Tropicana Products, Inc. v. United States

SLIP OP. 07-141
UNITED STATES COURT OF INTERNATIONAL TRADE
:
TROPICANA PRODUCTS, INC., :
:
Plaintiff, :
:
and :
:
LOUIS DREYFUS CITRUS, INC., and :
FISCHER S/A AGROINDUSTRIA, :
:
Plaintiff-Intervenors, :
:
v. :
: Before: Jane A. Restani, Chief Judge
:
UNITED STATES, : Court No. 06-00109
:
Defendant, :
:
and :
:
A. DUDA & SONS, INC., CITRUS :
WORLD, INC., FLORIDA CITRUS MUTUAL, :
SOUTHERN GARDENS CITRUS :
PROCESSING CORP., and THE COCA-COLA :
COMPANY, :
:
Defendant-Intervenors. :
:
OPINION
[Defendant United States’ determination of material injury by reason of subject imports
REMANDED.]
Dated: September 19, 2007
Neville Peterson, LLP (John M. Peterson, Catherine C. Chen, George W. Thompson, and
Michael K. Tomenga) for the plaintiff.
Vinson & Elkins, LLP (Christopher A. Dunn and Valerie S. Ellis) for the plaintiff-
intervenor Louis Dreyfus Citrus, Inc.
COURT NO. 06-00109 PAGE 2
Kalik Lewin (Robert G. Kalik and Brenna S. Lenchak) for the plaintiff-intervenor Fischer
S/A Agroindustria.
Peter D. Keisler, Assistant Attorney General; Jeanne E. Davidson, Director, Commercial
Litigation Branch, Civil Division, U.S. Department of Justice (Michael J. Dierberg), for the
defendant.
James M. Lyons, General Counsel, U.S. International Trade Commission (David A.J.
Goldfine and Andrea C. Casson) for the defendant.
Barnes, Richardson & Colburn (Stephen W. Brophy) for defendant-intervenor A. Duda &
Sons, Inc., Citrus World, Inc., Florida Citrus Mutual, and Southern Gardens Citrus Processing
Corp.
Crowell & Moring, LLP (Jeffrey L. Snyder and Alexander H. Schaefer) for the
defendant-intervenor the Coca-Cola Company.
Restani, Chief Judge: This matter arises from Plaintiff Tropicana Products, Inc.’s
(“Tropicana”) challenge to the International Trade Commission’s (“Commission”) determination
that an industry in the United States producing conventional and organic frozen concentrated
orange juice for further manufacturing (“FCOJM”) and conventional and organic not-from-
concentrate orange juice (“NFC”) (collectively “certain orange juice”) is materially injured by
reason of imports of certain orange juice from Brazil.1 Following parties’ cross-motions for
judgment on the agency record, the court remanded for the Commission to reconsider its
determination. See Tropicana Prods., Inc. v. United States, 484 F. Supp. 2d 1330, 1353–54 (CIT
2007) (“Tropicana I”). On remand, the Commission again found that the domestic orange juice
1
Fischer S/A Agroindustria (“Fischer”) and Louis Dreyfus Citrus, Inc. (“Dreyfus”) join
the action as Plaintiff-Intervenors. A. Duda & Sons, Inc., Citrus World, Inc., Florida Citrus
Mutual, Southern Gardens Citrus Processing Corp., and the Coca-Cola Company join as
Defendant-Intervenors.
COURT NO. 06-00109 PAGE 3
industry is materially injured by reason of imports of certain orange juice from Brazil. See
Certain Orange Juice from Brazil, USITC Pub. 3930, Inv. No. 731-TA-1089 (June 2007), List 1,
P.R. Doc. 371R (“Remand Determination”).
BACKGROUND
This matter began on December 27, 2004, when several domestic producers of
certain orange juice2 filed a petition with the Commission and the Department of Commerce
(“Commerce”), claiming that an industry in the United States was materially injured, or
threatened with material injury, by reason of imports of certain orange juice from Brazil.
Commerce instituted an antidumping duty investigation and found that certain orange juice from
Brazil was being sold at less then fair value (“LTFV”). Certain Orange Juice from Brazil, 71
Fed. Reg. 2183 (Dep’t Commerce Jan. 13, 2006) (notice of final determination of sales at less
than fair value and affirmative final determination of critical circumstances). Thereafter, the
Commission gave its final determination to Commerce.
