Papierfabrik August Koehler AG v. United States , 808 F. Supp. 2d 1350 ( 2012 )

SLIP OP 12- 5
UNITED STATES COURT OF INTERNATIONAL TRADE
PAPIERFABRIK AUGUST KOEHLER AG and
KOEHLER AMERICA, INC.,
Plaintiffs,
- and -
MITSUBISHI INT’L CORP., MITSUBISHI
HI-TEC PAPER FLENSBURG GmbH, and
MITSUBISHI HI-TEC PAPER BIELEFELD
GmbH,
Before: Donald C.Pogue,
Plaintiff-Intervenors, Chief Judge
Court No. 08-00430
v.
THE UNITED STATES and the UNITED
STATES INTERNATIONAL TRADE
COMMISSION,
Defendants,
- and -
APPLETON PAPERS INC.,
Defendant-Intervenor.
OPINION
[Commission’s remand determination affirmed.]
Dated: January 10, 2012
William Silverman and Richard P. Ferrin, Drinker Biddle &
Reath LLP, of Washington, DC, for the Plaintiffs,
Eric C. Emerson and Jamie B. Beaber, Steptoe & Johnson LLP,
of Washington, DC, for the Plaintiff-Intervenors,
David F. D’Alessandris, Trial Attorney, Commercial
Court No. 08-00430 Page 2
Litigation Branch, Civil Division, U.S. Department of Justice, of
Washington, DC, for Defendants. With him on the briefs were Tony
West, Assistant Attorney General; Jeanne E. Davidson, Director;
and Patricia M. McCarthy, Assistant Director.
Marc A. Bernstein, Office of General Counsel, United States
International Trade Commission, of Washington, DC, for Defendant
United States International Trade Commission. With him on the
briefs were James M. Lyons, General Counsel, and Neal J.
Reynolds, Assistant General Counsel for Litigation.
Joseph W. Dorn, Gilbert B. Kaplan, Brian E. McGill, and
Daniel L. Schneiderman, King & Spalding LLP, of Washington, DC,
for the Defendant-Intervenors.
Pogue, Chief Judge: This case returns to court following
remand ordered by the Court of Appeals for the Federal Circuit in
Papierfabrik August Koehler AG v. United States, 413 F. App’x.
227 (Fed. Cir. 2011) (“Koehler II”).1 On remand, the
International Trade Commission (the “ITC” or “Commission”) found
– after obtaining and taking into consideration intermediate
calculation worksheets from the Department of Commerce showing
that a specific subset of lightweight thermal paper (“LWTP”) was
not dumped on the United States market – that the domestic LWTP
industry is still threatened with material injury by way of
subject imports from Germany.
Plaintiffs (“Koehler”) challenge the Commission’s remand
determination. The court has jurisdiction pursuant to 28 U.S.C.
1
Koehler II vacated and remanded this court’s previous
judgment. See Papierfabrik August Koehler AG v. United States,
__ CIT __, 675 F. Supp. 2d 1172 (2009) (“Koehler I”).
Court No. 08-00430 Page 3
§ 1581(c).
After a brief discussion of the background and applicable
standard of review, the court will explain why it concludes that
the Commission’s remand determination is free of legal error and
based on a reasonable reading of the record.
BACKGROUND
In October, 2008, the Department of Commerce (“the
Department” or “Commerce”) issued a finding that imports of LWTP
from Germany were being or were likely to be sold in the United
States at less than fair value. Lightweight Thermal Paper from
Germany, 73 Fed. Reg. 57,326 (Dep’t Commerce Oct. 2, 2008)
(notice of final determination of sales at less than fair value)
(“Commerce Final Determination”).2 Shortly thereafter, pursuant
to 19 U.S.C. § 1673d(b), the Commission conducted a separate
injury investigation and determined that the domestic LWTP
industry was threatened with material injury by way of imports
from Germany, including imports from Plaintiffs. Certain
Lightweight Thermal Paper from China and Germany, 73 Fed. Reg.
2Commerce defined the LWTP subject merchandise as “thermal
paper with a basis weight of 70 grams per square meter . . . or
less.” Commerce Final Determination, 73 Fed. Reg. at 57,327.
Koehler was a mandatory respondent in Commerce’s
investigation, Id. at 57,327 n.4. In its investigation, Commerce
found that imports of the subject merchandise from Koehler were
being dumped at a margin of 6.50 percent. Id. at 57,328.
