Home Products Intern., Inc. v. U.S.

• Decision Date: 17 December 2009
• Docket Number: Slip Op. 09-145.,Court No. 08-00094.
• Citation: 675 F.Supp.2d 1192
• Parties: HOME PRODUCTS INTERNATIONAL, INC., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

675 F.Supp.2d 1192

HOME PRODUCTS INTERNATIONAL, INC., Plaintiff, v. UNITED STATES, Defendant.

Slip Op. 09-145.

Court No. 08-00094.

United States Court of International Trade.

December 17, 2009.

Blank Rome LLP (Frederick L. Ikenson, Larry Hampel), for Plaintiff Home Products International, Inc.

Tony West, Assistant Attorney General; Jeanne E. Davidson, Director; Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Carrie Anna Dunsmore); and Office of the Chief Counsel for Import Administration, U.S. Department of Commerce (Thomas M. Beline), of counsel, for Defendant United States.

Garvey Schubert Barer (Ronald M. Wisla, William E. Perry, Lizbeth R. Levinson), for Defendant-Intervenor Since Hardware (Guangzhou) Co., Ltd.

OPINION

GORDON, Judge.

This action arises from the second administrative review of the antidumping duty order covering floor-standing metal-top ironing tables from the People's Republic of China. See Floor-Standing, Metal-Top Ironing Tables and Certain Parts Thereof from the People's Republic of China, 73 Fed.Reg. 14,437 (Dep't of Commerce Mar. 18, 2008) (final results admin. review) ("Final Results"), and accompanying Issues and Decision Memorandum for Floor-Standing, Metal-Top Ironing Tables and Certain Parts Thereof from the People's Republic of China, A-570-888 (March 10, 2008), available at http://ia.ita.doc.gov/frn/summary/PRC/E8-5415-1.pdf ("Decision Memorandum") (last visited Dec. 17, 2009) (Pub.Doc.77).¹ Home Products International, Inc. ("Home Products") moves for judgment on the agency record pursuant to USCIT Rule 56.2 challenging the Final Results, The court has jurisdiction pursuant to Section 516A(a)(2)(B)(iii) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) (2006),² and 28 U.S.C. § 1581(c) (2006).

I. Standard of Review

For administrative reviews of antidumping duty orders, the court sustains determinations, findings, or conclusions of the U.S. Department of Commerce ("Commerce") 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). See also Dorbest Ltd. v. United States, 30 CIT 1671, 1675-76, 462 F.Supp.2d 1262, 1268 (2006) (providing a comprehensive explanation of the standard of review in the nonmarket economy context). 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 (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 § 10.3[1] (2d. ed.2009). 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." Edward D. Re, Bernard J. Babb, and Susan M. Koplin, 8 West's Fed. Forms, National Courts § 13342 (2d ed.2009).

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. Dupont, 407 F.3d at 1215 (Fed. Cir.2005). "[S]tatutory interpretations articulated by Commerce during its antidumping proceedings are entitled to judicial deference under Chevron." Pesquera Mares Australes Ltda. v. United States, 266 F.3d 1372, 1382 (Fed.Cir.2001).

II. Background

In the Final Results Commerce calculated a final dumping margin for respondent, Since Hardware (Guangzhou) Co., Ltd. ("Since Hardware"), of 0.34 percent (de minimis) ad valorem. Final Results, 73 Fed.Reg. at 14,438. Home Products challenges Commerce's use of the complete 2004-2005 financial statements from Infiniti Modules, Pvt. Ltd. ("Infiniti Modules") as the surrogate for valuing factory overhead, selling, general, and administrative expenses ("SG & A"), and profit, rather than the more contemporaneous, but less complete, 2005-2006 Infiniti Modules financial statements.

