Diamond Sawblades Manufacturers Coalition v. United States , 33 Ct. Int'l Trade 48 ( 2009 )

Slip Op. 09 - 5
UNITED STATES COURT OF INTERNATIONAL TRADE
:
DIAMOND SAWBLADES :
MANUFACTURERS COALITION, :
:
Plaintiff, :
:
v. : Before: MUSGRAVE, Senior Judge
: Court No. 06-00247
UNITED STATES, :
: PUBLIC VERSION
Defendant, :
:
and :
:
ST. GOBAIN ABRASIVES, INC., EHWA :
DIAMOND INDUSTRIAL CO., LTD., and :
SHINHAN DIAMOND INDUS. CO., LTD., :
:
Defendant-Intervenors. :
:
OPINION
[Sustaining the ITC’s Remand Determination.]
Decided: January 13, 2009
Wiley, Rein & Fielding, LLP (Daniel B. Pickard) for the plaintiff.
James M. Lyons, General Counsel, Neal J. Reynolds, Assistant General Counsel, Office of
the General Counsel, U.S. International Trade Commission (Charles A. St. Charles) for the
defendant.
Akin Gump Strauss Hauer & Feld, LLP (J. David Park, Jarrod M. Goldfeder, Lisa W. Ross,
Spencer S. Griffith, and Valerie A. Slater) for the defendant-intervenors Ehwa Diamond Industrial
Co., Ltd. and Shinhan Diamond Industrial Co., Ltd.
Thompson Hine, LLP (Lynn M. Fischer Fox) for the defendant-intervenor Saint-Gobain
Abrasives, Inc.
Court No. 06-00247 Page 2
This matter comes before the court as a result of the court’s decision in Diamond Sawblades
Mfr’s. Coalition v. United States, Slip Op. 08-18 (Feb. 6, 2008). In that case, the court remanded
a decision of the U.S. International Trade Commission (“Commission” or “ITC”) that determined
the domestic diamond sawblade industry was neither materially injured nor threatened with material
injury by reason of subject imports from China and Korea. See Diamond Sawblades, Slip Op. 08-18;
Diamond Sawblades and Parts Thereof from China and Korea, Investigation Nos. 731-TA-1092 and
1093 (Final), USITC Publication 3862 (July 2006) Public R. Doc. 249 (“Original Determination”).
In its opinion, the court found that the ITC had failed to provide an adequate explanation or
substantial evidentiary support for certain ITC findings relating to the degree of competition between
subject imports and the domestic product; the court remanded the matter and instructed the
Commission to reconsider and explain more fully its negative-injury determination in light of the
court’s findings. Diamond Sawblades, Slip Op. 08-18. In the determination issued pursuant to the
court’s remand, the Commission affirmed its negative finding as to present material injury, but
reversed its position on threat of material injury (rendering an affirmative finding by a vote of 3-3).
Diamond Sawblades and Parts Thereof from China and Korea, Investigation Nos. 731-TA-1092 and
1093 (Final) (Remand), USITC Pub. 4007 (May 2008) Public R. Doc. 305R (“Remand
Determination”). Defendant-Intervenors Saint-Gobain Abrasives, Inc. (“St. Gobain”) Ehwa
Diamond Industrial Co., Ltd. (“Ehwa”) and Shinhan Diamond Industrial Co., Ltd. (“Shinhan”)
(hereinafter collectively “Respondents”) assert that the Remand Determination is contrary to law and
urge the court to reverse the ITC’s decision or to remand the matter for further consideration. The
Commission, joined with Plaintiff Diamond Sawblades Manufacturer’s Coalition (“DSMC”), argues
Court No. 06-00247 Page 3
that the decision should be sustained. This court has jurisdiction pursuant to 28 U.S.C. § 1581(c)
(2000). For the reasons set forth below, the court will sustain the Remand Determination.
I. Background
The facts of this case were extensively summarized in the court’s previous opinion on this
matter and need not be fully repeated here. See Diamond Sawblades, Slip Op 08-18 at 2-10. In July
2006, the Commission determined, by a 4-2 vote, that an industry in the United States was not
materially injured or threatened with material injury by reason of imports of diamond sawblades or
parts thereof from China and Korea. Original Determination at 3. The Commission found that
although subject imports were entering the United States in significant volumes, had increased
market share, and significantly undersold the domestic like product, there was “no causal nexus
between the subject imports and the condition of the domestic industry,” because competition
between the domestic product and subject imports was limited. Original Determination at 29, 31,
36. Specifically, the Commission found that “[c]ompetition between the subject imports and the
domestic product [was] limited by differences in the type of end user to which sales [we]re made,
the diameters of the blades sold, and the differences in blade type and the manufacturing process.”
Original Determination at 28.
The court remanded the Original Determination upon finding, inter alia, that the
Commission’s finding of limited competition lacked substantial evidentiary support. The court
specifically found that (1) the limited-competition finding could not be explained by differences in
sawblade diameter because record data showed heavy competition in the midrange (10-14") diameter
blades, where half of all sales (by revenue) were concentrated; (2) the limited-competition finding
Court No. 06-00247 Page 4
could not be explained by differences in blade type and manufacturing process because the
substantial majority of midrange sawblades were of the same type (segmented) and manufactured
with the same process (laser welding); and (3) the Commission had failed to adequately explain its
finding that “branded” and “nonbranded” distributors did not compete when evidence showed that
both distributor types served the same end user. Diamond Sawblades, Slip Op. at 16-18.
