KYD, Inc. v. United States

Slip Op. 12- 10
UNITED STATES COURT OF INTERNATIONAL TRADE
KYD, INC.,
Plaintiff,
v.
UNITED STATES, Before: Donald C. Pogue,
Chief Judge
Defendant.
Court No. 09-00034
POLYETHYLENE RETAIL CARRIER BAG
COMMITTEE, HILEX POLY CO., LLC,
and SUPERBAG CORPORATION,
Defendant-Intervenors.
OPINION
[Affirming Department of Commerce’s remand results.]
Dated: January 18, 2012
David John Craven, Riggle and Craven, of Chicago, IL, for
Plaintiff.
Carrie Anna Dunsmore, Renee A. Gerber, Stephen Carl Tosini
and Vincent dePaul Phillips, Trial Attorneys, Commercial
Litigation Branch, Civil Division, U.S. Department of Justice, of
Washington, DC, for Defendant. With them on the brief were Tony
West, Assistant Attorney General, Jeanne E. Davidson, Director,
Patricia M. McCarthy, Assistant Director. Of counsel on the
brief were Rachel Elizabeth Wenthold and Scott McBride,
Attorneys, U.S. Department of Commerce, of Washington, DC.
Daniel Lawrence Schneiderman and Stephen Andrew Jones, King
& Spalding LLP, of Washington, DC, for Defendant-Intervenors.
Pogue, Chief Judge: This action returns to court following a
Court. No. 09-00034 Page 2
second remand to the Department of Commerce (“Commerce” or the
“Department”).1 Plaintiff KYD, Inc. (“KYD”), an unaffiliated
domestic importer, challenges these Final Remand Redetermination
Results (“Second Remand Results”).2
Specifically, KYD challenges the dumping margin (“rate”)
that Commerce selected in the Second Remand Results for KYD’s
entries of subject merchandise, certain retail carrier bags
(“carrier bags”), imported from Thailand and exported by King Pac
Industrial Co., Ltd. (“King Pac”) and Master Packaging Co., Ltd.
(“Master Packaging”).
The court has jurisdiction over this matter pursuant to
Section 516A(a)(2) of the Tariff Act of 1930, as amended, 19
U.S.C. § 1516a(a)(2) (2006)3 and 28 U.S.C. § 1581(c).
For the reasons discussed below, the court concludes that
the Second Remand Results comply with the court’s remand order,
are free of legal error, are based on a reasonable reading of the
record evidence, and therefore are affirmed.
1
The second remand was ordered by the court’s decision in
KYD, Inc. v. United States, __ CIT __, 779 F. Supp. 2d 1361(2011) (“KYD III”).
2
Defendant-Intervenors are Polyethylene Retail Carrier Bag
Committee et al. (“PRCBC”).
3
All further citations to the Tariff Act of 1930, as
amended, are to Title 19 of the U.S. Code, 2006 edition.
Court. No. 09-00034 Page 3
BACKGROUND
This matter arises from Commerce’s third administrative
review of its 2004 antidumping duty order on carrier bags from
Thailand, Antidumping Duty Order: Polyethylene Retail Carrier
Bags from Thailand, 69 Fed. Reg. 48,204 (Dep’t Commerce Aug. 9,
2004) (the “Order”).4 KYD and PRCBC requested the third review,
with respect to King Pac, and PRCBC requested review with respect
to Master Packaging and three other suppliers. While KYD fully
participated in the review, King Pac and Master Packaging did
not. Polyethylene Retail Carrier Bags from Thailand: Preliminary
Results of Antidumping Duty Administrative Review and Intent to
Rescind in Part, 73 Fed. Reg. 52,288, 52,290 (Dep't Commerce Sep.
9, 2008) (“Preliminary Results”).5
Because the exporter/producers did not so participate,
Commerce determined that use of facts available, see 19 U.S.C.
4
The third administrative review covered entries for the
period of review (“POR”) from August 1, 2006–July 31, 2007. See
Polyethylene Retail Carrier Bags from Thailand: Final Results and
Partial Rescission of Antidumping Duty Administrative Review, 74
Fed. Reg. 2,511 (Dep’t Commerce Jan. 15, 2009)(final results of
antidumping duty administrative review) (“Final Results”), and
accompanying Issues & Decision Memorandum, A-549-821, ARP 06–07
(Jan. 7, 2009). The court presumes knowledge of the facts and
proceedings of the previous determinations in this matter. See
KYD III at 1365–72.
