DuPont Teijin Films v. United States

Slip Op. 15-95
UNITED STATES COURT OF INTERNATIONAL TRADE
DUPONT TEIJIN FILMS, et al.,
Plaintiffs,
v.
UNITED STATES,
Before: Mark A. Barnett, Judge
Defendant,
Court No. 15-00048
and
TERPHANE, INC., and TERPHANE,
LTDA.,
Defendant-Intervenors.
OPINION
Barnett, Judge: Plaintiffs, DuPont Teijin Films, Mitsubishi Polyester Film, Inc.
(“Mitsubishi”), and SKC, Inc. (“SKC”), move the court to stay this case pending the
outcome of the appeal of the Department of Commerce’s (“Commerce”) scope
determination (the “Scope Ruling”) in Mitsubishi Polyester Film, Inc. v. United States,
No. 13-00062 (filed Feb. 6, 2013). (Pls.’ Mot. to Stay (“Mot.”), ECF No. 22.) Defendant,
the United States, through the United States International Trade Commission (“ITC” or
“Commission”), takes no position on the motion. (Def.’s Resp. to Mot., ECF No. 24.)
Defendant-Intervenors, Terphane, Inc., and Terphane, Ltda., (together, “Terphane”)
oppose staying the case. (Def.-Intervenors’ Resp. in Opp’n to Mot. (“Opp’n”), ECF No.
25.) For the reasons discussed below, the court grants Plaintiffs’ motion.
Court No. 15-00048 Page 2
BACKGROUND AND PROCEDURAL HISTORY
A. Commerce’s Scope Ruling and the Mitsubishi Litigation
On November 10, 2008, Commerce issued an antidumping duty order on
polyethylene terephthalate (PET) film from Brazil, China, and the UAE. Polyethylene
Terephthalate Film, Sheet, and Strip from Brazil, the People’s Republic of China, and
the United Arab Emirates, 73 Fed. Reg. 66,595 (Dep’t of Commerce Nov. 10, 2008)
(antidumping duty order). On February 22, 2012, Defendant-Intevernors requested a
scope ruling from Commerce concerning certain copolymer surface films. On January
7, 2013, Commerce issued the Scope Ruling and found that certain PET film
coextruded products manufactured by Defendant-Intervenor Terphane, Ltda., a
Brazilian firm, are outside of the scope of the antidumping duty order. Antidumping
Duty Order on PET Film, Sheet, and Strip from Brazil, A-351-841 (Dep’t of Commerce
Jan. 7, 2013) (final scope ruling). On February 6, 2013, Plaintiffs Mitsubishi and SKC,
U.S. producers of PET film, appealed the determination to this court, initiating the
Mitsubishi litigation.
B. The Sunset Review
On October 1, 2013, the ITC issued a Notice of Institution for the first five-year
review of PET film from Brazil, China, and the UAE (“the Sunset Review”).
Polyethylene Terephthalate Film, Sheet, and Strip from Brazil, China, and the United
Arab Emirates, 78 Fed. Reg. 60,311 (ITC Oct. 1, 2013) (initiation of five-year reviews).
In Terphane’s responses to the notice, they argued that “Terphane’s business strategy
emphasizes out-of-scope value-added products and growth in the domestic Brazilian
Court No. 15-00048 Page 3
market,” and noted that “Commerce’s recent scope ruling confirms that several of
Terphane’s product lines are not subject merchandise.” (Mot. Ex. 2.) Soon thereafter,
Plaintiffs submitted comments to the ITC, stating that they “are concerned that
Terphane’s responses to the Commission are predicated on controversial and incorrect
legal views regarding the definition of ‘subject merchandise,’” and attached a copy of
the Mitsubishi complaint. (Mot. Ex. 4.) On January 23, 2014, the ITC determined to
conduct a full sunset review of the antidumping duty order. Polyethylene Terephthalate
Film, Sheet, and Strip from Brazil, China, and the United Arab Emirates, Inv. Nos. 731-
TA-1131-1132-1134 (ITC Jan. 23, 2014) (explanation of commission determination on
adequacy).
In comments subsequently submitted to the ITC, Plaintiffs recommended that the
Commission “[i]nstruct Terphane to provide two sets of questionnaire responses, one of
which assumes that its Copolymer Surface Films . . . are within the scope of the order,”
and noted that Plaintiffs currently were challenging the Scope Ruling in Mitsubishi.
(Mot. Ex. 8.) Nevertheless, the ITC approved questionnaires stating that the Terphane
products in question were outside of the scope of the order. (See Mot. Ex. 9.) On
January 14, 2015, the ITC issued a final determination, in which it reached affirmative
likely injury determinations with respect to China and the UAE, and a negative likely
injury determination for Brazil. Polyethylene Terephthalate Film, Sheet, and Strip from
Brazil, China, and the United Arab Emirates, USITC Pub. 4512, Inv. Nos. 731-TA-1131-
1132-1134 (Jan. 2014).
