Since Hardware (Guangzhou) Co. v. United States ( 2014 )

Slip Op. 14-159
UNITED STATES COURT OF INTERNATIONAL TRADE
SINCE HARDWARE (GUANGZHOU)
CO., LTD.,
Plaintiff,
Before: Leo M. Gordon, Judge
v.
Consol. Court No. 11-00106
UNITED STATES,
Defendant.
OPINION and ORDER
[Motion for reconsideration denied; order on second remand results vacated in part;
third remand results sustained.]
Dated: December 30, 2014
William E. Perry and Emily Lawson, Dorsey & Whitney LLP of Seattle, Washington for
Plaintiff Since Hardware (Guangzhou) Co., Ltd.
Gregory S. Menegaz, J. Kevin Horgan, and John J. Kenkel, DeKieffer & Horgan of
Washington, DC for Plaintiff-Intervenor Foshan Shunde.
Michael D. Snyder, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice for Defendant United States. 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 were Nathanial J. Halvorson and Aman Kakar,
Office of the Chief Counsel for Import Administration, U. S. Department of Commerce of
Washington, DC.
Frederick L. Ikenson, Larry Hampel, and Kierstan L. Carlson, Blank Rome LLP of
Washington, DC for Defendant-Intervenor Home Products International, Inc.
Gordon, Judge: This consolidated action involves the U.S. Department of
Commerce’s (“Commerce”) fifth administrative review of the antidumping duty order
covering Floor-Standing, Metal-Top Ironing Tables from China. See Floor-Standing,
Metal-Top Ironing Tables and Certain Parts Thereof from the People’s Republic of
Consol. Court No. 11-00106 Page 2
China, 76 Fed. Reg. 15,297 (Dep’t of Commerce Mar. 21, 2011) (final results admin.
review), as amended by 76 Fed. Reg. 23,543 (Dep’t of Commerce Apr. 27, 2011)
(amended final results admin. review); see also Issues and Decision Memorandum for
Ironing Tables from China, A-570-888 (Mar. 22, 2011), available at
http://ia.ita.doc.gov/frn/summary/PRC/2011-6558-1.pdf (last visited this date) (“Decision
Memorandum”). Before the court are the Final Results of Redetermination (July 8,
2014), ECF No. 162 (“Third Remand Results”) filed by Commerce pursuant to Since
Hardware (Guangzhou) Co. v. United States, 38 CIT ___, 977 F. Supp. 2d 1347 (2014)
(“Since Hardware III”); see also Final Results of Redetermination (Aug. 14, 2013),
ECF No. 113 (“Second Remand Results”); Since Hardware (Guangzhou) Co. v. United
States, 37 CIT ___, 911 F. Supp. 2d 1362 (2013) (“Since Hardware II”); Final Results of
Redetermination (Dec. 17, 2012), ECF No. 85 (“First Remand Results”); Since
Hardware (Guangzhou) Co. v. United States, Consol. Court No. 11-106, ECF No. 81
(CIT Aug. 14, 2012) (“Since Hardware I”) (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) (2012),1 and 28 U.S.C. § 1581(c) (2012).
Familiarity with the prior judicial and administrative decisions in this action is presumed.
Before the court are Foshan Shunde, and Since Hardware, and Home Products’
comments on the Third Remand Results. Pl. Foshan Shunde’s Comments on the U.S.
1
Further citations to the Tariff Act of 1930, as amended, are to the relevant provisions
of Title 19 of the U.S. Code, 2012 edition.
Consol. Court No. 11-00106 Page 3
Dep’t of Commerce’s Third Remand Redetermination (July 24, 2014), ECF No. 168
(“Foshan Comments”); Since Hardware (Guangzhou) Co. Objection to the Dep’t of
Commerce’s Third Remand Results (July 24, 2014), ECF No. 170; Comments of Home
Prods. Int’l, Inc. on the Final Results of Redetermination by the U.S. Dep’t of Commerce
(July 24, 2014), ECF No. 169 (“Home Products Comments”); see also Def.’s Resp. to
Comments to the Remand Redetermination (Aug. 21, 2014), ECF No. 179.
