Vinh Hoan Corp. v. United States

• Citation: 49 F.Supp.3d 1285
• Decision Date: 19 February 2015
• Docket Number: Slip Op. 15–16.,Court No. 13–00156.
• Parties: VINH HOAN CORPORATION, et al., Plaintiffs, and Binh An Seafood Joint Stock Company, Plaintiff–Intervenor, v. UNITED STATES, Defendant, and Catfish Farmers of America, et al., Defendant–Intervenors.
• Court: U.S. Court of International Trade

49 F.Supp.3d 1285

VINH HOAN CORPORATION, et al., Plaintiffs

and

Binh An Seafood Joint Stock Company, Plaintiff–Intervenor

v.UNITED STATES, DefendantandCatfish Farmers of America, et al., Defendant–Intervenors.

Slip Op. 15–16.

Court No. 13–00156.

United States Court of International Trade.

Feb. 19, 2015.

Matthew Jon McConkey, Mayer Brown LLP, of Washington, DC, argued for Vinh Hoan Corporation.

Jonathan Michael Freed, Trade Pacific, PLLC, of Washington, DC, argued for Vinh Quang Fisheries Corporation.

Ned Herman Marshak, Grunfeld Desiderio Lebowitz Silverman & Klestadt, LLP, of New York, NY, argued for Vietnam Association of Seafood Exporters and Producers and Anvifish Joint Stock Company. With him on the brief were Andrew Brehm Schroth, Dharmendra Narain Choudhary, and Kavita Mohan.

John Joseph Kenkel, deKieffer & Horgan, PLLC, of Washington, DC, argued for Binh An Seafood Joint Stock Company.

Ryan Michael Majerus, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for defendant. With him on the brief were Stuart F. Delery, Assistant Attorney General, Jeanne E. Davidson, Director, and Franklin E. White, Jr., Assistant Director. Of Counsel on the brief was Devin Scott Sikes, Attorney, Office of Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, of Washington, DC.

Nazakhtar Nikakhtar, Akin, Gump, Strauss, Hauer & Feld, LLP, of Washington, DC, argued for Catfish Farmers of America, et al. With her on the brief were Henry David Almond and Valerie A. Slater.

OPINION AND ORDER

KELLY, Judge:

This consolidated action comes before the court on USCIT Rule 56.2 motions for judgment on the agency record, challenging the Department of Commerce's (“Department” or “Commerce”) determination in Certain Frozen Fish Fillets From the Socialist Republic of Vietnam, 78 Fed.Reg. 17,350 (Dep't Commerce Mar. 21, 2013) (final results of antidumping duty administrative review and new shipper reviews) (“Final Results ”), as amended, 78 Fed.Reg. 29,323 (Dep't Commerce May 20, 2013) (“Amended Final Results ”); see also Issues and Decision Memorandum for Certain Frozen Fish Fillets from the Socialist Republic of Vietnam, A–552–801, (Mar. 13, 2013), available at http:// enforcement.trade.gov/frn/summary/VIETNAM/2013–06550–1.pdf (last visited February 10, 2015) (“Decision Memo ”).

Vinh Hoan Corporation (“Vinh Hoan”) commenced this action pursuant to section 516A of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a (2012).¹ The court consolidated Vinh Hoan's challenge with actions filed by Vietnam Association of Seafood Exporters and Producers (collectively “VASEP”), Binh An Seafood Joint Stock Company (“Binh An”), Anvifish Joint Stock Company and Vinh Quang Fisheries Corporation (“Anvifish and Vinh Quang”), and Catfish Farmers of America, an association of processors and growers, and individual U.S. catfish processors, America's Catch, Alabama Catfish Inc. dba Harvest Select Catfish, Inc., Heartland Catfish Company, Magnolia Processing, Inc. dba Pride of Pond, and Simmons Farm Raised Catfish, Inc. (collectively “Catfish Farmers of America”). In addition to the above named parties' Rule 56.2 motions, Catfish Farmers of America filed a response, as a defendant-intervenor, in opposition to motions by VASEP, Vinh Hoan, Anvifish and Vinh Quang, and Binh An. See Def.-Intervenors' Resp. Opp'n Pl.'s, Consol. Pls.', and Pl.-Intervenor's Rule 56.2 Mot. J. Agency R., May 22, 2014, ECF No. 79 (“Catfish Farmers of America's Resp.”). Vinh Hoan also filed a response, as a defendant-intervenor, in opposition to Catfish Farmers of America's motion. See Resp. Def.-Intervenor Vinh Hoan Corp. Opp'n Pls. Catfish Farmers of America, et al.'s Rule 56.2 Mot. J. Upon Agency R. Supp. Pl. VASEP's Rule 56.2 Mot. J. Upon Agency R., May 22, 2014, ECF No. 80 (“Vinh Hoan's Resp.”).

Given the length of this opinion, an outline of the issues discussed should be helpful to the reader. After a brief explanation of the background in the proceeding as well as the basis for jurisdiction and the standard of review the court will begin with a discussion of the legal framework for primary surrogate country selection. Part II of the opinion considers Commerce's methodology in selecting a primary surrogate country as well as Commerce's analysis of nonfish factors of production, financial statements and whole fish in selecting a primary surrogate country. Part III considers Commerce's analysis of specific surrogate values. Part IV reviews Commerce's treatment of certain sales as consignment sales. Part V addresses the inclusion of sample transactions in Commerce's margin calculation. Part VI analyzes a challenge to Commerce's normal value calculation for Vinh Hoan, specifically its refusal to adjust the ratio used to value Vinh Hoan's FOPs.