After examining data from crop year (“CY”) 2001/02 through CY 2004/05, the
Commission determined that the domestic industry producing certain orange juice is being
injured by reason of imports of certain orange juice from Brazil. Tropicana appealed and the
court remanded the decision to the Commission. See Tropicana I, 484 F. Supp. 2d at 1353–54.
The court found that the Commission “did not examine all of the significant issues relating to the
shortfall in domestic production of certain orange juice, the opposition of certain domestic
2
The petitioners were Florida Citrus Mutual, A. Duda & Sons, Inc., Citrus World, Inc.,
Peace River Citrus Products, Inc., and Southern Garden Citrus Processing Corp. Certain Orange
Juice from Brazil–Staff Report, Inv. No. 731-TA-1089 (Jan. 27, 2005), at I-1, List No. 1, P.R.
Doc. 329 (“Final Staff Report”).
COURT NO. 06-00109 PAGE 4
orange juice processors to the petition, or the impact of non-subject imports.” Id. at 1343. The
court instructed the Commission to consider on remand: “the full effects of a shortage in the
supply of domestic round oranges, and how that affects the Commission’s volume and price
effects analysis”; “the opposition to the petition by a large portion of the domestic industry;
[and,] whether, if prices were adjusted to account for the LTFV margin, non-subject imports
would displace subject imports.” Id. at 1353. “Given the relatedness of the issues,” the court
also asked the Commission to “consider the totality of the evidence anew.” Id.
Upon remand, the Commission reconsidered each issue and determined that the
domestic orange juice industry is materially injured by reason of imports of certain orange juice
from Brazil.3 Remand Determination, at 1. Tropicana contests the Commission’s determination,
arguing that the Commission did not properly consider each issue as instructed by the court.
The court has reviewed the Commission’s remand determination and found at
least two significant flaws – the Commission did not properly examine the inverse correlation
between domestic production and subject imports, and the Commission did not conduct a proper
analysis of the impact of non-subject imports. The Commission should address these issues
before the court proceeds further in this case.
3
Six commissioners participated in this remand determination. Remand Determination, at
1 n.2, n.4. Three Commissioners (Vice Chairman Aranoff and Commissioners Lane and Pinkert)
reached an affirmative determination while three Commissioners (Chairman Pearson and
Commissioners Okun and Williamson) reached a negative determination. Remand
Determination, at 1 n.5. Pursuant to 19 U.S.C. § 1677(11) (2000), a tie vote is resolved in favor
of an affirmative determination.
COURT NO. 06-00109 PAGE 5
STANDARD OF REVIEW
The court will uphold the Commission’s final determination in an antidumping
duty investigation 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).
DISCUSSION
As stated in Tropicana I, to make an affirmative determination, “the Commission
must find: (1) a ‘present material injury or a threat thereof,’ and (2) causation of such harm by
reason of subject imports.” Tropicana I, 484 F. Supp. 2d at 1333 (quoting Hynix Semiconductor,
Inc. v. United States, 431 F. Supp. 2d 1302, 1306 (CIT 2006)). The Commission must show
both that “the harm suffered by the domestic industry is ‘not inconsequential, immaterial, or
unimportant,’” Tropicana I, 484 F. Supp. 2d at 1342 (quoting 19 U.S.C. § 1677(7)(A)), and that
there exists a “causal – not merely temporal – connection between the [subject imports] and the
material injury.” Gerald Metals, Inc. v. United States, 132 F.3d 716, 720 (Fed. Cir. 1997). It
“must analyze contradictory evidence or evidence from which conflicting inferences could be
drawn, to ensure that the subject imports are causing the injury . . . .” Taiwan Semiconductor
Indus. Ass’n v. ITC, 266 F.3d 1339, 1345 (Fed. Cir. 2001) (citations and quotation marks
omitted)).
Further, the Commission must consider three factors in conducting its
determination: “(I) the volume of imports of the subject merchandise, (II) the effect of imports of
that merchandise on prices . . . for domestic like products, and (III) the impact of imports of such
merchandise on domestic producers of domestic like products, but only in the context of
production operations in the United States.” 19 U.S.C. § 1677(7)(B)(i). The Commission “may
COURT NO. 06-00109 PAGE 6
[also] consider such other economic factors as are relevant to the determination . . . .” 19 U.S.C.
