Ancientree Cabinet Co. v. United States
| Decision Date | 21 March 2022 |
| Docket Number | Slip Op. 22-24,Court No. 20-00114 |
| Citation | 565 F.Supp.3d 1373 |
| Parties | The ANCIENTREE CABINET CO., LTD., Plaintiff, Cabinets To Go, LLC, Plaintiff-Intervenor, v. UNITED STATES, Defendant, and American Kitchen Cabinet Alliance, Defendant-Intervenor. |
| Court | U.S. Court of International Trade |
Gregory S. Menegaz, J. Kevin Horgan and Alexandra H. Salzman,DeKieffer & Horgan, PLLC, of Washington, D.C., for Plaintiff The Ancientree Cabinet Co., Ltd.
Mark R. Ludwikowski, Clark Hill PLC, of Washington, D.C., for Plaintiff-Intervenor Cabinets To Go, LLC.
Iona Cristei, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., for Defendant United States. With her on the brief were Brian M. Boynton, Acting Assistant Attorney General, Patricia M. McCarthy, Director, and Tara K. Hogan, Assistant Director. Of Counsel Savannah Rose Maxwell, Attorney, Office of Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce.
Luke A. Meisner and Roger B. Shagrin, Schagrin Associates, of Washington, D.C., for Defendant-Intervenor American Kitchen Cabinet Alliance.
The Ancientree Cabinet Co., Ltd. ("Plaintiff" or "Ancientree") brought this action to contest the U.S. Department of Commerce's ("Commerce") final affirmative antidumping duty ("AD") determination in its investigation of wooden cabinets and vanities from the People's Republic of China ("China"). Ancientree challenged Commerce's determination, alleging that its selection of Romania as primary surrogate country and subsequent analysis of surrogate factors of production were unsupported by substantial evidence, and that its calculation of financial ratios was arbitrary and capricious. Ancientree Cabinet Co., Ltd. v. United States, 45 CIT ––––, ––––, 532 F. Supp. 3d 1241, 1247 (2021). The court determined that, while Commerce's surrogate country selection and surrogate FOP analysis were adequately supported by the record, its financial ratio calculations required remand for further explanation. Id. at 1265. Commerce having now provided additional explanation of its calculations, the court concludes that the financial ratio calculations are supported by substantial evidence and sustains Commerce's determination on remand.
The court set out the relevant legal and factual background of the proceedings in further detail in its previous opinion, Ancientree Cabinet Co., Ltd. v. United States, 532 Supp. 3d 1241 (" Ancientree I"). Information relevant to the instant opinion is set forth below.
Where, as here, the merchandise under investigation is exported from a non-market economy ("NME"),1 Commerce determines the normal value of the subject merchandise in large part through valuation of the manufacturer's factors of production ("FOPs"). 19 U.S.C. § 1677b(c)(1). FOPs are the factors "utilized in producing merchandise," and include the "hours of labor required, ... quantities of raw materials employed, ... amounts of energy and other utilities consumed, and ... representative capital costs, including depreciation," among other factors. 19 U.S.C. § 1677b(c)(1), (3)(A)–(D).
Commerce is required to value the FOPs reported by NME manufacturers on the basis of "the best available information regarding the values of such factors in a market economy country or countries" it identifies. 19 U.S.C. § 1677b(c)(1)(B). These countries -- commonly known as "surrogate countries" -- must, to the extent possible, display "a level of economic development comparable to that of the [NME] country" as well as "significant produc[tion] of comparable merchandise." 19 U.S.C. § 1677b(c)(4). Once the surrogate country or countries are selected, Commerce generates "surrogate financial ratios from ‘the financial statements of ... manufacturing firms’ " within the primary surrogate country, relying on those "select financial statements" which provide the "best available information." Ancientree I, 532 F. Supp. 3d at 1248 (quoting CP Kelco US, Inc. v. United States, 40 CIT ––––, ––––, 2016 WL 1403657 at *1 (2016) ).
The investigation of wooden cabinets and vanities from China currently before the court was initiated by Commerce on March 26, 2019. See Wooden Cabinets and Vanities and Components Thereof From the People's Republic of China: Initiation of Less-Than-Fair-Value Investigation, 84 Fed. Reg. 12,587 (Dep't Commerce Apr. 2, 2019) (initiating AD investigation for the period of investigation of July 1, 2018 to December 31, 2018). Commerce selected Ancientree as a mandatory respondent to the investigation, see Respondent Selection Mem. (Dep't Commerce June 4, 2019), P.R. 838, and accordingly requested that Ancientree report the FOPs consumed to produce its wooden cabinets, see AD Questionnaire (Dep't Commerce Apr. 25, 2019), P.R. 842. Ancientree, in response, "reported various FOPs, including birch and poplar sawnwood, particleboard, medium density fibreboard ... and paint." Ancientree I, 532 F. Supp. 3d at 1249–50.
