Meyer Corp. v. United States , 2023 CIT 13 ( 2023 )

Slip Op. 23-13
UNITED STATES COURT OF INTERNATIONAL TRADE
- - - - - - - - - - - - - - - - - - - - -x Senior Judge Aquilino
MEYER CORPORATION, U.S., :
Plaintiff, :
v. : Court No. 13-00154
UNITED STATES, :
Defendant. :
- - - - - - - - - - - - - - - - - - - - -x
Opinion & Order
[Upon appellate remand to “the court to
reconsider whether Meyer may rely on the
first-sale price”, that reconsideration
on the record at bar concludes that it
may not.]
Decided: February 9, 2023
John M. Peterson, John P. Donohue, Richard F. O’Neill, and
Patrick B. Klein, Neville Peterson LLP, New York, NY, for the
plaintiff.
Justin R. Miller, Attorney-in-Charge, and Beverly A. Farrell,
Senior Trial Attorney, U.S. Department of Justice, Civil Division,
Commercial Litigation Branch, International Trade Field Office, New
York, NY, and Brian M. Boynton, Principal Deputy Assistant Attorney
General, Civil Division, and Patricia M. McCarthy, Director, U.S.
Department of Justice, Civil Division, Commercial Litigation
Branch, Washington, D.C., for the defendant.
AQUILINO, Senior Judge: The mandate of the U.S. Court of
Appeals for the Federal Circuit (CAFC”) having issued pursuant to
its decision to remand supra sub nom. Meyer Corp. v. United States,
Court No. 13-00154 Page 2
43 F.4th 1325, 1333 (2022) (“Meyer III”), has led the parties to
file papers in regard thereto.
Presumed herein is familiarity with this test case on
valuation under 19 U.S.C. §1401a of 125 different sets of pots and
pans imported from the People’s Republic of China (“PRC”) and the
Kingdom of Thailand and the extensive record and prior decisions
thereon. See Meyer Corp. v. United States, 41 CIT ___, 255
F.Supp.3d 1348 (2017) (“Meyer I”) (summary judgment granted in part
and denied in part); Meyer Corp. v. United States, 45 CIT ___, Slip
Op. 21-26 (March 1, 2021) (“Meyer II”) (opinion after trial;
judgment for defendant).
The CAFC affirmed the finding that steel discs exported
to Thailand from China underwent only one substantial
transformation, not two, and that the resultant cookware for the
U.S. was thus not entitled to duty-free treatment. Meyer III, 43
F.4th at 1330-32. It also vacated and remanded plaintiff-
appellant’s first-sale claim, stating that “there is no basis in
the statute for Customs or the court to consider the effects of a
nonmarket economy on the transaction value and require a party to
show the absence of all ‘distortive nonmarket influences.’” Id. at
1332. The CAFC decision goes on to state that 19 U.S.C.
Court No. 13-00154 Page 3
§1401a(b)(2)(B) “concerns effects of the relationship between the
buyer and seller, not effects of government intervention, and
especially not with government intervention that affects the
industry as a whole.” Id. at 1332-33.
From this court’s perspective, because the purpose of the
General Agreements on Tariff and Trade was to promote trade
liberalization among market-oriented countries and help spread
democratic values that were associated with capitalism, in
opposition to fascism and the “Iron Curtain” that was descending on
Europe in the aftermath of World War II,1 the fact that the
valuation statute presupposes a “market” environment focusing on
the individual transaction is unsurprising. That was the purpose
of the GATT negotiations.
That does not mean, however, the statute as written
necessarily contemplates zero distinction between sellers operating
in market economies and those operating in nonmarket economies,
1
See, e.g., GATT 1947: How Stalin and the Marshall Plan
helped to conclude the negotiations, available at
https://www.wto.org/english/tratop_e/gatt_e/stalin_marshall_
conclude_negotiations_e.htm (last checked this date).
Court No. 13-00154 Page 4
particularly in view of the judge-made “first sale” rule2 on the
“price paid or payable” of 19 U.S.C. §1401a(b)(1) (“[i]f sufficient
information is not available, for any reason,3 with respect to any
amount” necessary to increase the “price actually paid or payable
for imported merchandise . . . by the amounts attributable” to the
items listed as (A) through (E) of §1401a(b)(1)(packing costs,
selling commissions, assists, royalties, license fees, and, of some
import to this case, “the proceeds of any subsequent resale,
disposal, or use of the imported merchandise that accrue, directly
or indirectly, to the seller”), then the transaction value of the
imported merchandise concerned “shall” be treated as one that
cannot be determined). It was the CAFC itself, in fact, which
articulated the concept of “the absence of any non-market
influences that affect the legitimacy of the sales price” -- apart
from the language of the statute itself. See Nissho Iwai Am. Corp.
v. United States, 982 F.2d 505, 509 (Fed.Cir. 1992).
