Hubscher Ribbon Corp. v. United States ( 2014 )

Slip Op. 14-43
UNITED STATES COURT OF INTERNATIONAL TRADE
HUBSCHER RIBBON CORP., LTD.,
Plaintiff,
Before: Leo M. Gordon, Judge
v.
Court No. 13-00071
UNITED STATES,
PUBLIC VERSION
Defendant.
OPINION
[Final results of administrative review sustained.]
Dated: April 15, 2014
John J. Kenkel, Gregory S. Menegaz, and J. Kevin Horgan, deKieffer & Horgan,
of Washington, DC, for Plaintiff Hubscher Ribbon Corp., Ltd.
Ryan M. Majerus, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of Washington, DC, for Defendant United States. With him on the briefs
were Stuart F. Delery, Assistant Attorney General, Jeanne E. Davidson, Director, Patricia M.
McCarthy, Assistant Director. Of counsel on the briefs was Scott D. McBride, Senior Attorney,
U.S. Department of Commerce, Office of the Chief Counsel for Import Administration, of
Washington, DC.
Gregory C. Dorris, Pepper Hamilton, LLP, of Washington, DC, for Defendant-
Intervenor Berwick Offray, LLC.
Gordon, Judge: This action involves an administrative review conducted by the
U.S. Department of Commerce (“Commerce”) of the antidumping duty order covering
narrow woven ribbons with woven selvedge from the People’s Republic of China. See
Narrow Woven Ribbons with Woven Selvedge from the People’s Republic of China,
78 Fed. Reg. 10,130 (Dep’t of Commerce Feb. 13, 2013) (final results admin. review)
(“Final Results”); see also Issues and Decision Memorandum for the Final Results of the
Court No. 13-00071 Page 2
Antidumping Duty Administrative Review on Narrow Woven Ribbons with Woven
Selvedge from the People’s Republic of China, A-570-952 (Dep’t of Commerce Feb. 5,
2013) (“Decision Memorandum”), available at http://enforcement.trade.gov/frn/
summary/prc/2013-03236-1.pdf (last visited this date). Before the court is Plaintiff
Hubscher Ribbon Corp., Ltd.’s (“Hubscher”) motion for judgment on the agency record
challenging Commerce’s assignment of a total adverse facts available (“AFA”) rate of
247.65%. See Pl.’s R. 56.2 Mem. in Supp. of Mot. for J. on the Agency R. at 3, ECF
No. 33 (“Pl.’s Br.”). The court has jurisdiction pursuant to Section 516A(a)(2)(B)(iii) of
Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(2)(B)(iii) (2006),1 and 28 U.S.C.
§ 1581(c) (2006). For the reasons set forth below, the court sustains the Final Results.
I. Background
During the less than fair value (“LTFV”) investigation, Commerce assigned
dumping margins of 0.00% to Yama Ribbons and Bows Co., Ltd. (“Yama”), the sole
cooperative mandatory respondent, 123.83% for the separate rate respondents, and
247.65% as total adverse facts available (“AFA”) for (1) the China-wide entity and (2) the
uncooperative mandatory respondent Ningbo Jintian Import & Export Co., Ltd. (“Ningbo”).
Narrow Woven Ribbons with Woven Selvedge from the People’s Republic of China,
75 Fed. Reg. 41,808, 41,811 (Dep’t of Commerce July 19, 2010) (final determ.) (“LTFV
Final Results”).
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, and all applicable supplements.
Court No. 13-00071 Page 3
The separate rate of 123.83% was the subject of interesting litigation. One of the
separate rate respondents, Yangzhou Bestpak Gifts & Crafts Co. (“Bestpak”), challenged
the reasonableness of the 123.83% separate rate, which Commerce derived by simply
averaging Yama’s de minimis rate and Ningbo’s total AFA rate (which was derived from
the petition). The U.S. Court of International Trade (“CIT”) was initially skeptical that such
a simple average constituted a “reasonable method” to derive the separate rate,
assuming there might be other options from the administrative record, and remanded to
Commerce for further consideration. Yangzhou Bestpak Gifts & Crafts Co. v. United
States, 35 CIT ___, ___, 783 F. Supp. 2d 1346, 1350-53 (2011), after remand, 36 CIT
