Koyo Seiko Co. v. U.S.

• Decision Date: 16 December 2008
• Docket Number: No. 2007-1556.,No. 2007-1557.,No. 2007-1558.,No. 2008-1038.,2007-1556.,2007-1557.,2007-1558.,2008-1038.
• Citation: 551 F.3d 1286
• Parties: KOYO SEIKO CO., Ltd. and Koyo Corporation of U.S.A., Plaintiffs-Appellants, and Nankai Seiko Co., Ltd., Plaintiff, and Nippon Pillow Block Company and FYH Bearing Units USA, Inc., American NTN Bearing Manufacturing Corporation, NTN-BCA Corporation, NTN-Driveshaft, Inc., NTN Bearing Corporation of America, and NTN Corporation, Plaintiffs-Appellants, and NSK Corporation, NSK Ltd., and NSK Precision America, Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee, and Timken U.S. Corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

551 F.3d 1286

KOYO SEIKO CO., Ltd. and Koyo Corporation of U.S.A., Plaintiffs-Appellants, and Nankai Seiko Co., Ltd., Plaintiff, and Nippon Pillow Block Company and FYH Bearing Units USA, Inc., American NTN Bearing Manufacturing Corporation, NTN-BCA Corporation, NTN-Driveshaft, Inc., NTN Bearing Corporation of America, and NTN Corporation, Plaintiffs-Appellants, and NSK Corporation, NSK Ltd., and NSK Precision America, Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee, and Timken U.S. Corporation, Defendant-Appellee.

No. 2007-1556.

No. 2007-1557.

No. 2007-1558.

No. 2008-1038.

United States Court of Appeals, Federal Circuit.

December 16, 2008.

Neil R. Ellis, Sidley Austin LLP, of Washington, DC, argued for plaintiffs-appellants Koyo Seiko Co., Ltd., et al. With him on the brief was Jill Caiazzo. Of counsel was Lawrence R. Walders.

Diane A. MacDonald, Baker & McKenzie LLP, of Chicago, Illinois, argued for plaintiffs-appellants Nippon Pillow Block Company, et al. With her on the brief for American NTN Bearing Manufacturing Corporation, et al., was Donald J. Unger. On the brief for Nippon Pillow Block Company, et al., were Kevin J. Sullivan and Kevin M. O'Brien, of Washington, DC. Of counsel was Thomas Peele, of Washington, DC.

Matthew P. Jaffe, Crowell & Moring LLP, of Washington, DC, argued for plaintiffs-appellants NSK Corporation, et al. With him on the brief were Robert A. Lipstein and Alexander H. Schaefer. Of counsel was Sobia Haque.

Claudia Burke, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee United States. With her on the brief were Gregory G. Katsas, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director. Of counsel on the brief were David W. Richardson, Deborah R. King, and Sapna Sharma, Attorney-Advisors, Office of the Chief Counsel for Import Administration, United States Department of Commerce, of Washington, DC.

Geert M. De Prest, Stewart and Stewart, of Washington, DC, argued for defendant-appellee Timken U.S. Corporation. With him on the brief were Terence P. Stewart, William A. Fennell, and Lane S. Hurewitz.

Before MICHEL, Chief Judge, FRIEDMAN, Circuit Judge, and WALKER,^* Chief District Judge.

FRIEDMAN, Circuit Judge.

Four Japanese ball bearing manufacturers and their United States affiliates (collectively, "the Manufacturers") challenge various aspects of the Department of Commerce ("Commerce")'s 15 th review under Commerce's 1989 antidumping order covering certain ball bearings and parts thereof imported into the United States from six countries, including Japan. See Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof from the Federal Republic of Germany: Final Results of Antidumping Administrative Reviews, 56 Fed.Reg. 31,692 (Dep't of Commerce July 11, 1991) ("First Review"). The challenged review set antidumping duties for the Manufacturers on their imports during a 12-month period in 2003-2004. See Ball Bearings and Parts Thereof from France, Germany, Italy, Japan, Singapore, and the United Kingdom: Final Results of Antidumping Duty Administrative Reviews, 70 Fed.Reg. 54,711 (Dep't of Commerce Sept. 16, 2005) ("Final Results").

This court recently rejected two of the Manufacturers' principal contentions raised in another challenge to the 15th review by other ball bearing manufacturers. SKF USA, Inc. v. United States, 537 F.3d 1373 (Fed.Cir.2008). That decision is dispositive of the two contentions here. The Manufacturers' remaining contentions are unpersuasive. We therefore affirm the Court of International Trade's judgment upholding the Final Results (of the 15th review). See Koyo Seiko Co. v. United States, 516 F.Supp.2d 1323 (Ct. Int'l Trade 2007).