On remand, the Commission reopened the record for the purpose of collecting additional
information pertinent to its analysis as to whether competition between subject imports and the
domestic like product was limited by differences in products and/or customer types. See Diamond
Sawblades and Parts Thereof from China and Korea, 73 Fed. Reg. 16910, 16911 (ITC March 31,
2008) (notice of remand proceedings). In consideration of that data and the court’s remand
instructions (and with the replacement of two of the original six commissioners) the ITC issued a
new decision on May 14, 2008. In that decision, the Commission again found that the domestic
industry was not materially injured by reason of subject imports, but reversed its position on the issue
of threat-of-material-injury. Remand Determination at 1. That reversal was based, in part, upon its
reversal on the issue of competition, where, according to the Commission, “the record leaves no
doubt that there is considerable overlap in the mid-range sizes and that U.S.-, Chinese-, and Korean-
produced finished diamond sawblades compete with each other in the same end-user markets and
across a range of product sizes.” Remand Determination at 16.
Respondents contend that the Remand Determination is erroneous because, inter alia, (1) the
finding of substantial competition is unlawful and ignores substantial record evidence; (2) the threat
determination is unsupported by substantial evidence and contrary to law; and (3) the Commission
Court No. 06-00247 Page 5
improperly concluded that the analysis advocated in Bratsk Aluminum Smelter v. United States,
444 F.3d 1369 (Fed. Cir. 2006), does not apply to a threat determination. St. Gobain Br. at 5-7, 24;
Ehwa/Shinhan Br. at 5, 10, 21. Respondents Ehwa and Shinhan argue separately that the ITC’s
decision to cumulate Korean and Chinese imports is contrary to law. Ehwa/Shinhan Br. at 3.
Respondent St. Gobain contends that the findings of the Remand Determination are entitled to
“considerably less deference” from the court because the ITC reversed itself from the prior decision.
St.Gobain Br. at 2. For the reasons set forth below, the court will sustain the Remand Determination.
II. Standard of Review
The Court must uphold the Commission’s determination unless it finds that the determination
is “unsupported by substantial evidence on the record, or otherwise not in accordance with law.”
19 U.S.C. § 1516a(b)(1)(B) (2000). The United States Court of Appeals for the Federal Circuit
(“Federal Circuit”) has stated that “in the hierarchy of the four most common standards of review,
substantial evidence is the second most deferential, and can be translated roughly to mean is [the
determination] unreasonable?” Nippon Steel Corp. v. United States, 458 F.3d 1345, 1351 (Fed. Cir.
2006) (internal citation and quotations omitted) (alteration in original).
The ITC’s factual determinations are “presumed to be correct,” and the burden of
demonstrating otherwise rests upon the party challenging the determination. 28 U.S.C. § 2639(a)(1)
(2000). Further, the Commission “is not required to explicitly address every piece of evidence
presented by the parties, and absent a showing to the contrary, the ITC is presumed to have
considered all of the evidence on the record.” Nucor Corp. v. United States, 28 CIT 188, 234,
318 F. Supp. 2d 1207, 1247 (2004) (quotations and citation omitted) aff’d, 414 F.3d 1331 (Fed. Cir.
2005).
Court No. 06-00247 Page 6
III. Discussion
A. Deference Afforded to Agency Reversals
At the outset, Respondent St. Gobain suggests that the Commission’s new decision is entitled
to less deference from the court because it constitutes a reversal from a prior determination.
St. Gobain points out that under the INS v. Cardoza-Fonseca line of cases, agency decisions that
reverse prior decisions are “entitled to considerably less deference” from the Court. St. Gobain Br.
at 2 (citing INS v. Cardoza-Fonseca, 480 U.S. 421, 446, n.30 (1987)); Conf. Oral Arg. Tr. at 7.
The court finds this argument meritless. The “deference” discussed in Cardoza-Fonseca
refers to the deference afforded to an agency’s interpretation of a statute, otherwise known as
“Chevron deference.” See Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc.,
467 U.S. 837 (1984). A similar concept of deference is afforded to an agency’s reasonable
interpretation of its own regulations, particularly when that interpretation reflects an agency’s
longstanding policies or guidelines. See Smiley v. Citibank (South Dakota), N.A., 517 U.S. 735(1996); Gose v. U.S. Postal Svc., 451 F.3d 831 (Fed. Cir. 2006). That deference is substantially
diminished, however, where an agency’s interpretation of the statute or regulation at issue is
inconsistent with its prior interpretations of the provision. Thomas Jefferson Univ. v. Shalala, 512
U.S. 504, 515 (1994).
Respondent’s suggestion—that the policy of affording the agency “considerably less
deference” should be applied to an agency’s reversal on the outcome of a particular decision—
cannot be accepted. Among other things, such a policy would be inconsistent with the purpose of
this court’s remand (which was based, in part, on a “substantial doubt whether the Commission
would have made the same ultimate finding with the erroneous findings removed from the picture”)
Court No. 06-00247 Page 7
and contrary to the deference inherent in this Court’s statutorily-mandated standard of review. See
19 U.S.C. § 1516a(b)(1)(B). Accordingly, the court must afford to the Commission the same
deference in the Remand Determination as that afforded to it in the Original Determination.
