Best Mattresses Int'l Co. v. United States, 21-00281

CourtU.S. Court of International Trade
Writing for the CourtGARY S. KATZMANN JUDGE
Decision Date17 February 2023
Docket Number21-00281,Slip Op. 23-19
PartiesBEST MATTRESSES INTERNATIONAL COMPANY LIMITED AND ROSE LION FURNITURE INTERNATIONAL COMPANY LIMITED, Plaintiffs and Consolidated Defendant-Intervenors, v. UNITED STATES, Defendant, and BROOKLYN BEDDING, LLC; CORSICANA MATTRESS COMPANY; ELITE COMFORT SOLUTIONS; FXI, INC.; INNOCOR, INC.; KOLCRAFT ENTERPRISES INC.; LEGGETT & PLATT, INCORPORATED; THE INTERNATIONAL BROTHERHOOD OF TEAMSTERS; AND UNITED STEEL, PAPER AND FORESTRY, RUBBER, MANUFACTURING, ENERGY, ALLIED INDUSTRIAL AND SERVICE WORKERS INTERNATIONAL UNION, AFL-CIO, Defendant-Intervenors and Consolidated Plaintiffs.

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BEST MATTRESSES INTERNATIONAL COMPANY LIMITED AND ROSE LION FURNITURE INTERNATIONAL COMPANY LIMITED, Plaintiffs and Consolidated Defendant-Intervenors,
v.

UNITED STATES, Defendant,

and BROOKLYN BEDDING, LLC; CORSICANA MATTRESS COMPANY; ELITE COMFORT SOLUTIONS; FXI, INC.; INNOCOR, INC.; KOLCRAFT ENTERPRISES INC.; LEGGETT & PLATT, INCORPORATED; THE INTERNATIONAL BROTHERHOOD OF TEAMSTERS; AND UNITED STEEL, PAPER AND FORESTRY, RUBBER, MANUFACTURING, ENERGY, ALLIED INDUSTRIAL AND SERVICE WORKERS INTERNATIONAL UNION, AFL-CIO, Defendant-Intervenors and Consolidated Plaintiffs.

No. 21-00281

Slip Op. 23-19

Court of Appeals of International Trade

February 17, 2023


[ Plaintiffs' Motion for Judgment on the Agency Record is granted in part and denied in part. Defendant-Intervenors' Motion for Judgment on the Agency Record is granted. The U.S. Department of Commerce's Partial Motion to Dismiss is granted. Commerce's Final Determination is remanded for reconsideration or further explanation. ]

Jeffrey S. Grimson, Jacob Reiskin, Kristin H. Mowry, Sarah M. Wyss, and Wenhui (Flora) Ji, Mowry &Grimson, PLLC, of Washington, D.C., for Plaintiffs and Consolidated DefendantIntervenors Best Mattresses International Company Limited and Rose Lion Furniture International Company Limited.

Kara M. Westercamp, 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, Jeanne E. Davidson, Director, and L. Misha Preheim, Assistant Director. Of counsel on the brief was Paul K. Keith, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, D.C.

Yohai Baisburd, Jack A. Levy, and Chase J. Dunn, Cassidy Levy Kent (USA) LLP, of Washington, D.C., for Defendant Intervenors and Consolidated Plaintiffs Brooklyn Bedding, LLC; Corsicana Mattress Company; Elite Comfort Solutions; FXI, Inc.; Innocor, Inc.; Kolcraft Enterprises Inc.; Leggett &Platt, Incorporated; the International Brotherhood of Teamsters; and United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO.

Before: Gary S. Katzmann, Judge

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OPINION AND ORDER

GARY S. KATZMANN JUDGE

Important issues relating to agency discretion, surrogate value methodology, and the treatment of NME-based affiliated suppliers in market economy proceedings spring forth from the facts of this case. Plaintiffs Best Mattresses International Company Limited ("Best Mattresses") and Rose Lion Furniture International Company Limited ("Rose Lion") challenge certain aspects of the final affirmative antidumping duty determination regarding mattresses from Cambodia by Defendant U.S. Department of Commerce ("Commerce" or "the Government"). See Mattresses from Cambodia, Indonesia, Malaysia, Serbia, Thailand, the Republic of Turkey, and the Socialist Republic of Vietnam: Antidumping Duty Orders and Amended Final Affirmative Antidumping Determination for Cambodia, 86 Fed. Reg. 26,460 (Dep't Com. May 14, 2021) ("Final Determination"), P.R. 325.[1] Defendant-Intervenors Brooklyn

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Bedding, LLC, Corsicana Mattress Company, Elite Comfort Solutions, FXI, Inc., Innocor, Inc., Kolcraft Enterprises Inc., Leggett &Platt, Incorporated, the International Brotherhood of Teamsters, and United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO challenge additional aspects of Commerce's Final Determination.[2] Plaintiffs and Defendant-Intervenors each move for judgment on the agency record pursuant to USCIT Rule 56.2 and argue that parts of the Final Determination were "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i).

