Chung Ling Co., Ltd. v. US

• Decision Date: 11 August 1993
• Docket Number: No. 90-10-00528.,90-10-00528.
• Citation: 829 F. Supp. 1353
• Parties: CHUNG LING CO., LTD., et al., Plaintiffs, v. UNITED STATES, Defendant, and National Knitwear and Sportswear Association, Defendant-Intervenor.
• Court: U.S. Court of International Trade

829 F. Supp. 1353

CHUNG LING CO., LTD., et al., Plaintiffs, v. UNITED STATES, Defendant and National Knitwear and Sportswear Association, Defendant-Intervenor.

No. 90-10-00528.

United States Court of International Trade.

August 11, 1993.

COPYRIGHT MATERIAL OMITTED

Sidley & Austin, Judith H. Bello, Alan F. Holmer, and Jeremy O. Preiss, Washington, DC, for plaintiff Cheonji Sanup, Inc.

Grunfeld, Desiderio, Lebowitz & Silverman, Bruce M. Mitchell, David L. Simon, and Jeffrey S. Grimson, New York City, for plaintiff Comitex Knitters, Ltd.

Whitman & Ransom, Charles H. Bayar, Dennis James, Jr. and Kathleen F. Patterson (Charles Y.W. Chiu, New York City, of counsel), for plaintiff Chung Ling Co., Ltd.

Office of Gen. Counsel, United States Intern. Trade Com'n, Lyn M. Schlitt, Gen. Counsel, James A. Toupin, Asst. Gen. Counsel, and Andrea C. Casson, Washington, DC, for defendant.

Gibson, Dunn & Crutcher, Joseph H. Price, Judith A. Ott, Donald Harrison, and Jerry S. Fowler, Jr., Washington, DC, for defendant-intervenor.

OPINION

CARMAN, Judge:

Defendant-Intervenor contests the International Trade Commission's remand results in Sweaters Wholly or in Chief Weight of Manmade Fibers from Hong Kong, The Republic of Korea, and Taiwan, USITC Pub. 2577, Views on Remand in Inv. Nos. 731-TA-448-450 (1992) (available on WESTLAW, ITC database) (Remand Determination). Plaintiffs and defendant seek to have the remand determination sustained. The Court retained jurisdiction over this matter during the pendency of the ITC's remand investigation.

BACKGROUND

In 1990, the ITC determined that an industry in the U.S. was materially injured by reason of imports of certain sweaters. Sweaters Wholly or in Chief Weight of Manmade Fibers from Hong Kong, the Republic of Korea, and Taiwan, USITC Pub. 2312, Inv. Nos. 731-TA-448-450 (1990) (1990 Determination). Plaintiffs appealed the ITC's final determination, and this Court remanded the case to the ITC. Chung Ling Co. v. United States, 16 CIT ___, 805 F.Supp. 45 (1992) (Chung Ling I).

In Chung Ling I, the Court held that the 1990 final determination was not supported by substantial evidence on the record and was not otherwise in accordance with law. Id. at ___, 805 F.Supp. at 56. The Court remanded the case and ordered the Commission to review four broad areas: (1) producers' questionnaire data and the adverse inference rule; (2) petitioner's interference with the investigation; (3) causation; and (4) like product. Id. at ___, 805 F.Supp. at 50-56. The Court ordered the following concerning the adverse inference rule issue:

On remand, the Commission may conduct any further investigation deemed warranted to obtain data representative of the man made fiber (MMF) sweater producers' pricing and the financial condition of the MMF sweater "industry," as defined in the statute; and/or, the Commission may apply the adverse inference rule against the domestic industry.

Id. at ___, 805 F.Supp. at 50.

With respect to the issue of petitioner's interference with the investigation, the Court held:

In sum, it is the Court's view that in these investigations NKSA exceeded permissible bounds of communication with its members in aid of the Commission's investigatory responsibilities. In view of NKSA's obviously pervasive and suggestive communications with the domestic industry and the Commission's erroneous finding of a single innocuous contact between NKSA and one of its members, a remand on the interference issue is plainly warranted. On remand, the Commission is directed to conduct a further investigation of NKSA's interference with the questionnaire responses, reevaluate whether "this is a case in which * * * objectivity of the questionnaire response data has been compromised," ITC Report at 27, n. 77, and reconsider whether to draw an adverse inference.

Id. at ___, 805 F.Supp. at 52.

The Court ordered the following concerning the issue of causation:

Due to the flawed pricing definitions in the questionnaire instructions, as described above, the record is not clear concerning that matter. Additionally, the U.S. producer pricing data was inadequate for a thorough underselling analysis. Remand for further investigation and/or clarification of U.S. producer pricing and the importers' net f.o.b. purchase prices is warranted.

