Il v. United States

• Decision Date: 08 October 2010
• Docket Number: No. 2010-1136.,2010-1136.
• Citation: 620 F.3d 1350
• Parties: WALGREEN CO. OF DEERFIELD, IL, Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

620 F.3d 1350

WALGREEN CO. OF DEERFIELD, IL, Plaintiff-Appellant,

v.UNITED STATES, Defendant-Appellee.

No. 2010-1136.

United States Court of Appeals,Federal Circuit.

Oct. 8, 2010.

Mark Stuart Zolno, Katten Muchin Rosenman LLP, of Washington, DC, for plaintiff-appellant. With him on the brief were Eric R. Rock and Benjamin H. Shanbaum.

L. Misha Preheim, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, for defendant-appellee United States. With him on the brief were Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, and Regnald T. Blades, Jr., Assistant Director.

Before RADER, Chief Judge, LINN, and DYK, Circuit Judges.

LINN, Circuit Judge.

Walgreen Co. of Deerfield, IL (“Walgreen”) appeals the affirmance by the Court of International Trade (“CIT”) of a determination by the Department of Commerce (“Commerce”) in Final Scope Ruling: Antidumping Duty Order on Certain Tissue Paper from the People's Republic of China, United States Department of Commerce Memorandum from James C. Doyle, Director, Office 9, to Stephen J. Claeys, Deputy Assistant Secretary for Import Administration, Scope Inquiry No. A-570-894 (Sept. 19, 2008) (“ Final Scope Ruling ”), that certain tissue paper contained in Walgreen's “Gift Bag to Go” gift bag sets are within the scope of an earlier antidumping order covering certain tissue paper from the People's Republic of China, Notice of Amended Final Determination of Sales at Less than Fair Value and Antidumping Duty Order: Certain Tissue Paper Products from the People's Republic of China, 70 Fed.Reg. 16,223-01 (Dep't of Commerce Mar. 30, 2005) (“ Final Order ”). Because Commerce's Final Scope Ruling is supported by substantial evidence, we affirm.

Background

When domestic producers suspect that competing goods are being sold in the United States at less than fair value (i.e., being “dumped”), they may petition Commerce to impose duties on the importer. Duferco Steel, Inc. v. United States, 296 F.3d 1087, 1089 (Fed.Cir.2002). Commerce first makes an initial determination “of whether there is a reasonable basis to believe or suspect that the merchandise is being sold, or is likely to be sold, at less than fair value.” 19 U.S.C. § 1673b(b)(1)(A). Commerce then makes a “final determination of whether the subject merchandise is being, or is likely to be, sold in the United States at less than its fair value.” Id. § 1673d(a)(1). As relevant here, “subject merchandise” is “the class or kind of merchandise that is within the scope of an ... [antidumping] order.” Id. § 1677(25). In the final determination, Commerce defines the scope of products that are subject to the antidumping order.

“[B]ecause the descriptions of subject merchandise contained in [Commerce's] determinations must be written in general terms,” Commerce may issue “ ‘scope rulings' that clarify the scope of an order ... with respect to particular products.” 19 C.F.R. § 351.225(a). The importer may present its arguments for why its products do not fall within the scope of the antidumping order, and members of the domestic industry may reply with counterarguments.

Commerce makes its scope rulings in one or two steps:

(k) [I]n considering whether a particular product is included within the scope of an order ... the Secretary will take into account the following:

(1) The descriptions of the merchandise contained in the petition, the initial investigation, and the determinations of the Secretary (including prior scope determinations) and the Commission.

(2) When the above criteria are not dispositive, the Secretary will further consider:

(i) The physical characteristics of the product;

(ii) The expectations of the ultimate purchasers;

(iii) The ultimate use of the product;

(iv) The channels of trade in which the product is sold; and

(v) The manner in which the product is advertised and displayed.

Id. § 351.225(k)(1-2). If Commerce determines that the application for a scope ruling and the criteria in § 351.225(k)(1) (“(k)(1) criteria”) are sufficient to determine whether the products fall within the scope of the final antidumping order, Commerce issues a final scope ruling. Id. § 351.225(d). If not, Commerce initiates a scope inquiry to consider the criteria enumerated in § 351.225(k)(2) (“(k)(2) criteria”), which then results in a final scope ruling. Id. § 351.225(e).

