604 F.3d 1363 (Fed. Cir. 2010), 2009-1257, Dorbest Ltd. v. United States

Docket Nº:2009-1257, 2009-1266.
Citation:604 F.3d 1363
Opinion Judge:MICHEL, Chief Judge.
Party Name:DORBEST LIMITED, Rui Feng Woodwork (Dongguan) Co., Ltd., and Rui Feng Lumber Development (Shenzhen) Co., Ltd., Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee, and American Furniture Manufacturers Committee for Legal Trade, and Vaughan-Bassett Furniture Company, Inc., Plaintiffs-Appellants, and Cabinet Makers, Millmen and Industrial Car
Attorney:Jeffrey S. Grimson, Troutman Sanders LLP, of Washington, DC, argued for plaintiffs-appellants Dorbest Limited, et al. With him on the brief were Donald B. Cameron, Julie C. Mendoza, R. Will Planert, Brady W. Mills, and Mary S. Hodgins. Of counsel were Jill A. Cramer, Susan E. Lehman and Kristin H...
Judge Panel:Before MICHEL, Chief Judge, BRYSON and DYK, Circuit Judges.
Case Date:May 14, 2010
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit
 
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604 F.3d 1363 (Fed. Cir. 2010)

DORBEST LIMITED, Rui Feng Woodwork (Dongguan) Co., Ltd., and Rui Feng Lumber Development (Shenzhen) Co., Ltd., Plaintiffs-Appellants,

and

American Furniture Manufacturers Committee for Legal Trade, and Vaughan-Bassett Furniture Company, Inc., Plaintiffs-Appellants,

and

Cabinet Makers, Millmen and Industrial Carpenters Local 721, UBC Southern Council of Industrial Workers Local 2305, United Steel Workers of America Local 193U, Carpenters Industrial Union Local 2093, Teamsters, Chauffeurs, Warehousemen and Helpers Local 991, and IUE Industrial Division of CWA Local 82472, Plaintiffs,

v.

UNITED STATES, Defendant-Appellee,

and

Dongguan Lung Dong and Dong He, Defendants-Appellees,

and

Art Heritage International Ltd., Super Art Furniture Co., Ltd., Artwork Metal & Plastic Co., Ltd., Jibson Industries Ltd., Always Loyal International, Fortune Glory Ltd. (Hk Ltd.), Nanhai Jiantai Woodwork Co., Fine Furniture (Shanghai) Ltd., Coaster Company of America, Collezione Europa USA, Inc., Fine Furniture Design & Marketing LLC, Global Furnitures, Inc., Hillsdale Furniture, LLC, Klaussner International, LLC, Magnussen Home Furnishings, Inc., L. Powell Company, Riversedge Furniture Company, Woodstuff Manufacturing, Inc. (doing business as Samuel Lawrence), Schnadig Corporation, Good Companies, and Standard Furniture Manufacturing Co., Inc., Defendants.

Nos. 2009-1257, 2009-1266.

United States Court of Appeals, Federal Circuit.

May 14, 2010

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Jeffrey S. Grimson, Troutman Sanders LLP, of Washington, DC, argued for plaintiffs-appellants Dorbest Limited, et al. With him on the brief were Donald B. Cameron, Julie C. Mendoza, R. Will Planert, Brady W. Mills, and Mary S. Hodgins. Of counsel were Jill A. Cramer, Susan E. Lehman and Kristin H. Mowry, Mowry & Grimson, PLLC, of Washington, DC.

Joseph W. Dorn, King & Spalding LLP, of Washington, DC, argued for plaintiffs-appellants American Furniture Manufacturers Committee for Legal Trade, et al. With him on the brief was J. Michael Taylor.

Carrie A. Dunsmore, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee United States. With her on the brief were Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director. Of counsel was Brian A. Mizoguchi.

Before MICHEL, Chief Judge, BRYSON and DYK, Circuit Judges.

MICHEL, Chief Judge.

This is an antidumping duty case relating to wooden bedroom furniture imported from China. In 2005, the Department of Commerce (" Commerce" ) imposed an antidumping duty order on this merchandise. Both the foreign producers and the domestic interested parties brought suit in the Court of International Trade (" CIT" ), raising issues with Commerce's calculation of the duty rate. The foreign producers argued that Commerce's calculation of Chinese labor rates was not in accordance with the governing statute, both because the calculation used data from countries that are not economically comparable to China, and because the calculation used data from countries that are not significant producers of merchandise comparable to the wooden bedroom furniture at issue here. The CIT affirmed Commerce's labor rate calculation method. Because we hold that Commerce's method for calculating wage rates uses data not permitted to be used by the governing statute, we invalidate the regulation establishing that calculation method, vacate the CIT's affirmance of the application of that regulation, and remand for further proceedings consistent with the governing statute.

