Borusan Mannesmann Boru Sanayi Ve Ticaret A.S. v. Am. Cast Iron Pipe Co.

• Decision Date: 20 July 2021
• Docket Number: 2020-2014
• Citation: 5 F.4th 1367
• Parties: BORUSAN MANNESMANN BORU SANAYI VE TICARET A.S., Plaintiff-Appellee United States, Defendant v. AMERICAN CAST IRON PIPE COMPANY, Berg Steel Pipe Corp., Berg Spiral Pipe Corp., Dura-Bond Industries, Stupp Corporation, Individually and as Members of the American Line Pipe Producers Association, Greens Bayou Pipe Mill, LP, JSW Steel (USA) Inc., Skyline Steel, Trinity Products LLC, Welspun Tubular LLC USA, Defendants-Appellants
• Court: U.S. Court of Appeals — Federal Circuit

5 F.4th 1367

BORUSAN MANNESMANN BORU SANAYI VE TICARET A.S., Plaintiff-AppelleeUnited States, Defendant

v.AMERICAN CAST IRON PIPE COMPANY, Berg Steel Pipe Corp., Berg Spiral Pipe Corp., Dura-Bond Industries, Stupp Corporation, Individually and as Members of the American Line Pipe Producers Association, Greens Bayou Pipe Mill, LP, JSW Steel (USA) Inc., Skyline Steel, Trinity Products LLC, Welspun Tubular LLC USA, Defendants-Appellants

2020-2014

United States Court of Appeals, Federal Circuit.

Decided: July 20, 2021

Julie Mendoza, Morris, Manning & Martin, LLP, Washington, DC, argued for plaintiff-appellee. Also represented by Donald Cameron, Jr., Sabahat Chaudhary, Eugene Degnan, Mary Hodgins, Brady Mills, R. Will Planert, Edward John Thomas, III.

Timothy C. Brightbill, Wiley Rein LLP, Washington, DC, argued for defendants-appellants. Also represented by Tessa V. Capeloto, Laura El-Sabaawi, Maureen E. Thorson, Enbar Toledano.

Before Moore, Chief Judge^* , Dyk, and Reyna, Circuit Judges.

Dissenting opinion filed by Circuit Judge Dyk.

Reyna, Circuit Judge.

The American Cast Iron Pipe Company and other domestic producers of large diameter welded pipe appeal a judgment by the Court of International Trade involving certain price adjustments that were made in the course of an antidumping duty investigation. Appellee Borusan Mannesmann Boru Sanayi Ve Ticaret A.S. claims that it is entitled to a post-sale price adjustment based on the total value of penalties it paid for late delivery of product to a customer. The Court of International Trade agreed and remanded to the U.S. Department of Commerce with instructions to grant the claimed post-sale price adjustment and recalculate the resulting antidumping duty margins. On remand, the Department of Commerce granted the post-sale price adjustment, which produced a de minimis antidumping duty rate. This appeal followed. Because we conclude that the Department of Commerce's original post-sale price adjustment was supported by substantial evidence and in accordance with law, we reverse.

BACKGROUND

Generally, antidumping duty rates are determined by price comparison. The U.S. Department of Commerce ("Commerce") compares the price of sales of the product under investigation that were made during the period of investigation in both the home (foreign) market and in the U.S. market. The difference in the prices is referred to as the less than fair value margin. 19 U.S.C. § 1677f-1(d). The less than fair value margin is the basis for the establishment of antidumping duty rates.

Differences in circumstances of sale can affect the level of prices respectively in both the U.S. market and the (foreign) home market, such as rebates, taxes, shipping, and fuel. Because of these differences in circumstances, prices must be adjusted to ensure an apples-to-apples comparison. Torrington Co. v. United States , 68 F.3d 1347, 1352 (Fed. Cir. 1995). Specifically, prices must be net of any "price adjustment." 19 C.F.R. § 351.401(c). Because post-sale price adjustments¹ may significantly affect the level of antidumping duty margins, post-sale price adjustments are not permitted unless a party can show that it is entitled to the adjustment.

This appeal involves whether Borusan Mannesmann Boru Sanayi Ve Ticaret A.S. ("Borusan") is entitled to a post-sale price adjustment. We start with the observation that the record indicates that if the post-sale price adjustment here is permitted, the antidumping duty margin falls to a de minimis level, a zero margin. If the post-sale adjustment is not permitted, Borusan could be subject to 5.11 percent antidumping duty margin. Whether the post-sale price adjustment should be permitted in this case turns on the question of whether the circumstances underlying the adjustment were established and known to Borusan's customer at the time the sale was made to the customer.

Borusan is a Turkish producer of large diameter welded pipe ("LD WP"), a type of welded pipe used in the construction of oil and gas pipeline projects. J.A. 5092–94. On September 10, 2013, Borusan and two other Turkish LD WP producers (collectively, the "JVA members") entered into a Joint Venture Agreement ("JVA"). J.A. 17, 2277–80. Specifically, the JVA members entered into the JVA for the purpose of bidding on a pipeline project² in Turkey, which would span hundreds of miles and required multiple sizes of LD WP. J.A. 2915–19. The three JVA members agreed to be jointly and severally liable for failures to perform under the contract. J.A. 17, 22–23. Each member agreed to reimburse the other two for any damages resulting from that specific member's failure to fulfill its obligations. J.A. 2278.

