Hung Vuong Corp. v. United States

Decision Date03 December 2020
Docket NumberCourt No. 19-00055,Slip Op. 20-174
Citation483 F.Supp.3d 1321
Parties HUNG VUONG CORPORATION, et al., Plaintiffs, v. UNITED STATES, Defendant, and Catfish Farmers of America, et al., Defendant-Intervenors.
CourtU.S. Court of International Trade

Robert L. LaFrankie, Crowell & Moring LLP of Washington, DC, argued for Plaintiffs.

Kara M. Westercamp, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice of Washington, DC, argued for Defendant.

With her on the brief were Joseph H. Hunt, Assistant Attorney General; Jeanne E. Davidson, Director; Patricia M. McCarthy, Assistant Director. Of counsel on the brief was Ian A. McInerney, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce of Washington, DC.

Jonathan M. Zielinski, Cassidy Levy Kent (USA) LLP of Washington, DC, argued for Defendant-Intervenors. With him on the brief were James R. Cannon, Jr., and Jeffrey B. Denning.

OPINION AND ORDER

Baker, Judge:

In some quarters, the humble catfish has a bad reputation. It's ugly, often maligned as a "bottom-feeder," and with fins that sting, it's not so easy to remove from a fishing line intended for statelier fish.1 But as reported in the newspaper of record, the ugly, ungainly, and prickly catfish is, in fact, a delicacy. Craig Claiborne, "Catfish, Long a Southern Delicacy, Branches Out," N.Y. Times , Nov. 11, 1981, at C6. As a result, commercial catfish farming is a big business in this country.

Indeed, the demand for catfish is so great that foreign producers have entered the domestic market. Some of those producers are in Vietnam. In 2003, the Commerce Department determined that "catfish"2 produced in Vietnam and exported to this country were dumped in the U.S., i.e., sold in the U.S. at below the normal sales price in Vietnam,3 and Commerce imposed import duties.

Under the statutory and administrative scheme, antidumping duties can be reviewed once per year and may be adjusted (upwards or downwards) as to particular entities. This litigation stems from the 14th such review4 of the antidumping order as to certain frozen fish fillets from Vietnam.

In that review, Commerce found that it could not verify information submitted by the Vietnamese producer and that the administrative record was otherwise incomplete in several respects. Commerce further found that these information deficiencies resulted from the producer's failure to cooperate to the best of its ability and therefore supplied the missing information by assuming facts most adverse to the producer, which resulted in the highest possible import duty.

The Vietnamese producer then brought this action challenging Commerce's decision. After briefing and argument on the producer's motion for judgment on the agency record, the Court grants the motion in part, denies the motion in part, and remands for further proceedings consistent with this opinion.

Table of Contents

Statutory and Regulatory Background...1334

B. The Administrative Review Process...1334
1. Purpose of the review...1334
2. Selection of respondents...1335
3. Verification of respondents’ answers...1336
4. "Adverse facts available"...1336
C. Reviews Involving Non-Market Economies...1339
1. Factors of production...1339
2. Control numbers...1339
3. Country-wide versus separate rates...1340

Factual and Procedural Background...1341

A. The Review...1341
1. Commerce preliminarily assigned Hung Vuong a $0.00 dumping margin....1341
2. Commerce issued supplemental questionnaires and conducted verification in Vietnam...1342
3. Commerce issued its final decision and assigned Hung Vuong a $3.87/kg dumping margin after applying facts available with an adverse inference....1342
B. This Lawsuit...1343

Jurisdiction and Standard of Review...1343

Analysis...1344

I. Hung Vuong Fails to Overcome the Presumption That Commerce Acted in Good Faith....1344

II. The Court Sustains in Part and Remands in Part Commerce's Determination to Apply Facts Otherwise Available with an Adverse Inference...1345

A. Failure to Retain Source Documents...1346
1. Commerce's findings...1346
2. The administrative record permitted Commerce to apply facts otherwise available with an adverse inference as to the failure to retain source documents...1348
B. Hung Vuong's Relationship with Customers...1353
1. Commerce's findings...1353
2. Commerce must reconsider its application of facts otherwise available with an adverse inference as to customer relationships....1354
C. Control Number Reporting...1357
1. Commerce's findings...1357
2. The administrative record permitted Commerce to apply facts otherwise available with an adverse inference as to control number reporting....1358
D. Factors of Production...1363
1. Commerce's findings...1363
2. The administrative record did not permit Commerce to apply facts otherwise available with an adverse inference as to the fish byproducts portion of Hung Vuong's factors of production data....1364
E. The Court Is Required to Remand Commerce's Decision to Apply "Total AFA."...1367