The domestic interested parties take issue with the CIT's treatment of Commerce's method for calculating non-production

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factors, such as profit, in determining the fair value of the imported Chinese merchandise. Commerce had used data from seven surrogate companies from India to determine average ratios used to calculate the value of several non-production factors. The CIT ultimately required Commerce to eliminate four of the seven companies from its calculation. Because we find that Commerce's original calculation method, using all seven surrogate companies, represented a permissible application of the governing statute, we find that the CIT erred by rejecting Commerce's original calculation, vacate the CIT's affirmance of Commerce's eventual calculation using only three companies, and remand for further proceedings using Commerce's original calculation method.

Finally, the foreign producers and the domestic interested parties each raise a separate alleged problem with Commerce's calculation of the antidumping duty margin. In both cases, these problems were raised before the CIT, but the CIT held that it was unable to address the issues because they had not been appropriately raised first before Commerce. Because we find that these issues needed to be raised before Commerce at an appropriate time and were not so raised, we affirm the CIT's refusal to decide these issues on the merits.

I. BACKGROUND

Under the antidumping duty statute, Commerce may " determine[ ] that a class or kind of foreign merchandise is being, or is likely to be, sold in the United States at less than fair value." 19 U.S.C. § 1673. If Commerce finds that this activity, known as " dumping," is occurring, and if the corresponding domestic industry is materially injured or is materially hampered from forming by the dumping, then Commerce is required to impose a duty on imports of the dumped foreign merchandise. The amount of the duty is set at " an amount equal to the amount by which the normal value [of the merchandise] exceeds the export price." Id. This case is about the process by which Commerce determines the " normal value" of the dumped merchandise.

Normal value is usually determined as the price at which the merchandise in question is sold in the exporting country, but this does not apply to merchandise exported from countries with non-market economies. In these countries, " sales of merchandise ... do not reflect the fair value of the merchandise," because those sales " do[ ] not operate on market principles of cost or pricing structures." Id. § 1677(18). For merchandise from non-market economy countries, the procedure for determining normal value has been established by statute. Id. § 1677b(c). In these cases, normal value is determined " on the basis of the value of the factors of production utilized in producing the merchandise[,] to which shall be added an amount for general expenses and profit plus the cost of containers, coverings, and other expenses." Id. § 1677b(c)(1). The factors of production " include, but are not limited to ... hours of labor required, ... quantities of raw materials employed, ... amounts of energy and other utilities consumed, and ... representative capital cost, including depreciation." Id. § 1677b(c)(3). In valuing these factors of production, Commerce is required to " utilize, to the extent possible, the prices or costs of factors of production in one or more market economy countries that are ... at a level of economic development comparable to that of the non-market economy country, and ... significant producers of comparable merchandise." Id. § 1677b(c)(4).

Commerce has promulgated regulations that prescribe how it carries out these statutory duties. For most of the factors

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of production, Commerce uses the values that prevail in a single market economy country (called a " surrogate country" ) that Commerce finds is both (a) economically comparable to the non-market economy country in question and (b) a significant producer of the merchandise in question. 19 C.F.R. § 351.408(c)(2). One factor of production, labor, is treated differently from the other factors. To value the labor used to produce subject merchandise, Commerce uses " regression-based rates reflective of the observed relationship between wages and national income in market economy countries." Id. § 351.408(c)(3). In addition to these methods of valuing the direct inputs to production, Commerce also values selling, general, and administrative expenses (" SG & A" ), factory overhead, and profit. These are determined using financial ratios derived from publicly-available financial statements of producers of comparable merchandise in the surrogate country. Id. § 351.408(c)(4). Generally, if more than one producer's financial statements are available, Commerce averages the financial ratios derived from all the available financial statements.

Here, in 2003, Commerce opened an investigation into whether wooden bedroom furniture from China was being dumped. Notice of Initiation of Antidumping Duty Investigation: Wooden Bedroom Furniture from the People's Republic of China, 68 Fed.Reg. 70,228 (Dec. 17, 2003). In June 2004, Commerce preliminarily determined that dumping was occurring. Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Wooden Bedroom Furniture from the People's Republic of China, 69 Fed.Reg. 35,312 (June 24, 2004) (" Preliminary Determination " ). After taking briefing from interested parties, Commerce published its final determination on November 17, 2004. Notice of Final Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Wooden Bedroom Furniture from the People's Republic of China, 69 Fed.Reg. 67,313 (Nov. 17, 2004) (" Final Determination " ). This was amended to correct some ministerial errors in January 2005. Notice of Amended Final Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Wooden Bedroom Furniture from the People's Republic of China, 70 Fed.Reg. 329 (Jan. 4, 2005) (" Amended Final Determination...

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