Itochu Building Products v. United States , 733 F.3d 1140 ( 2013 )

United States Court of Appeals
for the Federal Circuit
______________________
ITOCHU BUILDING PRODUCTS,
Plaintiff-Appellant,
v.
UNITED STATES,
Defendant-Appellee.
______________________
2013-1044
______________________
Appeal from the United States Court of International
Trade in No. 11-CV-0208, Judge Timothy C. Stanceu.
______________________
Decided: August 19, 2013
______________________
NED H. MARSHAK, Grunfeld, Desiderio, Lebowitz, Sil-
verman & Klestadt, LLP, of New York, New York, argued
for plaintiff-appellant. With him on the brief were BRUCE
M. MITCHELL, ANDREW T. SCHUTZ and KAVITA MOHAN.
RYAN M. MAJERUS, Trial Attorney, Commercial Litiga-
tion Branch, Civil Division, United States Department of
Justice, of Washington, DC, argued for defendant-
appellee. On the brief were STUART F. DELERY, Principal
Deputy Assistant Attorney General, JEANNE E. DAVIDSON,
Director, CARRIE A. DUNSMORE, Trial Attorney. Of coun-
sel on the brief was NATHANIEL HALVORSON, Attorney,
Office of the Chief Counsel for Import Administration,
United States Department of Commerce, of Washington,
2 ITOCHU BUILDING PRODUCTS v. US
DC. Of counsel was MELISSA M. DEVINE, Attorney,
United States Department of Justice, of Washington, DC.
______________________
Before LOURIE, BRYSON, and TARANTO, Circuit Judges.
TARANTO, Circuit Judge.
Itochu Building Products asked the United States De-
partment of Commerce to act under 19 U.S.C. § 1675(b) to
revoke part of an antidumping-duty order applicable to
imported steel nails. Before Commerce issued its prelim-
inary determination to do so, Itochu submitted comments,
met with Commerce officials, and provided legal authority
to urge that the requested partial revocation take effect at
an early specified date. Commerce rejected that position
in its preliminary ruling, saying that a later date would
apply, and generally invited interested parties to com-
ment. Itochu did not avail itself of that opportunity. In
its final ruling, Commerce adopted the partial revocation,
which the domestic industry did not oppose, but adhered
to its position giving the change the later effective date.
When Itochu challenged the effective-date determina-
tion in the United States Court of International Trade,
the court declined to address the merits. Instead, invok-
ing 28 U.S.C. § 2637(d)’s directive to require exhaustion of
administrative remedies “where appropriate,” the trade
court dismissed Itochu’s challenge because Itochu had
failed to resubmit to Commerce, after the preliminary
ruling, the comments it had submitted earlier.
We reverse the trade court’s ruling as an abuse of dis-
cretion. In the circumstances here, requiring exhaustion
served no discernible practical purpose and would have
risked harm to Itochu. We remand for further proceed-
ings.
BACKGROUND
In August 2008, after finding that certain steel nails
exported from the People’s Republic of China were being
ITOCHU BUILDING PRODUCTS v. US 3
sold in the United States at less than fair value, the
Department of Commerce issued an antidumping-duty
order under 19 U.S.C. §§ 1673d-e, effective as of January
23, 2008. Certain Steel Nails from the People’s Rep. of
China, 73 Fed. Reg. 44,961 (Dep’t of Commerce Aug. 1,
2008) (antidumping-duty order). In September 2009,
Commerce initiated an administrative review of that
order, under 19 U.S.C. § 1675(a), for the period January
23, 2008, to July 31, 2009. Certain Steel Nails from the
People’s Rep. of China, 74 Fed. Reg. 48,224, 48,226-28
(Dep’t of Commerce Sep. 22, 2009) (initiation of admin.
rev.).
