Dongguan Sunrise Furniture Co. v. United States, Slip Op. 14–83.

• Decision Date: 18 July 2014
• Docket Number: Slip Op. 14–83.,Court No. 10–00254.
• Citation: 997 F.Supp.2d 1330
• Parties: DONGGUAN SUNRISE FURNITURE CO., LTD., Taicang Sunrise Wood Industry Co., Ltd., Taicang Fairmont Designs Furniture Co., Ltd., and Meizhou Sunrise Furniture Co., Ltd., Plaintiffs, Longrange Furniture Co., Ltd., Consolidated Plaintiff, Coaster Company of America and Langfang Tiancheng Furniture Co., Ltd., Plaintiff–Intervenors, v. UNITED STATES, Defendant, American Furniture Manufacturers Committee for Legal Trade and Vaughan–Bassett Furniture Company, Inc., Defendant–Intervenors.
• Court: U.S. Court of International Trade

997 F.Supp.2d 1330

DONGGUAN SUNRISE FURNITURE CO., LTD., Taicang Sunrise Wood Industry Co., Ltd., Taicang Fairmont Designs Furniture Co., Ltd., and Meizhou Sunrise Furniture Co., Ltd., Plaintiffs,Longrange Furniture Co., Ltd., Consolidated Plaintiff,Coaster Company of America and Langfang Tiancheng Furniture Co., Ltd., Plaintiff–Intervenors,

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

Slip Op. 14–83. Court No. 10–00254.

United States Court of International Trade.

July 18, 2014.

Peter J. Koenig, Squire Sanders (US) LLP, of Washington, DC, for plaintiffs.

Lizbeth R. Levinson and Ronald M. Wisla, Kutak Rock LLP, of Washington, DC, for consolidated plaintiff.

Kristin H. Mowry, Jeffrey S. Grimson, Jill A. Cramer, Sarah M. Wyss, and Daniel R. Wilson, Mowry & Grimson, PLLC, of Washington, DC, for plaintiff-intervenors.

Stephen C. Tosini, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for defendant. With him on the brief were Stuart F. Delery, Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director. Of counsel on the brief was Rebecca Cantu, Senior Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, DC.

J. Michael Taylor, Joseph W. Dorn, Daniel L. Schneiderman, and Mark T. Wasden, King & Spalding, LLP, of Washington, DC, for defendant-intervenors.

OPINION

RESTANI, Judge:

This matter comes before the court following the court's decision in Dongguan Sunrise Furniture Co. v. United States, 931 F.Supp.2d 1346, 1348 (CIT 2013) (“ Dongguan III ”), in which the court remanded Commerce's second redetermination in Wooden Bedroom Furniture From the People's Republic of China: Final Results and Final Rescission in Part, 75 Fed.Reg. 50,992, 50,992 (Dep't Commerce Aug. 18, 2010) (“Final Results ”), to the U.S. Department of Commerce (“Commerce”) to reconsider its four partial adverse facts available (“AFA”) rates assigned to Fairmont's unreported sales of dressers, armoires, chests, and nightstands. For the reasons stated below, the court finds that Commerce's selected AFA rates are not supported by substantial evidence, and thus Commerce's third remand results are remanded.

BACKGROUND

The facts of this case have been documented in the court's previous opinions. See generally Dongguan III, 931 F.Supp.2d at 1348–49. The court presumes familiarity with those decisions but summarizes the facts as relevant to this opinion. In the Final Results, Plaintiffs Dongguan Sunrise Furniture Co., Ltd., Taicang Sunrise Wood Industry Co., Ltd., Taicang Fairmont Designs Furniture Co., Ltd., and Meizhou Sunrise Furniture Co., Ltd. (collectively “Fairmont” or “Plaintiff”) received a rate of 43.23%, which was calculated based on a rate of approximately 34% for reported sales and a partial adverse facts available (“AFA”) rate of 216.01% for unreported sales. Final Results, 75 Fed.Reg. at 50,997; Dongguan Sunrise Furniture Co. v. United States, 865 F.Supp.2d 1216, 1234 (CIT 2012) (“ Dongguan I ”). In Dongguan I, the court sustained Commerce's application of a partial AFA rate to calculate the overall dumping margin, but held that Commerce's selected AFA rate of 216.01% was not supported by substantial evidence. 865 F.Supp.2d at 1232–34. Commerce failed to demonstrate that the 216.01% rate, which was calculated in a new shipper review for a different entity during a different period of review (“POR”), was relevant and reliable for Fairmont. Id. at 1233.

