Gallant Ocean (Thailand) Co., Ltd. v. US

• Decision Date: 16 April 2010
• Docket Number: No. 2009-1282.,2009-1282.
• Parties: GALLANT OCEAN (THAILAND) CO., LTD., Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

602 F.3d 1319

GALLANT OCEAN (THAILAND) CO., LTD., Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee.

No. 2009-1282.

United States Court of Appeals, Federal Circuit.

April 16, 2010.

Robert G. Gosselink, Trade Pacific PLLC, of Washington, DC, argued for plaintiff-appellant. With him on the brief were Jonathan M. Freed and Ji Hyun Tak.

Carrie Dunsmore, Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee. On the brief were Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, Patricia M. McCarthy, Assistant Director, and Stephen C. Tosini, Attorney.

Before RADER, MOORE Circuit Judges, and WILKEN, District Judge.^*

RADER, Circuit Judge.

Gallant Ocean (Thailand) Co., Ltd. ("Gallant") appeals from a final judgment of the United States Court of International Trade concerning its importation of frozen warmwater shrimp. The Court of International Trade affirmed a decision of the United States Department of Commerce ("Commerce") to apply an adverse facts available ("AFA") rate of 57.64% against Gallant. Gallant Ocean (Thailand) Co., Ltd. v. United States, 602 F.Supp.2d 1337 (Ct. Int'l Trade 2009). Because substantial evidence does not support the 57.64% AFA rate, this court vacates and remands.

I.

Commerce issues antidumping duty orders for imported merchandise that is sold in the United States below its fair value and materially injures or threatens to injure a domestic industry. See 19 U.S.C. § 1673 (2006). An antidumping duty reflects the amount by which the normal value exceeds the export price of a foreign exporter's merchandise. 19 U.S.C. § 1673e(a)(1); 19 U.S.C. § 1677(35). This excess amount is also known as the "dumping margin." The normal value is the price of the merchandise when sold for consumption in the exporting country. 19 U.S.C. § 1677b(1). If the imported merchandise is not sold in the exporting country, the normal value is the price at which the merchandise is sold for consumption in another similar exporting country or the United States. Id.

Commerce periodically reviews and reassesses antidumping duties. 19 U.S.C. § 1675(a). During its administrative review, Commerce requests information from the interested parties, including the foreign exporters of the subject merchandise. Upon a finding that an interested party refuses to cooperate with these information requests, Commerce "may use an inference that is adverse to the interests of that party in selecting from among the facts otherwise available." 19 U.S.C. § 1677e(b). Therefore, Commerce can apply AFA rates against uncooperative parties. In calculating AFA rates, Commerce may rely on information derived from (1) the petition; (2) a final determination in the investigation; (3) any previous review; or (4) any other information in the record. Id. "When Commerce relies on secondary information rather than on information obtained in the course of an investigation or review, Commerce shall, to the extent practicable, corroborate that information from independent sources that are reasonably at its disposal." 19 U.S.C. § 1677e(c).

II.

Gallant is a Thai exporter of shrimp. In December 2003, the Ad Hoc Shrimp Trade Action Committee, a domestic committee, filed petitions with Commerce and the International Trade Commission ("ITC"), alleging that Thai and other foreign exporters were dumping frozen warmwater shrimp in the United States. Notice of Initiation of Antidumping Duty Investigations, 69 Fed.Reg. 3876 (Jan. 27, 2004). Based on the petition, Commerce calculated the Thai exporters' dumping margin at 57.64%, as adjusted at the initiation of the less-than-fair value investigation. Id. at 3881. Thus, Commerce initially assigned an adjusted petition rate of 57.64% against Thai exporters.

After investigating the alleged dumping, Commerce issued an antidumping duty order on certain frozen warmwater shrimp from Thailand. Notice of Final Determination of Sales at Less than Fair Value and Negative Final Determination of Critical Circumstances: Certain Frozen and Canned Warmwater Shrimp from Thailand, 69 Fed.Reg. 76918, 76920 (Dec. 23, 2004). Commerce imposed dumping margins ranging from 5.91% to 6.82% against Thai exporters of shrimp. Notice of Amended Final Determinations of Sales at Less than Fair Value and Antidumping Duty Order: Certain Frozen Warmwater Shrimp from Thailand, 70 Fed.Reg. 5145, 5146 (Feb. 1, 2005) ("Final Antidumping Order"). Gallant did not participate in this initial investigation.

