Home Meridian International, Inc. v. United States , 772 F.3d 1289 ( 2014 )

United States Court of Appeals
for the Federal Circuit
______________________
HOME MERIDIAN INTERNATIONAL, INC.,
doing business as Samuel Lawrence Furniture Co.,
and Pulaski Furniture Company,
GREAT RICH (HK) ENTERPRISES CO., LTD.,
AND DONGGUAN LIAOBUSHANGDUN HUADA
FURNITURE FACTORY,
Plaintiffs-Appellees,
AND
DALIAN HUAFENG FURNITURE GROUP CO.,
LTD., AND NANHAI BAIYI WOODWORK CO., LTD.,
Plaintiffs,
v.
UNITED STATES,
Defendant,
AND
AMERICAN FURNITURE MANUFACTURERS
COMMITTEE FOR LEGAL TRADE, AND VAUGHAN-
BASSETT FURNITURE COMPANY, INC.,
Defendants-Appellants.
______________________
2014-1251
______________________
2 HOME MERIDIAN INTERNATIONAL v. US
Appeals from the United States Court of International
Trade in Nos. 1:11-cv-00325-JAR, 1:11-cv-0326-JAR, 1:11-
00356-JAR, 1:11-cv-00360-JAR, and 1:11-cv-00365-JAR,
Judge Jane A. Restani.
______________________
Decided: December 1, 2014
______________________
JEFFREY S. GRIMSON, Mowry & Grimson, PLLC, of
Washington, DC, argued for plaintiffs-appellees. With
him on the brief were KRISTIN H. MOWRY, JILL A. CRAMER,
SARAH M. WYSS, and DANIEL R. WILSON. Of counsel was
REBECCA M. JANZ.
J. MICHAEL TAYLOR, King & Spalding LLP, of Wash-
ington, DC, argued for defendants-appellants. With him
on the brief were JOSEPH W. DORN and MARK T. WASDEN.
Of counsel was DANIEL SCHNEIDERMAN.
______________________
Before O’MALLEY, TARANTO, and CHEN, Circuit Judges.
O’MALLEY, Circuit Judge.
American Furniture Manufacturers Committee for
Legal Trade and Vaughan-Bassett Furniture Company,
Inc. (together, “AFMC”) appeal from a U.S. Court of
International Trade judgment sustaining, after two
previous remands, the U.S. Department of Commerce’s
valuation of inputs for wooden bedroom furniture import-
ed from the People’s Republic of China. Because substan-
tial evidence supported Commerce’s prior valuation, we
reverse.
BACKGROUND
In 2005, Commerce published an antidumping duty
order on wooden bedroom furniture from the People’s
Republic of China. In 2010, AFMC requested an adminis-
HOME MERIDIAN INTERNATIONAL v. US 3
trative review of certain companies exporting such furni-
ture to the United States between January 1, 2009 and
December 31, 2009 (“Period of Review”). After Commerce
selected Dalian Huafeng Furniture Group Co., Ltd.
(“Huafeng”) as the mandatory respondent, Huafeng
provided Commerce with data related to its 2008 pur-
chases of the following wood inputs from market economy
suppliers relevant to the subject merchandise (“market
economy purchases”): pine, poplar, birch, and elm lumber,
as well as oak veneer and plywood.
I. Final Results
In 2011, Commerce assigned Huafeng a dumping
margin of 41.75% using 2009 import data from the Phil-
lippines (“surrogate values”), a market economy, to value
the relevant wood inputs (“Final Results”). Commerce
explained that the surrogate values represented the “best
available information” under 19 U.S.C. § 1677b(c)(1)
(2012) because they were contemporaneous with the
Period of Review, and the market economy purchases
identified by Huafeng were not.
Commerce found that 19 C.F.R. § 351.408(c)(1) (2014)
and the Antidumping Methodologies: Market Economy
Inputs, Expected Non-Market Economy Wages, Duty
Drawback; and Request for Comments, 71 Fed. Reg.
