Home Products International, Inc. v. United States , 810 F. Supp. 2d 1373 ( 2012 )

Slip Op. 12-4
UNITED STATES COURT OF INTERNATIONAL TRADE
HOME PRODUCTS INTERNATIONAL,
INC.,
Plaintiff, Before: Leo M. Gordon, Judge
v. Consol. Court No. 11-00104
UNITED STATES,
Defendant.
OPINION and ORDER
[Administrative review results remanded.]
Dated: January 6, 2012
Frederick L. Ikenson, Peggy A. Clarke, Larry Hampel, Blank Rome LLP, of
Washington, DC for Plaintiff Home Products International, Inc.
Carrie A. Dunsmore, Trial Attorney, Commercial Litigation Branch, Civil Division,
U.S. Department of Justice, of Washington, D.C. for defendant. With her on the brief
were Tony West, Assistant Attorney General, Jeanne E. Davidson, Director and Patricia
M. McCarthy, Assistant Director. Of Counsel on brief was Thomas M. Beline, Office of
the Chief Counsel for Import Administration, International Department of Commerce of
Washington, D.C. for Defendant United States.
William E. Perry, Emily Lawson, Dorsey & Whitney LLP, of Seattle WA, for
Defendant-Intervenor Since Hardware (Guangzhou) Co., Ltd.
Gordon, Judge: This consolidated action involves an administrative review
conducted by the U.S. Department of Commerce (“Commerce”) of the antidumping duty
order covering Floor-Standing, Metal-Top Ironing Tables from China. See Floor-
Standing, Metal-Top Ironing Tables and Certain Parts Thereof from the People’s
Republic of China, 76 Fed. Reg. 15,295 (Dep’t of Commerce Mar. 21, 2011) (final
Consol. Court No. 11-00104 Page 2
results admin. review) (“Final Results”); see also Issues and Decision Memorandum for
Ironing Tables from China, A-570-888 (Mar. 20, 2011), available at
http://ia.ita.doc.gov/frn/summary/PRC/2011-6560-1.pdf (last visited Jan. 6, 2012)
(“Decision Memorandum”). Before the court are motions for judgment on the agency
record filed by Home Products International, Inc. (“HPI”) and Since Hardware
(Guangzhou) Co., Ltd. (“Since Hardware”). The court has jurisdiction pursuant to
Section 516A(a)(2)(B)(iii) of the Tariff Act of 1930, as amended, 19 U.S.C. §
1516a(a)(2)(B)(iii) (2006),1 and 28 U.S.C. § 1581(c) (2006).
HPI challenges Commerce’s determination to use the market economy purchase
price for Since Hardware’s cartons. Since Hardware challenges Commerce’s (1)
selection of a financial statement for use in the surrogate financial ratio, and (2)
surrogate value determination for labor.2 For the reasons set forth below, the court
remands the Final Results to Commerce to address certain aspects of its surrogate
value determination for labor.
I. 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.” 19 U.S.C.
§ 1516a(b)(1)(B)(i). More specifically, when reviewing agency determinations, findings,
or conclusions for substantial evidence, the court assesses whether the agency action
1
Further citations to the Tariff Act of 1930, as amended, are to the relevant provisions
of Title 19 of the U.S. Code, 2006 edition.
2
Since Hardware also challenged Commerce’s surrogate value determination for
brokerage and handling, which the court decided on procedural grounds in a prior order.
Consol. Court No. 11-00104 Page 3
is reasonable given the record as a whole. Nippon Steel Corp. v. United States, 458
F.3d 1345, 1350-51 (Fed. Cir. 2006). Substantial evidence has been described as
“such relevant evidence as a reasonable mind might accept as adequate to support a
conclusion.” Dupont Teijin Films USA v. United States, 407 F.3d 1211, 1215 (Fed. Cir.