___, 825 F. Supp. 2d 1346 (2012), vacated by 716 F.3d 1370 (Fed. Cir. 2013).
On remand, Commerce explained that there was very limited data upon which to
determine the commercial reality of the separate rate respondents. Bestpak, 36 CIT at
___, 825 F. Supp. 2d at 1350-51. The CIT acknowledged the limited record data and
sustained Commerce’s explanation as reasonable (supported by substantial evidence),
albeit reluctantly. It explained the challenges that limited data pose for Commerce, the
interested parties, and the court, especially when drawing conclusions about what
constitutes a reasonable measure for the separate rate. Id. 36 CIT at ___, 825 F. Supp.
2d at 1350-53.
On appeal the U.S. Court of Appeals for the Federal Circuit (“Federal Circuit”)
rejected the reasonableness of Commerce’s simple average that incorporated a total AFA
rate for otherwise cooperative, separate rate respondents, noting that Commerce was to
blame for the limited record, having had ample time to select another mandatory
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respondent when Ningbo withdrew its participation. Bestpak, 716 F.3d at 1378-80. On
remand Commerce chose to review Bestpak individually and calculate its actual rate.
Despite Bestpak maintaining through the course of the litigation that it deserved a zero
percent rate, Bestpak, 35 CIT at ___, 825 F. Supp. 2d at 1350 (“Bestpak, for its part,
requests an order from the court directing Commerce to assign Bestpak a 0% rate.”),
716 F.3d at 1381-82 (“Bestpak . . . argued that the sample invoice was evidence of its
commercial behavior and strongly supported a determination that Bestpak was entitled to
a zero dumping rate.”), Bestpak voluntarily dismissed the litigation rather than be
individually reviewed, conceding that all its entries would be covered by the 123.83%
separate rate. See Form 8 Notice of Dismissal, Yangzhou Bestpak Gifts & Crafts Co. v.
United States, No. 10-00295 (USCIT Nov. 13, 2013), ECF No. 76 (“Yangzhou Bestpak
will remain subject to the antidumping duty order on narrow woven ribbon with woven
selvedge from the People’s Republic of China at the antidumping duty rate of 123.83%,
and all of Bestpak’s entries suspended in this action will be liquidated at that rate.”). One
wonders what Bestpak’s actual rate and commercial reality would have been had
Commerce completed the individual review. Would it have been higher than 123.83%?
In any event, although seemingly struck down by the Federal Circuit as unreasonable,
the 123.83% separate rate now appears to have regained some validity.
In the subsequent first administrative review Commerce selected and examined
Hubscher, an exporter, as the only mandatory respondent. No other respondents were
individually reviewed. Narrow Woven Ribbons with Woven Selvedge from the People’s
Republic of China, 77 Fed. Reg. 47,363, 47,363-64 (Dep’t of Commerce Aug. 8, 2012)
Court No. 13-00071 Page 5
(prelim. results admin. review) (“Preliminary Results”). Hubscher at first cooperated,
reporting among its questionnaire responses that Yama produced all of the subject
merchandise that Hubscher imported during the period of review. When it came time to
submit its cost information, however, Hubscher withdrew from the administrative review.
Hubscher Letter Re: Withdrawal from Administrative Review, at 1-2 (Dep’t of Commerce
May 29, 2012), PD 68.2
Commerce then applied total AFA to Hubscher. Preliminary Results, 77 Fed. Reg.
at 47,367; Decision Memorandum at 2. Commerce selected 247.65%, “the highest rate
alleged in the petition,” as the total AFA rate. Preliminary Results, 77 Fed. Reg. at 47,368
(“To determine the relevance of the petition margin, we placed the model-specific rates
calculated for the respondents in the LTFV investigation on the record of this segment of
the proceeding and compared the 247.65 percent rate with those model-specific rates.”);
see also Final Results, 78 Fed. Reg. at 10,133; Decision Memorandum at 8-10 & n.26;
Comments and Departmental Position Containing Proprietary Information (Dep’t of
Commerce Feb. 5, 2013), CD 30 (“Corroboration Memorandum”). Although Hubscher
admits “that it did not fully participate in the first administrative review and deserves a
dumping margin based on ‘adverse facts available,’” Pl.’s Br. at 17; see 19 U.S.C.
