Jinfu Trading Co. v. United States

Slip Op. 07-95
UNITED STATES COURT OF INTERNATIONAL TRADE
:
JINFU TRADING CO., LTD., :
:
Plaintiff, :
:
v. :
: Before: Richard K. Eaton, Judge
UNITED STATES, :
: Court No. 04-00597
Defendant, : Public Version
:
and :
:
AMERICAN HONEY PRODUCERS :
ASSOCIATION and SIOUX HONEY :
ASSOCIATION, :
:
Deft.-Ints. :
:
OPINION AND ORDER
[Commerce’s Final Results of Redetermination Pursuant to Remand
are remanded.]
Dated: June 13, 2007
Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt, LLP (Bruce
M. Mitchell, Paul G. Figueroa and Adam M. Dambrov), for
plaintiff.
Peter D. Keisler, Assistant Attorney General; Jeanne E. Davidson,
Director, Commercial Litigation Branch, Civil Division, United
States Department of Justice; Patricia M. McCarthy, Deputy
Director, International Trade Section, Commercial Litigation
Branch, Civil Division, United States Department of Justice
(David S. Silverbrand); Office of the Chief Counsel, Import
Administration, United States Department of Commerce (Douglas S.
Ierley), of counsel, for defendant.
Collier, Shannon, Scott, PLLC (Michael J. Coursey, Adam H. Gordon
and Jennifer E. McCadney), for defendant-intervenors.
Court No. 04-00597 Page 2
Eaton, Judge: Before the court are the United States
Department of Commerce’s (“Commerce” or the “Department”) final
results of its redetermination pursuant to the court’s remand
order in Jinfu Trading, Co., Ltd. v. United States, 30 CIT ,
Slip Op. 06-137 (Sept. 7, 2006) (“Jinfu I”).1 See Final Results
of Redetermination Pursuant to Remand (Dep’t of Commerce Dec. 5,
2006) (“Remand Redetermination”). In Jinfu I, the court remanded
Commerce’s decision to rescind plaintiff Jinfu Trading Co.,
Ltd.’s (“Jinfu PRC”) new shipper review upon concluding that
Jinfu PRC was not affiliated with either Yousheng Trading
(U.S.A.) Co., Ltd. (“Yousheng USA”) or its successor Jinfu
Trading (U.S.A.) Co., Ltd. (“Jinfu USA”) within the meaning of 19
U.S.C. § 1677(33)(F) or (G) (2000).2 See Jinfu I, 30 CIT at ,
Slip Op. 06-137 at 32; see also Honey from the People’s Republic
of China (“PRC”), 69 Fed. Reg. 64,029 (Dep’t of Commerce Nov. 3,
1
For purposes of confidentiality, the court will employ
the same shorthand references used in Jinfu I. Specifically,
Jinfu Trading (“U.S.A.”) Co., Ltd.’s sole employee is referred to
as “Mr. A”; the chief executive officer of Jinfu Trading Co.,
Ltd. as “CEO B”; the unaffiliated U.S. buyer as “Customer C”; and
the original owner of what was then Yousheng Trading (“U.S.A.”)
Co., Ltd. (“Yousheng USA”) as “Mr. D.” The attorney retained in
October 2002 to aid in the attempted transfer of ownership of
Yousheng USA to CEO B is referred to as “Attorney E.”
2
Pursuant to 19 U.S.C. § 1677(33)(F), “[t]wo or more
persons directly or indirectly controlling, controlled by, or
under common control with, any person” are considered affiliated.
Under 19 U.S.C. § 1677(33)(G), Commerce will find affiliated
“[a]ny person who controls any other person and such other
person.”
Court No. 04-00597 Page 3
2004) (“Final Results”).3 As a result of the new shipper review
being rescinded, Commerce assigned the country-wide dumping rate
of 183.80 percent to Jinfu PRC’s honey exports to the United
States. See Final Results, 69 Fed. Reg. at 64,030. On remand,
the court directed Commerce to either reinstate plaintiff’s new
shipper review or reopen the record to provide plaintiff with an
opportunity to submit additional evidence concerning the issue of
affiliation. In particular, plaintiff would be provided with an
opportunity to place on the record evidence that the chief
executive officer of Jinfu PRC, CEO B, controlled the pricing4
3
Whether Jinfu PRC was affiliated with either Yousheng
USA or Jinfu USA is relevant because under 19 C.F.R.
