Medline Industries, Inc. v. United States , 961 F. Supp. 2d 1287 ( 2014 )

Slip Op. 14-9
UNITED STATES COURT OF INTERNATIONAL TRADE
MEDLINE INDUSTRIES, INC., :
:
Plaintiff, : Before: Nicholas Tsoucalas,
: Senior Judge
v. :
: Court No.: 13-00070
UNITED STATES, :
:
Defendant. :
:
OPINION
[Plaintiff’s motion for judgment on the agency record is denied.]
Dated: January 29, 2014
Michael G. Hodes and Lawrence R. Pilon, Hodes Keating &
Pilon, of Chicago, IL, for plaintiff.
Douglas G. Edelschick, Trial Attorney, Commercial
Litigation Branch, Civil Division, U.S. Department of Justice, of
Washington, DC, for defendant. With him on the brief were Stuart
F. Delery, Assistant Attorney General, Jeanne E. Davidson,
Director, and Patricia M. McCarthy, Assistant Director. Of counsel
on the brief was Scott D. McBride, Attorney, Office of the Chief
Counsel for Trade Enforcement and Compliance, U.S. Department of
Commerce, of Washington, DC.
Tsoucalas, Senior Judge: Plaintiff Medline Industries,
Inc. (“Medline”) moves for judgment on the agency record contesting
defendant Department of Commerce’s (“Commerce”) Scope Ruling on
Medline’s Hospital Bed End Panel Components (Dec. 21, 2012) (“Scope
Ruling”). Medline insists that Commerce erroneously determined
that its wooden hospital bed end panel components were within the
scope of the antidumping duty order on wooden bedroom furniture
from the People’s Republic of China (“PRC”). Mem. Supp. Pl.’s Mot.
J. Agency R. at 7 (“Pl.’s Br.”). Commerce opposes Medline’s
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motion. For the following reasons, Medline’s motion is denied.
BACKGROUND
In January 2005, Commerce issued an antidumping duty
order covering wooden bedroom furniture from the PRC. See Notice
of Amended Final Determination of Sales at Less Than Fair Value and
Antidumping Duty Order, 70 Fed. Reg. 329 (Jan. 4, 2005) (the
“Order”). Commerce has since modified the scope of the Order,
defining it during Medline’s scope inquiry as follows:
The product covered by the order is wooden
bedroom furniture. Wooden bedroom furniture
is generally, but not exclusively, designed,
manufactured, and offered for sale in
coordinated groups, or bedrooms, in which all
of the individual pieces are of approximately
the same style and approximately the same
material and/or finish. The subject
merchandise is made substantially of wood
products, including both solid wood and also
engineered wood products made from wood
particles, fibers, or other wooden materials
such as plywood, strand board, particle board,
and fiberboard, with or without wood veneers,
wood overlays, or laminates, with or without
non-wood components or trim such as metal,
marble, leather, glass, plastic, or other
resins, and whether or not assembled,
completed, or finished.
The subject merchandise includes the
following items: (1) Wooden beds such as loft
beds, bunk beds, and other beds; (2) wooden
headboards for beds (whether stand-alone or
attached to side rails), wooden footboards for
beds, wooden side rails for beds, and wooden
canopies for beds; (3) night tables, night
stands, dressers, commodes, bureaus, mule
chests, gentlemen’s chests, bachelor’s chests,
lingerie chests, wardrobes, vanities,
chessers, chifforobes, and wardrobe-type
cabinets; (4) dressers with framed glass
Court No. 13-00070 Page 3
mirrors that are attached to, incorporated in,
sit on, or hang over the dresser; (5)
chests-on-chests, highboys, lowboys, chests of
drawers, chests, door chests, chiffoniers,
hutches, and armoires; (6) desks, computer
stands, filing cabinets, book cases, or
writing tables that are attached to or
incorporated in the subject merchandise; and
(7) other bedroom furniture consistent with
the above list.