Home Products has also moved for reconsideration of Since Hardware III. Mot.
of Home Prods. Int’l, Inc. for Reh’g of Slip Op. 14-44, Insofar as it Relates to the Issue
of Brokerage and Handling (May 15, 2014), ECF No. 153 (“Home Products Mot. for
Reh’g”); see also Pls. Foshan Shunde and Since Hardware Joint Opp’n to Def.-
Intervenor Home Prods. Int’l’s Mot. for Recons. (June 23, 2014), ECF No. 158 (“Joint
Reh’g Resp.”); Def.’s Resp. to Def.-Intervenor’s Mot. for Recons. (June 23, 2014), ECF
No. 159; Reply of Home Prods. Int’l, Inc. to the Resps. to its Mot. for Reh’g (July 14,
2014), ECF No. 166.
For the reasons that follow, the court denies Home Products’ motion to
reconsider, and sustains the Third Remand Results.
I. Standard of Review
For administrative reviews of antidumping duty orders, the court sustains
Commerce‘s “determinations, findings, or conclusions” unless they are “unsupported by
substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C.
§ 1516a(b)(1)(B)(i). More specifically, when reviewing agency determinations, findings,
or conclusions for substantial evidence, the court assesses whether the agency action
Consol. Court No. 11-00106 Page 4
is reasonable given the record as a whole. Nippon Steel Corp. v. United States, 458
F.3d 1345, 1350-51 (Fed. Cir. 2006). Substantial evidence has been described as
“such relevant evidence as a reasonable mind might accept as adequate to support a
conclusion.” DuPont Teijin Films USA v. United States, 407 F.3d 1211, 1215 (Fed. Cir.
2005) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)). Substantial
evidence has also been described as “something less than the weight of the evidence,
and the possibility of drawing two inconsistent conclusions from the evidence does not
prevent an administrative agency's finding from being supported by substantial
evidence.” Consolo v. Fed. Mar. Comm'n, 383 U.S. 607, 620 (1966). Fundamentally,
though, “substantial evidence” is best understood as a word formula connoting
reasonableness review. 3 Charles H. Koch, Jr., Administrative Law and Practice
§ 9.24[1] (3d ed. 2014). Therefore, when addressing a substantial evidence issue
raised by a party, the court analyzes whether the challenged agency action “was
reasonable given the circumstances presented by the whole record.” Edward D. Re,
Bernard J. Babb, and Susan M. Koplin, 8 West's Fed. Forms, National Courts § 13342
(2d ed. 2014).
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. See United States v. Eurodif
S.A., 555 U.S. 305, 316 (2009) (Commerce's “interpretation governs in the absence of
unambiguous statutory language to the contrary or unreasonable resolution of language
that is ambiguous.”).
Consol. Court No. 11-00106 Page 5
II. Discussion
In its comments on the Third Remand Results, Foshan Shunde challenges
Commerce’s failure to adjust its brokerage and handling (“B&H”) valuation for document
preparation and customs clearance costs as unreasonable and Commerce’s zeroing
methodology in the non-market economy context as inconsistent with law. Foshan
Comments at 7-19. In its comments on the Third Remand Results, Since Hardware
also challenges Commerce’s surrogate valuation for B&H as unreasonable, though the
court in its first decision in this action deemed the issue waived due to the
incompleteness of Since Hardware’s opening brief. Since Hardware I at 7. One portion
of Commerce’s remand results has been submitted under protest: Commerce’s use of
the $473.94 baseline for B&H that the court directed Commerce to use as the best
available information. See Since Hardware III, 38 CIT at ___, 977 F. Supp. 2d at 1358-
59, 1364. Commerce avers that its original choice of $645 remains reasonable on the
administrative record. Third Remand Results at 6-9. Home Products agrees and
argues that the court should remand to Commerce to calculate Foshan Shunde’s
surrogate B&H value using the $645 data point. Home Products Comments at 2. For
the reasons that follow, the court sustains the Third Remand Results with the $473.94
baseline calculation as the “best available information.” The court also sustains
Commerce’s other B&H determinations, vacates that portion of Since Hardware II
addressing the container size conversion factor, and sustains Commerce’s justification
for zeroing.