2005) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)). Substantial
evidence has also been described as “something less than the weight of the evidence,
and the possibility of drawing two inconsistent conclusions from the evidence does not
prevent an administrative agency's finding from being supported by substantial
evidence.” Consolo v. Fed. Mar. Comm'n, 383 U.S. 607, 620 (1966). Fundamentally,
though, “substantial evidence” is best understood as a word formula connoting
reasonableness review. 3 Charles H. Koch, Jr., Administrative Law and Practice §
9.24[1] (3d. ed. 2011). Therefore, when addressing a substantial evidence issue raised
by a party, the court analyzes whether the challenged agency action “was reasonable
given the circumstances presented by the whole record.” Edward D. Re, Bernard J.
Babb, and Susan M. Koplin, 8 West's Fed. Forms, National Courts § 13342 (2d ed.
2011).
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. Dupont, 407 F.3d 1211, 1215;
Agro Dutch Indus. Ltd. v. United States, 508 F.3d 1024, 1030 (Fed. Cir. 2007).
“[S]tatutory interpretations articulated by Commerce during its antidumping proceedings
are entitled to judicial deference under Chevron.” Pesquera Mares Australes Ltda. v.
Consol. Court No. 11-00104 Page 4
United States, 266 F.3d 1372, 1382 (Fed. Cir. 2001); see also Wheatland Tube Co. v.
United States, 495 F.3d 1355, 1359 (Fed. Cir. 2007) (“[W]e determine whether
Commerce's statutory interpretation is entitled to deference pursuant to Chevron.”).
II. Discussion
A. Cartons
Although Commerce generally uses data from a surrogate market economy
country to value inputs for a respondent operating in a non-market economy, if the
respondent purchases an input in sufficient quantity from a market economy,
Commerce values those inputs based on the purchase price paid. 19 C.F.R. §
351.408(c)(1). Commerce has adopted a rebuttable presumption that market economy
purchase prices are the best available information if the total purchased volume
exceeds 33 percent of the total volume of that input’s purchases. See Antidumping
Methodologies: Market Economy Inputs, Expected Non-Market Economy Wages, Duty
Drawback; and Request for Comments, 71 Fed. Reg. 61,716, 61,717-719 (Dep’t of
Commerce Oct. 19, 2006) (“market economy input methodology”).
Applying the market economy input methodology, Commerce determined that
Since Hardware purchased more than 33 percent of its cartons from a market economy
source, and that the market economy price was the best available information to value
cartons. In its administrative case brief HPI contended that Since Hardware’s carton
input consisted of two inputs, cartons and corrugated paper, and that if separated, the
33 percent threshold would not be met. HPI Case Brief at 11-13, PR 82.3 In the Final
3
“PR __” refers to a document contained in the public administrative record.
Consol. Court No. 11-00104 Page 5
Results Commerce did not share HPI’s “inferences and assumptions,” Clearon Corp. v.
United States, 35 CIT ___, ___, 800 F. Supp. 2d 1355, 1361 (2011), and continued to
treat cartons as one input.
In its brief before the court, HPI again contends that Since Hardware’s carton
input should be divided into two separate factors of production—a cartons factor and a
corrugated paper factor. Home Products Br. at 3-4, ECF No. 29. The available record
evidence, however, demonstrates that Since Hardware reported the carton input as one
factor, Since Hardware treats the input as one factor, and Commerce verified Since
Hardware’s input as one factor. See Since Hardware Section D Response PR 17;
Verification Memorandum, PR 51. The court cannot identify any record evidence that
demonstrates that Since Hardware purchased cartons as two inputs (cartons and
corrugated paper). For example, Home Products might have included on the
administrative record affidavits or invoices from its own experience with cartons, or
obtained information from Since Hardware’s supplier (as it did for brokerage and
handling) demonstrating that the supplier sells cartons as two items, not one. See QVD
Food Co. v. United States, 658 F.3d 1318, 1324 (Fed. Cir. 2011) (“[T]he burden of
creating an adequate record lies with [interested parties] and not with Commerce.”)