§ 1677e(a), Hubscher argues that Commerce unreasonably applied the highest petition
rate as total AFA. Pl.’s Br. at 3, 17. For the reasons set forth below, the court sustains
the Final Results.
2
“PD” refers to a document contained in the public administrative record. “CD” refers to
a document contained in the confidential record.
Court No. 13-00071 Page 6
II. 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 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. 2014).
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. 2013).
Separately, the two-step framework provided in Chevron, U.S.A., Inc. v. Natural
Court No. 13-00071 Page 7
Res. Def. Council, Inc., 467 U.S. 837, 842-45 (1984), governs judicial review of
Commerce's interpretation of the antidumping statute. See United States v. Eurodif S.A.,
555 U.S. 305, 316 (2009) (Commerce's “interpretation governs in the absence of
unambiguous statutory language to the contrary or unreasonable resolution of language
that is ambiguous.”).
III. Discussion
In a total AFA scenario like the one presented here, Commerce typically cannot
calculate an antidumping rate for an uncooperative respondent because the information
required for such a calculation (in this case the respondent's cost information for the
subject merchandise during the period of review) has not been provided. As a substitute,
Commerce relies on various “secondary” sources of information (the petition, the final
determination from the investigation, prior administrative reviews, or any other information
placed on the record), 19 U.S.C. § 1677e(b), (c), to select a proxy that should be a
“reasonably accurate estimate of the respondent’s actual rate, albeit with some built-in
increase intended as a deterrent to noncompliance.” F.LLI de Cecco Di Filippo Fara S.
Martino S.p.A. v. United States, 216 F.3d 1027, 1032 (Fed. Cir. 2000) (“de Cecco”).
When selecting an appropriate total AFA proxy, “Commerce must balance the
statutory objectives of finding an accurate dumping margin and inducing compliance.”
Timken Co. v. United States, 354 F.3d 1334, 1345 (Fed. Cir. 2004). The proxy’s purpose
“is to provide respondents with an incentive to cooperate, not to impose punitive,
aberrational, or uncorroborated margins.” de Cecco, 216 F.3d at 1032. Although a higher
AFA rate creates a stronger incentive to cooperate, “Commerce may not select
Court No. 13-00071 Page 8
unreasonably high rates having no relationship to the respondent's actual dumping
margin.” Gallant Ocean (Thailand) Co. v. United States, 602 F.3d 1319, 1323 (Fed. Cir.
2010) (citing de Cecco, 216 F.3d at 1032). “Commerce must select secondary
information that has some grounding in commercial reality.” Id. 1323-24.
As de Cecco explained, these requirements are logical outgrowths of the statute’s
corroboration requirement, see de Cecco, 216 F.3d at 1032, which mandates that
Commerce, to the extent practicable, corroborate secondary information with
independent sources reasonably at its disposal. 19 U.S.C. § 1677e(c). In practice
“corroboration” involves confirming that secondary information has “probative value,”
19 C.F.R. § 351.308(d) (2013), by examining its “reliability and relevance.” Mittal Steel
Galati S.A. v. United States, 31 CIT 730, 734, 491 F. Supp. 2d 1273, 1278 (2007) (citing
Ball Bearings and Parts Thereof from France, Germany, Italy, Japan, Singapore, and the
United Kingdom, 70 Fed. Reg. 54,711, 54,712-13 (Dep’t of Commerce Sept. 16, 2005)
(final results admin. reviews)). More simply, to corroborate the selection of a total AFA
rate, Commerce must, to the extent practicable, “demonstrate that the rate is reliable and
relevant to the particular respondent” in light of the whole record before it. Yantai Xinke
Steel Structure Co. v. United States, 36 CIT ___, ___, Slip Op. 12-95 at 27 (July 18,
2012); PSC VSMPO-AVISMA Corp. v. United States, 35 CIT ___, ___, 755 F. Supp. 2d
1330, 1336-37 (2011) (citing Gallant Ocean, 602 F.3d at 1323-24); de Cecco, 216 F.3d
at 1032 (“Obviously a higher adverse margin creates a stronger deterrent, but Congress
tempered deterrent value with the corroboration requirement. It could only have done so
to prevent the petition rate (or other adverse inference rate), when unreasonable, from
Court No. 13-00071 Page 9
prevailing and to block any temptation by Commerce to overreach reality in seeking to
maximize deterrence.”).