B. Competition Finding
As in the court’s previous review, one of the principal points of controversy in this matter
concerns the Commission’s competition finding. Respondents now argue that the Remand
Determination’s finding of “substantial competition throughout the market” is unsupported by
substantial evidence and contend that the finding of attenuated competition in the Original
Determination was correct. St. Gobain Br. at 8; Ehwa/Shinhan Br. at 5. Respondent St. Gobain
asserts that the ITC ignored evidence that the market is “highly segmented” between the “DIY[(do-it-
yourself)]/general contractor” (also referred to as “general use”) market and the “professional”
market, and ignored evidence showing that the domestic industry sold only “professional”
sawblades, while the subject importers sold blades almost exclusively to the “DIY/general
contractor” market. St. Gobain Br. at 9. Respondents assert further that the ITC ignored evidence
of attenuated competition based on channels of distribution and ignored that price differentials
between subject imports and domestic blades demonstrate that these are “two different products that
do not compete.” Ehwa/Shinhan Br. at 6-7. Although the respondents arguments are intertwined,
the court will address those arguments seriatim.
1. Attenuated Competition based on Market Segmentation
Respondent St. Gobain first takes issue with the Commission’s “summary reject[ion]” of its
contention that the diamond sawblade market is highly segmented into “professional” and
Court No. 06-00247 Page 8
“DIY/general contractor” market segments. St. Gobain Br. at 9. Respondent argues that the highly
segmented market severely attenuates competition because the domestic industry is almost
exclusively relegated to the “professional” market while the subject imports are similarly relegated
to the “DIY/general contractor” market. Id.
The court is unable to accept these arguments. Although some evidence supports the
respondent’s contentions, the Commission’s decision to reject the “professional” vs. “DIY/general
contractor” dichotomy was not unreasonable and is supported by substantial evidence. The
Commission discussed the problems with market segmentation based on these divisions in the
Remand Determination, where it noted:
Although respondents contend that the U.S. diamond sawblade
market is “highly segmented” into “professional-use” and “general
use” categories, with larger-diameter blades often being used by the
professional-use segment (by which they mean specialized concrete
contractors), petitioners argue that there are no clear dividing lines.
Respondents themselves were unable to define the professional-use
market clearly, arguing during the preliminary phase investigations
that size was an important factor in establishing a dividing line
between “professional” and “general” use and then arguing during the
final phase investigations that the dividing line was based on the
horsepower of the saw in which the blade was used. Contrary to
respondents’ argument, the record demonstrates an overlap in usage
by “professional” concrete contractors, general contractors, and DIY
end users, notably in the midrange-diameter category.
Remand Determination at 30 (Separate Views); Remand Determination at 5 (Views of the
Commission).
Substantial evidence supports the Commission’s analysis. As noted above, the Commission
rejected professional vs. general use market segmentation upon finding that the distinctions between
the proposed segments were unclear, and that, even where the distinctions were clear, the record
Court No. 06-00247 Page 9
demonstrated a substantial overlap in usage, particularly in the midrange blades. Evidence of record
supporting the Commission’s findings falls into three categories: (1) evidence that the definition of
a “professional” was not always clear; (2) evidence that the definition of a professional blade was
changed as the investigation progressed; and (3) evidence that the domestic industry supplied blades
to general contractors and that the subject imports supplied professional end users.
For example, in the Original Staff Report the ITC staff observed that “professional”
sawblades were generally characterized as those that were (1) sold to “professionals,” i.e., end users
in the road and commercial construction industry; (2) largely segmented and greater than 14" in
diameter; and (3) “typically custom engineered for the industry.” ITC Staff Report, Pub. R. Doc. 249
(“Original Staff Report”) at I-10. However, evidence of record shows that this definition was
quickly contradicted. See Hearing Tr. at 38-39 (Ms. O’Day) (stating that her definition of the term
“professional[] . . . includes both general contractors and specialty contractors, plumbers,
electricians, masons, construction contractors, refractory tile and marble installers, as well as
concrete sawing and breaking specialists.”); id. at 90 (Mr. Garrison (U.S. producer)) (testifying that
custom blades were a “very small” (5-15%) portion of his business).
Further, that “professional” blades were defined as greater than 14" in diameter did not
support the respondent’s assertions regarding the “professional” focus of the domestic industry
because data showed that the primary area of competitive overlap (and a substantial portion of the
revenue of both the subject imports and the domestic industry) was in the midrange (10-14"
diameter) blades. That is, according to the definitions of professional and DIY/general contractor
blades provided above, a midrange sized sawblade would be categorized as a general contractor
Court No. 06-00247 Page 10
blade. However if midrange blades are for general contractors and the domestic industry’s largest
percentage of revenue is from midrange blades, the claim that the domestic industry focuses almost
exclusively on professional blades cannot be true.
Respondent asserts that the type of blade and the process by which it is manufactured further
distinguishes professional from general use blades. However, as the court noted in its previous
opinion on this matter, because a substantial majority of all sawblades sold in the U.S., regardless
of source, were of the same type (segmented) and manufactured with the same process (laser
welding), those factors are of little use as distinguishing characteristics.
Respondent then points to testimonial evidence indicating that the most relevant
characteristic of a sawblade is the horsepower rating, and that only professional blades are designed
for use on high-horsepower (greater than 35Hp) equipment. See Hearing Tr. at 307 (Mr. Nixon)
(“We’ve chosen 35 horsepower as kind of the line in the sand that depicts the professional user.”).