Court No. 08-00430 Page 4
70,367 (ITC Nov. 20, 2008) (final determinations).3
LWTP is sold in a variety of weights, including 48 grams per
square meter (“48g LWTP”) and 55 grams per square meter (“55g
LWTP”), which, together, comprise the bulk of LWTP sold in the
United States. ITC Original Determination, USITC Pub. 4043 at
16. During the Commission’s period of investigation, domestic
production of LWTP was “overwhelmingly concentrated” in 55g LWTP.
Remand Results 23, Sept. 30, 2011, ECF No. 123 (citing ITC
Original Determination, USITC Pub. 4043 at 16). Similarly, the
majority of imported LWTP during the same time period was 55g.4
ITC Original Determination, USITC Pub. 4043 at 16. However, the
Commission also found that domestic production of 48g LWTP was
highly likely to increase in the future. Id. at 38, 42.
Likewise, German producers, including Plaintiffs, reported
increased imports of 48g LWTP as a “significant change in product
range” during the pertinent time period. Id. at 17.
During the original ITC proceedings, Plaintiffs argued that
a series of worksheets from Commerce’s investigation showed that
3
The views of the Commission are contained in Certain
Lightweight Thermal Paper from China and Germany, USITC Pub.
4043, Inv. Nos. 701-TA-451 & 731-TA-1126-1127 (Final) (Nov.
2008), Admin. R. Pub. Doc. 285 (“ITC Original Determination”).
4
The Commerce period of investigation was from July 1, 2006
through June 30, 2007. The ITC’s threat analysis, however,
focused on the imminent future after October 2008. See Remand
Results 22.
Court No. 08-00430 Page 5
48g LWTP was not dumped in the United States market during
Commerce’s period of investigation and therefore the Commission
should completely disregard the increase in imports of 48g LWTP
in its separate injury investigation and final determination.
The Commission declined to do so based in part on the Federal
Circuit’s decision in Algoma Steel Corp. v. United States, 865
F.2d 240 (Fed. Cir. 1989), which, under the Commission’s
interpretation, did not “compel or even authorize the Commission
to examine individual sales or model transactions considered by
Commerce.” ITC Original Determination, USITC Pub. 4043 at 31
n.201.5 Because Commerce also had not issued a separate dumping
margin for 48g LWTP, the Commission concluded it was not
permitted to consider individual sales of 48g and 55g LWTP in its
injury determination.
Plaintiffs appealed to this court which affirmed the
Commission’s determination. Koehler I, __ CIT at __, 675 F.
Supp. 2d at 1191–92. The Court of Appeals, however, vacated
Koehler I, holding that the Commission’s refusal to consider
intermediate 48g dumping margins “was premised on a divergent
5
The Commission also declined to disregard the increased
48g LWTP shipments based on 19 U.S.C. § 1677(35)(C)(ii), which
states that the dumping margin used by the Commission “shall
be . . . the dumping margin or margins most recently published by
[Commerce] prior to the closing of the Commission’s
administrative record.” ITC Original Determination, USITC Pub.
4043 at 31 n.201; 19 U.S.C. § 1677(35)(C)(ii).
Court No. 08-00430 Page 6
reading of Algoma, and a misunderstanding of Koehler’s request.”
Koehler II, 413 F. App’x. at 231. The Court stated that “Algoma
specifically allows for consideration of raw data in computer
print outs ‘by reasons specific to the particular case . . . .’”
Id. (quoting Algoma, 865 F.2d at 242). It reasoned that the
statute requires that Commerce make available to the Commission
all of the information upon which its determination was based,
see 19 U.S.C. § 1673d(c)(1)(A), including the sales prices of a
“subset of dumped goods,” here the 48g LWTP. Koehler II, 413 F.
App’x. at 231–32. With regard to the Plaintiffs’ request, the
Court of Appeals interpreted it as a request for the Commission
to make decisions “based on the price, measured as a dumping
margin, of a subset of dumped goods” and to analyze data that is
available to the Commission. Id.6
The Court of Appeals further held that while the ITC may not
change Commerce’s determination that all of Plaintiffs’ products
were being dumped at a rate of 6.50 percent, it was permitted to
examine and consider Commerce’s intermediate calculations and
6
“Commerce analyzed seven of Koehler's LWTP products,
distinguished by weight . . . [and] found that six of the seven
Koehler products had positive dumping margins—meaning they are
being sold at [less than fair value]. As calculated by Commerce,
and reflected in Commerce's intermediate calculations, the only
Koehler product without a positive dumping margin was Koehler's
48 gsm LWTP product. The 48 gsm product constituted 38.15 percent
of Kohler's quantity of sales in the United States and made up
40.28 percent of the value of sales in the United States.”
