Toys "R" Us, Inc. v. United States

SLIP OP. 08-79
UNITED STATES COURT OF INTERNATIONAL TRADE
__________________________________________
:
TOYS “R” US, INC., :
:
Plaintiff, :
:
v. : Before: Jane A. Restani, Chief Judge
:
UNITED STATES, : Court No. 07-00115
:
Defendant, :
:
and :
:
AMERICAN FURNITURE MANUFACTURERS :
COMMITTEE FOR LEGAL TRADE, :
:
and :
:
VAUGHAN-BASSETT FURNITURE :
COMPANY, INC. :
:
Defendant-Intervenors. :
:
OPINION
[Commerce scope inquiry determination remanded.]
Dated: July 16, 2008
Grunfeld Desiderio Lebowitz Silverman & Klestadt, LLP (Mark E. Pardo and
Paul G. Figueroa) for the plaintiff.
Gregory G. Katsas, Acting Assistant Attorney General; Jeanne E. Davidson,
Director, Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil
Division, U.S. Department of Justice (Brian A. Mizoguchi); Nithya Nagarajan, Office of the
Chief Counsel for Import Administration, U.S. Department of Commerce, of counsel, for the
defendant.
King & Spalding, LLP (J. Michael Taylor, Stephen A. Jones, Joseph W. Dorn,
and Tina M. Shaughnessy) for the defendant-intervenors.
Court No. 07-00115 Page 2
Restani, Chief Judge: This matter is before the court on plaintiff Toys “R” Us’
(“TRU”) motion for judgment upon the agency record pursuant to USCIT Rule 56.2. Plaintiff,
an importer of certain toy boxes from the People’s Republic of China (“PRC”), challenges the
United States Department of Commerce’s (“Commerce”) final scope ruling regarding an
antidumping duty order covering certain wooden bedroom furniture from the PRC. (See Compl.
¶¶ 1–2); see also Wooden Bedroom Furniture from the People’s Republic of China: Scope
Ruling on Toy Boxes, available at App. to Pl.’s Br. in Supp. of Rule 56.2 Mot. for J. Upon the
Agency R. (“Pl.’s App.”), Tab 4 (Mar. 9, 2007) (“Final Scope Ruling”). For the reasons stated
below, the court remands to Commerce to determine a functional test and to conduct a scope
inquiry in accordance with 19 C.F.R. § 351.225(k)(2).
BACKGROUND
On October 31, 2003, the American Furniture Manufacturers Committee for Legal Trade
filed a petition for the imposition of antidumping duties against wooden bedroom furniture from
the PRC. See Petition for the Imposition of Antidumping Duties Against Wooden Bedroom
Furniture from China, available at Pl.’s App., Tab 1, at Ex. 5 (Oct. 31, 2003) (“Petition”). An
antidumping duty order was placed on certain wooden bedroom furniture from the PRC in
January 2005. See Notice of Amended Final Determination of Sales at Less Than Fair Value
and Antidumping Duty Order: Wooden Bedroom Furniture From the People’s Republic of
China, 70 Fed. Reg. 329, 329–30 (Jan. 4, 2005) (“WBF Order”). The scope of this order was
stated as follows:
The product covered by the order is wooden bedroom furniture. Wooden
bedroom furniture is generally, but not exclusively, designed, manufactured, and
offered for sale in coordinated groups, or bedrooms, in which all of the individual
pieces are of approximately the same style and approximately the same material
and/or finish.
Court No. 07-00115 Page 3
Id. at 332. Additionally, the subject merchandise included the following items:
(1) Wooden beds such as loft beds, bunk beds, and other beds; (2) wooden
headboards for beds (whether stand-alone or attached to side rails), wooden
footboards for beds, wooden side rails for beds, and wooden canopies for beds;
(3) night tables, night stands, dressers, commodes, bureaus, mule chests,
gentlemen’s chests, bachelor’s chests, lingerie chests, wardrobes, vanities,
chessers, chifforobes, and wardrobe-type cabinets; (4) dressers with framed glass
mirrors that are attached to, incorporated in, sit on, or hang over the dresser;
(5) chests-on-chests, highboys, lowboys, chests of drawers, chests, door chests,
chiffoniers, hutches, and armoires; (6) desks, computer stands, filing cabinets,
book cases, or writing tables that are attached to or incorporated in the subject
merchandise; and (7) other bedroom furniture consistent with the above list.