The court finds this assertion unconvincing. Although there is little data in the record on the subject
of horsepower ratings, where that information does exist— in the individual product comparisons—
the data do not support the respondent’s primary argument that the domestic industry was relegated
to professional (when defined as high-horsepower) blades. For example, of the seven products
compared, products 2, 3, 4, and 5 were mid-range (10-14" diameter) blades. Of those blades, only
Product 5 was designated as high horsepower. Yet data show that subject import sales of Product 5
were almost equal to the domestic industry sales of Product 5. See Original Staff Report at V-37-39,
Tables V-5a, V-5b, V-5c. Further, in products 2, 3, and 4, which were not high-horsepower blades,
the domestic industry dominated almost every sales category. Id.
Court No. 06-00247 Page 11
2. Attenuation of Competition based on Channels of Distribution
In the Original Determination the Commission found that competition was attenuated by
channels of distribution based in part upon finding that the “distributors” channel (through which
both the domestic industry and the subject importers sold the majority (by value) of their products)
should be further subdivided into “branded” and “nonbranded” distributors as separate channels of
distribution that did not compete with one another. Upon review, the court found that the
Commission had failed to provide an adequate explanation as to the difference between a “branded”
and “nonbranded” distributor, or how this division attenuated competition when evidence showed
that both types of distributors served the same end user. Slip Op. 08-18 at 16-17.
In its new decision, the Commission reconsidered that finding in light of additional evidence
obtained on remand (as well as evidence of record) and changed its position on this issue. As noted
in the Remand Determination, the ITC found that, regardless of distributor type, “the products
ultimately are purchased and used thereafter largely by the same types of end users,” and thus
essentially compete in the same market. Remand Determination at 7.
a. Conflicting Evidence and the Remand Staff Report
Respondent St. Gobain argues that the Remand Determination is fatally flawed in this regard
because the ITC ignored evidence showing that “branded” and “nonbranded” distributors were
distinctly separate channels of distribution, and based its conclusion on “end-user information
reported in a few distributor questionnaires.” St. Gobain Br. at 12-13. St. Gobain contends further
that, when the “self serving” responses of producer-purchasers were excluded, the remand
questionnaire data showed that a substantial majority of firms believed that nonbranded and branded
Court No. 06-00247 Page 12
distributors “seldom or never competed for business.” St. Gobain Br. at 14 (citing to Table III-1 of
the Remand Staff Report).
The Commission’s determination that branded and nonbranded distributors compete is
supported by substantial evidence. Data contained in the Original Staff Report show that both
branded and nonbranded distributors (and one distributor self-defined as both) indicated “general
contractors” as their primary customer. Original Staff Report at II-7. Similarly, as discussed below,
additional questionnaire data presented in the Remand Staff Report may be reasonably interpreted
to show competition. See Remand Staff Report at Table III-1.
The proper interpretation of information contained in the Remand Staff Report was a point
of some contention in this matter. To illustrate, Table III-1, the interpretation of which the
respondents challenge, is shown below.
Court No. 06-00247 Page 13
Remand Staff Report, Table III-1.
In its questionnaire, the Commission asked sawblade purchasers to indicate “the extent to
which U.S. branded and unbranded distributors competed against each other” and derived table III-1
from the responses. Remand Staff Report at III-1. The Commission cited to Table III-1 in the
Remand Determination as evidence that branded and nonbranded distributors compete, noting that
“a substantial majority of all purchasers familiar with the issue . . . reported that branded and
unbranded sawblades always, frequently, or sometimes competed in all size ranges.” Remand
Determination at 7, n.40. Conversely, respondent St. Gobain argues that the data above actually
“show that the majority of firms with an opinion believed that branded and unbranded distributors
seldom or never compete for business,” and further that “when the self-serving responses of
Petitioners are excluded the distinction is even more obvious, with 14 [questionnaire responders]
reporting little or no competition and only nine reporting always or frequent competition.” St.
Gobain Br. at 14. Essentially, both respondents assert that the Commission’s choice to include the
“self-serving” responses of the producer-purchasers was error, and that the Commission’s decision
to group the “sometimes” responses together with the “always” and “frequently” responses was
unreasonable. St. Gobain Br. at 14; Ehwa/Shinhan Br. at 9.
The court must reject these arguments. The respondents have pointed to no evidence
impeaching the credibility of the producer-purchaser responses that would make the ITC’s decision
to include those responses unreasonable. Nor can the court conclude that it was unreasonable for
the Commission to interpret a response that distributors “sometimes” compete as evidence of
competition, as opposed to evidence of limited competition. The respondents are asking the court
Court No. 06-00247 Page 14
to reweigh the evidence and to displace the agency’s interpretation of that evidence with its own.
This the court is not permitted to do. See Universal Camera Corp. v. NRLB, 340 U.S. 474, 488
(1951) (holding that the court may not “displace the [agency’s] choice between two fairly conflicting
views, even though the court would justifiably have made a different choice had the matter been
before it de novo.”); Usinor v. United States, 28 CIT 1107, 342 F. Supp. 2d 1267, 1272 (2004). As
this court has noted on many previous occasions, “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. Federal Maritime Comm’n, 383 U.S. 607, 619-20
(1966), quoted in Matsushita Elec. Indus. Co. v. United States, 750 F.2d 927, 933 (Fed. Cir. 1984).
b. Commission Practice
Respondents Ehwa and Shinhan object to the ITC’s nonbranded/branded distributor analysis
as “contrary to law” because it deviates from the Commission’s “consistent practice when evaluating
the extent of competition.” Ehwa/Shinhan Br. at 6-7. According to the respondents, the
Commission’s consistent practice in this regard “is to examine the purchasers to whom U.S.
producers and suppliers of subject imports first sell subject merchandise, and not the customers of
those purchasers further down the distribution chain.” Id. (emphasis in original).