(internal quotation marks and citation omitted). In short, Commerce’s finding that Since
Hardware’s cartons are one factor and not two is reasonable. Commerce’s treatment of
Since Hardware’s cartons input must therefore be sustained.
Consol. Court No. 11-00104 Page 6
B. Surrogate Financial Statements
Since Hardware only filed a rebuttal brief during the administrative proceeding
and did not challenge Commerce’s selection of surrogate financial statements. See
November 17, 2010 Letter from Since Hardware to Commerce, PR 83. In its brief
before the court, Since Hardware raises for the first time issues relating to the selection
of surrogate financial statements, issues that it could have raised before the agency in
its case briefs. Since Hardware has therefore failed to exhaust its administrative
remedies. See 28 U.S.C. § 2637(d); Carpenter Tech. Corp. v. United States, 30 CIT
1373, 1374-75, 452 F. Supp. 2d 1344, 1346 (2006) (citing Woodford v. Ngo, 548 U.S.
81, 88-90 (2006)); see also 19 C.F.R. § 351.309(c)(2). Accordingly, Commerce’s
selection of financial statements is sustained.
C. Labor Wage Rage
When determining surrogate labor rates, Commerce is required “to utilize, to the
extent possible,” data from one or more market economy countries that are both
economically comparable to the non-market economy at issue, and “significant
producers of comparable merchandise.” 19 U.S.C. § 1677b(c)(4); Dorbest Ltd. v. United
States, 604 F.3d 1363, 1372–73 (Fed. Cir. 2010) (invalidating portion of Commerce’s
labor regulation, 19 C.F.R. § 351.408(c)(3)). In the Final Results Commerce valued
labor using an average, industry-specific wage rate calculated from earning or wage
data under Chapter 5B of the International Labor Organization (“ILO”) Yearbook on
Labor Statistics. See Industry Specific Wage Rate Selection Memorandum, PR 71.
Commerce relied on industry-specific labor data from multiple countries that Commerce
Consol. Court No. 11-00104 Page 7
determined were economically comparable to China and significant producers of
comparable merchandise. Id. Commerce, however, did not utilize wage data from the
primary surrogate country, India. Id.Since Hardware challenges Commerce’s valuation of the labor wage rate,
arguing that wage data from India is the best available information to value labor. Since
Hardware contends that this result is mandated by 19 U.S.C. § 1677b(c)(4), Dorbest,
and Shandong Rongxin Import & Export Co. v. United States, 35 CIT ___, 774 F. Supp.
2d 1307 (2011), as well as Commerce’s subsequently announced policy changes for
the calculation of labor wage rates in NME proceedings, Antidumping Methodologies in
Proceedings Involving Non-Market Economies: Valuing the Factor of Production: Labor,
76 Fed. Reg. 36,092 (June 21, 2011) (“New Labor Wage Rate Policy”).
These authorities, however, do not mandate the result that Since Hardware
desires. As the court in Shandong explained: “The Court finds groundless [the]
argument that Commerce was obligated to utilize data from a single country to value
labor. This argument is untenable in the face of a statute, agency regulation, and CAFC
case law, which all explicitly permit the agency to utilize data from multiple countries.”
Shandong, 35 CIT at ___, 774 F. Supp. 2d at 1314. Commerce may, as a matter of
gap-filling discretion, decide to use only one country when valuing labor (an approach it
has since adopted in its New Labor Wage Rate Policy), but nothing in the authorities
relied upon by Since Hardware mandates that result.
For Since Hardware to obtain the relief it desires, (an order from the court
directing Commerce to use only Indian wage data to value labor), the administrative
Consol. Court No. 11-00104 Page 8
record must support the conclusion that India, and India alone, is both economically
comparable to China and a significant producer of comparable merchandise. Since
Hardware, though, never makes that specific argument. Instead, Since Hardware
argues that Commerce’s use of HTS categories at the six-digit, instead of the 10-digit,
level was “overly broad,” inflating the measure of exports from countries that Commerce
identified as “significant producers.” Since Hardware Br. at 7, ECF No. 30. Missing
from this argument, however, is any explanation why the measure is “overly broad.”
