Swiff-Train Co. v. United States, Slip Op. 13–38.

Citation904 F.Supp.2d 1336
Decision Date20 March 2013
Docket NumberCourt No. 12–00010.,Slip Op. 13–38.
PartiesSWIFF–TRAIN CO., Metropolitan Hardwood Floors, Inc., BR Custom Surface, Real Wood Floors, LLC, Galleher Corp. and DPR International, LLC, Plaintiffs, v. UNITED STATES, Defendant, and Coalition for American Hardwood Parity, Defendant–Intervenor.
CourtU.S. Court of International Trade

OPINION TEXT STARTS HERE

William Ellis Perry, Dorsey & Whitney, LLP, of Seattle, WA, for plaintiffs. With him on the brief was Emily Lawson.

Mary Jane Alves, Attorney, Office of the General Counsel, U.S. International Trade Commission, Washington, DC, argued for defendant. With her on the brief were James M. Lyons, General Counsel, Andrea C. Casson, Assistant General Counsel and Geoffrey S. Carlson, Attorney. Alexander V. Sverdlov, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Washington DC, also appeared for defendant.

Jeffrey Steven Levin, Levin Trade Law, P.C., Washington, DC, for defendant-intervenor.

OPINION

MUSGRAVE, Senior Judge:

This action is before the court on Plaintiffs' Rule 56.2 Motion for Judgment on the Agency Record. Swiff–Train Co., Metropolitan Hardwood Floors, Inc., BR Custom Surface, Real Wood Floors, LLC, Galleher Corp., DPR International, LLC (collectively, Plaintiffs) challenge the final determination of the U.S. International Trade Commission (“Commission”) in Multilayered Wood Flooring from China, Inv. Nos. 701–TA–476 and 731–TA–1179 (Final), 76 Fed. Reg. 76435 (December 7, 2011) (“Final Determination”), see also Views of the Commission Majority (Confidential), Confidential Record Document (“CR”) 525 (“ Views ”). Plaintiffs challenge the Commission's determination that the industry in the United States producing multilayered wood flooring (“MLWF”) is materially injured by reason of imports from China that are sold at less than fair value (“LTFV”). The court has jurisdiction pursuant to 28 U.S.C. § 1581(c).

The court held an oral argument on the issues in this case on January 23, 2013. After due consideration of the parties' submissions, the administrative record and all other papers herein and for the reasons that follow the court remands to the Commission for analysis and reconsideration relating to its decision not to investigate domestic producers of hardwood plywood used for flooring, for further explanation of the impact the subject imports had on the domestic industry in light of collapse of the housing market during the period of investigation, and to re-evaluate whether the subject imports were a “but-for” cause of material injury to the domestic industry. The court also remands so that the Commission may make findings on the issue of price suppression/depression. The Commission's determination is upheld in all other respects.

I. Background

MLWF is “composed of an assembly of two or more layers or plies of wood veneer(s) in combination with a core.” See Multilayered Wood Flooring from the People's Republic of China: Amended Final Duty Determination of Sales at Less than Fair Value and Antidumping Duty Order, 76 Fed. Reg. 76690 (Dep't Commerce, Dec. 8, 2010) (Final) (“Final AD Order”). MLWF is a type of wood flooring product that is typically comprised of two to ten layers or plies that include a core sandwiched between a back or bottom layer and a face veneer surface of a desired wood species and finish. ITC Staff Report (Confidential) dated October 27, 2011, CR 507 (“Staff Report”) at I–9.

On October 21, 2010, an ad hoc association of U.S. manufacturers of MLWF, the Coalition for American Hardwood Parity (DefendantIntervenor here), filed a petition with the Commission and the Department of Commerce (“Commerce”) alleging that the MLWF industry in the United States was materially injured or threatened with material injury by reason of less than fair value (“LTFV”) MLWF imported from China. Commerce found that Chinese MLWF was being sold in the United States at LTFV. See Final AD Order, and Multilayered Wood Flooring from the People's Republic of China: Countervailing Duty Order, 76 Fed. Reg. 76693 (Dep't Commerce, Dec. 8, 2010) (Final CVD Order).

Following its own investigation, the Commission found that the domestic industry was materially injured by reason of Chinese MLWF imports. Views at 3. Six commissioners participated in the determination; four voted to find material injury and two dissented. Id. at 3 n. 1. The Commission found that the domestic industry suffered from declining market share “due primarily to the significant volume of subject imports from China that is increasing significantly relative to domestic production and apparent U.S. consumption....” Views at 53–54. The subject imports significantly undersold domestic MLWF while the U.S. industry suffered declines in employment and wages and lost money throughout the period under investigation. Views at 54. “Based on all the foregoing trends, we find that there is a causal nexus between subject imports and the poor condition of the domestic industry and that the domestic industry is materially injured by reason of subject imports.” Views at 54.