Consol. Court No. 11-00106 Page 6
A. B&H Baseline Cost
In Since Hardware III the court reviewed Foshan Shunde’s challenge to
Commerce’s calculation of its B&H costs. Commerce originally chose $645 as the best
available information to value respondents’ B&H costs, a number derived from the
World Bank’s Doing Business in India: 2010 publication. Commerce and the parties
appear to have believed that number was an average derived from costs in 17 cities
across India, which for Commerce represented a “broad market average.” First
Remand Results at 18; see Decision Memorandum at 19 (describing the World Bank
data point as, inter alia, a “broad market average” that is “a more credible and
representative source than the data provided by Foshan Shunde that are limited to
select Indian companies and ports”). Commerce and the parties, however, were
incorrect about the $645 data point. That number was not a “broad market average” of
multiple port city data points, but instead, a Mumbai-only data point. This was a
somewhat surprising fundamental error with the administrative record because
Commerce and the parties had been litigating the B&H issue since at least 2010 over
the course of three administrative and three judicial proceedings. The complexity of
surrogate valuations and margin calculations normally means that Commerce and the
interested parties have a better command of the administrative record than the court.
Here, however, to help with closure on the B&H issue, the court in Since
Hardware III provided a thorough explanation of the various B&H data as the record
grew during successive remand proceedings. Since Hardware III, 38 CIT at ___, 977 F.
Consol. Court No. 11-00106 Page 7
Supp. 2d at 1354-55. As the court explained, only during the second remand
proceedings when individual data points for all 17 Indian cities were on the record did
Commerce and the parties appear to understand that the World Bank’s $645 figure was
in fact a Mumbai-only data point as opposed to a 17-city average. Id. The court also
observed that the $645 Mumbai-only data point, the second highest value for any
individual city on the record, was significantly higher than the $473.94 average for all 17
cities on the record. See id. at ___, 977 F. Supp. 2d at 1354-59.
Recall that when Commerce selected the $645 data point, it did so in the belief
that the $645 data point was “publicly available, specific to the costs in question,
represents a broad market average, and [was] contemporaneous to the POR.” Decision
Memorandum at 19; see First Remand Results at 17-18; see 19 U.S.C. § 1677b(c)(1).
Applying those very same selection criteria to the properly interpreted surrogate B&H
data, the court in Since Hardware III concluded that a reasonable mind would only
choose the $473.94 17-city average as the “best available” baseline B&H surrogate
value. The court reasoned that the only difference between the Mumbai-only data point
and the 17-city average under Commerce’s own selection criteria was that the 17-city
average represented a broader “market average” for B&H, and directed Commerce to
use that figure. Since Hardware III, 38 CIT at ___, 977 F. Supp. 2d at 1358-59, 1364.
On remand, Commerce used that data point, but has done so under protest.
Commerce now explains that it has concerns about the reliability of the data from the
other Indian cities and that the Mumbai-only data point is the best available information.
Commerce’s reasons include the frequency at which the Mumbai-only data point is
Consol. Court No. 11-00106 Page 8
updated in comparison to the 16 other data points, the high level of population and
container traffic in Mumbai as compared to the remaining 16 cities, and Foshan
Shunde’s location in a large urban area in China that is more comparable to Mumbai
than the 16 other Indian cities. Third Remand Results at 6-7.
Standing alone, without any consideration of the prior substantive and procedural
posture of this action, Commerce’s explanation and choice of the $645 baseline might
pass as reasonable. The Third Remand Results, however, do not stand alone, but
represent the fourth opportunity for Commerce to reasonably explain Foshan Shunde’s
surrogate B&H calculation. The $645 data point has always been a surrogate value
selection in search of a reasoned basis. The prior administrative and judicial
proceedings necessarily inform Commerce’s decision-making, and in the Third Remand
Results Commerce has arbitrarily altered the application of its surrogate value selection
criteria. Had Commerce been concerned about the reliability of the World Bank’s data
for the 16 smaller cities or the importance of selecting B&H data from an individually
comparable city, it could have articulated those concerns in any of the three prior
administrative determinations.2 Instead, what Commerce continually emphasized was
the importance of selecting “surrogate values which are . . . representative of a broad
market average.” First Remand Results at 17-18 (citing Certain Polyester Staple Fiber
from the People’s Republic of China, 75 Fed. Reg. 1336 (Dep’t of Commerce Jan. 11,
2
Foshan Shunde first placed the subnational reports for four seaport cities on the
record on October 18, 2010, well before Commerce issued its Final Determination.
