Fujian Lianfu Forestry Co., Ltd. v. U.S.

• Decision Date: 10 August 2009
• Docket Number: Slip Op. 09-81.,Court No. 07-00306.
• Citation: 638 F.Supp.2d 1325
• Parties: FUJIAN LIANFU FORESTRY CO., LTD., a.k.a. Fujian Wonder Pacific Inc., Fuzhou Huan Mei Furniture Co., Ltd., and Jiangsu Dare Furniture Co., Ltd., Plaintiffs, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

638 F.Supp.2d 1325

FUJIAN LIANFU FORESTRY CO., LTD., a.k.a. Fujian Wonder Pacific Inc., Fuzhou Huan Mei Furniture Co., Ltd., and Jiangsu Dare Furniture Co., Ltd., Plaintiffs, v. UNITED STATES, Defendant.

Slip Op. 09-81.

Court No. 07-00306.

United States Court of International Trade.

August 10, 2009.

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Arent Fox (Nancy A. Noonan, Matthew L. Kanna) for Plaintiffs Fujian Lianfu Forestry Co., Ltd., a.k.a. Fujian Wonder Pacific Inc., Fuzhou Huan Mei Furniture Co., Ltd., and Jiangsu Dare Furniture Co., Ltd.

Steptoe & Johnson (Thomas J. Trendl, Jamie B. Beaber) for Plaintiffs Starcorp Furniture Co., Ltd., Starcorp Furniture (Shanghai) Co., Ltd., Orin Furniture (Shanghai) Co., Ltd., Shanghai Star Furniture Co. Ltd., and Shanghai Xing Ding Furniture Industrial Co., Ltd.

Tony West, 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), Senior Trial Attorney; and Office of Chief Counsel for Import Administration, U.S. Department of Commerce (Rachel Wenthold), of counsel, for Defendant United States.

King & Spalding LLP, Washington, DC (J. Michael Taylor, Elizabeth E. Duall, Jeffrey M. Telep, Joseph W. Dorn, Stephen A. Jones) for Defendant-Intervenor American Furniture Manufacturers Committee for Legal Trade.

OPINION AND ORDER

GORDON, Judge.

This consolidated action arises from the first administrative review of the antidumping duty order ("Order") covering wooden bedroom furniture from the People's Republic of China ("PRC"). See Amended Final Results of Antidumping Duty Administrative Review and New Shipper Reviews: Wooden Bedroom Furniture From the People's Republic of China, 72 Fed.Reg. 46,957 (Dep't Commerce Aug. 22, 2007), as amended, 72 Fed.Reg. 62,834 (Dep't Commerce Nov. 7, 2007) (amended final results admin. review) ("Final Results"); see also Issues and Decision Memorandum for the 2004-2005 Administrative Review of Wooden Bedroom Furniture from the People's Republic of China, A-570-890 (Aug. 8, 2007), available at http://ia.ita.doc.gov/frn/summary/prc/E 7-16584-1.pdf (last visited Aug. 10, 2009) ("Issues and Dec. Mem."); Memorandum from Wendy J. Frankel, Director, AD/CVD Enforcement, Office 8, to Stephen J. Claeys, Deputy Assistant Secretary for Import Administration (Aug. 8, 2007) (Application of Adverse Facts Available to Starcorp) ("Starcorp AFA Mem.").

Respondents, (1) Fujian Lianfu Forestry Co., Ltd., a.k.a. Fujian Wonder Pacific

Inc., Fuzhou Huan Mei Furniture Co., Ltd., and Jiangsu Dare Furniture Co., Ltd., ("Dare Group"); and (2) Starcorp Furniture Co., Ltd., Starcorp Furniture (Shanghai) Co., Ltd., Orin Furniture (Shanghai) Co., Ltd., Shanghai Star Furniture Co., Ltd., and Shanghai Xing Ding Furniture Industrial Co., Ltd., ("Starcorp"); and Petitioners, American Furniture Manufacturers Committee For Legal Trade ("AFMC"), each move for judgment on the agency record pursuant to USCIT Rule 56.2, challenging the Final Results. The court has jurisdiction pursuant to Section 516A(a)(2)(B)(iii) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) (2006),¹ and 28 U.S.C. § 1581(c) (2000). For the reasons set forth below, the court remands this action to Commerce to reconsider (1) its decision regarding combination rates, and (2) its selection of a total adverse facts available rate of 216.01 percent for Starcorp. The court sustains Commerce's determinations regarding all other issues in this action.

I. Standard of Review

When reviewing the U.S. Department of Commerce's ("Commerce") final results of an antidumping duty administrative review under 19 U.S.C. § 1516a(a)(2)(B)(iii) and 28 U.S.C. § 1581(c), the U.S. Court of International Trade sustains Commerce's "determinations, findings, or conclusions" unless they are "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i).

