Peer Bearing Company - Changsh v. United States , 766 F.3d 1396 ( 2014 )

United States Court of Appeals
for the Federal Circuit
______________________
PEER BEARING COMPANY - CHANGSHAN,
Plaintiff-Appellee,
v.
UNITED STATES,
Defendant,
AND
THE TIMKEN COMPANY,
Defendant-Appellant.
______________________
2014-1001
______________________
Appeal from the United States Court of International
Trade in No. 09-CV-0052, Chief Judge Timothy C.
Stanceu.
______________________
Decided: September 12, 2014
______________________
STEPHANIE MANAKER BELL, Stewart and Stewart of
Washington, DC, argued for defendant-appellant. With
her on the brief were TERENCE P. STEWART and WILLIAM
A. FENNELL.
2 PEER BEARING COMPANY - CHANGSHAN v. US
DIANA DIMITRIUC QUAIA, Arent Fox LLP, of Washing-
ton, DC, argued for plaintiff-appellee. With her on the
brief was JOHN M. GURLEY.
______________________
Before NEWMAN, PLAGER, and MOORE, Circuit Judges.
MOORE, Circuit Judge.
The Timken Company (Timken) appeals from the
judgment of the United States Court of International
Trade affirming the United States Department of Com-
merce’s (Commerce) calculation of an antidumping duty
margin for Peer Bearing Company - Changshan’s (CPZ)
imports. For the reasons below, we vacate and remand.
BACKGROUND
This case involves Commerce’s administrative review
of CPZ’s entry of tapered roller bearings that were subject
to an Antidumping Duty Order. CPZ imported the bear-
ings by selling them to an unaffiliated U.S. importer. The
U.S. importer then sold the bearings to CPZ’s U.S. affili-
ate, Peer Bearing Co. (Peer), which then resold them to
unaffiliated U.S. customers.
After instituting review, Commerce issued an initial
questionnaire requiring CPZ to identify whether its sales
of bearings qualified either as export price (EP) sales or as
constructed export price (CEP) sales. This classification
determines which price Commerce uses as the U.S. price
when calculating CPZ’s antidumping duty margin for the
bearings. If CPZ’s sales are properly classified as EP
sales, Commerce uses data reflecting the price of CPZ’s
sales to its unaffiliated U.S. importer, i.e., the EP data. If
CPZ’s sales are properly classified as CEP sales, Com-
merce uses data reflecting the price of Peer’s sales to its
U.S. customers, i.e., the CEP data. CPZ responded that
its sales were properly classified as CEP sales and provid-
PEER BEARING COMPANY - CHANGSHAN v. US 3
ed Commerce with the CEP data for its bearing sales. It
did not provide the corresponding EP data.
Timken, an intervening domestic bearing producer,
submitted comments to Commerce, urging Commerce to
require CPZ to also provide the EP data so that Com-
merce could calculate CPZ’s margin on an EP basis.
Commerce did not require CPZ to submit the EP data at
that time. Instead, in its Preliminary Results, Commerce
calculated CPZ’s margin on a CEP basis, using the CEP
data that CPZ provided. Tapered Roller Bearings and
Parts Thereof, Finished and Unfinished, from the People’s
Republic of China: Preliminary Results of Antidumping
Duty Administrative Review, 73 Fed. Reg. 41033 (Dep’t of
Commerce July 17, 2008) (Preliminary Results). After
Commerce issued the Preliminary Results, Timken again
submitted comments arguing that the margin should be
calculated on an EP basis.
In its Final Results, Commerce changed course and
calculated CPZ’s margin on an EP basis. Tapered Roller
Bearings and Parts Thereof, Finished and Unfinished,
from the People’s Republic of China: Final Results of
Antidumping Duty Administrative Review, 74 Fed. Reg.
