Fine Furniture (Shanghai) Ltd. v. United States

• Citation: 748 F.3d 1365
• Decision Date: 23 April 2014
• Docket Number: Nos. 2013–1158,2013–1173.,2013–1172,2013–1174,s. 2013–1158
• Parties: FINE FURNITURE (SHANGHAI) LIMITED, Great Wood (Tonghua) Ltd., and Fine Furniture Plantation (Shishou) Ltd., Plaintiff–Appellant, and Baroque Timber Industries (Zhongshan) Co., Ltd., Riverside Plywood Corporation, Samling Elegant Living Trading (Labuan) Limited, Samling Global USA, Inc., Samling Riverside Co., Ltd., Suzhou Times Flooring Co., Ltd., Shanghai Eswell Timber Co., Ltd., Shanghai Lairunde Wood Co., Ltd., Shanghai New Sihe Wood Co., Ltd., Shanghai Shenlin Corporation, Vicwood Industry (Suzhou) Co., Ltd., Xuzhou Shenghe Wood Co., Ltd., and A & W (Shanghai) Woods Co., Ltd., Plaintiffs–Appellants, and Hangzhou Hawd Flooring Co., Ltd., Dunhua City Jisen Wood Industry Co., Ltd., Dunhua City Dexin Wood Industry Co., Ltd., Dalian Huilong Wooden Products Co., Ltd., Kunshan Yingyinature Wood Industry Co., Ltd., and Karly Wood Product Limited, Plaintiffs–Appellants, Hunchun Forest Wolf Industry Co., Ltd., Nanjing Minglin Wooden Industry Co., Ltd., Dalian Penghong Floor Products Co., Ltd., Dongtai Fuan Universal Dynamics, LLC, Zhejiang Fudeli Timber Industry Co., Ltd., Fusong Qianqiu Wooden Product Co., Ltd., Power Dekor Group Co., Ltd., Jiafeng Wood (Suzhou) Co., Ltd., Jiangsu Senmao Bamboo and Wood Industry Co., Ltd., Shenyang Haobainian Wooden Co., Ltd., Guangzhou Pan Yu Kang Da Board Co., Ltd., Nakahiro Jyou Sei Furniture (Dalian) Co., Ltd., Yixing Lion–King Timber Industry Co., Ltd., Guangzhou Panyu Southernstar Co., Ltd., Dalian Kemian Wood Industry Co., Ltd., Fulik Timber (HK) Company, Ltd., Puli Trading Ltd., Zhejiang Shiyou Timber Co., Ltd., Shanghai Lizhong Wood Products Co., Ltd., and Shenzhenshi Huanwei Woods Co., Ltd., Plaintiffs–Appellants, and The Bureau of Fair Trade for Imports & Exports, Ministry of Commerce, and Peoples Republic of China, Plaintiff, v. UNITED STATES, Defendant–Appellee, and The Coalition for American Hardwood Parity, Defendant.
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

