fully participate in the first administrative review and deserves a dumping margin based on ‘adverse facts available,‘” Pl.‘s Br. at 17; see
II. Standard of Review
For administrative reviews of antidumping duty orders, the court sustains Commerce‘s “determinations, findings, or conclusions” unless they are “unsupported by substantial evidence on the record, or otherwise not in accordance with law.”
Separately, the two-step framework provided in Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842-45 (1984), governs judicial review of Commerce‘s interpretation of the antidumping statute. See United States v. Eurodif S.A., 555 U.S. 305, 316 (2009) (Commerce‘s “interpretation governs in the absence of unambiguous statutory language to the contrary or unreasonable resolution of language that is ambiguous.“).
III. Discussion
In a total AFA scenario like the one presented here, Commerce typically cannot calculate an antidumping rate for an uncooperative respondent because the information required for such a calculation (in this case the respondent‘s cost information for the subject merchandise during the period of review) has not been provided. As a substitute, Commerce relies on various “secondary” sources of information (the petition, the final determination from the investigation, prior administrative reviews, or any other information placed on the record),
When selecting an appropriate total AFA proxy, “Commerce must balance the statutory objectives of finding an accurate dumping margin and inducing compliance.” Timken Co. v. United States, 354 F.3d 1334, 1345 (Fed. Cir. 2004). The proxy‘s purpose “is to provide respondents with an incentive to cooperate, not to impose punitive, aberrational, or uncorroborated margins.” de Cecco, 216 F.3d at 1032. Although a higher AFA rate creates a stronger incentive to cooperate, “Commerce may not select unreasonably high rates having no relationship to the respondent‘s actual dumping margin.” Gallant Ocean (Thailand) Co. v. United States, 602 F.3d 1319, 1323 (Fed. Cir. 2010) (citing de Cecco, 216 F.3d at 1032). “Commerce must select secondary information that has some grounding in commercial reality.” Id. 1323-24.
As de Cecco explained, these requirements are logical outgrowths of the statute‘s corroboration requirement, see de Cecco, 216 F.3d at 1032, which mandates that Commerce, to the extent practicable, corroborate secondary information with independent sources reasonably at its disposal.
Before turning to the specific facts, the court addresses Hubscher‘s contention that the Chevron framework governs the court‘s review of that Commerce‘s total AFA selection. For Hubscher, the 247.65% rate represents an unreasonable application of the statute under the second prong of Chevron. Pl.‘s Br. at 15. The court does not agree that the reasonableness of Commerce‘s corroboration of the total AFA rate is a Chevron issue; it is instead a substantial evidence question in which the court reviews the reasonableness of Commerce‘s actions against a known legal standard given the facts and circumstances of the administrative record. More specifically, the issue in this case is whether Commerce, to the extent practicable, reasonably confirmed the reliability and relevance of the highest rate in the petition as a reasonable proxy for Hubscher‘s actual rate plus some built-in increase intended as a deterrent against noncompliance.
Corroboration
The administrative record in the first administrative review had limited information, as did the record for the investigation (an “independent source of information” reasonably at Commerce‘s disposal). Hubscher, for its part, identifies only “three possible alternatives” to the petition rate: (1) Yama‘s 0.00% rate, (2) the 123.83% separate rate, and (3) a hypothetical rate calculated using Hubscher‘s U.S. sales data or Yama‘s factors of production (“FOP“) data from the investigation, with all three rates including some unspecified “factor” added “for deterrence.” Pl.‘s Reply to Def.‘s and Def.-Intervenor‘s Resp. Brs. to Pl.‘s R. 56.2 Mot. at 6-7; see Pl.‘s Br. at 25-26.3 Commerce explained that the first two are not valid alternatives because those rates were assigned to cooperative parties. See Decision Memorandum at 10 (“The Department is not required to as-
Along with apparently limited total AFA proxy choices, Commerce had limited data from which to conduct its corroboration. Commerce did, however, attempt to piece together a connection between Hubscher and the petition rate. As Commerce explained, during the period of review Hubscher sourced its subject merchandise from Yama. Yama, in turn, had a number of of model-specific transactions during the prior proceeding (the investigation) that fell within the range of the petition rate. Corroboration Memorandum at 3. Because Hubscher purchased all of its subject merchandise from Yama, Commerce inferred that Hubscher‘s commercial reali-4ty reflected these higher-margin transactions. See Decision Memorandum at 9 n. 26 (“[I]t is not unreasonable to infer that Hubschercorp could sell subject merchandise to those companies at the same dumping levels.“).