61716, 61717–18 (Oct. 19, 2006), do not mandate that
Commerce only use market economy purchases when
valuing inputs, as importer Home Meridian International,
Inc., Great Rich (HK) Enterprises Co., Ltd., Dongguan
Liaobushangdun Huada Furniture Factory (collectively,
“Home Meridian”), and Huafeng suggested. Commerce
explained that, although § 351.408(c)(1) provides that
Commerce “normally will use the price paid to the market
economy supplier” when such data is available, the “word
‘normally’ provides [Commerce] with the discretion to not
use those prices if Commerce believes they do not consti-
tute the best available information for valuing an input.”
4 HOME MERIDIAN INTERNATIONAL v. US
Joint Appendix (“J.A.”) 1000910–11. Commerce clarified
that, although the Antidumping Methodologies create a
rebuttable presumption in favor of using market economy
purchases, the presumption only applies when a specified
volume of those purchases are made during the period of
review. Because Huafeng made no such purchases during
the Period of Review, Commerce concluded that the
presumption did not apply.
The Court of International Trade remanded the
matter to Commerce, finding that Commerce categorically
excluded the market economy purchases on the basis of
contemporaneity, and failed to make any factual determi-
nation on their reliability as indicators of normal value.
The court acknowledged that Commerce has long favored
contemporaneous surrogate values over non-
contemporaneous market economy purchases to value
inputs, which the court perceived to be a “blanket rule”
Commerce relied on in practice “to the exclusion of all
other factors.” J.A. 50. The court, however, questioned
whether this “blanket rule” was in accordance with the
law where, as Huafeng and Home Meridian suggested
was the case, the non-contemporaneous purchases consti-
tuted 100% of the inputs used to produce the merchandise
manufactured and exported during the Period of Review.
II. First Redetermination
In 2013, Commerce again found that the surrogate
values constituted the “best available information” (“First
Redetermination”). Commerce acknowledged that it uses
contemporaneous market economy purchases when avail-
able because those purchases “reflect the respondent’s
actual [market cost] experience during the [period of
review],” but reiterated that Huafeng made no such
purchases here. J.A. 1001018.
Commerce concluded that the record did not support
Huafeng and Home Meridian’s argument that market
economy purchases constituted 100% of the inputs used to
HOME MERIDIAN INTERNATIONAL v. US 5
make the subject merchandise. First, Commerce found
that Huafeng made no purchases of the six relevant wood
inputs during the Period of Review. Second, Commerce
determined that, in the thirteen months prior to the
Period of Review, Huafeng purchased pine, poplar, birch,
and elm lumber inputs from both market economy and
non-market economy suppliers. Third, Commerce found
that for three types of lumber (elm, poplar, and birch)
there were sufficient non-market economy purchases to
account for 100% of Huafeng’s consumption of that lum-
ber during the Period of Review. Fourth, Commerce
determined that there was a sufficient quantity of rele-
vant wood inputs in Huafeng’s inventory before Huafeng
made the market economy purchases that could have
covered the consumption of lumber inputs during both
2008 and the Period of Review. Finally, Commerce de-
termined that there was no evidence demonstrating
specifically which inputs Huafeng used to produce the
subject merchandise.
Commerce then examined the reliability of the surro-
gate values. Commerce recognized that the Philippine
import data reflected higher prices than Huafeng’s mar-
ket economy purchases, but held that the higher prices
alone did not render the data aberrational. Commerce
referred to Huafeng’s acknowledgement that prices can
increase, as it purchased a “large quantity of lumber [in
2008] to avoid the risk of prices increasing, which it was
predicted may happen.” J.A. 1000508, 1001021. In
addition, Commerce noted that another similarly situated
respondent in China paid prices in 2008 that were signifi-
cantly higher than Huafeng’s market economy purchases
and aligned more closely with the surrogate values.
Commerce used a Philippine Harmonized Tariff Schedule
(“HTS”) wooden basket category to value the poplar,
birch, and elm lumber inputs. Commerce explained that,
while the HTS category did not address each input indi-
vidually, it was nevertheless contemporaneous with the
6 HOME MERIDIAN INTERNATIONAL v. US
Period of Review and “consist[s] of actual prices paid by
[market economy] buyers of these wood inputs.” J.A.
