Brother Industries, Ltd. v. United States

• Decision Date: 30 April 1982
• Docket Number: Consolidated Court No. 80-9-01436.
• Citation: 3 CIT 125,540 F. Supp. 1341
• Parties: BROTHER INDUSTRIES, LTD., and Brother International Corporation, Plaintiffs, v. UNITED STATES, Defendant, Smith-Corona Group, Consumer Products Division, SCM Corporation, Party-in-Interest. SMITH-CORONA GROUP, CONSUMER PRODUCTS DIVISION, SCM CORPORATION, Plaintiff, v. UNITED STATES, Defendant, Brother Industries, Ltd., and Brother International Corporation; Silver Seiko, Ltd., and Silver Reed America, Inc., Parties-in-Interest.
• Court: U.S. Court of International Trade

540 F. Supp. 1341

3 CIT 125

BROTHER INDUSTRIES, LTD., and Brother International Corporation, Plaintiffs, v. UNITED STATES, Defendant,

Smith-Corona Group, Consumer Products Division, SCM Corporation, Party-in-Interest.

SMITH-CORONA GROUP, CONSUMER PRODUCTS DIVISION, SCM CORPORATION, Plaintiff, v. UNITED STATES, Defendant,

Brother Industries, Ltd., and Brother International Corporation;

Silver Seiko, Ltd., and Silver Reed America, Inc., Parties-in-Interest.

Consolidated Court No. 80-9-01436.

United States Court of International Trade.

April 30, 1982.

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Tanaka Walders & Ritger, Washington, D. C. (H. William Tanaka, Lawrence Walders, Donald L. E. Ritger and Wesley K. Caine, Washington, D. C., of counsel), for Brother Industries, Ltd. and Brother Intern. Corp.

Eugene L. Stewart, Terence P. Stewart, Washington, D. C., Edwin M. Silverstone

and Michael M. Maloney, New York City, for Smith-Corona Group, Consumer Products Div., SCM Corp.

J. Paul McGrath, Asst. Atty. Gen., Washington, D. C. (David M. Cohen, Director, Commercial Litigation Branch, Velta A. Melnbrencis, New York City, and Francis J. Sailer, Washington, D. C., of counsel), James M. Lyons, Staff Atty., Intern. Trade Administration, Dept. of Commerce, Washington, D. C., for defendant.

Arter, Hadden & Hemmendinger, Washington, D. C. (Noel Hemmendinger, William Barringer and Christopher Dunn, Washington, D. C., of counsel), for Silver Reed America, Inc. and Silver Seiko, Ltd.

MEMORANDUM AND ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT.

NEWMAN, Judge:

We are faced in this consolidated action with a number of highly complex issues which are of novel impression, and undoubtedly are of great significance in the administration of the nation's antidumping laws. The above-captioned cases arose out of the same determination by the Department of Commerce, thus are largely interrelated and consequently — for the sake of expedition — were consolidated by this Court for review.

I. BACKGROUND

Smith-Corona Group, Consumer Products Division, SCM Corporation ("SCM"), and the related companies of Brother Industries, Ltd., of Nagoya, Japan and Brother International Corporation, of Piscataway, New Jersey (collectively "Brother"),¹ challenge the "Early Determination of Antidumping Duties" by the International Trade Administration, United States Department of Commerce ("Commerce") in Portable Electric Typewriters from Japan; Determination of Duty, published in the Federal Register on August 13, 1980,² 45 FR 53853-56, as clarified and corrected in 46 FR 14006 (1980).

SCM is the sole domestic manufacturer of portable electric typewriters ("PETs"). Brother Industries, Ltd. is a Japanese manufacturer of PETs and Brother International Corporation is an importer of such merchandise from Japan. Silver Seiko, Ltd. and Silver Reed America, Inc. (collectively "Silver") have intervened in these proceedings. The former is a Japanese manufacturer of PETs, and the latter is an importer of such merchandise from Japan.

At a previous stage of this litigation, SCM made application under section 516A(c)(2) of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (19 U.S.C. § 1516a(c)(2)), to enjoin the liquidation of the entries that were the subject of Commerce's early determination of antidumping duties pending the final hearing and disposition on the merits of the action, and additionally, for certain incidental relief. Brother filed a cross-motion to dismiss for lack of subject matter jurisdiction, which cross-motion was opposed by SCM and the Government. Silver does not challenge the Court's jurisdiction. In 1 CIT —, Slip Op. 80-17, 507 F.Supp. 1015 (December 30, 1980), this Court entered a memorandum and order: (1) granting SCM's motion for injunctive relief (thus, staying the liquidation of entries of PETs on and after January 4, 1980 to May 7, 1980, covered by the early determination of antidumping duties); (2) denying SCM's application for incidental relief; and (3) denying Brother's cross-motion to dismiss for lack of jurisdiction. The prior history of this case is summarized in my prior decision of December 30, 1980, and in the interest of brevity that background will be reiterated herein only to the extent necessary for discussion of the issues presently before the Court.³