5
No party disputes that King Pac and Master Packaging
failed to cooperate to the best of their abilities by not
responding to Commerce’s requests for information. Second Remand
Results 18, Aug. 18, 2011, ECF No. 98.
Court. No. 09-00034 Page 4
§ 1677e(a),6 was required and that an adverse inference, see 19
U.S.C. § 1677e(b),7 was warranted to determine KYD’s rate (an
adverse facts available (“AFA”) rate). Preliminary Results at
52,290. Commerce ultimately assigned a rate of 122.88 percent,
from the original investigation, for KYD’s entries. Id. In doing
so, Commerce declined to use information that KYD provided,
6
“(a) In general
If—
(1) necessary information is not available on the record, or
(2) an interested party or any other person—
(A) withholds information that has been requested by the
administering authority or the Commission under this
subtitle,
(B) fails to provide such information by the deadlines for
submission of the information or in the form and manner
requested, subject to subsections (c)(1) and (e) of
section 1677m of this title,
(C) significantly impedes a proceeding under this subtitle,
or
(D) provides such information but the information cannot be
verified as provided in section 1677m(i) of this title,
the administering authority and the Commission shall, subject to
section 1677m(d) of this title, use the facts otherwise available
in reaching the applicable determination under this subtitle.”
19 U.S.C. § 1677e(a).
7
“If the administering authority or the Commission (as the
case may be) finds that an interested party has failed to
cooperate by not acting to the best of its ability to comply with
a request for information from the administering authority or the
Commission, the administering authority or the Commission (as the
case may be), in reaching the applicable determination under this
subtitle, may use an inference that is adverse to the interests
of that party in selecting from among the facts otherwise
available.”
19 U.S.C. § 1677e(b).
Court. No. 09-00034 Page 5
including specifically its sales data, and did not calculate an
importer-specific assessment rate. Id. at 52,291. The Final
Results mirrored these decisions. Final Results at 2,511-12.
KYD commenced this action, challenging the application of
adverse inferences with respect to the relevant entries and
Commerce’s selection of an antidumping duty rate for those
entries. The court remanded, concluding that 19 U.S.C.
§ 1677m(e)8 required Commerce to either consider KYD’s
information or explain why it declined to do so. KYD, Inc. v.
United States, __ CIT __, 704 F. Supp. 2d 1323, 1334 (2010) (“KYD
8
“(e)Use of certain information
In reaching a determination under section 1671b, 1671d, 1673b,
1673d, 1675, or 1675b of this title the administering authority
and the Commission shall not decline to consider information that
is submitted by an interested party and is necessary to the
determination but does not meet all the applicable requirements
established by the administering authority or the Commission,
if--
(1) the information is submitted by the deadline established
for its submission,
(2) the information can be verified,
(3) the information is not so incomplete that it cannot serve
as a reliable basis for reaching the applicable determination,
(4) the interested party has demonstrated that it acted to the
best of its ability in providing the information and meeting
the requirements established by the administering authority or
the Commission with respect to the information, and
(5) the information can be used without undue difficulties.”
19 U.S.C. § 1677m(e).
Court. No. 09-00034 Page 6
II”).
In response, Commerce filed its First Remand Results on
September 2, 2010, explaining but not altering the 122.88 percent
rate. Reviewing those results, the court concluded that the
statute permitted Commerce to select a rate adverse to KYD, but
that the 122.88 percent rate was neither corroborated9 nor
supported by substantial evidence in the record. KYD III at 1368.
The court recognized that although that rate may have been
reliable when first used, it was no longer relevant to KYD’s
imports in the third review, especially when considered in light
of KYD’s own data. Id. at 1381-83.
Invoking a prior opinion in an earlier review of the Order,
the court explained that, in selecting an AFA rate, “Commerce is
permitted to use a ‘common sense inference that the highest prior
margin is the most probative evidence of current margins because,
if it were not so, the importer, knowing of the rule, would have
produced current information showing the margin to be less.” KYD
Inc. v. United States, 607 F.3d 760, 766-67 (Fed. Cir. 2010)
(“KYD I”) (quoting Rhone Poulenc, Inc. v. United States, 899 F.2d
9See 19 U.S.C. § 1677e(c)(“When the administering authority
or the Commission relies on secondary information rather than on
information obtained in the course of an investigation or review,
the administering authority or the Commission, as the case may
be, shall, to the extent practicable, corroborate that
information from independent sources that are reasonably at their
disposal.”); see also Gallant Ocean (Thai.) Co., Ltd v. United
States, 602 F.3d 1319, 1323 (Fed. Cir. 2010).