3987, 3988 (Dep’t of Commerce Jan. 22, 2009) (Final
Results). However, because CPZ had previously provided
Commerce with only CEP data, the record contained only
limited EP data relating to a small subset of the imported
bearings. Commerce used this limited data to estimate
the EP prices for each imported product. J.A. 2181.
Based on its estimated EP prices, Commerce calculated a
margin of 92.84%. Final Results, 74 Fed. Reg. at 3989.
The Court of International Trade held that Commerce’s
methods for estimating EP prices in the Final Results
were contrary to law and remanded. Peer Bearing Co. -
Changshan v. United States, 752 F. Supp. 2d 1353, 1360–
64 (Ct. Int’l Trade 2011) (Peer I).
4 PEER BEARING COMPANY - CHANGSHAN v. US
On remand, Commerce reopened the record and twice
requested that CPZ provide it with the EP data. CPZ
responded that it could not provide the EP data because
during the time between Commerce’s Preliminary Results
and Final Results, CPZ had been sold and the new owners
had not maintained the EP data. 1 In its first redetermi-
nation on remand, Commerce held that CPZ had a duty to
maintain access to the EP data during the course of the
entire proceeding. Final Results of Redetermination
Pursuant to Court Remand at 19–20, Peer Bearing Co. -
Changshan v. United States, No. 09-cv-00052 (Ct. Int’l
Trade July 1, 2011), ECF No. 98 (First Remand Redeter-
mination). It found that “the issue of [whether EP data or
CEP data should be used for] the antidumping duty
margin calculation was raised on the record of the under-
lying administrative review prior to the briefing stage,
and again at the briefing stage, before the transfer oc-
curred,” and continued to be an issue throughout the
proceeding. Id. at 19. Thus, Commerce concluded, “CPZ
should have been aware that at some point [Commerce]
might seek this information,” and it had a duty to main-
tain access to it. Id. Commerce determined that CPZ’s
failure to maintain the EP data constituted a “fail[ure] to
cooperate to the best of its ability” within the meaning of
19 U.S.C. § 1677e(b), and therefore applied adverse facts
available against CPZ to determine the margin. Id. at
20–21. It then calculated a 60.95% margin for CPZ. Id.
at 22.
The Court of International Trade determined that
Commerce erred in applying adverse facts available based
on CPZ’s failure to maintain access to the EP data. Peer
1 As part of the sale, a new entity established by the
previous owners assumed responsibility for the antidump-
ing proceedings at issue here.
PEER BEARING COMPANY - CHANGSHAN v. US 5
Bearing Co. - Changshan v. United States, 853 F. Supp.
2d 1365, 1373 (Ct. Int’l Trade 2012) (Peer II). It held that
19 U.S.C. § 1677e(b), which allows for the application of
adverse facts available if a party fails to act “to the best of
its ability to comply with a request for information,” does
not apply to requests that the party has yet to receive. Id.
at 1374. It thus found it unreasonable for Commerce to
expect CPZ to have preserved the EP data that was
requested by Commerce for the first time on remand. Id.
at 1374–75. The Court of International Trade remanded
again for Commerce to “redetermine the U.S. prices of the
subject merchandise according to a lawful method.” Id. at
1378–79.
On the second remand, Commerce again concluded
that CPZ’s margin should properly be calculated on an EP
basis, but that the record did not contain sufficient data
for doing so. Final Results of Redetermination Pursuant
to Court Remand at 10, Peer Bearing Co. - Changshan v.
United States, No. 09-cv-00052 (Ct. Int’l Trade Oct. 2,
2012), ECF No. 124 (Second Remand Redetermination).
Therefore, under protest, Commerce calculated a 6.52%
margin using the CEP data, without applying adverse
facts available. Id. at 10–11. The Court of International
Trade affirmed Commerce’s Second Remand Redetermi-
nation. Peer Bearing Co. - Changshan v. United States,
No. 09-cv-00052, 2013 WL 4615134 (Ct. Int’l Trade Aug.
