Midwest Fastener Corp. v. United States, 100118 USCIT, 17-00131

Docket Nº:17-00131, Slip Op. 18-132
Opinion Judge:GARY S. KATZMANN JUDGE.
Party Name:MIDWEST FASTENER CORP., Plaintiff, v. UNITED STATES, Defendant, and MID CONTINENT STEEL & WIRE, INC., Defendant-Intervenor.
Attorney:Robert K. Williams, Clark Hill PLC, of Chicago, IL, argued for plaintiff. With him on the brief were Mark R. Ludwikowski and Lara A. Austrins. Sosun Bae, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for defendant. With him on ...
Judge Panel:Before: Judge Gary S. Katzmann.
Case Date:October 01, 2018
Court:Court of International Trade
 
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MIDWEST FASTENER CORP., Plaintiff,

v.

UNITED STATES, Defendant,

and

MID CONTINENT STEEL & WIRE, INC., Defendant-Intervenor.

No. 17-00131

Slip Op. 18-132

Court of Appeals of International Trade

October 1, 2018

Commerce's Final Results are remanded and plaintiff s motion for judgment on the agency record is granted in part.

Robert K. Williams, Clark Hill PLC, of Chicago, IL, argued for plaintiff. With him on the brief were Mark R. Ludwikowski and Lara A. Austrins.

Sosun Bae, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for defendant. With him on the brief were Chad A. Readler, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director. Of counsel on the brief was Jessica DiPietro, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, DC.

Adam H. Gordon, The Bristol Group PLLC, of Washington, DC, argued for defendant-intervenor. With him on the brief were Ping Gong and Lydia K. Childre.

Before: Judge Gary S. Katzmann.

OPINION

GARY S. KATZMANN JUDGE.

In this iteration of litigation centering on whether a product is classified as a nail, plaintiff Midwest Fastener Corp. ("Midwest") challenges the Department of Commerce's ("Commerce") determination that its imported zinc and nylon anchors fall within the scope of the Certain Steel Nails From the Socialist Republic of Vietnam: Countervailing Duty Order, 80 Fed. Reg. 41, 006 (Dep't Commerce July 14, 2015), and Certain Steel Nails from the Republic of Korea, Malaysia, the Sultanate of Oman, Taiwan, and the Socialist Republic of Vietnam: Antidumping Duty Orders, 80 Fed. Reg. 39, 994 (Dep't Commerce July 13, 2015) (collectively, the "Orders"). Midwest argues that its anchors are not steel nails and, therefore, do not fall within the scope of the Orders and that Commerce's scope determination is unsupported by substantial evidence on the record and is otherwise not in accordance with law. The court concludes that Commerce's determination was not in accordance with law.

BACKGROUND

A. Legal and Regulatory Framework of Scope Reviews Generally.

Dumping occurs when a foreign company sells a product in the United States for less than fair value - that is, for a lower price than in its home market. Sioux Honey Ass'n v. Hartford Fire Ins. Co., 672 F.3d 1041, 1046 (Fed. Cir. 2012)). Similarly, a foreign country may provide a countervailable subsidy to a product and thus artificially lower its price. U.S. Steel Grp. v. United States, 96 F.3d 1352, 1355 n.1 (Fed. Cir. 1996). To empower Commerce to offset economic distortions caused by dumping and countervailable subsidies, Congress enacted the Tariff Act of 1930.1 Sioux Honey Ass'n, 672 F.3d at 1046-47. Under the Tariff Act's framework, Commerce may -- either upon petition by a domestic producer or of its own initiative -- begin an investigation into potential dumping or subsidies and, if appropriate, issue orders imposing duties on the subject merchandise. Id.

