Target Corp. v. United States

• Decision Date: 21 June 2010
• Docket Number: 2009-1519.,No. 2009-1518,2009-1518
• Citation: 609 F.3d 1352
• Parties: TARGET CORPORATION, Qingdao Kingking Applied Chemistry Co., Ltd., Dalian Talent Gift Co., Ltd., Shanghai Autumn Light Enterprise Co., Ltd., Zhongshan Zhongnam Candle Manufacturer Co., Ltd., Amstar Business Co., Ltd., Jiaxing Moonlight Candle Art Co., Ltd., and Shonfeld's (USA), Inc., Plaintiffs,andNantucket Distributing Co., Inc., Plaintiff-Appellant,andSpecialty Merchandise Corporation, Plaintiff-Appellant,v.UNITED STATES, Defendant-Appellee,andNational Candle Association, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

609 F.3d 1352

TARGET CORPORATION, Qingdao Kingking Applied Chemistry Co., Ltd., Dalian Talent Gift Co., Ltd., Shanghai Autumn Light Enterprise Co., Ltd., Zhongshan Zhongnam Candle Manufacturer Co., Ltd., Amstar Business Co., Ltd., Jiaxing Moonlight Candle Art Co., Ltd., and Shonfeld's (USA), Inc., Plaintiffs,andNantucket Distributing Co., Inc., Plaintiff-Appellant,andSpecialty Merchandise Corporation, Plaintiff-Appellant,v. UNITED STATES, Defendant-Appellee,andNational Candle Association, Defendant-Appellee.

Nos. 2009-1518, 2009-1519.

United States Court of Appeals Federal Circuit.

June 21, 2010.

COPYRIGHT MATERIAL OMITTED

Ned H. Marshak, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP, of New York, NY, argued for all plaintiffs-appellants. With him on the brief for Nantucket Distributing Co. Inc. were Max F. Schutzman and Andrew T. Schutz. Counsel for plaintiff-appellant Specialty Merchandise Corporation were Jeffrey S. Neeley, Stephen W. Brophy and Matthew T. McGrath, Barnes, Richardson & Colburn, of Washington, DC.

Michael J. Dierberg, 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 Franklin E. White, Jr., Assistant Director. Of counsel was Antonia R. Soares, Trial Attorney.

Karen A. McGee, Barnes & Thornburg LLP, of Washington, DC, argued for defendant-appellee National Candle Association. With her on the brief was Randolph J. Stayin.

Before RADER, Chief Judge,^* GAJARSA, and PROST, Circuit Judges.

GAJARSA, Circuit Judge.

This case comes to us on appeal from the Court of International Trade. At issue is whether the Court of International Trade correctly sustained the U.S. Department of Commerce's (“Commerce”) final affirmative circumvention determination that petroleum wax candles with 50% or more vegetable wax (“mixed-wax candles”) are later-developed merchandise covered by the antidumping duty order on petroleum wax candles from China. Target Corp. v. United States, 626 F.Supp.2d 1285 (Ct. Int'l Trade 2009) (“ Target II ”). Because Commerce's reasonable interpretation of the relevant Congressional statute is entitled to Chevron deference and because Commerce's determination rested on substantial evidence, we affirm.

Background

I.

Importers of goods into the United States are subject to antidumping duties under Section 736(a) of the Tariff Act of 1930 if (1) Commerce finds 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 [ (“LTFV”)];” and (2) the U.S. International Trade Commission (“ITC”) finds that a domestic industry is materially injured (or is threatened with material injury) or the establishment of an industry in the United States is materially retarded “by reason of imports of that merchandise, or by reason of sales (or the likelihood of sales) of that merchandise for importation.” 19 U.S.C. § 1673 (emphasis added); see also Viraj Group v. United States, 476 F.3d 1349, 1351 (Fed.Cir.2007).

To combat circumvention of antidumping orders, “Congress has provided that Commerce's consideration of certain types of articles within the scope of an [antidumping duty] order will be a proper clarification or interpretation of the order instead of improper expansion or change even where these products do not fall within the order's literal scope.” Wheatland Tube Co. v. United States, 161 F.3d 1365, 1370 (Fed.Cir.1998). These articles include: (1) merchandise completed or assembled in the United States whose “parts or components [are] produced in the foreign country with respect to which [an antidumping duty] order ... applies,” 19 U.S.C. § 1677j(a); (2) merchandise “completed or assembled in another foreign country from merchandise which ... is subject to [an antidumping duty] order or ... is produced in the foreign country with respect to which [the] order ... applies,” id. § 1677j(b); (3) merchandise “altered in form or appearance in minor respects ... whether or not included in the same tariff classification,” id. § 1677j(c); and (4) later-developed merchandise that would have been included in the order see id. § 1677j(d).