In April 2006, Commerce began its first administrative review of the antidumping duty order for the period covering August 4, 2004 through January 31, 2006. Notice of Initiation of Administrative Reviews of the Antidumping Duty Orders on Certain Frozen Warmwater Shrimp from Brazil, Ecuador, India and Thailand, 71 Fed. Reg. 17819 (Apr. 7, 2006). Commerce requested 145 Thai companies, including Gallant, to submit a quantity and value questionnaire. Id. at 17829. Gallant did not respond. Certain Frozen Warmwater Shrimp from Thailand: Preliminary Results and Partial Rescission of Anti-Dumping Duty Administrative Review, 72 Fed.Reg. 10669, 10673 (Mar. 9, 2007) ("Preliminary Results"). In May 2006, Commerce asked Gallant to respond for the second time. Id. at 10673. Gallant again did not respond. Id.

In March 2007, Commerce found that Gallant had not acted to the best of its ability to cooperate with Commerce's information requests and preliminarily assigned it a 57.64% AFA rate. Id. Commerce based the AFA rate on the adjusted petition rate. Id. at 10669-70. Commerce explained that it corroborated the adjusted petition rate with the transaction-specific margins calculated for the three mandatory respondents: Good Luck Product Co., Ltd. ("Good Luck Product"); Thai I-Mei Frozen Foods Co., Ltd. ("Thai I-Mei"); and Pakfood Public Co. Ltd. and its affiliated subsidies (collectively, "Pakfood"). Id. Specifically, both Good Luck Product and Pakfood had multiple transactions with dumping margins above the adjusted petition rate. Id. at 10673.

In September 2007, Commerce published the final results, continuing to assign a 57.64% AFA rate to Gallant and other uncooperative parties. Id. at 52069. Commerce assigned much lower dumping margins to cooperative parties: 10.75% for Good Luck Product; 2.58% for Thai I-Mei; 4.29% for Pakfood; and 4.31% for all other cooperative parties. Id.

Gallant challenged the 57.64% AFA rate as having no rational relationship to its commercial practices. Gallant Ocean, 602 F.Supp.2d at 1345. The Court of International Trade affirmed Commerce's adverse inference determination. Id. at 1346-52. Gallant now appeals to this court. This court has jurisdiction under 28 U.S.C. § 1295(a)(5).

III.

This court reviews a decision of the Court of International Trade concerning Commerce's antidumping determination by reapplying the same standard of review used by the Court of International Trade. Tung Mung Dev. Co. v. United States, 354 F.3d 1371, 1378 (Fed.Cir.2004). This court upholds Commerce's determinations unless they are "unsupported by substantial evidence on the record, or otherwise not in accordance with law." Alloy Piping Prods., Inc. v. Kanzen Tetsu Sdn. Bhd., 334 F.3d 1284, 1289 (Fed.Cir.2003) (internal citation omitted). Substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Micron Tech., Inc. v. United States, 117 F.3d 1386, 1393 (Fed. Cir.1997) (internal citation omitted). This court reviews the record as a whole, including any evidence that "fairly detracts from the substantiality of the evidence," in determining whether substantial evidence exists. Id.

IV.

Commerce has broad discretion in making antidumping determinations. F. lli Di Cecco De Filippo Fara S. Martino S.p.A. v. United States, 216 F.3d 1027, 1032 (Fed.Cir.2000). Commerce's discretion is particularly great in the case of uncooperative respondents. For example, Commerce can select from a list of secondary sources as a basis for its adverse inferences against uncooperative parties. See 19 U.S.C. § 1677e(b). "Commerce's discretion in these matters, however, is not unbounded." De Cecco, 216 F.3d at 1032.

An AFA rate must be "a reasonably accurate estimate of the respondent's actual rate, albeit with some built-in increase intended as a deterrent to non-compliance." Id. (emphasis added). The purpose of the AFA rate "is to provide respondents with an incentive to cooperate, not to impose punitive, aberrational, or uncorroborated margins." Id. Therefore, although a higher AFA rate creates a stronger deterrent, Commerce may not select unreasonably high rates having no relationship to the respondent's actual dumping margin. Id. Congress tempered the deterrent purpose with the corroboration requirement so as "to prevent the petition rate (or other adverse inference rate), when unreasonable, from prevailing and to block any temptation by Commerce to overreach reality in seeking to maximize deterrence." Id.

In this case, Commerce incorrectly presumed that the adjusted petition rate was reliable in the face of much more reliable information and thus imposed an unreasonably high 57.64% AFA rate against Gallant. Cf. id. at 1033 (affirming CIT's holding that Commerce may not use the petition rate to establish the dumping margin when its own investigation revealed that the petition rate was not credible). The adjusted petition rate did not and does not represent commercial reality. Commerce calculated the adjusted petition rate based on the highest dumping margin alleged in the petition. The fact that Commerce ultimately imposed dumping margins between 5.91% and 6.82% for the same products after its initial investigation shows the possession of better information and shows that the adjusted petition rate was aberrational. Cooperating respondents' actual dumping margins during the administrative...