§ 1677(7)(B)(ii).
As stated previously, the Commission has failed to consider properly the inverse
correlation between domestic production and subject imports, and the impact of non-subject
imports.
I. Inverse Correlation Between Domestic Production and Subject Imports
In Tropicana I, the court noted that subject imports “fluctuated from year to year,
increasing when domestic production was higher and decreasing when domestic production was
lower.”4 Tropicana I, 484 F. Supp. 2d at 1344. The court remarked that this correlation may be
“explained by the need of the domestic producers of certain orange juice [to] maintain relatively
large bulk juice inventories to ensure their supply of certain orange juice during fluctuations in
domestic production,” and instructed the Commission to examine the issue. Id. at 1345–46
(citation and quotation marks omitted).
On remand, the Commission found that “[t]o the extent there is an inverse
correlation between domestic production and subject imports, . . . the magnitude of any such
correlation is questionable on this record” given that “[s]ubject import volumes were virtually
identical in two crop years when domestic production levels varied substantially.” Remand
Determination, at 8–9 n.47. The Commission stated that in CY 2002/03, subject imports totaled
4
Likewise, “the level of subject imports held in domestic inventory was inversely
correlated to the level of production of the domestic like product – rising when production levels
fell and vice-versa.” Tropicana I, 484 F. Supp. 2d at 1345.
COURT NO. 06-00109 PAGE 7
227.3 million gallons SSE,5 while domestic production totaled 203 million gallons SSE, and that
in CY 2004/05, subject imports totaled 231.7 million gallons SSE, while domestic production
totaled 149.6 million gallons SSE. Id. at 9 n.47.
The court, however, is uncertain how the Commission obtained its data regarding
domestic production. The table to which the Commission cites does not provide the domestic
production values that the Commission states in its remand determination. See Final Staff
Report, at Table C-3. Instead of stating that domestic production was 203 million gallons SSE in
CY 2002/03 and 149.6 million gallons SSE in CY 2004/05, the table to which the Commission
cites provides that domestic production was 1.23 billion pounds in CY 2002/03 and .97 billion
pounds in CY 2004/05. Id. It is unclear whether the Commission had converted the figures
listed in the table from pounds to gallons SSE and if so, whether the Commission had used a
proper conversion rate.
Further, if domestic production levels and subject import volumes are compared
using data expressing the values in the same unit of measurement, gallons SSE, the inverse
correlation between the two figures becomes readily apparent. As stated in Tropicana I,
The domestic production of certain orange juice decreased from approximately 1.432
billion gallons SSE in CY 2001/02 to 1.246 billion gallons SSE in CY 2002/03
before increasing to 1.471 billion gallons SSE in CY 2003/04 and then decreasing
significantly to 1.006 billion gallons SSE in CY 2004/05. Final Staff Report, at
Table IV-6. Meanwhile, the volume of subject imports increased from 109.7 million
gallons SSE in CY 2001/02 to 227.3 million gallons SSE in CY 2002/03, then
decreased to 154.2 million gallons SSE in CY 2003/04 before rising again to 231.7
million gallons SSE in CY 2004/05. Final Determination, at 17 n.133.
5
Single strength equivalent (“SSE”) gallons are a standard volume measurement for
ready-to-drink orange juice. Final Determination, at 17 n.132.
COURT NO. 06-00109 PAGE 8
Tropicana I, 484 F. Supp. 2d at 1343 n.20. As seen from these data, the volume of subject
imports increases when domestic production decreases and vice versa. As previously stated, this
strong correlation may be “explained by the need of the ‘domestic producers of certain orange
juice [to] maintain relatively large bulk juice inventories’ to ensure their supply of certain orange
juice during fluctuations in domestic production.” Tropicana I, 484 F. Supp. 2d at 1345 (quoting
Final Determination, at 15.)
The Commission, however, did not provide a sustainable analysis of this issue but
instead dismissed the magnitude of this correlation by referring to unexplained data. Thus, the
court remands this issue for the Commission to consider again.