Third Remand Results at 7 n.29. Commerce and Foshan Shunde placed the remaining
subnational report data on the record during the second remand proceedings.
Consol. Court No. 11-00106 Page 9
2010) (final results admin. review)). In those prior administrative proceedings,
Commerce did not distinguish the Mumbai-only data point from the 16 other ports, and
“reliability” was not mentioned or analyzed as a significant concern. Compare Third
Remand Results at 6-9, 21-22 (explaining preference for the Mumbai-only data point
due to concerns over the reliability of the subnational data for the 16 other Indian cities
and the level of port traffic in Mumbai as compared to Foshan Shunde’s home city with
reference to new evidence added to the record), with Decision Memorandum at 18-19
(no similar discussion), First Remand Results at 15-22, 38-41 (no similar discussion),
and Second Remand Results at 12-14, 31-35 (explaining preference for the Mumbai-
only data point but omitting any reference to the relative reliability of the data points or
the importance of selecting data from a particular city that is more comparable to
Foshan Shunde’s home city).
In the Third Remand Results, therefore, Commerce altered its selection criteria
by suddenly shifting its emphasis away from identifying a “broad market average” to a
focus on reliability and single-city comparability. Commerce apparently derived this new
thinking from Home Products’ motion to reconsider, which was filed with the court one
month before Commerce circulated its draft remand results. Turning briefly to the
merits of Home Products’ motion, disposition of a Rule 59 motion is “within the sound
discretion of the court.” USEC, Inc. v. United States, 25 CIT 229, 230, 138 F. Supp. 2d
1335, 1336 (2001). Such motions do not permit an unsuccessful party to re-litigate a
case, but are supposed “to address a fundamental or significant flaw in the original
proceeding.” Id. To that end, “a court's previous decision will not be disturbed unless it
Consol. Court No. 11-00106 Page 10
is ‘manifestly erroneous.’” Id. at 230, 138 F. Supp. 2d at 1337. Home Products’ motion
does not identify manifest error in Since Hardware III, but instead, as Foshan Shunde
points out, raises arguments that Home Products could have made earlier in the
litigation either before the court or Commerce. See Joint Reh’g Resp. at 3-16. The
court does not entertain afterthought arguments in a motion for reconsideration. See
Donguan Sunrise v. United States, 38 CIT ___, ___, Slip. Op. 14-117 at 4 (2014)
(“Because AFMC had ample opportunity to raise its concerns about the general context
of Commerce’s choice previously but failed to do so, the court will not entertain them
now.”); see also United States v. Matthews, 32 CIT 1087, 1089, 580 F. Supp. 2d 1347,
1349 (2008) (arguments raised for first time on rehearing not properly before the court
when prior opportunity existed for moving party to make its position known).
Apart from creating a tactical annoyance for Foshan Shunde (which had to
simultaneously answer the motion and file comments on the remand), the real
motivation behind the motion may have been, as Foshan Shunde alleges, Joint Reh’g
Resp. at 2-3, to communicate to Commerce a dispositional path for the Third Remand
Results. In addition to the timing between Home Products’ motion and Commerce’s
draft remand results described above (with the motion filed one month before issuance
of the draft remand results), Foshan Shunde identifies a substantive similarity between
the two. Id.; Foshan Comments at 4-5. Compare, e.g., Home Products Mot. for Reh’g
at 8-9 (discussing the frequency of publication of the subnational reports, citing to the
World Bank’s website), and id. at 12-14 (discussing Mumbai’s population and port
volume as compared to other Indian cities and citing to Wikipedia entries), with Third
Consol. Court No. 11-00106 Page 11
Remand Results at 7-8 & n.30 (discussing the frequency of publication of the
subnational reports, citing to printouts of pages from the World Bank’s website that no
party had submitted as evidence or cited to at any earlier proceeding), and id. at 8-9
(discussing Mumbai’s population and port volume as compared to other Indian cities
and citing to printouts of pages from Indian internet sources that no party had submitted
as evidence or cited to at any earlier proceeding).