§ 351.214(b)(2)(iv)(C) (2005), a party seeking a new shipper
review must provide documentation establishing “[t]he date of the
first sale to an unaffiliated customer in the United
States . . . .” Before Commerce, plaintiff submitted
documentation in support of its claim that the new shipper sale
was made by Jinfu PRC (via Jinfu USA) to Customer C on November
2, 2002. Based on that documentation, Commerce initiated the new
shipper review. Having found the documentation insufficient to
establish that Jinfu PRC was affiliated with either Yousheng USA
or Jinfu USA as of that date, however, Commerce rescinded the
review. Commerce took this action because, absent affiliation,
the sale to Customer C could not be considered a sale by Jinfu
PRC. Thus, it is the absence of documentation supporting
plaintiff’s claim that it was affiliated with either Yousheng USA
or Jinfu USA on November 2, 2002, that resulted in Commerce’s
cessation of the new shipper review.
4
The presence of control may be contingent on the
existence of evidence that one party has the potential to control
the pricing decisions of the other. See 19 C.F.R.
§ 351.102(b); see also Hontex Enters., Inc. v. United States, 27
CIT 272, 296, 248 F. Supp. 2d 1323, 1343 (2003) (holding that
control, and thus affiliation, can only be had if “the
relationship [is] such that it has the potential to impact
decisions concerning production, pricing, or cost of subject
(continued...)
Court No. 04-00597 Page 4
decisions made by Jinfu USA’s sole employee, Mr. A. See Jinfu I,
30 CIT at , Slip Op. 06-137 at 32–33.
On remand, Commerce reopened the record and plaintiff
submitted additional evidence concerning affiliation. See Remand
Redetermination at 2. After considering this additional
evidence, plaintiff’s accompanying explanation of that evidence
and all other comments from interested parties, Commerce
continued to find that neither Yousheng USA nor its successor
Jinfu USA were affiliated with Jinfu PRC at the time of the
claimed new shipper sale. See Remand Redetermination at 3.
Jurisdiction lies pursuant to 28 U.S.C. § 1581(c) (2000) and
19 U.S.C. § 1516a(a)(2)(B)(iii). For the following reasons, the
court remands Commerce’s determination for a second time.
BACKGROUND
Familiarity with this case is presumed. The court sets
forth only those facts relevant to this opinion. At issue in
Jinfu I was plaintiff’s contention that Commerce erroneously
concluded that Jinfu USA and Jinfu PRC were not affiliated on the
date of the claimed new shipper sale, November 2, 2002. The
primary basis for the Department’s conclusion was its finding
that Jinfu PRC did not own either Yousheng USA or Jinfu USA as of
4
(...continued)
merchandise”) (internal quotation marks omitted).
Court No. 04-00597 Page 5
that date. See Issues & Decision Mem. for the Final Results and
Final Rescission, In Part, of the New Shipper Review of the
Antidumping Duty Order on Honey from the PRC (Dep’t of Commerce
Oct. 25, 2004) (“Issues & Decision Mem.”) at 10–11. In Jinfu I,
the court’s review of the record and the parties’ submissions
revealed that, while nothing indicated that CEO B owned either
Yousheng USA or Jinfu USA on or before November 2, 2002, there
was, in fact, evidence that CEO B not only had the potential to
influence what was then Yousheng USA’s pricing decisions, but
actually exercised that control. See Jinfu I, 30 CIT at , Slip
Op. 06-137 at 28.
In reaching this finding, the court relied heavily on the
contents of the Department’s verification report. That report
indicated that, while Mr. A negotiated the price of the honey
with the U.S. customer, Customer C, the final transaction was
consummated only after CEO B approved the sales price. See id.
at , Slip Op. 06-137 at 29. This approval was evidenced by
facsimile transmissions exchanged between Jinfu USA and Jinfu
PRC. See id. at , Slip Op. 06-137 at 30–31 (“[T]he faxes
indicate that Mr. A did not enter into the transaction at the
quoted price before getting the approval of CEO B, and that he
believed he was working for a single enterprise encompassing
Court No. 04-00597 Page 6
Jinfu PRC and Yousheng USA.”).5
5
The faxes were exchanged on November 13, 2002. Mr. A
initiated the discourse in his fax to CEO B:
Firstly, I would like to report [to] you that
the current market price of honey in the
United States is between [[ ]] and
[[ ]] per pound. Because of the sharp
reduction of the export of honey from other
countries, the domestic sales and price of
honey in the United States is very promising.