II. Non-Subject Imports
The court also instructed the Commission to consider whether it would have to
analyze the effect of non-subject imports on the domestic industry as required by Gerald Metals,
132 F.3d at 720, and Bratsk Aluminium Smelter v. United States, 444 F.3d 1369, 1373 (Fed. Cir.
2006). As discussed in Tropicana I, in Gerald Metals, the Federal Circuit found that the
Commission should have examined whether non-subject imports would have replaced all or a
great part of subject imports when non-subject imports were perfect substitutes for subject
imports and frequently undersold the domestic like product. Gerald Metals, 444 F.3d at 718–19.
The Federal Circuit expanded upon this holding in Bratsk, stating that:
Where commodity products are at issue and fairly traded, price competitive, non-
subject imports are in the market, the Commission must explain why the
elimination of subject imports would benefit the domestic industry instead of
resulting in the non-subject imports’ replacement of the subject imports’ market
share without any beneficial impact on domestic producers.
Bratsk, 444 F.3d at 1373 (emphasis added). The Federal Circuit required the Commission to
COURT NO. 06-00109 PAGE 9
make such an explanation “whenever the antidumping investigation is centered on a commodity
product, and price competitive non-subject imports are a significant factor in the market.” Id. at
1375. Because the Commission did not make such an inquiry, the court remanded the issue to
the Commission.
On remand, the Commission found that the first factor of the test was met as certain
orange juice is a “commodity product.” Remand Determination, at 18. As to the second factor of
the test, the Commission found that “price competitive non-subject imports are not a significant
factor in the U.S. market based on the relatively low market share held by such imports.” Id. In
particular, the Commission noted that the three largest non-subject sources of certain orange juice
in the United States did not account for a large percentage of U.S. imports6 and U.S. apparent
consumption in the final year of the POI.7 Id. at 18–19. The Commission commented that “even
6
“[B]y quantity, non-subject imports comprised 40.8% of total imports in CY 2001/02,
20.8% in CY 2002/03, 29.4% in CY 2003/04, and 34.2% in CY 2004/05.” Tropicana I, 484 F.
Supp. 2d at 1350. While non-subject imports are not a majority of imports, it is difficult to say
that numbers ranging from above 20% to above 40% are not large.
7
The share of U.S. apparent consumption comprised of non-subject imports and of
subject imports is as follows:
(continued...)
COURT NO. 06-00109 PAGE 10
at their highest level of 8.0 percent of apparent consumption, non-subject imports’ market share was
only at the level held by subject imports before the subject imports’ surge late in the POI.” Id. at
18. The Commission further found that projected exports from non-subject Brazilian producer
Citrovita to the U.S. for CY 2005/06 and 2006/07 were modest compared to subject Brazilian
producer’s projected exports to the U.S. in CY 2005/06 and 2006/07. Id. at 19. Thus, the
7
(...continued)
Crop Year 2001/02 2002/03 2003/04 2004/05
U.S. Apparent 5.2% 4.2% 4.5% 8.0%
Consumption
Comprised of
Non-Subject
Imports
U.S. Apparent 7.6% 15.9% 10.7% 15.4%
Consumption
Comprised of
Subject Imports
Remand Determination, at I-11.
The following lists the three largest non-subject import countries’ share of U.S. imports
(by quantity) and apparent consumption of certain orange juice:
Crop Year 2004/05
Mexico Percentage of U.S. Imports 15.6%
Percentage of U.S. Apparent Consumption 3.7%
Belize Percentage of U.S. Imports 8.6%
Percentage of U.S. Apparent Consumption 2.0%
Costa Rica Percentage of U.S. Imports 8.4%
Percentage of U.S. Apparent Consumption 2.0%
Id. at I-10–11.
See infra note 8 regarding Brazilian imports.
COURT NO. 06-00109 PAGE 11
Commission found that non-subject imports are not a significant factor in the U.S. and did not
complete the final step of a Bratsk test.
Although non-subject imports here did comprise a smaller portion of the domestic
market during the POI than those at issue in Bratsk, as the court observed previously, they are
nevertheless not “an indisputably insignificant factor in the market.” Tropicana I, 484 F. Supp.