The court is unable to find merit in this argument. The cases offered by the respondents do
not support their contention either directly or by close analogy. The Commission practice (to which
those cases refer) of “examin[ing] prices for the first arm[’]s-length transaction in the U.S. market”
relates to the pricing data used to determine whether underselling has occurred, not whether the
products compete or whether distributors should be considered two separate channels of distribution.
Court No. 06-00247 Page 15
See Sodium Hexametaphosphate from China, Inv. No. 731-TA-1110 (Final), ITC Publication 3984
(Mar. 2008), 2008 WL 1727622. Moreover, this court’s remand was premised, in part, on the
Commission’s failure to provide an adequate explanation as to why “branded” and “nonbranded”
distributors should be considered different channels of distribution, particularly in light of evidence
suggesting that both distributor types served the same end user. Because the point of determining
“the existence of common or similar channels of distribution” is ultimately to determine whether the
subject imports compete with the domestic product, Wieland Werke, AG v. United States, 13 CIT
561, 563, 718 F. Supp. 50, 52 (1989), it was not unreasonable for the Commission to examine other
customers in the distribution chain to make that determination.
3. Attenuated Competition and Price Effects Determination
Respondent St. Gobain contends that the price-effects data “provide significant additional
evidence that the Commission’s competition analysis is inaccurate” because “the incredibly large
price differential indicated that the products being compared were not the same.” St. Gobain Br. at
18. Respondent also asserts that the Commission’s price-depression finding itself is flawed in this
regard because the Commission’s price data do not reflect an “apples-to-apples,” comparison; that
is, “the imports are not underselling U.S. products but are actually lower-value/lower cost products
that should not fairly be compared to the higher-quality domestic products.” Id.The court is unable to accept these arguments. The Remand Determination indicates that the
Commission’s price-effects findings were based on data generated from comparisons within seven
individual diamond sawblade product groupings. The Commission requested information from the
domestic industry and the subject importers as to selling price, number of units sold, customer type,
Court No. 06-00247 Page 16
etc., for each of the specified products. From that information the Commission derived various
findings (such as the degree of underselling) in regard to each product. See generally Original Staff
Report at V-19-24; see also Remand Determination at 14. A description of each product examined
is found in the Original Staff Report:
Product 1.– 4" diameter laser-welded blades for dry cutting, 0.080" segment
thickness, Premium grade blade (diamond impact strength within a TI/TTI range
of 72-75 and diamond concentration in a range of 12-15 percent by volume of the
segments or alternatively 0.55-0.65 carats/ccm);
Product 2.– 12" diameter laser-welded blades for dry cutting, 0.110" segmented
thickness, Premium grade blade (diamond impact strength within a TI/TTI range
of 82-85 and diamond concentration in a range of 17-20 percent by volume of the
segments or alternatively 0.75-0.85 carats/ccm) for use in high speed saws of 5,000
rpm or more;
Product 3.– 14" diameter laser-welded blades for dry cutting, 0.110" segment
thickness, Premium grade blade (diamond impact strength within a TI/TTI range
of 82-85 and diamond concentration in a range of 17-20 percent by volume of the
segments or alternatively 0.75-0.85 carats/ccm) for use in high speed saws of 5,000
rpm or more;
Product 4.– 14" diameter laser-welded blades for dry cutting, 0.125" segment
thickness, Premium grade blade (diamond impact strength within a TI/TTI range
of 82-85 and diamond concentration in a range of 17-20 percent by volume of the
segments or alternatively 0.75-0.85 carats/ccm) for use in high speed saws of 5,000
rpm or more;
Product 5.– 14" diameter laser-welded blades for wet cutting cured concrete,
0.125" segmented thickness, Premium grade blade (diamond impact strength within
a TI/TTI range of 74-77 and diamond concentration in a range of 33-35 percent by
volume of the segments or alternatively 1.45-1.55 carats/ccm) for use in saws of 35
hp or more;
Product 6.– 18" diameter laser-welded blades for wet cutting cured concrete,
0.125" segment thickness, Premium grade blade (diamond impact strength within
a TI/TTI range of 74-77 and diamond concentration in a range of 33-35 percent by
volume of the segments or alternatively 1.45-1.55 carats/ccm) for use in saws of 35
hp or more; and
Product 7.– 24" diameter laser-welded blades for wet cutting cured concrete,
0.155" segment thickness, Premium grade blade (diamond impact strength within
a TI/TTI range of 74-77 and diamond concentration in a range of 33-35 percent by
volume of the segments or alternatively 1.45-1.55 carats/ccm) for use in saws of 35
hp or more.
Original Staff Report at V-19. The data shown above do not indicate, as the respondents assert, that
the Commission’s price-effects determination was based on an “apples to oranges” comparison.
Court No. 06-00247 Page 17
Within each product type, the products compared appear to have been identical in terms of diameter,
type, manufacturing process, segment thickness, grade and concentration of diamonds, and
horsepower rating. If these are different products, the respondents have failed to explain what those
differences are. Accordingly, the respondent’s assertions must be rejected.