There is nothing inherently wrong or improper with Commerce adopting the
arguments of a party in its findings, conclusions, and determinations. The problem
here, as noted above, is that Commerce’s choice of the $645 B&H baseline measure
has, from the outset of the litigation, been in search of a reasoned basis. By co-opting
Home Products’ belated justification for the $645 measure, Commerce arbitrarily shifts
the application of its selection criteria away from a desire to obtain a “broad market
average” toward a sudden emphasis on “reliability” and single-city comparability. Had
Commerce consistently applied that focus earlier in the proceeding, it may have
provided a reasonable justification for the $645 measure. Coming as it does, however,
so late in the game, Commerce’s change in emphasis reads like an arbitrary effort to
reach a desired outcome rather than a reasonable attempt to identify the best available
information to value Foshan Shunde’s B&H costs. The court will therefore sustain the
Third Remand Results in which Commerce used the court-directed $473.94 baseline
measure for Foshan Shunde’s B&H costs.
Consol. Court No. 11-00106 Page 12
B. Document Preparation and Customs Clearance Cost Component
Foshan Shunde has consistently argued that Commerce should alter its B&H
calculation to reflect evidence suggesting that Foshan Shunde may have incurred
document preparation and customs clearance fees only once every 6.2 containers it
shipped. In the Second Remand Results, Commerce declined to address this
argument, indicating that it was “not part of the Foshan Shunde surrogate value
information identified by the court in Since Hardware II . . . at issue in this
redetermination.” Second Remand Results at 31-32. The court in Since Hardware III
disagreed, and remanded to Commerce with instructions to “address Foshan Shunde’s
arguments regarding document preparation and customs clearance costs,” and “in
particular record evidence appearing to demonstrate that Foshan Shunde actually
incurred such costs only once per 6.2 containers it shipped.” Since Hardware III, 38 CIT
at ___, 977 F. Supp. 2d at 1361. Commerce in the Third Remand Results considered
and rejected Foshan Shunde’s argument, explaining that the World Bank data is not
specific enough to adjust bill of lading costs in the way Foshan Shunde requests, and
that Foshan Shunde’s bill of lading evidence is drawn from too small and unreliable a
data set to conclude that Foshan Shunde actually incurred bill of lading costs once per
6.2 containers.
Foshan Shunde now argues that “[t]he World Bank materials on the record of this
case preclude any consideration of reported costs accounting for multiple shipments or
multiple containers with one shipment” due to the “rigidity with which the World Bank
has set its parameters.” Foshan Comments at 7-8. Foshan Shunde explains that the
Consol. Court No. 11-00106 Page 13
World Bank surveyed producers seeking “one quote for a one-time shipment of one
container.” Id. at 8 (quoting Foshan Shunde Surrogate Values for the Final Results Ex.
8 at 91-92 (Dep’t of Commerce Oct. 18, 2010)). According to Foshan Shunde, this
parameter “renders the World Bank study inappropriate for calculating Foshan Shunde’s
[B&H] expenses without important adjustments, including accounting for the fact that
Foshan Shunde shipped multiple containers included on one bill of lading with one set
of export documentation considered together for a single customs clearance.” Id. at 8-
9. In response to Commerce’s finding that the bill of lading evidence may not accurately
reflect Foshan Shunde’s experience, Foshan Shunde maintains that Commerce’s
selection is unreasonable because the record demonstrates at minimum that Foshan
Shunde did ship multiple containers per bill of lading. Id. at 9-10.
The court understands Foshan Shunde’s logical assumption that a “one quote for
a one-time shipment of one container” could imply that the World Bank’s survey
accounts for the full cost of issuing exactly one bill of lading for exactly one container of
goods. Commerce, however, reasonably concluded that the record here supports a
different finding. As Commerce explains, the World Bank study “seeks to prescribe the
total time and cost of exporting without specifying the specific number of bills of lading
that are issued with each shipment,” and does not itemize bill of lading costs
independently from the broader document preparation and customs clearance metric.
