Luciano Pisoni Fabbrica Accessori Instrumenti Musicali v. U.S.

• Decision Date: 20 January 1988
• Docket Number: No. 87-1344,87-1344
• Citation: 837 F.2d 465
• Parties: , 6 Fed. Cir. (T) 57 LUCIANO PISONI FABBRICA ACCESSORI INSTRUMENTI MUSICALI and Enzo Pizzi, Inc., Plaintiffs-Appellants, v. The UNITED STATES, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

Page 465

837 F.2d 465

9 ITRD 1932, 6 Fed. Cir. (T) 57

LUCIANO PISONI FABBRICA ACCESSORI INSTRUMENTI MUSICALI and Enzo Pizzi, Inc., Plaintiffs-Appellants, v. The UNITED STATES, Defendant-Appellee.

No. 87-1344.

United States Court of Appeals, Federal Circuit.

Jan. 20, 1988.

John Gurley, Klayman & Gurley, Washington, D.C., argued for plaintiffs-appellants. With him on the brief were Larry Klayman, Washington, D.C., and Michael Diedring.

Elizabeth C. Seastrum, Commercial Litigation Branch, Dept. of Justice, Washington, D.C., argued for defendant-appellee. With her on the brief were Richard K. Willard, Asst. Atty. Gen., David M. Cohen, Director, Washington, D.C., and Velta A. Melnbrencis, Asst. Director, New York City. Also on the brief were Douglas A. Riggs, Gen. Counsel, M. Jean Anderson, Chief Counsel for Intern. Trade and Paul C. Aiken, Atty.-Advisor, Office of the Deputy Chief Counsel for Import Admin., U.S. Dept. of Commerce, Washington, D.C., of counsel.

Before NIES, BISSELL, and MAYER, Circuit Judges.

MAYER, Circuit Judge.

OPINION

This appeal is from an order of the United States Court of International Trade denying an application for attorney fees and other expenses under the Equal Access to Justice Act because the position of the United States was substantially justified. We affirm.

Background

On September 12, 1984, the Department of Commerce (Commerce) issued an antidumping order on pads for woodwind instrument keys from Italy. 49 Fed.Reg. 37,137. Appellants, Luciano Pisoni Fabbrica Accessori Instrumenti Musicali and Enzo Pizzi, Inc. (collectively Pisoni), are respectively the Italian producer and American importer of these pads. In the Court of International Trade, they contested the final determinations of Commerce and the International Trade Commission which provided the bases for the antidumping order.

The court upheld Commerce's decision to initiate and continue the antidumping investigation, but it determined "that Commerce's comparison of pads without allowing for differences in the physical characteristics of the different ranges of pad sizes was unreasonable and not in accordance with law." It remanded for a merchandise adjustment under 19 C.F.R. Sec. 353.16. Luciano Pisoni Fabbrica Accessori v. United States, 640 F.Supp. 255, 260 (CIT 1986). The court also determined that Commerce should have used daily exchange rates in its currency conversion methodology, saying, "It is not reasonable for Commerce to find dumping by a firm with only ten relevant home market sales during the period of the investigation solely because of Commerce's use of quarterly exchange rates." Id.

On remand, after making the merchandise adjustment and applying daily exchange rates, Commerce concluded that the dumping margin was de minimis and that the pads were not being sold at less than fair value in the United States. The court affirmed and dismissed the case, Luciano Pisoni Fabbrica Accessori v. United States, 645 F.Supp. 956, 957 (CIT 1986), and Commerce revoked the part of the antidumping order which applied to appellants' pads. 51 Fed.Reg. 40,239.

Pisoni then applied for attorney fees and expenses under the Equal Access to Justice Act (EAJA), 28 U.S.C. Sec. 2412(d)(1)(A). The court declined to award them because it found that the government's actions were substantially justified. Luciano Pisoni Fabbrica Accessori v. United States, 658 F.Supp. 902, 907 (CIT 1987). Here on appeal, Pisoni contends it should have the award under the EAJA because Commerce's merchandise comparison and exchange rate conversion methodologies were determined by the Court of International Trade to be unreasonable and could not therefore be considered substantially justified.

Discussion

Under the EAJA "a court shall award to a prevailing party other than the United States fees and other expenses ... incurred by that party in any civil action ... brought by or against the United States ... unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust." 28 U.S.C. Sec. 2412(d)(1)(A). This court has defined "substantially justified" to require "that the Government show that it was clearly reasonable in asserting its position, including its position at the agency level, in view of the law and the facts." Gavette v. Office of Personnel Management, 808 F.2d 1456, 1467 (Fed.Cir.1986) (in banc).