"Substantial evidence" is a word formula that connotes reasonableness review. When reviewing a party's substantial evidence challenge, the court assesses whether the agency "determination, finding, or conclusion" is reasonable given the record as a whole. See Nippon Steel Corp. v. United States, 458 F.3d 1345, 1350-51 (Fed.Cir.2006); 3 Charles H. Koch, Jr., Administrative Law and Practice § 10.3[1] (2d ed.2008). When reviewing substantial evidence issues from non-market economy proceedings involving Commerce's selection of the "best available" pricing and cost data taken from "surrogate" economies/companies, 19 U.S.C. § 1677b(c), the court's role "is not to evaluate whether the information Commerce used was the best available, but rather whether a reasonable mind could conclude that Commerce chose the best available information." Goldlink Indus. Co. v. United States, 30 CIT 616, 619, 431 F.Supp.2d 1323, 1327 (2006) ("Goldlink"); see also Dorbest Ltd. v. United States, 30 CIT 1671, 1675-76, 462 F.Supp.2d 1262, 1269-70 (2006) ("Dorbest") (providing comprehensive explanation of substantial evidence standard of review in non-market economy context).

Separately, the two-step framework provided in Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842-45, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), governs judicial review of Commerce's interpretation of the antidumping statute. Dupont Teijin Films USA, LP v. United States, 407 F.3d 1211, 1215 (Fed. Cir.2005). "[S]tatutory interpretations articulated by Commerce during its antidumping proceedings are entitled to judicial deference under Chevron." Pesquera Mares Australes Ltda. v. United States, 266 F.3d 1372, 1382 (Fed.Cir.2001).

II. Discussion

A. Combination Rates

AFMC challenges Commerce's decision not to assign combination rates² to exporters pursuant to 19 C.F.R. § 351.107(b) (2004).³ Commerce concedes that it did not explain its decision regarding combination rates. Commerce therefore requests a remand to reexamine the record, provide a reasoned explanation, and take any appropriate action consistent with the remand analysis. Accordingly, the court will grant the remand request. See SKF USA Inc. v. United States, 254 F.3d 1022, 1029 (Fed.Cir.2001).

B. Selection of Total Adverse Facts Available Rate for Starcorp⁴

In the Final Results, after concluding that Starcorp had not cooperated to the best of its ability (an issue the court addresses in Section C), Commerce assigned a total adverse facts available ("AFA") rate of 216.01 percent to Starcorp. See Issues and Dec. Mem., Pub. Doc. 1185 fr. 222.⁵ In a total AFA scenario, Commerce is unable to calculate an antidumping rate for an uncooperative respondent because the information required for such a calculation (the respondent's sales and cost information for the subject merchandise during the period of review) is found to be unreliable. As a substitute, Commerce relies on the petition, the final determination from the investigation, prior administrative reviews, or other information placed on the record, 19 U.S.C. § 1677e(b), to select a proxy that should be a "reasonably accurate estimate of the respondent's actual rate, albeit with some built-in increase intended as a deterrent to noncompliance." F.lli De Cecco Di Filippo Fara S. Martino S.p.A. v. United States, 216 F.3d 1027, 1032 (Fed.Cir.2000) ("De Cecco").

When applying a total AFA rate, Commerce shall, "to the extent practicable," corroborate that rate "from independent sources that are reasonably at [its] disposal." 19 U.S.C. § 1677e(c). The statute does not prescribe any methodology for corroborating a total facts available rate, but the regulations state that corroborate "means that the Secretary will examine whether the secondary information to be used has probative value." 19 C.F.R. § 351.308(d) (parroting Uruguay Round Agreements Act Statement of Administrative Action, H.R.Rep. No. 103-316, vol. 1 at 870 (1994), reprinted in 1994 U.S.C.C.A.N. 3773, 4199). A total facts available proxy rate should therefore have probative value of a "reasonably accurate estimate of the respondent's actual rate, albeit with some built-in increase intended as a deterrent to noncompliance." De Cecco, 216 F.3d at 1032. As a general matter Commerce assesses the probative value of secondary information by examining its reliability and relevance. See Ball Bearings and Parts Thereof from France, Germany, Italy, Japan, Singapore, and the United Kingdom, 70 Fed.Reg. 54, 711, 54,712-13 (Sept. 16, 2005) (final results). For specific secondary information like a total facts available proxy, the corroboration analysis therefore depends on whether the proxy is a reliable and relevant indicator that satisfies the De Cecco standard.

What this means is that the total AFA rate should bear a "rational relationship to the respondent, not just the industry on the whole." Tianjin Mach. Imp. & Exp. Corp. v. United States, 31 CIT ___, ___, 2007 WL 2701368, *14 (2007) (citing Shandong Huarong Gen. Group Corp., 31 CIT ___, ___, 2007 WL 54067, *2 (2007) ("[T]he law `requires that an assigned rate relate to the company to which it is assigned.'") (internal citation omitted)). Courts "have affirmed Commerce's selection of adverse facts available margins where Commerce corroborated the margin with respect to a respondent's own transaction specific margins, either from the period of review at issue, . . ., or a previous period of review." PAM, S.p.A. v. United States, 31 CIT ___, ___ 495 F.Supp.2d 1360, 1372 (2007) ("PAM") (citing Ta Chen Stainless Steel Pipe, Inc. v. United States, 298 F.3d 1330, 1339-40 (Fed.Cir.2002) and Mittal Steel Galati S.A. v. United States, 31 CIT ___, ___, 491 F.Supp.2d 1273, 1276 (2007)). Similarly, this Court has found that "Commerce adequately corroborated where it compared the adverse...