Elkay Mfg. Co. v. United States

• Citation: 34 F.Supp.3d 1369
• Decision Date: 22 December 2014
• Docket Number: Slip Op. 14–150.,Court No. 13–00176.
• Parties: ELKAY MANUFACTURING COMPANY, Plaintiff, v. UNITED STATES, Defendant, and Guangdong Dongyuan Kitchenware Industrial Company, Ltd., Defendant-intervenor.
• Court: U.S. Court of International Trade

34 F.Supp.3d 1369

ELKAY MANUFACTURING COMPANY, Plaintiff

v.UNITED STATES, DefendantandGuangdong Dongyuan Kitchenware Industrial Company, Ltd., Defendant-intervenor.

Slip Op. 14–150.

Court No. 13–00176.

United States Court of International Trade.

Dec. 22, 2014.

Joseph W. Dorn and P. Lee Smith, King & Spalding LLP, of Washington, D.C., for plaintiff and consolidated defendant-intervenor Elkay Manufacturing Company.

Gregory S. Menegaz, J. Kevin Horgan, and John J. Kenkel, DeKieffer & Horgan, PLLC, of Washington, D.C., for consolidated plaintiff and defendant-intervenor Guangdong Dongyuan Kitchenware Industrial Company, Ltd.

Patricia M. McCarthy, Assistant Director, and Richard P. Schroeder, Trial Attorney, Civil Division, Commercial Litigation Branch, U.S. Department of Justice, of Washington, D.C., for defendant United States. With him on the brief were Stuart F. Delery, Assistant Attorney General, and Jeanne E. Davidson, Director. Of counsel on the brief was Whitney M. Rolig, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce.

OPINION AND ORDER

STANCEU, Chief Judge:

In this consolidated action, plaintiffs Elkay Manufacturing Company (“Elkay”) and Guangdong Dongyuan Kitchenware Industrial Company, Ltd. (“Dongyuan”) contest a determination (“Final Determination”) that the International Trade Administration, U.S. Department of Commerce (“Commerce” or the “Department”) issued upon the affirmative conclusion of an antidumping duty investigation of drawn stainless steel sinks (“subject merchandise”) from the People's Republic of China (“China” or the “PRC”). Both plaintiffs challenge aspects of the Department's calculation of the normal value of subject merchandise.¹

Dongyuan, a Chinese manufacturer and exporter of stainless steel sinks and one of the two producer/exporters that Commerce investigated individually, challenges the Department's use of import data from Thailand to determine a surrogate value for the cold-rolled stainless steel coil that Dongyuan used as the primary material in producing subject merchandise. Compl. ¶ 11–15 (June 12, 2013), ECF No. 9 (Court No. 13–00199) (“Dongyuan Compl.”). Elkay, a U.S. producer and the petitioner in the investigation, challenges the Department's method of accounting for selling, general, and administrative (“SG & A”) expenses in the normal value determinations for the two individually-investigated producer/exporters.² Compl. ¶ 11–14 (June 5, 2013), ECF No. 14 (“Elkay Compl.”).

Before the court are Dongyuan's and Elkay's motions for judgment on the agency record pursuant to USCIT Rule 56.2. Elkay's Mot. for J. on the Agency R. (Oct. 21, 2013), ECF No. 26 (“Elkay Mot.”); Dongyuan's Rule 56.2 Mot. for J. Upon the Agency R. (Oct. 21, 2013), ECF No. 27 (“Dongyuan Mot.”). Also before the court is a request by defendant United States for a partial voluntary remand to allow Commerce to reconsider the use of the Thai import data for determining a surrogate value for cold-rolled stainless steel coil. Def.'s Resp. to Pl.'s Rule 56.2 Mot. for J. on the Agency R. 1 (Feb. 28, 2014), ECF No. 40 (“Def. Opp'n”). The court grants the Department's partial voluntary remand request and in addition directs Commerce to reconsider its method of accounting for SG & A expenses in the normal value calculations.

I. Background

The decision contested in this case concluded an antidumping duty less-than-fair-value investigation. See Drawn Stainless Steel Sinks From the People's Republic of China: Investigation, Final Determination, 78 Fed.Reg. 13,019 (Int'l Trade Admin. Feb. 26, 2013) (“Final Determination ”), as amended, 78 Fed.Reg. 21,592 (Int'l Trade Admin. Apr. 11, 2013). In response to a petition by Elkay, Commerce initiated the investigation, which examined imports of subject merchandise made during the period of July 1, 2011 through December 31, 2011 (“period of investigation” or “POI”). Drawn Stainless Steel Sinks From the People's Republic of China: Initiation of Antidumping Duty Investigation, 77 Fed.Reg. 18,207 (Int'l Trade Admin. Mar. 27, 2012). On May 14, 2012, Commerce selected for individual investigation as “mandatory respondents” two Chinese producer/exporters—Dongyuan and a combined entity Commerce identified as consisting of Zhongshan Superte Kitchenware Co., Ltd. (“Superte”) and a related invoicing company, Foshan Zhaoshun Trade Co., Ltd. (“Zhaoshun”) (collectively identified as “Superte/Zhaoshun”). Final Determination, 78 Fed.Reg. at 13,019 n. 2.