C. Threat Finding Arguments
Respondents assert that the Commission’s threat finding is unsupported by substantial
evidence and contrary to law. Respondents contend, inter alia, that (1) that the robust condition of
the domestic industry does not square with the Commission’s finding that the domestic industry is
threatened with material injury; (2) the Commission’s finding of “flattening” demand is contradicted
by substantial record evidence; and (3) that the Commission’s finding that subject imports can
“service the professional construction sector” is unsupported by substantial evidence. Ehwa/Shinhan
Br. at 11- 12, 17; St. Gobain Br. at 19, 20.
The crux of the Commission’s finding is that the domestic industry was only able to remain
profitable (though the profits declined) because of the dramatic increases in demand for diamond
sawblades during the period of investigation (“POI”). However, the Commission reasoned, because
demand was expected to “flatten” and the subject imports were expected to continue to increase,
nothing would save the domestic industry from material injury. The Commission explained:
The domestic industry’s ability to maintain profitability was
attributable in large part to the high and increasing demand during the
POI. Despite this favorable circumstance, as well as the success of a
number of domestic producers in reducing their costs of production
through increased productivity, reductions in employment, and
investment in upgraded equipment, the industry’s operating income
and operating income margin declined during the POI, as prices fell
and material costs rose. We note that various domestic industry
Court No. 06-00247 Page 18
representatives testified that cost and efficiency improvements have
reached a limit and are not expected to have additional impact on the
industry going forward. Now that demand is likely to flatten and low-
priced subject imports are likely to continue to increase in the
imminent future, the increasing volumes of imports will cause prices
to decline further absent antidumping relief. These import increases
and price declines will likely accelerate the loss of operating income,
leading to material injury to the domestic industry.
Remand Determination at 23.
Substantial evidence of record supports the Commission’s findings. It is undisputed that
demand for diamond sawblades dramatically increased during the POI, regardless of market segment.
The record also shows that, in spite of the increased demand, several indicators of the domestic
industry’s performance trended downward. The domestic industry’s market share for finished
diamond sawblades fell (by value) from [ ]% in 2003 to [ ]% in 2005; aggregate operating
income fell a total of [ ]% during the POI, as did the domestic industry’s aggregate operating
income margins (falling [ ]%) and aggregate return on assets (falling [ ]%). Moreover, as noted
below, evidence supports a finding of flattening demand and increasing subject imports.
Accordingly, the court must find that the Commission’s conclusion is supported by substantial
evidence and is not unreasonable.
Respondents take issue with the fact that the ITC’s “flattening” demand finding was based
on questionnaire responses stating that demand for finished sawblades would not change in the
future. According to the respondents, “these responses indicate simply that demand would continue
to remain high and at strong levels,” and were not indicative of threat. Ehwa/Shinhan Br. at 11; see
also St. Gobain Br. at 20. Respondents assert further that the ITC ignored evidence showing that
demand would increase in the future, such as testimony regarding the passage of a highway bill that
Court No. 06-00247 Page 19
would generate demand for professional cutting blades, and further demand generated by Hurricane
Katrina rebuilding efforts. Ehwa/Shinhan Br. at 11, St. Gobain Br. at 21.
The court finds no merit in these arguments. First, whether demand is high or low is
unrelated to whether that demand is increasing, decreasing, or flat. Evidence of record shows that
the majority of U.S. producers, the majority of U.S. importers, and the majority of other U.S.
purchasers all reported that they did not expect demand to change in the future; a minority expected
demand to increase or decrease. Original Staff Report at II-37. Hence, the Commission’s finding
of “flattening demand” is supported by substantial evidence. Second, the Commission is presumed
to have considered all of the evidence before it. Although some evidence may be deemed to be of
such relevance that the failure to address it may require remand, Altx Inc., v. United States, 25 CIT
1100, 1117-18, 167 F. Supp. 2d 1353, 1374 (2001) (holding that the ITC must address evidence that
“seriously undermines its reasoning and conclusions”), testimony as to the potential effects of future
highway funds hardly rises to that level. Moreover, it appears that passage of the Highway Bill was
indeed factored into the Commission’s finding because, as noted in the Original Staff Report, the
firms that were expecting an increase in demand noted “more federal funds for highways and
bridges” as one of the reasons for that expectation. Original Staff Report at II-37. Accordingly, the
Commission’s determination in this regard is adequately explained and supported by substantial
evidence.
Respondents Ehwa and Shinhan next attack the Commission’s finding regarding the
respondents’ ability to “service the professional construction sector,” and assert that the Commission
“cite[d] no evidence that imports will begin shifting to the larger-sized [blades] sold directly or
Court No. 06-00247 Page 20
indirectly to professional end users.” Ehwa/Shinhan Br. at 12-13. Respondents argue further that
subject imports of the larger-sized blades increased “[ ], by [ ]” during the POI
and that substantial evidence indicates that foreign producers were not able to service professional
construction users from abroad. Id.The finding to which the respondents apparently refer is found in the Remand Determination
at pages 22-23, where the Commission stated:
Contrary to the respondents arguments, no portion of the market, as
defined by size or end-user category, is sheltered from competition
with the subject imports. Cumulated subject import sales are
increasing in each size range, including the larger sizes in which
professional customers that may require post-sale customer service
dominate.
Remand Determination at 22-23. The Commission’s finding that subject importers had the ability
to infiltrate the larger-sized “professional” sawblades sector1 is supported by substantial evidence.