BACKGROUND

On October 3, 2011, Commerce initiated this eighth antidumping (“AD”) duty administrative review covering subject imports entered during the period of review (“POR”), August 1, 2010 through July 31, 2011. See Certain Frozen Fish Fillets From the Socialist Republic of Vietnam, 77 Fed.Reg. 56,180, 56,180 (Dep't Commerce Sept. 12, 2012) (preliminary results of the eighth antidumping duty administrative review and ninth new shipper reviews, partial rescission of review, and intent to revoke order in part) (“Preliminary Results ”). Because Commerce treats Vietnam as a nonmarket economy (“NME”) it selected a surrogate market economy country to value the factors of production of the subject imports. Id. at 56,183. During the preliminary results, Commerce chose Bangladesh as the primary surrogate country. Id. at 56,184. However, for the final results, Commerce chose Indonesia as the primary surrogate country. Final Results at 17,351.

Commerce selected Anvifish and Vinh Hoan as mandatory respondents, assigning them respective rates of 1.34 dollars per kilogram (“USD/kg”) and 0.19 USD/kg. Final Results at 17,352 –53. Further, in accordance with its practice, Commerce assigned the average of these rates, 0.77 USD/kg, to nonselected, separate rate respondents. Commerce also assigned a rate of 2.11 USD/kg to those who did not rebut the presumption of government control. Id. After receiving ministerial error allegations the Department revised the margin for Anvifish to 2.39 USD/kg and for the separate rate companies to 1.29 USD/kg. Amended Final Results at 29,324.

VASEP, Vinh Hoan, Anvifish and Vinh Quang, and Binh An challenge Commerce's selection of Indonesia as the primary surrogate country. See Mem. Law Supp. Pl.'s Rule 56.2 Mot. J. Upon Agency R. 8–61, Nov. 14, 2013, ECF No. 37 (“VASEP's Br.”); Mem. Law Supp. Vinh Hoan Corp.'s Mot. J. Upon Agency R. 54–60, Nov. 14, 2013, ECF No. 39 (“Vinh Hoan's Br.”); Mem. P. & A. Supp. Anvifish Joint Stock Co. and Vinh Quang Fisheries Corp. J. Upon Agency R. 10–26, Nov. 14, 2013, ECF No. 42 (“Anvifish's & Vinh Quang's Br.”); Mot. J. On Agency R. Under USCIT Rule 56.21 –3, Nov. 14, 2013, ECF No. 40 (“Binh An's Mot.”). Vinh Hoan also challenges Commerce's fish oil byproduct offset calculation, the values assigned to labor, two energy inputs and several byproducts, the inclusion of “freight-in” in the selling, general, and administrative expense ratio, the inclusion of sample transactions in Vinh Hoan's margin calculation, the use of facts available on all of Vinh Hoan's consignment sales, and the inland freight and brokerage and handling calculation. Vinh Hoan's Br. 7–54. Vinh Hoan further claims that if it were not for Commerce's numerous errors, it would have been entitled to a de minimis margin which would have resulted in the revocation of the order as to Vinh Hoan. Vinh Hoan's Br. 60. Anvifish and Vinh Quang challenge Commerce's use of the Vitarich price quote to value Anvifish's byproducts and use of a Philippine company's financial statement to calculate financial ratios. Avifish's & Vinh Quang's Br. 19–33.² Binh An joins the arguments briefed by VASEP, Vinh Hoan, and Anvifish and Vinh Quang in all respects. Binh An's Mot. 1.

Catfish Farmers of America challenge Commerce's refusal to make an adjustment to Vinh Hoan's normal value (“NV”) and Commerce's calculation of Vinh Hoan's fish oil byproduct offset. Mem. Supp. Pls. Catfish Farmers of America, et al.'s Rule 56.2 Mot. J. Upon Agency R. 6–25, Nov. 14, 2013, ECF No. 44 (“Catfish Farmers of America's Br.”).

Defendant, United States (“Defendant”), responds that the court should sustain Commerce's determinations except for Commerce's calculation of Vinh Hoan's fish oil byproduct offset for which Defendant requests a voluntary remand. Def.'s Resp. Pls.' Mots. J. Upon Agency R. 2–3, May 22, 2014, ECF No. 77 (“Def.'s Resp.”).

The court finds that Commerce's primary surrogate selection is contrary to law and unsupported by substantial evidence. Further, the court grants the Defendant's request for a voluntary remand to reconsider its fish oil byproduct calculation. The court also finds Commerce's use of facts available for all of Vinh Hoan's CCEP sales is unsupported by substantial evidence. Moreover, the court sustains Commerce's inclusion of sample sales in Vinh Hoan's margin calculation. Finally, the court finds that Commerce's refusal to adjust Vinh Hoan's NV was not supported by substantial evidence. The court reserves judgment on the remaining issues.

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction pursuant to 28 U.S.C. § 1581(c)(2012), and 19 U.S.C. § 1516a(a) and “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).

DISCUSSION

I. Primary Surrogate Country Selection: Legal Framework and Background

In NME AD proceedings, Commerce generally calculates NV “on the basis of the value of the factors of production utilized in producing the merchandise ... [together with] an amount for general expenses and profit plus the cost of...