Before turning to the specific facts, the court addresses Hubscher’s contention that
the Chevron framework governs the court’s review of that Commerce’s total AFA
selection. For Hubscher, the 247.65% rate represents an unreasonable application of the
statute under the second prong of Chevron. Pl.’s Br. at 15. The court does not agree
that the reasonableness of Commerce’s corroboration of the total AFA rate is a Chevron
issue; it is instead a substantial evidence question in which the court reviews the
reasonableness of Commerce’s actions against a known legal standard given the facts
and circumstances of the administrative record. More specifically, the issue in this case
is whether Commerce, to the extent practicable, reasonably confirmed the reliability and
relevance of the highest rate in the petition as a reasonable proxy for Hubscher’s actual
rate plus some built-in increase intended as a deterrent against non-compliance.
Corroboration
The administrative record in the first administrative review had limited information,
as did the record for the investigation (an “independent source of information” reasonably
at Commerce’s disposal). Hubscher, for its part, identifies only “three possible
alternatives” to the petition rate: (1) Yama’s 0.00% rate, (2) the 123.83% separate rate,
and (3) a hypothetical rate calculated using Hubscher’s U.S. sales data or Yama’s factors
of production (“FOP”) data from the investigation, with all three rates including some
unspecified “factor” added “for deterrence.” Pl.’s Reply to Def.’s and Def.-Intervenor’s
Court No. 13-00071 Page 10
Resp. Brs. to Pl.’s R. 56.2 Mot. at 6-7; see Pl.’s Br. at 25-26.3 Commerce explained that
the first two are not valid alternatives because those rates were assigned to cooperative
parties. See Decision Memorandum at 10 (“The Department is not required to assign to
an uncooperative respondent such as Hubschercorp a rate assigned to cooperative
respondents in the same case.”). Hubscher’s last proposed alternative, a hypothetical
rate using Hubscher’s U.S. sales data or Yama’s FOP data from the investigation, is more
illusory than real because Hubscher provides no calculation. Hubscher also apparently
failed to make this specific argument before the agency. The Decision Memorandum
contains no reference to an argument by Hubscher that Commerce should calculate a
more reasonable total AFA rate for Hubscher based on its record information. See
Memorandum at 4-5 (summarizing Hubscher’s arguments before Commerce); see also
19 C.F.R. § 351.309(c)(2) (“The case brief must present all arguments that continue in
submitter’s view to be relevant to the final determination.”); Bestpak, 716 F.3d 1370, 1381.
Along with apparently limited total AFA proxy choices, Commerce had limited data
from which to conduct its corroboration. Commerce did, however, attempt to piece
3
The court notes that there may be other alternatives, for example, ones derived directly
from Yama’s transaction specific margins, such as an average of a subset of those
margins, see, e.g., Qingdao Taifa Group Co. v. United States, 35 CIT ___, ___, 780 F.
Supp. 2d 1342, 1347 (2011) (“Commerce calculated the weighted-average margin of
145.90% using data from the sales of the three models with the highest margins, which
accounted for 36% of Taifa's total sales by quantity.”); Lifestyle Enter., Inc. v. United
States, 37 CIT ___,___, 896 F. Supp. 2d 1297, 1301-02 (2013) (“Commerce decided to
look at only the top 15% of these ranked Yihua Timber sales. Commerce then took the
simple average of these weighted-average dumping margins for each product type to
arrive at an 83.55% margin for Orient.” (citations omitted)), but Hubscher did not propose
any of these alternatives before Commerce. See Corroboration Memorandum at
2 (“Hubschercorp does not offer an alternative analysis for the Department to
consider . . . .”).