Although the respondents characterize the subject imports’ increase in large-blade sales as “[ ],”
data in the record indicates that the [ ]. See Original Staff Report
at Table IV-4. The respondents essentially attack the substantiality of the Commission’s findings
by offering their own interpretation of the evidence in support of an alternate conclusion. As to the
specific issue of “post-sale customer service,” the Commission noted evidence showing that “some,
but not all sales to professional concrete contractors may require customization, quick turnaround,
or onsite customer service,” and that even where such service was required, evidence suggested that
subject importers were not precluded from entering the market because of their ability to “provide
overnight shipping” and/or “service through their U.S. sales affiliates,” or service through U.S.
1
In this instance, the parties are referring to diamond sawblades greater than 20" in diameter.
Court No. 06-00247 Page 21
distributors. Remand Determination at 23 n.141. Accordingly, the court must conclude that the
Commission’s findings in this regard are not unreasonable and are supported by substantial evidence.
As noted above, it is not the function of the court to “reweigh the evidence or substitute its own
judgment for that of the agency.” Usinor, 342 F. Supp. 2d at 1272.
D. Cumulation Argument
Respondents Ehwa and Shinhan assert that the ITC’s decision to cumulate subject imports
in its threat analysis is unsupported by substantial evidence. Specifically, the respondents argue that
there were significant disparities between Korean and Chinese imports’ pricing and volume trends
during the POI, and that “ITC will not cumulate subject imports if, as here, subject imports are
[ ].”
Ehwa/Shinhan Br. at 3.
The statute provides, in pertinent part:
(H) Cumulation for determining threat of material injury
To the extent practicable . . . for the purposes of clause (i)(III)
and (IV) of subparagraph (F) the Commission may cumulatively
assess the volume and price effects of imports of the subject
merchandise from all countries . . . if such imports compete with each
other and with domestic like products in the United States market.
19 U.S.C. § 1677(7)(H) (2000).
Respondents appear to argue that the statute’s inclusion of the permissive “may,” together
with this Court’s history of upholding ITC decisions not to cumulate imports where a “great
disparity” in patterns of volume or underselling existed, amounts to a mandate that the Commission
“may not” cumulate imports if the patterns of volume or underselling are “substantially” different.
Court No. 06-00247 Page 22
Ehwa/Shinhan Br. at 4 (citing Torrington v. United States, 16 CIT 220, 229-30, 790 F. Supp. 1161,
1172 (1992).
The court does not agree. The decision as to whether cumulation is appropriate in a threat
case is discretionary. If the imports at issue meet the ministerial requirements of section 1677(7)(H)
and “compete with each other and with the domestic like products,” the Commission may cumulate
if it finds it “practicable” to do so. The legislative history of the cumulation statute reveals that the
threat provision was made discretionary because Congress recognized “the difficulty of applying the
concept of cumulation to threat cases, and [did] not seek to require cumulation where it is
impracticable to do so because such assessment would be conjectural or speculative.” H.R. Rep. No.
100-40, pt. 1, at 131 (1987). Hence, where this Court has sustained the ITC’s decisions to not
cumulate in threat cases, it has done so in the spirit of deference to the ITC, requiring only that the
Commission’s decision be adequately explained, reasonable, and supported by substantial evidence.
See Asociacion Colombiana de Exportadores de Flores v. United States, 12 CIT 1174, 1178, 704
F. Supp. 1068, 1072 (1988) (cited by Torrington, supra).In this case, the Commission’s decision to cumulate was not unreasonable. During the POI,
Korean imports increased [ ] percent (by value) and Chinese imports increased [ ] percent;
Korean imports undersold domestic sawblades in 189 of 245 comparisons at margins ranging up to
80.8 percent, while Chinese imports undersold domestic sawblades in 112 of 115 comparisons at
margins ranging as high as 84.4 percent. Remand Determination at 14; Original Staff Report at V-
62, Table V9c. Although these data reflect differences in the rate of increase and degree of
underselling, those differences are insufficient to render unreasonable the ITC’s decision to
Court No. 06-00247 Page 23
cumulate, or that cumulation was “practicable” under the circumstances. Accordingly the court must
sustain the ITC’s decision to cumulate the subject imports.
E. Bratsk Analysis
Finally, Respondents contend that the Commission’s failure to apply the Bratsk test was error
and requires remand. E.g., Ehwa/Shinhan Br. at 21, 23 (citing Bratsk Aluminum Smelter v. United
States, 444 F.3d 1369 (Fed. Cir. 2006)). Respondents contend that “[u]nder Bratsk the ITC is
required to determine if third-country imports will, in part, replace subject imports,” and that a
proper application of the Bratsk test in this case “produces startling results.” Id. These “startling
results,” according to the respondents, would show that [
] and that [
]. Respondents contend that, because the
ITC failed to perform the analysis mandated by Bratsk, the ITC failed to take into account the
increasing non-subject imports “which strongly indicates that subject imports do not threaten injury
to the U.S. domestic injury because non-subject imports could ‘replace’ them.” Ehwa/Shinhan Br.
at 24.
The ITC contends that because Bratsk and its holdings were made in the context of a present
material injury finding, there is no clear mandate from the Federal Circuit that such an analysis is
required where only threat of material injury is at issue. ITC Br. at 21. Additionally, the ITC
asserted at oral argument that the respondents never presented the Bratsk argument to the
Commission, and, accordingly, had failed to exhaust administrative remedies on this issue. Conf.
Oral Arg. Tr. at 48. For the reasons set forth below, the court agrees.