Id. at 332 (footnotes omitted). A “chest” was defined as being “typically a case piece taller than
it is wide featuring a series of drawers and with or without one or more doors for storing
clothing. The piece can either include drawers or be designed as a large box incorporating a lid.”
Id. at 332 n.5. The WBF Order also contained a list of particular items that were excluded from
the scope of the order.1
1
The following items were excluded:
(1) Seats, chairs, benches, couches, sofas, sofa beds, stools, and
other seating furniture; (2) mattresses, mattress supports (including
box springs), infant cribs, water beds, and futon frames; (3) office
furniture, such as desks, stand-up desks, computer cabinets, filing
cabinets, credenzas, and bookcases; (4) dining room or kitchen
furniture such as dining tables, chairs, servers, sideboards, buffets,
corner cabinets, china cabinets, and china hutches; (5) other
non-bedroom furniture, such as television cabinets, cocktail tables,
end tables, occasional tables, wall systems, book cases, and
entertainment systems; (6) bedroom furniture made primarily of
wicker, cane, osier, bamboo or rattan; (7) side rails for beds made
of metal if sold separately from the headboard and footboard;
(8) bedroom furniture in which bentwood parts predominate;
(9) jewelry armories; (10) cheval mirrors[;] (11) certain metal
parts[;] (12) mirrors that do not attach to, incorporate in, sit on, or
hang over a dresser if they are not designed and marketed to be
sold in conjunction with a dresser as part of a dresser-mirror set.
(continued...)
Court No. 07-00115 Page 4
On September 26, 2006, TRU filed a scope ruling request, asking that Commerce find
five toy boxes imported by TRU to be outside the scope of the WBF Order. Toys “R” Us Scope
Inquiry on Certain Toy Boxes—Wooden Bedroom Furniture from the People’s Republic of
China, available at Pl.’s App., Tab 1 (Sept. 26, 2006). TRU argued that the clear language of the
WBF Order, as well as the descriptions included in the petition and the International Trade
Commission’s (“ITC”) final report, indicated that the toy boxes at issue are not wooden bedroom
furniture. Id. at 8. Specifically, TRU maintained that “toy boxes are not included in the scope
based on the language covering bedroom chests because toy boxes are very distinct products
used solely for the specific purposes of storing toys as well as entertaining and educating
children.” Id.On March 9, 2007, Commerce released its final scope ruling, finding that four of the five
boxes at issue were within the scope of the antidumping duty order. Final Scope Ruling at 9.
Pursuant to 19 C.F.R. § 351.225(k)(1), Commerce found the description of the merchandise
contained in the petition, the initial investigation, and the determinations of the Secretary of
Commerce (including prior scope determinations)2 and the ITC to be dispositive of the matter.
Id. at 8–9. Commerce reiterated that “the WBF Order ‘makes no reference requiring that boxes
1
(...continued)
Id. at 332–33 (footnotes omitted).
2
In an unrelated scope determination made on November 14, 2005, Commerce found
that certain infant furniture, including infant armoires and toy boxes or chests, were within the
scope of the WBF Order pursuant to 19 C.F.R. § 351.225(k)(1). Final Scope Ruling and Formal
Scope Inquiry Initiation: Dorel Asia, available at Pl.’s App., Tab 1, at Ex. 1 (Nov. 14, 2005)
(“Dorel Scope Ruling”). Commerce determined that the scope language “clearly states that
wooden bedroom ‘chests’ or ‘box[es] incorporating a lid’ are within the scope of the Order,
regardless of the proposed contents and design of the chests or boxes,” and found that the Order
made “no reference requiring that boxes or chests be used for any particular or defined purpose.”
Id. at 11–12.
Court No. 07-00115 Page 5
or chests be used for any particular or defined purpose. Nor does {it} provide exclusionary
language for toy boxes or chests or any other wooden bedroom furniture that may be fitted with
slow-closing safety hinges, special locking mechanisms, or air vents.’” Id. at 8 (citing Dorel
Scope Ruling at 12). Finding that four of the five toy boxes “are large boxes, incorporating a lid,
and are made substantially of wood,” Commerce determined that “these toy boxes clearly meet
the description of the merchandise covered by the WBF Order.” Id. at 8–9. Commerce therefore
found it unnecessary to consider the additional factors contained in 19 C.F.R. § 351.225(k)(2).
