Home Meridian Int'l, Inc. v. United States

• Decision Date: 25 June 2013
• Docket Number: Court No. 11–00325.,Slip Op. 13–81.
• Citation: 922 F.Supp.2d 1366
• Parties: HOME MERIDIAN INTERNATIONAL, INC. d/b/a Samuel Lawrence Furniture Co. and Pulaski Furniture Co.; and Import Services, Inc., Plaintiffs, Great Rich (HK) Enterprises Co., Ltd., Dongguan Liaobushangdun Huada Furniture Factory, Nanhai Baiyi Woodwork Co., Ltd., and Dalian Huafeng Furniture Group Co., Ltd., Consolidated Plaintiffs, v. UNITED STATES, Defendant, American Furniture Manufacturers Committee for Legal Trade and Vaughan–Bassett Furniture Company, Inc., Intervenor Defendants.
• Court: U.S. Court of International Trade

922 F.Supp.2d 1366

HOME MERIDIAN INTERNATIONAL, INC. d/b/a Samuel Lawrence Furniture Co. and Pulaski Furniture Co.; and Import Services, Inc., Plaintiffs,

Great Rich (HK) Enterprises Co., Ltd., Dongguan Liaobushangdun Huada Furniture Factory, Nanhai Baiyi Woodwork Co., Ltd., and Dalian Huafeng Furniture Group Co., Ltd., Consolidated Plaintiffs,

v.UNITED STATES, Defendant,American Furniture Manufacturers Committee for Legal Trade and Vaughan–Bassett Furniture Company, Inc., Intervenor Defendants.

Slip Op. 13–81.

Court No. 11–00325.

United States Court of

International Trade.

June 25, 2013.

Kristin H. Mowry, Jeffrey S. Grimson, Jill A. Cramer, Rebecca M. Janz, Sarah M. Wyss, and Susan L. Brooks, Mowry & Grimson, PLLC, of Washington, DC, for Plaintiffs and Consolidated Plaintiffs Great Rich (HK) Enterprises Co., Ltd. and Dongguan Liaobushangdun Huada Furniture Factory.

Ned H. Marshak, Bruce M. Mitchell, and Mark E. Pardo, Grunfeld Desiderio Lebowitz Silverman & Klestadt, LLP, of New York, N.Y. and Washington, DC, for Consolidated Plaintiff Nanhai Baiyi Woodwork Co., Ltd.

Lizbeth R. Levinson and Ronald M. Wisla, Kutak Rock LLP, of Washington, DC, for Consolidated Plaintiff Dalian Huafeng Furniture Group Co., Ltd.

Carrie A. Dunsmore and Joshua E. Kurland, Trial Attorneys, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for Defendant. With her on the brief were Stuart F. Delery, Acting Assistant Attorney General, Jeanne E. Davidson, Director,and Patricia M. McCarthy, Assistant Director. Of Counsel on the brief was Shana A. Hofstetter, Attorney, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, of Washington, DC.

J. Michael Taylor, Daniel L. Schneiderman, Joseph W. Dorn, Mark T. Wasden, Prentiss L. Smith, Sarah K. Davis, King & Spalding, LLP, of Washington, DC, for Intervenor Defendants.

OPINION AND ORDER

RESTANI, Judge:

This matter is before the court following a remand to the Department of Commerce (“Commerce”) in Home Meridian Int'l, Inc. v. United States, 865 F.Supp.2d 1311 (CIT 2012). This case involves challenges to Commerce's final results in the fifth antidumping duty (“AD”) review of certain wooden bedroom furniture (“WBF”) from the People's Republic of China (“PRC”). See Wooden Bedroom Furniture from the People's Republic of China: Final Results and Final Rescission in Part, 76 Fed.Reg. 49,729, 49,729 (Dep't Commerce Aug. 11, 2011). The court determines that for the reasons below, Commerce failed to comply with the court's remand order with respect to the valuation of Huafeng Furniture Group Co., Ltd.'s (“Huafeng”) factors of production (“FOPs”) and the use of Insular Rattan and Native Products' (“Insular Rattan”) financial statement.

BACKGROUND

The court assumes familiarity with the facts of this case as set out in the previous opinion, although they are summarized briefly below. See generally Home Meridian, 865 F.Supp.2d at 1315–20, 1326–27.

In its previous order, the court instructed Commerce to address six issues raised by Plaintiffs and Intervenor Defendants in their motions for judgment on the agency record. Specifically, the court ordered Commerce to: 1) reconsider whether surrogate values or market-economy (“ME”) purchases should be used in valuing Huafeng's FOPs for wood inputs; 2) reclassify Huafeng's poly foam input; 3) explain its reliance on 2008 gross-national income (“GNI”) data for labor wage rates; 4) support its finding that Insular Rattan's financial statements are acceptable for financial ratio calculations; 5) investigate whether combination rates are proper; and 6) explain its differing use of zeroing in administrative reviews and investigations. See Home Meridian, 865 F.Supp.2d at 1332. On remand, Commerce: 1) continued to rely upon surrogate values to calculate normal value based on Huafeng's FOPs; 2) reclassified poly foam input as cellular plastic; 3) continued to rely on 2008 GNI data in calculating labor wage rates; 4) found Insular Rattan's financial statements to be reliable and acceptable; 5) determined that combination rates were not appropriate; and 6) explained its use of zeroing in reviews. See Final Results of Redetermination Pursuant to Court Order (Dep't Commerce Feb. 25, 2013) (“ Remand Results ”), Dkt. No. 97.

