805 F.Supp. 45 (CIT. 1992), Court 90-10-00528, Chung Ling Co., Ltd. v. United States
|Docket Nº:||Court 90-10-00528|
|Citation:||805 F.Supp. 45|
|Party Name:||Chung Ling Co., Ltd. v. United States|
|Case Date:||July 28, 1992|
|Court:||Court of International Trade|
Whitman & Ransom, Charles H. Bayar, New York City, Far East United Law Office, Charles Y.W. Chiu and Swidler & Berlin, Chartered, Washington, D.C. (Lester Hyman and H.P. Goldfield, of counsel), for plaintiffs Chung Ling Co., Ltd. et al.
Grunfeld, Desiderio, Lebowitz & Silverman, Bruce M. Mitchell and David L. Simon, Washington, D.C., for plaintiff Comitex Knitters, Ltd.
Steptoe & Johnson, Stewart A. Baker and Gracia M. Berg, Washington, D.C., for plaintiffs Cheonji Sanup, Inc. et al.
Office of Gen. Counsel, U.S. Intern. Trade Com'n, Lyn M. Schlitt, Gen. Counsel, James A. Toupin, Asst. Gen. Counsel, and William T. Kane, Washington, D.C., for defendant.
Gibson, Dunn & Crutcher, Joseph H. Price and Kathrin Sears, Washington, D.C., for defendant-intervenor.
MEMORANDUM OPINION AND ORDER
In these consolidated antidumping actions, certain producers and exporters of manmade fiber ("MMF") sweaters, Chung Ling Co., Ltd. and other Taiwan plaintiffs ("Taiwan plaintiffs"), Comitex Knitters, Ltd. of Hong Kong ("Hong Kong plaintiff"), and Cheonji Sanup, Inc. and other Korean plaintiffs ("Korean plaintiffs"), contest the final affirmative administrative determinations of the International Trade Commission rendered pursuant to 19 U.S.C. § 1673d(b) in its material injury investigations, Sweaters Wholly or in Chief Weight of Manmade Fibers from Hong Kong, the Republic of Korea, and Taiwan, Inv. Nos. 731-TA-448, 449 and 450 (Final), USITC Pub. No. 2312 (Sept.1990) (" ITC Report ").
The National Knitwear and Sportswear Association ("NKSA"), a national trade association representing approximately 243 domestic sweater manufacturers and the petitioner in the antidumping investigations at the administrative level before the United States Department of Commerce and the Commission, appears in these actions as defendant-intervenor in support of the Commission.
The Commission by a vote of two (Commissioners Seely G. Lodwick and David B. Rohr) to one (Commissioner Don E. Newquist, dissenting), with one Commissioner (Anne E. Brunsdale) not participating, rendered its final affirmative determinations in the subject investigations on September 10, 1990 and notice thereof was published in the Federal Register on September 19, 1990. 55 Fed.Reg. 38,588. The final affirmative injury determinations of the Commission paved the way for the Commerce
Department, that found "dumping" (sales at less than fair value), to issue final antidumping duty orders, published on September 24, 1990. 55 Fed.Reg. 39,033 (Taiwan), 39,035 (Hong Kong) and 39,036 (Korea). The Commission majority's views and determinations are referred to herein as those of the "Commission" or "ITC."
Separate actions challenging the Commission's final determinations were consolidated under the above-captioned court number by order of April 19, 1991. This consolidated action is presently before the court on plaintiffs' motions under CIT Rule 56.1 for judgment on the agency record. Jurisdiction is predicated on 19 U.S.C. § 1516a(a)(2)(A)(i)(II) and 28 U.S.C. § 1581(c).
Briefly, plaintiffs claim that the subject determinations are unsupported by substantial evidence and were otherwise not in accordance with law, and request that the action be remanded.
The administrative record, ITC Report, and legal memoranda of the parties are voluminous--the "briefs" on these motions alone comprising some 600 pages. The record, ITC Report, and the parties' thorough and helpful briefs have been carefully considered, but in the interests of brevity they are referred to herein only to the extent necessary to address the issues that warrant remand. For the following reasons, this action is remanded to the Commission.