Id. at 9.
JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction pursuant to 19 U.S.C. § 1516a(a)(2). Commerce’s final scope
determination is upheld unless it is found “to be unsupported by substantial evidence on the
record, or otherwise not in accordance with law.” 19 U.S.C. §1516a(b)(1)(B)(i). “The court
gives significant deference to Commerce’s interpretation of its own orders, but a scope
determination is not in accordance with the law if it changes the scope of an order or interprets
an order in a manner contrary to the order’s terms.” Allegheny Bradford Corp. v. United States,
342 F. Supp. 2d 1172, 1183 (CIT 2004); see also Duferco Steel, Inc. v. United States, 296 F.3d
1087, 1096–97 (Fed. Cir. 2002).
DISCUSSION
Pursuant to 19 C.F.R. § 351.225, “in considering whether a particular product is included
within the scope of an order or a suspended investigation, [Commerce] will take into account. . .
[t]he descriptions of the merchandise contained in the petition, the initial investigation, and the
determinations of [Commerce] (including prior scope determinations) and the [ITC].” 19 C.F.R.
§ 351.225(k)(1). Only “[w]hen the above criteria are not dispositive . . . will [Commerce]
Court No. 07-00115 Page 6
further consider: (i) The physical characteristics of the product; (ii) The expectations of the
ultimate purchasers; (iii) The ultimate use of the product; (iv) The channels of trade in which the
product is sold; and (v) The manner in which the product is advertised and displayed.” 19
C.F.R. § 351.225(k)(2). In conducting a scope inquiry, “‘the scope of a final order may be
clarified, [but] it can not be changed in a way contrary to its terms.’” Duferco Steel, Inc., 296
F.3d at 1097 (quoting Smith Corona Corp. v. United States, 915 F.2d 683, 686 (Fed. Cir. 1990)).
TRU argues that the WBF Order “establishes two separate and distinct requirements for
subject merchandise: (1) all subject merchandise must be made substantially of wood and (2) all
subject merchandise must be ‘bedroom furniture.’” (Br. in Supp. of Pl.’s Rule 56.2 Mot. for J.
Upon the Agency R. 13.) TRU contends that Commerce’s reasoning unlawfully expands the
scope of the WBF Order to cover all wooden boxes with lids, even if they are not “bedroom”
furniture. (Id. at 19.) TRU maintains that instead, “[a] box or a chest can only be scope
merchandise if it is an item of bedroom furniture, which can only be determined by its design
and intended purpose.” (Id. at 14.) TRU argues that the WBF Order describes a chest as “for
storing clothing,” and therefore, because the toy boxes in question are for other purposes, they
plainly fall outside the scope of the order as constituting “non-bedroom furniture.” (Id. at
14–15.)
TRU identifies the underlying petition and ITC investigation as further indications that
the scope of wooden bedroom furniture is defined by its use or purpose. The petition states that
“[a]ll types of wooden bedroom furniture are made of wood products, have physical
characteristics that are dictated by their intended use in a bedroom, and are typically used in a
bedroom.” Petition at 20. The petition further notes that:
Court No. 07-00115 Page 7
Because a bedroom is the room in which people sleep, it is also the room in which
people dress and undress, and is, therefore, the room in which people store their
clothes. In terms of daily life, these functions are the essence of a bedroom – and
have been, since time immemorial – and they are so linked as to be inseparable.
Id. at 18.
The ITC investigation also concluded that “wooden furniture [is] designed and
manufactured for use in the bedroom. It includes such items of wooden furniture as beds,
nightstands, chests, armoires, and dressers with mirrors.” Wooden Bedroom Furniture From
China, USITC Pub. No. 3743, Investigation No. 731-TA-1058 (Final), at 6 (Dec. 2004). The
ITC determined that “all of the individual items of WBF share the same broad physical
characteristics and end uses in that they are items of wooden furniture designed and
manufactured for use in a bedroom.” Id. at 7.
