887 F.Supp.2d 1301 (CIT 2012), 11-00178, Zhaoqing New Zhongya Aluminum Co., Ltd. v. United States

Docket Nº:11-00178.[1]
Citation:887 F.Supp.2d 1301
Opinion Judge:POGUE, Chief Judge:
Party Name:ZHAOQING NEW ZHONGYA ALUMINUM CO., LTD.; Zhongya Shaped Aluminum; and Guang Ya Aluminum Industries, Co. Ltd., Plaintiffs, v. UNITED STATES, Defendant. Slip Op. 12-130.
Attorney:Peter J. Koenig, Squire Sanders LLP, of Washington, DC, for the Plaintiffs Zhaoqing New Zhongya Aluminum Co., Ltd., Zhongya Shaped Aluminum (HK) Holding, Ltd., and Karlton Aluminum Company Ltd. Mark D. Davis, Davis & Leiman P.C., of Washington, DC, for the Plaintiffs Guang Ya Aluminum Industries ...
Case Date:October 11, 2012
Court:Court of International Trade
 
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887 F.Supp.2d 1301 (CIT 2012)

ZHAOQING NEW ZHONGYA ALUMINUM CO., LTD.; Zhongya Shaped Aluminum; and Guang Ya Aluminum Industries, Co. Ltd., Plaintiffs,

v.

UNITED STATES, Defendant.

Slip Op. 12-130.

No. 11-00178. 1

United States Court of International Trade.

October 11, 2012

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[Copyrighted Material Omitted]

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Peter J. Koenig, Squire Sanders LLP, of Washington, DC, for the Plaintiffs Zhaoqing New Zhongya Aluminum Co., Ltd., Zhongya Shaped Aluminum (HK) Holding, Ltd., and Karlton Aluminum Company Ltd.

Mark D. Davis, Davis & Leiman P.C., of Washington, DC, for the Plaintiffs Guang Ya Aluminum Industries Co., Ltd., and Guang Ya Aluminum Industries (Hong Kong) Ltd.

Tara K. Hogan, Trial Attorney, Commercial Litigation Branch, Civil Division,

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U.S. Department of Justice, of Washington, DC, for the Defendant. With her on the briefs were Stuart E. Delery, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Reginald T. Blades, Jr., Assistant Director. Of counsel on the briefs was Rebecca Canto, Attorney, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, of Washington, DC.

Stephen A. Jones and Daniel L. Schneiderman, King & Spalding LLP, of Washington, DC, for the Defendant-Intervenors, the Aluminum Extrusions Fair Trade Committee.

OPINION

POGUE, Chief Judge:

In this action, Plaintiffs, who are Chinese producers of extruded aluminum, seek review of certain findings in the United States Department of Commerce's (" Commerce" or " the Department" ) antidumping investigation of extruded aluminum from the People's Republic of China (" China" ).2 Specifically, Plaintiffs allege that Commerce erred in collapsing into a single entity three affiliated exporter/producers, the Guang Ya group, New Zhongya, and Xinya, and improperly applied adverse facts available (" AFA" ) to this collapsed entity when calculating antidumping duty rates. As explained below, Commerce's final determination is supported by a reasonable reading of the record.

The court has jurisdiction pursuant to § 516A(a)(2)(B)(i) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(i) (2006)3 and 28 U.S.C. § 1581(c) (2006).

STANDARD OF REVIEW

Under this court's familiar standard of review, Commerce's determination will be affirmed 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). Substantial evidence means " more than a mere scintilla" of " such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Universal Camera Corp. v. NLRB, 340 U.S. 474, 477, 71 S.Ct. 456, 95 L.Ed. 456 (1951) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938)). To determine if substantial evidence exists, the court reviews

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the record as a whole, including whatever " fairly detracts from [the conclusion's] weight." Id. at 488, 71 S.Ct. 456. It is also relevant here that the possibility of drawing two inconsistent conclusions from the evidence does not invalidate Commerce's conclusion as long as it remains supported by substantial evidence on the record. Id. (" [A] court may [not] displace the [agency's] choice between two fairly conflicting views, even though the court would justifiably have made a different choice had the matter been before it de novo." ).

BACKGROUND

In its antidumping investigation, as is relevant here, Commerce initially found that the Plaintiffs were separate from the China-wide entity. It then determined that the Guang Ya group (" Guang Ya" ), New Zhongya (" Zhongya" ), and Xinya met the statutory and regulatory requirements for collapsing affiliated companies. Specifically, the relevant statute directs Commerce to consider as affiliated any " members of a family." 19 U.S.C. § 1677(33)(A). The applicable regulation calls for collapsing affiliated companies where: 1) a shift in production between factories would not require " substantial retooling" of either facility and 2) there is a " significant potential for the manipulation of price or production." I & D Memo at 31; 19 C.F.R. § 351.401(f). When evaluating potential for manipulation, Commerce considers relevant factors, including but not limited to: 1) the level of common ownership, 2) the extent to which managers and board members sit on the board of directors of an affiliated firm, and 3) whether operations are intertwined. 19 C.F.R. § 351.401(f)(2).