I contacted a US local client who was willing
to order a container of honey at the ex-
warehouse price of [[ ]] USD per ton on
the condition that it can pass the
examination of US customs and FDA. Since the
annual purchasing amount of this client is
relatively significant, if a good
relationship can be established with this
client, it will be of great help to our
company’s sales to the US.
Please let me know you[r] opinion and advise
me further.
Letter from Bruce M. Mitchell to Abdelali Elouaradia, Oct. 23,
2006, Ex. 19 (“Pl.’s Remand Submission”). On the same day CEO B
responded, stating:
We received you[r] letter and felt happy that
there are clients . . . interested in the
honey product of our company. You did a good
job on the report of US market. We finished
a container . . . on November 5.
In order to open the US market and better
understand the marketing information, I agree
with you. We accept the client’s quotation
of [[ ]] USD per ton as ex-warehouse
price on the condition that it passes the
examination of the US customs and FDA.
Please make the preparation and keep in touch
with the client for purpose of long term
cooperation. I hereby authorize you to sign
contract with the client.
(continued...)
Court No. 04-00597 Page 7
Based on the evidence of CEO B’s control of the pricing
decisions of the claimed U.S. affiliate and the absence from the
Final Results of a thorough discussion of the matter, the court
remanded the Final Results to the Department and instructed it
“to either find that Jinfu PRC and Yousheng USA were affiliated
as of November 2, 2002, and to reinstate plaintiff’s new shipper
review, or to provide other record evidence to support its
conclusion that the companies were not affiliated.” Jinfu I, 30
CIT at , Slip Op. 06-137 at 32–33. If the Department chose not
to find the companies affiliated, the court instructed the
Department to “reopen the record to provide plaintiff with an
opportunity to place thereon further evidence with respect to
affiliation and to provide an explanation of that evidence.” Id.
at , Slip Op. 06-137 at 33.
On remand, Commerce chose the court’s second option and
reopened the record. On October 23, 2006, plaintiff submitted
additional evidence regarding the issue of affiliation and
provided an explanation of that evidence. See Remand
Redetermination at 2. On November 13, 2006, the Department,
having considered plaintiff’s additional evidence, issued its
draft remand redetermination in which it again concluded that the
5
(...continued)
Please process as soon as possible.
Pl.’s Remand Submission, Ex. 20.
Court No. 04-00597 Page 8
companies were not affiliated within the meaning of 19 U.S.C.
§ 1677(33) because CEO B did not control the pricing decisions of
either Yousheng USA or Jinfu USA. On November 20, 2006,
plaintiff commented on the draft redetermination. Commerce also
permitted the American Honey Producers Association and the Sioux
Honey Association, as interested parties, to comment on the draft
results, which they did on November 22, 2006.
After considering the additional evidence and the
accompanying comments and explanations, Commerce determined that
it would “not change[] [its] finding of no affiliation between
Jinfu PRC and Yousheng USA/Jinfu USA at the time of the relevant
U.S. sale, i.e., November 2, 2002.” Remand Redetermination at
2–3. Thus, Commerce reaffirmed its earlier determination and
declined to reinstate plaintiff’s new shipper review.
STANDARD OF REVIEW
The court reviews Commerce’s Remand Redetermination for
substantial evidence. See 19 U.S.C. § 1516a(b)(1)(B)(i) (“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.”).
“Substantial evidence is ‘such relevant evidence as a reasonable
mind might accept as adequate to support a conclusion.’” Huaiyin
Foreign Trade Corp. (30) v. United States, 322 F.3d 1369, 1374
Court No. 04-00597 Page 9
(Fed. Cir. 2003) (quoting Consol. Edison Co. v. NLRB, 305 U.S.
197, 229 (1938)). To determine the existence of substantial
evidence, the court must “consider[] the record as a whole,
including evidence that supports as well as evidence that ‘fairly
detracts from the substantiality of the evidence.’” Id. (quoting
Atl. Sugar, Ltd. v. United States, 744 F.2d 1556, 1562 (Fed. Cir.
1984)). The possibility of drawing two opposite yet equally
justified conclusions from the record will not prevent the
agency’s determination from being supported by substantial
evidence. See Consolo v. Fed. Mar. Comm’n, 383 U.S. 607, 620
(1966).