Mid Continent Nail Corporation was one of several
domestic nail manufacturers that had petitioned Com-
merce to launch the investigation that had resulted in the
antidumping-duty order. On February 11, 2011, while
the administrative review was still underway, Mid Conti-
nent notified Commerce that it no longer had an interest
in receiving antidumping-duty relief from imports of four
types of steel nails. See Certain Steel Nails from the
People’s Rep. of China, 76 Fed. Reg. 22,369 (Dep’t of
Commerce Apr. 21, 2011) (initiation and prelim. results).
Mid Continent asked Commerce to initiate a changed-
circumstances review, under 19 U.S.C. §§ 1675(b), (d)(1),
to revoke the order as to those four types of nails. Id.Mid Continent asked that the revocation be effective for
all entries that (a) were made on or after January 23,
2008, and (b) were not subject to final duty determina-
tions (i.e., were not yet liquidated) when the changed-
circumstances order eventually issued. January 23, 2008,
was the effective date of the antidumping-duty order and
the start of the period covered by the pending administra-
tive review. Id.On February 22, 2011, Itochu submitted comments to
Commerce in support of Mid Continent’s request for
partial revocation of the antidumping-duty order. Itochu
urged that partial revocation of the order back to January
23, 2008, would be consistent with two of Commerce’s
4 ITOCHU BUILDING PRODUCTS v. US
policies. First, it argued, Commerce had a practice of
revoking orders for unliquidated entries that were not yet
subject to a completed administrative review. Itochu
argued that United States Customs and Border Protection
does not fix and assess the final amount of duties owed on
entries (i.e., does not liquidate such entries) until an
administrative review is complete, see 19 U.S.C.
§ 1675(a)(2)(C), and here, the administrative review was
still pending. Second, and in any event, should the ad-
ministrative review conclude before Commerce could
make its final determination in the changed-
circumstances review, Itochu explained that its January
2008 date was consistent with Commerce’s practice of
granting similar requests where entries remain unliqui-
dated for other reasons, such as ongoing litigation. Itochu
also requested that Commerce expedite consideration of
the changed-circumstances review because the domestic
industry and interested parties supported the requested
partial revocation.
On March 8, 2011, counsel for Itochu met with eight
officials from the Department of Commerce to present its
argument that partial revocation should take effect as of
January 23, 2008. In support of its position, Itochu’s
counsel provided the officials with 41 pages of excerpts
from prior Commerce determinations in which, Itochu
argued, Commerce had granted requests that partial
revocations in changed-circumstances reviews apply to all
unliquidated entries.
On March 23, 2011, Commerce completed its adminis-
trative review for the period from January 23, 2008, to
July 31, 2009. Certain Steel Nails from the People’s Rep.
of China, 76 Fed. Reg. 16,379 (Dep’t of Commerce Mar.
23, 2011) (final results admin. rev.). Commerce issued
liquidation instructions to Customs for the steel nails
covered by the administrative review, but liquidation of
Itochu’s entries was thereafter enjoined pending a chal-
lenge in the trade court to the final results of the adminis-
trative review. See Mid Continent Nail Corp. v. United
ITOCHU BUILDING PRODUCTS v. US 5
States, No. 11-cv-119-DAR, Dkt. No. 13 (Int’l Trade Ct.
May 20, 2011) (order granting preliminary injunction).
On April 21, 2011, Commerce took two actions simul-
taneously: it formally initiated the changed-circumstances
review and, granting Itochu’s request for expedition,
published the preliminary results of the review. Certain
Steel Nails from the People’s Rep. of China, 76 Fed. Reg.
at 22,369. Commerce preliminarily determined that “the
domestic producers . . . ha[d] no interest in the continued
application of the antidumping duty order” for the four
types of nails at issue and that it intended to revoke the
order for those nails. Id. at 22,371.