Commerce conversely argues that the plain language of the WBF Order clearly defines
“chests” as bedroom furniture, contending that “bedroom” is defined by the listed subject and
non-subject merchandise. (Tr. of Oral Argument 21:8–13 (May 1, 2008).) Commerce contends
that the scope definition list of bedroom furniture is not an exhaustive list because it expressly
includes the catch-all item of “other bedroom furniture consistent with the above list.” (Def.’s
Mem. in Opp’n to Pl.’s Mot. for J. Upon the Agency R. 14.) Commerce therefore maintains that
because this catch-all follows the listing of “chests,” the WBF Order clearly states that “‘chests’
– “like all other items included in the ‘above list’ of subject merchandise – are defined by the
WBF Order’s plain language to be ‘bedroom furniture.’” (Id. at 14–15.) Stated differently,
Commerce argues that the subject merchandise meet the definition of “chests” because they are
boxes with lids and do not fall within any of the specifically excluded items listed in the WBF
Court No. 07-00115 Page 8
Order.3 Commerce also notes that the description of “chests” uses the word “typically” instead
of “always.” (Id. at 16.) Commerce contends that “to the extent that a chest is ‘typically’ a
piece ‘for storing clothing,’ it is also plain from the text of the WBF Order’s definition of a chest
that such a piece can be ‘a large box incorporating a lid.’” (Id. at 17.)
“[B]ecause the descriptions of subject merchandise contained in [Commerce’s]
determinations must be written in general terms,” it is often difficult to determine “whether a
particular product is included within the scope of an antidumping or countervailing duty order.”
19 C.F.R. § 351.225(a); see also Duferco Steel, Inc., 296 F.3d at 1096. Here, the plain language
of the WBF Order does not define “bedroom furniture.” While both parties have presented
arguments as to what the proper functional test for “bedroom furniture” is under the WBF Order,
neither test is sufficient for a scope inquiry determination under 19 C.F.R. § 351.225(k)(1).
Contrary to TRU’s argument, the WBF Order does not require that chests must always be for
“storing clothing” but rather states that they are only “typically” designed for doing so.
Although the petition and ITC investigation “may provide valuable guidance as to the
interpretation of the final order,” and indicate that purpose or use help define the scope of
wooden bedroom furniture, “they cannot substitute for language in the order itself.” Duferco
Steel, Inc., 296 F.3d at 1097. Further, purpose or use cannot be the test when conducting a
§ 351.225(k)(1) determination, as for this product, they are factors relevant only to a
§ 351.225(k)(2) inquiry, which Commerce did not do here.
The WBF Order also cannot be read to encompass wooden chests as subject merchandise
unless explicitly excluded. There are items that are not bedroom furniture that are neither
3
Notably, Commerce conceded at oral argument that it was not aware of any other scope
order that has been read in this manner. (Tr. of Oral Argument 21:14–23.)
Court No. 07-00115 Page 9
included nor excluded under the order, and it is not possible to consider every item that could
potentially be subject to the order. Instead, when the criteria under § 351.225(k)(1) are not
dispositive for a scope inquiry, as is the case here, a determination pursuant to § 351.225(k)(2) is
warranted. See Novosteel SA v. United States, 128 F. Supp. 2d 720, 723–24 n.5 (CIT 2001); see
also Tak Fat Trading Co. v. United States, 396 F.3d 1378, 1382 (Fed. Cir. 2005) (“If the
determination can be made based on section (k)(1), a scope ruling will issue without a full
evaluation of the criteria in (k)(2).”).
Consequently, the court concludes the WBF Order is ambiguous with respect to the
chests at issue. A proper functional test has not been articulated that would make it possible to
determine whether the toy boxes at issue are within the scope of the WBF Order. In addition to
articulating a test, it is necessary for Commerce to further address whether the subject
merchandise falls within the scope of the order using the factors enumerated in § 351.225(k)(2).
CONCLUSION
The court hereby remands the matter to Commerce for further evaluation pursuant to the
procedures set forth in 19 C.F.R. § 351.225(k)(2).
/s/ Jane A. Restani
Jane A. Restani
Chief Judge
Dated: This 16th day of July, 2008.
New York, New York.