Michaels Stores, Inc. v. United States

• Decision Date: 21 August 2013
• Docket Number: Court No. 12–00146.,Slip Op. 13–110.
• Citation: 931 F.Supp.2d 1308
• Parties: MICHAELS STORES, INC., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

931 F.Supp.2d 1308

MICHAELS STORES, INC., Plaintiff,

v.UNITED STATES, Defendant.

Slip Op. 13–110. Court No. 12–00146.

United States Court of International Trade.

Aug. 21, 2013.

Lewis E. Leibowitz, Craig A. Lewis, Eric B. Gillman, and Wesley V. Carrington, Hogan Lovells U.S. LLP, of Washington, DC, for plaintiff.

Carrie A. Dunsmore, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, for defendant. With her on the brief were Stuart F. Delery, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director. Of counsel on the brief was Daniel J. Calhoun, Attorney, United States Department of Commerce, Washington, DC.

OPINION

RESTANI, Judge:

This matter is before the court following denial of Defendant United States' motion to dismiss in Michaels Stores, Inc. v. United States, Slip Op. 12–161, 2012 WL 6720675, 2012 Ct. Int'l Trade LEXIS 161 (Dec. 27, 2012). Plaintiff Michaels Stores, Inc. (“Michaels”) challenges the liquidation and cash deposit instructions issued by the Department of Commerce (“Commerce”) in administering the antidumping duty (“AD”) order for certain cased pencils from the People's Republic of China (“PRC”). See Antidumping Duty Order: Certain Cased Pencils from the People's Republic of China, 59 Fed.Reg. 66,909, 66,909 (Dep't Commerce Dec. 28, 1994) (“ Cased Pencils Initial Order ”). For the reasons below, the court determines that Commerce lawfully issued liquidation instructions covering the 2008–2009 and 2009–2010 administrative review periods for certain cased pencils that were imported by Michaels.

BACKGROUND

At issue in this case is the content of liquidation instructions issued following administrative reviews covering two periods of review (“POR”), the 2008–2009 POR and the 2009–2010 POR, both arising out of the 1994 AD order on cased pencils. See Initiation of Antidumping and Countervailing Duty Administrative Reviews, Request for Revocation in Part, and Deferral of Initiation of Administrative Review, 75 Fed.Reg. 4770, 4771 (Dep't Commerce Jan. 29, 2010) (“ Initiation of Administrative Review 2010 ”); Initiation of Antidumping and Countervailing Duty Administrative Reviews, 76 Fed.Reg. 5137 (Dep't Commerce Jan. 28, 2011) (“ Initiation of Administrative Review 2011 ”). The parties appear to agree on the facts presented below.

During the 2008–2009 POR, Michaels purchased goods that had been produced by three manufacturers of cased pencils, China First Pencil Co., Ltd. (“China First”), Shanghai Three Star Stationery Industry Co., Ltd. (“Three Star”), and Shandong Rongxin Import and Export Co., Ltd. (“Rongxin”). Mem. of Points & Authorities in Supp. of Pl.'s Mot. for Summ. J. (“Pl.'s Mem.”) at 2; Def.'s Resp. to Pl.'s Mot. for Summ. J. (“Def.'s Resp.”) at 6. Michaels received these pencils from three different PRC exporters. Pl.'s Mem. at 2; Def.'s Resp. at 6. Similarly, during the 2009–2010 POR, Michaels purchased goods that had been produced by two manufacturers, China First and Rongxin. Pl.'s Mem. at 6; Def.'s Resp. at 12. Again, Michaels did not receive the pencils directly from these producers, but instead it received them from two different PRC exporters.¹ Pl.'s Mem. at 6; Def.'s Resp. at 12.

The cash deposit instructions issued by Commerce, to which the liquidation instructions referred, informed U.S. Customs and Border Protection (“Customs”) that “if any entries of this merchandise are exported by a firm other than the exporters listed above, then the following instructions apply.” Pl.'s Mem. Ex. 6 at 1–2, Ex. 9 at 2, Ex. 11 at 1–2 (emphasis added). Commerce first ordered Customs to use a separate rate “[i]f the PRC or non-PRC exporter of the subject merchandise has its own rate.” ²Id. (emphasis added). Because the exporters of the subject merchandise were not given separate rates in the instructions, Customs continued to the second paragraph, which required Customs to apply the PRC-wide rate to subject merchandise “[f]or all PRC exporters of subject merchandise which have not been assigned to a separate rate.” ³Id. As a result, although the cash deposit instructions included separate rates for the companies that produced the merchandise in question, those rates applied only when those companies directly exported the merchandise to the United States. See id.

