Geneva Steel Co. v. Ranger Steel Supply Corp.

• Decision Date: 19 September 1997
• Docket Number: No. 96-C-774 B.,96-C-774 B.
• Citation: 980 F.Supp. 1209
• Parties: GENEVA STEEL COMPANY, Plaintiff, v. RANGER STEEL SUPPLY CORPORATION and Thyssen Incorporated, Defendants.
• Court: U.S. District Court — District of Utah

980 F.Supp. 1209

GENEVA STEEL COMPANY, Plaintiff, v. RANGER STEEL SUPPLY CORPORATION and Thyssen Incorporated, Defendants.

No. 96-C-774 B.

United States District Court, D. Utah, Central Division.

September 19, 1997.

Clark Waddoups, Salt Lake City, UT, Carolyn McHugh, Salt Lake City, UT, Charles Owen Verrill, Jr., Washington, DC, for Geneva Steel Co.

Mark O. Van Wagoner, Salt Lake City, UT, Thomas R. Barton, Salt Lake City, UT, Kermit W. Almstedt, Washington, DC, Richard G. Parker, Washington, DC, for Ranger Steel Supply Corp.

Kenneth Yeates, Salt Lake City, UT, David Ettinger, Detroit, MI, Gail T. Cumins, New York, NY, for Thyssen Inc.

OPINION & ORDER

BENSON, District Judge.

This case is before the court pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure on Defendants' Motion to Dismiss for failure to state a claim upon which relief can be granted. Plaintiff alleges in its Complaint that Defendants violated the Antidumping Act of 1916, 15 U.S.C. § 72, by systematically selling steel purchased abroad to customers in the United States at prices substantially below the actual market value of the steel in the countries where the steel was made. Plaintiff alleges that these below-cost sales were made with the intention on the part of the Defendants to injure the domestic United States steel industry. Plaintiff Geneva Steel Company is a domestic United States steel producer.

Rule 12(b)(6) Motion to Dismiss Standard

In ruling on the Defendants' motion to dismiss, the court assumes the truth of all well-pleaded facts in Plaintiff's complaint and views them in a light most favorable to Plaintiff. Zinermon v. Burch, 494 U.S. 113, 118, 110 S.Ct. 975, 979, 108 L.Ed.2d 100 (1990). The court views all reasonable inferences in favor of the Plaintiff, and the pleadings are construed liberally. Id. The court may dismiss the complaint for failure to state a claim upon which relief can be granted only if it appears to a certainty that Plaintiff can prove no set of facts in support of its claim which would entitle Plaintiff to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957); Jacobs, Visconsi & Jacobs Co. v. City of Lawrence, 927 F.2d 1111, 1115 (10th Cir.1991). In reviewing the sufficiency of a complaint, the issue is not whether Plaintiff will prevail, but whether Plaintiff is entitled to offer evidence to support its claims. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974).

Background

Geneva is the owner of a steel mill in Utah County, Utah. Geneva sells steel products to customers both within and outside of the United States. Geneva has its roots in World War II, commencing operations as a producer of steel for liberty ships. Geneva was originally owned and operated by U.S. Steel Co., which later became USX Corporation. In 1987, Geneva was purchased from USX by its present owners, who have since spent more than $370 million to modernize the plant.

According to the allegations of Geneva's complaint, during the 1980s and 1990s the entire U.S. Steel industry has undergone significant improvements and seen substantial investment in order to meet vigorous competition both at home and abroad. As a result the U.S. Steel market ranks among the world's most efficient producers of top quality steel plate. Geneva contends that its sales, and the sales of other domestic U.S. Steel producers, have been significantly affected in recent years by steel imported from countries outside of the United States. Geneva cites industry publications and reports to show that as a result of these escalating imports, sales of steel plate inside the United States by domestic companies have fallen sharply in recent years. Geneva alleges that some of these imported products are being unfairly "dumped" into the United States at prices below their actual costs of production and their actual market value in their countries of production.

In response to these dumping practices in the early 1990s, domestic U.S. Steel companies filed complaints with the United States International Trade Commission, which is empowered to impose tariffs on any imports that are found to be improperly dumped in the United States. In 1994, the International Trade Commission found that steel imports from 11 countries — Belgium, Brazil, Canada, Finland, Germany, Mexico, Poland, Romania, Spain, Sweden and the United Kingdom — were in violation of United States anti-dumping laws and regulations. As a result, tariffs were imposed on steel imports from each of these 11 countries.