Court. No. 09-00034 Page 7
1185, 1190 (Fed. Cir. 1990) (“the Rhone presumption”10); KYD III
at 1378. But the court also recognized that the Rhone
presumption is both rebuttable and limited to previously examined
exporters,11 KYD III at 1379-81, and that “[e]ven if a party is
uncooperative, Commerce is still constrained by ‘commercial
reality.’Gallant, 602 F.3d at 1323.” KYD III at 1371.
Accordingly, the court again remanded to Commerce. Id. at 1384.
In its Second Remand Results, the Department reviewed KYD’s
submitted data and selected an AFA rate of 94.62 percent. Second
Remand Results 6. That rate represented sales transactions made
by two cooperative respondents reviewed in the third
administrative review, but was nonetheless higher than the
highest weighted-average margin of a cooperative respondent in
that review. Second Remand Results 4-6.
KYD now challenges the 94.62 percent rate.
10
“Despite the changed statutory context, the Federal
Circuit has since cited Rhone Poulenc for the proposition that
Commerce can select the highest prior dumping rate, see Ta Chen
Stainless Steel Pipe, Inc. v. United States, 298 F.3d 1330, 1339
(Fed. Cir. 2002) (citing Rhone Poulenc, 899 F.2d at 1190), and
for the proposition that Commerce is to ‘calculate dumping
margins as accurately as possible,’ Parkdale Int'l v. United
States, 475 F.3d 1375, 1380 (Fed. Cir. 2007) (citing Rhone
Poulenc, 899 F.2d at 1191).” KYD II, 704 F. Supp. 2d at 1330 n.8.
11
Commerce had not previously examined Master Packaging.
KYD III at 1380.
Court. No. 09-00034 Page 8
STANDARD OF REVIEW
The Department, in its remand redetermination, must comply
with the terms of the court’s remand order. Jinan Yipin Corp. v.
United States, __ CIT __, 637 F. Supp. 2d 1183, 1185 (2009). In
addition, 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.” 19 U.S.C. § 1516a(b)(1)(B)(i); Koyo Seiko
Co. v. United States, 20 F.3d 1160, 1164 (Fed. Cir. 1994).
The substantial evidence standard of review “can be
translated roughly to mean ‘is [the determination]
unreasonable?’” Nippon Steel Corp. v. United States, 458 F.3d
1345, 1351 (Fed. Cir. 2006) (alteration in original) (quoting
SSIH Equip. S.A. v. U. S. Int’l Trade Comm’n, 718 F.2d 365, 381
(Fed. Cir. 1983)); Daewoo Elecs. Co. v. Int’l Union, 6 F.3d 1511,
1520 (Fed. Cir. 1993)("The specific determination we make is
‘whether the evidence and reasonable inferences from the record
support’" Commerce's findings.). The “court reviews the record
as a whole, including any evidence that ‘fairly detracts from the
substantiality of the evidence,’ in determining whether
substantial evidence exists.” Gallant Ocean, 602 F.3d at 1323(Fed. Cir. 2010) (quoting Micron Tech., Inc. v. United States,
117 F.3d 1386, 1393 (Fed. Cir. 1997).
Court. No. 09-00034 Page 9
DISCUSSION
Plaintiff’s main argument against the Second Remand Results
is that there is a more accurate method to calculate KYD’s rate
than Commerce’s chosen methodology, and that Commerce’s
determination is contrary to law because KYD’s data is “more than
sufficient” to establish Plaintiff’s rate. Pl.’s Cmts. on Second
Remand Results 9, Sep. 9, 2011, ECF No. 101 (“Pl.’s Br.”).12 KYD
contends that Commerce should have selected its rate based on its
own submitted data, and that any missing information could have
been approximated using data from the two cooperative
respondents. Pl.’s Br. 10-12.13
Regarding its own average price data, Plaintiff submits that
the U.S. price for KYD’s purchases exceeded the price paid by the
12
The court has already rejected KYD’s argument that
Commerce is required to use KYD’s pricing information, finding
Commerce’s argument that 19 U.S.C. § 1677m(e) does not require
the use of such information when it is “so incomplete that it
cannot serve as a reliable basis” for calculating a dumping
margin for the entries at issue to be reasonable. KYD III at
1377-78.
