Macao Commercial & Indus. Spring Mattress Mfr. v. United States

• Decision Date: 20 March 2020
• Docket Number: Court No. 19-00005,Slip Op. 20-37
• Citation: 437 F.Supp.3d 1324
• Parties: MACAO COMMERCIAL AND INDUSTRIAL SPRING MATTRESS MANUFACTURER, Plaintiff, v. UNITED STATES, Defendant, and Leggett & Platt, Inc., Defendant-Intervenor.
• Court: U.S. Court of International Trade

437 F.Supp.3d 1324

MACAO COMMERCIAL AND INDUSTRIAL SPRING MATTRESS MANUFACTURER, Plaintiff,

v. UNITED STATES, Defendant,andLeggett & Platt, Inc., Defendant-Intervenor.

Slip Op. 20-37

Court No. 19-00005

United States Court of International Trade.

March 20, 2020

Susan Kohn Ross and Alesha M. Dominique, Mitchell Silberberg & Knupp LLP of Los Angeles, CA and Washington, DC for Plaintiff Macao Commercial and Industrial Spring Mattress Manufacturer.

Kelly A. Krystyniak, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice of Washington, DC, for Defendant United States. With her on brief were Joseph H. Hunt, Assistant Attorney General, Jeanne E. Davidson, Director, Claudia Burke, Assistant Director. Of counsel was Elio Gonzalez, Attorney, U.S. Department of Commerce, Office of Chief Counsel for Trade Enforcement and Compliance of Washington, DC.

Yohai Baisburd, Jeffery B. Denning, and Chase J. Dunn, Cassidy Levy Kent (USA) LLP of Washington, DC for Defendant-Intervenor Leggett & Platt, Inc.

Gordon, Judge:

This action involves the U.S. Department of Commerce's ("Commerce") final affirmative determination that Plaintiff Macao Commercial and Industrial Spring Mattress Manufacturer ("Plaintiff" or "Macao Commercial") circumvented the antidumping duty ("AD") order on uncovered innerspring units ("innersprings" or "innerspring units") from the People's Republic of China ("PRC"). See Uncovered Innerspring Units from the People's Republic of China, 83 Fed. Reg. 65,626 (Dep't of Commerce Dec. 21, 2018) (final affirm. determ. of circumvention of the AD Order) ("Final Determination"), and the accompanying Issues and Decision Memorandum (Dep't of Commerce Dec. 14, 2018), available at https://enforcement.trade.gov/frn/summary/prc/2018-27677-1.pdf (last visited this date) ("Decision Memorandum"); see also Uncovered Innerspring Units from the People's Republic of China, 74 Fed. Reg. 7,661 (Dep't of Commerce Feb. 19, 2009) ("Order").

Before the court is Plaintiff's motion for judgment on the agency record under USCIT Rule 56.2. See Pl.’s Mot. for J. on the Agency R., ECF No. 29¹ ("Pl.’s Br."); see also Def.’s Resp. to Pl.’s Mot. for J. on the Agency R., ECF No. 34 ("Def.’s Resp."); Def.-Intervenor Leggett & Platt, Inc.’s Resp. Opp. Pl.’s Mot. for J. on the Agency R., ECF No. 36; Pl.’s Reply in Supp. Of Mot. for J. on the Agency R., ECF No. 38 ("Pl.’s Reply"). The court has jurisdiction pursuant to Section 516A(a)(2)(B)(vi) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(vi) (2012),² and 28 U.S.C. § 1581(c) (2012). For the reasons set forth below, the court sustains Commerce's Final Determination.

I. Background

Macao Commercial is a foreign producer and exporter of uncovered innerspring units made from Chinese-origin materials. See Decision Memorandum at 4. During the course of the sixth administrative review of the Order, Commerce selected Macao Commercial as one of the two mandatory respondents subject to individual examination during the review. Following Macao Commercial's responses to Commerce's original and supplemental questionnaires, Commerce explained that it intended to evaluate whether self-initiation of an anti-circumvention inquiry would be warranted based upon the information submitted by Macao Commercial during the review. See Uncovered Innerspring Units from the People's Republic of China, 81 Fed. Reg. 62,729 (Dep't of Commerce Sept. 12, 2016) (final results AD admin rev.), and accompanying Issues and Decision Memorandum at cmt. 1 (Dep't of Commerce Sept. 6, 2016), available at https://enforcement.trade.gov/frn/summary/prc/2016-21859-1.pdf (last visited this date).