Id. at ___, 805 F.Supp. at 54 (citation omitted).

Finally, with respect to the like product issue, the Court held:

In short, the Commission's like product analysis is supported by substantial evidence and is otherwise in accordance with law, except as pertains to the issue of blends. The Court must agree with Taiwan plaintiffs' contention that the Commission's finding of a clear dividing line in the U.S. sweater industry based on fiber composition predicated on the minor position of blends in the market is unsupported by substantial evidence. The Commission's finding of the minor position of blends was significant in the determination of the like product under the clear dividing line standard.... The Court holds that the Commission's like product determination, insofar as it was based on a finding of the minor position of blends in the U.S. market, is unsupported by substantial evidence and is remanded for further investigation and/or reconsideration.

Id. at ___, 805 F.Supp. at 56. The Court concluded Chung Ling I by stating that "on the present agency record, the Commission's final injury determinations are unsupported by substantial evidence and are otherwise not in accordance with law." Id. at ___, 805 F.Supp. at 56.

On September 25, 1992, this Court issued a memorandum and order denying defendant's motion to amend Chung Ling I's remand order. Chung Ling Co. v. United States, 16 CIT ___, 805 F.Supp. 56 (1992) (Chung Ling II). Chung Ling II further explained the Court's remand instructions. In its discussion of "Producers' Questionnaire Data and Adverse Inference," the Court stated:

due to the low rate of and incomplete responses, the producer questionnaire data was inadequate to furnish the Commission with any semblance of representative data in critical financial indicators of injury and causation. More, the Court pointed out that the supplementary information resorted to by the Commission — Bureau of Census statistics — was also inadequate to supply much critical information that was required for an accurate injury determination. In short, the Commission's final investigations, while clearly "diligent," were inadequate.

Id. at ___, 805 F.Supp. at 61 (emphasis in original). Continuing its discussion of the questionnaire data, the Court stated that the remand order "was couched to afford the Commission wide latitude and discretion in further investigation and/or drawing of an adverse inference." Id. at ___, 805 F.Supp. at 64.

The Court also reviewed its instructions regarding the Commission's like product determination.

In Chung Ling I this Court held that the Commission's finding of the minor position of blends in the U.S. sweater market and the significance of that fact in overall like product analysis warranted further investigation and/or reconsideration by the Commission on remand. It is the Commission's responsibility to assess in light of the overall record the significance of the position of blends in the U.S. sweater market and, in light of the current record, to what extent if any, further investigation of that factual issue is indicated.

Id. at ___, 805 F.Supp. at 65 (emphasis in original). The Court concluded its discussion of its remand order by stating that "under the broad terms of the remand order in Chung Ling I, the Commission must be the sole judge of what, if any, further data acquisition efforts are justified...." Id. at ___, 805 F.Supp. at 67.

Following remand, the ITC issued revised questionnaires to domestic producers and received briefs from the parties. The Commission subsequently unanimously determined that an industry in the United States was not materially injured or threatened with material injury by reason of the subject imports. Remand Determination at 1. Four of the Commissioners, Vice-Chairman Watson and Commissioners Brunsdale, Nuzum¹ and Crawford, had not participated in the 1990 Determination and reviewed the entire record in the remand investigation de novo. Id. at 1 n. 3. Chairman Newquist joined these four Commissioners, and also readopted his dissenting views from the 1990 Determination. Id. at 1 n. 4; see 1990 Determination at 55-71. Although Commissioner Rohr reached a negative determination, he did not join in the views of the other five Commissioners. Remand Determination at 1 n. 1, 47-51. Instead, he drew a "no injury" adverse inference against the domestic industry based on his finding that the financial and pricing data on the record had not measurably improved over that collected in the original determination. Id. at 47-53.

CONTENTIONS OF THE PARTIES

Defendant-Intervenor, NKSA, contends that the ITC's unanimous negative determination on remand exceeded the scope of this Court's remand order. NKSA maintains the ITC exceeded the scope by making a de novo injury determination instead of limiting itself to supplying an institutional response to the four specific issues the Court ordered it to consider on remand. NKSA requests that this Court disregard the Commission's unauthorized and extraneous findings. According to NKSA, once these findings are disregarded, that part of the Commission's findings that NKSA claims were responsive to the specific remand issues, will support the original determination. NKSA argues in the alternative that if the Court were to accept the Commission's decision to consider the entire case de novo, the negative determination is not supported by substantial evidence and is not otherwise in accordance with law.

Plaintiffs and defendant argue that the ITC properly conducted the remand investigation within the scope of the remand order. Furthermore, plaintiffs and defendant maintain the...