13
Plaintiff correctly argues that Gallant Ocean (Thai.) Co.
v. United States requires only that Commerce determine a
“reasonably accurate estimate” of the rate that would have been
applied had the entity cooperated. Gallant Ocean, 602 F.3d at
1323 (Fed. Cir. 2010); Pl.’s Br. 13-14. The phrase originated in
F.lli De Cecco di Filippo Far S. Martino S.p.A. v. United States,
216 F.3d 1027, 1032 (Fed. Cir. 2010): “It is clear from
Congress's imposition of the corroboration requirement in 19
U.S.C. § 1677e(c) that it intended for an adverse facts available
rate to be a reasonably accurate estimate of the respondent's
actual rate, albeit with some built-in increase intended as a
deterrent to non-compliance.”
Court. No. 09-00034 Page 10
two cooperative respondents by approximately a third, and that
these substantial differences illustrate that the AFA rate was
aberrational. Pl.’s Br. 10-11. To Plaintiff, this data indicates
that Commerce’s selected rate reflects a price that far exceeds
the average price KYD paid and King Pac and Master Packaging
received. Id. at 10. Plaintiff claims that its pricing data,
while admittedly not sufficient to calculate an exact rate, is
still sufficient to establish a “reasonably accurate estimate of
the respondent[s’] actual rate” for KYD’s imported entries. Id.
at 9, 14.
Commerce disagrees, arguing that KYD’s data does not take
into account the differences in the products it purchased or the
normal values of the merchandise King Pac or Master Packaging
sold, rendering KYD’s conclusions on average prices it paid
versus average prices for merchandise sold by cooperative
respondents “meaningless.” Second Remand Results 18.
To Commerce, because the carrier bags KYD purchased are not
identical to those the cooperative respondents sold, and Commerce
does not know the manufacturing costs of the merchandise KYD
purchased, Commerce cannot simply make an adjustment in normal
value to calculate KYD’s margin. Id. at 19.14 Moreover, Commerce
14
Plaintiff relies on Changzhou Wujin Fine Chem. Factory
Co. v. United States, __ CIT __, 2010 WL 3239213 (2010) to argue
that Commerce strayed from a practice of calculating rates for
uncooperative respondents by using normal values from cooperative
respondents. But Plaintiff presents no facts to indicate that
Court. No. 09-00034 Page 11
notes that it does not have sufficient information regarding the
adjustment amounts required under 19 U.S.C. § 1677a(c),15 nor
does it have sufficient normal value information.16 Second Remand
Results 4.
Plaintiff disagrees, stating that because KYD’s sales were
purchased on an FOB Thailand basis, international freight, marine
insurance and U.S. brokerage and handling would not have been
deducted from the U.S. price. Thus, Plaintiff maintains that the
necessary information for these data elements was not missing.
Pl.’s Br. 6.
Commerce counters that while this is correct for
international freight, Commerce would still need more information
such as the relative location of factories, domestic freight
expenses and insurance costs, and identities of the freight
companies exporters’ used, rendering KYD’s solutions insufficient
because this information is not on the record. Def.’s Resp. to
Cmts. Regarding Remand Determination 7-8, Oct. 3, 2011, ECF No.
114 (“Def.’s Resp.); Pl.’s Br. 5-7.
the mandatory respondent’s merchandise at issue there was
different from that of the uncooperative respondent, as Commerce
demonstrates here. Pl.'s Br. 12.
15
Examples include inland freight in Thailand,
international freight and marine insurance. Second Remand Results
4.
16
Including prices or adjustments to price such as imputed
credit expense. Id.
Court. No. 09-00034 Page 12
Nonetheless, Commerce did consider KYD’s submitted U.S.
sales data. Second Remand Results 4-5. Specifically, it “used
KYD’s information to establish certain physical parameters of the
U.S. sales King Pac and Master Packaging made to KYD as a guide
in selecting an appropriate adverse facts-available rate from
[two cooperative respondents’,] Naraipak’s or Polyplast’s[,]
transaction-specific margins.” Id. at 5; Def.’s Resp. 3.
Commerce explained further, reasoning that the physical
characteristics of the models examined may influence pricing
behavior. Second Remand Results 5. Commerce noted that, in
general, in this proceeding, Commerce used thirteen physical
characteristics to match products. Id. KYD submitted information
on only eight of those thirteen characteristics, so in examining
products sold by Naraipak or Polyplast, Commerce looked for sales
similar to KYD’s imports based on those eight factors. Id.; see
also Preliminary Results, 73 Fed. Reg. at 52,292 (unchanged in
Final Results). Commerce did this to ensure that the sales of
the responding companies considered were sales of products
reasonably similar to KYD’s imports. Second Remand Results 5-6.