Prior to 1994, little or no steel plate manufactured in Russia, Ukraine and China was sold in the United States. Beginning in 1994, according to the allegations of Geneva's complaint, the Defendants began importing into the United States large quantities of steel plate from Ukraine, Russia and China. Geneva alleges in its complaint and in its moving papers that these imports were sold by Defendants in the United States at prices well below the actual market value and costs of production in the countries of origin and well below the costs at which steel plate could be produced by Geneva or the other U.S. steel companies. Geneva asserts that the price charged for these imports was as much as $100.00 a ton less than the prices offered by United States manufacturers and that these prices were significantly less than the prices charged for the dumped steel from the 11 countries previously found to be in violation of U.S. antidumping laws. As a result, Geneva's and other United States steel companies' sales fell drastically, with orders dropping as much as 65%. In November, 1996, Geneva claims to have laid off the equivalent of 185 workers due to the dumping practices of the Defendants. Geneva further alleges that the Defendants sold large quantities of steel from the three countries in question when it knew that the ITC had earlier determined that imports from the 11 offending countries were having a significant injurious effect on the health of the U.S. steel industry and with full knowledge that Mexico and Western European countries had already imposed significant tariffs on steel imported from Russia, Ukraine and China.

The Defendants, Thyssen and Ranger, are described by Geneva as knowledgeable and sophisticated steel traders. Thyssen is a subsidiary of Thyssen A.G., a German company that is one of the largest steel producers in the world with a history in steel production dating back to 1871. Ranger has operated in the United States steel market since 1958, and promotes itself as the "largest distributor of plate steel in the country."

Geneva asserts that Thyssen and Ranger have been able to import steel below cost from Ukraine and Russia largely because of the recent breakup of the Soviet Union. Prior to its dissolution the Soviet Union was the world's largest steel producer. Steel plants were built throughout the Soviet Union to maintain the Soviet Union's vast military and industrial complex. While the Soviet Union remained a strong international power, virtually all of its steel was utilized within its own borders. Whole cities were built up and around the Russian and Ukrainian steel mills. Then, when the breakup of the Soviet Union occurred in the early 1990's, this large consumption of steel in the former Soviet countries fell dramatically, from 101 million metric tons in 1991 to an estimated 49 million metric tons in 1996. Some of the steel mills in Russia and Ukraine closed, but many have stayed in nearly full operation for political and social reasons. The result of all of this has been large surpluses of steel in Ukraine and Russia which are available to be purchased at extremely cheap prices, well below the actual costs of production. Russia began exporting 60% of its steel output. Ukraine's exports rose to 75% of its steel production.

As explained earlier, Geneva has brought this suit under the Antidumping Act of 1916, which authorizes private causes of action against importers of dumped goods. In addition to this suit, Geneva and other United States steel producers have petitioned the United States International Trade Commission for a finding of illegal dumping of steel from Ukraine, Russia and China, and have sought the imposition of tariffs on steel imports from those countries.¹ Geneva contends that notwithstanding the prospective tariff relief that may be obtained from the International Trade Commission, it is entitled to the damages permitted under the Antidumping Act of 1916.

Historical Perspective

The 1916 Antidumping Act is best understood in the proper historical perspective. Beginning in 1913, the Democratic White House and Congress staged vigorous opposition to the power of domestic and international cartels and trusts. President Woodrow Wilson campaigned in 1912 on a message of free trade and fair competition: "The men who created the monopoly ... have taken advantage of the protective tariff [to] shut out competition and to make sure that the prices are in their own control." Wilson, A Crossroads of Freedom: 1912 Campaign Speeches of Woodrow Wilson, 156 (J. Davidson, ed.) (1956). During Wilson's first term, the Underwood Tariff Act was passed, reducing tariffs in order that "no concern shall [have] a monopoly ... gained other than through the fact that it is able to furnish better goods at lower prices than others." H.R.Rep. No. 5, 63d Cong., 1st Sess. 17 (1913). The Clayton Antitrust Act followed in 1914, expanding prohibitions against anti-competitive and predatory behavior, including price discrimination.

Across the Atlantic, World War I forced European manufacturers to turn their resources towards domestic defense, freeing U.S. industries from their foreign competition and serving "as protection more effective than any tariff legislation could possibly be." Taussig, The Tariff History of the United States, 448 (1931, reprinted 1967). Observing this prosperity, some U.S....