Matra Ams., LLC v. United States
| Docket Number | Slip Op. 24-14,Consol. Court No. 21-00632 |
| Decision Date | 08 February 2024 |
| Citation | 681 F.Supp.3d 1339 |
| Parties | MATRA AMERICAS, LLC and Matra Atlantic GmbH, Plaintiffs, and Koehler Paper SE and Koehler Oberkirch GmbH, Plaintiff-Intervenors, v. UNITED STATES, Defendant, and Appvion, LLC and Domtar Corporation, Defendant-Intervenors. |
| Court | U.S. Court of International Trade |
R. Will Planert, Morris, Manning & Martin, LLP, of Washington, D.C., argued for Plaintiffs Matra Americas, LLC and Matra Atlantic GmbH. With him on the briefs were Donald B. Cameron, Julie C. Mendoza, Brady W. Mills, Mary S. Hodgins, Eugene Degnan, Edward J. Thomas III, Jordan L. Fleischer, and Nicholas C. Duffey.
Thomas J. Trendl, Zhu (Judy) Wang, and Zachary Simmons, Steptoe & Johnson LLP, of Washington, D.C., argued for Plaintiff Intervenors Koehler Paper SE and Koehler Oberkirch GmbH.
Emma E. Bond, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., argued for Defendant United States. With her on the brief were Brian M. Boynton, Principal Deputy Assistant Attorney General, Patricia M. McCarthy, Director, Reginald T. Blades, Jr., Assistant Director. Of counsel on the brief was W. Mitch Purdy, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, D.C.
Daniel L. Schneiderman, King & Spalding LLP, of Washington, D.C., argued for Defendant-Intervenor, Domtar Corporation and Appvion, LLC. With him on the brief was Stephen J. Orava.
Before the court are seven consolidated challenges to the methodology and reasoning underlying the United States Department of Commerce's ("Commerce") assessment of antidumping duties on imports of thermal paper.
Plaintiffs Koehler Paper SE and Koehler Oberkirch GmbH (collectively, "Koehler") are German producers of thermal paper. Together with affiliates Matra Americas, LLC and Matra Atlantic GmbH (collectively, "Matra"),1 Koehler brings three challenges to Commerce's final determination of Koehler's dumping rates. See Thermal Paper from Germany: Final Affirmative Determination of Sales at Less than Fair Value and Final Affirmative Determination of Critical Circumstances, in Part, 86 Fed. Reg. 54152 (Dep't Com. Sept. 30, 2021), P.R. 299 ("Final Determination") and accompanying memorandum, Mem. from J. Maeder to C. Marsh, re: Issues and Decision Memorandum for the Final Affirmative Determination of Sales at Less than Fair Value in the Antidumping Duty Investigation of Thermal Paper from Germany (Dep't Com. Sept. 24, 2021), P.R. 291 ("IDM"). Koehler challenges Commerce's application of the "Cohen's d" methodology as a measure of variation among U.S. market prices, Commerce's refusal to consider certain exhibits to the case brief Koehler submitted at the agency level, and Commerce's inclusion of Koehler's "Blue4est" paper product within the scope of its investigation. See Pls.' Mot. for J. on the Agency R. at 2-6, Sept. 15, 2022, ECF No. 46 ("Koehler's Br.").
Defendant-Intervenors Appvion Operations, Inc. and Domtar Corporation (collectively, "Domestics") are U.S. entities that also produce thermal paper. They bring four challenges of their own to the Final Determination. Domestics challenge Commerce's consideration of certain test results for the "dynamic sensitivity" product characteristic that Koehler submitted pursuant to the underlying investigation, Commerce's determination that Koehler's submission of certain test results for the "static sensitivity" product characteristic was complete, Commerce's application of price adjustments for some of Koehler's home market rebates, and Commerce's classification of Koehler's interest expenses on previously-incurred antidumping liabilities as a cost of production. See Def.-Inters.' Mot. for J. on the Agency R. at 3, Sept. 15, 2022, ECF No. 44 ("Domestics' Br.").
The United States ("the Government") opposes all seven challenges. Def.'s Mem. in Opposition to Mots. for J. on the Agency R. at 3, Feb. 21, 2023, ECF No. 58 ("Gov't Br.").
The court sustains the Final Determination in part with respect to Commerce's inclusion of Blue4est paper as subject merchandise, to Commerce's coding of the dynamic sensitivity product characteristic, and to Commerce's application of price adjustments for some of Koehler's home market rebates. The court denies Koehler's challenge to Commerce's rejection of exhibits to Koehler's case brief on the ground of harmless error. The court remands Commerce's Final Determination in part for reconsideration or further explanation of Commerce's Cohen's d methodology, of Commerce's coding of the static sensitivity product characteristic, and of Commerce's classification of Koehler's accrued interest expenses as a cost of production.