The scope of the order excludes the
following items: (1) seats, chairs, benches,
couches, sofas, sofa beds, stools, and other
seating furniture; (2) mattresses, mattress
supports (including box springs), infant
cribs, water beds, and futon frames; (3)
office furniture, such as desks, stand-up
desks, computer cabinets, filing cabinets,
credenzas, and bookcases; (4) dining room or
kitchen furniture such as dining tables,
chairs, servers, sideboards, buffets, corner
cabinets, china cabinets, and china hutches;
(5) other non-bedroom furniture, such as
television cabinets, cocktail tables, end
tables, occasional tables, wall systems, book
cases, and entertainment systems; (6) bedroom
furniture made primarily of wicker, cane,
osier, bamboo or rattan; (7) side rails for
beds made of metal if sold separately from the
headboard and footboard; (8) bedroom furniture
in which bentwood parts predominate; (9)
jewelry armories; (10) cheval mirrors; (11)
certain metal parts; (12) mirrors that do not
attach to, incorporate in, sit on, or hang
over a dresser if they are not designed and
marketed to be sold in conjunction with a
dresser as part of a dresser-mirror set; (13)
upholstered beds and (14) toy boxes.
Scope Ruling at 2–3 (internal footnotes omitted).
Medline imports hospital bed end panel components from
the PRC. See Scope Ruling Request at 1 (Nov. 12, 2012). In
November 2012, it filed a scope ruling request concerning wooden
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headboards and footboards made for its “Alterra™ Model FCE1232
steel-framed hospital beds.” Id. at 1–2. In its request, Medline
argued that the end panels were outside the scope of the Order
because hospital beds are classified differently than bedroom
furniture and were not discussed in the petition or the
investigation underlying the Order. Id. at 5–7.
In the Scope Ruling, Commerce determined that Medline’s
wooden end panel components were within the scope of the Order
because “the language of the scope explicitly includes wooden
headboards and footboards.” Scope Ruling at 8. Although it found
the language of the Order to be dispositive, Commerce noted that
its decision was consistent with previous scope rulings in which it
determined that wooden end panels for metal-framed beds were within
the scope of the Order. Id. at 6–8 (discussing Final Scope Ruling:
Sunrise Medical Inc. (Sept. 29, 2005) (“Sunrise Ruling”) and Scope
Ruling on University Loft Company’s Request (Dec. 13, 2011)).
Commerce also rejected Medline’s argument that its end panel
components were not bedroom furniture, noting that it previously
found that wooden end panels for beds made for use in long term
care facilities were within the scope of the Order because “the
scope covers all wooden bedroom furniture meeting the written
description of the merchandise, and this written description is
dispositive, regardless of tariff classifications.” Id. at 7
(citing Sunrise Ruling at 11).
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Medline contests the Scope Ruling, arguing that Commerce
impermissibly expanded the scope of the Order to include non-
bedroom furniture and failed to perform an adequate analysis in
accordance with the regulations governing scope inquiries.
See Pl.’s Br. at 8–23.
JURISDICTION and STANDARD OF REVIEW
The Court has jurisdiction pursuant to 28 U.S.C. §
1581(c) (2006) and section 516A(a)(2)(B)(vi) of the Tariff Act of
1930,1 as amended, 19 U.S.C. § 1516a(a)(2)(B)(vi) (2006).
The Court must uphold Commerce’s scope determination
unless it is “unsupported by substantial evidence on the record, or
otherwise not in accordance with law.” 19 U.S.C. §
1516a(b)(1)(B)(i). When reviewing a scope ruling, the Court grants
“significant deference to Commerce’s interpretation of its own
orders.” Allegheny Bradford Corp. v. United States, 28 CIT 830,
842, 342 F. Supp. 2d 1172, 1183 (2004). “However, Commerce cannot
‘interpret’ an antidumping order so as to change the scope of that
order, nor can Commerce interpret an order in a manner contrary to
its terms.” Duferco Steel, Inc. v. United States, 296 F.3d 1087,
1095 (Fed. Cir. 2002) (citing Eckstrom Indus., Inc. v. United
States, 254 F.3d 1068, 1072 (Fed. Cir. 2001)).
1
All further references to the Tariff Act of 1930 will be to
the relevant provisions of Title 19 of the United States Code, 2006
edition, and all applicable supplements thereto.
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DISCUSSION
“In a scope ruling proceeding ‘a predicate for the
interpretive process is language in the order that is subject to
interpretation.’” Arcelormittal Stainless Belg. N.V. v. United
States, 694 F.3d 82, 84 (Fed. Cir. 2012) (quoting Tak Fat Trading
Co. v. United States, 396 F.3d 1378, 1383 (Fed. Cir. 2005)). “If
Commerce determines that the language at issue is not ambiguous, it
states what it understands to be the plain meaning of the language,
and the proceedings terminate.” Id.; see Mid Continent Nail Corp.
v. United States, 725 F.3d 1295, 1302 (Fed. Cir. 2013).
