Hiep Thanh Seafood Joint Stock Co. v. United States , 821 F. Supp. 2d 1335 ( 2012 )

Slip Op. 12-19
UNITED STATES COURT OF INTERNATIONAL TRADE
HIEP THANH SEAFOOD JOINT STOCK CO.,
Plaintiff,
Before: Leo M. Gordon, Judge
v.
Consol. Court No. 09-00270
UNITED STATES,
Defendant.
[Remand results sustained.]
Dated: February 15, 2012
Matthew J. McConkey, Jeffrey C. Lowe, Mayer Brown, LLP, of Washington, DC,
for Plaintiff Hiep Thanh Seafood Joint Stock Co.
Richard P. Schroeder, Trial Attorney, Commercial Litigation Branch, Civil
Division, U.S. Department of Justice of Washington, DC, for Defendant United States.
With him on the brief were Tony West, Assistant Attorney General, Jeanne E. Davidson,
Director, Franklin E. White, Jr., Assistant Director, Commercial Litigation Branch, Civil
Division, U.S. Department of Justice and David Richardson, Office of the Chief Counsel
for Import Administration, U.S. Department of Commerce.
Valerie A. Slater, Jarrod M. Goldfeder, Nicole M. D’Avanzo, Natalya D.
Dobrowolsky Akin, Gump, Strauss, Hauer & Feld, LLP, of Washington, DC, for
Defendant-Intervenors Catfish Farmers of America, America's Catch, Consolidated
Catfish Companies, LLC, d/b/a Country Select Fish, Delta Pride Catfish Inc., Harvest
Select Catfish Inc., Heartland Catfish Company, Pride of the Pond, Simmons Farm
Raised Catfish, Inc., and Southern Pride Catfish Company, LLC.
OPINION
Gordon, Judge: This action involves the third new shipper review conducted by
the U.S. Department of Commerce (“Commerce”) of the antidumping duty order
covering certain frozen fish fillets from the Socialist Republic of Vietnam. Certain
Frozen Fish Fillets from the Socialist Republic of Vietnam, 74 Fed. Reg. 37,188 (Dep’t
Consol. Court No. 09-00270 Page 2
of Commerce July 28, 2009) (amended final results admin. review) (“Final
Results”); see also Issues and Decision Memorandum, A-552-801 (June 15, 2009),
available at http://ia.ita.doc.gov/frn/summary/VIETNAM/E9-14607-1.pdf (last visited
Feb. 15, 2012) (“Decision Memorandum”). Before the court are the Final Results of
Redetermination (Sept. 30, 2011) (“2nd Remand Results”), ECF No. 68, filed by
Commerce pursuant to Hiep Thanh Seafood Joint Stock Co. v. United States, 35 CIT
___, 781 F. Supp. 2d 1366 (June 23, 2011) (“Hiep Thanh II”) (order remanding to
Commerce). The court has jurisdiction pursuant to Section 516A(a)(2)(B)(iii) of the
Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) (2006),1 and 28 U.S.C. §
1581(c) (2006). For the reasons set forth below, the court sustains the 2nd Remand
Results.
Standard of Review
When reviewing Commerce’s antidumping determinations under 19 U.S.C. §
1516a(a)(2)(B)(iii) and 28 U.S.C. § 1581(c), the U.S. Court of International Trade
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
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.
Consol. Court No. 09-00270 Page 3
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.” Consol. Edison Co. v. NLRB, 305 U.S. 197, 229
(1938). Substantial evidence has also been described as “something less than the
weight of the evidence, and the possibility of drawing two inconsistent conclusions from
the evidence does not prevent an administrative agency's finding from being supported
by substantial evidence.” Consolo v. Fed. Mar. Comm'n, 383 U.S. 607, 620 (1966).
Fundamentally, though, “substantial evidence” is best understood as a word formula
connoting reasonableness review. 3 Charles H. Koch, Jr., Administrative Law and
Practice § 9.24[1] (3d. ed. 2011). Therefore, when addressing a substantial evidence
issue raised by a party, the court analyzes whether the challenged agency action “was
reasonable given the circumstances presented by the whole record.” Edward D. Re,
Bernard J. Babb, and Susan M. Koplin, 8 West's Fed. Forms, National Courts § 13342
(2d ed. 2010).