Third Remand Results at 12-14. The record, in other words, does not foreclose the
possibility that the World Bank’s document preparation and customs clearance figure
may instead incorporate the average bill of lading cost for shipping one container, as
Consol. Court No. 11-00106 Page 14
opposed to the cost of exactly one bill of lading per container. Moreover, as Commerce
explains, Foshan Shunde derived its “6.2” figure from an “examination of nine U.S.
sales traces examined at verification, which themselves were culled from a U.S.
database that is approximately 70 times larger than the sample base used by Foshan
Shunde.” Id. at 14 (emphasis added). With such concerns over the accuracy of Foshan
Shunde’s proposed figure and its relevance to the World Bank’s data, Commerce
reasonably found that using the unadjusted World Bank document preparation and
customs clearance cost component was the “best available” means of estimating that
portion of Foshan Shunde’s overall B&H costs.
C. Zeroing
In accordance with a prior order lifting a stay on consideration of the zeroing
issue, the court in Since Hardware III remanded for Commerce to address Foshan
Shunde’s arguments about zeroing in the non-market economy context. Since
Hardware III, 38 CIT at ___, 977 F. Supp. 2d at 1364. In the Third Remand Results,
Commerce continued to apply zeroing and justified its approach largely by reference to
Union Steel v. United States, 713 F.3d 1101 (Fed. Cir. 2013), a Court of Appeals for the
Federal Circuit (“Federal Circuit”) decision affirming Commerce’s justification for zeroing
in administrative reviews but not in investigations as a reasonable interpretation of an
ambiguous statute under Chevron step two. Third Remand Results at 26-30 (citing
Union Steel 713 F.3d at 1108).
Foshan Shunde argues that Union Steel does not apply to administrative reviews
of non-market economies, and that Commerce’s justification for zeroing in such reviews
Consol. Court No. 11-00106 Page 15
is unreasonable. Foshan Shunde explains that the Federal Circuit in Union Steel
upheld Commerce’s practice of zeroing in market economies as reasonable because of
the “greater specificity” zeroing provided when conducting an average-to-transaction
(“A-to-T”) comparison in administrative reviews than the average-to-average (“A-to-A”)
comparison employed in investigations. Specifically, according to Foshan Shunde,
Union Steel determined that Commerce’s practice of zeroing in administrative reviews
but not investigations “was only justified by the greater accuracy resulting from the use
of monthly normal values (calculated from actual invoiced sales prices).” Foshan
Shunde Comments at 18 (emphasis added); see Union Steel, 713 F.3d at 1108 (citing
Union Steel v. United States, 36 CIT ___, ___, 823 F. Supp. 2d 1346, 1359 (2012)).
Because Commerce uses a yearly average normal value instead of monthly average
normal values in non-market economy administrative reviews, Foshan Shunde argues
that Union Steel does not apply. Id. Foshan Shunde requests the court to hold
Commerce’s justification for zeroing here to be unreasonable because it, among other
things, “tends to artificially drive some sales below fair value and others above fair
value” and “unfairly disadvantages NME [non-market economy] respondents.” Id. at 19.
The main focus of Foshan Shunde’s argument is on the normal value side of the
antidumping duty margin equation. Foshan Shunde does not examine or consider the
export or constructed export price side of the equation. Problematically for Foshan
Shunde, Union Steel did not uphold zeroing as reasonable “only” because of the greater
specificity Commerce attains by using monthly average normal values in market
economy reviews. See Foshan Shunde Comments at 18. Instead, Union Steel
Consol. Court No. 11-00106 Page 16
consistently emphasized that zeroing in combination with the A-to-T methodology can
increase accuracy and reveal masked dumping because Commerce compares normal
value to transaction-specific export prices as opposed to average export prices under
the A-to-A methodology used in investigations. As the Federal Circuit explained:
When using average-to-average comparisons, transactions are divided
into “averaging groups.” Remand Results at 11. Transactions are divided
into averaging groups on the basis of physical characteristics and level of
trade for the purpose of price comparison. Id. When calculating the
average export price or constructed export price, Commerce calculates a
comparison result for each averaging group, and averages together high
and low export prices within the group. Thus, those export prices above
normal value offset those below normal value within the averaging group.
