Changzhou Hawd Flooring Co. v. United States

• Decision Date: 15 February 2017
• Docket Number: 2015-1904,2015-1899,2015-1903,2015-1901
• Citation: 848 F.3d 1006
• Parties: 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., Karly Wood Product Limited, Fine Furniture (Shanghai) Limited, Lumber Liquidators Services, LLC, Armstrong Wood Products (Kunshan) Co., Ltd., Plaintiffs–Appellants, Home Legend, LLC, Plaintiff, v. UNITED STATES, The Coalition for American Hardwood Parity, Defendants–Appellees.
• Court: U.S. Court of Appeals — Federal Circuit

848 F.3d 1006

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., Karly Wood Product Limited, Fine Furniture (Shanghai) Limited, Lumber Liquidators Services, LLC, Armstrong Wood Products (Kunshan) Co., Ltd., Plaintiffs–Appellants,Home Legend, LLC, Plaintiff,

v.UNITED STATES, The Coalition for American Hardwood Parity, Defendants–Appellees.

2015-1899

2015-1901

2015-1903

2015-1904

United States Court of Appeals, Federal Circuit.

Decided: February 15, 2017

Jeffrey S. Grimson , Mowry & Grimson, PLLC, Washington, DC, argued for all plaintiffs-appellants. Plaintiff-appellant Fine Furniture (Shanghai) Limited also represented by Kristin Heim Mowry, Jill A. Cramer, Sarah M. Wyss .

Gregory S. Menegaz , DeKieffer & Horgan, PLLC, Washington, DC, for plaintiffs-appellants 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., Karly Wood Product Limited. Also represented by James Kevin Horgan, Alexandra H. Salzman .

Arthur K. Purcell , Sandler Travis & Rosenberg, P.A., New York, NY, for plaintiff-appellant Lumber Liquidators Services, LLC. Also represented by Mark Ludwikowski, Kristen Smith , Washington, DC; Michelle L. Mejia , Chicago, IL.

Harold Deen Kaplan , Hogan Lovells US LLP, Washington, DC, for plaintiff-appellant Armstrong Wood Products (Kunshan) Co., Ltd. Also represented by Craig Anderson Lewis .

Tara K. Hogan , Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellee United States. Also represented by Benjamin C. Mizer, Jeanne E. Davidson, Claudia Burke ; Shelby Anderson , Office of Chief Counsel for Trade Enforcement and Compliance, United States Department of Commerce, Washington, DC.

Jeffrey Steven Levin , Levin Trade Law PC, Bethesda, MD, for defendant-appellee The Coalition for American Hardwood Parity.

Before Lourie, Taranto, and Chen, Circuit Judges.

Taranto, Circuit Judge.

This case arises from the U.S. Department of Commerce's antidumping-duty investigation of multilayered wood flooring imports from the People's Republic of China. The appellants here are Chinese entities that Commerce found had demonstrated their independence from the Chinese government and so deserved a "separate" antidumping-duty rate, not the so-called China-wide rate that applies to entities that had not shown their independence from the Chinese government. Commerce did not individually investigate appellants to determine firm-specific dumping margins. Instead, it assigned them a rate that, though not specified numerically, was declared to be more than de minimis , even though it found zero or de minimis dumping margins for all three of the Chinese firms that it had individually investigated. The Court of International Trade affirmed that determination.

Appellants contend that they are entitled to a de minimis rate. After the Court of International Trade rendered its decision in this case, our court made clear that the "separate rate" method used by Commerce here is a departure from the congressionally approved "expected method" applicable when all of the individually investigated firms have a zero or de minimis rate, which is the case here, and that certain findings are necessary to justify such a departure. Albemarle Corp. & Subsidiaries v. United States , 821 F.3d 1345, 1348 (Fed. Cir. 2016). Under the "expected method," appellants would be entitled to a de minimis rate. Because Commerce did not make the findings needed to justify departing from the expected method, we vacate the Court of International Trade's judgment, and we remand.

I

In 2010, the Department of Commerce initiated an antidumping-duty investigation of multilayered wood flooring from China, based on a petition filed by the Coalition for American Hardwood Parity under 19 U.S.C. § 1673a(b). Multilayered Wood Flooring from the People's Republic of China: Initiation of Antidumping Duty Investigation, 75 Fed. Reg. 70,714 (Dep't of Commerce Nov. 18, 2010). In order to select particular Chinese firms to be individually investigated as mandatory respondents, Commerce sent questionnaires to the Chinese exporters and producers identified in the petition, asking about the quantities and value of the goods at issue sent to the United States. Id. at 70,717 –18. Of the 190 recipients of the questionnaire, 80 timely responded. Multilayered Wood Flooring from the People's Republic of China: Preliminary Determination of Sales at Less Than Fair Value, 76 Fed. Reg. 30,656, 30,657 (Dep't of Commerce May 26, 2011). Commerce selected "the three largest exporters (by volume)" as mandatory respondents. Id. at 30,658. Although several firms offered to be individually investigated as voluntary respondents, id. , the three mandatory respondents are the only firms that Commerce individually investigated in this investigation. See Changzhou Hawd Flooring Co. v. United States , 44 F.Supp.3d 1376, 1389 n.31, 1390 (Ct. Int'l Trade 2015).

