Hyundai Electronics Industries Co. v. U.S.

• Decision Date: 16 April 2004
• Docket Number: Court No. 00-01-00027.,SLIP OP. 04-37.
• Citation: 342 F.Supp.2d 1141
• Parties: HYUNDAI ELECTRONICS INDUSTRIES CO., LTD. and Hyundai Electronics America, Inc., Plaintiffs, v. UNITED STATES, Defendant, and Micron Technology, Inc. Defendant-Intervenor.
• Court: U.S. Court of International Trade

Page 1141

342 F.Supp.2d 1141

HYUNDAI ELECTRONICS INDUSTRIES CO., LTD. and Hyundai Electronics America, Inc., Plaintiffs, v. UNITED STATES, Defendant, and Micron Technology, Inc. Defendant-Intervenor.

SLIP OP. 04-37.

Court No. 00-01-00027.

United States Court of International Trade.

April 16, 2004.

COPYRIGHT MATERIAL OMITTED

Willkie, Farr, & Gallagher, Washington, DC (Christopher A. Dunn, James P. Durling, and Daniel L. Porter) for plaintiff Hyundai Electronics.

Kaye, Scholer, Fierman, Hays & Handler LLP, Washington, DC (Raymond Paretzky) for plaintiff LG Semicon.

Peter D. Keisler, Assistant Attorney General, David M. Cohen, Director, Patricia McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Kenneth S. Kessler); Patrick V. Gallagher, Jr., Office of the Chief Counsel for Import Administration, United States Department of Commerce, for defendant United States, of counsel.

Hale & Dorr (Michael D. Esch and Gilbert D. Kaplan) for defendant-intervenor Micron Technology, Inc.

OPINION

GOLDBERG, Senior Judge.

In this consolidated action, Hyundai Electronics Industries Co., Ltd. and Hyundai Electronics America, Inc. (collectively "Hyundai") challenges the final results of the Department of Commerce's ("Commerce") fifth administrative review regarding Dynamic Random Access Memory semiconductors of one megabit or above ("DRAMs") from the Republic of Korea covering the period of May 1, 1997 through April 30, 1998. See Dynamic Random Access Memory Semiconductors of One Megabit Or Above from the Republic of Korea, 64 Fed.Reg. 69694 (Dec. 14, 1999) ("Final Results"). At issue in this case are DRAMs produced by LG Semicon Co., Ltd. ("LG Semicon")¹ and Hyundai. For the reasons that follow, the Court sustains in part and reverses and remands in part the Final Results. The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1581(c).

I. BACKGROUND

On May 10, 1993, Commerce published the antidumping duty order on DRAMs from the Republic of Korea. See Dynamic Random Access Semiconductors of One Megabit or Above from the Republic of Korea, 58 Fed.Reg. 27520 (May 10, 1993). In response to a request by Defendant-Intervenor Micron Technology, Inc. ("Micron"), a domestic producer of DRAMs, Commerce initiated the fifth administrative review of the antidumping order on June 29, 1998. See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Requests for Revocations in Part, 65 Fed.Reg. 35188 (June 29, 1998).

On June 8, 1999, Commerce published the preliminary results for the fifth administrative review. See Dynamic Random Access Memory Semiconductors of One Megabit or Above From the Republic of Korea: Preliminary Results of the Antidumping Administrative Review and Notice of Intent Not to Revoke Order, 64 Fed.Reg. 30481 (June 8, 1999) ("Preliminary Results"). Commerce applied partial adverse facts available in calculating the dumping margin for LG Semicon because it found that it had reported as third-country sales "a substantial number of U.S. sales that it knew or should have known were U.S. sales," and concluded that LG Semicon "failed to cooperate to the best of its ability." Id. at 30482.

Commerce published the Final Results on December 14, 1999. Commerce determined that in selling DRAMs to customers in Germany and Mexico, LG Semicon knew or should have known that the ultimate destination of the products was the United States. See Final Results, 64 Fed.Reg. at 69717. Further, Commerce concluded that LG Semicon failed to cooperate to the best of its ability by failing to report the sales to customers in Germany and Mexico as U.S. sales and also because of the inadequacy of the information supplied. See id. at 69696. As a result, Commerce based the final dumping margin on total adverse facts available. See id. Using total adverse facts available for LG Semicon, Commerce applied the highest rate calculated in the Final Results, which was the margin for Hyundai. See id.

In addition, Commerce recalculated the research and development ("R & D") expenses for LG Semicon and Hyundai. See id. Commerce recalculated these expenses because of alleged distortions due to changes in LG Semicon and Hyundai's accounting methodologies. See id. at 69699. Previously, the companies had expensed R & D costs in the year incurred, but in the period of the fifth review they switched to capitalizing the costs. See id. Commerce achieved its recalculation by allocating R & D expenses of all semiconductors produced by LG Semicon and Hyundai over the total semiconductor cost of goods sold. See id. at 69702.