On March 3, 2014, the JVA members entered into a Consortium Agreement which, like the JVA, stated that the parties would be jointly and severally responsible and liable towards the client. J.A. 2286, 2903. The Consortium Agreement also provided that the parties would share equally in the award, if obtained, and would take equal shares of responsibility for fulfilling the requirements. J.A. 17. A copy of the original Consortium Agreement was sent to the client. J.A. 2904.

The JVA members were successful and won the bid on the gas pipeline project. On October 14, 2014, the JVA members and the client entered into a sales contract titled "Procurement Contract relating to the Supply of Line Pipes and Hot Bends" ("Sales Contract"). J.A. 2781. The Sales Contract incorporated the Consortium Agreement as Appendix L. J.A. 2903–04. It did not, however, incorporate the JVA. Like the JVA and the Consortium Agreement, the Sales Contract provided that the three JVA members were jointly and severally liable to the client for damages resulting from the members’ failure to fulfill their obligations. J.A. 2867–68.

Under the Sales Contract, the JVA members agreed to provide 56" and 48" LD WP to the client per a set schedule. The parties subsequently amended the Sales Contract to change the amount of 56" LD WP required and to revise the delivery and completion schedule and pricing schedule. J.A. 4359. Due to delay, the JVA members incurred late delivery penalties for both 56" and 48" LD WP. See, e.g. , J.A. 4360.

On June 9, 2017, after the JVA members delivered all the ordered 56" LD WP, the client notified the members that it sought an amount of money as a penalty for late deliveries of 56" pipe. Id. The JVA members responded with a letter requesting that the client withdraw its damages demand, arguing that factors beyond the JVA members’ control, including the client's own procedural changes, caused the delivery delays. J.A. 4361.

On September 6, 2017, after all ordered 48" pipe was delivered, the client notified the JVA members that it sought an additional amount as a penalty for late deliveries of the 48" pipe. Id. The members again responded the following month in a letter asking the client to cancel its damages demand, reiterating substantially the same arguments they had made with respect to the late delivery penalties for the 56" pipe. Id. Negotiations between the client and the JVA members regarding damages continued well into 2018.

On January 17, 2018, the appellants, domestic producers of LD WP, requested that Commerce and the U.S. International Trade Commission initiate antidumping duty investigations on U.S. imports of LD WP from Turkey. Petitioners alleged that the U.S. LD WP industry was materially injured by sales of imports at less than fair value from six countries, including Turkey.³ J.A. 85–92. Commerce initiated an antidumping duty investigation in February 2018, covering a review period from January 1, 2017 through December 31, 2017. J.A. 85–86 ( Large Diameter Welded Pipe from Canada, Greece, India, the People's Republic of China, the Republic of Korea, and the Republic of Turkey: Initiation of Less-Than-Fair-Value Investigations, 83 Fed. Reg. 7,154 (Feb. 20, 2018) ).

Commerce issued antidumping duty questionnaires to several Turkish producers of LD WP, including Borusan. In its initial questionnaire response dated April 23, 2018, Borusan claimed that it was entitled to a post-sale price adjustment to account for the late delivery penalties it had incurred in the pipeline project. J.A. 1216. Specifically, Borusan sought a post-sale price adjustment equal to the entire value of the penalty and represented that it had "agreed to pay its customer" that amount for a "disputed penalty for late delivery on sales." Id. Borusan, however, had not yet made any penalty payment and, in fact, the JVA members including Borusan were still negotiating the penalty amount with the client. On May 28, 2018, the client responded to the JVA members’ July 2017 and October 2017 letters stating that the client agreed that it had contributed to the delivery delays and accordingly lowered the penalties for both the 56" pipe and the 48" pipe. J.A. 4361. On June 11, 2018, after further discussions with the client, the JVA members agreed to the reduced penalty amounts. Id. That same day, the JVA members created a protocol that allocated the total penalty among the three members proportionally to each member's responsibility for the delay. J.A. 3003. The JVA members further agreed Borusan would be responsible for the largest share of the total penalty ("final allocation"). J.A. 3004.

On June 15, 2018, Borusan informed Commerce that it had reached an agreement with the client and the JVA members as to its final allocation of the penalty. J.A. 2230–31. Borusan further stated that the penalty was subject to an ongoing dispute among the JVA members, such that no final payment had been made, but the penalty was being allocated to the members proportionally to their share of responsibility, i.e., per the final allocation. J.A. 2230–32. Borusan explained:

Under [the Sales Contract], the [JVA] members agreed to provide a designated quantity of various sizes and dimensions of LD pipe as a group. No individual agreements were made between [the client] and the [t

...