As an initial matter, Commerce determined that the companies were affiliated and that a shift in production between them would not require significant retooling of facilities.4 I & D Memo, Comment 4 at 32. Commerce then turned to the relevant factors identified by the regulations for assessing potential for manipulation. Id.

With regards to the first factor, common ownership, Commerce found that the owners of these companies constituted a family grouping, pursuant to 19 U.S.C. § 1677(33)(A), and that this grouping satisfied the criteria for common control under 19 U.S.C. § 1677(33)(F) because members of the Kuang family grouping owned a substantial portion, if not all, of each of the three companies. Final Determination, 76 Fed. Reg. at 18,527. While Commerce initially stated that it did not know the exact ownership of Xinya,5 it later gathered evidence, all of which indicated that a member of the Kuang family owned Xinya, even though that evidence could interpreted in a manner that leads to inconsistent conclusions. I & D Memo, Comment 4 at 34-35. Specifically, in this antidumping investigation, Guang Ya claimed a Kuang sibling was a Xinya shareholder, whereas Zhongya stated on the public record of an accompanying countervailing duty investigation that the same Kuang sibling owned Xinya. Preliminary Determination, 75 Fed. Reg. at 69,407. Commerce attempted to ascertain who owned Xinya during the verification stage of this antidumping investigation, but Xinya refused to cooperate. I & D Memo, Comment 4 at 34-35. Commerce did, however, find undisputed record evidence that a Kuang brother-in-

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law was the general manager of Xinya. Id. at 32. Because none of the parties recanted earlier statements that the owner or shareholder of Xinya was a Kuang sibling, and because there was no evidence on the record to suggest that anyone other than a Kuang sibling controlled Xinya, Commerce concluded that the earlier evidence showing familial affiliation was credible and considered Xinya to be owned by the Kuang family grouping. Def.'s Opp'n to Pls.' Rule 56.2 M. For J. upon the Agency R., ECF No. 31 at 9 (" Def.'s Br." ).

While Commerce did not find any common board members or management between the companies, it concluded that such a finding was unnecessary because the family grouping constituted a single unit, and Kuang family members managed or directed each of the three companies. Def.'s Br. at 14. Furthermore, Commerce found other factors supported a finding of potential for price manipulation. Specifically, not only did the Kuang family hold senior leadership positions in each company, but the record showed money transfers from Xinya to Zhongya which Commerce took as indicia that the companies were intertwined.6 During verification, Zhongya offered two inconsistent explanations for the money transfers. Final Collapsing Memo at 4. Because the verification process acts as a spot check and is not designed to be exhaustive, Commerce concluded that " the fact [we] did not uncover additional evidence of intertwined transactions during the course of these verifications is not telling" and that the relationship between the three companies " poses a significant potential for the manipulation of price or production." Id. at 10. It therefore collapsed Guang Ya, Zhongya, and Xinya into a single entity when calculating AD duties. 7 Final Determination, 76 Fed. Reg. at 18,527.

When calculating the applicable dumping margin for the collapsed entity, Commerce relied on adverse facts available, pursuant to 19 U.S.C. § 1677e(b), because each of the three companies that makes up the collapsed entity failed to cooperate. Id. at 18,528-29. According to Commerce, the resulting record was filled with " such extensive omissions and inaccuracies that a reasonably accurate, reliable dumping margin could not be calculated." Def.'s Br. at 15. First, Guang Ya possessed information concerning aluminum billet consumption, and knew that Commerce required this data, but, without explanation, removed the data from its database. I & D Memo, Comment 5 at 52. Even after Commerce requested the information in a supplemental questionnaire, Guang Ya did not produce it. Id. Guang Ya later submitted aluminum billet consumption data

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that was inconsistent with data that had already been verified. Id. Second, Zhongya failed to provide complete and accurate U.S. sales data upon Commerce's request. Id. Finally, Xinya was not responsive in any appreciable way to Commerce's multiple antidumping questionnaires, and during verification did not provide requested documents or make personnel available who could accurately answer Commerce's questions. Id.

Accordingly, using adverse inferences, Commerce calculated a final rate of 33.28% for the Guang Ya/Zhongya/Xinya entity. Final Determination, 76 Fed. Reg. at 18,530. Plaintiffs challenge this rate.

DISCUSSION

Plaintiffs claim both that the record cannot support a finding that the three companies are affiliated and that it does not support Commerce's decision to collapse the corporations into one entity. Plaintiffs also challenge Commerce's decision to impose an AFA rate. Each challenge is considered in turn.

I. Affiliation

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