Commerce then aggregates the results of the comparison for each
averaging group to calculate a weighted average dumping margin. Id. at
11–12. Accordingly, this comparison methodology masks individual
transaction prices below normal value with other above normal value
prices within the same averaging group.
In contrast, when Commerce uses the average-to-transaction comparison
method, as it did in this administrative review, Commerce compares the
export price (or constructed export price) for a particular export transaction
with an average normal value for the comparable sales of foreign like
products within the averaging group. Id. at 12. For specific export
transactions, Commerce calculates a comparison result which establishes
the amount that transaction is priced at less than its normal value. Id.
Using this methodology, Commerce does not average export transaction
prices before comparing the export price (or constructed export price) to
normal value. Instead, Commerce uses a single export transaction price
and aggregates the transaction-specific comparison result. The average-
to-transaction comparison methodology thus reveals individual dumping.
Commerce's decision to use or not use the zeroing methodology
reasonably reflects unique goals in differing comparison methodologies.
In average-to-average comparisons, as used in investigations, Commerce
examines average export prices; zeroing is not necessary because high
prices offset low prices within each averaging group. When examining
individual export transactions, using the average-to-transaction
comparison methodology, prices are not averaged and zeroing reveals
masked dumping. This ensures the amount of antidumping duties
Consol. Court No. 11-00106 Page 17
assessed better reflect the results of each average-to-transaction
comparison. Commerce's differing interpretation is reasonable because
the comparison methodologies compute dumping margins in different
ways and are used for different reasons.
Id. at 1108-09. The Federal Circuit agreed that using “the export price (or constructed
export price) for a particular export transaction” under the A-to-T methodology
reasonably justified zeroing because it enabled Commerce to “reveal[] individual
dumping.” Id. In its comments on the Third Remand Results, Foshan Shunde does not
address the export price side of the equation, perhaps in recognition that Commerce’s
use of transaction-specific export prices in both non-market and market economy
administrative reviews weakens Foshan Shunde’s argument. See Foshan Shunde
Comments at 12-19. For example, Foshan Shunde makes no effort to explain why
using individual export transaction prices with zeroing does not “reveal individual
dumping” in non-market economy reviews like it does in market economy reviews, or
why it believes the accuracy of monthly average normal values is more important to
revealing individual dumping than using individual export prices. See id. By leaving off
one side of the ledger, Foshan Shunde has not provided the court with a sufficient basis
to distinguish Union Steel.
Consistent with Union Steel, Commerce explained below that “the examination of
individual export transactions, as opposed to averaging the export transactions, allows
[Commerce] to further its recognized interest in greater specificity to determine pricing
behavior for individual transactions and to identify masked dumping in administrative
reviews,” even when comparing that export price to a single average normal value.
Consol. Court No. 11-00106 Page 18
Third Remand Results at 29 (emphasis added). As the Federal Circuit explained, “[n]o
rule of law precludes Commerce from interpreting 19 U.S.C. § 1677(35) differently in
different circumstances as long as it provides an adequate explanation.” Id. at 1110.
Here, Commerce’s explanation is consistent with that sustained as reasonable in Union
Steel and other market and non-market economy cases. See, e.g., id. at 1108-11;
Dongguan Sunrise Furniture Co. v. United States, 37 CIT ___, ___, 904 F. Supp. 2d
1359, 1367 (2013); Xiamen Int’l Trade & Indus. Co. v. United States, 37 CIT ___, ___,
953 F. Supp. 2d 1307, 1310 n.1 (2013); Grobest, 36 CIT at ___, 853 F. Supp. 2d at
1356-62. That explanation rests on fundamental differences between A-to-A and A-to-T
comparison methodologies and the purposes of conducting reviews as opposed to
investigations that are applicable in non-market economy contexts as well as market
economy contexts. See 19 U.S.C. §§ 1677(35), 1677f-1(d); 19 C.F.R. § 351.414. The
court therefore must sustain Commerce’s use of zeroing in this administrative review.
