Marsan Gida Sanayi Ve Ticaret A.S. v. United States

• Decision Date: 06 August 2013
• Docket Number: Court No. 11–00431.,Slip Op. 13–90.
• Citation: 931 F.Supp.2d 1258
• Parties: MARSAN GIDA SANAYI VE TICARET A.S., Plaintiff, v. UNITED STATES, Defendant, and American Italian Pasta Company, Dakota Growers Pasta Company, and New World Pasta Company, Defendant–Intervenors.
• Court: U.S. Court of International Trade

931 F.Supp.2d 1258

MARSAN GIDA SANAYI VE TICARET A.S., Plaintiff,

v. UNITED STATES, Defendant,andAmerican Italian Pasta Company, Dakota Growers Pasta Company, and New World Pasta Company, Defendant–Intervenors.

Slip Op. 13–90. Court No. 11–00431.

United States Court of International Trade.

July 19, 2013.

As Amended Aug. 6, 2013.

David L. Simon, Law Offices of David L. Simon, of Washington, D.C., argued for Plaintiff.

Tara K. Hogan, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., argued for Defendant. With her on the brief were Stuart F. Delery, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Claudia Burke, Assistant Director. Of counsel on the brief was Daniel J. Calhoun, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, of Washington, D.C.

Paul C. Rosenthal, Kelley Drye & Warren, LLP, of Washington, D.C., argued for Defendant–Intervenors. With him on the brief was David C. Smith.

OPINION

RIDGWAY, Judge:

In this action, Plaintiff Marsan Gida Sanayi ve Ticaret A.S. (“Marsan”)—a Turkish exporter of pasta—contests the final results issued by the U.S. Department of Commerce in the 14th antidumping duty review of certain pasta from Turkey. SeeCertain Pasta from Turkey: Notice of Final Results of 14th Antidumping Duty Administrative Review, 76 Fed.Reg. 68,399 (Dep't Commerce Nov. 4, 2011) (“Final Results”); Certain Pasta from Turkey: Issues and Decision Memorandum for the Final Results of the 14th Antidumping Duty Administrative Review (Oct. 26, 2011) (IA Pub. Doc. No. 5) (“Issues & Decision Memorandum”) at 1.¹

In the Final Results, Commerce rejected Marsan's claims that it was affiliated with Turkish pasta producers Birlik Pazarlama A.S. (“Birlik”) and Bellini Gida Sanayi A.S. (“Bellini”), both suppliers to Marsan. The subject entries were therefore liquidated at the rate of 51.49%—a rate that was higher than the rate which would have applied if the companies had been found to be affiliated. See Principal Brief of Plaintiff Marsan Gida Sanayi ve Ticaret A.S. for Judgment upon the Agency Record Pursuant to Rule 56.2 (“Pl.'s Brief”) at 15.

Pending before the Court is the Motion of Plaintiff Marsan Gida Sanayi ve Ticaret A.S. for Judgment on the Agency Record. Marsan claims that, in determining that Marsan was not affiliated with its suppliers, Commerce misapplied the legal standard for control and failed to adequately consider certain record evidence. See generally Pl.'s Brief at 1–4; Reply Brief of Plaintiff Marsan Gida Sanayi ve Ticaret A.S. for Judgment upon the Agency Record Pursuant to Rule 56.2 (“Pl.'s Reply Brief”) at 6–8. Marsan urges the court to remand the matter to Commerce and to instruct the agency to find Marsan affiliated with its suppliers. See Pl.'s Brief at 24–25; Pl.'s Reply Brief at 15.

Marsan's motion is opposed by the Government and by Defendant–Intervenors—American Italian Pasta Company, Dakota Growers Pasta Company, and New World Pasta Company (collectively, “Domestic Producers”)—who maintain that Commerce's determination is supported by substantial evidence and in accordance with law, and should be sustained. See generally Defendant's Response to Plaintiff's Motion for Judgment upon the Agency Record (“Def.'s Brief”); Defendant–Intervenors' Response to the Motion for Judgment on the Agency Record and Supporting Memorandum of Law by Marsan Gida Sanayi ve Ticaret A.S. (“Def.-Ints.' Brief”).

Jurisdiction lies under 28 U.S.C. § 1581(c) (2006).² As discussed in detail below, Marsan's Motion for Judgment on the Agency Record must be denied.

I. Background

A. Overview of the Statutory and Regulatory Framework

In determining whether two companies are affiliated for purposes of selecting the sales to be used in an antidumping duty determination, Commerce must examine the relationship between the companies in accordance with 19 U.S.C. § 1677(33).³ Although the statute includes seven subsections describing what constitutes affiliation,subsection (F) is the sole subsection at issue here. See Pl.'s Brief at 7 (summarizing Marsan's argument under 19 U.S.C. § 1677(33)(F)); id. at 15 (asserting that Marsan is affiliated with its suppliers under subsection (F)); see also id. at 25 (same).⁴

Pursuant to subsection (F), “affiliated” parties include “[t]wo or more persons directly or indirectly controlling, controlled by, or under common control with, any person.” 19 U.S.C. § 1677(33)(F). Three scenarios of affiliation are thus envisioned by the subsection: (1) two or more persons, directly or indirectly, controlling any person; (2) two or more persons, directly or indirectly, controlled by any person; and (3) two or more persons, directly or indirectly, under common control with any person. See19 U.S.C. § 1677(33)(F). The question of “control” is the key issue in the analysis.