1001022. Thus, in weighing the merits of the surrogate
values and market economy purchases, Commerce deter-
mined that the surrogate values represented the “best
available information.”
The Court of International Trade again remanded the
matter to Commerce, with the directive to “use Huafeng’s
actual [market economy] wood input purchases” for
valuation or to reopen the record to make further factual
findings regarding whether those purchases represented
100% of the inputs used to produce the subject merchan-
dise. J.A. 18. The court first held Commerce’s interpreta-
tion of § 351.408(c)(1) to be reasonable, and agreed that
the Antidumping Methodologies did not require use of the
market economy purchases. The court then held that,
nevertheless, Commerce improperly found that market
economy purchases did not constitute 100% of the inputs
used to produce the subject merchandise. The court
explained that the record supported the contrary conclu-
sion, including that Huafeng separated its inputs based
on country of origin at the manufacturing site and segre-
gated its workshops based on shipping destination. The
court held that, although these facts were not definitive,
they still outweighed Commerce’s “zero evidence to the
contrary.” Home Meridian Int’l, Inc. v. United States, 922
F. Supp. 2d 1366, 1376 (Ct. Int’l Trade 2013).
AFMC then filed a Motion for Reconsideration or, in
the Alternative, for an Order Directing Commerce to
Reopen the Record, which the Court of International
Trade denied.
III. Second Redetermination
On remand for the second time, Commerce first de-
termined that it did not need to reopen the record because
the “best available information” analysis focuses on the
purchase of inputs, not consumption thereof, and reopen-
HOME MERIDIAN INTERNATIONAL v. US 7
ing the record to make factual determinations regarding
consumption would thus be futile (“Second Redetermina-
tion”). Commerce then verified that the market economy
purchases were in fact from market economy suppliers,
and used those values to assign a new dumping margin of
11.79%.
The Court of International Trade sustained the Sec-
ond Redetermination. AFMC timely appealed. We have
jurisdiction under 28 U.S.C. § 1295(a)(5).
DISCUSSION
We review Commerce’s factual determinations for
substantial evidence, and its legal conclusions de novo.
Lifestyle Enter. v. United States, 751 F.3d 1371, 1378
(Fed. Cir. 2014). We do not limit our review to Com-
merce’s Second Redetermination and the Court of Inter-
national Trade’s decision thereon, as our review extends
to the interim decisions of Commerce and the Court of
International Trade as well. Nippon Steel Corp. v. U.S.
Int’l Trade Comm’n, 494 F.3d 1371, 1378 (Fed. Cir. 2007).
We reject appellee’s suggestion that we are barred from
considering interim decisions rendered by Commerce
whenever Commerce renders an alternative final deter-
mination after remand. As our precedent makes clear,
our ability to review interim decisions is preserved for
final review, regardless of changes to those decisions
which occur post-remand. Id.
We first address whether Commerce properly inter-
preted § 351.408(c)(1) and the Antidumping Methodolo-
gies, and then turn to the question of whether substantial
evidence supported Commerce’s valuation of inputs prior
to the Second Redetermination.
I.
As a general rule, we defer to an agency’s interpreta-
tions of a regulation it promulgates if the regulation is
ambiguous and the agency’s interpretation is not plainly
8 HOME MERIDIAN INTERNATIONAL v. US
erroneous or inconsistent with the regulation. Gose v.
U.S. Postal Serv., 451 F.3d 831, 836 (Fed. Cir. 2006).
Commerce properly interpreted § 351.408(c)(1) as not
requiring the use of market economy purchases for valua-
tion when they do not constitute the “best available
information.” Commerce correctly interpreted the Anti-
dumping Methodologies presumption as applying only to
situations where a certain volume of market economy
purchases are made during the relevant period of review.