Pursuant to 19 U.S.C. § 1677j(b), in order to prevent circumvention of an antidumping duty order, Commerce is empowered to find certain merchandise to be within the scope of the order if "before importation into the United States, such imported merchandise is completed or assembled in another foreign country from merchandise [that is subject to an existing antidumping duty order]." 19 U.S.C. § 1677j(b)(1)(B). Commerce proceeded to self-initiate an anti-circumvention inquiry to determine whether innersprings manufactured by Macao Commercial in Macau from raw materials originating in China, including uncoiled steel wire, nonwoven fabric, and glue, and exported to the United States from Macau are circumventing the Order. See Uncovered Innerspring Units from the People's Republic of China, 81 Fed. Reg. 83,801 (Dep't of Commerce Nov. 22, 2016) (initiation of anticircumvention inquiry on Order ).

After gathering additional information from Macao Commercial by issuing supplemental questionnaires and conducting public and closed hearings, Commerce determined that Macao Commercial had failed to provide necessary, requested cost reconciliations. See Decision Memorandum at 9–12. Commerce also found that there were discrepancies and unexplained differences with respect to Macao Commercial's financial statements. Id. Finding that Macao Commercial failed to cooperate to the best of its ability, Commerce determined that the application of facts available with an adverse inference ("AFA") was appropriate in part. Id. at 12. Consequently, Commerce concluded that Macao Commercial's merchandise was subject to the Order pursuant to 19 U.S.C. § 1677j(b). See Final Determination.

II. Standard of Review

The court 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). More specifically, when reviewing agency determinations, findings or conclusions for substantial evidence, the court assesses whether the agency action is reasonable given the record as a whole. Nippon Steel Corp v. United States, 458 F.3d 1345, 1350–51 (Fed. Cir. 2006). Substantial evidence has been described as "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." DuPont Teijin Films USA v. United States, 407 F.3d 1211, 1215 (Fed. Cir. 2005) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938) ). Substantial evidence has also been described as "something less than the weight of evidence, and the possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency's findings from being supported by substantial evidence." Consolo v. Fed. Mar. Comm'n, 383 U.S. 607, 620, 86 S.Ct. 1018, 16 L.Ed.2d 131 (1966). Fundamentally, though, "substantial evidence" is best understood as a word formula connoting a reasonableness review. 3 Charles H. Koch, Jr., Administrative Law and Practice § 9.24[1] (3d ed. 2019). Therefore, when addressing a substantial evidence issue raised by a party, the court analyzes whether the challenged agency action "was reasonable given the circumstances presented by the whole record." 8A West's Fed. Forms, National Courts § 3.6 (5th ed. 2019).

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 Tariff Act. See United States v. Eurodif S.A., 555 U.S. 305, 316, 129 S.Ct. 878, 172 L.Ed.2d 679 (2009) (An agency's "interpretation governs in the absence of unambiguous statutory language to the contrary or unreasonable resolution of language that is ambiguous.").

III. Discussion

Pursuant to 19 U.S.C. § 1677j(b)(1)(B), Commerce may determine that merchandise is circumventing an AD order where, "before importation into the United States, such imported merchandise is completed or assembled in another foreign country from merchandise which—(i) is subject to such order or finding, or (ii) is produced in the foreign country with respect to which such order or finding applies." 19 U.S.C. § 1677j(b)(1)(B). The subsequent subsections of the statute provide factors to guide Commerce's anti-circumvention determinations. See 19 U.S.C. § 1677j(b)(1)(C)–(E) (providing Commerce must assess the significance of the "process of assembly or completion in the foreign country" and "the value of the merchandise produced in the foreign country").

A. Completion or Assembly Under 19 U.S.C. § 1677j(b)(1)(B)

Plaintiff's initial challenge focuses on 19 U.S.C. § 1677j(b)(1)(B), which Commerce applied in determining that Macao Commercial circumvented the Order as described above. Plaintiff highlights that Commerce occasionally described Macao Commercial's production process as "manufacturing" instead of solely using the precise terms "completion" or "assembly" as provided in the statute. Pl.’s Br. at 7–12. Commerce rejected Plaintiff's argument that that Macao Commercial's "manufacturing" activities fell outside the scope of § 1677j(b)(1)(B), explaining that "Macao Commercial attempts to use semantics to draw a difference between manufacturing, on the one hand, versus completion or assembly on the other. However, neither the statute nor the legislative history contemplate a distinction between manufacturing and completion or assembly." Decision Memorandum at 13 (citing Omnibus Trade Act, Report of the Senate Finance Committee, S. Rep. No. 100-71, at 99–101 (1987), and the Statement of Administrative Action accompanying the Uruguay Round Agreements Act, H. Doc. No. 103-316 (1994), at 892–95). Plaintiff maintains that Commerce erroneously interpreted § 1677j(b)(1)(B) by concluding that the "assembly or completion" language in the statute covered Macao Commercial's "manufacturing" process. Id. at 11–12.

Plaintiff notably fails to explain why it should prevail under the Chevron framework that this Court uses to assess arguments challenging Commerce's interpretation of statutes. Rather, Plaintiff merely notes that the term "manufacturing" is absent from the language of the statute and its legislative history. See Pl.’s Br. at 11–12. Plaintiff does not contend...