Separately, the two-step framework provided in Chevron, U.S.A., Inc. v. Natural
Res. Def. Council, Inc., 467 U.S. 837, 842-45 (1984), governs judicial review of
Commerce's interpretation of the antidumping statute. Dupont Teijin Films USA v.
United States, 407 F.3d 1211, 1215 (Fed. Cir. 2005); Agro Dutch Indus. v. United
States, 508 F.3d 1024, 1030 (Fed. Cir. 2007). “[S]tatutory interpretations articulated by
Commerce during its antidumping proceedings are entitled to judicial deference under
Chevron.” Pesquera Mares Australes Ltda. v. United States, 266 F.3d 1372, 1382 (Fed.
Cir. 2001); see also Wheatland Tube Co. v. United States, 495 F.3d 1355, 1359 (Fed.
Consol. Court No. 09-00270 Page 4
Cir. 2007) (“[W]e determine whether Commerce's statutory interpretation is entitled to
deference pursuant to Chevron.”).
Background
This case involves the proper treatment of sales of subject merchandise that
respondent/producer Hiep Thanh Seafood Joint Stock Co. (“Hiep Thanh”) made to an
unaffiliated Mexican customer, and delivered to a U.S port, at which point the Mexican
customer took title and then entered the merchandise for U.S. consumption. The issue
is whether these sales should be included within Hiep Thanh’s margin calculation as
part of Hiep Thanh’s U.S. sales database, or accounted for elsewhere within the new
shipper review. In the Final Results Commerce included the sales within Hiep Thanh’s
U.S. sales database. Decision Memorandum at cmt 5. Hiep Thanh then commenced
this action, arguing that Commerce erred because Heip Thanh had no knowledge,
actual or constructive, that those sales were destined for U.S. customers. Hiep Thanh
Seafood Joint Stock Co. v. United States, 34 CIT ___, ___, 752 F. Supp. 2d 1330, 1334
(Nov. 5, 2010) (“Hiep Thanh I”). The court remanded the matter for further
consideration by Commerce because it was unclear from the Decision Memorandum
whether Commerce (1) applied its standard “knowledge test” to analyze the sales in
question, or (2) may have applied a different framework that did not depend on Hiep
Thanh's knowledge of the “ultimate destination” of the merchandise, but rather Hiep
Thanh's more limited knowledge that the merchandise was destined in some form for
the United States (as a shipment) coupled with actual consumption entries that Hiep
Thanh may not have known about. Id., 34 at ___, 752 F. Supp. 2d at 1335.
Consol. Court No. 09-00270 Page 5
In the first remand Commerce provided a more detailed explanation of its
decision to include the sales within Hiep Thanh’s U.S. sales database. See Final
Results of Redetermination (Jan. 31, 2011) (“1st Remand Results”), ECF No. 53., filed
by Commerce pursuant to Hiep Thanh I. After reviewing the 1st Remand Results the
court again remanded the action to Commerce. Hiep Thanh II, 35 CIT at ___, 781 F.
Supp. 2d at 1374. Familiarity with prior administrative and judicial decisions in this
action is presumed.
Discussion
In the 2nd Remand Results Commerce reconsidered its application of its
“knowledge test”2 to determine whether to include the disputed sales within Hiep
Thanh’s U.S. sales database. Commerce simplified its approach:
Upon reconsideration on remand, we determine that while the knowledge
test is a framework that is of use in identifying the first party in a
transaction chain with knowledge of U.S. destination where there are
multiple entities involved in such chains prior to importation, the framework
is one that does not fit the fact pattern in this case. In this case, prior to
importation, there were only two entities involved in the sale of the subject
merchandise, Hiep Thanh and the unaffiliated purchaser. As such, the
Department determines that the disputed sales are in fact U.S. sales that
belong in Hiep Thanh's margin calculation because Hiep Thanh made the
sales for exportation to the United States, and they fall squarely within the
purview of 19 U.S.C.§1677a(a). Application of the knowledge test is
neither necessary nor appropriate in these circumstances.
