Baroque Timber Indus. (Zhongshan) Co. v. United States

• Decision Date: 31 March 2014
• Docket Number: Court No. 12–00007.,Slip Op. 14–35.
• Citation: 971 F.Supp.2d 1333
• Parties: BAROQUE TIMBER INDUSTRIES (ZHONGSHAN) COMPANY, LIMITED, et al., Plaintiffs, v. UNITED STATES, Defendant, and Coalition for American Hardwood Parity, et al., Defendant–Intervenors.
• Court: U.S. Court of International Trade

971 F.Supp.2d 1333

BAROQUE TIMBER INDUSTRIES (ZHONGSHAN) COMPANY, LIMITED, et al., Plaintiffs,

v.UNITED STATES, Defendant,andCoalition for American Hardwood Parity, et al., Defendant–Intervenors.

Slip Op. 14–35.

Court No. 12–00007.¹

United States Court of

International Trade.

March 31, 2014.

Francis J. Sailer, Mark E. Pardo, Andrew T. Schutz, Kavita Mohan, and John M. Foote, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt, LLP, of Washington, DC, for Baroque Timber Industries (Zhongshan) Co., Ltd.; Riverside Plywood Corp.; Samling Elegant Living Trading (Labuan) Ltd.; Samling Global USA, Inc.; Samling Riverside Co., Ltd.; and Suzhou Times Flooring Co., Ltd.

Gregory S. Menegaz, James K. Horgan, and John J. Kenkel, deKieffer & Horgan, PLLC, Washington, DC, for Zhejiang Layo Wood Industry Co., Ltd.; Changzhou Hawd Flooring Co., Ltd.; Dunhua City Jisen Wood Industry Co., Ltd.; Dunhua City Dexin Wood Industry Co., Ltd.; Dalian Huilong Wooden Products Co., Ltd.; Kunshan Yingyi–Nature Wood Industry Co., Ltd.; and Karly Wood Product Ltd.

Kristin H. Mowry, Daniel R. Wilson, Jeffrey S. Grimson, Jill A. Cramer, Susan L. Brooks, Sarah M. Wyss, and Rebecca M. Janz, Mowry & Grimson, PLLC, of Washington, DC, for Fine Furniture (Shanghai) Ltd.; Great Wood (Tonghua) Ltd.; and Fine Furniture Plantation (Shishou) Ltd.

Kristen S. Smith and Mark R. Ludwikowski, Sandler, Travis & Rosenberg, PA, of Washington, DC, for Lumber Liquidators Services, LLC; Armstrong Wood Products (Kunshan) Co., Ltd.; and Home Legend, LLC.

Jeffrey S. Neeley, Michael S. Holton, and Stephen W. Brophy, Barnes, Richardson & Colburn, Washington, DC, for Zhejiang Yuhua Timber Co., Ltd.

Alexander V. Sverdlov, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, for the United States. With him on the brief were Stuart F. Delery, Principal Deputy AssistantAttorney General, Jeanne E. Davidson, Director, and Claudia Burke, Assistant Director. Of counsel on the brief were Shana A. Hofstetter and Melissa M. Brewer, Attornies, International Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, of Washington, DC.

Jeffrey S. Levin, Levin Trade Law, P.C., of Bethesda, MD, for the Coalition for American Hardwood Parity.

OPINION

POGUE, Chief Judge:

This consolidated action returns to court,² following remand ³ and redetermination ⁴ of the final results of the antidumping duty investigation of multilayered wood flooring from the People's Republic of China (“PRC” or “China”).⁵ Plaintiffs, cooperative non-investigated respondents who have established their entitlement to a separate antidumping duty rate, challenge the remand redetermination of that rate.⁶ Plaintiffs argue that the Department of Commerce's (“the Department” or “Commerce”) redetermination is flawed because the Department's legal interpretations are not in accordance with the law and the Department's factual conclusions are not supported by a reasonable reading of the evidence.⁷

Plaintiffs are, in part, correct. Commerce has not articulated a rational connection between the record evidence and the rate applied to the separate rate companies, nor has Commerce explained how its determination bears a relationship to Plaintiffs' economic reality. Accordingly, the court remands to Commerce for further consideration in accordance with this opinion.

BACKGROUND

I. Baroque III

This dispute originates in a petition by the Coalition for American Hardwood Parity(“CAHP”) alleging that imports of multilayered wood flooring from the PRC were being dumped in the United States. In response, Commerce initiated an antidumping duty investigation for the period of April 1, 2010 through September 30, 2010. Multilayered Wood Flooring from the People's Republic of China, 75 Fed.Reg. 70,714 (Dep't Commerce Nov. 18, 2010) (initiation of antidumping duty investigation) (“ Initiation Notice ”). Commerce indicated that it would select mandatory respondents based on quantity and value (“Q & V”) questionnaires. Id. at 70,717. Commerce requested Q & V data from 190 companies and received timely responses from 80. Multilayered Wood Flooring from the People's Republic of China, 76 Fed.Reg. 30,656, 30,657 (Dep't Commerce May 26, 2011) (preliminary determination of sales at less than fair value) (“ Preliminary Determination ”). From these, Commerce selected three mandatory respondents, the largest cooperating exporters (by volume) of wood flooring, for the investigation: Zhejiang Yuhua Timber Co., Ltd. (“Yuhua”), Zhejiang Layo Wood Industry Co., Ltd. (“Layo”), and the Samling Group ⁸ (“Samling”). Id. at 30,658;see also19 U.S.C. § 1677f–1(c)(2)(B).⁹ Those companies that failed to respond to Commerce's Q & V questionnaire were treated as part of the PRC-wide entity. Preliminary Determination at 30,661.¹⁰