30, 2013) (Peer III).
Timken appeals. It argues that the Court of Interna-
tional Trade should have affirmed Commerce’s applica-
tion of adverse facts available in its First Remand
Redetermination. It does not challenge the Court of
International Trade’s review of Commerce’s Final Results
or of its Second Remand Redetermination. We have
jurisdiction under 28 U.S.C. § 1295(a)(5).
6 PEER BEARING COMPANY - CHANGSHAN v. US
DISCUSSION
We review a decision of the Court of International
Trade evaluating an antidumping determination by
Commerce by reapplying the statutory standard of review
that the Court of International Trade applied in reviewing
the administrative record. Ta Chen Stainless Steel Pipe,
Inc. v. United States, 298 F.3d 1330, 1335 (Fed. Cir.
2002). We will uphold Commerce’s determination unless
it is unsupported by substantial evidence on the record or
otherwise not in accordance with the law. Id.Commerce may “use an inference that is adverse to
the interests of [a] party” (i.e., apply adverse facts availa-
ble against the party) when it determines that the party
“has failed to cooperate by not acting to the best of its
ability to comply with a request for information.”
19 U.S.C. § 1677e(b). In its First Remand Redetermina-
tion, Commerce held that § 1677e(b) permitted applica-
tion of adverse facts available for CPZ’s failure to retain
information even though that information was not re-
quested by Commerce until a remand from the Court of
International Trade required it. First Remand Redeter-
mination at 19–20. The Court of International Trade held
that this interpretation was incorrect. Peer II at 1374.
We do not agree.
We have previously considered § 1677e(b)’s “best of its
ability” provision. In Nippon Steel Corp. v. United States,
we held that the “best of its ability” provision “requires
that importers . . . take reasonable steps to keep and
maintain full and complete records documenting the
information that a reasonable importer should anticipate
being called upon to produce.” 337 F.3d 1373, 1382 (Fed.
Cir. 2003). In Ta Chen, we clarified that the information
an importer must maintain can include information
requested for the first time on remand. 298 F.3d at 1333–
34; see also id. at 1343 (Gajarsa, J., dissenting) (“This
statement implies that Commerce’s supplemental ques-
PEER BEARING COMPANY - CHANGSHAN v. US 7
tionnaire requested [the CEP] data. That implication is
clearly erroneous. The supplemental questionnaire made
no such request.”); Ta Chen Stainless Steel Pipe, Ltd. v.
United States, No. 97-08-01344, 1999 WL 1001194, at *12
(Ct. Int’l Trade Oct. 28, 1999) (“Ta Chen did not provide
[CEP data]. [Commerce], however, never specifically
requested this information.”). In Ta Chen, after Com-
merce’s Final Results, the Court of International Trade
remanded to obtain previously unrequested CEP data
when the respondent had only previously provided EP
data. Ta Chen, 298 F.3d at 1333–34. On remand, the
respondent explained that it was unable to provide the
CEP data because its affiliate, which originally possessed
the data, had gone out of business and no longer had the
data. Id. at 1334. We affirmed Commerce’s application of
adverse facts available finding that it was reasonable to
expect the respondent to preserve its CEP data in the
event that Commerce eventually requested it. Id. at
1336. We see no error in Commerce’s interpretation or
application of § 1677e(b) in this case, which are consistent
with Ta Chen and Nippon Steel. To comply with “the best
of its ability” provision, an importer must maintain access
to information so long as that information is the type that
a reasonable and responsible importer would have known
was required to be maintained. The obligation to main-
tain its data does not cease at the conclusion of the re-
view, when as in this case, there is an appeal which could
cause a need for further proceedings.