Commerce further analyzed Yama‘s higher-margin transactions to determine if they were somehow unusual or unusable, and concluded, based on both the number of sales and the quantity of ribbons sold, that “there is nothing about those transactions that calls into question their commercial nature or suggests that they were aberrational.” Decision Memorandum at 10; see also Corroboration Memorandum at 3 (containing Commerce‘s analysis of Yama‘s proprietary data). The number of transactions and the quantity of ribbon in those transactions are not so miniscule as to be immaterial. Cf., e.g., Dongguan Sunrise Furniture Co. v. United States, 36 CIT —, —, 865 F.Supp.2d 1216, 1232-34 (2012) (remanding AFA rate to Commerce for further consideration because transactions purporting to corroborate rate were “miniscule“). Hubscher has also not argued that those transactions are unusual with respect to quantity or model. Cf. iScholar, Inc. v. United States, 35 CIT —, —, Slip Op. 11-04 at 5-7, 2011 WL 109014 (Jan. 13, 2011) (sustaining Commerce‘s use of a cooperating respondent‘s highest transaction-specific margin as the total AFA rate for uncooperative respondent where the transaction fell within the cooperating respondent‘s usual quantity and range of models sold).
The court though is reluctant to accept this invitation. As the Bestpak litigation revealed, Yama‘s rate does not reflect all respondents’ commercial reality. After all, in Bestpak, an otherwise cooperative separate rate respondent argued all along that it was entitled to Yama‘s zero, 716 F.3d at 1381, but ultimately voluntarily dismissed the litigation rather than be individually reviewed, conceding that the 123.83% separate rate covered its subject merchandise. See Form 8 Notice of Dismissal, Yangzhou Bestpak Gifts & Crafts Co. v. United States, No. 10-00295 (USCIT Nov. 13, 2013), ECF No. 76. The more pressing problem for Hubscher is its apparent unwillingness to directly address Commerce‘s inference about Hubscher‘s commercial reality reflecting Yama‘s higher-margin transactions. The court anticipated an immediate and vigorous challenge from Hubscher explaining why this inference must be unreasonable. Hubscher is best positioned to explain from the available data that the 247.34% rate simply cannot reasonably reflect Hubscher‘s commercial reality. Recall that Hubscher sourced all its merchandise from Yama. And yet, Hubscher never offers a specific explanation about its own “commercial reality” from the available information on the record. The court is left wondering why Hubscher did not do more when Commerce preliminarily assigned it the 247.34% rate corroborated with a small subset of Yama‘s data. Hubscher did not request that Commerce move the entire Yama data set onto the record for Hubscher to analyze against its own record data. That omission, in turn, has left a limited administrative record with limited data against which the court can analyze whether the AFA rate is a reasonably accurate estimate of Hubscher‘s actual rate albeit with some built-in increase intended as a deterrent against noncompliance. Hubscher, therefore, passed up an important opportunity to crunch Yama‘s data against its own data and create a narrative of its own commercial experience to discredit the petition rate as an unreasonable AFA choice. The court cannot understand why Hubscher let this opportunity pass. Is this because Hubscher already knew from analyzing its own cost data (not provided to Commerce) that its “actual” margin was higher than Hubscher could tolerate, perhaps even in the range of the petition rate, or higher, resulting in a litigation strategy to deflect attention away from Hubscher‘s own data, leaving only general arguments about Yama‘s data?
In the Final Results, Decision Memorandum, and Corroboration Memorandum Commerce has to the extent practica-
Although courts are generally suspicious of petition rates, see, e.g., de Cecco, 216 F.3d at 1032-33; Gallant Ocean, 602 F.3d at 1324; but see Universal Polybag Co. v. United States, 32 CIT 904, 918-22, 577 F.Supp.2d 1284, 1298-1301 (2008) (sustaining highest rate in petition as total AFA), Congress has not foreclosed their use, see
In the instant case, on the other hand, the Department does not have multiple calculated rates for several respondents, nor were there multiple calculated rates in the original investigation. Furthermore, unlike in the administrative review underlying Gallant Ocean, the administrative record here does not contain any information to determine whether a previous respondent was “similarly-sized and similarly-situated” to Hubschercorp, and there are not “abundant resources” from which the Department could determine a different rate.