Court No. 15-00048 Page 4
In its analysis, the ITC cumulated imports from China and the UAE, but not from
Brazil. See id. To support its decision not to cumulate Brazilian imports, the ITC stated:
Given the additional capacity coming online in Brazil in the reasonably
foreseeable future, the Brazilian industry’s behavior prior to the imposition
of the orders and its continued interest in the U.S. market for out-of-scope
merchandise, and in light of the relatively low standard for a discernible
adverse impact, we do not find that subject imports from Brazil would likely
have no discernible adverse impact on the domestic industry if the order
were revoked.
Id. at 13-14 (footnote omitted) (emphasis added). The Commission further found that
Brazilian imports would face different conditions of competition than Chinese and
Emirati imports for the following reasons:
There is only one Brazilian producer of subject PET film, Terphane Ltda.,
which has a corporate relationship with its U.S. affiliate, Terphane, Inc.;
Terphane, Inc. has control over all PET film sales in the U.S. market by
Telphane Ltda., and ensures that no sales of any Terphane products are
made to U.S. customers without its approval. As such, the general manager
of Terphane, Inc. has effective veto power over imports to the U.S. market
by Terphane Ltda., and is responsible for ensuring that any U.S. imports
from Brazil are consistent with Terphane’s overall coordinated corporate
strategy. Terphane’s strategy is detailed in its 2015 business planning
documents . . . . This strategy calls for (1) a focus on the Brazilian home
market and regional export market in Latin America; (2) the maximization of
production and sale of value-added and specialty films; (3) investment in
research so as to develop new value-added products; (4) seeking relief from
dumped imports under the Brazilian antidumping laws; and (5) being a
“niche player” in the North American market by exporting out-of-scope
higher value specialty films.
Id. at 19-20 (footnotes omitted) (emphasis added). In its material injury analysis, the
ITC again relied on Terphane’s corporate strategy, i.e., that imports from Brazil would
focus on out-of-scope merchandise, to find that subject imports from Brazil likely would
not have significant negative volume and price effects. Id. at 40-41, 43. Together,
Court No. 15-00048 Page 5
these findings led the ITC to conclude that “revocation of the antidumping duty order on
subject imports from Brazil would not likely lead to a significant adverse impact on the
domestic industry” and that “if the antidumping duty order were revoked, subject imports
from Brazil would not be likely to lead to continuation or recurrence of material industry
to an industry in the United States within a reasonably foreseeable time.” Id. at 43.
Commerce revoked the antidumping duty order for PET film from Brazil on February 6,
2015. Polyethylene Terephthalate Film, Sheet, and Strip from Brazil, the People’s
Republic of China, and the United Arab Emirates, 88 Fed. Reg. 6689 (Dep’t of
Commerce Feb. 6, 2015) (continuation and revocation of antidumping duty orders).
Plaintiffs filed this suit, contesting the ITC’s determination, on February 20, 2015,
(see ECF No. 1 (Summons)), and filed their Complaint on March 23, 2015, (Compl.,
ECF No. 5). Of relevance, Count 1 of the Complaint challenges the ITC’s cumulation
determination because it relied on the Scope Ruling for support, (Compl. ¶¶ 15-16), and
Count 3 alleges that the ITC’s volume, price effects, impact, and material injury findings
were predicated on the erroneous cumulation determination, (Compl. ¶¶ 21-22).
Plaintiffs now move to stay the action, pending the outcome of the Mitsubishi litigation.
(Mot.)
Legal Standard
A court’s power to stay its proceedings “is incidental to the power inherent in
every court to control the disposition of the causes on its docket with economy of time
and effort for itself, for counsel, and for litigants.” Neenah Foundry Co. v. United States,
24 CIT 202, 203 (2000) (citation omitted) (quoting Landis v. N. Am. Co., 299 U.S. 248,
Court No. 15-00048 Page 6
254 (1936)); accord RHI Refractories Liaoning Co. v. United States, 35 CIT __, __, 774
F. Supp. 2d 1280, 1284 (2011). Whether to stay a case lies “‘within the sound
discretion of the trial court.’” RHI Refractories Liaoning Co., 35 CIT at __, 774 F. Supp.
2d at 1284 (quoting Cherokee Nation of Okla. v. United States, 124 F.3d 1413, 1416
(Fed. Cir. 1997)). When exercising its discretion, the court “‘must weigh competing
interests and maintain an even balance,’ taking into account those of the plaintiff, the
defendant, non-parties or the public, and even itself.” Neenah Foundry Co., 24 CIT at
203 (footnote and citations omitted); accord RHI Refractories Liaoning Co., 35 CIT at
__, 774 F. Supp. 2d at 1284.
“A court may properly determine that it is efficient for its own docket and the
fairest course for the parties to enter a stay of an action before it, pending resolution of
independent proceedings which bear upon the case.” Deacero S.A.P.I. de C.V. v.