748 F.3d 1365

FINE FURNITURE (SHANGHAI) LIMITED, Great Wood (Tonghua) Ltd., and Fine Furniture Plantation (Shishou) Ltd., Plaintiff–Appellant,andBaroque Timber Industries (Zhongshan) Co., Ltd., Riverside Plywood Corporation, Samling Elegant Living Trading (Labuan) Limited, Samling Global USA, Inc., Samling Riverside Co., Ltd., Suzhou Times Flooring Co., Ltd., Shanghai Eswell Timber Co., Ltd., Shanghai Lairunde Wood Co., Ltd., Shanghai New Sihe Wood Co., Ltd., Shanghai Shenlin Corporation, Vicwood Industry (Suzhou) Co., Ltd., Xuzhou Shenghe Wood Co., Ltd., and A & W (Shanghai) Woods Co., Ltd., Plaintiffs–Appellants,andHangzhou Hawd Flooring Co., Ltd., Dunhua City Jisen Wood Industry Co., Ltd., Dunhua City Dexin Wood Industry Co., Ltd., Dalian Huilong Wooden Products Co., Ltd., Kunshan Yingyinature Wood Industry Co., Ltd., and Karly Wood Product Limited, Plaintiffs–Appellants,Hunchun Forest Wolf Industry Co., Ltd., Nanjing Minglin Wooden Industry Co., Ltd., Dalian Penghong Floor Products Co., Ltd., Dongtai Fuan Universal Dynamics, LLC, Zhejiang Fudeli Timber Industry Co., Ltd., Fusong Qianqiu Wooden Product Co., Ltd., Power Dekor Group Co., Ltd., Jiafeng Wood (Suzhou) Co., Ltd., Jiangsu Senmao Bamboo and Wood Industry Co., Ltd., Shenyang Haobainian Wooden Co., Ltd., Guangzhou Pan Yu Kang Da Board Co., Ltd., Nakahiro Jyou Sei Furniture (Dalian) Co., Ltd., Yixing Lion–King Timber Industry Co., Ltd., Guangzhou Panyu Southernstar Co., Ltd., Dalian Kemian Wood Industry Co., Ltd., Fulik Timber (HK) Company, Ltd., Puli Trading Ltd., Zhejiang Shiyou Timber Co., Ltd., Shanghai Lizhong Wood Products Co., Ltd., and Shenzhenshi Huanwei Woods Co., Ltd., Plaintiffs–Appellants,andThe Bureau of Fair Trade for Imports & Exports, Ministry of Commerce, and Peoples Republic of China, Plaintiff,

v. UNITED STATES, Defendant–Appellee,andThe Coalition for American Hardwood Parity, Defendant.

Nos. 2013–1158, 2013–1174, 2013–1172, 2013–1173.

United States Court of Appeals, Federal Circuit.

April 23, 2014.

Kristin H. Mowry, Mowry & Grimson, PLLC, of Washington, DC, argued for all plaintiff-appellants. With her on the brief were Jeffrey S. Grimson, Jill A. Cramer, and Sarah M. Wyss, for Fine Furniture (Shanghai) Limited, et al. Francis J. Sailer, Mark E. Pardo and Andrew T. Schutz, Grunfeld Desiderio Lebowitz Silverman & Klestadt, LLP, of Washington, DC, for Baroque Timber Industries (Zhongshan) Co., Ltd., et al; Gregory S. Menegaz, DeKieffer & Hogan, of Washington, DC, for Changzhou Hawd Flooring Co., Ltd., et al.; Jeffrey S. Neeley and Stephen W. Brophy, Barnes, Richardson, & Colburn, LLP, of Washington, DC, for Dalian Kemian Wood Industry Co., Ltd., et al. Of counsel were Jeffrey Kevin Horgan, DeKieffer & Horgan, of Washington, DC, and Kavita Mohan, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt, LLP, of Washington, DC.

Alexander V. Sverdlov, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee. With him on the brief were Stuart F. Delery, Acting Assistant Attorney General, and Jeanne E. Davidson, Director. Of counsel was Scott D. McBride, Senior Attorney, Office of the Chief Counsel for Import Administration, United States Department of Commerce, of Washington, DC. Of counsel was Jonathan M. Zielinski, of Washington, DC.

Before NEWMAN, PLAGER, and CHEN, Circuit Judges.

PLAGER, Circuit Judge.

This is a countervailing duty (“CVD”) case under the United States' trade laws. It involves the application of adverse inferences in a CVD investigation when a party fails to provide requested information.

Fine Furniture (Shanghai) Limited, et al. (referred to hereafter collectively as “Fine Furniture”), is a producer of hardwood flooring in China, whose flooring material is imported into the United States. In response to a petition by domestic industries, the U.S. Department of Commerce (“Commerce”) instituted a CVD investigation of multilayered wood flooring in China. Commerce selected Fine Furniture as a mandatory respondent in the investigation. After the government of China, the foreign government respondent in the investigation, did not provide requested information, Commerce relied on adverse inferences to find that the government's provision of electricity constituted a specific financial contribution and applied this adverse inference to select the benchmark for determining the existence and amount of benefit.¹

The Court of International Trade (“the trial court”) determined that Commerce properly utilized adverse inferences to substitute for information controlled by the government of China that was not provided in the course of the investigation. Fine Furniture appeals the judgment of the trial court, alleging that Commerce improperly used adverse inferences against Fine Furniture, a cooperating party, in calculating the CVD rate.