For merchandise exported from a non-market econo-
my, like the People’s Republic of China, Commerce de-
termines normal value for dumping margin calculations
on the “basis of the value of the factors of production [like
raw material inputs] utilized in producing the merchan-
dise and to which shall be added an amount for general
expenses and profit plus the cost of containers, coverings,
and other expenses.” 19 U.S.C. § 1677b(c)(1),(3). Com-
merce must value these factors based on the “best availa-
ble information.” Id. § 1677b(c)(1)(B).
“Best available information” can constitute surrogate
values or market economy purchases. Commerce typical-
ly uses surrogate values, which are “prices or costs of
factors of production in one or more market economy
countries that are . . . at a level of economic development
comparable to that of the nonmarket economy country,
and significant producers of comparable merchandise.” 19
U.S.C. § 1677b(c)(4). Section 351.408(c)(1), however,
provides that, when a respondent purchases inputs pro-
duced in a market economy country from a market econ-
omy supplier with market economy currency, Commerce
“normally will use” this market economy purchase price
for valuation “if substantially all of the total volume of the
factor is purchased from the” supplier. Based on
§ 351.408(c)(1), Commerce created a rebuttable presump-
tion that, generally in situations where there are both
market and non-market economy purchases made during
HOME MERIDIAN INTERNATIONAL v. US 9
the period of review, Commerce will use market economy
purchases to value the entire input if those purchases
exceed thirty-three percent of the total volume of inputs
from all sources during the period. Antidumping Method-
ologies, 71 Fed. Reg. at 61717–18.
Thus, no regulation or statute imposes a strict re-
quirement on Commerce to use non-contemporaneous
market economy purchases rather than contemporaneous
surrogate values, or vice versa, in valuing inputs for the
calculation of a dumping margin. Commerce, instead,
must only determine what set of data represents the “best
available information.” Commerce’s interpretation of
§ 351.408(c)(1), specifically its language that Commerce
“normally will use the price paid to the market economy
supplier,” was reasonable because the word “normally”
indicates that Commerce has the discretion not to use
market economy purchases when it does not constitute
the “best available information.”
Home Meridian and AFMC advance alternative inter-
pretations, but both are misplaced. Home Meridian
argues that Commerce must use the market economy
purchases for valuation and that there is no contempora-
neity requirement in § 351.408(c)(1). Neither the regula-
tion nor the governing statute, however, prohibits
Commerce from relying on contemporaneity as a factor in
valuation, and Commerce is not required to use market
economy purchases when they do not constitute the “best
available information.” AFMC contends that
§ 351.408(c)(1) and the Antidumping Methodologies, read
together, allow Commerce to completely disregard market
economy purchases. This is an overstatement. Here,
Commerce correctly determined from the unambiguous
language of the Antidumping Methodologies that the
presumption to use market economy purchases did not
apply because Huafeng made no such purchases during
the Period of Review. Nevertheless, neither
§ 351.408(c)(1) nor the Antidumping Methodologies per-
10 HOME MERIDIAN INTERNATIONAL v. US
mits Commerce to categorically exclude market economy
purchases without making a factual determination as to
the extent to which they inform the inquiry into what is
the best available information for valuing the relevant
inputs.
Commerce therefore did not err in interpreting
§ 351.408(c)(1) or the Antidumping Methodologies. That
these interpretations were proper is not dispositive,
however, as Commerce was still required to weigh the
reliability of the market economy purchases against the
surrogate values.
II.
Although substantial evidence did not support Com-
merce’s valuation of inputs in the Final Results, substan-
tial evidence supported Commerce’s valuation in the First
Redetermination. Substantial evidence did not support
Commerce’s valuation in the Final Results because Com-
merce failed to make any factual determination as to the
reliability of the market economy purchases or weigh the
merits of those purchases against the surrogate values.
Substantial evidence supported Commerce’s valuation
in its First Redetermination, however, and the Court of
International Trade erroneously held otherwise. Com-
merce has a longstanding practice of favoring contempo-
raneous surrogate values over non-contemporaneous
market economy purchases because, according to Com-
merce, those surrogate values more accurately reflect the
respondent’s actual market cost experience during the
relevant period of review. The Court of International
Trade only questioned whether that practice extends to
situations where 100% of the inputs used to produce the
subject merchandise are non-contemporaneous market
economy purchases.