United States, Slip Op. 15-87, 2015 WL 4909618, at *4 (CIT Aug. 17, 2015) (citation
and quotation marks omitted). Without “a showing that there is at least a fair possibility
that the stay . . . will work damage to some one [sic] else, there is no requirement” that
the movant “make a strong showing of necessity or establish a clear case of hardship or
inequity to warrant the granting of the requested stay.” An Giang Agric. & Food Imp.
Exp. Co. v. United States, 28 CIT 1671, 1677, 350 F. Supp. 2d 1162, 1167 (2004)
(ellipses in original) (citations and quotation marks omitted). However, the movant
“[n]ormally . . . must clearly identify the ‘hardship or inequity’ in moving forward with the
case ‘if there is even a fair possibility that the stay . . . will work damage to some one
Court No. 15-00048 Page 7
[sic] else.’” RHI Refractories Liaoning Co., 35 CIT at __, 774 F. Supp. 2d at 1284
(footnote omitted) (second ellipses in original) (quoting Landis, 299 U.S. at 255).
Discussion
A. Plaintiffs’ Arguments
Plaintiffs argue that staying this case until the resolution of Mitsubishi will avoid
the possibility of conflicting judgments. They urge that this case and Mitsubishi “involve
a common legal question: whether Telephane’s Products are properly within the scope
of the antidumping duty order on PET film from Brazil.” (Mot. 10.) In Mitsubishi,
Mitsubishi and SKC are challenging the validity of Commerce’s Scope Ruling, while in
this case, the ITC’s reasoning relied on the Scope Ruling to support its decision not to
cumulate Brazilian imports with those from China and the UAE, leading to the negative
sunset review determination. Because Commerce is the agency charged with defining
the scope of antidumping duty orders, and because the ITC must defer to Commerce’s
scope rulings when making its own determinations, the court should not proceed with
the present case until the conclusion of Mitsubishi. (See Mot. 10, 12-13.)
Plaintiffs also assert that granting a stay will preserve judicial resources.
Because Mitsubishi and this case will require the court to determine whether Terphane’s
products fall within the scope of the antidumping duty order, staying this case until
Mitsubishi’s conclusion will allow the court to avoid expending resources to resolve the
same issue twice. (Mot. 11, 15.) Plaintiffs further contend that a stay would not harm
any of the parties. They note that Commerce already has revoked the antidumping duty
order on PET film from Brazil, and that the court has not enjoined U.S. Customs and
Court No. 15-00048 Page 8
Border Protection (“Customs”) from liquidating Terphane’s PET film entries from Brazil.
Therefore, neither Terphane nor the government will be injured by a stay. (Mot. 15-17.)
B. Defendant-Intervenors’ Arguments
Terphane avers that the court should not grant Plaintiffs’ motion because there is
no risk of conflicting judgments between this case and Mitsubishi. They assert that
Plaintiffs did not raise their scope argument before the ITC at the administrative level
and, therefore, did not exhaust their administrative remedies. Because of this failure to
exhaust, Plaintiffs are precluded from making a scope argument before the court in this
matter, and, thus, there is no danger of conflicting judgments. (Opp’n 1-14.) Terphane
also invokes Plaintiffs’ alleged inability to raise the scope claim to argue that granting a
stay will not promote judicial economy or conserve party resources. (Opp’n 14.)
Furthermore, they contend that the complexity of trade cases renders them “not
conducive to quick judicial review” and counsels against granting a stay. (Opp’n 14
(citation and quotation marks omitted).) Finally, Terphane maintains that a stay will
harm them because “any delay to litigation imposes some harm,” and “Plaintiffs’ motion
evinces an intent to cast a shadow and uncertainty over Terphane’s commercial
activities for as long as possible.” (Opp’n 15-16 (citation and quotation marks omitted).)
C. Analysis
The court finds that the various interests of the parties and the court itself support
staying this case pending the outcome of the Mitsubishi litigation. In Mitsubishi,
Mitsubishi and SKC, plaintiffs in this case, have appealed the Scope Ruling, which
found that certain of Terphane’s imports from Brazil are outside the scope of the
Court No. 15-00048 Page 9
antidumping duty order. In this action, Plaintiffs’ first claim challenges the ITC’s
decision not to cumulate Brazilian subject imports in reliance on the allegedly unlawful
Scope Ruling. (Compl. ¶ 16.) Plaintiffs’ third claim challenges the ITC’s volume, price
effects, impact, and material injury determinations, arguing that, “[h]ad Brazilian subject
imports been cumulated with subject imports from China and the U.A.E., the
Commission would have reached an affirmative likely material injury determination.”