On remand, Commerce grouped the unreported sales into four categories based on general product type: armoires, chests, nightstands, and dressers. Dongguan Sunrise Furniture Co. v. United States, 904 F.Supp.2d 1359, 1362 (CIT 2013) (“ Dongguan II ”). Commerce then determinedan AFA margin for each of the four general product types by selecting the single highest CONNUM-specific ¹ margin below 216.01% from Fairmont's reported sales that fell within the corresponding general categories.²Id. Fairmont received a rate of 39.41%, which included partial AFA rates of 182.15% for the unreported armoires, 215.51% for the unreported chests, 134.42% for the unreported nightstands, and 183.52% for the unreported dressers. Id.; Dongguan III, 931 F.Supp.2d at 1348. The court again remanded to Commerce, stating that Commerce had failed to demonstrate “a rational relationship between the AFA rates chosen and a reasonably accurate estimate of Fairmont's actual rate,” because the AFA rates were based on minuscule percentages of Fairmont's actual sales. Dongguan II, 904 F.Supp.2d at 1363–64. The court also noted that the weighted-average margin for the reported sales, which constituted the vast majority of Fairmont's sales during the POR, indicated that Fairmont's actual rate was much lower than the selected AFA rates. Id. at 1364.

During the second remand proceedings, Commerce calculated partial AFA rates of 189% for the unreported armoires, 161% for the unreported chests, 140% for the unreported nightstands, and 161% for the unreported dressers, which resulted in an overall rate of 41.75%.³Dongguan III, 931 F.Supp.2d at 1349. Commerce arrived at the partial AFA rates by selecting the single-highest CONNUM-specific margin below 216% where at least 0.04% of the total reported sales in that product category were dumped at or above the selected margin. Id. Once again, the court remanded to Commerce. Id. at 1356. The court noted that “Commerce ignored the majority of the reported and verified information” regarding the sales data for the four general product types at issue “and instead relied on an extremely small percentage of [those] sales.” Id. The court held that because “Commerce declined to consider the very evidence it identified as most indicative of Fairmont's actual rate for the unreported sales, and given that the disregarded record evidence suggests a reasonably accurate estimate of Fairmont's actual rate would be much lower, Commerce's determinations are not supported by substantial evidence.” Id.

In the remand proceedings currently challenged before the court, Commerce calculated new partial AFA rates for each of the four types of unreported sales.⁴Final Results of Third Redetermination Pursuant to Ct. Order, ECF No. 193–1, 2 (“ Third Remand Results ”). Commerce based these partial AFA rates on the weighted-average dumping margins of the 15% of reported sales with the highest dumping margins within each of the four general product categories. Id. at 12–13. This resulted in an overall dumping margin of 44.64%. Id. at 34. Fairmont contends that the partial AFA rates are not supported by substantial evidence. Pl. Fairmont Cmts. on Third Remand Results, ECF No. 204, 1–10 (“Pl.'s Cmts.”). Defendant–Intervenors continue to argue that 216.01% was the appropriate AFA rate, but otherwise do not object to the Third Remand Results. AFMC's Cmts. Concerning Commerce's Final Results of Third Redetermination Pursuant to Ct. Order, ECF No. 195, 1–2. Defendant argues that the partial AFA rates are in compliance with the court's remand order in Dongguan III and supported by substantial evidence. Def.'s Resp. to Fairmont's and AFMC's Remand Cmts., ECF No. 213, 2–11 (“Def.'s Resp.”).

DISCUSSION

Fairmont makes several arguments in support of its contention that the partial AFA rates are not supported by substantial evidence. First, Fairmont notes that the selected partial AFA rates are impermissibly excessive because these rates are very close to or even higher than the rates before the court in Dongguan II and Dongguan III. Pl.'s Cmts. 1–2. Thus, the rates have the same flaw of unconnectedness to Fairmont's true commercial behavior, as the court previously found. See id. Fairmont also argues that Commerce acted unreasonably in comparing the volume of sales relied upon by Commerce to calculate the AFA rates to the volume of unreported sales in determining what constitutes a significant portion of the available evidence. Id. at 3. Fairmont further contends that Commerce impermissibly focused on the quantity of reported sales used to calculate the AFA rates without properly considering whether those sales were representative of Fairmont's commercial reality with respect to its unreported sales.⁵Id. at 3–8. Finally, Fairmont argues that the AFA rates are far higher than necessary to deter future non-compliance. Id. at 8–10.

Commerce provides several justifications to support the partial AFA rates. First, Commerce defends its conclusion that the 15% of sales with the highest dumping margins for the four categories constitute a meaningful portion of the available data by noting that this volume of sales is several times larger than the volume of unreported sales and by comparing it to the 15% of sales used to support the AFA rate upheld in Lifestyle Enterprise, Inc. v. United States, 896 F.Supp.2d 1297, 1301–02 (CIT 2013), aff'd in part, rev'd in part on other grounds,751 F.3d 1371 (Fed.Cir.2014). Third Remand Results at 12–14. Commerce also reasons that because many of Fairmont's transactions deviated greatly from the overall dumping margin, the 15% of sales relied upon reflect Fairmont's commercial reality, even though the AFA rates appear to be high when compared to the overall dumping margin. Id. at 13. ⁶ Commerce further states that AFA rates based on the sales with the highest margins are necessary to ensure that sales with high dumping margins are reported in the future. Id. at 15–16.

When a party has failed to act to the best of its ability, Commerce, “in reaching the applicable determination under this subtitle, may use an inference that is adverse to the interests of that party in selecting from among the facts otherwise available.” 19 U.S.C. § 1677e(b). Commerce's chosen AFA rates must be “a reasonably accurate estimate of...