2
That rule evolved from the prior concept of “export
value.” See Tariff Act of 1930 §402(d) (June 17, 1930). It has
been maintained by various judicial decisions, even under the
current valuation statute. See, e.g., United States v. S.S. Kresge
Co., 26 CCPA 349, 352 (1939); R.J. Saunders & Co. v. United States,
42 CCPA 55, 59 (1954); United States v. Getz Bros. & Co., 55 CCPA
11 (1967); E.C. McAfee Co. v. United States, 842 F.2d 314 (Fed.
Cir. 1988); and Nissho Iwai Am. Corp. v. United States, 982 F.2d
505 (Fed.Cir. 1992).
3
Emphasis added.
Court No. 13-00154 Page 5
Be that as it has been, the current CAFC panel having,
seemingly unequivocally, answered Meyer II’s earlier question or
observation on that point, this court, accordingly, will continue
its consideration of the substance of the matter, as developed
before, during, and after trial.
I
The plaintiff commenced this action seeking first-sale
treatment for its imported cookware from the PRC, and duty-free
treatment under the Generalized System of Preferences (GSP) for
certain cookware imported from Thailand, a beneficiary developing
country (BDC). After extensive discovery, the parties cross-moved
for partial summary judgment on whether cookware sets containing a
non-de minimis, non-BDC component could qualify the entire set for
GSP treatment; and whether Meyer’s imported cookware is viably
valued at the price between the Thai producer and a middleman
(first-sale price), both of which are Meyer related. Meyer I, 41
CIT at ___, 255 F.Supp.3d at 1350-51.
On the set issue, this court determined that the presence
of a non-BDC component in a set would not preclude BDC components
from receiving GSP treatment, although such treatment would not
extend to a non-BDC component. Id., 41 CIT at ___, 255 F.Supp.3d
Court No. 13-00154 Page 6
at 1355-59. However, the issue of whether the Thai-made components
were entitled to duty-free treatment under the GSP was yet to be
resolved. In determining whether first-sale could present a viable
value for the related entities, this court found that the
government had not waived the issue of Meyer’s failure to provide
its parent’s financial information as requested during discovery.
Id., 41 CIT at ___, 255 F.Supp.3d at 1360-61. This court further
held that “[a]ll of the entities relevant to that issue [i.e.
dealing at arm’s length] are related, and therefore the financial
information pertaining to the parent is also relevant to examining
whether any non-market influences affect the legitimacy of the
sales price.” Id., 41 CIT at ___, 255 F.Supp.3d at 1361. Finally,
after noting that the first-sale-transaction issue revealed
disputed material facts, this court required the parties to confer
and propose how to proceed. Id., 41 CIT at ___, 255 F.Supp.3d at
1362.
Ultimately, a trial was held on the issue of whether
certain Thai cookware had undergone double substantial
transformation and thus satisfied the requirements for duty-free
treatment under the GSP, and also the issue of whether the
first-sale-transaction price was a viable value for the imported
merchandise. Between the Meyer I decision and commencement of the
Court No. 13-00154 Page 7
trial, Meyer did not amend its discovery responses to include its
parent’s financial information. Although the plaintiff presented
direct testimony from five witnesses at trial, such testimony did
not include witnesses from Meyer Manufacturing Company Limited
(Meyer Hong Kong) or from Meyer International Holdings Limited
(Meyer Holdings), the direct parent company of the plaintiff, the
Thai producer, Meyer Macau, Meyer Hong Kong, and the indirect
parent of the PRC producer.
After trial, the parties submitted competing findings of
fact and conclusions of law. After considering them, this court
concluded that GSP treatment was not available for Thai cookware
manufactured from steel discs obtained from the PRC because no
double substantial transformation of the discs had occurred by the
Thai manufacturing process. Meyer II at *50.
This court further held that, “[b]ased on the applicable
law and the evidence adduced at trial, the plaintiff has also
failed to establish that it should be entitled to use the
transaction value between the China producer and Meyer Hong Kong or
the Thai producer and Meyer Macau (‘first sale’) for the
appraisement of the imported cookware.” Id. This court noted
that, for the “all costs plus profit” test, costs are critical and
Court No. 13-00154 Page 8
that the costs of the inputs from the PRC are suspect.4 It also
found that “no CBP regulation requires that the ‘firm’ mentioned in
19 C.F.R. §152.103(l)(1)(iii) be the ‘parent’ of the importing
party.” Id.Regardless, even if the costs of inputs were not suspect,
this court observed that the parent company “Meyer Holding[s]
presumptively had the ability to influence the price paid or
payable for them.” Id. at *51. Moreover, “[w]ithout financial
statements, th[is] court has no concept of the extent to which the
finances of the Meyer group units are truly independent ‘silos’ of
one another, or the extent to which there might have been state
influence or assistance to some degree.” Id. For whatever reason,
in vacating and remanding Meyer II, the CAFC does not address these
observations.