DISCUSSION
The court must now decide whether Commerce has, on remand,
supported with substantial evidence from the record its
conclusion that Jinfu PRC did not control or have the potential
to control the pricing decisions of Yousheng USA or its successor
Jinfu USA as of November 2, 2002.
In its Remand Redetermination, Commerce found that “the
record d[id] not support a finding that CEO B had control over
Mr. A’s business decisions, particularly those dealing with
pricing.” Remand Redetermination at 7. The Department
maintained this position despite the presence on the record of
the faxes exchanged between Mr. A and CEO B.
Court No. 04-00597 Page 10
Commerce first took issue with the faxes’ credibility.
At verification, Department officials
questioned the credibility of the exchanged
facsimiles given that neither document
contained any fax communications commonly
found at the top of most faxed transmissions.
Mr. A stated that he did not have a facsimile
report recording the date and time he
transmitted the letter to CEO B. The lack of
transmission information on the faxes, when
viewed in the context of credibility
problems6 regarding corporate ownership
documents submitted by Jinfu PRC to the
Department, raises questions regarding the
veracity and reliability of the facsimiles.
Remand Redetermination at 10. Commerce, therefore, appeared to
take the view that, because it was justified in suspecting the
reliability of plaintiff’s proffered evidence of ownership, it
was entitled to view all evidence relating to the claimed new
shipper sale with skepticism.
The Department also concluded that even if the faxes were to
be found credible, they would not support a finding of control
because they were exchanged after the subject honey was shipped.
The Department observes that the subject shipment, “[p]er the
bill of lading, . . . left the port of Shanghai for Oakland [,
6
A primary reason for Commerce’s conclusion in the Final
Results that CEO B did not own Jinfu USA on November 2, 2002, was
its finding that the evidence supporting plaintiff’s ownership
claim was incredible. See Issues & Decision Mem. at 26. In
particular, Commerce found that plaintiff’s “corporate
resolutions, a certificate of transfer of stocks, amended
articles of incorporation and by-laws, and a receipt for legal
services preparing these documents,” were backdated. Def.’s
Resp. to Comments Upon Final Results of Redetermination Pursuant
to Remand (“Def’s Resp.”) 12 n.4.
Court No. 04-00597 Page 11
California] on November 5, 2002,” and that the facsimiles were
exchanged on November 13, 2002. Remand Redetermination at 9.
Commerce explained:
According to the facsimiles, CEO B agreed to
the price negotiated by Mr. A on November 13,
2002 (the date of the fax from CEO B to Mr.
A), subsequent to which Mr. A entered into a
sales contract with the U.S. customer. The
price, according to statements at
verification and as noted above, was reached
through negotiations between Mr. A and the
U.S. customer at a time that coincided with
Jinfu PRC’s sale to Mr. A. . . .
Given that the goods were on the water headed
for Oakland . . . at the time the alleged
facsimiles were exchanged between Mr. A and
CEO B, these documents are irrelevant in
establishing that Mr. A’s price negotiations
were subject to the approval of CEO B.
Remand Redetermination at 10. Commerce, then, concluded that in
light of “the timeline presented above, the U.S. resale price was
established and agreed upon prior to the date of the alleged
facsimiles, i.e., November 13, 2002.” Remand Redetermination at
11.
Commerce further discounted the faxes’ probative value by
stating that, “even if considered credible or reliable, [the
faxes] merely indicate that Mr. A found a customer willing to pay
X price per [metric ton] for the honey and that CEO B agreed to
this price.” Remand Redetermination at 11 (footnote omitted).
The Department apparently concluded that, because the price of
the honey remained unchanged from the original price negotiated
by Mr. A, CEO B’s approval could not be considered evidence of
Court No. 04-00597 Page 12
his control over Mr. A’s pricing decisions. See Remand
Redetermination at 11 (“The contract with the U.S. customer is
signed on November 15, 2002, on terms that d[id] not change
between then and the shipment to the end-user. . . . The terms
of this sale also did not change between contract and receipt of
payment.”). In reaching its conclusion, though, Commerce does
not discuss the sentence in CEO B’s fax to Mr. A “I hereby
authorize you to sign contract with the client.” Letter from
Bruce M. Mitchell to Abdelali Elouaradia, Oct. 23, 2006, Ex. 20
(“Pl.’s Remand Submission”).