Koehler II, 413 F. App’x. at 229-30
Court No. 08-00430 Page 7
subsets of the subject merchandise when making an injury
determination. Id. at 231 (citing Cleo Inc. v. United States,
501 F.3d 1291, 1295 (Fed. Cir. 2007)).7
Following the Appeals Court order and mandate, this court
remanded the matter to the Commission with instructions to
reconsider and revise its decision in accordance with the
decision of the Court of Appeals, indicating how any decision is
in accordance with Algoma Steel.
Following the remand order, the Commission re-opened its
record to obtain additional material from the record of
Commerce’s investigation. Noting that neither the Appeals Court
opinion nor this court’s remand order called into question the
Commission’s findings or conclusions regarding domestic like
product, industry, or conditions of competition, the Commission
focused on “whether the information from the Commerce dumping
investigation warrants modification of the prior analysis that
there is a threat of material injury by reason of the subject
imports.” Remand Results 5.
In affirming its finding of threat of material injury, the
Commission concluded that different weights of LWTP are or will
be dumped on the United States market in direct response to
7
The court emphasized that the Commission, not Commerce,
“determines whether all articles in the subject merchandise are
‘like products,’ which in turn make up an ‘industry’ for the
purposes of a dumping determination.” Id. at 231.
Court No. 08-00430 Page 8
market competition. See Id. at 23. Specifically, importers
respond to increased domestic production of and/or demand for a
particular weight of LWTP by dumping the same weight of LWTP on
the United States market.
STANDARD OF REVIEW
The Department, in its remand redetermination, must comply
with the terms of the court’s remand order. Jinan Yipin Corp. v.
United States, __ CIT __, 637 F. Supp. 2d 1183, 1185 (2009). In
addition, the court “shall hold unlawful any determination,
finding, or conclusion found ... to be unsupported by substantial
evidence on the record, or otherwise not in accordance with law.”
19 U.S.C. § 1516a(b)(1)(B)(i); Koyo Seiko Co. v. United States,
20 F.3d 1160, 1164 (Fed. Cir. 1994).
The substantial evidence standard of review “can be
translated roughly to mean ‘is [the determination]
unreasonable?’” Nippon Steel Corp. v. United States, 458 F.3d
1345, 1351 (Fed. Cir. 2006) (alteration in original) (quoting
SSIH Equip. S.A. v. U.S. Int’l Trade Comm’n, 718 F.2d 365, 381
(Fed. Cir. 1983)); Daewoo Elecs. Co. v. Int’l Union, 6 F.3d 1511,
1520 (Fed. Cir. 1993) (“The specific determination we make is
‘whether the evidence and reasonable inferences from the record
support’ [the agency’s] findings.” ). Moreover, the possibility
of drawing two inconsistent conclusions from the evidence does
Court No. 08-00430 Page 9
not render the agency’s determination unreasonable, Consolo v.
Fed. Maritime Comm’n, 383 U.S. 607, 620 (1966), and where
“[s]ubstantial evidence exists on both sides of the issue[,]
. . . the statutory substantial evidence standard compels
deference to the [agency].” Nippon Steel, 458 F.3d at 1354.
DISCUSSION
While Commerce is charged with investigating whether
merchandise is being dumped on the domestic market and if so,
determining the dumping margin for such imports, the ITC is
responsible for determining whether an industry in the United
States is or will be threatened with material injury by reason of
these imports. See 19 U.S.C. § 1673d(b). The Commission’s
analysis is, by its nature, of a different character and also
covers a different time period than the Commerce investigation.
See 19 U.S.C. § 1677(7)(F) (charging the ITC with the forward-
looking task of determining actual and potential effects of
imports of subject merchandise on the domestic industry). The
governing statute requires that the Commission consider all
“relevant economic factors which have a bearing on the state of
the industry in the United States, including, but not limited to
actual and potential decline in output, sales, [and] market share
. . . . ” when making its threat analysis. 19 U.S.C.