This case involves the last category of those articles, “later-developed” merchandise, which is governed by 19 U.S.C. § 1677j(d). Section 1677j(d) codifies Commerce's administrative practice for analyzing whether later-developed merchandise falls within the scope of an antidumping duty order. See H.R.Rep. No. 100-576, at 601 (1988), reprinted in 1988 U.S.C.C.A.N. 1547, 1634 (“This provision is intended to clarify and codify current Commerce Department authority, which has been recognized by the courts.”).

II.

In 1986, Commerce issued an antidumping duty order on petroleum wax candles from China. Petroleum Wax Candles from the People's Republic of China, 51 Fed.Reg. 30,686 (Aug. 28, 1986) (“ Candles Antidumping Order ”). In the LTFV proceeding, Commerce defined the subject merchandise, in relevant part, as “petroleum wax candles made from petroleum wax.” Petroleum Wax Candles from the People's Republic of China, 51 Fed.Reg. 25,085 (Jul. 10, 1986). For the corresponding injury investigation, the ITC defined the domestic like product, in relevant part, as candles “composed of over 50 percent petroleum wax.” Candles from the People's Republic of China, USITC Pub. 1888, Inv. No. 731-TA-282, at 2-3 (Aug.1986) (“ ITC Final Report ”).

Commerce, in a series of scope determinations, recognized that the ITC's percentage-based like product definition mandated that candles containing less than 50% petroleum wax be excluded from the scope of the Candles Antidumping Order. See, e.g., Petroleum Wax Candles from the People's Republic of China, Final Scope Ruling, A-570-504 (Dec. 10, 1998) (“ Costco Wholesale ”) (candles composed of 19% petroleum wax and 81% beeswax excluded from the Candles Antidumping Order for not satisfying Commission's like product definition of petroleum wax candles).

In 2004, the domestic interested party, the National Candle Association (“NCA”), petitioned Commerce to initiate a later-developed merchandise anticircumvention inquiry and determine whether petroleum candles “containing palm or vegetable wax as the majority ingredient” were circumventing the Candles Antidumping Order. NCA claimed that the late-1990s development of mixed-wax candles, which allegedly were indistinguishable by the consumer from petroleum wax candles, enabled importers to completely avoid paying antidumping duties on 87% of their candles imported from China. In March 2005, Commerce initiated the inquiry. Petroleum Wax Candles from the People's Republic of China, 70 Fed.Reg. 10,962, 10,963 (Mar. 7, 2005) (“ Notice of Initiation ”).

As Commerce was commencing the later-developed merchandise anticircumvention inquiry, the ITC was coincidentally conducting a second five-year sunset review of the Candles Antidumping Order. See Candles from the People's Republic of China, USITC Pub. 3790, Inv. No. 731-TA-282 (July 2005) (“ Second Sunset Review ”). The lone participant in the Second Sunset Review, NCA, urged the ITC to re-examine the domestic like product definition from the ITC Final Report and include “all blended candles” regardless of the proportion of petroleum wax. Second Sunset Review at 7. The ITC then redefined the domestic like product “to include all blended candles,” or more simply, candles “containing any amount of petroleum wax.” Id. at 9. No party challenged the Second Sunset Review.

Subsequently, Commerce completed the anticircumvention inquiry and determined that mixed-wax candles containing “any amount” of petroleum wax were within the scope of the Candles Antidumping Order.Petroleum Wax Candles from the People's Republic of China, 71 Fed.Reg. 59,075, 59,077-78 (Oct. 6, 2006) (“ Final Determination ”).

Specifically, Commerce ruled that it was appropriate to apply a “commercial availability” test for determining whether merchandise is “later-developed” within the meaning of 19 U.S.C. § 1677j(d). Furthermore, Commerce proposed an additional requirement that later-developed merchandise must have resulted from a significant technological advancement or significant alteration to an earlier product. In addition, Commerce found that it could not “definitively conclude” that mixed-wax candles were commercially available at the time of the investigation. Commerce also determined that mixed-wax candles should be within the scope of the antidumping order, based upon its findings that petroleum and mixed-wax candles are similar when applying the Diversified Products criteria set forth in 19 U.S.C. § 1677j(d)(1) ¹, including the general physical characteristics, the expectations of the ultimate purchasers, the ultimate use of the products, the channels of trade of the products, and the advertising and display of the products.

Plaintiffs ², including Appellants Nantucket Distributing Co., Inc. and Specialty Merchandise Corporation, Inc. (collectively, “Nantucket”), challenged Commerce's determination. The Court of International Trade affirmed in part and remanded in part Commerce's determination Target Corp. v. United States, 578 F.Supp.2d 1369 (Ct. Int'l Trade 2008) (“ Target I ”).

The Court of International Trade found that Commerce's commercial availability test was based upon a reasonable interpretation of the statute. Id. at 1375. The Court of International Trade, however, remanded the case to Commerce with respect to two issues. First, the court concluded that language in Commerce's final anticircumvention determination, that it could not “definitively conclude” that mixed-wax candles were commercially available at the time of the antidumping investigation, caused confusion which prevented the court from appropriately reviewing Commerce's finding for substantial evidence. Id. at 1376. The Court of...