As further evidence that CEO B did not have the potential to
control Mr. A’s pricing decisions, the Department relied on
specific business-related actions taken by Mr. A without first
consulting CEO B. See Remand Redetermination at 12. In
particular, the Department asserted that, unbeknownst to CEO B,
“the U.S. customer was financing the entire U.S. transaction in
question.” Remand Redetermination at 12. Commerce stated:
The total amount paid by the U.S. customer by
November 20, 2002, . . . was received by Mr.
A prior to paying the bill from the freight
forwarding company. Moreover, in reviewing
Jinfu USA’s checkbook registers at
verification, Department officials discovered
that Mr. A had also borrowed money from the
U.S. customer in order to pay Jinfu USA’s
freight forwarding bill for a later sale.
There is no evidence on the record to suggest
that Mr. A requested approval from CEO B
prior to receiving the loan, nor is there
evidence on the record to suggest that Jinfu
PRC sent money to its alleged affiliate to
Court No. 04-00597 Page 13
repay the loan.
Remand Redetermination at 12 (citation omitted). The Department,
thus, concluded that CEO B could not be in a position to exercise
control over Mr. A and Jinfu USA if Mr. A could receive the
advance payment and obtain the loan without CEO B’s approval.
Finally, the Department found the contents of affidavits of
Mr. A, CEO B and Jinfu PRC’s account manager submitted to
establish that Mr. A believed he was under CEO B’s control to be
“contradicted by record evidence.” Remand Redetermination at 20;
see Mr. A Aff. ¶¶ 9, 12 (explaining that at the time of the new
shipper sale, “I was working for and being paid by [CEO B],” and
that “[i]t ha[d] always been my understanding that Jinfu USA was
owned by [CEO B] at the time that Jinfu USA purchased honey from
[CEO B’s] company in China, and resold the honey to our customer
in the U.S.”).
According to Commerce, the statements made by these
individuals at verification, in particular those of Mr. A, tell a
different story from that presented in the newly submitted
affidavits. For instance, Commerce observed that at
verification, “Mr. A stated that he did not want CEO B to have
direct access to Jinfu USA’s U.S. customers because of the
possibility that Jinfu PRC would sell directly to the customers.”
Remand Redetermination at 20 (citation omitted). As another
example, the Department repeated its assertion that Mr. A
“obtained a loan from the U.S. customer to pay for his freight
Court No. 04-00597 Page 14
forwarding bill without first seeking CEO B’s approval.” Remand
Redetermination at 21 (citation omitted). Based on its
conclusion that the statements in the newly submitted affidavits
concerning Mr. A’s belief that he was under the control of CEO B
were not supported by the evidence already on the record, the
Department found that they failed to justify a finding of
affiliation by way of control.
Thus, after considering the additional evidence plaintiff
placed on the record regarding the question of affiliation and
comparing it with earlier submitted record evidence, the
Department concluded that “[t]here is substantial evidence on the
record that demonstrates . . . that Mr. A made the sale of honey
to the U.S. customer without the approval of CEO B . . . .”
Remand Redetermination at 18. Commerce, therefore, continued to
find that Jinfu PRC was not affiliated with either Yousheng USA
or its successor Jinfu USA as of the date of the claimed new
shipper sale and that, as a result, plaintiff was not entitled to
a new shipper review.
Plaintiff makes both factual and procedural objections to
the Department’s Remand Redetermination, insisting at all times
that the record supports a finding of affiliation. See generally
Pl.’s Comments Resp. Commerce’s Final Results of Redetermination
(“Pl.’s Comments”). In contesting Commerce’s factual
determinations, plaintiff reasserts its argument in Jinfu I that
Court No. 04-00597 Page 15
CEO B actually owned Jinfu USA on November 2, 2002. That is,
plaintiff maintains that the evidence it claims shows ownership
demonstrates, at a minimum, that CEO B controlled the company as
of the date of the claimed new shipper sale.
