Itochu Bldg. Prods., Co. v. United States

• Decision Date: 16 February 2017
• Docket Number: Court No. 15–00009,Slip Op. 17–17
• Citation: 208 F.Supp.3d 1377
• Parties: ITOCHU BUILDING PRODUCTS, CO., INC., Plaintiff, v. UNITED STATES, Defendant, and Mid Continent Steel & Wire, Inc., Defendant–Intervenor.
• Court: U.S. Court of International Trade

208 F.Supp.3d 1377

ITOCHU BUILDING PRODUCTS, CO., INC., Plaintiff,

v. UNITED STATES, Defendant,andMid Continent Steel & Wire, Inc., Defendant–Intervenor.

Slip Op. 17–17

Court No. 15–00009

United States Court of International Trade.

February 16, 2017

Bruce M. Mitchell , Ned H. Marshak , and Andrew T. Schutz , Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP of New York, NY for plaintiff.

Eric J. Singley , Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for defendant. With him on the brief were Benjamin C. Mizer , Principal Deputy Assistant Attorney General, Jeanne E. Davidson , Director, and Patricia M. McCarthy , Assistant Director. Of Counsel on the brief was Henry J. Loyer , Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, of Washington, DC.

Adam H. Gordon and Ping Gong , The Bristol Group PLLC of Washington DC, for defendant-intervenor.

OPINION

Barnett, Judge:

This case is before the court following the Department of Commerce's ("Commerce") remand redetermination in the first administrative review of the antidumping duty order on certain steel nails from the United Arab Emirates (UAE). Confidential Final Results of Redetermination Pursuant to Itochu Building Products, Co., Inc. v. United States , [ ] Court No. 15–00009, Slip Op. 16–37 (CIT April 15, 2016) ("Remand Redet."), ECF No. 63–1; see also Itochu Building Products, Co., Inc. v. United States ("Itochu "), 40 CIT ––––, 163 F.Supp.3d 1330 (2016) ; Certain Steel Nails from the United Arab Emirates , 79 Fed. Reg. 78,396 (Dep't Commerce Dec. 30, 2014) (final results of antidumping duty admin. review; 2011–2013) ("Final Results"), Public Joint App. ("PJA") Doc. 34, ECF No. 40; Public Admin. R. ("PR")¹ 198, ECF No. 19; and accompanying Issues and Decision Mem. , A–520–804 (Dep't Commerce Dec. 22, 2014) ("I&D Mem."), PJA Doc. 35; PR 185. In Itochu , the court directed Commerce to "further explain its affiliation finding with respect to Dubai Wire ... or to alter that determination."

Itochu , 40 CIT at ––––, 163 F.Supp.3d at 1339. The court deferred ruling on Plaintiff Itochu Building Co., Inc.'s ("Plaintiff" or "Itochu")² alternative argument regarding the third country viability of Dubai Wire FZE's ("Dubai Wire") sales to Canada pending the remand redetermination. Id. Familiarity with the court's earlier decision in this case is presumed.

Upon consideration of the court's remand instructions, Commerce again determined that Dubai Wire and Itochu are affiliated via the joint-venture company Progressive Steel & Wire, LLC ("PSW"). Commerce also determined that this affiliation has the potential to impact decisions concerning the production, pricing, or cost of the subject merchandise or the foreign like product. Remand Redet. at 1–2. Plaintiff challenges Commerce's finding as unsupported by substantial evidence. See generally Confidential Pl.'s Comments in Opp'n to the Redet. Pursuant to Court Remand, ECF No. 70 ("Pl.'s Opp'n to Remand Redet."). Defendant and Defendant–Intervenor, Mid Continent Steel & Wire, Inc. ("Mid Continent") support Commerce's remand redetermination. See Confidential Def.'s Resp. to Comments on the Remand Redet. ("Def.'s Resp. to Pl.'s Opp'n"), ECF No. 76; Confidential Def.–Intervenor Mid Continent Steel & Wire, Inc.'s Resp. Comments in Supp. of Remand Results ("Def.–Intervenor's Resp. to Pl.'s Opp'n"), ECF No. 74.

For the reasons discussed below, the court sustains Commerce's remand redetermination. The court also sustains Commerce's Final Results on the issue of the viability of Canadian sales to determine normal value.

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction pursuant to § 516A(a)(2)(B)(i) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(i) (2012),³ and 28 U.S.C. § 1581(c). The court will uphold an agency determination that is supported by substantial evidence and otherwise in accordance with law. 19 U.S.C. § 1516a(b)(1)(B)(i).

DISCUSSION

I. Affiliation between Itochu and Dubai Wire

The issue before the court is whether Commerce's finding of affiliation between Itochu and Dubai Wire is supported by substantial evidence. Plaintiff asserts that Commerce ignored evidence showing that Itochu and Dubai Wire's corporate relationship did not impact production, pricing, or cost of subject merchandise because Itochu dealt with Dubai Wire in the same manner in which it dealt with dozens of other vendors, and the corporate relationship between Itochu and Dubai Wire did not impact the manner in which they conducted business with each other. See generally Pl.'s Opp'n to Remand Redet. Plaintiff's arguments are unavailing.