Plaintiffs Home Meridian International, Inc. and Import Services, Inc., as well as Consolidated Plaintiffs Great Rich (HK) Enterprises Co., Ltd. and Dongguan Liaobushangdun Huada Furniture Factory (collectively “HMI”), continue to challenge Commerce's decision to use certain surrogate values. Plaintiffs argue that Huafeng's pre-period of review ME input purchases must be used to value Huafeng's FOPs. See Cmts. of Home Meridian Int'l, Inc. d/b/a Samuel Lawrence Furniture Co. and Pulaski Furniture Co.; Import Servs., Inc.; Great Rich (HK) Enters. Co., Ltd.; & Dongguan Liaobushangdun Huada Furniture Factory on Dep't of Commerce Feb. 25, 2013 Final Results of Redetermination Pursuant to Ct. Order (“HMI Cmts.”) 2–29. HMI also contends that Commerce has perpetuated a ministerial error in its surrogate value calculations. Id. at 30. Intervenor Defendants American Furniture Manufacturers Committee for Legal Trade and Vaughan–Bassett Furniture Co., Inc. (collectively “AFMC”) argue that Commerce's reliance upon Insular Rattan's financial statement is unsupported by substantial evidence and contrary to agency practice. See AFMC's Cmts. Concerning Commerce's Final Results of Redetermination Pursuant to Court Remand (“AFMC Cmts.”) 2–7. Defendant United States responds that Commerce's determinations on both issues are supported by substantial evidence and in accordance with law. See Def.'s Resp. to Pls.' Remand Cmts. (“Def.'s Resp.”) 3–17.¹

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction pursuant to 28 U.S.C. § 1581(c). The court will not uphold a determination by Commerce 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)(i).

DISCUSSION

I. Value of Huafeng's Wood Inputs

HMI contends that Commerce violated the applicable statutory and regulatory framework when it used surrogate values to calculate the normal value of Huafeng's products. HMI Cmts. 3–29. HMI insists that Commerce was required to use Huafeng's ME purchases, all of which were made prior to the period of review (“POR”). Id. Additionally, HMI asserts that even if Commerce's methodology were permitted by the applicable statute and regulation, substantial evidence fails to support Commerce's selection of surrogate values as the best information available when compared with Huafeng's ME purchase prices. Id. Defendant asserts that Commerce has a reasonable practice of not using pre-POR ME input purchases in calculating normal value and that the chosen surrogate values constituted the best available information on the record. Def.'s Resp. 3–12. The court concludes that HMI's interpretations of the applicable statute and Commerce regulation are not mandated because both the statute and regulation are ambiguous. HMI's claim that Commerce lacked substantial evidence to support its decision, however, has merit.

In non-market economy (“NME”) ² AD cases,³ Commerce “shall determine the normal value of the subject merchandise on the basis of the value of the factors of production utilized in producing the merchandise.” ⁴19 U.S.C. § 1677b(c)(1). Among other costs, the factors of production include “quantities of raw materials employed.” Id. § 1677b(c)(3). In calculating normal value, “the valuation of the factors of production shall be based on the best available information regarding the values of such factors in a market economy country or countries considered to be appropriate by the administering authority.” Id. § 1677b(c)(1). Furthermore, Commerce “shall utilize, to the extent possible, the prices or costs of factors of production in one or more market economy countries that are—(A) at a level of economic development comparable to that of the nonmarket economy country, and (B) significant producers of comparable merchandise.” Id. § 1677b(c)(4).⁵

“Nowhere does the statute speak directly to any methodology Commerce must employ to value the factors of production, indeed the very structure of the statute suggests Congress intended to vest discretion in Commerce by providing only a framework within which to work.” Shakeproof Assembly Components Div. of Ill. Tool Works, Inc. v. United States, 59 F.Supp.2d 1354, 1357 (CIT 1999); see QVD Food Co. v. United States, 658 F.3d 1318, 1323 (Fed.Cir.2011) (recognizing that Commerce is entitled to deference in interpreting the undefined term “best available information”). Nonetheless, selection of the best available information must be in line with the overall purpose of the antidumping statute, which the Federal Circuit has explained to be “determining current margins as accurately as possible.” Rhone Poulenc, Inc. v. United States, 899 F.2d 1185, 1191 (Fed.Cir.1990); see also Lasko Metal Prods., Inc. v. United States, 43 F.3d 1442, 1443 (Fed.Cir.1994) (“Lasko II ”) (“[T]here is much in the statute that supports the notion that it is Commerce's duty to determine margins as accurately as possible, and to use the best information available to it in doing so.”). In calculating normal value in the NME context, the particular aim of the statute is to determine the non-distorted cost of producing such goods. See Lasko Metal Prods., Inc. v. United States, 810 F.Supp. 314, 316–17 (CIT 1992) (“Lasko I ”).

A. Commerce's Methodology

In applying this framework, Commerce has confronted situations in which an NME producer sourced its inputs from an ME supplier, paying for the goods in a convertible, ME currency. The court previously has held that the statute is silent regarding the methodology that Commerce must use under these circumstances; it also has held, however, that an interpretation prohibiting Commerce from...