II. STANDARD OF REVIEW

The Court must sustain the Final Results unless it is "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B). To determine whether Commerce's construction of the statutes is in accordance with law, the Court looks to Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). It is only if the Court concludes that "Congress either had no intent on the matter, or that Congress's purpose and intent regarding the matter is ultimately unclear," that the Court will defer to Commerce's construction under Chevron. Timex V.I., Inc. v. United States, 157 F.3d 879, 881 (Fed.Cir.1998). In addition, "[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) (interpreting United States v. Mead, 533 U.S. 218, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001)). Accordingly, the Court will not substitute "its own construction of a statutory provision for a reasonable interpretation made by [Commerce]." IPSCO, Inc. v. United States, 965 F.2d 1056, 1061 (Fed.Cir.1992).

III. DISCUSSION

A. Commerce's Treatment of LG Semicon DRAMs Sold Through Germany

LG Semicon challenges the treatment of sales to a customer in Germany that Commerce determined entered the United States.

On September 14, 1999, three weeks before the scheduled final determination, Commerce placed a memorandum on the record regarding information about sales made by LG Semicon to [] ("the customer"). See Brief of Plaintiffs Hyundai Electronics Indus. Co., Ltd. and Hyundai Electronics America, Inc. in Support of Plaintiffs' Motion for Judgment Upon the Agency Record ("Pl. LG Semicon's Br.") at 6; Appendix to Pl. LG Semicon's Br. ("Pl. LG Semicon's Br.App."), C.R. 53 (Commerce Memorandum Regarding LG Semicon's Sales to Germany).² The memo indicated that the German subsidiary of [ ] ("the customer's German subsidiary"), after purchasing DRAMs from LG Semicon, shipped them to its manufacturing facility in Puerto Rico ("the customer's Puerto Rican manufacturing facility"). It noted that within days of LG Semicon's sale of DRAMs to the customer's German subsidiary, a significant amount of DRAMs entered the United States via the customer. See Pl. LG Semicon's Br.App., C.R. 53 at 2.

The memo contained information regarding Commerce's receipt of an e-mail on January 4, 1999. See Pl. LG Semicon's Br.App., C.R. 53, Ex. 1. The e-mail, sent by a former employee of LG Semicon, stated that LG Semicon was "knowingly and willfully" dumping DRAMs into the United States by shipping DRAMs to the customer's German subsidiary, which would then ship the DRAMs to the customer's Puerto Rican manufacturing facility. See id. The e-mail also alleged that LG Semicon sold DRAMs to Germany in order to evade U.S. dumping duties and that LG Semicon's senior management both knew and approved of these sales. See id.

The memo also disclosed for the first time information regarding Commerce's meeting with Mark Vecchiarelli, another former employee of LG Semicon. See Pl. LG Semicon's Br.App., C.R. 53, Ex. 4; C.R. 63 (Commerce Memorandum Explaining and Attaching Draft and Final Versions of Exhibit 4 to Commerce's 09/13/1999 Memorandum). In this meeting, Vecchiarelli informed Commerce that LG Semicon sold DRAMs to the customer's German subsidiary with the knowledge that the ultimate destination for the DRAMs was the customer's Puerto Rican manufacturing facility. See Pl. LG Semicon's Br.App., C.R. 53 at 2.

1. Commerce's Determination that LG Semicon Knew or Should Have Known that DRAMs It Sold Were Destined for the United States Is Supported by Substantial Evidence.

Commerce applies a "knowledge test" to determine whether a foreign producer knew or should have known, at the time of sale, that subject merchandise was destined for the United States. See Wonderful Chemical Indus., Ltd. v. United States, 27 CIT ___, ___, 259 F.Supp.2d 1273, 1279 (2003); LG Semicon Co., Ltd. v. United States, 23 CIT 1074, 1077, 1999 WL 1458844 (1999). Commerce's test is consistent with Congressional intent, as demonstrated by the Statement of Administrative Action accompanying the Trade Agreements Act of 1979, which provides: "if the producer knew or had reason to know the goods were for sale to an unrelated U.S. buyer... the producer's sales prices will be used as `purchase price' to be compared with that producer's foreign market value." H.R. Doc. No. 96-153; see also LG Semicon, 23 CIT at 1077, 1999 WL 1458844. The knowledge test does not require Commerce to prove that the producer had actual knowledge, as such a requirement would "eviscerate the acknowledged standard." Allegheny Ludlum Corp. v. United States, 24 CIT 1424, 1434-35, 215 F.Supp.2d 1322, 1332 (2000); see also Wonderful Chemical, 27 CIT at ___, 259 F.Supp.2d at 1279.³

LG Semicon claims that Commerce's decision was based solely on the statement made by Vecchiarelli. See Pl. LG Semicon's Br. at 22. LG Semicon contends that Vecchiarelli's statement is not truthful and accurate. See id. at 23. LG Semicon argues that even assuming that Vecchiarelli's statement was truthful and accurate, his statement...