We conclude that, in calculating the CVD rate, Commerce properly applied adverse inferences to determine the CVD levied on the importation. We affirm the judgment of the Court of International Trade.

Background

The CVD statute is a remedial measure that provides relief to domestic manufacturers by imposing duties upon imports of comparable foreign products that have the benefit of a subsidy from the foreign government. 19 U.S.C. § 1671(a). The statute mandates that if “the government of a country or any public entity within the territory of a country” is providing a countervailable subsidy with respect to the production or exportation of specific merchandise, “then there shall be imposed upon such merchandise a countervailing duty, in addition to any other duty imposed, equal to the amount of the net countervailable subsidy.” Id.

Commerce initiated a CVD investigation on multilayered wood flooring from China in November 2010 in response to a petition from domestic producers. ² Commerce limited its individual examination to those companies accounting for the largest volume of imports, and selected Fine Furniture as a mandatory respondent.

During the investigation, Commerce sent out questionnaires to analyze an allegation that the government of China subsidized the respondents' electricity costs. Among other things, Commerce sought draft provincial price proposals for 2006 and 2008 for each province in which the mandatory respondents were located.³ It is undisputed that Fine Furniture provided all of the information requested of it, while the government of China did not.⁴

Commerce determined that the government of China's decision not to provide all of the requested information was a failure to cooperate to the best of its ability. Specifically, Commerce requested information for 2006 and 2008 documenting how electricity rates were determined for each province in which mandatory respondents were located, including draft provincial price proposals. The government of China declined to provide this information, creating a gap in the record.

Accordingly, Commerce applied an adverse inference to find that the Electricity Program provided a financial contribution and was specific to the identified respondents. Commerce also applied adverse inferences to determine the benchmark price for electricity—that is, the price that could have constituted adequate remuneration. Commerce compared the respondents' reported electricity costs with the calculated benchmark price to determine the benefit that respondent companies received under the Electricity Program.⁵

In its petition to the trial court, Fine Furniture challenged Commerce's determination, arguing that Commerce's use of adverse inferences was impermissible because Fine Furniture cooperated in Commerce's investigation. The trial court rejected this argument, finding that Commerce did not apply adverse inferencesagainst Fine Furniture; rather, as the trial court explained, Commerce applied adverse inferences as its method for determining the information requested from, but not provided by, the government of China. Fine Furniture (Shanghai) Ltd. v. United States, 865 F.Supp.2d 1254, 1260–63 (Ct. Int'l Trade 2012). This appeal followed.

We have jurisdiction over this appeal pursuant to 28 U.S.C. § 1295(a)(5).

Discussion

1. Standard of Review

We review decisions of the Court of International Trade evaluating Commerce's final determinations by reapplying the standard that the Court of International Trade applied in reviewing the administrative record. SNR Roulements v. United States, 402 F.3d 1358, 1361 (Fed.Cir.2005); Micron Tech., Inc. v. United States, 117 F.3d 1386, 1393 (Fed.Cir.1997). Accordingly, we will uphold Commerce's determination unless it is “unsupported by substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i).

On questions of law, we review Commerce's construction of the trade statute based on the two-pronged framework established by Chevron, U.S.A. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). See Agro Dutch Indus. v. United States, 508 F.3d 1024, 1029–1030 (Fed.Cir.2007) (finding that review of Commerce's interpretation of a governing statute should be conducted within the framework established by Chevron ). The first prong requires the court to determine whether Congress' intent is clear. If it is, the court “must give effect to the unambiguously expressed intent of Congress.” Chevron, 467 U.S. at 842–43, 104 S.Ct. 2778.

If, however, Congress' intent under the statute regarding the matter at issue is not clear, then the second prong of Chevron requires the court to determine whether the agency's interpretation of the statute is a reasonable one. See id. at 842–44, 104 S.Ct. 2778. The Supreme Court has reaffirmed that Commerce's “interpretation governs in the absence of unambiguous statutory language to the contrary or unreasonable resolution of language that is ambiguous.” See United States v. Eurodif S.A., 555 U.S. 305, 316, 129 S.Ct....