Ferro Union, Inc. v. United States , 23 Ct. Int'l Trade 1069 ( 1999 )

Slip Op. 99-143
UNITED STATES COURT OF INTERNATIONAL TRADE
_________________________________
:
FERRO UNION, INC. AND :
ASOMA CORPORATION, :
:
Plaintiffs, :
:
v. :
:
THE UNITED STATES, : Court No. 97-11-01973
:
Defendant, :
:
and :
:
WHEATLAND TUBE COMPANY, :
:
Defendant-Intervenor. :
________________________________ :
[Application for attorney’s fees and expenses denied.]
Dated: December 30, 1999
Mayer, Brown & Platt (Simeon M. Kriesberg, Carol J.
Bilzi, Peter C. Choharis, and Andrew A. Nicely) for
plaintiffs.
David W. Ogden, Acting Assistant Attorney General, David
M. Cohen, Director, Commercial Litigation Branch, Civil
Division, United States Department of Justice (Michele D.
Lynch), Brian Peck, Office of Chief Counsel for Import
Administration, United States Department of Commerce, of
counsel, for defendant.
OPINION
RESTANI, Judge: This matter concerns plaintiffs’ application
for attorney’s fees and expenses pursuant to USCIT R. 68 and
the Equal Access to Justice Act (“EAJA”), 28 U.S.C.A. § 2412Court No. 97-11-01973 Page 2
(West Supp. 1999).1 Plaintiffs, Ferro Union and Asoma
Corporation, Inc. (“Asoma”), allege that the position of
defendant, the Department of Commerce (“Commerce”) in Ferro
Union, Inc. v. United States, 44 F. Supp.2d 1310 (Ct. Int’l
Trade 1999), and in Certain Welded Carbon Steel Pipes and
Tubes from Thailand, 62 Fed. Reg. 53,808 (Dep’t Commerce 1997)
(final results of antidumping duty admin. rev.) [hereinafter
“Final Results”], was not “substantially justified” within the
meaning of the EAJA. Asoma seeks an award of $250,633.78,
which is one half of the attorney’s fees and expenses incurred
by plaintiffs. Plaintiffs admit that Ferro Union is not
entitled to an EAJA fee award because it had a total net worth
of more than $7,000,000. Pls.’ Br. at 2 n.1; see also 28
U.S.C.A. § 2412(d)(2)(B)(ii) (defining “party” for purposes of
EAJA as a business whose net worth does not exceed $7,000,000
at the time of the civil action). Thus, fees are requested
for Asoma only. For purposes of this opinion, the court will
briefly review the facts of this case, but the court assumes
familiarity with its earlier opinions, both Ferro Union, 44 F.
Supp.2d 1310 and the opinion pursuant to remand, Ferro Union,
1 The EAJA applies to actions in this court.
Consolidated Int’l Automotive, Inc. v. United States, 16 CIT
692, 692 n.1, 797 F. Supp. 1007, 1008 n.1 (1992) (citation
omitted).
Court No. 97-11-01973 Page 3
Inc. v. United States, No. 97-11-01973, 1999 WL 825584 (Ct.
Int’l Trade Oct. 6, 1999).
Background
On April 1, 1996, Ferro Union and Asoma, along with Saha
Thai Steep Pipe Co., Ltd. (“Saha Thai”),2 requested a review
of the 1986 antidumping duty order on welded carbon steel
pipes and tubes from Thailand. Ferro Union, 44 F. Supp.2d at
1313. Commerce initiated the review on April 25, 1996, for
the period March 1, 1995 through February 29, 1996.
Initiation of Antidumping and Countervailing Duty
Administrative Reviews, 61 Fed. Reg. 18,378, 18,378-79 (Dep’t
Commerce 1996). In both its preliminary results and final
results, Commerce determined that an application of total
adverse facts available, pursuant to 19 U.S.C. § 1677e (1994),
was warranted because of Saha Thai’s failure to provide
complete information on affiliates. See Certain Welded Carbon
Steel Pipes and Tubes from Thailand, 62 Fed. Reg. 17,590,
17,592 (Dep’t Commerce 1997) (preliminary results of
antidumping duty admin. rev.); Final Results, 62 Fed. Reg. at
53,809-10. Ferro Union and Asoma challenged the Final Results
in this court. In Ferro Union the court upheld Commerce’s
2 Ferro Union and Asoma are U.S. importers of Saha Thai
pipe.
Court No. 97-11-01973 Page 4
determination to continue with the review, despite Saha Thai’s
request for termination. Ferro Union, 44 F. Supp.2d at 1317.
The court also upheld Commerce’s interpretation of the terms
“family” and “control” listed in the definition of “affiliated
persons” in 19 U.S.C. § 1677(33) (1994). Id. at 1324-26. The
court remanded several other issues. Specifically, the court
found that although Commerce’s interpretation of “family” was
permissible, it was improperly applied because Commerce failed
to provide the respondent with complete notice of the agency’s
interpretation of the term. Id. at 1325-26. The court
therefore instructed Commerce to ignore any possible
affiliation Saha Thai may have had with two particular Thai
companies, and to substantiate its conclusion that Saha Thai
should have disclosed affiliations with five other companies.