Court No. 13-00071 Page 11
together a connection between Hubscher and the petition rate. As Commerce explained,
during the period of review Hubscher sourced its subject merchandise from Yama. Yama,
in turn, had a number of model-specific transactions during the prior proceeding (the
investigation) that fell within the range of the petition rate. Corroboration Memorandum
at 3. Because Hubscher purchased all of its subject merchandise from Yama, Commerce
inferred that Hubscher’s commercial reality reflected these higher-margin transactions.
See Decision Memorandum at 9 n.26 (“[I]t is not unreasonable to infer that Hubschercorp
could sell subject merchandise to those companies at the same dumping levels.”).
Commerce further analyzed Yama’s higher-margin transactions to determine if
they were somehow unusual or unusable, and concluded, based on both the number of
sales and the quantity of ribbons sold, that “there is nothing about those transactions that
calls into question their commercial nature or suggests that they were aberrational.”
Decision Memorandum at 10; see also Corroboration Memorandum at 3 (containing
Commerce’s analysis of Yama’s proprietary data). The number of transactions and the
quantity of ribbon in those transactions are not so miniscule as to be immaterial. Cf., e.g.,
Dongguan Sunrise Furniture Co. v. United States, 36 CIT ___, ___, 865 F. Supp. 2d 1216,
1232-34 (2012) (remanding AFA rate to Commerce for further consideration because
transactions purporting to corroborate rate were “miniscule”).4 Hubscher has also not
4
Specifically, Commerce noted that it analyzed [[ ]] Yama model specific transactions
that were higher than the petition rate, and that those transactions amounted to [[ ]]
percent by quantity of Yama’s total yards of ribbon sold during the period of investigation.
Commerce also noted that it “did not include in its corroboration analysis a number of
Yama’s model-specific margins which were well above the highest margin of [[ ]]
percent (up to a margin of [[ ]] percent).” Corroboration Memorandum at 3
(emphasis in original).
Court No. 13-00071 Page 12
argued that those transactions are unusual with respect to quantity or model. Cf. iScholar,
Inc. v. United States, 35 CIT ___, ___, Slip Op. 11-04 at 5-7 (Jan. 13, 2011) (sustaining
Commerce’s use of a cooperating respondent’s highest transaction-specific margin as
the total AFA rate for uncooperative respondent where the transaction fell within the
cooperating respondent’s usual quantity and range of models sold).
What Commerce did here was analyze the limited available data and infer that
Hubscher’s commercial reality reflected Yama’s higher-margin transactions. Hubscher
has chosen not to refute that inference directly, instead arguing generally that Yama’s
higher-margin, model-specific data cannot be relevant or material given Yama’s low
calculated rate (0.00%). See Pl.’s Br. at 15-26; Pl.’s Reply at 1-9. It is, in effect, a
common sense argument that the petition rate of 247.65% cannot be reliable or relevant
for any other respondent because the only calculated margin from any segment of the
proceeding is Yama’s zero. Hubscher argues that even though several of Yama’s model-
specific transactions (for thousands of yards of ribbon) had margins near or greater than
the petition rate, Yama sold millions of yards of ribbon, the vast majority of which had no
or low margins, meaning the petition rate of 247.65% is aberrational at best, and punitive
at worst. From this vantage point, Hubscher invites the court to declare the petition rate
unlawful, confident that Yama’s rate reflects everyone’s commercial reality. See Pl.’s
Reply at 3, 5.
