Dorbest Ltd. v. U.S.
| Decision Date | 27 February 2008 |
| Docket Number | Slip-Op. 08-24. Court No. 05-00003. |
| Citation | 547 F.Supp.2d 1321 |
| Parties | DORBEST LTD.; Rui Feng Woodwork (Dongguan) Co. Ltd.; Rui Feng Lumber Dev. (Shenzhen) Co. Ltd., and Am. Furniture Mfrs. Comm. for Legal Trade; Vaughan-Bassett Furniture Co. Inc.; Cabinet Makers, Millmen, & Indus. Carpenters Local 721; UBC S. Council of Indus. Workers Local 2305; United Steel Workers of AM. Local 193U; Carpenters Indus. Union Local 2093; Teamsters, Chauffeurs, Warehousemen & Helpers Local 991; IUE Indus. Div. of CWA Local 82472, Plaintiffs/Defendant-Intervenors, v. UNITED STATES, Defendant, Dongguan Lung Dong/Don He Art Heritage Int'l, Ltd/Super Art Furniture Co./Artowrk Metal & Plastic Co./Jibson Indus. Ltd./Always Loyal Int'l; Fortune Glory Ltd. (Hk Ltd.)/Nanhai Jiantai Woodwork Co.; Fine Furniture (Shanghai) Ltd.; Coaster Co. of Am.; Collezione Europa, USA, Inc.; Fine Furniture Design & Mktg. LLC; Global Furniture, Inc.; Hillsdale Furniture, LLC; Klaussner Int'l, LLC; Magnussen Home Furnishings Inc.; L. Powell Co.; Riversedge Furniture Co.; Woodstuff Mfg. Inc., d/b/a Samuel Lawrence; Schnadig Corp.; Good Cos.; Standard Furniture Mfg. Co., Defendant-Intervenors. |
| Court | U.S. Court of International Trade |
Michael F. Hertz, Deputy 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, Michael D. Panzera); Rachel E. Wenthold, Senior Attorney, Office of Chief Counsel for Import Administration, U.S. Department of Commerce, for the United States Department of Commerce.
Mowry International Group, LLC (Jill Cramer and Kristin H. Mowry) and Howe & Russell, PC (Kevin Russell) on behalf of Art Heritage International, Limited et al.
Trade Pacific, PLLC (Robert G. Gosselink) on behalf of Dongguan Lung Dong/ Dong He et al.
Before: Pogue, Judge.
This matter is before the court following partial remand. In its prior opinion, the court reviewed the Department of Commerce's ("Commerce's") affirmative less than fair value determination for subject merchandise and the antidumping duty order and dumping margins subsequently imposed. Dorbest Ltd. v. United States, ___ CIT ___, 462 F.Supp.2d 1262 (2006) ("Dorbest");1 see also. Wooden Bedroom Furniture From the People's Republic of China, 69 Fed.Reg. 67,313, 67,317 (Dep't Commerce Nov. 17, 2004)(final determination of sales at less than fair value)("Final Results") amended by Wooden Bedroom Furniture From, the People's Republic of China, 70 Fed.Reg. 329, 330 (Dep't Commerce Jan. 4, 2005)(notice of amended final determination of sales at less than fair market value and antidumping duty order). During the investigation leading to the Final Results, Commerce used various methods to value the factors of production of the subject merchandise in order to approximate the normal value of the merchandise, and to make its determination regarding dumping. See Dorbest, 462 F.Supp.2d at 1265, n. 1. A number of these valuations were remanded for redetermination pursuant to the court's order. Id. at 1321-22. Commerce's remand determination as to the following issues are now before the court:
1. Labor wage rate
2. Valuation of specific factors of production
a. Hooks and connectors
b. Resin c. Mirrors
d. Cardboard
e. Metal spare parts, non-scope metal canopies and other metal parts
3. Selection of surrogate companies to calculate financial ratios
4. Calculation of financial ratios
5. Calculation of Separate/Section A rate
For the reasons discussed below, the court sustains in part and remands in part Commerce's redetermination pursuant to court remand.
The court reviews remand determinations for compliance with the court's remand order. NMB Sing. Ltd. v. United States, 28 C.I.T. 1252, 341 F.Supp.2d 1327 (2004)(affirming International Trade Commission's determinations on remand where the determinations were in accordance with law, supported by substantial evidence, and otherwise satisfied the remand order); see also Olympia Indus., Inc. v. United States, 23 CIT 80, 82, 36 F.Supp.2d 414, 416 (1999)(affirming after "review[ing] Commerce's compliance with these instructions in its Remand Results" and finding the determination to be supported by substantial evidence and in accordance with law). In addition, any factual findings on remand must be supported by substantial evidence and the agency's legal determinations must be in accordance with law. 19 U.S.C. § 1516a(b)(1)(B); see, e.g., AG der Dillinger Huttenwerke v. United States, 28 CIT 94, 95, 310 F.Supp.2d 1347, 1349 (2004)( remand determination to legal and factual standards set out in 19 U.S.C. § 1516a(b)(1)(B)).