Standard of Review
The standard of judicial review for Commission final injury determinations is set forth in 19 U.S.C. § 1516a(b)(1)(B): "The court shall hold unlawful any determination, finding, or conclusion found * * * to be unsupported by substantial evidence on the record, or otherwise not in accordance with law." "[S]ubstantial evidence is more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." American Spring Wire Corp. v. United States, 8 CIT 20, 21, 590 F.Supp. 1273, 1276 (1984) (quoting Universal Camera Corp. v. NLRB, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1951)), aff'd sub nom. Armco, Inc. v. United States, 3 Fed.Cir. (T) 123, 760 F.2d 249 (1985).
Adverse Inference Rule
In the preliminary investigations, the Commission expressed great concern for the poor responsiveness of the domestic producers to the Commission's questionnaires. Although refusing to adopt an adverse inference with respect to injury against the domestic industry, the Commission admonished in its preliminary report that "if the response rate by the domestic industry in any final investigations is not substantially above present levels, the Commission may reconsider the propriety of drawing an adverse inference against the domestic industry." Sweaters Wholly or in Chief Weight of Manmade Fibers from Hong Kong, the Republic of Korea, and Taiwan, Inv. Nos. 731-TA-448-450 (Preliminary), USITC Pub. 2234 at 17 n. 46 (Nov.1989).
In these final investigations, of the 197 questionnaires it sent to a selective sampling of U.S. sweater producers, the Commission received 83 responses--fewer than one-half. The Commission explained the disappointingly low response rate on the basis of the lack of the appropriate financial and accounting data by the producers to provide the detailed information sought by the lengthy questionnaires.
Plaintiffs argue that due to inadequate producer questionnaire response, the Commission's data base is not representative of the U.S. MMF sweater industry in the critical financial and economic indicators of injury relied on for the affirmative determinations. Although the extent of the U.S. sweater industry coverage the Commission obtained from the producer questionnaire responses was fairly broad based, representing 49 percent of the total quantity of sweaters produced and 72 percent in terms of shipments, plaintiffs stress that these industry coverage figures are for all sweaters, MMF and non-MMF, and therefore are misleading; with regard to the industry and like product under investigation,
MMF sweaters, questionnaire responses were received from a mere nine producers accounting for only fifteen percent of MMF sweater production in 1989. ITC Report at 32 n. 94; Final Staff Report at A-41, A-57. What is more, these sparse MMF sweater producer responses were often lacking specific responses to data requested by the questionnaires relevant to pricing and the financial conditions and trends in the industry.
Citing Atlantic Sugar, Ltd. v. United States, 4 CIT 248, 251, 553 F.Supp. 1055, 1059 (1982), and a long line of agency precedents, plaintiffs contend that the Commission should have drawn an adverse inference that the data in the possession of the producer questionnaire recipients who did not respond and the data selectively withheld in the partial responses would show no material injury by reason of the subject imports.
In Alberta Pork Producers' Marketing Bd. v. United States, 11 CIT 563, 580, 669 F.Supp. 445, 459 (1987) (quoting International Union (UAW) v. N.L.R.B., 459 F.2d 1329, 1336 (D.C.Cir.1972)), the court stated: "The adverse inference rule provides that 'when a party has relevant evidence within his control which he fails to produce, that failure gives rise to an inference that the evidence is unfavorable to him.' " Continuing, the Alberta Pork court held:
[T]he Commission has discretion in deciding whether or not to draw an adverse inference with respect to injury based upon a party's failure to participate in the administrative proceeding, but the decision in either event must be based upon a sound rationale. In investigations where the Commission is able to gather the necessary information through its subpoena power or other independent sources, there is very little reason to draw an adverse inference for failure to respond to questionnaires.
Id. (emphasis added). See also Trent Tube Div. v. United States, 14 CIT 780, ----, 752 F.Supp. 468, 476 (1990).
The Commission addressed adverse inference in its report as follows:
[T]hrough voluntary responses and the use of the Commission's subpoena power, the Commission has received significantly more questionnaire responses than in the preliminary investigations. In light of this, and the absence of expressions of opposition to the petition by domestic producers, we have decided not to draw an inference that the lack of more complete questionnaire data is evidence that the domestic industry is not materially injured. Rather, although the level of response by U.S. producers was not ideal, we have used this data and data from secondary sources in examining the question of material injury.
ITC Report at 28.
Alberta Pork teaches that although the Commission's decision on adverse inference is committed to agency discretion, its decision must be based upon a sound rationale. Plaintiffs insist that in these investigations the Commission abused its discretion by failing to articulate a sound rationale. The court must agree. The Commission's stated justifications for not drawing an adverse inference--(1) the Commission received significantly more questionnaire responses in the final than in the preliminary...
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