We conclude that there is substantial evidence to sup-
port Commerce’s determination that CPZ did not act to
the best of its ability to comply with Commerce’s request,
even though that request came for the first time on re-
mand. Commerce determined that CPZ should have been
aware that Commerce may request the EP data and that
CPZ had a responsibility to maintain access to it through-
out the course of the proceeding. First Remand Redeter-
mination at 19. The Court of International Trade
8 PEER BEARING COMPANY - CHANGSHAN v. US
disagreed, holding that “it is not reasonable for Commerce
to expect CPZ to have preserved [the EP] data for so
long,” and that CPZ’s failure to do so did not constitute a
failure to cooperate. Peer II at 1371–75.
We hold that substantial record evidence supports
Commerce’s finding that CPZ failed to cooperate to the
best of its ability by not maintaining access to the EP data
throughout the course of the proceeding. The EP data in
this case is the type of data that a “reasonable importer
should anticipate being called upon to produce.” Nippon
Steel, 337 F.3d at 1382. In each administrative review,
Commerce calculates the U.S. price using either EP or
CEP data. Commerce’s regulations state that it obtains
most of its factual information from the interested par-
ties, 19 C.F.R. § 351.301(a), and that Commerce “may
request any person to submit factual information at any
time during a proceeding,” id. § 351.301(c)(2). In this
case, CPZ was on notice that its EP data may be neces-
sary; Timken twice argued that EP data and not CEP
data should be used to calculate the U.S. price. Com-
merce has established that a reasonable importer would
have been on notice that EP data was relevant to the
proceeding and may be requested by Commerce. It is true
that Commerce initially calculated the U.S. price using
the CEP methodology and that, at that time, Commerce
had not yet requested the EP data. However, CPZ knew
from Timken’s repeated objections that the proper calcu-
lation of U.S. price was at issue. When Timken was
objecting, CPZ had access to the EP data but chose not to
provide it or maintain it. Thus, we conclude that under
these circumstances, where the importer knew there was
a dispute over whether to use EP or CEP data, a reasona-
ble importer would know that it needed to maintain both.
We are not persuaded by CPZ’s argument that the
sale of the company prevented it from acquiring access to
the EP data. CPZ knew before the sale that there was an
ongoing dispute over whether Commerce should use CEP
PEER BEARING COMPANY - CHANGSHAN v. US 9
or EP data. And just over four months after CPZ was sold
to its new owners, Commerce issued its Final Results
which calculated the margin on an EP basis. CPZ thus
knew unequivocally that Commerce intended to use EP
data, but it did nothing at that time to retrieve or pre-
serve it.
CPZ contends that it took reasonable measures to
maintain its access to the EP data after the change of
ownership because the purchase agreement gave it access
to the data. Appellee’s Br. at 38. This is inaccurate. The
purchase agreement between CPZ and the new owners
does not demonstrate that CPZ acted to the best of its
ability to maintain access to the EP data. The agreement
only required the new owners to give CPZ access to the
records in existence—it did not require the new owners to
maintain those records. Ensuring access to records
without also ensuring that those records continue to exist
does not ensure much of anything.
The issue before us is not whether an importer must
maintain access to all sales records from the start of an
administrative review until the end. We hold that where,
as here, there is a dispute over the proper methodology
that Commerce should use to calculate the antidumping
duty margin, and the respondent has notice of the dispute
at a time when the respondent has access to the data
needed to determine the U.S. price according to either
methodology, the respondent has a duty to maintain
access to the data. Failure to maintain access to the data
may, based on the specific facts of the case, result in a
determination that the importer has failed to act to the
best of its ability in responding to a request for the data
and an application of adverse facts available against the
importer.
CONCLUSION
Because Commerce’s application of adverse facts
available in its First Remand Redetermination was sup-
10 PEER BEARING COMPANY - CHANGSHAN v. US
ported by substantial evidence, we vacate the Court of
International Trade’s decision in Peer III and remand. On
remand, the Court of International Trade should reinstate
Commerce’s application of adverse facts available and its
calculation of CPZ’s margin in its First Remand Redeter-
mination.
VACATED AND REMANDED