However, “[i]f the language is ambiguous, Commerce must
next consider the regulatory history, as contained in the so-called
‘(k)(1) materials.’” Id. The “(k)(1) materials” include the
“descriptions of the merchandise contained in the petition, the
initial investigation, and the determinations of [Commerce]
(including prior scope determinations) and the [International Trade
Commission].” 19 C.F.R. § 351.225(k)(1) (2013). While “[r]eview
of the petition and the investigation may provide valuable guidance
as to the interpretation of the final order[,]” these materials
“cannot substitute for language in the order itself.” Duferco
Steel, 296 F.3d at 1097.
“If the (k)(1) materials are not dispositive, Commerce
then considers the (k)(2) criteria.” Mid Continent Nail, 725 F.3d
at 1302. The (k)(2) criteria include: the “physical
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characteristics of the product,” the “expectations of the ultimate
purchasers,” the “ultimate use of the product,” the “channels of
trade in which the product is sold,” and the “manner in which the
product is advertised and displayed.” 19 C.F.R. § 351.225(k)(2).
As noted above, Commerce found that the language of the
Order was unambiguous — “the language of the scope explicitly
includes wooden headboards and footboards.” Scope Ruling at 8. As
Medline’s end panel components are wooden headboards and
footboards, Commerce concluded that they were within the scope of
the Order. Id.Medline acknowledges that its end panel components are
wooden furniture as described in the scope language, but disputes
Commerce’s interpretation of the scope language with regard to the
term “bedroom.” See Pl.’s Br. at 8. According to Medline, the
scope language is unambiguous: the Order covers “wooden bedroom
furniture,” and therefore the merchandise must be used in a
bedroom. Id. at 10–11. Insisting that its hospital bed end panel
components are not made for use in a bedroom, Medline argues that
Commerce unreasonably expanded the scope of the Order. Id. at 11.
Medline contends that Commerce ignored the term “bedroom” in its
analysis, and therefore failed to consider the use of the end panel
components. Id. at 11–12. Furthermore, Medline argues that even
if the term “bedroom” was ambiguous, Commerce’s analysis of the
(k)(1) materials focused too narrowly on prior scope determinations
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and ignored evidence contrary to its conclusion. Id. at 13–23.
Medline’s alternative interpretation of the scope
language is unpersuasive. Although Medline repeatedly refers to
instances in which the Order mentions “bedroom” furniture, Medline
does not identify any language in the Order limiting or defining
the term “bedroom” in such a way as to unambiguously exclude the
merchandise under review. See Pl.’s Br. at 10–13. In fact, the
order does not further define the term “bedroom.” See Scope Ruling
at 2–4. Rather, it explicitly identifies the types of wooden
furniture that are subject to the order, and those types that are
excluded. Id. at 2–3. Accordingly, Medline cannot show that its
end panel components are per se outside the scope of the Order
simply in virtue of their use in hospital rooms.
Furthermore, contrary to Medline’s insistence, the Scope
Ruling is consistent with the plain terms of the Order. The scope
language begins: “The product covered by the [Order] is wooden
bedroom furniture.” Scope Ruling at 2. As mentioned, the scope
language does not further define “bedroom,” but it does include a
list of “subject merchandise” covered by the Order as well as a
list of products excluded from the scope. Id. at 2–3. It
specifically states that “[t]he subject merchandise includes . . .
(2) wooden headboards for beds[,] . . . wooden footboards for beds,
wooden side rails for beds, and wooden canopies for beds.” Id. at
2. The list of subject and non-subject merchandise indicates that
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Medline’s wooden end panels — headboards and footboards — are of a
type of merchandise the Order covers. Moreover, the language
contradicts Medline’s argument that Commerce was required to
consider the use of the merchandise in its scope inquiry. Because
the Order specifically identifies wooden headboards and footboards
as subject merchandise, Commerce’s interpretation of the scope
language was reasonable. See Arcelormittal, 694 F.3d at 84.
Given that Commerce reasonably concluded that the scope
language was unambiguous, the court need not address Medline’s
claim that Commerce’s (k)(1) analysis was unreasonable. See id.;
Mid Continent Nail, 725 F.3d at 1302.
CONCLUSION
For the foregoing reasons, the Scope Ruling is supported
by substantial evidence and otherwise in accordance with law.
Judgment will be entered accordingly.
/s/ Nicholas Tsoucalas
Nicholas Tsoucalas
Senior Judge
Dated: January 29, 2014
New York, New York