Regarding the effective date of the revocation, Com-
merce noted that Itochu had submitted comments, and
met with department officials, to urge that the revocation
take effect January 23, 2008. Id. at 22,370. But Com-
merce preliminarily rejected that position, because it did
“not find this to be consistent with [Commerce’s] recent
practice.” Id. at 22,371. Commerce instead said that the
revocation would be effective August 1, 2009, the day
after the period covered by the just-completed administra-
tive review. Id. Commerce explained: “It is the Depart-
ment’s practice to revoke (in whole or in part) an
antidumping duty order so that the effective date of
revocation covers entries that have not been subject to a
completed administrative review.” Id. Commerce invited
interested parties to comment on the preliminary results
within 14 days, though it did not cite 19 C.F.R. § 351.309,
the regulation that governs submission of written argu-
ment by interested parties. Id. Commerce explained that
the timing of its final results would depend on whether it
received comments: if so, the final results would not issue
for up to 270 days; if not, they would issue within 45 days.
Id.Itochu did not submit comments in response to the
preliminary results. On May 24, 2011, 33 days after
publication of the preliminary results, Commerce pub-
lished the final results of the changed-circumstances
6 ITOCHU BUILDING PRODUCTS v. US
review. Certain Steel Nails from the People’s Rep. of
China, 76 Fed. Reg. 30,101 (Dep’t of Commerce May 24,
2011) (final results). Commerce concluded that it would
revoke the antidumping duty order with regard to the
four types of steel nails at issue. Id. Again describing its
interactions with Itochu concerning the effective date of
the revocation, Commerce again rejected Itochu’s position,
instead adopting August 1, 2009, as the effective date.
See id. at 30,101-02. Commerce explained that its “recent
practice has been to select the date after the most recent
period for which a review was completed . . . as the effec-
tive date.” Id. at 30,102 & n.5.
Itochu challenged Commerce’s determination regard-
ing the effective date in the trade court and moved for
judgment on the agency record under that court’s Rule
56.2. On September 19, 2012, the court issued its deci-
sion. Itochu Bldg. Prods. v. United States, 865 F. Supp.
2d 1332 (Ct. Int’l Trade 2012). It did not reach the merits
of the proper effective date for the partial revocation of
the antidumping-duty order. Rather, relying on its au-
thority under 28 U.S.C. § 2637(d) to “require the exhaus-
tion of administrative remedies” “where appropriate,” the
court found that Itochu had failed to exhaust its adminis-
trative remedies by “declin[ing] to file comments in re-
sponse to the combined notice of initiation and notice of
preliminary results of that review.” Id. at 1337. Accord-
ing to the court, Itochu was required to “raise all relevant
arguments at the time Commerce request[ed] comments.”
Id. Having not done so, the court ruled, Itochu had
waived any objection to Commerce’s decision as to the
effective date. Id.The trade court rejected Itochu’s argument that be-
cause Commerce did not cite 19 C.F.R. § 351.309 in its
preliminary results, Itochu was not on notice that it
would lose its opportunity to contest Commerce’s effective
date determination by not responding to Commerce’s
preliminary results. The court reasoned that the exhaus-
tion requirement here was not regulatory in nature, but
ITOCHU BUILDING PRODUCTS v. US 7
rather arose from the exhaustion doctrine as codified in
§ 2637(d). Id. at 1338. Accordingly, the exhaustion
requirement applied whether or not section 351.309 was
explicitly referenced. Id. The trade court also addressed
Itochu’s argument that resubmitting its comments would
have been futile because Commerce was simultaneously
defending its recent effective-date “practice” in an active
trade court case, Heveafil Sdn. Bdh. v. United States, No.
04-00477 (Ct. Int’l Trade filed Sep. 9, 2004). The court
rejected the futility contention on the ground that Com-
merce “did not indicate in its notice that there would be
no possibility of a change in position on the effective date
issue.” Itochu Bldg. Prods., 865 F. Supp. 2d at 1338-39.
Itochu appeals. This court has jurisdiction under 28
U.S.C. § 1295(a)(5).
