Kyd Inc v. United States

• Decision Date: 20 August 2010
• Docket Number: No. 2009-1366.,2009-1366.
• Parties: KYD, INC., Plaintiff-Appellant,v.UNITED STATES, Defendant-Appellee,andPolyethylene Retail Carrier Bag Committee, Hilex Poly Co., LLC, and Superbag Corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Federal Circuit

607 F.3d 760

KYD, INC., Plaintiff-Appellant,v. UNITED STATES, Defendant-Appellee,andPolyethylene Retail Carrier Bag Committee, Hilex Poly Co., LLC, and Superbag Corporation, Defendants-Appellees.

No. 2009-1366.

United States Court of Appeals Federal Circuit.

May 28, 2010.

Rehearing and Rehearing En Banc Denied Aug. 20, 2010.

David J. Craven, Riggle & Craven, of Chicago, IL, argued for plaintiff-appellant.

David L. Silverbrand, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee United States. With him on the brief were Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director. Of counsel was Scott D. McBride, Office of the Chief Counsel for Import Administration, United States Department of Commerce, of Washington, DC.

Daniel L. Schneiderman, King & Spalding LLP, of Washington, DC, argued for defendants-appellees Polyethylene Retail Carrier Bag Committee, et al. With him on the brief was Stephen A. Jones. Of counsel was Joseph W. Dorn.

Before NEWMAN, BRYSON, and DYK, Circuit Judges.

Opinion concurring-in-part and dissenting-in part filed by Circuit Judge DYK.

BRYSON, Circuit Judge.

KYD, Inc., an importer of polyethylene retail carrier bags (“PRCBs”), challenges an antidumping duty imposed on bags made by King Pac Industrial Co., Ltd., a Thai company that manufactured the bags KYD imported. KYD appeals from a decision of the Court of International Trade, which affirmed a determination by the Department of Commerce setting the antidumping duty rate for King Pac's bags at 122.88 percent.

I

In 2004, Commerce issued an antidumping duty order on PRCBs from Thailand. Polyethylene Retail Carrier Bags From Thailand, 69 Fed.Reg. 48,204 (Aug. 9, 2004) (antidumping duty order). In that order, Commerce assigned an antidumping duty rate of 122.88 percent to Zippac Company and two other exporters who failed to cooperate with Commerce's investigation. Commerce assigned that rate based on 19 U.S.C. § 1677e, which provides that if an interested party withholds or fails to provide requested information, Commerce shall “use the facts otherwise available in reaching the applicable determination.” Id. § 1677e(a)(2). In the case of an uncooperative respondent, Commerce “may use an inference that is adverse to the interests of that party in selecting from among the facts otherwise available.” Id. § 1677e(b). A margin based on such an adverse inference is referred to as an adverse facts available (“AFA”) margin.

When Commerce initiated its investigation of PRCBs from Thailand in July 2003, it noted that the domestic industry petitioners had calculated dumping margins for Thai-manufactured PRCBs ranging from 24.84 percent to 122.88 percent. The petitioners' information as to the normal value and export prices of those PRCBs was based on information from a single large Thai producer. Polyethylene Retail Carrier Bags From The People's Republic of China, Malaysia, and Thailand, 68 Fed.Reg. 42,002, 42,004 (July 16, 2003) (initiation of antidumping duty investigations).

In its preliminary and final determinations of sales at less than fair value, Commerce stated that it corroborated the petitioners' export price and normal price calculations by comparing the prices and expenses set forth in the petition with the prices and expenses submitted by the responding Thai companies for comparable products. In particular, Commerce explained that it examined information in the petition such as price quotations from the large Thai producer for various sizes of PRCBs commonly produced in Thailand, import statistics, and affidavits from managers of the Thai producer. Based on its investigation, Commerce found that the information in the petition was “reasonable.” Commerce also stated that it had found no information indicating that the dumping margin of 122.88 percent was inappropriate. To the contrary, Commerce concluded that the record supported the use of 122.88 percent as the “best indication” of the dumping margin for the uncooperative exporters, including Zippac, as it had “probative value” with respect to those firms and reflected “the appropriate adverse inference.” Polyethylene Retail Carrier Bags From Thailand, 69 Fed.Reg. 3552, 3554 (Jan. 26, 2004) (preliminary determination of sales at less than fair value); Polyethylene Retail Carrier Bags From Thailand, 69 Fed.Reg. 34,122, 34,123-24 (June 18, 2004) (final determination of sales at less than fair value).