During both PORs, Michaels made cash deposits for the entries of cased pencils with Customs pursuant to Michaels' interpretation of the AD order. Pl.'s Mem. at 2, 6. The corresponding cash deposit instructions indicated that the cash deposit rate for exporters not specifically listed and without a separate rate, however, was “the PRC-wide rate of 114.90 percent.” ⁴Id. Michaels instead made cash deposits at the cash deposit rates assigned to the corresponding producer of the pencils. Pl.'s Mem. at 2, 6; Def.'s Resp. at 6, 12. While Commerce initiated administrative reviews of some of the producers at issue here, certain producers withdrew their requests for administrative review, and Commerce reviewed only one of the producers at issue here, Rongxin, and only for the 2008–2009 POR. Final Results 2011, 76 Fed.Reg. at 27,989. None of the subject exporters were specifically identified by Commerce, and none of the subject exporters requested a review. See Certain Cased Pencils From the People's Republic of China: Preliminary Results and Partial Rescission of Antidumping Duty Administrative Review, 76 Fed.Reg. 2337, 2339 (Dep't Commerce Jan. 13, 2011) (“ Partial Rescission of AD Review ”); Certain Cased Pencils From the People's Republic of China: Rescission of Antidumping Duty Administrative Review, 76 Fed.Reg. 27,990, 27,990 (Dep't Commerce May 13, 2011) (“ Rescission of AD Review ”). For both PORs, Commerce issued liquidation instructions, ordering Customs to liquidate the subject entries at the cash deposit rate in effect at the time of entry. Pl.'s Mem. at 2–4, 7–8; Def.'s Resp. at 8, 10, 14–15.

Furthermore, following the 2008–2009 administrative review of Rongxin, Commerce issued a producer's rate for Rongxin of 0.17 percent. Pl.'s Mem. at 4; Def.'s Resp. at 9. Commerce also issued “exporter/importer-specific” ⁵ liquidation instructions for Rongxin without including Michaels on the importer list.⁶ Def.'s Resp. at 9–10. Consequently, for pencils manufactured by Rongxin during the 2008–2009 POR that were purchased by Michaels through a different export company, Customs also liquidated these entries at a rate equal to the PRC-wide rate of 114.90 percent. Def.'s Resp. at 11.

Following liquidation, Michaels was assessed supplemental duties associated with these entries, seeking the difference between the cash deposits Michaels made at the producer's rate and liquidation at the PRC-wide rate. Pl.'s Mem. at 6, 9. After most of Michaels' protests with Customs were unsuccessful, Michaels filed the present action. Although defendant attempted to dismiss the majority of Michaels' claims for lack of jurisdiction, the court denied that motion on December 27, 2012. See Michaels Stores, 2012 WL 6720675, at *1–2, 2012 Ct. Int'l Trade LEXIS 161, at *4.

JURISDICTION AND STANDARD OF REVIEW

As established in its previous opinion, the court has jurisdiction pursuant to 28 U.S.C. § 1581(i) (2006).⁷ The court will find unlawful an action by Commerce if it is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A); see28 U.S.C. § 2640(e) (directing the court to evaluate 28 U.S.C. § 1581(i) cases under the standards set forth in the Administrative Procedure Act). Moreover, the court will find that Commerce has abused its discretion if its “decision (1) is clearly unreasonable, arbitrary, or fanciful; (2) is based on an erroneous conclusion of law ... or (4) follows from a record that contains no evidence on which [Commerce] could rationally base its decision.” See Sterling Fed. Sys. v. Goldin, 16 F.3d 1177, 1182 (Fed.Cir.1994) (quoting Gerritsen v. Shirai, 979 F.2d 1524, 1529 (Fed.Cir.1992)).

DISCUSSION

I. Michaels' Motion for Summary Judgment

After apparently conceding that the administrative record ⁸ would not be sufficient to adjudicate this case, defendant incorrectly argues that Michaels' motion for summary judgment is improper. See Def.'s Resp. at 20. Under 28 U.S.C. § 1581(i)(4), the court has jurisdiction over civil actions pertaining to the “administration and enforcement” of certain actions taken by Commerce. Summary judgment is proper if “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” USCIT R. 56(a). Therefore, when the plaintiff's “case hinges on pure questions of law, resolution by summary judgment is appropriate.” Can. Wheat Bd. v. United States, 32 CIT 1116, 1121, 580 F.Supp.2d 1350, 1356 (2008) (finding summary judgment appropriate in a § 1581(i) case).

A motion for summary judgment, as opposed to judgment on the agency record, is appropriate in this case because Michaels' arguments do not challenge the final results of an administrative review. Michaels merely challenges the liquidation instructions and, only by reference, the cash deposit instructions. The liquidation instructions are not part of an administrative review but rather implement the results of a review. Pl.'s Mem. at 17, 19, 22; see Consol. Bearings Co. v. United States, 348 F.3d 997, 1002 (Fed.Cir.2003) (distinguishing between a challenge to the final results of administrative review and a challenge to liquidation instructions). Consequently, just as in Canadian Wheat Board where the plaintiffs properly challenged a notice of revocation with a motion for summary judgment, here the “true nature” of Michaels' argument is a challenge to the administration and enforcement of Commerce's final determination and not to the determination itself. See32 CIT at 1127, 580 F.Supp.2d at 1356. Thus, Michaels' motion for summary judgment is properly before ...