DISCUSSION
The trade court, relying on its discretionary authority
under 28 U.S.C. § 2637(d), held that Itochu waived its
objection to Commerce’s effective-date determination
because it did not resubmit, after the preliminary results
rejected its position, the argument it had fully presented
before that rejection. We review for abuse of discretion
the trade court’s determination that dismissal for failure
to exhaust was “appropriate” here. 28 U.S.C. § 2637(d);
Agro Dutch Indus. Ltd. v. United States, 508 F.3d 1024,
1029 (Fed. Cir. 2007). In the circumstances presented, we
hold, dismissal on exhaustion grounds was an abuse of
discretion. 1
1 We do not adopt Itochu’s suggestion that exhaus-
tion is excused simply because Commerce did not ask for
case briefs under 19 C.F.R. § 351.309 in its preliminary
results. Failure to exploit an available agency remedy,
even if not specifically required, can constitute a failure to
exhaust in appropriate circumstances. See Corus Staal
BV v. United States, 502 F.3d 1370, 1379 (Fed. Cir. 2007).
8 ITOCHU BUILDING PRODUCTS v. US
This court has explained that section 2637(d) “indi-
cates a congressional intent that, absent a strong contrary
reason, the [trade] court should insist that parties ex-
haust their remedies before the pertinent administrative
agencies.” Corus Staal BV v. United States, 502 F.3d
1370, 1379 (Fed. Cir. 2007). The requirement that invo-
cation of exhaustion be “appropriate,” however, requires
that it serve some practical purpose when applied. In-
quiry into the purposes served by requiring exhaustion in
the particular case, and any harms caused by requiring
such exhaustion, is needed to determine appropriateness.
Requiring exhaustion can protect administrative
agency authority and promote judicial efficiency. McCar-
thy v. Madigan, 503 U.S. 140, 145 (1992). The require-
ment can protect an agency’s interest in being the initial
decisionmaker in implementing the statutes defining its
On the other hand, Itochu was under no specific re-
quirement to file a case brief. In Corus Staal, the plaintiff
filed a case brief, as 19 C.F.R. § 351.309(b)(1) expressly
contemplates for the “administrative review” involved,
and that filing was subject to the requirement, 19 C.F.R.
§ 351.309(c)(2), that, when a case brief is filed, it must
include all arguments the submitter believes remain
pertinent. Corus Staal, 502 F.3d at 1378. Those provi-
sions do not apply here. 19 C.F.R. § 351.309(b)(1) (not
listing changed-circumstances reviews), § 351.309(c)(2)
(what must be included in a case brief if filed). Similarly,
section 351.309(c)(1) establishes only the timing rules for
any case briefs filed; it does not impose duties to file. And
section 351.109(b)(2) merely contemplates Commerce
“requests.” See also 19 C.F.R. § 351.221(b)(4)(ii) (Com-
merce will issue an “invitation for argument” in prelimi-
nary results). With no directive requiring a filing after
the preliminary results here, either by general regulation
or case-specific Commerce command, the exhaustion
analysis is not altered by the regulations.
ITOCHU BUILDING PRODUCTS v. US 9
tasks. Id. And it can serve judicial efficiency by promot-
ing development of an agency record that is adequate for
later court review and by giving an agency a full oppor-
tunity to correct errors and thereby narrow or even elimi-
nate disputes needing judicial resolution. Id. at 145-46.
At the same time, “the interest of the individual in retain-
ing prompt access to a federal judicial forum” is taken into
account in deciding when exhaustion is demanded in
order to protect “institutional interests.” Id. at 146.
Courts have recognized several recurring circum-
stances in which institutional interests are not sufficient-
ly weighty or application of the doctrine would otherwise
be unjust. For example, a party often is permitted to
bypass an available avenue of administrative challenge if
pursuing that route would clearly be futile, i.e., where it is
clear that additional filings with the agency would be
ineffectual. See Corus Staal, 502 F.3d at 1378-79 (futility
applies in situations where plaintiffs “would be ‘required
to go through obviously useless motions in order to pre-
serve their rights’”) (quoting Bendure v. United States,
554 F.2d 427, 431 (Ct. Cl. 1977). Requiring exhaustion
may also be inappropriate where the issue for the court is
a “pure question of law” that can be addressed without
further factual development or further agency exercise of
discretion. See Agro Dutch, 508 F.3d at 1029. In such
circumstances, among others, requiring exhaustion may
serve no agency or judicial interest, may cause harm from
delay, and may therefore be inappropriate.