Court No. 06-00247 Page 24
In Mittal Steel, the Federal Circuit clarified that the inquiry required by Bratsk
is not concerned with whether an antidumping order would actually
lead to the elimination of those goods from the market in the future
or whether those goods would be replaced by goods from other
sources. Rather, the inquiry is a hypothetical one that sheds light on
whether the injury to the domestic industry can reasonably be
attributed to the subject imports. The focus of the inquiry is on the
cause of injury in the past, not the prospect of effectiveness in the
future.
Mittal Steel, 542 F3d at 876 (emphasis added). According to Mittal Steel, Bratsk essentially calls
for a “but-for”causation test when certain “triggering” factors are present: When the ITC’s inquiry
“is centered on a commodity product, and price competitive non-subject imports are a significant
factor in the market,” the Commission is required “to explain why . . . it concluded that the subject
imports caused material injury to the domestic industry.” Id. at 1375. In essence, Mittal Steel
clarified that a Bratsk analysis is a method of assessing of whether the injury suffered by the
domestic industry was “by reason of” the subject imports and not “by reason of” nonsubject imports.
Accordingly, the court must reject as incorrect the respondents’ interpretation of Bratsk as
requiring an analysis as to the potential beneficiaries of an antidumping order. In other words,
Respondents’ assertions as to the “startling results” that would ensue in the wake of antidumping
duties are not part of the causation analysis directed by Mittal Steel, but part of the “whether goods
would be replaced by other sources” question that Mittal Steel expressly rejected. As to the
argument of whether Bratsk must be applied to a threat analysis, the court finds that, for the reasons
stated below, it is unnecessary to decide that issue here.
Administrative exhaustion of remedies is generally required before a litigant will be allowed
to raise a claim via a civil action. See 28 U.S.C. § 2637(d) (2000); Sharp Corp. v. United States,
Court No. 06-00247 Page 25
837 F.2d 1058, 1062 (Fed. Cir. 1988). A reviewing court usurps the agency’s function when it sets
aside a determination upon a ground not previously presented and deprives the agency of an
opportunity to consider the matter, make its ruling, and state the reasons for its action. United States
v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 37 (1952).
At oral argument the respondent asserted that the requirement of administrative exhaustion
of remedies should not apply in this matter because there was no opportunity to raise Bratsk at an
earlier time. Respondent contends that the question “didn’t become a germane and live issue until
the Commission on remand issued its threat finding for the first time in the history of this
proceeding.” Conf. Oral Arg. Tr. at 51. The court cannot agree. As noted above, Mittal Steel
clarified that a Bratsk analysis is part of a causation analysis. The issue of causation has been a
“germane and live issue” since the beginning of the investigation, and at no point in the investigation
did the respondents assert that nonsubject imports played any causal role in the condition of the
domestic industry. Accordingly, the court will decline to address this argument.
F. Plaintiff’s Request for Relief
Plaintiff DSMC requests that, should the court choose to affirm the Remand Determination,
the court (1) direct the ITC to “transmit its remand decision to [the Department of] Commerce and
to publish notice of the decision in the Federal Register” as required by law, (2) direct the
Department of Commerce “to publish notice of this court’s affirmation of the ITC’s final remand
decision in the Federal Register,” and (3) to “order the suspension of liquidation and collection of
cash deposits.” Pl’s. Br. at 22-23. DSMC contends that this additional action is necessary “to
provide effective relief” in this matter because, although the actions it requests the court to mandate
Court No. 06-00247 Page 26
are required by law, “the agencies have, in other cases, delayed such actions until all appeals are
exhausted.” Id. at 21.
Because the plaintiff’s prayer for relief requires the court to take the additional steps of
ordering the ITC and Commerce to complete the specific actions listed above, the court will construe
the request as a petition for a writ of mandamus. See Decca Hospitality Furnishings, LLC v. United
States, 30 CIT 357, 363-64,427 F. Supp. 2d 1249, 1255 (2006).
The common-law writ of mandamus, as codified in 28 U. S. C. §§ 1361, 1651(a) (2000) is
a drastic remedy, “to be invoked only in extraordinary situations.” Kerr v. U. S. Dist. Ct. N.D. Cal.,
426 U.S. 394, 402 (1976). Because a writ of mandamus is “one of the most potent weapons in the
judicial arsenal,” Cheney v. United States Dist. Court for D.C., 542 U.S. 367, 380 (2004), three
conditions must be met before the court may issue a writ: First, the party seeking issuance of the
writ must demonstrate that he lacks adequate alternative means to obtain the desired relief; second,
the petitioner must demonstrate a clear and indisputable right to the writ; and third, “even if the first
two prerequisites have been met, the issuing court, in the exercise of its discretion, must be satisfied
that the writ is appropriate under the circumstances.” Cheney, 542 U.S. at 380-81.
The court is unable to find that a writ of mandamus is appropriate at this time. The plaintiff’s
request is based upon speculation that the ITC and Department of Commerce may, in the future, fail
to perform duties required by law. However, at the present time, the standard operation of the law
provides to the plaintiff an adequate means to attain the desired relief. Accordingly, the plaintiff’s
request must be denied.
The court has considered the parties other arguments and finds them without merit.
Court No. 06-00247 Page 27
IV. Conclusion
Upon consideration of the foregoing, the court finds that the Commission’s Remand
Determination is not unreasonable and is supported by substantial evidence. Accordingly, the court
will sustain the Remand Determination in its entirety. Judgment will be entered accordingly.
/s/ R. Kenton Musgrave
R. KENTON MUSGRAVE, Senior Judge
Dated: January 13, 2009
New York, New York