(Compl. ¶ 22.) In other words, the ITC’s reliance on the Scope Ruling, which
underpinned its decision not to cumulate Brazilian subject imports, ultimately led to a
negative injury determination. Thus, the validity of the Scope Ruling is central to both
claims. In such circumstances, the court finds that staying this action pending the
conclusion of Mitsubishi would best conserve the resources of the court and parties, as
well as preclude the issuance of conflicting judgments. See SKF USA, Inc. v. United
States, Slip Op. 12-74, 2012 WL 1999685, at *1 (CIT June 4, 2012) (granting motion to
stay because cases raise the same general issue and “the pending litigation . . . is likely
to affect the disposition” of one of the plaintiff’s claims); RHI Refractories Liaoning Co.,
35 CIT __, 774 F. Supp. 2d at 1285; see also Am. Life Ins. Co. v. Stewart, 300 U.S.
203, 215 (1937) (“In the exercise of sound discretion[, a court] may hold one lawsuit in
abeyance to abide the outcome of another, especially where the parties and the issues
are the same.” (brackets in original)); An Giang Agric. & Food Imp. Exp. Co., 28 CIT at
__, 350 F. Supp. 2d at 1166 (noting that, if “the effect of a stay [is] to narrow and
sharpen the issues” in the stayed action, “that point counsels entry . . . of the stay”).
Court No. 15-00048 Page 10
Terphane’s contention that the court should not grant a stay because Plaintiffs
allegedly did not raise the Scope Ruling issue at the administrative level, is premature.
Although the court “‘shall, where appropriate, require the exhaustion of administrative
remedies,’” the court “has discretion with respect to whether to require exhaustion.”
SKF USA, Inc., 2012 WL 1999685, at *2 (quoting 28 U.S.C. § 2637(d)). The doctrine of
exhaustion “serves ‘the twin purposes . . . of protecting administrative agency authority
and promoting judicial efficiency.’” Gerber Food (Yunnan) Co. v. United States, 33 CIT
186, __, 601 F. Supp. 2d 1370, 1377 (2009) (ellipses in original) (citation and quotation
marks omitted) (quoting Richey v. United States, 322 F.3d 1317, 1326 (Fed. Cir. 2003)).
The court finds that ruling on the exhaustion issue at this time would not be a prudent
use of the resources of the parties or this court, because the outcome of Mitsubishi may
render Plaintiffs’ Scope Ruling arguments moot. See NSK Corp. v. United States, Slip
Op. 12-76, 2012 WL 1999641, at *2 (CIT June 4, 2012); SKF USA, Inc., 2012 WL
199685, at *2; see also Union Steel Mfg. Co. v. United States, 37 CIT __, __ n.7, 896 F.
Supp. 2d 1330, 1336 n.7 (2013) (collecting cases in which “stays have been entered
notwithstanding arguments that the plaintiff(s) failed to exhaust their administrative
remedies”). The court therefore will grant Plaintiffs’ motion notwithstanding the
outstanding exhaustion issue.
Finally, Terphane has failed to show that it will suffer any harm other than the
extended period of litigation if the court were to grant a stay. Commerce has revoked
the antidumping duty order on PET film imported from Brazil, and the court has not
enjoined Customs from liquidating Terphane’s entries. See Polyethylene Terephthalate
Court No. 15-00048 Page 11
Film, Sheet, and Strip from Brazil, the People’s Republic of China, and the United Arab
Emirates, 88 Fed. Reg. 6689. Consequently, Terphane’s imports of PET film currently
enter the United States free of any antidumping duty or security requirement. While
Terphane argues that “some harm is inherent in any denial of the right to proceed,”
Neenah Foundry Co., 24 CIT at 205, such effects, however, “are attendant to litigation
generally. At most, a stay would (to some extent) prolong them.” An Giang Agric. Food
Imp. Exp. Co., 28 CIT at __, 350 F. Supp. 2d at 1166. Terphane has not articulated any
cognizable harm that would come to it as a result of a stay in this action.
Taking these factors into account, the court finds that staying this case pending
the final outcome of the Mitsubishi litigation would conserve the resources of the parties
and the court, and eliminate the potential for conflicting judgments.
CONCLUSION
For the reasons stated above, the court grants Plaintiffs’ Motion to Stay. The
court therefore orders this case stayed pending the outcome of the Mitsubishi litigation.
The parties shall file a joint status report within 14 days of the final resolution of
Mitsubishi.
/s/ Mark A. Barnett
Mark A. Barnett, Judge
Dated: August 26, 2015
New York, New York