In the present case, no purpose was served by requir-
ing Itochu to have resubmitted its effective-date argu-
ment after Commerce announced the preliminary results.
Itochu put its argument on the record before Commerce
issued its preliminary results: it set forth its position in
comments, met with eight department officials to discuss
the issue, and submitted legal support for its position.
Nothing in the record suggests that any additional mate-
rial from Itochu would have been significant to Com-
merce’s consideration of the issue or to later judicial
10 ITOCHU BUILDING PRODUCTS v. US
review. Indeed, the trade court indicated that a simple
resubmission would have sufficed for exhaustion. Itochu
Bldg. Prods., 865 F. Supp. 2d at 1339.
Nothing in Commerce’s clear rejection of Itochu’s posi-
tion, in the preliminary results, adverted to any consider-
ation that was material to Commerce’s decision about the
effective date and that Itochu had failed to address. In its
final results, Commerce likewise identified no such un-
addressed material consideration. Nor, in the final re-
sults, did Commerce reject Itochu’s effective-date position
for a failure to exhaust or indicate that it thought Itochu
had abandoned its position. To the contrary, Commerce
referred to Itochu’s position and again ruled on the effec-
tive-date issue on the merits. Nothing in Commerce’s two
pronouncements in this case hints at something signifi-
cant that Itochu could have said but did not.
The affirmatively stated basis for Commerce’s ruling,
moreover, together with Commerce’s contemporaneous in-
court elaboration of its position on the issue, strongly
suggests that a resubmission by Itochu would have been
futile. Commerce twice simply invoked its “recent prac-
tice.” And that practice, evidently, was grounded in the
legal position that Commerce was at the time defending
in the Heveafil case: that the statute, specifically the
provision governing administrative reviews, 19 U.S.C.
§ 1675(a), barred it from including in changed-
circumstances relief any entries, even unliquidated en-
tries, that had been subject to a completed administrative
review. See Heveafil Sdn. Bdh. v. United States, No. 04-
00477, 2012 WL 934102, at *2 (Ct. Int’l Trade Mar. 21,
2012). Commerce had been pressing that position since
before the steel nails antidumping-duty order even issued.
See Trs. in Bankr. of N. Am. Rubber Thread Co. v. United
States, 533 F. Supp. 2d 1290, 1293-94 (Ct. lnt’l Trade
2007). The trade court in 2007 had rejected that legal
position, which, the court added, did not actually mirror
Commerce’s practice. Id. at 1294-95, 1296-97. But there
is no indication, and Commerce did not suggest when
ITOCHU BUILDING PRODUCTS v. US 11
asked at oral argument in the present case, that Com-
merce had abandoned its position even by 2012, when the
Heveafil court again rejected it. 2012 WL 934102, at *3.
In these circumstances, there was no reasonable pro-
spect that Commerce would have changed its position in
the present changed-circumstances review if only Itochu
had re-filed its comments, in 2011, after Commerce an-
nounced its preliminary results. Commerce’s apparent
position at the time made such comments legally immate-
rial. Commerce had heard everything on the issue that
Itochu had to say. An inference of futility is not fairly
negated by indulging the singularly unlikely assumption
that Commerce would have changed its legal position in
this proceeding in 2011 while it was defending that posi-
tion in court.
For those reasons, there was no practical purpose
served by requiring Itochu to file comments on the effec-
tive-date issue after Commerce released its preliminary
results. At the same time, Itochu had a concrete interest
in avoiding a substantial delay in obtaining a final agency
decision that making such a pointless filing could have
caused. If Itochu had resubmitted its comments after
Commerce issued its preliminary results, Commerce could
have taken nine months (270 days) from the preliminary-
results announcement to issue its final determination,
whereas Commerce would issue its final determination
within 45 days if no comments were submitted. Com-
merce might not have taken the full 270 days, but there
was a substantial risk that it would have taken much or
all of that extra time. Such extra time, of up to about
seven months, would have prejudiced Itochu, which would
have had to continue depositing antidumping duties on
the four types of nails at issue, and would have had to
postpone judicial review, while it waited for a decision.