Court No. 08-00430 Page 10
§ 1677(7)(C)(iii).8
In order to find a causal nexus between the subject imports
and the domestic industry’s condition, the Commission must find
that the subject imports will have more than a tangential,
trivial, or incidental effect on the industry,9 and that further
dumped imports are imminent. 19 U.S.C. § 1677(7)(F)(ii). It is
the Commission’s charge to make findings of fact and, if it finds
that there is injury to the domestic market, “explain, in a
8
In relevant part, the statute states that “the Commission
shall consider, among other relevant economic factors . . .
any . . . substantial increase in production capacity in the
exporting country indicating the likelihood of substantially
increased imports of the subject merchandise into the United
States . . . and any other demonstrable adverse trends that
indicate the probability that there is likely to be material
injury by reason of imports . . . .” 19 U.S.C.
§ 1677(7)(F)(i)(II) & (IX).
9
Under the “by reason of” standard of causation, subject
imports must have more than an “incidental, tangential or
trivial” effect on the industry. See Nippon Steel Corp. v. Int’l
Trade Comm’n, 345 F.3d 1379, 1381 (Fed. Cir. 2003); see also
Gerald Metals, Inc. v. United States, 132 F.3d 716, 721-22 (Fed.
Cir. 1997); Mittal Steel Point Lisas Ltd. v. United States, 542
F.3d 867, 873 (Fed. Cir. 2008).
Nonetheless, in making its determination, the Commission
“need not isolate the injury caused by other factors from injury
cased by unfair imports . . . [r]ather, the Commission must
examine other factors to ensure that it is not attributing injury
from other sources to the subject imports.” Uruguay Round
Agreements Act, Statement of Administrative Action, H.R. Rep. No.
103–316, 156 (1994) reprinted in 1994 U.S.C.C.A.N. 4040, 4185
(“SAA”). The SAA accompanied the Uruguay Round Agreements Act
(“URAA”) and was approved by Congress as an “authoritative
expression by the United States concerning the interpretation and
application of the Uruguay Round Agreements and [the URAA] in any
judicial proceeding . . . concerning” the interpretation or
application of the URAA. 19 U.S.C. § 3511(a)(2) and § 3512(d).
Court No. 08-00430 Page 11
meaningful way,” the causation of such injury. Bratsk Aluminum
Smelter v. United States, 444 F.3d 1369, 1376 (Fed. Cir. 2006);
Mittal Steel, 542 F.3d at 874–75. The Commission “must examine
the relevant data and articulate a satisfactory explanation for
its action.” Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto.
Ins. Co., 463 U.S. 29, 43 (1983).
Here, pursuant to the directive from the Court of Appeals,
and the remand order of this court, the Commission considered
Commerce’s intermediate dumping margin calculations and provided
a reasonable explanation for continuing to find a positive threat
of injury to the domestic industry. First, the Commission
reopened the record to request further information from Commerce
regarding the interpretation of the Commerce data. Remand
Results 9–10 (citing “Final Analysis Memorandum for Sales –
Koehler” Sept. 25, 2008, and “Cost of Production and Constructed
Value Calculation Adjustments for the Final Determination” Sept.
25, 2008, EDIS Doc. 454291). The Commission noted that it was
required to weigh this information while conducting its overall
statutory directives. Id. at 18. In this context, and
responding to the court’s remand order that it articulate how its
decision is consistent with Algoma Steel, the Commission found
that Commerce’s intermediate calculations were “of limited
utility in an analysis of threat of material injury by reason of
subject imports” because they were not probative with respect to
Court No. 08-00430 Page 12
the focal point of the Commission’s threat analysis. Id. at
19.10
The Commission recognized “undisputed changes in conditions
of competition between the time covered by Commerce’s dumping
investigation and the time period we have considered in analyzing
threat of material injury.” Id. at 22. It further noted that
market participants anticipated growing demand for 48g LWTP,
indicated in part by Defendant-Intervenor’s construction of a
facility in August 2008 with the intent to increase production of
48g LWTP. Plaintiffs, the predominant German exporters of LWTP,
ceased bringing 55g LWTP into the United States in March 2008 and
indications are that future imports will be “heavily
concentrated” in 48g LWTP. ITC Original Determination, USITC
Pub. 4043 at 37.
In addition, the Commission recognized that “where
competition was most concentrated during the periods both
Commerce and the Commission investigated, Commerce calculated
much higher rates of dumping than the 6.50 percent weighted
average dumping margin it published in its final determination.”
10
The Commission acknowledges that there is data from
Commerce’s first administrative review showing that 48g LWTP from
Germany was sold at less than fair value after Commerce’s initial
period of review. However, because the data pertaining to
Commerce’s review was not available during the Commission’s
original investigation, the Commission has not considered it.
Remand Results 26 n.85.
