Changzhou Hawd Flooring Co. v. United States

Citation324 F.Supp.3d 1317
Decision Date03 July 2018
Docket NumberSlip Op. 18–82,Court No. 12–00020
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, Plaintiffs, v. UNITED STATES, Defendant.
CourtU.S. Court of International Trade

Gregory S. Menegaz and Alexandra H. Salzman, deKieffer & Horgan, PLLC, of Washington, DC, argued for the Plaintiffs 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 Limited. With them on the brief was J. Kevin Horgan.

Jill A. Cramer, Mowry & Grimson, PLLC, of Washington, DC, argued for PlaintiffIntervenor Fine Furniture (Shanghai) Limited. With her on the brief were Kristin H. Mowry, Jeffrey S. Grimson, Sarah A. Wyss, Yuzhe PengLing, and James Beaty.

Craig A. Lewis, Hogan Lovells US LLP, of Washington, DC, argued for PlaintiffIntervenor Armstrong Wood Products (Kunshan) Co., Ltd. With him on the brief was H. Deen Kaplan.

Mark Ludwikowski Clark Hill PLC, of Washington, DC, argued for PlaintiffIntervenor Lumber Liquidators Services, LLC. With him on the brief were R. Kevin Williams and Lara A. Austrins.

Claudia Burke, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for Defendant United States. With her on the brief were Chad A. Readier, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Tara K. Hogan, Assistant Director. Of counsel was Shelby M. Anderson, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, DC.

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

OPINION and ORDER

Gordon, Judge:

This action involves the final less than fair value determination of the U.S. Department of Commerce ("Commerce") in the antidumping duty investigation covering multilayered wood flooring from the People's Republic of China ("PRC") for the period of April 1, 2010 through September 30, 2010. See Multilayered Wood Flooring from the People's Republic of China, 76 Fed. Reg. 64,318 (Dep't of Commerce Oct. 18, 2011) (final determ.) ("Final Determination"), and accompanying Issues & Decision Memorandum, A–570–970 (Oct. 11, 2011), available at http://enforcement.trade.gov/frn/summary/prc/2011-26932-1.pdf ("Decision Memorandum") (last visited this date); see also Multilayered Wood Flooring from the People's Republic of China, 76 Fed. Reg. 76,690 (Dep't of Commerce Dec. 8, 2011) (amended final determ. and antidumping duty order) ("Order").

This action returns to the U.S. Court of International Trade from Commerce following a remand redetermination ordered by the U.S. Court of Appeals for the Federal Circuit directing Commerce to revise its determination of the "separate rate" and apply the "expected method" under 19 U.S.C. § 1673d(c)(5)(B), or to justify any departure from the "expected method." Changzhou Hawd Flooring Co. v. United States, 848 F.3d 1006, 1008 (Fed. Cir. 2017) (" Changzhou Hawd VI"). Commerce "was unable to make the findings necessary to justify departure from the expected method," Final Results of Redetermination at 32 (July 21, 2017) ("Fifth Remand Results"), and thus applied the "expected method" for the separate rate, averaging the calculated rates of mandatory respondents, which was zero. The issue before the court is whether Commerce was then obligated also to exclude the separate rate respondents from the Order as it did with the mandatory respondents. Familiarity with the history of this action is presumed. See Fifth Remand Results at 2–6 (explaining history of case).

Separate rate respondents Changzhou Hawd Flooring Co., Ltd., Dalian Huilong Wooden Products Co., Ltd., Dunhua City Jisen Wood Industry Co., Ltd., Dunhua City Dexin Wood Industry Co., Ltd., Kunshan Yingyi–Nature Wood Industry Co., Ltd, and Karly Wood Product Limited (together, "Changzhou Hawd"); Fine Furniture (Shanghai) Limited ("Fine Furniture"); Armstrong Wood Products (Kunshan) Co., Ltd. ("Armstrong") challenge the Fifth Remand Results. See Pl.–lntervenor Armstrong's Comments Regarding Commerce's Final Results of Redetermination Pursuant to Court Remand, ECF No. 170 ("Armstrong Cmts."); Comments of Certain Separate Rate Appellants Opp. Fifth Remand Redetermination, ECF No. 171 ("Changzhou Hawd Cmts."); Pl.–lntervenor Fine Furniture's Comments on Commerce's Final Results of Redetermination Pursuant to Court Remand, ECF No. 172 ("Fine Furniture Cmts."); see also Def.'s Reply to Pls.'Comments on Remand Redetermination, ECF No. 176 ("Def.'s Reply"); Reply Comments of Def.–lntervenor Regarding Commerce's Final Results of Redetermination Pursuant to Court Order, ECF No. 175 ("Def.–lntervenor Reply"). Plaintiff–lntervenor Lumber Liquidators also challenges Commerce's refusal to exclude the separate rate respondents, but also argues that Commerce should have terminated the Order ab initio. See Pl.–lntervenor Lumber Liquidators Services, LLC's Comments on Remand Redetermination, ECF No. 173 ("Lumber Liquidators Cmts.").

For the reasons set forth below, the court sustains Commerce's decision (1) denying Lumber Liquidators' request to terminate the Order ab initio, and (2) denying exclusion from the Order for the separate rate respondents that did not request voluntary examination. For the three separate rate respondents that requested voluntary examination during the investigation (Fine Furniture, Armstrong, and Dunhua City Jisen Wood Industry Co., Ltd., collectively, "Voluntary Applicants"), the court determines that Commerce arbitrarily applied its exclusion regulation, 19C.F.R. § 351.204(e)(1), and enters judgment ordering Commerce to exclude them from the Order.