Under the statutory scheme, “control” may exist where a party is merely “legally or operationally in a position to exercise restrain or direction over the other party.” 19 U.S.C. § 1677(33) (emphasis added). In other words, evidence of the actual exercise of control by one party over another is not required. Rather, the focus is on one party's ability to control another.

In considering affiliation based on control, Commerce is to evaluate, “among others,” the following factors: (i) corporate or family groupings; (ii) franchise or joint venture agreements; (iii) debt financing; and (iv) close supplier relationships. 19 C.F.R. § 351.102(b)(3). In addition, the Statement of Administrative Action accompanying the Uruguay Round Agreements Act explains that, in evaluating the existence of affiliation based upon control, Commerce is to consider not only whether control arises from traditional relationships (such as the specific relationships enumerated in the agency's regulations), but also from more “modern business arrangements.” See Uruguay Round Agreements Act, Statement of Administrative Action, H.R. Doc. No. 103–316, vol. 1 at 838 (1994), reprinted in 1994 U.S.C.C.A.N. 4040, 4174–75 (“SAA”).⁵ The focus on more “modern business arrangements” is intended to reflect the realities of the marketplace. See id.

Finally, the existence of one of these relationships—while necessary—is not sufficient to support a determination of affiliation based on control. Commerce will find affiliation based on control only if the relationship in question “has the potential to impact decisions concerning the production, pricing, or cost of the subject merchandise.” 19 C.F.R. § 351.102(b)(3).

B. The Facts of This Case

Marsan commenced this action to contest the results of the 14th administrative review of the antidumping duty order on pasta from Turkey for the period of July 1, 2009 to June 30, 2010 (the “period of investigation”). See Issues & Decision Memorandum at 1.

From the outset of the administrative review, Marsan argued that it was affiliated with its suppliers pursuant to each of the seven subsections of 19 U.S.C. § 1677(33). See Issues & Decision Memorandum at 2. In its Preliminary Results, Commerce found insufficient evidence to support any of Marsan's affiliation claims, and therefore made an initial determination that Marsan was not so affiliated. SeeCertain Pasta From Turkey: Notice of Preliminary Results of Antidumping Duty Administrative Review, 76 Fed.Reg. 23,974, 23,975–77 (Dep't Commerce April 29, 2011) (“Preliminary Results”). Following publication of the Preliminary Results, Marsan filed an administrative case brief with Commerce, arguing that the agency erred in its analysis of Marsan's affiliation arguments under each of the seven subsections of the statute. See Issues & Decision Memorandum at 2 (noting that Marsan argued that it was affiliated with its suppliers pursuant to sections (A)-(G) of 19 U.S.C. § 1677(33)).

The record of the underlying agency proceeding documents Commerce's careful and thorough consideration of Marsan's claims of “affiliation” pursuant to each statutory provision, both at the Preliminary Results stage and, again, in the agency's issuance of the Final Results. In the Issues & Decision Memorandum accompanying the Final Results, Commerce summarized its analysis of the arguments that Marsan made claiming affiliation under each of the seven subsections of the statute, and once again concluded that Marsan was not affiliated with its suppliers under any of the subsections. See Issues & Decision Memorandum at 3–5.

For purposes of this action, Marsan has narrowed its focus to a single theory of affiliation, under subsection (F). Marsan contends that both Marsan and Birlik/Bellini (Marsan's suppliers) were under the common control of the Ülker group, a Turkish conglomerate in the food sector. Specifically, Marsan asserts that the Ülker group was in a position to control Birlik/Bellini by virtue of being their parent company. Pl.'s Brief at 4.⁶ In addition, Marsan contends that the Ülker group was in a position to control Marsan via Mr. Tevfik Arikan, as described in detail below. It is this latter relationship of alleged control— i.e., the Ülker group's ability to control Marsan, via Mr. Arikan—that is in dispute.

Marsan made a two-prong argument to Commerce in an effort to establish the Ülker group's ability to control Marsan. It is this argument that lies at the heart of this case. Marsan first argued that the Ülker group was in a position to control Mr. Arikan, a top-level General Manager within the Ülker group ⁷ and a member of the board of directors of one of Ülker's subsidiaries, Pasifik Tuketim Urunleri A.S. (“Pasifik”). See Pl.'s Brief at 9, 11 n. 2, 15; Marsan Case Brief (CRU Pub. Doc. No. 43) (“Case Brief”) at 10. And, second, Marsan argued that Mr. Arikan—in turn—was in a position to control Marsan by virtue of his service as vice-chairman of Marsan's five-member board of directors. See Case Brief at 9–19; Pl.'s Brief at 15, 22. Marsan maintains that, through these two relationship links ( i.e.,...