Commerce properly determined that the record did
not support Huafeng and Home Meridian’s assertion that
HOME MERIDIAN INTERNATIONAL v. US 11
100% of the inputs used to produce the subject merchan-
dise were market economy purchases. Huafeng’s “Market
Economy Purchases Spreadsheet” endorses Commerce’s
conclusion. Commerce could have reasonably inferred
from the spreadsheet that Huafeng purchased only two of
the wood inputs (oak veneer and plywood) exclusively
from market economy suppliers in 2008. J.A. 1000469.
The spreadsheet also indicates that Huafeng purchased
the four remaining types of wood inputs from both non-
market and market economy suppliers in 2008. Id.
Commerce further found that, for three types of lumber,
there were sufficient non-market economy purchases to
provide 100% of the lumber consumed during the Period
of Review. There is no evidence demonstrating which of
these units Huafeng used to produce the subject mer-
chandise.
Additionally, there was no evidence in the record to
corroborate Huafeng and Home Meridian’s assertion to
the contrary. For example, Huafeng never provided a
verified statement that it only used market economy
purchases to produce the subject merchandise. Huafeng
and Home Meridian only made this assertion through
counsel in briefs before Commerce. Commerce was not
required to prove a negative, and did not need to find
affirmative evidence demonstrating that Huafeng did not
use market economy purchases of wood inputs to produce
the subject merchandise.
Commerce acknowledged the flaws of the surrogate
values but concluded that they represented a more accu-
rate reflection of Huafeng’s actual market cost experience.
Substantial evidence supported that conclusion. Com-
merce, for instance, addressed the fact that the surrogate
values were higher in price than the market economy
purchases, but found that the difference alone did not
render the surrogate values misrepresentative. Even
Huafeng acknowledged that price increases are not an
abnormal occurrence, stating that it purchased large
12 HOME MERIDIAN INTERNATIONAL v. US
quantities of lumber in 2008 to “avoid the risk of prices
increasing.” J.A. 1000508. Furthermore, though the HTS
wooden basket category used to value poplar, birch, and
elm lumber inputs does not address each type of input
individually, it was not unreasonable for Commerce to
find the category more reliable than the market economy
purchases because the category was contemporaneous
with the Period of Review and reflected actual prices that
market economy buyers paid for those inputs.
The data on which Commerce relies to value inputs
must be the “best available information,” but there is no
requirement that the data be perfect. Here, Commerce
gave considerable weight to contemporaneity, as the
Court of International Trade recognized Commerce often
does when comparing contemporaneous surrogate values
with non-contemporaneous market economy purchases.
See Home Meridian Int’l Inc. v. United States, 865 F.
Supp. 2d 1311, 1317 n.5 (Ct. Int’l Trade 2012). Though
contemporaneity may not necessarily outweigh all other
factors where the only inputs used to produce the subject
merchandise are market economy purchases, Commerce
properly determined from the record that, here, the inputs
could not have been all market economy purchases.
Substantial evidence therefore supported Commerce’s
valuation of the wood inputs in its First Redetermination.
We have considered Home Meridian’s remaining
arguments concerning Commerce’s valuation in the First
Redetermination, and find them unpersuasive. In view of
our conclusion, we find it unnecessary to address the
merits of Commerce’s Second Redetermination, and the
Court of International Trade’s decision thereon. See
Nippon Steel Corp. v. U.S. Int’l Trade Comm’n, 494 F.3d
1371, 1378 (Fed. Cir. 2007).
CONCLUSION
For the reasons stated above, we hold that substantial
evidence supported Commerce’s valuation in its First
HOME MERIDIAN INTERNATIONAL v. US 13
Redetermination, and the Court of International Trade
incorrectly found otherwise. We, accordingly: (1) vacate
Commerce’s Second Redetermination and the Court of
International Trade’s decision thereon; (2) reverse the
Court of International Trade’s decision on Commerce’s
First Redetermination; and (3) direct the Court of Inter-
national Trade to reinstate Commerce’s valuation in the
First Redetermination.
REVERSED