In addition to that previously placed on the record,
plaintiff cites two pieces of new evidence it submitted on remand
to support its position. First, plaintiff points to an affidavit
from Attorney E. According to Attorney E, he “was retained in
October 2002 to transfer ownership of Jinfu USA to CEO B and that
in October 2002 he drafted and provided to Mr. A and CEO B
documents which, if they had been promptly and properly executed,
actually transferred legal ownership of Yousheng/Jinfu USA to CEO
B.” Pl.’s Comments 12. Second, plaintiff asserts that
affidavits of CEO B, Mr. D (the previous owner of Yousheng USA)
and Mr. A each reveal that CEO B owned or controlled Jinfu USA as
early as October 2002. See Pl.’s Comments 8–9. As plaintiff
explains, the affidavits repeat its claims in Jinfu I regarding
Mr. D’s intention to transfer ownership to CEO B and CEO B’s
intention to purchase the company. Moreover, the affidavits are
pointed to as proof of Mr. A’s understanding that he needed CEO
B’s approval on all pricing and sales decisions. Plaintiff,
therefore, contends that while
the additional documents submitted [on
remand] on October 23, 2006, are sufficient
to establish that CEO B actually owned Jinfu
USA prior to [Jinfu PRC]’s initial sale to
Court No. 04-00597 Page 16
the United States . . . this Court need not
reconsider this issue at this time, since
these documents also reconfirm that
operational control of Yousheng/Jinfu USA had
been transferred to CEO B, notwithstanding
that legal ownership arguably remained with
Mr. D.
Pl.’s Comments 12 n.4; see also Pl.’s Comments 12–13 (insisting
that the new submissions “constitute[] compelling evidence that
CEO B actually had operational control of Yousheng/Jinfu USA at
the end of October 2002”). Thus, plaintiff takes the position
that the evidence, if not demonstrating ownership, at least
establishes that CEO B actually controlled Mr. A’s pricing
decisions.
Plaintiff next takes issue with the Department’s conclusion
that Mr. A finalized the sales price of the honey with Customer C
without obtaining CEO B’s approval. See Pl.’s Comments 14. For
plaintiff, “[t]his determination is simply wrong.” Pl.’s
Comments 14. The key pieces of evidence for plaintiff’s position
remain the faxes transmitted between Mr. A and CEO B. Plaintiff
characterizes as baseless the Department’s decision not to attach
substantial weight to these transmissions “because of their
failure to have fax communications commonly found at the top of
most transmissions.” Pl.’s Comments 15 (internal quotation marks
& citation omitted). For plaintiff:
The facsimile exchange clearly conveys the
message which the parties intended to convey
— that Mr. A was seeking CEO B’s approval of
a sales price to a particular customer and
Court No. 04-00597 Page 17
that CEO B approved this price and agreed to
the sale. And as the Department implies,
while “fax communication” may “normally” have
notations at the top, the absence of such
notation does not compel a conclusion (as the
Department now suggests) that the facsimiles
were never sent or received.
Pl.’s Comments 15 (footnote omitted).
Plaintiff further challenges the Department’s
characterization of the evidence that the honey was shipped
before Mr. A received CEO B’s approval of the price.
The Department suggests that evidence
supporting its claim is found in the facts
that: (1) Mr. A negotiated prices with
Customer C in late October and early November
2002; and (2) the merchandise was already on
the water destined for Oakland prior to
November 13, 2002. These facts do not
constitute evidence that CEO B did not
exercise operational control over
Yousheng/Jinfu USA. In this regard, Mr. A
and Customer C did not enter into a formal
agreement for Jinfu USA to sell honey to
Customer C until November 15, 2002. Contrary
to the Department’s suggestion, there does
not exist a scintilla of evidence that this
resale was consummated, and the material
terms of sale established with certainty
prior to this date. Merchandise is often
resold by a U.S. importer (e.g., Jinfu USA)
to an ultimate consumer (e.g., Customer C)
while in-transit to the United States, and as
Mr. A advised the Department at verification,
“he was confident that if . . . {Customer C}
. . . had not purchased the . . . honey, he
would be able to find another buyer through
his relationships with sales representatives/
importers . . . .”
Pl.’s Comments 15–16 (footnotes & citations omitted). Put
another way, it is plaintiff’s view that the honey’s shipment
prior to November 13, 2002, the date CEO B agreed to the purchase
Court No. 04-00597 Page 18
price, bore no relationship to a finding that CEO B controlled
the price of the honey sold to Customer C.