At around the same time, Commerce's Office of Policy ("OP") determined, based on data from the World Development Report, that Romania, Malaysia, Russia, Mexico, Brazil, and Kazakhstan were all countries at a comparable level of economic development to China, and requested interested party comments on potential surrogates. See Request for Economic Development, Surrogate Country and Surrogate Value Cmts. and Information at 1–2, Attach. (Dep't Commerce June 17, 2019), P.R. 850. Defendant-Intervenor American Kitchen Cabinet Alliance ("AKC Alliance") recommended Romania as the primary surrogate country, while Ancientree recommended Malaysia. See Petitioner, Initial Surrogate Value Cmts. (Aug. 7, 2019), P.R. 956–61 ( ); Ancientree, Prelim. Surrogate Value Submission (Aug. 7, 2019), P.R. 952–53 ( ).
On October 9, 2019, after consideration of the various submissions, Commerce issued its preliminary determination. See Wooden Cabinets and Vanities and Components Thereof from the People's Republic of China: Prelim. Affirmative Determ. of Sales at Less than Fair Value, Postponement of Final Determ. and Extension of Provisional Measures, 84 Fed. Reg. 54,106 (Dep't Commerce Oct. 9, 2019) ("Preliminary Determination"), and accompanying Preliminary Decision Memorandum (Oct. 9, 2019) P.R. 1407 ("PDM"), as corrected by Wooden Cabinets and Vanities and Components Thereof from the People's Republic of China: Prelim. Affirmative Determ. of Sales at Less than Fair Value, Postponement of Final Determ. and Extension of Provisional Measures, 84 Fed. Reg. 56,420 (Dep't Commerce Oct. 22, 2019). In the Preliminary Determination Commerce selected Romania as the primary surrogate country, finding that its level of economic development was comparable to China's, that it was a significant producer of comparable merchandise, and its producers could supply reliable surrogate value data. See PDM at 14. Commerce accordingly preliminarily valued Ancientree's FOPs on the basis of the Romanian surrogate data, and calculated surrogate financial ratios from the financial statements of Romanian manufacturer S.C. Sigstrat S.A. ("Sigstrat"). Id. at 13–14; Prelim. Surrogate Value Memo (Dep't Commerce Oct. 3, 2019), P.R. 1411–12 ( ).
On February 28, 2020, Commerce issued its final determination, in which it concluded that wooden cabinets and vanities from China were being sold at less than fair value in the United States and calculated the applicable AD rate. See Wooden Cabinets and Vanities and Components Thereof from the People's Republic of China: Final Affirmative Determ. of Sales at Less Than Fair Value, 85 Fed. Reg. 11,953 (Dep't Commerce Feb. 28, 2020), as corrected by Wooden Cabinets and Vanities and Components Thereof From the People's Republic of China: Corrected Notice of Final Affirmative Determ. of Sales at Less Than Fair Value, 85 Fed. Reg. 17,855 (Dep't Commerce Mar. 31, 2020) ("Final Determination"), and accompanying Issues and Decision Memorandum (Feb. 21, 2020), P.R. 1554 ("IDM"). In its Final Determination, Commerce largely maintained the surrogate value analysis from the Preliminary Determination, including both its selection of Romania as primary surrogate country and its calculation of surrogate financial ratios from Sigstrat's financial statements. IDM at 29–40. Commerce issued a final AD order on April 21, 2020. Wooden Cabinets and Vanities and Components Thereof From the People's Republic of China: Antidumping Duty Order, 85 Fed. Reg. 22,126 (Dep't Commerce Apr. 21, 2020) ("Order"). This appeal followed.
Ancientree initiated this challenge to Commerce's Final Determination on May 21, 2020. Summons, ECF No. 1; Compl., ECF No. 6. AKC Alliance joined the litigation as Defendant-Intervenor on June 17, 2020. Consent Mot. to Intervene as Def.-Inter., ECF No. 10; Order Granting Mot. to Intervene, ECF No. 14. Cabinets To Go, LLC then joined this litigation as Plaintiff-Intervenor on June 19, 2020. Consent Mot. to Intervene as Pl.-Inter., ECF No. 15; Order Granting Mot. to Intervene, ECF No. 19. After consideration of the motions filed by Ancientree and Cabinets To Go, LLC for judgment on the agency record, and the opposition of the United States ("the Government") and AKC Alliance, the court sustained the Final Determination with respect to Commerce's selection of Romania as primary surrogate country and its selection of surrogate values, but remanded for further explanation Commerce's calculation of financial ratios. Ancientree I, 532 F. Supp. 3d at 1265–66. In particular, the court determined that Commerce failed to adequately address Ancientree's argument that the financial ratio calculations "differed from Commerce's past calculations of financial ratios using Sigstrat's financial statements" by employing substantially fewer line items. Id. at 1260.
On October 12, 2021, Commerce filed its remand...
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