With no purpose served by exhaustion here, and a con-
crete interest in prompt judicial review impaired by
requiring Itochu’s resubmission of earlier comments, we
conclude, the trade court could not properly find it “ap-
12 ITOCHU BUILDING PRODUCTS v. US
propriate” to invoke the exhaustion doctrine to bar con-
sideration of Itochu’s challenge on the merits.
This court’s decision in Corus Staal does not dictate a
contrary result. There, Corus first included its argument,
on an issue about whether it had absorbed imposed du-
ties, in a submission made in response to an agency
request for information in an administrative review.
Corus Staal, 502 F.3d at 1378. In its preliminary results,
Commerce rejected the argument that Corus made in its
submission. Id. Corus did not challenge that determina-
tion in its subsequent case brief as required by 19 C.F.R.
§ 351.309(c)(2). Id. The trade court held that Corus had
failed to exhaust its remedies in those circumstances,
notwithstanding Corus’s argument that including this
challenge in its case brief would have been futile because
of Commerce’s consistent position on duty absorption.
Corus Staal, 502 F.3d at 1380.
This court held that the trade court did not abuse its
discretion. Even though Commerce chose an approach to
duty absorption different from what Corus had advocated,
Commerce’s position reflected policy decisions, not a
perceived statutory mandate, and Commerce was “not
bound to adhere to the approach it employ[ed] if a suffi-
ciently persuasive showing [wa]s made that the approach
[wa]s flawed in general or in its application to a particular
case.” Id. Corus thus could and should have tried to
make a more comprehensive argument to Commerce
regarding how to exercise that discretion. Id. Further,
even if Commerce had continued to reject Corus’s legal or
policy arguments, it “might have accepted Corus’s factual
showing that it had not [in fact] absorbed antidumping
duties, thereby obviating the need for judicial review.” Id.Indeed, because Corus did not set forth its factual and
legal arguments in detail before the agency, Commerce
did not have the “opportunity to set forth its position in a
manner that would facilitate judicial review.” Id.The present case differs from Corus Staal in key re-
spects, even beyond what regulatory requirements apply.
ITOCHU BUILDING PRODUCTS v. US 13
See note 1, supra. Here, Commerce’s position, which
Commerce was defending in court at the time, was that it
had no discretion in the matter because it was con-
strained by statute to reject Itochu’s position. Moreover,
Commerce has not identified any new factual or legal
argument that Itochu could have made after Commerce
issued its preliminary results that might have affected
Commerce’s position, aided judicial review, or given
Itochu the relief it sought. In these circumstances, which
are likely rare ones, the demanding abuse-of-discretion
standard for reversal of an exhaustion ruling under
section 2637(d) is met. 2
CONCLUSION
The decision of the trade court—dismissing Itochu’s
challenge to Commerce’s effective-date determination for
failure to exhaust administrative remedies—is reversed.
The case is remanded for further proceedings.
REVERSED AND REMANDED
2 Like Corus Staal, this court’s decision in Mittal
Steel Point Lisas Ltd. v. United States, 548 F.3d 1375(Fed. Cir. 2008), involved circumstances materially differ-
ent from those presented here. Id. at 1383-84 (in an
administrative review, after trade-court remand for
Commerce to consider policy and party-specific issues,
party did not comment on issues). See also Carpenter
Technology Corp. v. United States, 452 F. Supp. 2d 1344,
1346 (Ct. Int’l Trade 2006) (administrative review; “com-
plex, fact-specific issue”); China First Pencil Co., Ltd. v.
United States, 427 F. Supp. 2d 1236, 1243-44 (Ct. Int’l
Trade 2006) (administrative review; similar case-specific,
fact-based issues); Ta Chen Stainless Steel Pipe, Ltd. v.
United States, 342 F. Supp. 2d 1191, 1205 (Ct. Int’l Trade
2004) (administrative review; same).