2nd Remand Results at 4. Commerce further explained:
Within the context of the facts of this case, the Department
interprets "exportation to the United States" to mean any sale to an
2
A full discussion of the “knowledge test” is provided in Hiep Thanh II, 35 CIT at ___,
781 F. Supp. 2d at 1371-74.
Consol. Court No. 09-00270 Page 6
unaffiliated party in which merchandise is to be delivered to a U.S.
destination, regardless of whether any underlying paper work may indicate
possible subsequent export to a third country. We believe that if a sale is
made for delivery of merchandise to the United States (and record
evidence clearly indicates that the disputed sales were made as such),
there is a significant potential for it to enter the U.S. market for
consumption (as discussed below, the sales in question did, in fact, enter
the United States for consumption). If the Department were not to take this
approach, it would place certain respondents in a position to exclude U.S.
sales from reporting requirements by claiming them as sales to be shipped
through the United States when, in reality, the merchandise is entered for
consumption and thus enters the commerce of the United States subject
to antidumping duties.
While Hiep Thanh may have anticipated that the disputed sales
were ultimately to be delivered to Mexico, via the United States, Hiep
Thanh stated that these sales were made according to sales terms “X”
indicating that the merchandise was delivered to the unaffiliated
purchaser, Customer Z, at a U.S. destination, at which point transfer of
title took place. Another unaffiliated company, Company Y, acted as the
U.S. importer of record. These facts in their totality demonstrate that the
merchandise was "for exportation to the United States" as the Department
reasonably interprets the phrase under section 1677a(a) of the statute.
Id. at 6.
Hiep Thanh, for its part, still maintains that the sales should be excluded from its
margin calculation. Hiep Thanh argues that the disputed sales were made to a
“Mexican customer, as documented by all sales and shipping documents.” Hiep Thanh
Comments on 2nd Remand Results at 7 (emphasis in original), ECF No. 73. The issue
though is not whether the sales were made to a Mexican customer, but whether they
were for “exportation to the United States.” 19 U.S.C. § 1677a(a). For Hiep Thanh to
prevail (and obtain an order from the court directing Commerce to exclude the sales
from Hiep Thanh’s margin calculation), the administrative record must lead a
reasonable mind to draw one and only one conclusion: the sales were for exportation to
Consol. Court No. 09-00270 Page 7
Mexico and not the United States. That conclusion, in turn, depends upon inferences to
be drawn from the available record evidence—inferences that must compete with direct
record evidence and other inferences (having perhaps an equal or better claim) that the
disputed sales were for exportation to the United States.
To explain further, Hiep Thanh would like Commerce and the court to infer that
sales to a Mexican customer must be Mexican sales for exportation to Mexico. Hiep
Thanh, however, did not ship the disputed sales to Mexico. The bills of lading detail
shipment to a U.S. port, with no subsequent Mexican destination. See Confidential
Joint Appendix, Tab P3, Ex. 3, Attachs. B, C, & D, ECF No. 48. As Commerce noted,
title transferred in the United States. 2nd Remand Results at 6. Contrary to Hiep
Thanh’s post hoc claims that the subject merchandise was supposed to be transported
“in-bond” to Mexico, Hiep Thanh Comments on 2nd Remand Results at 7, Hiep Thanh
shipped merchandise covered by an antidumping duty order to a U.S. port without any
arrangements for further transportation to Mexico, and without any qualification or
limitation against U.S. entry. See Confidential Joint Appendix, Tab P3, Ex. 3, Attachs.
B, C, & D, ECF No. 48. In short, Hiep Thanh delivered merchandise covered by an
antidumping duty order to a U.S. port, where title transferred to a Mexican customer,
who was free to, and did, distribute it in both the U.S. and Mexican markets. Such facts
make it difficult to accept Hiep Thanh’s hoped for inference that the disputed sales
(those entered for U.S. consumption) must have been for exportation to Mexico. A
reasonable mind reviewing this administrative record would not have to conclude that
the disputed sales were for exportation to Mexico.