"Dumping occurs when a foreign company sells a product in the United States at a lower price than what it sells that same product for in its home market." Sioux Honey Ass'n v. Hartford Fire Ins. Co., 672 F.3d 1041, 1046 (Fed. Cir. 2012). Such sales, which permit foreign producers to undercut domestic companies by selling products below reasonable fair market value, amount to unfair competition with American industry. Id. To remedy this issue Congress enacted the Tariff Act of 1930, which empowers Commerce to investigate potential dumping and to issue orders imposing duties on imported merchandise as necessary. Id. at 1047.
Commerce imposes antidumping duties on imported goods if it determines that the goods are being, or are likely to be, sold at less than fair value, and the International Trade Commission ("ITC") concludes that the sale of the merchandise below fair value materially injures, threatens to materially injure, or impedes the establishment of an industry in the United States. See 19 U.S.C. § 1673; Diamond Sawblades Mfrs. Coal. v. United States, 866 F.3d 1304, 1306 (Fed. Cir. 2017). Merchandise is sold at less than fair value when its normal value is greater than the price charged for the product in the United States. See 19 U.S.C. § 1673. The amount of antidumping duties that Commerce assesses is based on Commerce's calculation of the "dumping margin," which is "the amount by which the normal value exceeds the export price or constructed export price of the subject merchandise." 19 U.S.C. § 1677(35)(A). Commerce must determine the "margins as accurately as possible." Rhone Poulenc, Inc. v. United States, 899 F.2d 1185, 1191 (Fed. Cir. 1990).
This determination is a complex, multi-step endeavor. The following legal background is relevant to the challenges raised in this case:
A. Commerce's Cohen's d Methodology
Commerce ordinarily determines normal value on the basis of market prices in the exporting country. 19 U.S.C. §§ 1677b(a)(1)(B)(i). Once normal value is determined, Commerce calculates a weighted-average dumping margin. In general, the agency "compar[es] . . . the weighted average of the normal values with the weighted average of the export prices (and constructed export prices) for comparable merchandise," termed the average-to-average ("A-to-A") method, "unless the Secretary determines another method is appropriate in a particular case." 19 C.F.R. § 351.414(b)(1), (c)(1); see also 19 U.S.C. § 1677f-1(d)(1)(A)(i).
"The [A-to-A] method, however, sometimes fails to detect 'targeted' or 'masked' dumping, because a respondent's sales of low-priced 'dumped' merchandise would be averaged with (and offset by) sales of higher-priced 'masking' merchandise, giving the impression that no dumping was taking place." Stupp Corp. v. United States ("Stupp III"), 5 F.4th 1341, 1345 (Fed. Cir. 2021) (internal quotation marks and citation omitted); see also Differential Pricing Analysis; Request for Comments, 79 Fed. Reg. 26720, 26721 (Dep't Com. May 9, 2014) ("Differential Pricing Analysis"). Commerce is therefore authorized to use two alternative methods to address the kind of targeted dumping that the A-to-A method may fail to detect. Stupp III, 5 F.4th at 1345. Relevant here,2 Commerce may use the average-to-transaction ("A-to-T") method, which "involves a comparison of the weighted average of the normal values to the export prices (or constructed export prices) of individual transactions for comparable merchandise." Id. § 351.414(b)(3). The A-to-T method is appropriate only if "there is a pattern of export prices (or constructed export prices) for comparable merchandise that differ significantly among purchasers, regions, or periods of time," and if Commerce "explains why such differences cannot be taken into account" using alternative methods. 19 U.S.C. § 1677f-1(d)(1)(B).
To determine whether to "there is a pattern of export prices (or constructed export prices) for comparable merchandise that differ significantly among purchasers, regions, or periods of time," such as would warrant using the A-to-T method instead of the A-to-A method, Commerce conducts a series of statistical tests that together constitute a "differential pricing analysis." Apex Frozen Foods Priv. Ltd. v. United States, 862 F.3d 1337, 1342 & n.2 (Fed. Cir. 2017); see also Stupp III, 5 F.4th at 1346-47. Commerce's differential pricing analysis consists of three steps:
1. The Cohen's d Test. Commerce first segments export sales into subsets based on region, purchasers, and time periods. See Differential Pricing Analysis, 79 Fed. Reg. at 26722. Commerce then applies the Cohen's d test,3 which measures the extent of the difference in the means between a test group and comparison group of prices ("effect size"), to each subset. Id. Commerce designates the subset as the "test group" and aggregates the remaining export sales into what it terms the "comparison group." Stupp III, 5 F.4th at 1346. Commerce calculates Cohen's d for each test group by dividing the absolute value of the difference between the mean of the comparison group and the mean of the test group by the two groups' average standard deviation. Se...
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