The court though is reluctant to accept this invitation. As the Bestpak litigation
revealed, Yama’s rate does not reflect all respondents’ commercial reality. After all, in
Bestpak, an otherwise cooperative separate rate respondent argued all along that it was
Court No. 13-00071 Page 13
entitled to Yama’s zero, 716 F.3d at 1381, but ultimately voluntarily dismissed the litigation
rather than be individually reviewed, conceding that the 123.83% separate rate covered
its subject merchandise. See Form 8 Notice of Dismissal, Yangzhou Bestpak Gifts &
Crafts Co. v. United States, No. 10-00295 (USCIT Nov. 13, 2013), ECF No. 76. The more
pressing problem for Hubscher is its apparent unwillingness to directly address
Commerce’s inference about Hubscher’s commercial reality reflecting Yama’s higher-
margin transactions. The court anticipated an immediate and vigorous challenge from
Hubscher explaining why this inference must be unreasonable. Hubscher is best
positioned to explain from the available data that the 247.34% rate simply cannot
reasonably reflect Hubscher’s commercial reality. Recall that Hubscher sourced all its
merchandise from Yama. And yet, Hubscher never offers a specific explanation about its
own “commercial reality” from the available information on the record. The court is left
wondering why Hubscher did not do more when Commerce preliminarily assigned it the
247.34% rate corroborated with a small subset of Yama’s data. Hubscher did not request
that Commerce move the entire Yama data set onto the record for Hubscher to analyze
against its own record data. That omission, in turn, has left a limited administrative record
with limited data against which the court can analyze whether the AFA rate is a reasonably
accurate estimate of Hubscher’s actual rate albeit with some built-in increase intended as
a deterrent against noncompliance. Hubscher, therefore, passed up an important
opportunity to crunch Yama’s data against its own data and create a narrative of its own
commercial experience to discredit the petition rate as an unreasonable AFA choice. The
court cannot understand why Hubscher let this opportunity pass. Is this because
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Hubscher already knew from analyzing its own cost data (not provided to Commerce) that
its “actual” margin was higher than Hubscher could tolerate, perhaps even in the range
of the petition rate, or higher, resulting in a litigation strategy to deflect attention away
from Hubscher’s own data, leaving only general arguments about Yama’s data?
In the Final Results, Decision Memorandum, and Corroboration Memorandum
Commerce has to the extent practicable offered a reasonable path for the court to
conclude that the petition rate of 247.34% may very well be a reasonably accurate
estimate of Hubscher’s actual rate, albeit with some built-in increase intended as a
deterrent to noncompliance. In the court’s view, Hubscher has left too much unexplained
and has not met its burden to demonstrate the unreasonableness of Commerce’s
corroboration, see 28 U.S.C. § 2639(a)(1) (“[T]he decision of . . . the administering
authority . . . is presumed to be correct. The burden of proving otherwise shall rest upon
the party challenging such decision.”).
Although courts are generally suspicious of petition rates, see, e.g., de Cecco,
216 F.3d at 1032-33; Gallant Ocean, 602 F.3d at 1324; but see Universal Polybag Co.
v. United States, 32 CIT at 918-22, 577 F. Supp. 2d at 1298-1301 (sustaining highest rate
in petition as total AFA), Congress has not foreclosed their use, see 19 U.S.C.
§ 1677e(b)(1); de Cecco, 216 F.3d at 1032 (“the statute explicitly allows for use of ‘the
petition’ to determine relevant facts when a respondent does not cooperate.”).
Commerce’s discretion to use a petition rate as total AFA narrows considerably when the
record and “independent sources” of information present numerous calculated rates
among various respondents, potentially better informing the “commercial reality” or
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“actual rate” of a non-cooperative party. That was the case in Gallant Ocean, where
dozens of voluntary respondents had received calculated rates that in turn informed the
Federal Circuit’s analysis of the reasonableness of Commerce’s use of a petition rate as
AFA. Gallant Ocean, 602 F.3d at 1323-24. Here, in the investigation and first review,
there were no voluntary respondents, and only one calculated rate for a mandatory
respondent. Commerce noted this difference:
In the instant case, on the other hand, the Department does not have
multiple calculated rates for several respondents, nor were there multiple
calculated rates in the original investigation. Furthermore, unlike in the
administrative review underlying Gallant Ocean, the administrative record
here does not contain any information to determine whether a previous
respondent was “similarly-sized and similarly-situated” to Hubschercorp,
and there are not “abundant resources” from which the Department could
determine a different rate.