D. Container Size Cost Conversion Factor
Foshan Shunde has now voluntarily abandoned its claim that the 20-foot to 40-
foot container cost conversion factor should be lower than a 50% increase. Joint Reh’g
Resp. at 9. The court accordingly will vacate the portion of Since Hardware III that
deals with this issue, and sustain Commerce’s selection of a 50% increase in the Third
Remand Results. See Since Hardware III, 38 CIT at ___, 977 F. Supp. 2d at 1359-60.
E. Since Hardware’s B&H
In its first decision in this action the court deemed Since Hardware’s B&H issue
waived because of incompleteness, Since Hardware (Guangzhou) Co. v. United States,
Consol. Court No. 11-00106 Page 19
No. 11-00106 (Aug. 14, 2012), ECF. No. 81 (order), just as it did in the immediate prior
action. Home Prods. Int'l, Inc. v. United States, No. 11–00104 (Jan. 3, 2012), ECF No.
62 (order deeming challenge to B & H calculation waived), as amended, ECF No.
63; Home Prods. Int'l, Inc. v. United States, 36 CIT ___, ___, 837 F. Supp. 2d 1294,
1300-02 (2012); opinion after remand, Home Prods. Int'l, Inc. v. United States, 36 CIT
___, 853 F. Supp. 2d 1257 (2012).
Missing from Since Hardware’s brief was any effort at identifying standards
against which the court could evaluate the reasonableness of Commerce’s findings and
conclusions for Since Hardware’s surrogate B&H calculation (e.g., how Commerce
typically calculates B&H in the non-market economy context, etc.). Since Hardware’s R.
56.2 Mem. in Supp. of Mot. for J. upon Agency Rec. at 9-10, ECF. No. 42. In marked
contrast to Since Hardware’s approach is the well-developed argumentation of Foshan
Shunde. See Foshan Shunde’s R. 56.2 Mem. in Supp. of Mot. for J. upon Agency Rec.
at 16-33, ECF No. 44.
It is just not possible to read the B&H section of Since Hardware’s opening brief
and understand what is being argued, challenged or contested. Since Hardware cites
no statutes, regulations, or administrative or judicial precedents. The court could not
understand this section of Since Hardware’s brief. The court could not rightly review
Since Hardware’s B&H issue without assuming the role of co-plaintiff and framing the
issue against the operative standard of review. This is not the role of the court. See
United States v. Great Am. Ins. Co., 738 F.3d 1320, 1328 (Fed. Cir. 2013) (“It is well
established that arguments that are not appropriately developed in a party's briefing
Consol. Court No. 11-00106 Page 20
may be deemed waived.”); MTZ Polyfilms, Ltd. v. United States, 33 CIT 1575, 1578,
659 F. Supp. 2d 1303, 1308 (2009) (“‘[I]ssues adverted to in a perfunctory manner,
unaccompanied by some effort at developed argumentation, are deemed waived. It is
not enough merely to mention a possible argument in the most skeletal way, leaving the
court to do counsel's work, create the ossature for the argument, and put flesh on its
bones.’” (quoting United States v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990)).
Since Hardware suggests that it nevertheless is entitled to the same adjustments
to B&H that Foshan Shunde received. Since Hardware though does not understand the
posture of the litigation. When the court deemed the issue waived for Since Hardware,
it sustained Commerce’s B&H determination for Since Hardware. There is, therefore, a
real consequence for Since Hardware inadequately briefing the issue.
III. Conclusion
In accordance with the foregoing, it is hereby
ORDERED that the portion of the court’s decision in Since Hardware III dealing
with the reasonableness of Commerce’s use of a 50% increase to convert prices for 20-
foot containers into prices for 40-foot containers, Since Hardware III, 38 CIT at ___, 977
F. Supp. 2d at 1359-60, is vacated; it is further
ORDERED that the portion of the Second Remand Results pertaining to
Commerce’s application of a 50% increase for converting 20-foot container costs to 40-
foot container costs is sustained; it is further
ORDERED that HPI’s motion for reconsideration of Since Hardware III is denied;
and it is further
Consol. Court No. 11-00106 Page 21
ORDERED that Commerce’s Third Remand Results are sustained.
Judgment will issue separately.
/s/ Leo M. Gordon
Judge Leo M. Gordon
Dated: December 30, 2014
New York, New York