Plaintiff also contends that in reaching its conclusion that
CEO B was not in a position to exercise control over Jinfu USA,
the Department gave undue credit to evidence indicating that: (1)
Mr. A received pre-payment from Customer C for the new shipper
sale; and (2) that he also obtained a loan from Customer C to
finance a later transaction. See Pl.’s Comments 16–17. First,
with respect to Mr. A’s receipt of the advance payment, plaintiff
insists that “the fact that Customer C may have financed the
transaction by paying Jinfu USA for the merchandise prior to such
time as Jinfu USA paid its freight forwarding company is
completely unrelated to whether CEO B exercised operational
control over Jinfu USA.” Pl.’s Comments 17. Second, with regard
to Customer C’s loan to Mr. A, plaintiff argues that, because
“the loan to which the Department refers relates to a transaction
which took place in August 2003, . . . [t]he fact that there may
be no evidence on this . . . record to suggest that Mr. A
requested approval from CEO B prior to receiving the loan . . .
is neither surprising nor significant.” Pl.’s Comments 17. As
plaintiff states, “a sales transaction subsequent to the [new
shipper review] . . . normally is not subject to analysis in a
verification of a [new shipper review].” Pl.’s Comments 17.
That is, because the loan was for a sale that took place after
Court No. 04-00597 Page 19
Commerce initiated the new shipper review, the absence of any
record evidence concerning the loan was to be expected.
Finally, plaintiff claims that the Department made a
procedural error in rendering the Remand Redetermination without
providing plaintiff an opportunity to place on the record
additional evidence intended to address Commerce’s concerns
regarding the credibility and reliability of the faxes and the
circumstances surrounding the advance payment and loan by
Customer C to Jinfu USA. See Pl.’s Comments 18. Plaintiff
claims that it was prejudiced because the Department’s primary
reliance on the faxes, the Customer C pre-payment of the sales
price for the claimed shipper transaction and the later loan was
not made known until the issuance of the draft results of the
remand redetermination. That is, plaintiff claims that while it
was given the opportunity to, and in fact did submit comments on
the draft redetermination, it was not allowed to place on the
record specific evidence rebutting the Department’s new
conclusions. See Pl.’s Comments 18 (“[Plaintiff], not
surprisingly, was unable to read the Department’s mind and to
provide documentation addressing certain factors which the
Department now considers relevant . . . .”). Thus, plaintiff
asks that “in the event that this Court decides that the
Department’s Redetermination should not be reversed,” it be
allowed to supplement the record with additional evidence “which
Court No. 04-00597 Page 20
directly addresses the Department’s rationale.” Pl.’s Comments
20.
As the court noted in Jinfu I, “[i]n its affiliation
analysis, Commerce must examine the subject relationship in
accordance with 19 U.S.C. § 1677(33).” Jinfu I, 30 CIT at ,
Slip Op. 06-137 at 12–13 (footnote omitted). The court further
stated that, in this case, under 19 U.S.C. § 1677(33), a finding
of control, and thus affiliation requires “proof that one
person . . . ‘ha[s] the potential to impact the decisions
concerning the . . . pricing . . . of the subject merchandise.’”
Jinfu I, 30 CIT at , Slip Op, 06-136 at 27 (quoting TIJID, Inc.
v. United States, 29 CIT , , 366 F. Supp. 2d 1286, 1293
(2005)); see also 19 C.F.R. § 351.102(b) (“The Secretary will not
find that control exists . . . unless the relationship has the
potential to impact decisions concerning the production, pricing,
or cost of the subject merchandise . . . .”). Thus, as was its
charge in Jinfu I, the court now “must determine whether Commerce
reasonably concluded that the evidence [on remand] failed to
demonstrate that on November 2, 2002, CEO B had, at a minimum,
the potential to exercise control over the pricing decisions of
Yousheng USA.” Jinfu I, 30 CIT at , Slip Op. 06-137 at 16.
The Court of Appeals for the Federal Circuit has made it
clear that, when reviewing an agency determination for
substantial evidence, this Court “do[es] not make the
Court No. 04-00597 Page 21
determination; [it] merely vet[s] the determination.” Nippon
Steel Corp. v. United States, 458 F.3d 1345, 1352 (Fed. Cir.
2006). In other words, the Court “must affirm a [Commerce]
determination if it is reasonable and supported by the record as
a whole, even if some evidence detracts from the [Department]’s
conclusion.” Id. (internal quotation marks & citation omitted).
In its Remand Redetermination, Commerce has again found that
the evidence, including that newly submitted on remand by
plaintiff, fails to demonstrate that CEO B had the potential to
control or actually controlled Jinfu USA as of November 2, 2002.
On remand, the Department took into consideration affidavits of
CEO B, Mr. A, Mr. D and Attorney E. In addition, the Department
emphasized the faxed communications between Mr. A and CEO B
regarding the price Mr. A was to charge Customer C for the honey.