2d at 1351. Thus, the court required the Commission upon remand to examine this issue. It did
so, but did not base its conclusion of insignificance on substantial evidence. Given the existence
of an important Brazilian non-subject producer not reflected in the major exporter non-subject
import totals8 and given that the Commission found that the volume of subject imports of other
countries comprising between 7.6% to 15.9% of apparent consumption during the POI was
significant enough to cause harm, the court cannot accept the Commission’s conclusion that the
volume of non-subject imports comprising only a slightly smaller percentage of apparent
consumption and as much as 40.8% in the first year of the POI of all imports is insignificant.
See Remand Determination, at I-10. Further, the volume of such non-subject imports as a share
of apparent consumption had surged during the last two years of the POI from 4.5% to 8.0%,
suggesting that their presence is increasing. Id. at I-11. Relatedly, such non-subject imports’
share of total imports has also increased steadily from the second year of the POI to the last. Id.
8
In its remand determination, the Commission noted that Citrovita, a major Brazilian
orange juice producer, was subject to an antidumping duty order during the POI and exported
little or no juice to the U.S. during the POI. Remand Determination, at 19. The Commission
then examined projected imports from Citrovita but did not examine Citrovita’s projected
production and whether Citrovita would have exported more to the United States if subject
imports had been fairly priced. Id. This does not require the Commission to look into the future,
an inquiry to which the Commission objects, so much as to hypothesize as to what the present
players, such as Citrovita, would have done in a situation of fair trade.
COURT NO. 06-00109 PAGE 12
at I-10. Based on these figures, the court cannot sustain the conclusion that the level of non-
subject imports is so insignificant as to relieve the Commission of its obligation to perform a
more complete Bratsk analysis.9
Furthermore, in this case it may not be particularly difficult, even at this late date,
for the Commission to examine whether the non-subject imports here would be able to replace
subject imports. Although the Commission is generally obligated to examine the impact of
non-subject imports from various sources, the Commission already has much of this information,
including projected production figures relating to non-subject Brazilian producer Citrovita, on
which Tropicana focuses much concern. See Final Staff Report, at Table VII-7. Given that the
Commission has not provided a sufficient reason for its conclusion that non-subject imports are
such an insignificant factor in the market that the Bratsk test may be ignored and that the
Commission has detailed information regarding one of the primary non-subject producers of
concern, the Commission must examine whether non-subject imports would replace subject
imports if prices of subject imports reflected fair value. How the Commission chooses to carry
out this task under the facts of this case is for it to determine in the first instance.
The Commission has expressed its displeasure with the Bratsk test, but just as the
Commission must obey the directions of this Court, this Court must obey the directions of its
appellate court.10 It is not the court’s province to reduce the Bratsk test to a simple restatement
9
This is not to say that volume of non-subject imports is unimportant. It must, however,
be considered in the context of the complete analysis.
10
The Bratsk test is not found in the plain words of the statute but, in the view of the
Federal Circuit, is necessary to fulfill the intent of the statute. Even the Commission majority
(continued...)
COURT NO. 06-00109 PAGE 13
of the causal requirement. As far as the court can discern, the test requires the Commission to do
more than say, “Whatever harm the non-subject imports may have caused or may in the future
cause, the subject imports also caused harm or threaten to do so.” The Commissioners in the
controlling determination appear to understand that but have decided that on these facts that a
complete Bratsk test need not be applied. For the reasons stated, the court does not agree.
CONCLUSION
Accordingly, the court remands the affirmative determination to the Commission.
The Commission has failed to explain correctly its conclusions as to the inverse correlation
between subject imports and domestic production, and has failed to conduct a sufficient Bratsk
analysis as required by the circumstances of this case.11 The Commission has thirty days to
consider these issues again.
/s/ Jane A. Restani
Jane A. Restani
Chief Judge
Dated this 19th day of September, 2007.
New York, New York.
10
(...continued)
seems to accept that the holding of Bratsk is binding precedent on this Court and on the
Commission. Therefore, the Commission is not free to avoid using the new methodology that
the Court of Appeals requires when, as in this investigation, the Commission found that
commodity prices are at issue and fairly traded, price competitive, non-subject imports are in the
market.
11
The court accepts the Commission’s statement that “in any remand” it considers “the
entire record in light of any new findings” it has made. Remand Determination, at 15–16.