II
Facts drive the law. It is not the other way around.
Even ignoring the fact that the claimed transaction values involve
4
The CAFC decision does not directly address this
necessary observation, which remains an element of this cost-plus-
profit case, even if 19 U.S.C. §1401a(b)(2)(B) “concerns effects of
the relationship between the buyer and seller, not effects of
government intervention, and especially not with government
intervention that affects the industry as a whole.”
Court No. 13-00154 Page 9
inputs from a non-market-economy country in the merchandise at
issue, this court still cannot ignore plaintiff’s non-
responsiveness to defendant’s request for information during
discovery. The fact that the government herein was not provided
with the financial information pertinent to plaintiff’s parent
company hampered its ability to discern whether or not the parent
of the plaintiff provided any form of assistance to reduce costs.
As this court previously observed (here excising any inference of
“nonmarket consideration” in accordance with the CAFC opinion):
Even if “true” costs of such inputs could be determined,
Meyer Holding[s] presumptively has had the ability to
influence the price paid or payable for them, for example
by providing its subsidiaries access to credit and
capital on terms that are not available to competitors
without the same level of bargaining power with
creditors, or even at “below market” rates. Without
financial statements, the court has no concept of the
extent to which the finances of the Meyer group units are
truly independent “silos” of one another . . ..
The most that plaintiffs’ witnesses could testify to was
that they were unaware of any such assistance . . .. At
trial, the defendant only lightly explored the extent to
which such considerations might be considered
[ ]distortive. But then again, the defendant never had
the ability to probe deeper, in part because it was never
provided the financial information it requested in
discovery in order to be able to ask or answer probing
questions.
The court understands that the Meyer parent is not
subject to this litigation and that the plaintiff, as its
“independent” subsidiary, can claim an inability to
obtain such information from it. However, given that the
parent has an interest in seeing these types of matters
Court No. 13-00154 Page 10
resolved favorably, it is therefore presumed to be
forthcoming, even unprompted, to provide whatever CBP
deems necessary to assist in their resolution, and the
fact that in that regard there has apparently been
considerable “resistance” throughout this case to that
not unreasonable discovery request and the “assistance”
that the parent could have provided its subsidiary to
address necessary questions . . ., speaks volumes.
. . . [T]he foregoing leads the court to doubt that
accurate ascertainment of the “true” value of the “price
paid or payable” at the first sale level in the customs
duty sense has been demonstrated in this case.
Meyer II at *50-51.
As the defendant points out, the prior analysis shows
that plaintiff’s failure to provide the financial information
requested by it during discovery provided an independent reason as
to why Meyer could not demonstrate a true first-sale value absent
of influence - not from a nonmarket-economy country per se — but
from the relationships of the related parties. And the plaintiff
had been forewarned by the court’s Meyer I decision as to the
importance of that financial information but chose not to
supplement its discovery responses.
Furthermore, “[a]lthough this Court may exercise such
discretion to rectify a significant flaw in the conduct of the
original proceeding, [t]he purpose of a rehearing is not to
relitigate the case.” Tianjin Magnesium Int'l Co. v. United
Court No. 13-00154 Page 11
States, 36 CIT 1698, 1699 (2012) (quotations and citations
omitted). As discussed above, an extensive record was developed
before this court. It is more than sufficient for conducting
reconsideration now.
Finally, this court considers that the CAFC’s holding of
Nissho Iwai’s “nonmarket influences” as simply referring to
influences growing out of the relationship of buyer and seller that
distort the price paid or payable, coupled with its “remand for
th[is] court to reconsider whether Meyer may rely on the first-sale
price”, negates any need for further proceedings now.5 The
plaintiff had more-than-adequate opportunity to make its case for
first-sale treatment, and any suggestion now for a retrial is
inconsistent with Rule 1 of the USCIT rules to “secure the just,
speedy, and inexpensive determination of every action and
proceeding.”
III
In view of the foregoing, and given the precision of the
CAFC remand quoted above, mandating Customs and Border Protection
to acquiesce in plaintiff’s plea for liquidation of its merchandise
5
Plaintiff’s motion(s) filed after the CAFC mandate issued
regarding possible such proceedings can be, and they hereby are,
dismissed.
Court No. 13-00154 Page 12
on the basis of its first sale is not warranted, and this court’s
judgment entered in Meyer II is therefore hereby affirmed.
So ordered.
Decided: New York, New York
February 9, 2023
/s Thomas J. Aquilino, Jr.
Senior Judge