Two commissioners dissented from the Commission's Views. Dissenting Views of Chairman Deanna Tanner Okun and Commissioner Daniel R. Pearson, Dec. 5, 2011, CR 526 (“ Dissenting Views ”). The dissenting commissioners found no material injury by reason of the subject imports of MLWF. Dissenting Views at 36. The dissenters disagreed with the Commission's findings on several important points. The dissenters found that MLWF was “substitutable” and found attenuated competition between the domestic and imported products, because domestic and imported product tended to be sold in different channels. Dissenting Views at 4–6. The dissenters also disagreed with the Commission's findings on volume, price effects and the impact the subject imports had on the domestic producers of MLWF.

We find that the record does not show a correlation between subject imports and the domestic industry's declining performance indicia during the period of investigation. The deterioration in the domestic industry's performance indicators coincided with the global economic downturn and the fall in residential housing construction appears to be demand driven, occurring while subject imports were decreasing overall during the period examined on an absolute basis.

Dissenting Views at 27.

II. Standard of Review

In reviewing the Commission's determination, the court will remand the Commission's determination if it is “unsupported by substantial evidence on the record, or otherwise not in accordance with law....” 19 U.S.C. § 1516a(b)(1)(B) (2000).

III. DiscussionA. Composition of Domestic Like Product Industry

Plaintiffs argue that the Commission should have investigated producers of domestic hardwood plywood used for flooring as part of the domestic like product industry.1 Defendant argues that this issue was not raised in a timely manner before the Commission and that there was little time for the Commission to perform such an investigation, even if it were warranted. 2 Plaintiffs briefed the issue before and after the Commission's final hearing, and the issue of whether hardwood plywood flooring was within scope was put before the Commission in June, 2011. Pl's Br. at 3–4, Reply Brief in Support of Plaintiff's Rule 56.2 Motion for Judgment on the Agency Record (“Pl's Reply”) at 2–4. The court finds that the issue was raised early enough in the proceedings to provide the Commission adequate time to address it, which it did. See Views at 8 n. 22. Therefore, the court does not find requiring exhaustion of administrative remedies is appropriate here. See28 U.S.C. § 2637(d), Al Tech Specialty Steel Corp. v. U.S., 11 CIT 372, 377, 661 F.Supp. 1206, 1209–10 (1987); cf. Ad Hoc Shrimp Trade Action Committee v. U.S., 33 CIT ––––, ––––, 675 F.Supp.2d 1287, 1300 (2009) ([i]t is ‘appropriate’ for litigants challenging antidumping actions to have exhausted their administrative remedies by including all arguments in their case briefs submitted to Department of Commerce).

The scope of the MLWF LTFV investigation defines the product in part as follows:

Multilayered wood flooring is composed of an assembly of two or more layers or plies of wood veneer(s) in combination with a core. The several layers, along with the core, are glued or otherwise bonded together to form a final assembled product. Multilayered wood flooring is often referred to by other terms, e.g., “engineered wood flooring” or plywood flooring. Regardless of the particular terminology, all products that meet the description set forth herein are intended for inclusion within the definition of subject merchandise.

All multilayered wood flooring is included within the definition of subject merchandise, without regard to: dimension (overall thickness, thickness of face ply, thickness of back ply, thickness of core, and thickness of inner plies; width; and length); wood species used for the face, back and inner veneers; core composition; and face grade. Multilayered wood flooring included within the definition of subject merchandise may be unfinished ( i.e., without a finally finished surface to protect the face veneer from wear and tear) or “prefinished” ( i.e., a coating applied to the face veneer, including, but not exclusively, oil or oil-modified or water-based polyurethanes, ultraviolet light cured polyurethanes, wax, epoxy-ester finishes, moisture-cured urethanes and acid-curing formaldehyde finishes). * * *

The core of multilayered wood flooring may be composed of a range of materials, including but not limited to hardwood or softwood veneer, particleboard, medium-density fiberboard (“MDF”), high-density fiberboard (“HDF”), stone and/or plastic composite, or strips of lumber placed edge-to-edge.

Final Antidumping Order, 76 Fed. Reg. at 76690 (emphasis added).3

Plaintiffs argue that the scope definition of MLWF [is] so broad that hardwood plywood suitable for...

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