In addition, because this was a non-market economy (“NME”) investigation, ¹¹ Commerce invited those exporters and producers seeking a separate rate to submit a separate-rate status application.¹² Commerce received timely-filed separate-rate applications from 74 companies, all of which demonstrated eligibility for separate rate status. Final Determination at 64,321.¹³

In its Final Determination, Commerce found that multilayered wood flooring was being dumped in the United States. Id. at 64,323–24. Commerce found a de minimis dumping margin for Yuhua and assigned margins of 3.98 percent and 2.63 percent to Layo and Samling, respectively. Id. Commerce assigned the AFA rate of 58.84 percent (the highest calculated transaction-specific rate among mandatory respondents) to the PRC-wide entity. Id. at 64,322. Commerce then assigned the separate rate respondents a rate of 3.31 percent. Id. This rate was the simple average of Layo and Samling's margins. I & D Memo, cmt. 11 at 51.¹⁴

Plaintiffs sought judicial review of the Final Determination pursuant to 19 U.S.C. §§ 1516a(a)(2)(A)(i)(II) and 1516a(a)(2)(B)(i), and Commerce requested a voluntary remand. The court affirmed in part and remanded in part. The court affirmed Commerce's rejection of Respondents' late filed surrogate financial statements. The court remanded to Commerce for reconsideration the surrogate value (“SV”) determinations for Layo's plywood input and Samling's HDF input; remanded for reconsideration Commerce's targeted dumping determination, in light of any changes to the surrogate value determinations and current standards; and remanded for further explanation or reconsideration the surrogate value determination for Layo's core veneer, Layo's HDF input, and Layo's brokerage and handling (“B & H”) fees to account for the cost of a letter of credit. Baroque III, ––– C.I.T. at ––––, 925 F.Supp.2d at 1337;see also Remand Results at 1–2.

II. Commerce's Redetermination Pursuant to Remand

In its Redetermination, Commerce revised its findings as required by Baroque III. Commerce (1) valued Layo's plywood input with an SV reflecting plywood thicknesses of 6.35 mm and 12.7 mm; (2) valued Samling's high-density fiberboard (“HDF”) with Philippine Harmonized Tariff Schedule (“HTS”) category 4411.11; (3) valued Layo's core veneer input with 2009 data reported by the Global Trade Atlas for Philippine HTS category 4408.9090.06; (4) provided further explanation for Commerce's determination “to continue converting SV for [Layo's] HDF using the average density of HDF used by [Layo]”; (5) adjusted Layo's “B & H SV to remove letter of credit costs not incurred by [Layo]”; and, (6) calculated Layo's and Samling's dumping margins “using an average-to-average comparison method, rather than the average-to-transaction comparison method.” Remand Results at 2.

As a result of these changes, not only Yuhua, but also Layo and Samling received dumping margins of zero. Id. at 26.¹⁵ The changes to Layo and Samling's SVs resulted in a new calculated highest transaction-specific rate of 25.62 percent. Commerce selected this rate as the revised AFA rate for the PRC-wide entity. Id. at 27. Because all the mandatory rates were zero, Commerce chose to recalculate the separate rate under 19 U.S.C. § 1673d(c)(5)(B)'s “any reasonable method provision,” taking a simple average of the three mandatory rates of zero and the AFA rate. This resulted in a separate rate of 6.41 percent, id., thereby increasing the separate respondents' rate while each of the components of that rate decreased.

STANDARD OF REVIEW

The court will uphold Commerce's determinations unless they are “unsupported by substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i).

Substantial evidence is “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Universal Camera Corp. v. N.L.R.B., 340 U.S. 474, 477, 71 S.Ct. 456, 95 L.Ed. 456 (1951) (quoting Consol. Edison Co. of New York v. N.L.R.B., 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938)). It must be “more than a scintilla, and must do more than create a suspicion of the existence of the fact to be established.” N.L.R.B. v. Columbian Enameling & Stamping Co., 306 U.S. 292, 300, 59 S.Ct. 501, 83 L.Ed. 660 (1939). In making its judgment, the court “looks to the record as a whole, including any evidence that fairly detracts from the substantiality of the evidence,” Gallant Ocean (Thailand) Co., Ltd. v. U.S., 602 F.3d 1319, 1323 (Fed.Cir.2010) (internal quotation marks and citation omitted),¹⁶ and determines “whether the evidence and reasonable inferences from the record support [the agency's] finding.” Daewoo Elecs. Co. v. Int'l Union of Elec., Elec., Technical, Salaried & Mach. Workers, AFL–CIO, 6 F.3d 1511, 1520 (Fed.Cir.1993) (internal quotation marks and citation omitted).¹⁷ Commerce must provide a “rational connection between the facts found and the choice made.” Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168, 83 S.Ct. 239, 9 L.Ed.2d 207 (1962). It must “examine the record and articulate a...