F. The Rate Commerce Applied Must Be Reconsidered on Remand....1369

Order...1369
Statutory and Regulatory Background
A. Antidumping Orders

The federal antidumping statute provides a mechanism for imposing remedial duties on imported merchandise sold, or likely to be sold, in the United States at "less than its fair value." 19 U.S.C. § 1673(1). The gist of the process is that an "interested party" as defined in the Tariff Act of 19305 files a petition simultaneously with Commerce and the International Trade Commission alleging that a U.S. domestic industry is materially injured or threatened with material injury by such imports. U.S. Int'l Trade Comm'n, Publication 4540, Antidumping and Countervailing Duty Handbook , at I-3 (14th ed. June 2015), available at https://www.usitc.gov/trade_remedy/documents/handbook.pdf (accessed Nov. 17, 2020).

Commerce then investigates whether the petition contains sufficient allegations of dumping and, if so, whether dumping is occurring, while the ITC investigates whether the relevant domestic industry is being, or is likely to be, materially injured. If both agencies find in the affirmative, Commerce publishes an antidumping order in the Federal Register imposing an antidumping duty "in an amount equal to the amount by which the normal value exceeds the export price (or the constructed export price) for the merchandise." 19 U.S.C. § 1673.6 The antidumping duty is in addition to any other duty imposed on the subject merchandise. 19 U.S.C. § 1673.

B. The Administrative Review Process
1. Purpose of the review

Because relevant background facts and market conditions change over time, the statutory and regulatory framework provides for administrative reviews of antidumping orders to adjust the rate. During the order's anniversary month,7 domestic interested parties8 may submit written requests asking Commerce to conduct an administrative review of specific foreign exporters or producers covered by the order. 19 C.F.R. § 351.213(b)(1). Exporters or producers covered by an antidumping order, or importers of exporters’ or producers’ merchandise covered by such an order, may similarly request a review of that order as it applies to them individually (in the case of an exporter or producer) or merchandise imported by them (in the case of an importer). Id. § 351.213(b)(2), (3).

The period of review covers the 12 months immediately preceding the most recent anniversary month. Id. § 351.213(e)(1)(i). Completion of the review is subject to strict time limits. See 19 U.S.C. § 1675(a)(3)(A) ; 19 C.F.R. § 351.213(h)(1)(2).

If no domestic interested party, affected foreign exporter, producer, or importer requests an administrative review, the then-current antidumping rate, referred to as the "preexisting rate," continues to apply.

2. Selection of respondents

If Commerce undertakes an administrative review, the Department must "determine the individual weighted average dumping margin for each known exporter and producer of the subject merchandise." 19 U.S.C. § 1677f-1(c)(1). Commerce may invoke an exception, however, "[i]f it is not practicable to make individual weighted average dumping margin determinations ... because of the large number of exporters or producers involved in the investigation or review," id. § 1677f-1(c)(2), in which case Commerce is to make the determination "for a reasonable number of exporters or producers by limiting its examination to" either a "statistically valid" sampling of exporters or producers, id. § 1677f-1(c)(2)(A), or "exporters and producers accounting for the largest volume of the subject merchandise from the exporting country that can be reasonably examined," id. § 1677f-1(c)(2)(B).

When Commerce implements this statutory exception, it identifies some exporters or producers as to whom it will make the "individual" determination; they are referred to as "mandatory respondents," who will receive individual antidumping rates at the end of the review, while exporters or producers not individually reviewed will receive either an "all others" rate or a nationwide single rate. 19 U.S.C. § 1673d(c)(1)(B)(i), (c)(5).9

Commerce then sends questionnaires to mandatory respondents seeking information for purposes of the review. 19 C.F.R. § 351.221(b)(2). The questionnaires give precise instructions on what information Commerce wants, in what form it must be reported, and when it is due.

The questionnaire answers are critical as respondents have the burden of creating an accurate administrative record. Ta Chen Stainless Steel Pipe, Inc. v. United States , 298 F.3d 1330, 1336 (Fed. Cir. 2002) (citing Zenith Elecs. Corp. v. United States , 988 F.2d 1573, 1583 (Fed. Cir. 1993) ). Respondents have this burden because they control the information that Commerce needs to complete its review. Id.

3. Verification of respondents’ answers

After the respondents answer the questionnaires, Commerce may conduct "verification." "Verification is like an...

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