In 2006, Commerce conducted the first administrative review of the antidumping duty order, for the period January 26, 2004, through July 31, 2005. In response to Commerce's questionnaire, King Pac responded on behalf of four entities, including Zippac, claiming that all four companies were affiliated due to common ownership and that they should be reviewed as a single entity. Commerce made several requests for information from King Pac, but it found King Pac's information to be incomplete, internally inconsistent, misleading, and inaccurate. Commerce concluded that although King Pac maintained detailed records containing all the information necessary to provide a complete and accurate questionnaire response, King Pac “did not provide complete or correct information” in response to Commerce's questionnaires. Decision to Apply Adverse Facts Available and the Appropriate Rate for the Preliminary Results of Review, at 5 (Aug. 31, 2006). Because Commerce determined that King Pac had significantly impeded the administrative review by not providing accurate and necessary information contained in its records, and had not acted to the best of its ability in producing the requested information, Commerce found it appropriate to calculate a dumping margin for King Pac based on facts otherwise available and to use an adverse inference in selecting from among the facts otherwise available. Id. at 5-6.

In the final results of the first administrative review, Commerce assigned an AFA rate of 122.88 percent to King Pac. Polyethylene Retail Carrier Bags From Thailand, 72 Fed.Reg.1982 (Jan. 17, 2007) (final results of administrative review). In response to King Pac's objection that the 122.88 percent AFA rate was punitive, Commerce explained that in addition to the analysis based on the materials submitted with the petition, it had calculated “transaction-specific margins for cooperative companies which are higher than the petition rate,” from which Commerce concluded that “the petition rate does not lie outside of the realm of actual selling practices and therefore is not punitive but is meant to encourage King Pac's cooperation.” Issues and Decision Memorandum for the Antidumping Duty Administrative Review of Polyethylene Retail Carrier Bags From Thailand for the Period of Review January 26, 2004, through July 31, 2005, at 30 (Jan. 9, 2007).

On King Pac's request for review, the Court of International Trade sustained Commerce's decision. Universal Polybag Co. v. United States, 577 F.Supp.2d 1284 (Ct. Int'l Trade 2008). The court held that Commerce had validly corroborated the AFA rate assigned to King Pac by looking to (1) the rate assigned to one of the companies affiliated with King Pac following the original investigation; (2) price quotes on similar products, accompanied by affidavits by company officials, that were submitted with the petition; and (3) “transaction-specific margins for other companies in the initial investigation [that] corroborate that the selected AFA rate continues to give an accurate reflection of commercial practices in the industry.” Id. at 1300. The court noted that Commerce had found “high-volume transaction-specific margins for cooperative companies which are both higher than the 122.88 percent petition rate and are close to that range.” Id.

In 2007, Commerce conducted a second administrative review covering the period August 1, 2005, through July 31, 2006. King Pac failed to respond to Commerce's requests for information pertinent to that administrative review. In the preliminary results for the second administrative review, Commerce stated that it would again assign the 122.88 percent AFA rate to King Pac because King Pac had failed to cooperate with Commerce's review, had significantly impeded the review, and had not acted to the best of its ability. Polyethylene Retail Carrier Bags From Thailand, 72 Fed.Reg. 37,718, 37,720 (July 11, 2007) (preliminary results of administrative review). ¹ Commerce further determined that the AFA rate it had selected remained reliable and relevant. Id.

In August 2007, KYD entered its appearance as an interested party. KYD challenged Commerce's selection of King Pac as a mandatory respondent and Commerce's application of the 122.88 percent AFA rate to King Pac for the second administrative review. Commerce rejected KYD's arguments and sustained the AFA rate of 122.88 percent for King Pac. Polyethylene Retail Carrier Bags From Thailand, 72 Fed.Reg. 64,580, 64,581 (Nov. 16, 2007) (final results of administrative review). At the same time, Commerce determined antidumping duty margins ranging from 0.80 percent to 1.87 percent for other respondents. Id.

In the memorandum in which Commerce explained its decision, Commerce noted that it had provided King Pac “with an opportunity to provide current information showing that its margin is lower than the adverse facts-available rate applied in earlier segments of the proceeding,” but that King Pac had elected not to cooperate at all in the review. Issues and Decision Memorandum for the Antidumping Duty Administrative Review of Polyethylene Retail Carrier Bags From Thailand for the Period of Review August 1, 2005, through July 31, 2006, at 6-7 (Nov. 8, 2007). Commerce noted the general rule that if a respondent fails to respond to a request for pricing data, Commerce may presume that the highest prior margin reflects the current margins. Based on that...