Consol. Court No. 09-00270 Page 8
A fair criticism of the 2nd Remand Results is that Commerce’s interpretation of the
phrase “exportation to the United States” is not as rigorous as the court might prefer.
Commerce could have provided some definitional context to the term “exportation” by
(1) ascertaining its common or technical meaning, see generally NORMAN J. SINGER &
J.D. SHAMBIE SINGER, 2A SUTHERLAND STATUTORY CONSTRUCTION §§ 47:28, 47:29 (7th
ed. 2011); or (2) analyzing whether the definition of “exportation” used by U.S. Customs
and Border Protection, 19 C.F.R. § 101.1, provides any helpful guidance. Commerce
instead chose to define the term through application to the particular facts on the
administrative record. 2nd Remand Results at 6 (“These facts in their totality
demonstrate that the merchandise was ‘for exportation to the United States’ as the
Department reasonably interprets the phrase under section 1677a(a) of the statute.”).
Commerce also, however, did explain why mere delivery to a U.S. port (separate and
apart from a subsequent consumption entry), constitutes an “exportation”; otherwise,
certain respondents could “exclude U.S. sales from reporting requirements by claiming
them as sales to be shipped through the United States when, in reality, the merchandise
is entered for consumption and thus enters the commerce of the United States subject
to antidumping duties.” Id.In its comments on the 2nd Remand Results, Hiep Thanh chose not to proffer a
definition of the term “exportation.” Instead, Hiep Thanh argues that “Commerce may
not reasonably set aside the knowledge test and may not apply its new rule in this
case.” Hiep Thanh Comments on 2nd Remand Results at 2. Although the court
understands Hiep Thanh’s desire to have Commerce apply a standard (a particular
Consol. Court No. 09-00270 Page 9
knowledge test) that would produce Hiep Thanh’s preferred result (exclusion of the
sales), the court cannot ignore the administrative law standards governing this case.
“Chevron contemplates administrative flexibility in the interpretation of silent or
ambiguous statutes,” Fujian Lianfu Forestry Co. v. United States, 33 CIT ___, ___, 638
F. Supp. 2d 1325, 1357 (2009), and “the statute does not specifically resolve whether
individual sales of subject merchandise should be included within a particular
respondent’s U.S. sales database.” Hiep Thanh II, 35 CIT at ___, 781 F. Supp. 2d at
1373. Commerce had before it a factual scenario it had not previously confronted. As
such, it had to “exercise its gap-filling discretion to derive a reasonable approach to the
problem.” Id.Hiep Thanh was the first to suggest that this case was “fairly simple.” Hiep
Thanh Comments on 1st Remand Results at 1, ECF No. 58. In the 2nd Remand Results
Commerce embraced that simplicity, abandoning the self-imposed complexity of the 1st
Remand Results. Commerce concluded that Hiep Thanh had sold subject merchandise
to an “unaffiliated purchaser for exportation to the United States.” 19 U.S.C. §
1677a(a). That conclusion finds reasonable support in the administrative record
because, as explained above, Hiep Thanh made a direct shipment to the United States
without any arrangements for further transportation to Mexico, and without any
qualification or limitation against U.S. entry. Also included in Commerce’s determination
is a simple but clear policy objective to discourage respondents who deliver subject
merchandise directly to the United States from too easily excluding sales from their
margin calculations by pleading ignorance of subsequent consumption entries.
Consol. Court No. 09-00270 Page 10
Hiep Thanh has not supplied the court with a basis upon which to order
Commerce to exclude the disputed sales from Hiep Thanh’s database. The statute
does not mandate that they be excluded, and the administrative record does not require
that a reasonable mind should exclude them either. In sum, Commerce’s 2nd Remand
Results are (1) reasonable given the circumstances presented by the whole record
(supported by substantial evidence) and (2) in accordance with law. Judgment will be
entered accordingly.
/s/ Leo M. Gordon
Judge Leo M. Gordon
Dated: February 15, 2012
New York, New York