Decision Memorandum at 10. Hubscher continues to argue that “the facts of its situation mirror” those in Gallant. Pl.‘s Br. at 17. But they do not. Here there was “no verified sales data on the record for the relevant period of review,” as Hubscher “was the only respondent and it failed to cooperate.... Under such circumstances, Commerce‘s corroboration may be less than ideal because the uncooperative acts of the respondent has deprived Commerce of the very information that it needs to link an AFA rate to [respondent‘s] commercial reality.” Qingdao Taifa Group Co. v. United States, 35 CIT —, —, 780 F.Supp.2d 1342, 1349 (2011). Congress understood this type of information shortfall might occur when it included the proviso, “to the extent practicable,” within Commerce‘s corroboration requirement. See
Plaintiff does not argue or suggest that Commerce is to blame for the limited number of calculated rates (or the
Since Gallant Ocean the Court of International Trade has in two cases suggested that when Commerce assigns a total AFA rate “in multiples of 100 percent, a bit more corroboration or record support is warranted.” Qingdao Taifa Group Co. v. United States, 34 CIT —, —, 760 F.Supp.2d 1379, 1386 n. 7 (2010) (holding unreasonable Commerce‘s corroboration of total AFA rates of 383.60% and 227.73%), appeal after third remand, 780 F.Supp.2d 1342 (sustaining Commerce‘s corroboration of lower revised total AFA rate of 145.90%); Lifestyle Enterprise, Inc. v. United States, 35 CIT —, —, 768 F.Supp.2d 1286, 1298 (2011) (holding unreasonable Commerce‘s corroboration of 216.01% total AFA rate: “As the rate becomes larger and greatly exceeds the rates of cooperating respondents, Commerce must provide a clearer explanation for its choice and ample record support for its determination.“), after remand, 36 CIT —, 844 F.Supp.2d 1283, 1288-91 & n. 7 (2012) (holding unreasonable Commerce‘s further attempted corroboration of 216.01% rate: “[Petitioner] could not point to any evidence on or off the record supporting its assertion that any large manufacturing company in any sector was dumping at a rate over 200%. Indeed, the idea that a large profit-seeking corporation deemed separate from the country-wide entity would dump its merchandise at rates over 200% seems inconsistent with commercial reality, absent some evidence to the contrary.“), after second remand, 36 CIT —, 865 F.Supp.2d 1284 (2012) (holding unreasonable Commerce‘s corroboration of lower revised total AFA rate of 130.81%), after third remand, 37 CIT —, 896 F.Supp.2d 1297 (2013) (sustaining Commerce‘s corroboration of lower revised total AFA rate of 83.55%).
Qingdao and Lifestyle, two cases that Hubscher does not cite or discuss, both
Government Ownership or Control
Hubscher also argues that 247.65% is “punitive” because Commerce also used the petition rate as the China-wide rate. Pl.‘s Reply at 6-7; see Pl.‘s Br. at 24-25. According to Hubscher this means that Commerce implicitly found that Hubscher was subject to government ownership or control even though it has no ties to the Government of China. Id. This is a straw man argument. Commerce never found, directly or implicitly, that Hubscher was subject to government control. What Commerce did was use the highest rate in the petition twice, first as the China-wide rate in the investigation, and second, as total AFA for Hubscher in the first administrative review. Commerce did not conflate the two, repeatedly referring to Hubscher‘s AFA margin as the “petition rate,” not the China-wide rate. Compare Decision Memorandum at 4, 6, 9-11 (describing Hubscher‘s AFA rate as being the highest petition rate, not the China-wide rate), with LTFV Final Results, 75 Fed. Reg. at 41,810-11 (continuing preliminary application of the “PRC-wide rate” as AFA to an uncooperative mandatory respondent because of its failure to answer questionnaire regarding government ownership and control); Lifestyle Enterprise, Inc. v. United States, 35 CIT —, —, 768 F.Supp.2d 1286, 1298 n. 12 (2011) (“This claim lacks merit as Commerce did not assign the PRC-wide rate per se, but rather selected the same rate based on separate considerations.“), after remand, 36 CIT —, 844 F.Supp.2d 1283 (2012), after second remand, 36 CIT —, 865 F.Supp.2d 1284 (2012), after third remand, 37 CIT —, 896 F.Supp.2d 1297 (2013); cf. Gerber Food (Yunnan) Co. v. United States, 29 CIT 753, 771-73, 387 F.Supp.2d 1270, 1287-88 (2005), after remand 31 CIT 921, 491 F.Supp.2d 1326 (2007), after second remand, 32 CIT 995, 2008 WL 4279528 (2008) (remanding selection of country-wide rate as AFA because, among other reasons, Commerce unreasonably made an implicit finding of government ownership or control).
IV. Conclusion
For the foregoing reasons Hubscher‘s motion for judgment on the agency record is denied. Judgment will be entered accordingly.