One might surmise that Since Hardware is arguing that the six-digit level includes
merchandise that is not “comparable” to the subject merchandise, as required by 19
U.S.C. § 1677b(c)(4). That argument, in turn, would implicate an analysis of the
meaning of the word “comparable”, together with an analysis of the information on the
administrative record on the scope of the six and ten-digit HTS categories. For
whatever reason though, Since Hardware chose not to fully develop its argument that
Commerce’s approach was “overly broad,” leaving the court to deem the issue waived,
and sustain Commerce’s use of multiple countries to calculate the surrogate value for
the labor wage rate. See MTZ Polyfilms, Ltd v. United States, 33 CIT ___, ___, 659 F.
Supp. 2d 1303, 1308-09 (2009); Fujian Lianfu Forestry Co. v. United States, 33 CIT
___, ___, 638 F. Supp. 2d 1325, 1350 (2009); United States v. Zannino, 895 F.2d 1, 17
(1st Cir. 1990) (“[I]ssues adverted to in a perfunctory manner, unaccompanied by some
effort at developed argumentation, are deemed waived. It is not enough merely to
mention a possible argument in the most skeletal way, leaving the court to do counsel's
Consol. Court No. 11-00104 Page 9
work, create the ossature for the argument, and put flesh on its bones.”) (internal
citations omitted).
Moving on, Since Hardware does raise one issue from Commerce’s labor wage
rate determination that merits a remand: Commerce’s selection of the industry-specific
data from the International Standard Classification of all Economic Activities (“ISIC”).
Commerce selected ISIC Revision 3 instead of Revision 2 because it was more
contemporaneous, but it does not include data from India (the primary surrogate), which
did not report data in Revision 3. See Decision Memorandum at 5. The court in
Shandong reviewed an identical issue, providing a detailed explanation of the potential
unreasonableness of excluding Indian data from the labor calculus:
The Court is less sanguine, however, about the reasons Commerce
cites for excluding Indian labor data, which was reported under ISIC–
Rev.2, from the group of countries ultimately providing the labor rate, all of
which reported data under ISIC–Rev.3. While the agency has made clear
that it prefers “to use data from a single ISIC revision to ensure
consistency of the industry category,” the Court finds Commerce's
justification for this preference lacking and inconsistent. The Indian wages
and earnings data reported to the ILO appears to meet all other criteria
identified by the agency, including quality, specificity, and
contemporaneity. Indian ILO labor data was reported for a year close to
the period of review—2006—and was reported at a more specific 3–digit
level of the ISIC than the 2–digit–level data relied on by Commerce. Also,
India reported a combined earnings figure for men and women, in
accordance with Commerce's preference, and the agency does not
dispute that the ISIC–Rev.2 Indian labor data includes the pencil industry.
To dismiss such apparently valuable data without further explanation is
unjustified. Moreover, refusing to use ISIC–Rev.2 data contradicts what
the agency has repeatedly identified as a paramount interest: generating
the broadest basket of countries possible to value labor. Commerce has
cited the need for a broad basket of countries to justify using less
contemporaneous data, Remand Results at 28, and to attempt to justify
the inclusion of labor data from countries with minuscule amounts of
exports, (Def.'s Resp. at 14.). The inconsistency with which Commerce
has asserted the need for a broad basket of countries warrants a remand.