Court No. 08-00430 Page 13
Remand Results 23 (citing EDIS Doc. 454291). In this context, the
Commission gave weight to data indicating that “Koehler was
inclined to sell types of LWTP that competed directly with the
domestic like product in dumped transactions, while non-dumped
transactions tended to focus on a product type that was not at
the time produced domestically in significant quantities.” Id.
at 24.11
The Commission emphasized that “the focus of competition
between LWTP from Germany and the domestic like product [is] not
static, but in fact changed after Commerce’s period of
investigation,” and concluded that the imminent future would be
“characterized by more intense competition between domestically
produced and German 48 gram LWTP . . . .” Id. Therefore, in
light of the evidence that dumping transactions occurred for
products in direct competition, the Commission continued to find
that there is a threat of material injury to the domestic market
by way of imports of 48g LWTP. Id. at 23 (“In the circumstances
of this investigation, viewing Commerce’s calculations for 48
gram LWTP as conclusive of likely conduct during the imminent
future is particularly inappropriate.”). This conclusion is one
that has reasonably taken into consideration and explained the
“relevant economic factors” which have a bearing on the LWTP
11
Plaintiffs do not challenge this aspect of Commerce’s
reading of the record. See Plaintiff’s Comments, ECF No. 127.
Court No. 08-00430 Page 14
industry in the United States. See 19 U.S.C. § 1677(7)(C)(iii).
Plaintiffs concede that “the Commission is not required to
tie each bit of injury to a dumped sale.” Plaintiff Comments 27.
Nonetheless, the Commission’s analysis does not ignore the role
of dumping in causing injury to the domestic industry. As noted
above, the Commission concluded that imports entering in the
imminent future would be heavily concentrated in 48g LWTP. Faced
with evidence that Koehler’s pricing practices indicated much
higher rates of dumping “where competition was most concentrated
during the periods both Commerce and the Commission
investigated,” Remand Results at 23, the Commission concluded
that it was unlikely that sales of the 48g LWTP will be at normal
value. Id. at 26.
The Plaintiffs raise two challenges to the remand
determination. First, Plaintiffs contend that the remand
determination violates the mandate of the Federal Circuit. The
Plaintiffs correctly argue that “the Federal Circuit has already
decided, either expressly or by necessary implication, that the
computer printout showing a negative dumping margin for Koehler’s
sales of 48-gram [LWTP] is factually relevant and legally germane
. . . .” Plaintiff Comments 3. Relevance, however, does not
determine weight, and the Appeals Court did not supplant the
Commission’s role to weigh the evidence and, on remand, determine
its effect. Had the Appeals Court intended otherwise, no remand
Court No. 08-00430 Page 15
would have been necessary.
Plaintiffs also argue that the following language in Koehler
II precludes the Commission from making an affirmative finding of
material injury:
Instead, [the worksheet data] allows the Commission to
take those calculations and apply its expertise to make
a fair and equitable injury determination. When the
threat determination is based almost exclusively on one
product within the subject merchandise, and that one
product is not being sold at [less than fair value],
the Commission should be able to use all materials at
its disposal to make an equitable determination. The
Commission incorrectly denied Koehler’s request, and
incorrectly interpreted this court’s holding in Algoma,
when refusing to consider potentially dispositive
intermediate data.
Id. at 7 (quoting Koehler II, 413 F. App’x. at 231–32). However,
Plaintiffs’ reliance is misplaced. The Court of Appeals ordered
that the Commission examine the data that is required by statute
to be available to it and conduct a “thoughtful consideration” of
this data. Koehler II, 413 F. App’x. at 231. While recognizing
that the data was “potentially dispositive,” the Court of Appeals
does not, either expressly or impliedly, hold that such data is
dispositive. This is in keeping with the Court’s prior holdings
that the Commission, not the courts, is the finder of facts in
injury proceedings. Mittal Steel, 542 F.3d at 875; Nippon Steel,
458 F.3d at 1352. Thus it was for the Commission to evaluate all
“relevant economic factors.” Its affirmative threat finding is
based on a reasonable reading of the record.
Court No. 08-00430 Page 16
CONCLUSION
Because the Commission took into consideration the data
submitted by Commerce and adequately explained its rationale for
not giving them weight in its positive threat assessment and
because the Commission’s finding that the domestic market for 48g
LWTP is threatened by way of imports from Germany is not
unreasonable, its determination is affirmed.
Judgment will be entered accordingly.
/s/ Donald C. Pogue
Donald C. Pogue, Chief Judge
Dated: January 10, 2012
New York, New York