In its early determination of antidumping duties, Commerce granted Brother and Silver a wide range of adjustments or deductions in determining the foreign market value of their PETs sold in Japan in the four-month period investigated that resulted in findings of various weighted average dumping margins.⁴ The gravamen of SCM's action is that certain of these adjustments or deductions are contrary to law and unsupported by substantial evidence in the administrative record.

Specifically, the adjustments to foreign market value made by Commerce which are challenged by SCM are:

(1) Adjustment of the foreign market value of each typewriter model for differences in packing costs and in Japanese inland freight incurred in sales in the home market and to the United States.

(2) Adjustment of the foreign market value of each typewriter model by the amount of certain types of rebates in connection with sales in Japan.

(3) Adjustment of the foreign market value of each typewriter model pursuant to 19 CFR § 353.15(c), for the exporter's sales price offset ("ESP offset"), in those instances where foreign market value was compared with the exporter's sales price.

(4) Adjustment of the foreign market value of each Brother typewriter model for differences in physical characteristics by an amount that was equal to the difference in the costs of certain accessories and printed materials provided in connection with sales in Japan and to the United States.

(5) Adjustment to the foreign market value of each typewriter model by an amount for certain advertising expenses incurred in sales in Japan.

As is evident from the above, SCM has mounted a broad and multifaceted challenge to Commerce's early determination of antidumping duties.⁵

Brother's action contests the denial by Commerce of an additional adjustment to foreign market value for the cost of a promotional campaign conducted in Japan, namely the give-away of transistor radios in connection with the sale of portable typewriters (including PETs). Brother contends that the disallowance was arbitrary and capricious or otherwise not in accordance with law.⁶ In all other respects, Brother supports the adjustments made by Commerce and challenged by SCM.

Presently before the Court are SCM's motion for summary judgment and cross-motions for summary judgment by the Government, Brother and Silver. Silver takes no position on that aspect of Commerce's determination challenged by Brother.

II.

"CAUSAL LINK" ISSUE

We first consider SCM's argument that Commerce erred as a matter of law in granting the contested adjustments to foreign market value because no "causal link" was established between the differences in circumstances of sale and the differential between United States price and the foreign market value, as required by 19 U.S.C. § 1677b(a)(4). In this connection, SCM argues that the Court must hold invalid the administering authority's regulation 19 CFR § 353.15(d) as being inconsistent with and in violation of the antidumping law. The "causal link" issue is the centerpiece of SCM's challenge to all of the contested adjustments.

SCM complains that Commerce in its early determination of antidumping duties made no finding of a causal link between the differences in circumstances of sale and the difference in the United States price and the foreign market value. Further, SCM contends that no information concerning a causal link was submitted by Brother or Silver to Commerce, nor was any such information requested by the administering authority.

The "causal link" issue presented by SCM arises from 19 U.S.C. § 1677b(a)(4), which so far as pertinent, reads:

(4) Other adjustments. — In determining foreign market value, if it is established to the satisfaction of the administering authority that the amount of any difference between the United States price and the foreign market value (or that the fact that the United States price is the same as the foreign market value) is wholly or partly due to —

(A) the fact that the wholesale quantities, in which such or similar merchandise is sold or, in the absence of sales, offered for sale, for exportation to, or in the principal markets of, the United States, as appropriate, in the ordinary course of trade, are less or are greater than the wholesale quantities in which such or similar merchandise is sold or, in the absence of sales, offered for sale, in the principal markets of the country of exportation in the ordinary course of trade for home consumption (or, if not so sold for home consumption, then for exportation to countries other than the United States);

(B) other differences in circumstances of sales; or

(C) the fact that merchandise described in paragraph (B) or (C) of section 1677(16) of this title is used in determining foreign market value.

then due allowance shall be made therefor. Emphasis added.

From a reading of the statute, it is clear that the party claiming entitlement to an adjustment of foreign market value must prove: (1) the existence of "other differences in circumstances of sales" within the meaning of the statute; (2) that the difference in United States price and foreign market value is wholly or partly due to other differences in circumstances of sale; and (3) the monetary value of the differences for which adjustments are claimed.

Focusing on the second requirement above, and particularly the language "due to" (denominated by SCM as the "causal link" requirement), it must be stressed that the statute requires only that a causal link be established to the satisfaction of the administering authority. But ...