Consol. Court No. 11-00104 Page 10
Commerce has broad discretion to determine which criteria it will use to
sort and prioritize the data it uses in making its determination. The Court's
role is to ensure that Commerce's sorting and prioritizing decisions are
reasonable and consistently applied. In this case, the Court finds that most
of Commerce's sorting and prioritizing decisions are well justified, such as
the decision to use earnings data if available, and wages data if not, and
the choice only to utilize data reported for both sexes. The decision to
insist that data be reported under a common ISIC revision, however, is not
supported by substantial evidence on the record. On remand, if
Commerce still wishes to omit all labor data that a qualifying country
reported under ISIC–Rev.2, it must explain why the need for consistency
across ISIC revisions predominates over the need for a broad basket of
countries to value labor. Alternatively, if Commerce determines that the
chief value is to have the broadest feasible basket of countries,
Commerce is instructed to review which qualifying countries have reported
data under a prior ISIC revision which satisfy the agency's other
requirements.
Shandong, 35 CIT at ___, 774 F. Supp. 2d at 1315. This is persuasive. Accordingly,
the court will remand this issue to Commerce to address these specific issues, and if
necessary, include Indian data in its calculation.
Finally, Since Hardware challenges Commerce’s choice of ISIC Classification 28
(metal fabricated products), as opposed to ISIC Classification 36 (manufacture of metal
furniture) as one of the proper surrogate value data sources for ironing tables.
Commerce carefully explained its choice of ISIC Classification 28 on page 3 of its
Industry Specific Wage Rate Selection Memorandum and again in the Decision
Memorandum at 5-6. Commerce’s choice and its accompanying explanations appear
more than reasonable on this administrative record.
Since Hardware favors ISIC Classification 36 (manufacture of metal furniture) on
the ground that ISIC Classification 28 (metal fabricated products) may cover items other
than ironing tables, but Since Hardware fails to establish that ISIC Classification 36
Consol. Court No. 11-00104 Page 11
(manufacture of metal furniture) only covers ironing tables. Since Hardware also fails to
explain why or how this issue adversely affects the surrogate labor value for the subject
merchandise. (For example, do labor rates vary widely among the products covered by
ISIC Classification 28? And conversely, are labor rates consistently uniform for the
items covered by ISIC Classification 36?). Also missing from Since Hardware’s
argument is any consideration of how ISIC Classification 36, when compared to ISIC
Classification 28, yields a much more accurate surrogate labor value for ironing tables.
Whatever the merits of ISIC Classification 36 may be (and Since Hardware has
not adequately explained what they are), substantial evidence review contemplates that
for a given data selection issue, two or more reasonable though inconsistent choices
are possible on the same administrative record. See Catfish Farmers of Am. v. United
States, 33 CIT ___, ___, 641 F. Supp. 2d 1362, 1366 (2009) (“The administrative record
for an antidumping duty administrative review may support two or more reasonable,
though inconsistent, determinations on a given issue.”). See also CITIC Trading Co. v.
United States, 27 CIT 356, 366 (2003) (“while the standard of review precludes the
court from determining whether [Commerce's] choice of surrogate values was the best
available on an absolute scale, the court may determine the reasonableness of
Commerce's selection of surrogate prices.”). With this framework in mind, and given an
administrative record containing a thorough and reasonable explanation justifying the
selection of ISIC Classification 28, the court must conclude that Since Hardware’s
arguments for an alternative ISIC Classification are without merit. Commerce’s choice
of ISIC Classification 28 is therefore sustained.
Consol. Court No. 11-00104 Page 12
III. Conclusion
For the foregoing reasons the court will remand this action to Commerce to
reconcile its exclusion of Indian wage data with Shandong. Accordingly, it is hereby
ORDERED that this action is remanded to Commerce to reconcile
its exclusion of Indian labor data with the concerns raised by the court in
Shandong; and it is further
ORDERED that Commerce shall file its remand results on or before
February 15, 2012; and it is further
ORDERED that, if applicable, the parties shall file a proposed
scheduling order with page limits for comments on the remand results no
later than seven days after Commerce files its remand results with the
court.
/s/ Leo M. Gordon
Judge Leo M. Gordon
Dated: January 6, 2012
New York, New York