The genesis of this case was a petition filed by members of the domestic industry, asking Commerce to determine that certain competing tissue papers were being sold in violation of the antidumping laws. On September 21, 2004, Commerce issued a preliminary determination on the petition, finding that there is a reasonable basis for belief that subject merchandise was being sold at less than fair value. Certain Tissue Paper Products and Certain Crepe Paper Products from the People's Republic of China: Notice of Preliminary Determinations of Sales at Less Than Fair Value, Affirmative Preliminary Determination of Critical Circumstances and Postponement of Final Determination for Certain Tissue Paper Products, 69 Fed.Reg. 56,407-19 (Dep't Commerce Sept. 21, 2004) (“ Preliminary Determination ”). Commerce then made a final determination that subject merchandise was being dumped. Notice of Final Determination of Sales at Less Than Fair Value: Certain Tissue Paper Products from the People's Republic of China, 70 Fed.Reg. 7475-01 (Dep't Commerce Feb. 14, 2005) (“ Final Determination ”). In that final determination, Commerce explicitly adopted an Issues and Decisions Memorandum for the Antidumping Duty investigation of Certain Tissue Paper Products from the People's Republic of China, 70 ITADOC 7475 (Feb. 3, 2005) (“ I & D Memo ”) as part of its decision. Final Determination, 70 Fed.Reg. at 7476. Commerce then amended certain details of the Final Determination, and released its Final Order. In the Final Order, Commerce conclusively laid out the scope of its antidumping determination. In full, Commerce defined the scope as follows:

The tissue paper products subject to this order are cut-to-length sheets of tissue paper having a basis weight not exceeding 29 grams per square meter. Tissue paper products subject to this order may or may not be bleached, dye-colored, surface-colored, glazed, surface decorated or printed, sequined, crinkled, embossed, and/or die cut. The tissue paper subject to this order is in the form of cut-to-length sheets of tissue paper with a width equal to or greater than one-half (0.5) inch. Subject tissue paper may be flat or folded, and may be packaged by banding or wrapping with paper or film, by placing in plastic or film bags, and/or by placing in boxes for distribution and use by the ultimate consumer. Packages of tissue paper subject to this order may consist solely of tissue paper of one color and/or style, or may contain multiple colors and/or styles.

The merchandise subject to this order does not have specific classification numbers assigned to them under the HTSUS. Subject merchandise may be under one or more of several different subheadings, including: 4802.30; 4802.54; 4802.61; 4802.62; 4802.69; 4804.31.1000; 4804.31.2000; 4804.31.4020; 4804.31.4040; 4804.31.6000; 4804.39; 4805.91.1090; 4805.91.5000; 4805.91.7000; 4806.40; 4808.30; 4808.90; 4811.90; 4823.90; 4820.50.00; 4802.90.00; 4805.91.90; 9505.90.40. The tariff classifications are provided for convenience and customs purposes; however, the written description of the scope of this order is dispositive.

Excluded from the scope of this order are the following tissue paper products: (1) tissue paper products that are coated in wax, paraffin, or polymers, of a kind used in floral and food service applications; (2) tissue paper products that have been perforated, embossed, or die-cut to the shape of a toilet seat, i.e., disposable sanitary covers for toilet seats; (3) toilet or facial tissue stock, towel or napkin stock, paper of a kind used for household or sanitary purposes, cellulose wadding, and webs of cellulose fibers (HTSUS 4803.00.20.00 and 4803.00.40.00).

Final Order, 70 Fed.Reg. at 16223-24.

On February 5, 2008, Walgreen requested a scope ruling from Commerce that five of its gift bag sets were not within the scope of the Final Order. The sets contain a gift bag, a crinkle bow, and one to six sheets of tissue paper. The tissue paper comprises from six to eleven percent of the cost of the gift bag sets.

Commerce's scope ruling was in two parts. Commerce first determined that Walgreen's gift bag sets were not unique products, but “merely subject merchandise packaged with non-subject merchandise.” Final Scope Ruling at 11. Commerce also relied on statements in the Preliminary Determination and the I & D Memo, that explicitly included within the scope of the duty investigation, subject merchandise packaged with non-subject merchandise. Final Scope Ruling at 11. Commerce analogized Walgreen's gift bag sets to the products at issue in a prior scope ruling. Recommendation Memo-Final Scope Ruling on the Request by Texsport for Clarification of the Scope of the Antidumping Duty Order on Porcelain-on-Steel Cooking Ware from the People's Republic of China at 4, U.S. Dep't of Commerce Memorandum from Richard Moreland, Director, Office of Antidumping Compliance, to Joseph A. Spetrini, Deputy Assistant Secretary for Compliance, Scope Inquiry No. A-570-506 (Aug. 8, 1990) (“ Texsport ”) (concluding that an outdoor cooking set including teakettles, skillets, frypans, cups and plates, was within the scope of an anti-dumping order covering teakettles, skillets and frypans). Commerce distinguished a large number of prior scope determinations involving unrelated antidumping orders, termed by Walgreen the “mixed media scope rulings.” ¹ In distinguishing those rulings, Commerce considered the sets of products involved in those determinations to be “unique products,” in contrast to what it considered to be...