Based on these parameters, Commerce, applying an adverse
inference,17 chose the highest transaction-specific margin of
Naraipak and Polyplast’s sales that shared the eight physical
characteristics of the products imported by KYD from King Pak and
17
Pursuant to 19 U.S.C. § 1677e(b).
Court. No. 09-00034 Page 13
Master Packaging. Second Remand Results 6; Def.’s Resp. 3.18
Commerce argues that the margin selected in the Second
Remand Results is reliable as well as consistent with the court’s
order; and that the corroboration requirement19 in the statute
does not apply because Commerce used transaction-specific
information obtained during the investigation and thus did not
use secondary information in need of corroboration. Def.’s Resp.
4; see also 19 U.S.C. § 1677(e)c; KYD III at 1371. Commerce adds
that even if the corroboration requirement were in play, that the
margin would still be relevant to King Pac and Master Packaging’s
commercial reality because the carrier bags share the same
characteristics as those imported by KYD. Def.’s Resp. 4.
While a selected rate must reflect commercial reality, it
18
Commerce selected a rate of 73.70 percent. However,
after taking interested parties’ comments into consideration,
Commerce decided on a rate of 94.62 percent. Second Remand
Results 6. Plaintiff notes that after the adjustment of a
computer program relating to ink coverage was modified, Commerce
selected a new and higher “outlier” as the basis for the AFA
rate. Plaintiff argues that after this modification, less than a
third of KYD’s reported observations were of bags falling within
the criteria for this new sale. Id. at 15.
Commerce admits a calculation error in the program comparing
the physical characteristics data, that it fixed accordingly in
the Second Remand Results. Id. at 14-16; Def.’s Resp. 10.
Commerce notes that KYD is not challenging that all eight
characteristics that KYD’s products shared with examined
transactions exist, but rather only that the corrected value for
the ink-coverage characteristic resulted in a higher margin.
Def.’s Resp. 10. Commerce discarded a rate based on only seven
of the physical characteristics as it would not have been as
accurate. Second Remand Results 15.
19
19 U.S.C. § 1677e(c).
Court. No. 09-00034 Page 14
does not have to reflect the rate Commerce would have calculated
had King Pac and Master Packaging participated in the review.
Second Remand Results 18. Rather, Commerce adequately reasoned
that because KYD’s purchased carrier bags are not identical to
those sold by the cooperative respondents, an “apples-to-apples”
comparison is not likely. Id. at 19.
Accordingly, using KYD’s own data to “describe the bounds of
transactions made by the cooperative respondents that [it]
considered for use as adverse facts available,” id., Commerce
chose a rate that, on this record, could reasonably be accepted
as an approximation of KYD’s rate, albeit with a built in
increase intended as a deterrent to non-compliance. Commerce
thus satisfied the requirements of the remand order and gave an
adequate explanation for why it reviewed but did not utilize
KYD’s other information. Id. at 18-19.
Accordingly, because King Pac and Master Packaging did not
provide sufficient usable information for the record, Commerce’s
transaction-specific margin for an adverse rate does not conflict
with statutory requirements, and Commerce’s selection is based on
substantial evidence, the Second Remand Results will be
sustained.20
20
Defendant-Intervenors (Petitioners) contend that, in KYD
III, the court usurped the agency’s investigative role and should
therefore vacate its decision and affirm Commerce’s initial
determination. Def.-Int.’s Reply to KYD’s Cmts. on Second Remand
Results, 4-6, Oct. 3, 2011, ECF No. 117(“Def.-Int.’s Br.”).
Court. No. 09-00034 Page 15
CONCLUSION
For the reasons discussed above, the Second Remand Results
are AFFIRMED in all respects.
IT IS SO ORDERED:
/s/ Donald C. Pogue
Donald C. Pogue, Chief Judge
Dated: January 18, 2012
New York, N.Y.
Because Defendant-Intervenors agree with the Remand
Determination, id. at 1, Commerce did not respond to their
comments, “as they are outside the scope of the [c]ourt’s remand
order.” Def.’s Resp. 10. Plaintiff agrees with Commerce that
most comments filed by Petitioners do not relate to the remand.
Pl.’s Br. 8.
The court has discussed above Plaintiff’s one issue with
Petitioner’s comments: the adjustment of the computer program
relating to ink coverage. Pl.’s Br. 8.
On the Petitioners’ remaining argument, Commerce contends,
persuasively, that it did not select a transaction-specific
margin of 108.64 percent because that transaction is less similar
to KYD’s purchased merchandise than the merchandise corresponding
to Commerce’s considered transactions. Def.'s Resp. 5.