I

In determining the existence and amount of dumping (i.e., selling at a price below fair value) in its annual review for a particular year under 19 U.S.C. § 1677b, Commerce compares the United States price of the "dumped" merchandise with the price of comparable merchandise in the exporter's or producer's home country, or a third-party country (the "comparison market"). Commerce first attempts to match sales of the "dumped" merchandise with sales of identical merchandise in the comparison market. 19 U.S.C § 1677(16)(A) (2006). Where there is no identical merchandise, Commerce attempts to match a sale in the United States with a sale of "foreign like product" in the comparison market. Id. § 1677(16)(B)-(C). Under the statute, Commerce determines what merchandise is similar. Id. § 1677(C)(iii). If there are no foreign sales of similar merchandise, Commerce calculates a constructed value. Id. § 1677b(a)(4).

The process by which Commerce identifies "foreign like product" in determining dumping margins for ball bearings is called "model-matching."

In its First Review, Commerce adopted a "family" model-match methodology for determining comparable foreign products for ball bearings. Under that methodology, Commerce compared imported bearings to foreign-sold bearings based upon eight different physical criteria. Foreign bearings that matched the "dumped" bearings under those eight criteria were grouped into the same "family" of "foreign like product." Commerce then calculated the price of the "foreign like product" primarily by weight averaging the prices of all matching foreign products sold. When the model-match process produced no matches, Commerce constructed a value for the foreign price.

After announcing in the 14th review that it intended to revise its model-match methodology, Commerce in its 15th review abandoned the "family" model-match methodology and adopted a two-step process under which it compared the "dumped" merchandise to a single matching foreign product.

In the first step, Commerce matched an import to products in the comparison market based upon four of the eight physical characteristics it previously had used. In the second step, Commerce selected from among the matches in the first step the single product that best matched the "dumped" product based on a comparison with the four other characteristics. As part of the second step, Commerce excluded foreign products that deviated from the "dumped" products by more than 40 percent in their physical measurements. The new process results in more individual matches than the old process, and thus Commerce did not have to use constructed prices as often as it did under the "family" approach.

In the 15th review Congress also continued to use the practice known as "zeroing," which deals with the situation where the United States price of the allegedly "dumped" merchandise is higher than the price charged in the comparison market. There the "antidumping" duty will be negative. Under zeroing, Commerce sets the antidumping margin at zero. The effect is that the negative margins do not offset positive margins. See NSK Ltd. v. United States, 510 F.3d 1375, 1379 (Fed.Cir.2007).

In January 2007, more than a year after Commerce decided the 15th review, the World Trade Organization Appellate Body and Dispute Settlement Body ("WTO") held zeroing to be inconsistent with WTO antidumping agreements. Appellate Body Report, United States—Measures Relating to Zeroing and Sunset Reviews, WT/ DS322/AB/R (Jan. 9, 2007). The United States announced its intention to implement the recommendations of the WTO by December 24, 2007. See WT/DS322/20 (May 8, 2007).

In a lengthy and detailed opinion, the Court of International Trade affirmed Commerce's Final Results. The court held that both Commerce's "New Model Match Methodology" and its "practice of `zeroing' negative dumping margins" were supported by substantial evidence and in accordance with law. Koyo-Seiko, 516 F.Supp.2d at 1332, 1343-44. The court also rejected the Manufacturers' other challenges to Commerce's Final Results, which we discuss in Part III below.

"We review the Court of International Trade's decisions regarding Commerce's antidumping determinations de novo, applying the same standard of review to Commerce's antidumping determinations as did that court." SKF, 537 F.3d at 1377 (citing Carpenter Tech. Corp. v. United States, 510 F.3d 1370, 1372 (Fed. Cir.2007) (citations omitted)). Thus, we must sustain Commerce's determinations unless they are "unsupported by substantial evidence on the record, or otherwise not in accordance with law." Id. (quoting 19 U.S.C. § 1516a(b)(1)(B)(i)).

II

A. In SKF, another group of foreign ball bearing manufacturers challenged the Final Results that are here under review. In its opinion there, issued ten days before we heard oral argument in this case, this court sustained both Commerce's new matching methodology and its use of zeroing in determining dumping margins in the 15th review.

The court ruled that Commerce's "new model-match methodology not only reflects a reasonable interpretation of the statute but also comports with our precedent." SKF, 537 F.3d at 1379. It stated: "In this case, Commerce provided adequate explanation of the reasonable `compelling reasons' motivating its determination." Id. at 1380. The court rejected the manufacturers' contention that Commerce had erred in applying "the modified model-match methodology retroactively." Id. at 1380. It quoted with apparent approval the Court of International Trade's statement in Koyo Seiko, 516 F.Supp.2d at 1334, that "[c]hanges in methodology, like all other antidumping review determinations, permissibly involve retroactive effect." Id. at 1381.

The court rejected as "unpersuasive" the manufacturers' challenges to Commerce's "zeroing" practice because they "fail[ed] to raise any argument not fully resolved by our established precedent." Id. at 1382. It quoted statements from several of this court's opinions upholding the practice, and concluded that "we need not revisit this issue today." Id.

This court's decision in SKF is...