The Final Determination is the result of Commerce's first antidumping duty investigation involving mattresses from Cambodia. See Mem. from J. Maeder to C. Marsh, re: Issues and Decisions Memorandum for the Final Affirmative Determination in the Less-Than-Fair-Value Investigation of Mattresses from Cambodia at 3 (Dep't Com. Mar. 18, 2021), P.R. 301 ("IDM"). In this market economy investigation, Commerce confronted an issue of first impression: how to calculate constructed value for respondents who, while formally based in market economies, sourced a substantial percentage of their minor and major inputs from affiliated suppliers located in a non-market economy ("NME"). Plaintiffs assert five challenges to the Final Determination: (1) Commerce's use of surrogate country data to value input cost of production ("COP") under the Major Input Rule, 19 U.S.C. § 1677b(f)(3), in a market economy proceeding was unauthorized

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and unreasonable; (2) Commerce's inclusion and exclusion of certain country data were unreasonable; (3) Commerce's use of the Transactions Disregarded Rule, 19 U.S.C. § 1677b(f)(2), to adjust Plaintiffs' fixed asset depreciation expenses was unauthorized and unreasonable; (4) Commerce's selection of the financial statement for calculating Plaintiffs' profit and selling expense ratios was unreasonable; and (5) Commerce's application of the Cohen's d test in calculating weighted average dumping margins was unauthorized. Defendant-Intervenors submit three more: (1) Commerce's construction of the Transactions Disregarded Rule, which interpreted "market under consideration" to mean the country under investigation, was not in accordance with law and unreasonable; (2) Commerce's use of distortive and unreliable Trademap surrogate data to value market price under the Transactions Disregarded Rule was unreasonable; and (3) Commerce's inclusion of NME and export-subsidizing countries in the surrogate data was unauthorized and unreasonable. Additionally, the Government moves to dismiss Count VI of Plaintiffs' Complaint for lack of standing to challenge Commerce's application of the Cohen's d test. See USCIT R. 12(b)(2). As with Commerce's investigation, many of these arguments are matters of first impression before the Court of International Trade.

First, the court grants the Government's motion to dismiss Count VI of Plaintiffs' Complaint. Plaintiffs fail to establish standing to challenge Commerce's application of the Cohen's d test because any difference in Commerce's methodology would not have materially impacted the result of the dumping margin. Second, the court grants in part and denies in part Plaintiffs' Motion for Judgment on the Agency Record. Almost all of Plaintiffs' challenges yield to the broad legal and factfinding discretion enjoyed by Commerce, which is master of the antidumping statutes. Notably, the court holds that Commerce's interpretation of the Major Inputs

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Rule, 19 U.S.C. § 1677b(f)(3); see infra pp. 7-8, to allow use of third-country surrogate data as "information available" for determining the COP of a major input purchased from an affiliated NME-based supplier is reasonable and warrants deference. But Plaintiffs prevail on two claims; Commerce's determinations that the financial statement it had selected was publicly available and sufficiently complete were unreasonable. Third, the court grants the Defendant-Intervenors' Motion for Judgment on the Agency Record. The court concludes that Commerce's interpretation of "market under consideration" in the Transactions Disregarded Rule, 19 U.S.C. § 1677b(f)(2); see infra pp. 6-7, to strictly mean the country under investigation is unreasonably inflexible and inconsistent with prior practice. Because Commerce's selection of Trademap data is premised on that interpretation, the court does not reach the other issues concerning the Trademap data's reliability. Moreover, Commerce's continued inclusion of NME and export-subsidizing countries in the surrogate data was inconsistent with other reasoning in its Final Determination. The court, therefore, remands to Commerce for reconsideration or further explanation consistent with this opinion.

BACKGROUND

I. Legal Framework for Antidumping Duty Determinations

"Dumping occurs when a foreign company sells a product in the United States at a lower price than what it sells that same product for in its home market." Sioux Honey Ass'n v. Hartford Fire Ins. Co., 672 F.3d 1041, 1046 (Fed. Cir. 2012). This practice constitutes unfair competition because it permits foreign producers to undercut domestic companies by selling products below reasonable fair market value. Id. To address the harmful impact of such unfair competition, Congress enacted the Tariff Act of 1930, which empowers Commerce to investigate potential

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dumping and, if necessary, to issue orders instituting duties on subject merchandise. Id. at 1047. When Commerce concludes that duties are appropriate, the agency is required to determine "margins as accurately as possible." Rhone Poulenc, Inc. v. United States, 899 F.2d 1185, 1191 (Fed. Cir. 1990).

Commerce imposes antidumping ("AD") duties on foreign goods if it determines that the goods are being, or are likely to be, sold at less than fair value, and the International Trade Commission ("ITC") concludes that the sale of the merchandise below fair value materially injures, threatens, or impedes the establishment of an industry in the United States. See 19 U.S.C. § 1673; Diamond Sawblades Mfrs. Coal. v. United States, 866 F.3d 1304, 1306 (Fed. Cir. 2017). Merchandise is sold at less than fair value when the normal value ("NV") is greater than the price charged for the product in the United States. See 19 U.S.C. § 1673. Commerce traditionally determines NV by reference to market prices in the exporting country, id. § 1677b(a)(1)(B)(i), or a third country, id. § 1677b(a)(1)(B)(ii). If there does not exist a viable home market or third country market to serve as the basis for NV, Commerce uses...

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