Decision Memorandum at 10. Hubscher continues to argue that “the facts of its situation
mirror” those in Gallant. Pl.’s Br. at 17. But they do not. Here there was “no verified
sales data on the record for the relevant period of review,” as Hubscher “was the only
respondent and it failed to cooperate. . . . Under such circumstances, Commerce's
corroboration may be less than ideal because the uncooperative acts of the respondent
has deprived Commerce of the very information that it needs to link an AFA rate to
[respondent’s] commercial reality.” Qingdao Taifa Group Co. v. United States, 35 CIT
___, ___ 780 F. Supp. 2d 1342, 1349 (2011). Congress understood this type of
information shortfall might occur when it included the proviso, “to the extent practicable,”
within Commerce’s corroboration requirement. See 19 U.S.C. § 1677e(c); H.R. Rep. No.
103-826, pt. 1 at 105 (1994), reprinted in 1994 U.S.C.C.A.N. 3773, 1994 WL 548728.
Court No. 13-00071 Page 16
(“The fact that corroboration may not be practicable in a given circumstance will not
prevent the agencies from applying an adverse inference under subsection (b).”).
Plaintiff does not argue or suggest that Commerce is to blame for the limited
number of calculated rates (or the lack of verified transaction data from other respondents
beside Yama). This is understandable. As has often been explained, Commerce does
not have subpoena power and cannot compel participation in antidumping proceedings.
See Essar Steel Ltd. v. United States, 678 F.3d 1268, 1276 (Fed. Cir. 2012) (“Because
Commerce lacks subpoena power, Commerce’s ability to apply adverse facts is an
important one.”). Although Commerce may designate mandatory respondents, there is
no guarantee those respondents will cooperate or participate. Here, over the course of
the investigation and first review, one mandatory respondent cooperated, and two did not.
And even Bestpak, one of the separate rate respondents that expended significant time,
energy, and expense to litigate the general issue of the separate rate, ultimately chose
not to be individually reviewed, voluntarily dismissing its separate rate litigation.
See Form 8 Notice of Dismissal, Yangzhou Bestpak Gifts & Crafts Co. v. United States,
No. 10-00295 (USCIT Nov. 13, 2013), ECF No. 76. There were eleven other separate
rate respondents in the investigation. Another came forward in the instant review.
None chose to be voluntarily reviewed. And if Bestpak is an indicator, even if Commerce
had designated five mandatory respondents, each may not have cooperated, yielding five
additional total AFA rates, five separate corroboration analyses and memoranda, all of
which would not further enlighten us about the commercial reality of this particular
industry. Commerce’s inability to mandate participation in its proceedings means that
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interested parties bear the primary burden of developing the administrative record.
See QVD Food Co. v. United States, 658 F.3d 1318, 1325 (Fed. Cir. 2011). In Gallant
Ocean there were many willing and cooperative voluntary respondents who assumed that
burden. Here, there were none.
Since Gallant Ocean the Court of International Trade has in two cases suggested
that when Commerce assigns a total AFA rate “in multiples of 100 percent, a bit more
corroboration or record support is warranted.” Qingdao Taifa Group Co. v. United States,
34 CIT ___, ___, 760 F. Supp. 2d 1379, 1386 n.7 (2010) (holding unreasonable
Commerce’s corroboration of total AFA rates of 383.60% and 227.73%), appeal after third
remand, 780 F. Supp. 2d 1342 (sustaining Commerce’s corroboration of lower revised
total AFA rate of 145.90%); Lifestyle Enterprise, Inc. v. United States, 35 CIT ___, ___,
768 F. Supp. 2d 1286, 1298 (2011) (holding unreasonable Commerce’s corroboration of
216.01% total AFA rate: “As the rate becomes larger and greatly exceeds the rates of
cooperating respondents, Commerce must provide a clearer explanation for its choice
and ample record support for its determination.”), after remand, 36 CIT ___, 844 F. Supp.