In Dorbest, the court analyzed the Department of Commerce's ("Commerce's") use of its linear regression model to calculate an approximation of the People's Republic of China's ("PRC's") wage rate.2 This method uses the reported Gross National Products ("GNIs") and wage rates3 of the market economy countries meeting Commerce's criteria to create a linear function that is then used to calculate approximations of wage rates based on a country's per capita GNI. Commerce then specifically determines the wage rate that corresponds to the PRC's reported GNI,4 and uses that wage rate as an input in further calculations.
As-applied invalidity:
In its initial analysis, the court first found that Commerce's use of a data set that excluded countries that met its standards for inclusion did not constitute use of the best available information and was arbitrary and therefore not supported by substantial evidence. Dorbest, 462 F.Supp.2d at 1295 (2006). Thus, the court instructed that Commerce either "(a) justify why its data set constitutes the best available information; or (b) incorporate those countries meeting its criteria into the data set...." Dorbest, 462 F.Supp.2d at 1321.
On remand, Commerce "reconsidered the data set used in this case and ... determined to include all data that meet [Commerce's] suitability requirements and that were available at the time the 2004 wage rate was calculated." Final Results of Redetermination Pursuant to Court Remand 4 ("Remand Results").5 In addition, Commerce engaged in notice and comment rulemaking to arrive at a revised methodology, detailed at Antidumping Methodologies: Market Economy Inputs, Expected Non-Market Economy Wages, Duty Drawback; and Request for Comments, 71 Fed.Reg. 61, 716 (Dep't Commerce Oct. 19, 2006) ("Antidumping Methodologies"); see also Expected Non-Market Economy Wages: Request for Comment on Calculation Methodology, 70 Fed.Reg. 37,761 (Dep't Commerce June 30, 2005)("Expected NME Wages"). Commerce applied the results of its rulemaking procedure to address the court's data selection concerns here.6
Commerce has complied with the court's order, and this aspect of the redetermination is not challenged by any of the parties, see Comments Pls. Dorbest on Commerce's 2d Remand Redetermination 6 ("Dorbest Comments on Remand Results"); the court therefore affirms this aspect of the redetermination.
Distortions in Wage Rate Calculation:
In Dorbest, the court also found Commerce's use of its wage rate methodology unreasonable, absent sufficient justification for its calculations, particularly as Commerce had not engaged in notice-and-comment rulemaking when developing its methodology. The court chose not to examine each aspect of Commerce's chosen methodology without the benefit of the agency's reasoning. Nonetheless, the court noted that, while in theory the regression analysis used by Commerce could be considered a reasonable use of the best available information, Commerce's regression model appeared to produce distortions. For example, when used to predict wage rates of market economies such as India (whose reported wage rate is known), the model predicts a wage rate three times higher than India's reported wage rate. Dorbest, 462 F.Supp.2d at 1296-97. Further in performing its regression analysis, Commerce chose not to use regression through the origin ("RTO") methodology, which employs the assumption that countries with a GNI of zero have wage rates of zero.7 The court noted the criticism that because Commerce used a regression model that had a positive y-intercept, rather than the RTO method, its regression model appears to overstate wage rates of low-income countries, so that the calculated wage rate is higher than the wage rates of any countries Commerce might otherwise look to as surrogates, making the methodology neither the most accurate nor fair. The court instructed Commerce to "reconsider its use of its methodology or an alternative method for determining the labor rate for the PRC in this case." Dorbest, 462 F.Supp.2d at 1321.
Commerce has now engaged in notice and comment rule-making regarding data selection and methodology for determining labor wage rates for non-market economies. See, e.g., Expected NME Wages, 70 Fed.Reg. 37,761; see also, Antidumping Methodologies, 71 Fed.Reg. 61,716. During this process, Commerce considered the parties' suggestions for altering its methodology. Ultimately, Commerce determined to employ the same methodology (Ordinary Least Squares linear regression) as it had in its Final Results using a data set of all countries meeting its selection criteria. As such, Commerce's regression model assumes that wage rates and GNI have an approximately linear relationship. See Expected NME Wages, 70 Fed.Reg. at 61,720 (...
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