Briefly, 19 U.S.C. § 1677(33) defines affiliation, in relevant part, as "two or more persons directly or indirectly controlling, controlled by, or under common control with, any person" and further, that "a person shall be considered to control another person if the person is legally or operationally in a position to exercise restraint or direction over the other person." Commerce's regulations further provide that

[i]n determining whether control over another person exists, within the meaning of section 771(33) of the Act, the Secretary will consider the following factors, among others: corporate or family groupings; franchise or joint venture agreements ; debt financing; and close supplier relationships. The Secretary will not find that control exists on the basis of these factors unless the relationship has the potential to impact decisions concerning the production, pricing, or cost of the subject merchandise or foreign like product ...

19 C.F.R. § 351.102(b)(3) (2012) (emphasis added). In the preamble to these regulations, Commerce confirmed its "focus on relationships that have the potential to impact decisions concerning production, pricing or cost" and that "section 771(33) ... properly focuses [Commerce] on the ability to exercise ‘control’ rather than the actuality of control over specific decisions." Antidumping Duties; Countervailing Duties , 62 Fed. Reg. 27,296, 27,297–98 (Dep't Commerce May 19, 1997) (final rule).⁴

During the administrative review, Commerce described the corporate relationship between the relevant entities as follows:

IBP is part of the Itochu group of companies, which includes its sister company PrimeSource, the joint venture partner with Integrated Business Group USA LLC (IBG), a wholly-owned subsidiary of DWE. PrimeSource and IBG each own 50 percent of the joint venture company Progressive Steel and Wire LLC (PSW), a producer of nails in the United States. The record indicates that DWE is 100 percent owned by its parent company Dubai Wire Products Limited (DWP), and DWE owns 100 percent of IBG, a company formed in November 2011 for the purpose of creating the joint venture company, PSW, with joint venture partner PrimeSource. DWE stated that PrimeSource and its sister company IBP are each 80 percent owned by Itochu International USA (Itochu USA), and Itochu USA's parent company, Itochu Corporation (Japan) (Itochu Japan) owns 100 percent of Itochu USA and 20 percent of both PrimeSource and IBP ... [t]he record indicates that the PSW joint venture is 50 percent owned by the DWE business structure and 50 percent owned by the IBP business structure.

Affiliation Mem. for Dubai Wire FZE (Dep't Commerce May 28, 2014) at 3–4, CJA Doc 19; CR 52 (internal citations and bracketing omitted). Based on this understanding, Commerce concluded that "the relationship between [the Dubai Wire group] and [the Itochu group] via the PSW joint venture, which produces identical merchandise in the United States, has the potential to have an impact on decisions concerning the production, pricing, or cost of the subject merchandise or foreign like product." Id . at 4. Upon review, the court found that Commerce had failed to adequately explain its finding. See generally Itochu , 40 CIT at ––––, 163 F.Supp.3d at 1338. Consequently, the court remanded the determination for Commerce to further explain or reconsider its reasoning.

In its Remand Redetermination, Commerce again found Itochu and Dubai Wire to be affiliated. See generally Remand Redet. Specifically, Commerce pointed to six factors to support its finding of affiliation: (1) Itochu was, by far, Dubai Wire's largest customer for nails in both the United States and Canada during the POR;⁵ Itochu resold the nails purchased from Dubai Wire to PrimeSource, which in turn sold the nails, and nails it separately purchased from PSW, to unaffiliated customers; (2) Dubai Wire sold a substantial portion of its total production of subject merchandise to Itochu;⁶ (3) officers and directors from both PrimeSource/Itochu and Dubai Wire also serve on the board of PSW; (4) PSW produces merchandise that is identical to the subject merchandise; (5) Itochu sends both UAE origin nails (subject merchandise) and non–UAE origin nails to PrimeSource, where all nails are commingled and lose their identity of origin; and, (6) PrimeSource directs the production and pricing of nails by PSW, buys all PSW nail output, and commingles them with the nails produced by Dubai Wire. Id . at 8–9. In sum, Commerce found that "the relationship between [Itochu] and Dubai Wire accounts for a high percentage of Dubai Wire's sales, the PSW joint venture produces merchandise identical to the subject merchandise and foreign like product, and all such nails lose their ‘identity’ in PrimeSource's warehouse." Id . at 9. Commerce concluded that Itochu's relationship with Dubai Wire, through the joint venture, has the potential to impact production, cost, or pricing of the subject merchandise or foreign like product. Id .

Commerce also explained that, in addition to the six factors above, the PSW joint-venture was specifically created to produce steel nails in the United States and to be responsive to PrimeSource's (and consequently, Itochu's) needs. Id . at 15. When combined...