Zara SpA v. United States, 040710 USCIT, 09-00001

Docket Nº:09-00001
Opinion Judge:Timothy C. Stanceu Judge
Party Name:Slip Op. 10-36 v. UNITED STATES, Defendant, PASTA ZARA SpA, Plaintiff, and AMERICAN ITALIAN PASTA COMPANY, DAKOTA GROWERS PASTA COMPANY, and NEW WORLD PASTA COMPANY, Defendant-Intervenors.
Attorney:Law Offices of David L. Simon (David L. Simon) for plaintiff. Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, Reginald T. Blades, Jr., Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Carrie A. Dunsmore and Jane C. Dempsey...
Judge Panel:Before: Timothy C. Stanceu, Judge
Case Date:April 07, 2010
Court:Court of International Trade
 
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PASTA ZARA SpA, Plaintiff,

v.

UNITED STATES, Defendant,

and

AMERICAN ITALIAN PASTA COMPANY, DAKOTA GROWERS PASTA COMPANY, and NEW WORLD PASTA COMPANY, Defendant-Intervenors.

No. 09-00001

Slip Op. 10-36

United States Court of International Trade

April 7, 2010

Affirming in part and remanding in part the final results of the eleventh administrative review of an antidumping duty order on certain pasta from Italy

Law Offices of David L. Simon (David L. Simon) for plaintiff.

Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, Reginald T. Blades, Jr., Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Carrie A. Dunsmore and Jane C. Dempsey); Daniel J. Calhoun and Mykhaylo Gryzlov, Office of Chief Counsel for Import Administration, United States Department of Commerce, of counsel, for defendant.

Kelley Drye & Warren LLP (David C Smith, Jr. and Paul C Rosenthal) for defendant-intervenors.

Before: Timothy C. Stanceu, Judge

OPINION AND ORDER

Timothy C. Stanceu Judge

Plaintiff Pasta Zara SpA ("Zara SpA" or "Zara"), an Italian producer and exporter of pasta products, contests the final determination ("Final Results") that the International Trade Administration, United States Department of Commerce ("Commerce" or the "Department"), issued to conclude the eleventh administrative review of an antidumping duty order on certain pasta from Italy (the "subject merchandise"). Certain Pasta From Italy: Notice of Final Results of the Eleventh Admin. Review & Partial Rescission of Review, 73 Fed. Reg. 75, 400, 75, 400 (Dec. 11, 2008) (Final Results"). Zara SpA advances three claims. It claims, first, that Commerce erred in deeming Zara SpA's sales of subject merchandise to be constructed export price ("CEP") sales rather than export price ("EP") sales. Compl. ¶¶ 10-13. Second, plaintiff contests Commerce's classifying certain accounting expenses incurred by Zara's U.S. affiliate as direct expenses rather than indirect expenses. Id. ¶¶ 14-18. Finally, Zara challenges Commerce's finding that Zara's sales in its home market of Italy occurred at a single level of trade ("LOT"), when, according to Zara, the record evidence establishes that some of these sales occurred at a second, more remote level of trade. Id. ¶¶ 19-23. Zara claims that Commerce erred in failing to exclude these sales from the calculation of normal value. Id. Based on an examination of the record evidence supporting Commerce's findings, the court affirms Commerce's decision to classify Zara's U.S. sales as CEP sales. Because the Final Results do not address the objection underlying plaintiffs second claim and because defendant agrees that a remand is appropriate on this claim, the court's order directs Commerce to reconsider its decision to treat the accounting expenses as indirect expenses. On plaintiffs third claim, the court, concluding that Commerce did not give adequate consideration to the relevant record evidence, orders Commerce to reconsider its determination that Zara's home market sales occurred at a single level of trade.

I. Background

Commerce initiated the eleventh review of an antidumping duty order on certain pasta from Italy on August 24, 2007. Initiation of Antidumping & Countervailing Duty Admin. Reviews & Request for Revocation in Part, 72 Fed. Reg. 48, 613, 48, 614 (Aug. 24, 2007). Commerce published preliminary results of the eleventh review on August 6, 2008, in which it determined for Zara SpA a preliminary weighted-average dumping margin of 10.34%. Certain Pasta from Italy: Notice of Prelim. Results of Eleventh Antidumping Duty Admin. Review, 73 Fed. Reg. 45, 716, 45, 720 (Aug. 6, 2008) ("Prelim. Results"). In the Final Results, Commerce assigned Zara a margin of 9.71%. Final Results, 73 Fed. Reg. at 75, 401. The Final Results incorporate by reference a memorandum ("Decision Memorandum") containing a discussion of the Department's findings and conclusions. Id.; Issues & Decisions for the Final Results of the Eleventh Admin. Review of the Antidumping Duty Order on Certain Pasta from Italy (2006-2007) (Dec. 4, 2008) ("Decision Mem.").