In large part because it found this evidence to be incredible,
the Department continued to find that CEO B did not control Jinfu
USA’s pricing decisions. Commerce, however, failed to explain
adequately why the evidence on the record as supplemented on
remand supports its finding that CEO B was not in control of
Jinfu USA at the time of the claimed new shipper sale.
In particular, Commerce has not explained why its finding
that the faxes, “even if considered credible or reliable, merely
indicate that Mr. A found a customer willing to pay X price per
[metric ton] for the honey and that CEO B agreed to this price.”
Court No. 04-00597 Page 22
Remand Redetermination at 11 (footnote omitted). That is,
Commerce has not articulated a rational connection between its
conclusion that CEO B did not control Jinfu USA’s pricing
decisions and its statement that the faxes, if valid, would not
evidence control. Of particular concern is Commerce’s failure to
expressly state why CEO B’s approval of the sales price and
authorization to execute the contract do not evidence control.
See Pl.’s Remand Submission, Ex. 20 (“We accept the client’s
quotation . . . as ex-warehouse price on the condition that it
passes the examination of the US customs and FDA. . . . I hereby
authorize you to sign contract with the client.”). Indeed, it is
difficult to read the facsimiles without concluding that, if they
are authentic, they are evidence that Mr. A sought CEO B’s
approval of the transaction and the price, and that he received
it. Therefore, the court remands this matter to Commerce to
permit the agency to explain why, if proven to be genuine, the
contents of that exchange would not demonstrate that CEO B
controlled Jinfu USA.
In addition, the court also finds it proper to allow
plaintiff, on remand, to put on the record specific evidence
aimed at rebutting Commerce’s conclusions, which were first made
known in the draft remand redetermination, regarding: (1) the
credibility and reliability of the faxes; and (2) the
circumstances surrounding Customer C’s pre-payment of the sales
price and the loan. This situation is not unlike those presented
Court No. 04-00597 Page 23
in AK Steel Corporation v. United States, 22 CIT 1070, 34 F.
Supp. 2d 756 (1998) and Böwe-Passat v. United States, 17 CIT 335(1993) (not reported in the Federal Supplement). Here, as in
those cases, plaintiff was first made aware of the prominent role
played by certain evidence in Commerce’s decision after the
record was closed. See AK Steel Corp., 22 CIT at 1092, 34 F.
Supp. 2d at 773 (sustaining Commerce’s use of respondent’s
explanation of data discrepancy as record evidence because
respondent “first became aware that reconciliation was in dispute
upon receiving a copy of [d]omestic [p]roducers’ [c]ase
[b]rief”); Böwe-Passat, 17 CIT at 343 (remanding matter, and
holding that Commerce’s refusal to permit respondent to address
previously unknown deficiencies in its submissions, made known
after record was closed, was a “predatory ‘gotcha’ policy”).
Plaintiff rightly complains that it had no way of knowing that
the lack of a reference date would be pivotal to its case. Also,
nothing in any of the proceedings had before the draft remand
redetermination indicated that the Department would rely so
heavily on Customer C’s having made early and full payment for
the claimed new shipper sale and having loaned Mr. A money to
finance a later transaction without the latter having secured CEO
B’s approval. Therefore, on remand, Commerce is instructed to
reopen the record and permit plaintiff to submit new evidence
with respect to these matters.
Court No. 04-00597 Page 24
CONCLUSION
Based on the foregoing, the court finds to be unsupported by
substantial evidence Commerce’s Remand Redetermination and
remands this case for a second time. On remand, Commerce is to:
(1) take into account the court’s opinion and provide an
explanation as to why the contents of the faxes exchanged between
Mr. A and CEO B, if credible and reliable, do not support a
conclusion that CEO B controlled Jinfu USA; and (2) reopen the
record to allow plaintiff to put on the record new evidence
regarding the credibility and reliability of the faxes, the
circumstances surrounding Customer C’s pre-payment of the sales
price for the claimed new shipper sale and the facts behind Mr.
A’s obtaining a loan from Customer C for a later transaction
without first obtaining CEO B’s approval. Remand results are due
September 11, 2007. Comments to the remand results are due
October 11, 2007. Replies to such comments are due October 22,
2007.
/s/Richard K. Eaton
Richard K. Eaton
Dated: June 13, 2007
New York, New York