I. Standard of Review

The court sustains Commerce's "determinations, findings, or conclusions" 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). More specifically, when reviewing agency determinations, findings, or conclusions for substantial evidence, the court assesses whether the agency action is reasonable given the record as a whole. Nippon Steel Corp. v. United States, 458 F.3d 1345, 1350–51 (Fed. Cir. 2006). Substantial evidence has been described as "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." DuPont Teijin Films USA v. United States, 407 F.3d 1211, 1215 (Fed. Cir. 2005) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938) ). Substantial evidence has also been described as "something less than the weight of the evidence, and the possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency's finding from being supported by substantial evidence." Consolo v. Fed. Mar. Comm'n, 383 U.S. 607, 620, 86 S.Ct. 1018, 16 L.Ed.2d 131 (1966). Fundamentally, though, "substantial evidence" is best understood as a word formula connoting reasonableness review. 3 Charles H. Koch, Jr. Administrative Law and Practice § 9.24[1] (3d ed. 2018). Therefore, when addressing a substantial evidence issue raised by a party, the court analyzes whether the challenged agency action "was reasonable given the circumstances presented by the whole record." 8A West's Fed. Forms, National Courts § 3.6 (5th ed. 2018).

Separately, the two-step framework provided in Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842–45, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), governs judicial review of Commerce's interpretation of the antidumping statute. See United States v. Eurodif S.A., 555 U.S. 305, 316, 129 S.Ct. 878, 172 L.Ed.2d 679 (2009) (Commerce's "interpretation governs in the absence of unambiguous statutory language to the contrary or unreasonable resolution of language that is ambiguous."); see also Harry T. Edwards & Linda A. Elliott, Federal Standards of Review 273–280 (3d ed. 2018) ("Comparing and Contrasting the Principal Standards of Review").

II. Discussion

The portion of this action now before the court involves Commerce's exclusion regulation, 19 C.F.R. § 351.204(e)(1), adopted in 1997 as part of a comprehensive regulatory update following the statutory amendments made by the Uruguay Round Agreements Act. See Uruguay Round Agreements Act, Pub. L. No. 103–465, 108 Stat. 4809 (1994) ("URAA"). Section 351.204(e)(1) provides that Commerce "will exclude from an affirmative final determination ..., any exporter or producer for which [Commerce] determines an individual weighted-average dumping margin ... of zero or de minimis." 19 C.F.R. § 351.204(e)(1). Although Commerce assigned the separate rate respondents a dumping margin of zero, which Commerce determined by averaging the individual weighted average dumping margins of the mandatory respondents, Commerce did not exclude the separate rate respondents because they had not been individually examined. Fifth Remand Results at 24–25.

During notice and comment for § 351.204, Commerce explained that the regulation "provides that any exporter or producer that is individually examined and that receives an individual weighted-average dumping margin ... of zero or de minimis will be excluded from an order." Antidumping Duties; Countervailing Duties: Proposed Rulemaking, 61 Fed. Reg. 7308, 7315 (Feb. 27, 1996). Commerce further explained:

As for former §§ 353.14 and 355.14, ..., these provisions are no longer necessary in light of the amendments to the statute made by the URAA, .... These provisions, notwithstanding their titles, functioned as a mechanism for considering requests by voluntary respondents to be investigated. As stated by the Department
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7 cases
  • Changzhou Hawd Flooring Co. v. United States
    • United States
    • United States Courts of Appeals. United States Court of Appeals for the Federal Circuit
    • January 10, 2020
    ...it held that Commerce had not justified inclusion of the voluntary-review firms in the order. Changzhou Hawd Flooring Co. v. United States , 324 F. Supp. 3d 1317, 1321 (Ct. Int’l Trade 2018) ( Changzhou CIT 2018 ). Appellants challenge the first of those holdings, while a domestic industry ......
  • Changzhou Hawd Flooring Co. v. United States, 2018-2335
    • United States
    • United States Courts of Appeals. United States Court of Appeals for the Federal Circuit
    • January 10, 2020
    ...it held that Commerce had not justified inclusion of the voluntary-review firms in the order. Changzhou Hawd Flooring Co. v. United States, 324 F. Supp. 3d 1317, 1321 (Ct. Int'l Trade 2018) (Changzhou CIT 2018). Appellants challenge the first of those holdings, while a domestic industry coa......
  • Shenzhen Xinboda Industrial Co., Ltd. v. United States
    • United States
    • U.S. Court of International Trade
    • December 26, 2018
    ...is "reasonable given the circumstances presented by the whole record," it will be sustained. Changzhou Hawd Flooring Co., Ltd. v. United States , 42 CIT ––––, ––––, 324 F.Supp.3d 1317, 1321 (2018) (internal quotation marks and citations omitted). The court addresses Xinboda's specific conte......
  • Haixing Jingmei Chem. Prods. Sales Co. v. United States, Slip Op. 18-181
    • United States
    • U.S. Court of International Trade
    • December 27, 2018
    ...involves consideration of the totality of the circumstances regarding the sale"); see also Changzhou Hawd Flooring Co., Ltd. v. United States , 42 CIT ––––, ––––, 324 F.Supp.3d 1317, 1321 (2018) (if Commerce's determination is "reasonable given the circumstances presented by the whole recor......
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