Plaintiff brought this action on January 5, 2009. Summons; Compl. Before the court is plaintiffs motion for judgment upon the agency record. Mot. of PL Pasta Zara SpA for J. upon the Agency R. pursuant to Rule 56.2 ("Pl. Mot."); Principal Br. of PL Pasta Zara SpA for J. upon the Agency R. pursuant to Rule 56.2 ("Pl. Br."). Defendant opposes Zara's motion with respect to the first and third claims in the complaint but acknowledges that a court remand is appropriate on the second claim, agreeing "that Commerce did not adequately consider Zara's contention" that certain "accounting expenses should be treated as indirect selling expenses, because they were not related to specific sales but were incurred regardless of the number of sales made in any given time period." Def's Resp. to Pl.'s Mot. for J. upon the Agency R. 18 ("Def Resp."). Defendant-intervenors oppose Zara's motion with respect to all three of plaintiff s claims. Def- Intervenors' Br. in Resp. to Pasta Zara's Mot. for J. on the Agency R. ("Def-Intervenors Resp.").

II. Discussion

The court exercises jurisdiction according to 28 U.S.C. § 1581(c) (2006). In ruling on Zara's motion for judgment upon the agency record, the court must hold unlawful any determination, finding, or conclusion found to be unsupported by substantial evidence on the record or otherwise not in accordance with law. 19 U.S.C. § 1516a(b)(l)(B)(i) (2006). "Substantial evidence is more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938).

A. The Court Must Sustain Commerce's Determination that Zara's Sales of Subject Merchandise Were Constructed Export Price Sales

Zara SpA contests as unsupported by substantial record evidence Commerce's determination that its sales of subject merchandise were constructed export price sales as defined by 19 U.S.C. § 1677a(b) rather than export price sales as defined by § 1677a(a). Compl. ¶¶ 10-13; 19 U.S.C. § 1677a(a)-(b) (2006). Based on the administrative record, the court must sustain Commerce's determination.

According to the statutory definition, export price is

the price at which the subject merchandise is first sold (or agreed to be sold) before the date of importation by the producer or exporter of the subject merchandise outside of the United States to an unaffiliated purchaser in the United States or to an unaffiliated purchaser for exportation to the United States.

19 U.S.C. § 1677a(a) (emphasis added). A constructed export price sale, in contrast, may occur either before or after the date of importation. Id. § 1677a(b). A constructed export price sale is a sale that is made in the United States by or for the account of the producer or exporter, or by a seller affiliated with the producer or exporter, to a purchaser unaffiliated with the producer or exporter. Id.

It is undisputed that a U.S. affiliate of Zara, Pasta Zara-USA Inc. ("Zara-USA"), Compl. ¶15, performed a role related to the sale of the subject merchandise in the United States that included invoicing the U.S. unaffiliated customer for the merchandise. Pl. Br. 6-8. The parties dispute the significance of that role and of the invoices. See id. 8-18; Def Resp. 8-12; Def-Intervenors Resp. 4-21. Partly as a result of that dispute, they disagree on the issue of whether the sales of Zara's subject merchandise qualified as export price sales.

Plaintiff argues that the course of dealing between Zara SpA, Zara-USA, and the single unaffiliated U.S. purchaser demonstrates that arm's-length sales, or agreements to sell, between Zara SpA and the unaffiliated purchaser occurred outside of the United States prior to the date of importation. Pl. Br. 6-9. In plaintiffs view, "the mutual assent to the price and quantity terms clearly occurs between Zara SpA and the arm's-length customer long before the goods are shipped from Italy." Id. at 9. Plaintiff contends that a binding agreement to sell the subject merchandise is formed "when the customer issues its purchase order and Zara [SpA] relies on the purchase order to begin production." Id. at 3. Although admitting that Zara SpA did not provide the unaffiliated customer a written acknowledgment of its acceptance of the purchase order, plaintiff argues that "[t]he mutual assent is evident in Zara's production against the customer's purchase order, which specifies both price and quantity" and that "Italy is therefore the 'location of the sale' and Zara SpA is therefore the seller; no subsequent actions can change these facts." Id. at 9. Plaintiff cites the United Nations Convention on Contracts for the International Sale of Goods, arts. 14, 18, opened for signature Ayr. 11, 1980, S. Treaty Doc. 98-9, at 25 (1983), 19 I.L.M. 671, 674-75 ("CISG" or the "UN Convention"), for the proposition that this production against the purchase orders created binding agreements to sell. Id. at 9, 17. It relies on Corns Staal BV v. United States, 502 F.3d 1370, 1376 (Fed. Cir. 2007), and AK Steel v. United States, 226 F.3d 1361, 1374 (Fed. Cir. 2000), to support its argument that these sales, as agreed upon in Italy, are EP sales according to the statute. Id. at 8-9, 17. Plaintiff also cites several antidumping determinations from administrative reviews of other subject merchandise, id. at...

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