Id. at 1331. The court also required Commerce to revisit its
procedure for applying total adverse facts available. Id. at
1330-32. After remand, Commerce chose a smaller margin based
on partial adverse facts, and the court upheld the remand
results. Ferro Union, 1999 WL 825584, at *6-7.
Discussion
The EAJA is a statute which authorizes the recovery of
attorney’s fees and expenses from an agency of the United
States. It constitutes a waiver of sovereign immunity which
Court No. 97-11-01973 Page 5
must be strictly construed. United States v. Modes, Inc., 18
CIT 153, 154 (1994) (citation omitted). The EAJA provides in
relevant part:
[A] court shall award to a prevailing party other than
the United States fees and other expenses . . . incurred
by that party in any civil action . . . including
proceedings for judicial review of agency action, brought
by or against the United States in any court having
jurisdiction of that action, unless the court finds that
the position of the United States was substantially
justified or that special circumstances make an award
unjust.
28 U.S.C.A. § 2412(d)(1)(A). The court must therefore
determine whether the party seeking the award is a “prevailing
party” and whether the government’s position was
“substantially justified” at both the administrative level and
litigation stage. See Urbano v. United States, 15 CIT 639,
641, 779 F. Supp. 1398, 1401 (1991) (“government’s position
must be substantially justified at both the agency level and
litigation stage.”) (citation omitted).
A prevailing party is one who “‘succeed[s] on any
significant issue in litigation which achieves some of the
benefit the part[y] sought in bringing suit.’” Modes, 18 CIT
at 155 (quotation omitted). The government does not challenge
Asoma’s assertion that it was the prevailing party in this
action. Although not all of plaintiffs’ challenges were
Court No. 97-11-01973 Page 6
successful,3 in the light of the fact that plaintiffs
ultimately were successful as to at least one major issue and
in having the 29.89 percent dumping margin from the Final
Results reduced substantially to 9.52 percent, the court
agrees that Asoma is a prevailing party for purposes of the
EAJA.
Plaintiffs assert that Commerce’s position was not
substantially justified at either the administrative level or
in the litigation before this court. Plaintiffs argue that
Commerce misapplied the statutory provisions regarding the
application of total adverse facts available, and that the
government ignored this court’s reasoning in Borden, Inc. v.
United States, 4 F. Supp.2d 1221 (Ct. Int’l Trade 1998) in
defending Commerce’s application of total adverse facts
available. The government counters that its position was
based on law and fact, and that Ferro Union involved the
interpretation of new and complex terms pursuant to the 1994
Uruguay Round Agreements Act.
3 For example, plaintiffs had asserted that Commerce
improperly continued its review of Saha Thai after Saha Thai’s
request for termination. The court held that Commerce had
discretion to continue the review, and that no violation of
Commerce’s regulations had occurred. Ferro Union, 44 F.
Supp.2d at 1317.
Court No. 97-11-01973 Page 7
The government bears the burden of showing that its
position was substantially justified. Inner Secrets/Secretly
Yours, Inc. v. United States, 20 CIT 210, 213, 916 F. Supp.
1258, 1261-62 (1996) (quotation omitted). The Supreme Court
has clarified that “substantially” in this context does not
mean “‘justified to a high degree,’ but rather ‘justified in
substance or in the main’ – that is, justified to a degree
that could satisfy a reasonable person.” Pierce v. Underwood,
487 U.S. 552, 565 (1988).
The fact that the party prevailed is not sufficient to
show that the government’s position was not substantially
justified. See Luciano Pisoni Fabbrica Accessori Instrumenti
Musicali v. United States, 837 F.2d 465, 467 (Fed. Cir. 1988)
(“The mere fact that the United States lost the case does not
show that its position in defending the case was not
substantially justified.”) (quotation omitted). As further
stated by the Federal Circuit:
The EAJA was not intended to be an automatic fee-shifting
device . . . . The decision on an award of attorney fees
is a judgment independent of the result on the merits,
and is reached by examination of the government’s
position and conduct through the EAJA ‘prism,’ . . . not
by redundantly applying whatever substantive rules
governed the underlying case.
Id. at 467 (quotations omitted). Indeed, attorney’s fees and
other expenses “are generally awarded only where the
Court No. 97-11-01973 Page 8
government offers ‘no plausible defense, explanation, or
substantiation for its action.’” Consolidated, 16 CIT at 696,
797 F. Supp. at 1011 (quotation omitted). Viewed in this
light, Commerce’s position at both the administrative level
and in the litigation before this court was substantially
justified.