Commerce deems China to be a nonmarket economy, and it presumes that each Chinese exporter and producer is state-controlled, and thus covered by a single China-wide antidumping-duty rate, but a firm may rebut the presumption. See Changzhou Wujin Fine Chem. Factory Co. v. United States , 701 F.3d 1367, 1370 (Fed. Cir. 2012). Here, Commerce determined that 74 firms established their independence from the Chinese government. See Multilayered Wood Flooring from the People's Republic of China: Final Determination of Sales at Less Than Fair Value, 76 Fed. Reg. 64,318, 64,321 –22 (Dep't of Commerce Oct. 18, 2011). For those 74 firms—not individually investigated, but not covered by the China-wide rate—Commerce had to calculate a "separate rate."

Commerce published its Final Determination on October 18, 2011, finding that the subject merchandise was being sold at less than fair value (dumped) in the United States. Id. at 64,318. Commerce determined that one of the three mandatory respondents had a de minimis dumping margin, but it assigned margins of 3.98% and 2.63% to the other two mandatory respondents. See id. at 64,323. After a voluntary remand from the Court of International Trade, Commerce revised the mandatory respondents' dumping margins, finding all three to be zero or de minimis . J.A. 101941. Commerce calculated the "separate rate," not by simply using the zero/de minimis rates for the three mandatory respondents, but by averaging those three zero figures with the 25.62% rate it adopted as the China-wide rate—yielding a separate rate of 6.41%. J.A. 101942.

On review, the Court of International Trade affirmed the dumping margins for the mandatory respondents but remanded for further explanation of how the separate rate related to economic reality. Baroque Timber Indus. (Zhongshan) Co. v. United States , 971 F.Supp.2d 1333, 1336 (Ct. Int'l Trade 2014). On remand, Commerce reasoned that the separate rate for the period of investigation should not be drawn entirely from the three mandatory respondents, all having a de minimis rate. Commerce gave two reasons. First, Commerce said, "if [any of] the 110 companies [that did not respond to the quantity-and-value questionnaires] had chosen to cooperate, the examined company's rate would have been above de minimis ... and would have been assigned to the separate rate plaintiffs as a separate rate in the FinalDetermination ." J.A. 102099.¹ Second, merely as confirmation, Commerce pointed to the recent results of its first administrative review under 19 U.S.C. § 1675, in which Commerce found dumping even for imports made after the announcement of the antidumping-duty order, notwithstanding that "the discipline of an antidumping order often results in lower or no margins ... as companies may change their pricing practices to eliminate the price discrimination found in the period of investigation." J.A. 102100. That result, Commerce said, confirmed the likelihood that it would have found above-de minimis dumping had it investigated more individual firms during the investigation. Id. On that basis, although Commerce did not reaffirm its 6.41% rate for the "separate rate" (not individually investigated) Chinese entities, it declared that they would be subject to a rate that it did not specify but declared to be more than de minimis .²

Appellants challenged that determination in the Court of International Trade. That court affirmed, concluding that "Commerce's determination regarding the group ... is based on a reasonable reading of the law and record evidence." Changzhou Hawd Flooring , 44 F.Supp.3d at 1380. The court held that Commerce's methodology was permissible because the statute allows "any reasonable method." Id. at 1384. After one further remand, which brought Changzhou Hawd Flooring within the "separate rate" applicable to government-independent but not individually investigated firms, the Court of International Trade entered a final judgment. Changzhou Hawd Flooring Co. v. United States , 77 F.Supp.3d 1351, 1359–60 (Ct. Int'l Trade 2015).³

Appellants, who are separate-rate entities, have timely appealed the above-de minimis separate rate, arguing for a de minimis separate rate. They assert that, although no rate was numerically specified, the assignment of an above-de minimis rate harms them because it subjects them to the antidumping-duty order and its continuing consequences, including subsequent periodic reviews under 19 U.S.C. § 1675, whereas assigning them a de minimis rate in this investigation would remove them from the order and relieve them from its consequences. See 19 C.F.R. § 351.204(e)(1) (excluding from final determination "any exporter or producer for which the Secretary determines an individual weighted-average dumping margin ......