Because the Court of International Trade concluded Commerce's methodology for comparing the pads was "unreasonable," and instructed the department to use a different currency conversion method, Pisoni argues that the actions cannot be considered "clearly reasonable" for purposes of the EAJA. In Pisoni's view, if the government's position is unreasonable on the merits, it is unreasonable period, and the court should order the government to pay its attorneys.

This view ignores the differences between the trial court's inquiries on the merits and on the fee application. The first inquiry led to a legal conclusion derived from statutory standards; the other to a factual one. In reviewing an antidumping proceeding, the Court of International Trade will "hold unlawful any determination, finding, or conclusion found ... to be unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. Sec. 1516a(b)(1). When the court said Commerce's merchandise comparison methodology was "unreasonable," it was using a shorthand word for unsupported by substantial evidence on the record. See F.T.C. v. Brown & Williamson Tobacco Corp., 778 F.2d 35, 44 (D.C.Cir.1985); SSIH Equip. S.A. v. United States Int'l Trade Comm'n, 718 F.2d 365, 381, 218 USPQ 678, 691 (Fed.Cir.1983) (Nies, J., additional views) ("supported by substantial evidence" raises the question: Is a finding of fact "unreasonable"?); cf. Universal Camera Corp. v. NLRB, 340 U.S. 474, 490, 71 S.Ct. 456, 465, 95 L.Ed. 456 (1951); Fischer & Porter Co. v. United States Int'l Trade Comm'n, 831 F.2d 1574, 1577, 4 USPQ2d 1700, 1701 (Fed.Cir.1987). Similarly, its conclusion that a dumping determination based solely on the use of quarterly exchange rates was "not reasonable" means unsupported by substantial evidence or otherwise not in accordance with law. We say this because the court decided the case in accordance with that statutory formula, regardless of the words chosen to announce its conclusion.

Notwithstanding that in this court substantial justification under the EAJA requires that the government's position be "clearly reasonable," a conclusion on the underlying merits that its actions were unreasonable because unsupported by substantial evidence or not in accordance with law as contemplated by section 1516a(b)(1) is not the end of the inquiry. "[T]he EAJA was not intended to be an automatic fee-shifting device in cases where the petitioner prevails.... [S]ubstantial justification is to be decided case-by-case on the basis of the record." Gavette, 808 F.2d at 1467. "The mere fact that the United States lost the case does not show that its position in defending the case was not substantially justified." Broad Ave. Laundry & Tailoring v. United States, 693 F.2d 1387, 1391 (Fed.Cir.1982). The decision on an award of attorney fees is a judgment independent of the result on the merits, and is reached by examination of the government's position and conduct through the EAJA "prism," see Federal Election Comm'n v. Rose, 806 F.2d 1081, 1090 (D.C.Cir.1986), not by redundantly applying whatever substantive rules governed the underlying case.

But Pisoni cites a congressional statement which says, "Agency action found to be arbitrary and capricious or unsupported by substantial evidence is virtually certain not to have been substantially justified under the [EAJA]." H.R.Rep. No. 120, 99th Cong., 1st Sess. 9 (Pt. I 1985), reprinted in 1985 U.S.Code Cong. & Ad. News 132, 138. We agree with the D.C. Circuit that this is "spurious legislative history, as evidenced by renunciations of this precise statement in both Houses." Rose, 806 F.2d at 1090. This language does not prevent the denial of attorney fees and expenses where the underlying agency action is found to be unsupported by substantial evidence or otherwise not in accordance with law. Those are legal conclusions pursuant to separate substantive standards, which may cover a range of egregiousness, and would be reviewed as such. Under the EAJA, we review the trial court's finding that the government's position was substantially justified under the clearly erroneous standard because that is a factual decision. Essex Electro Engineers, Inc. v. United States, 757 F.2d 247, 253 (Fed.Cir.1985); Alger v. United States, 741 F.2d 391, 394 (Fed.Cir.1984).

In deciding the department's merchandise comparison and exchange rate conversion activities were substantially justified, the court analyzed the government's arguments in light of the complexity, uniqueness, and newness of the issues and the availability of certain cost of production data. It came to a factual conclusion about the reasonableness of the government's position which included an assessment that the government's legal arguments were tenable. We can overturn this only if it is clearly erroneous.

Pisoni argues that the dumping determination was not substantially justified because Commerce...