2d 1283, 1288-91 & n.7 (2012) (holding unreasonable Commerce’s further attempted
corroboration of 216.01% rate: “[Petitioner] could not point to any evidence on or off the
record supporting its assertion that any large manufacturing company in any sector was
dumping at a rate over 200%. Indeed, the idea that a large profit-seeking corporation
deemed separate from the country-wide entity would dump its merchandise at rates over
200% seems inconsistent with commercial reality, absent some evidence to the
contrary.”), after second remand, 36 CIT ___, 865 F. Supp. 2d 1284 (2012) (holding
Court No. 13-00071 Page 18
unreasonable Commerce’s corroboration of lower revised total AFA rate of 130.81%),
after third remand, 37 CIT ___, 896 F. Supp. 2d 1297 (2013) (sustaining Commerce’s
corroboration of lower revised total AFA rate of 83.55%).
Qingdao and Lifestyles, two cases that Hubscher does not cite or discuss, both
involved proceedings with ample data and “abundant resources,” Gallant Ocean,
602 F.3d at 1324, which in turn significantly limited Commerce’s discretion to choose
otherwise high AFA margins in multiples of 100 percent. Commerce’s discretion here,
however, was no so limited. Commerce designated Hubscher as a mandatory
respondent. When Hubscher withdrew, Hubscher knew there were limited AFA proxies
from which to choose, and limited data from which to practicably corroborate the rate.
Hubscher sourced its entire inventory of subject merchandise from Yama, a fact
Commerce utilized to practicably tie the petition rate to Hubscher through Yama’s higher-
margin transactions, which were near or above the petition rate. Perhaps, over time, as
more calculated rates emerge, the highest rate in the petition may be discredited and
proven an unreasonable AFA proxy. At this juncture, however, Commerce appears to
have reasonably corroborated that rate, “to the extent practicable,” and correspondingly,
Hubscher has failed to persuade the court that Commerce’s selection of that rate and
accompanying corroboration is unreasonable.
Government Ownership or Control
Hubscher also argues that 247.65% is “punitive” because Commerce also used
the petition rate as the China-wide rate. Pl.’s Reply at 6-7; see Pl.’s Br. at 24-25.
According to Hubscher this means that Commerce implicitly found that Hubscher was
Court No. 13-00071 Page 19
subject to government ownership or control even though it has no ties to the Government
of China. Id. This is a straw man argument. Commerce never found, directly or implicitly,
that Hubscher was subject to government control. What Commerce did was use the
highest rate in the petition twice, first as the China-wide rate in the investigation, and
second, as total AFA for Hubscher in the first administrative review. Commerce did not
conflate the two, repeatedly referring to Hubscher’s AFA margin as the “petition rate,” not
the China-wide rate. Compare Decision Memorandum at 4, 6, 9-11 (describing
Hubscher’s AFA rate as being the highest petition rate, not the China-wide rate), with
LTFV Final Results, 75 Fed. Reg. at 41,810-11 (continuing preliminary application of the
“PRC-wide rate” as AFA to an uncooperative mandatory respondent because of its failure
to answer questionnaire regarding government ownership and control); Lifestyle
Enterprise, Inc. v. United States, 35 CIT ___, ___, 768 F. Supp. 2d 1286, 1298 n.12
(2011) (“This claim lacks merit as Commerce did not assign the PRC-wide rate per se,
but rather selected the same rate based on separate considerations.”), after remand,
36 CIT ___, 844 F. Supp. 2d 1283 (2012), after second remand, 36 CIT ___, 865 F. Supp.
2d 1284 (2012), after third remand, 37 CIT ___, 896 F. Supp. 2d 1297 (2013); cf. Gerber
Food (Yunnan) Co. v. United States, 29 CIT 753, 771-73, 387 F. Supp. 2d 1270, 1287-
88 (2005), after remand 31 CIT 921, 491 F. Supp. 2d 1326 (2007), after second remand,
32 CIT 995 (2008) (remanding selection of country-wide rate as AFA because, among
other reasons, Commerce unreasonably made an implicit finding of government
ownership or control).
Court No. 13-00071 Page 20
IV. Conclusion
For the foregoing reasons Hubscher’s motion for judgment on the agency record
is denied. Judgment will be entered accordingly.
/s/ Leo M. Gordon
Judge Leo M. Gordon
Dated: April 15, 2014
New York, New York