In order to provide producers and importers with notice as to whether their products fall within the scope of an antidumping or countervailing duty order, Congress has authorized Commerce to issue scope rulings clarifying "whether a particular type of merchandise is within the class or kind of merchandise described in an existing . . . order." 19 U.S.C. § 1516a(a)(2)(B)(vi). As "no specific statutory provision govern[s] the interpretation of the scope of antidumping or countervailing orders," Commerce and the courts developed a three-step analysis. Shenyang Yuanda Aluminum Indus. Eng'g Co. v. United States, 776 F.3d 1351, 1354 (Fed. Cir. 2015); Polites v. United States, 35 CIT__, __, 755 F.Supp.2d 1352, 1354 (2011); 19 C.F.R. § 351.225(k).

Because "[t]he language of the order determines the scope of an antidumping duty order[, ]" any scope ruling begins with an examination of the language of the order at issue. Tak Fat Trading Co. v. United States, 396 F.3d 1378, 1382 (Fed. Cir. 2005) (citing Duferco Steel, Inc. v. United States, 296 F.3d 1087, 1097 (Fed. Cir. 2002)). If the terms of the order are unambiguous, then those terms govern. Id. at 1382-83. "[T]he question of whether the unambiguous terms of a scope control the inquiry, or whether some ambiguity exists is a question of law that we review de novo." Meridian Prod., LLC v. United States, 851 F.3d 1375, 1382 (Fed. Cir. 2017). As the Federal Circuit has held, the terms of an order govern its scope. Duferco, 296 F.3d at 1097; see Eckstrom Indus., Inc. v. United States, 254 F.3d 1068, 1072 (Fed. Cir. 2001); Wheatland Tube Co. v. United States, 161 F.3d 1365, 1370 (Fed. Cir. 1998). "Although the scope of a final order may be clarified, it can not be changed in a way contrary to its terms." Duferco, 296 F.3d at 1097 (quoting Smith Corona Corp. v. United States, 915 F.2d 683, 686 (Fed. Cir. 1990)). For that reason, "if [the scope of an order] is not ambiguous, the plain meaning of the language governs." ArcelorMittal Stainless Belg. N.V. v. United States, 694 F.3d 82, 87 (Fed. Cir. 2012).

"In determining the common meaning of a term, courts may and do consult dictionaries, scientific authorities, and other reliable sources of information, including testimony of record." NEC Corp. v. Dep't of Commerce, 23 CIT 727, 731, 74 F.Supp.2d 1302, 1307 (1999) (quoting Holford USA Ltd. v. United States, 19 CIT 1486, 1493-94, 912 F.Supp. 555, 561 (1995)). Furthermore, "[b]ecause the primary purpose of an antidumping order is to place foreign exporters on notice of what merchandise is subject to duties, the terms of an order should be consistent, to the extent possible, with trade usage." ArcelorMittal, 694 F.3d at 88.

If Commerce determines that the terms of the order are either ambiguous or reasonably subject to interpretation, then Commerce "will take into account . . . the descriptions of the merchandise contained in the petition, the initial investigation, and [prior] determinations [of Commerce] (including prior scope determinations) and the [International Trade] Commission." 19 C.F.R. § 351.225(k)(1) ("(k)(1) sources"); Polites, 755 F.Supp.2d at 1354; Meridian Prod., 851 F.3d at 1382. To be dispositive, the (k)(1) sources "must be 'controlling' of the scope inquiry in the sense that they definitively answer the scope question." Polites, 755 F.Supp.2d at 1354 (quoting Sango Int'l v. United States, 484 F.3d 1371, 1379 (Fed. Cir. 2007)). If Commerce "can determine, based solely upon the application and the descriptions of the merchandise referred to in paragraph (k)(1) of . . . section [351.225], whether a product is included within the scope of an order . . . [Commerce] will issue a final ruling[.]" 19 C.F.R. § 351.225(d). If the § 351.225(k)(1) analysis is not dispositive, Commerce will initiate a scope inquiry under § 351.225(e), and apply the five criteria from Diversified Prods. Corp v. United States, 6 CIT 155, 162, 572 F.Supp. 883...

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