Because China is a nonmarket economy country, Commerce gathered surrogate data from market economy sources and used a factors of production methodology to construct normal value. Commerce invited parties to submit publicly available information for purposes of valuing the factors of production. Home Products submitted Indian financial statements from Infiniti Modules for the 2004-2005 fiscal year and the 2005-2006 fiscal year, as well as financial statements from Agew Steel Manufacturers Private Limited ("Agew Steel") for the 2004-2005 fiscal year. Pub. Doc. 29. Home Products requested that Commerce rely on the 2004-2005 Agew Steel financial statements and utilize the 2005-2006 Infiniti Modules's profit ratio in lieu of Agew Steel's negative profit ratio to calculate factory overhead, SG & A, and profit. Id. Home Products also submitted allocation schedules based on the data available in the Infiniti Modules 2005-2006 financial report.

On September 11, 2007, Commerce published its preliminary results of the review. Floor-Standing, Metal-Top Ironing Tables and Certain Parts Thereof from the People's Republic of China, 72 Fed.Reg. 51,781 (Dep't of Commerce Sept. 11, 2007) (prelim. results admin. review) ("Preliminary Results") (Pub.Doc.62). Commerce preliminarily valued the surrogate financial ratios of factory overhead, SG & A, and profit using the 2004-2005 Infiniti Modules financial statements. Commerce explained that the 2004-2005 Infiniti Modules financial statements are complete, publicly available, and reflect merchandise comparable to ironing tables. Preliminary Results, 72 Fed.Reg. at 51,786. Specifically, Commerce found that the Infiniti Modules 2005-2006 financial statements and Agew Steel 2004-2005 financial statements were missing profit and loss statements. Id. Thus, Commerce determined that the Infiniti Modules 2004-2005 financial statements represented the best information on the record to value Since Hardware's factors of production. Id.

Following Commerce's publication of the Preliminary Results, Home Products submitted its case brief and contended that the absence of profit and loss statements from the Infiniti Modules 2005-2006 financial statements and the Agew Steel 2004-2005 financial statements does not render those statements less reliable than the non-contemporaneous Infiniti Modules 2004-2005 financial statements, which do include a profit and loss statement. Pub. Doc. 66, Confid. Doc. 16. Specifically, Home Products argued that Commerce should have extrapolated all of the necessary information from the 2005-2006 Infiniti Modules financial statements, and that in any event, because the financial statements contained an auditor's stamp, the data detailed in the attached schedules must be accurate. Id.

On March 10, 2008, Commerce published the Final Results. Commerce found that the 2004-2005 Infiniti Modules financial statements are the best source of data available upon the record because they are complete, publicly available, and based upon comparable merchandise to ironing tables. Decision Memorandum at 6-9 (Cmt.1). Commerce explained:

While the missing P & L statement alone may not be dispositive, the Department agrees with Since Hardware that the proprietary nature of the statement suggests that there may be information on the P & L statements that is not reported in the supporting schedules, and thus raises concerns as to whether the portions of the 2005-2006 financial statement on the record provide the Department with all the necessary information. The P & L (or income statement) is internationally recognized as one of three major financial statements included in a financial report, and is used to report all revenues and expenses over a period of time. The P & L statement typically provides an itemization of all aggregated revenues and expenses, but certain incomes and expenses listed on the P & L statement often may not have supporting schedules, as recognized by petitioner in its rebuttal comments regarding the Delite Kom financial statements. Thus, without the P & L statement for the 2005-2006 Infiniti Modules financial statements, the Department is unable to confirm whether all revenues/expenses associated with the production of the comparable merchandise have been properly included in the surrogate financial ratio.

Furthermore, in allocating incomes and expenses for the purpose of deriving the surrogate financial ratios, it is the Department's standard practice to reconcile all of the company's revenues and costs (irrespective of its relationship to the subject merchandise), such that the total of the reported income statement amounts sum to (approximately) zero, allowing only for minor rounding errors. The Department notes, however, that based on petitioner's allocation of the reconstructed financial statements from the 2005-2006 Infiniti Modules sub-schedules, the total income figure (profits including revenue) exceeds the total expenses by several hundred rupees, further suggesting that the P&L statement may contain non-public, yet...