On October 4, 2012, Commerce issued a preliminary determination (“Preliminary Determination”) that imports of subject merchandise from China are being, or are likely to be, sold in the United States at less than fair value. Drawn Stainless Steel Sinks From the People's Republic of China: Antidumping Duty Investigation, 77 Fed.Reg. 60,673, 60,673 (Int'l Trade Admin. Oct. 4, 2012) (“Prelim. Determination ”). Commerce calculated preliminary weighted-average dumping margins of 54.25% for Dongyuan, 63.87% for Superte/Zhaoshun, and a simple average of the two rates, 59.06%, for “separate-rate” respondents, i.e., those producer/exporters not selected for individual examination that had demonstrated independence from the government of China. Id. at 60,674.

Commerce published its Final Determination on February 26, 2013 and issued an accompanying Issues and Decision Memorandum (“Decision Memorandum”).³ See Final Determination, 78 Fed.Reg. at 13,019 ; Issues & Decision Mem. for the Final Determination in the Antidumping Duty Investigation of Drawn Stainless Steel Sinks from the People's Republic of China,

A–570–983 (Feb. 19, 2013) (Admin.R.Doc. No. 417) (“Decision Mem. ”), available at http:// enforcement.trade.gov/frn/summary/PRC/2013–04379–1.pdf (last visited Dec. 16, 2014). In the Final Determination, Commerce determined that imports of subject merchandise from China are being, or are likely to be, sold in the United States at less than fair value. Final Determination, 78 Fed.Reg. at 13,019. Making certain changes to the analysis it used for the Preliminary Determination, Commerce assigned weighted-average dumping margins of 27.14% to Dongyuan, 39.87% to Superte/Zhaoshun, and a simple average of the two rates, 33.51%, to the separate-rate respondents. Final Determination, 78 Fed.Reg. at 13,020, 13,023.

Elkay initiated an action challenging the Final Determination by filing a summons on May 6, 2013 and a complaint on June 5, 2013. Summons, ECF No. 1; Elkay Compl. ¶ 1. Dongyuan initiated a separate action challenging the Final Determination by filing a summons on May 13, 2013 and a complaint on June 12, 2013. Summons, ECF No. 1 (Ct. No. 13–00199); Dongyuan Compl. ¶ 1. The court consolidated these cases on August 30, 2013.⁴ Order, ECF No. 25.

Elkay and Dongyuan filed their motions for judgment on the agency record and accompanying briefs on October 21, 2013. Elkay's Mot.; Rule 56.2 Br. of Elkay Mfg. Co. in Supp. of its Mot. for J. on the Agency R., ECF No. 29 (“Elkay Br.”); Dongyuan Mot.; Consol. Pl. Guangdong Dongyuan Kitchenware Mem. in Supp. of Mot. for J. on the Agency R., ECF No. 31 (“Dongyuan Br.”). On February 28, 2014, defendant filed a consolidated response in opposition to both motions, Def. Opp'n 1, and Dongyuan filed a response opposing Elkay's 56.2 motion, Def.-Intervenor Guangdong Dongyuan Kitchenware Resp. Br. in Opp'n to Pl.'s Rule 56.2 Mem., ECF No. 39 (“Dongyuan Opp'n.”). Elkay and Dongyuan each filed replies on April 4, 2014. Consol. Pl. Guangdong Dongyuan Kitchenware Reply Br. in Supp. of Mot. for J. on the Agency R., ECF No. 44 (“Dongyuan Reply”); Reply Br. of Elkay Mfg. Co. in Supp. of its Mot. for J. on the Agency R., ECF No. 45 (“Elkay Reply”).

II. Discussion

The court exercises jurisdiction under section 201 of the Customs Courts Act of 1980, 28 U.S.C. § 1581(c), pursuant to which the court reviews actions commenced under section 516A of the Tariff Act of 1930, as amended (the “Tariff Act”), 19 U.S.C. § 1516a, including an action contesting a final determination that Commerce issues to conclude an antidumping investigation.⁵ In reviewing a final determination, 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). Substantial evidence is evidence that “a reasonable mind might accept as adequate to support a conclusion.”

Consol. Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938).

Section 773(c)(1) of the Tariff Act, 19 U.S.C. § 1677b(c)(1), provides for the calculation of the normal value of subject merchandise from a nonmarket economy (“NME”) country “on the basis of the value of the factors of production utilized in producing the merchandise,” plus certain additions.⁶ The statute directs that “the valuation of the factors of production shall be based on the best available information regarding the values of such factors in a market economy country or countries considered to be appropriate by the administering authority.” Id.

A. The Court Grants Defendant's Request for a Voluntary Remand so that Commerce May Reconsider the Use of Thai Import Data to Value Cold–Rolled Stainless Steel Coil

During the antidumping investigation, Commerce identified Colombia, Indonesia, Peru, the Philippines, South Africa, Thailand, and Ukraine as countries comparable to the PRC in terms of economic development and found that all of these countries, excluding the Philippines, were significant producers of merchandise comparable to the merchandise under consideration. Decision Mem. for Prelim. Determination for the Antidumping Duty Investigation of Drawn Stainless Steel Sinks from the People's Republic of China 6 (Sept. 27, 2012) (Admin.R.Doc. No. 337) (“Prelim. Decision Mem. ”), available at http:// enforcement.trade.gov/frn/summary/PRC/2012–24549–1.pdf (last visited Dec. 16, 2014). Noting that cold-rolled stainless steel coil...