In concluding that Saha Thai was affiliated with a
variety of companies through familial ties, Commerce grounded
its analysis in the statute and concluded that the companies
were affiliates. See Final Results, 62 Fed. Reg. at 53,809-10
(analyzing definition of “affiliated persons,” “family” and
“control” pursuant to 19 U.S.C. § 1677(33)). Although the
court found some of Commerce’s descriptions of the family
relations vague, Commerce further described these
relationships on remand and properly found that the families
controlled Saha Thai. Ferro Union, 1999 WL 825584, at *6 &
n.14.
Commerce was applying new statutory terms at the time of
the Final Results. When the agency is dealing with a new
issue, the courts have recognized that the agency may be
substantially justified in its position, even if that position
is erroneous. See Consolidated, 16 CIT at 697, 797 F. Supp.
at 1012 (Commerce substantially justified in addressing
Court No. 97-11-01973 Page 9
matters pertaining to economy of People’s Republic of China
which “were not settled or fixed” and “Commerce [made] good
faith attempts to address them.”); see also Luciano, 837 F.2d
at 467 (underlying case revoked antidumping duty order, but
Commerce’s position substantially justified in part because of
“complexity, uniqueness, and newness” of issues). Here the
court recognized that the full scope of the term “affiliated
persons” pursuant to 19 U.S.C. § 1677(33) was “an admittedly
complex, and as yet unexplained, concept.” Ferro Union, 44 F.
Supp.2d at 1327. The court upheld Commerce’s interpretation
of the term, but found that Commerce had unfairly required
Saha Thai to apply this interpretation at the outset because
Saha Thai did not have reason to foresee the full meaning of
the term as interpreted by Commerce. Id. Nonetheless, it is
not clear that Commerce should have recognized Saha Thai’s
lack of notice. Because of the new statute, neither party was
certain of its duties. The court finds Commerce’s proper
interpretation of “affiliation” in this case was sufficient to
render its actions substantially justified or otherwise to
make the award of fees unjust.
Commerce also attempted to follow the framework of 19
U.S.C. § 1677e in applying total adverse facts available in
concluding that Saha Thai had significantly impeded the
Court No. 97-11-01973 Page 10
review. Final Results, 62 Fed. Reg. at 53,809. This
conclusion is sufficient for an application of facts otherwise
available. See 19 U.S.C. § 1677e(a)(2)(C). The flaw in
Commerce’s analysis was in failing to make the additional
finding that Saha Thai had “failed to cooperate by not acting
to the best of its ability” as required under 19 U.S.C. §
1677e(b) in order to draw an adverse inference. Ferro Union,
44 F. Supp.2d at 1329-31 & n.44.
Commerce’s method for selecting total adverse facts
available pursuant to 19 U.S.C. § 1677e(b), however, also
involved interpreting a new provision of the statute. This
court clarified in Borden that the analysis under the 1994
statute differs from prior law, and that Commerce must make a
series of determinations before making an adverse inference.
Borden, 4 F. Supp.2d at 1246-47. Borden, however, was issued
in 1998, after Commerce had issued the Final Results in its
administrative review of Saha Thai. Commerce therefore did
not have the benefit of the Borden analysis when it applied
total adverse facts available to Saha Thai. The government’s
judicial defense of Commerce’s determination likewise should
not be the basis for a fee award. An agreed remand to resolve
the more procedural issue would have wasted time and likely
would not have led to plaintiffs’ victory at that point. That
Court No. 97-11-01973 Page 11
is, had Commerce given adequate notice of its interpretation
of the statute, it likely would have been justified in
applying adverse facts after following the proper procedure.
Thus, because Commerce’s action as to notice of its
interpretation of “family” was substantially justified within
the meaning of the EAJA, it would be unjust to award fees
based on this procedural error which would not have been the
cause of plaintiffs’ success.4
Because it is denying any fee award, the court need not
decide whether Asoma’s request for attorney’s fees and
expenses was properly documented, pursuant to USCIT R. 68(b).
4 Plaintiffs also assert that the application of the
29.89 percent margin from the Final Results was not
substantially justified. Because Commerce was not required to
reach the issue, the court never resolved whether this margin
would have been acceptable if total adverse facts were
warranted. That is, because plaintiffs were successful on
their other theories the issue of corroboration of the higher
margin was mooted. To resolve this issue the court would have
to direct Commerce to perform an analysis merely for the
purpose of resolving the attorney’s fee issue. But a “request
for attorney’s fees should not result in a second major
litigation.” Naekel v. Department of Transp., FAA, 884 F.2d
1378, 1379 (Fed. Cir. 1989) (quoting Hensley v. Eckerhart, 461
U.S. 424, 437 (1983)). Further, it is unlikely that
plaintiffs would prevail in establishing lack of
justification. The corroboration issue also stems from the
new statute which had not been interpreted as to the relevant
point prior to the time of the court’s first decision on the
merits here.
Court No. 97-11-01973 Page 12
Conclusion
Although plaintiffs were prevailing parties, Commerce’s
position was substantially justified. The court therefore
denies the application for attorney’s fees and expenses of the
Asoma Corporation pursuant to the EAJA.
It is so ordered.
________________________
Jane A. Restani
Judge
Dated: New York, New York
This 30th day of December 1999.