Midwest Fastener Corp. v. United States

• Decision Date: 19 October 2018
• Docket Number: Court No. 17-00231,Slip Op. 18-142
• Citation: 348 F.Supp.3d 1297
• Parties: MIDWEST FASTENER CORP., Plaintiff, v. UNITED STATES, Defendant, and Mid Continent Steel & Wire, Inc., Defendant-Intervenor.
• Court: U.S. Court of International Trade

348 F.Supp.3d 1297

MIDWEST FASTENER CORP., Plaintiff,

v. UNITED STATES, Defendant,andMid Continent Steel & Wire, Inc., Defendant-Intervenor.

Slip Op. 18-142

Court No. 17-00231

United States Court of International Trade.

October 19, 2018

Robert Kevin Williams, Clark Hill PLC, of Chicago, IL, argued for plaintiff, Midwest Fastener Corp. With him on the brief were Lara A. Austrins and Mark Rett Ludwikowski.

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

Adam Henry Gordon, The Bristol Group PLLC, of Washington, DC, argued for defendant-intervenor, Mid Continent Steel & Wire, Inc. With him on the brief was Ping Gong.

OPINION AND ORDER

Kelly, Judge:

This action is before the court on Midwest Fastener Corp.'s ("Midwest" or "Plaintiff") USCIT Rule 56.2 motion for judgment on the agency record challenging the U.S. Department of Commerce's ("Commerce") determination that Plaintiff's strike pin anchors are subject to the antidumping duty ("ADD") order covering certain steel nails from the People's Republic of China ("PRC"). See Pl.' [Midwest]'s Rule 56.2 Mot. J. Agency R., Jan. 26, 2018, ECF No. 26; Mem. Law Supp. Pl.'s Rule 56.2 Mot. J. Agency R., Jan. 26, 2018, ECF No. 26 ("Pl.'s Br."); see also [ADD] Order on Certain Steel Nails from the [PRC]: Final Ruling on Midwest Fastener Strike Pin Anchors, (Aug. 2, 2017), ECF No. 21-3 ("Final Scope Ruling"); Certain Steel Nails from the [PRC], 73 Fed. Reg. 44,961 (Dep't Commerce Aug. 1, 2008) (notice of [ADD] order) ("PRC Nails Order"). Additionally, Plaintiff challenges as not in accordance with law and unsupported by substantial evidence Commerce's decision not to initiate a formal scope inquiry pursuant to 19 C.F.R. § 351.225(e) (2017)¹ and as not in accordance with law, what Plaintiff claims is, Commerce's retroactive suspension of liquidation and collection of cash deposits. See Pl.'s Br. at 18–21. Midwest, a United States importer of the strike pin anchors at issue here, commenced this action pursuant to section 516A(a)(2)(B)(vi) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(vi) (2012).² See Summons, Sept. 1, 2017, ECF No. 1; Compl., Sept. 1, 2017, ECF No. 7.

For the reasons that follow, the court remands Commerce's final scope determination that Plaintiff's strike pin anchors are subject to the PRC Nails Order.

BACKGROUND

On June 8, 2017, Midwest requested Commerce to issue a scope ruling excluding its strike pin anchors from the scope of the PRC Nails Order. See Midwest Fastener Scope Req.: Strike Pin Anchors, PD 19, bar code 3579812-01 (June 8, 2017) ("Pl.'s Scope Ruling Req.").³ Midwest's strike pin anchors have four components—a steel pin, a threaded body, a nut and a flat washer. Id. at 2; Final Scope Ruling at 4–5. Midwest avers that the pin component is composed of a medium carbon steel, coated in yellow zinc, has a rounded head, and that it is not meant to be removed from the anchor itself. Pl.'s Scope Ruling Req. at 3, Ex. 4 (producing a photograph of the steel pin component). Midwest's product ranges in size from ¼ x 1¾ to ¾ x 7½. Id. at 2, Ex. 2 (producing a photograph of the strike pin anchors at their various sizes and dimensions). The strike pin anchor is used by inserting the anchor body into a pre-drilled hole, tightening the nut component to orient and position the pin component, and then striking the pin component with a hammer. Final Scope Ruling at 9. The action of striking the pin component expands the anchor body and results in the fastening of the desired item against the masonry. Id. On July 14, 2017, Mid Continent Steel & Wire, Inc. submitted comments in opposition to Plaintiff's scope request. See generally Opp'n [Comments to Midwest's Scope Ruling Req.], PD 24, bar code 3593422-01 (July 14, 2017).

On August 2, 2017, Commerce issued the final scope ruling. Commerce explained that Midwest's strike pin anchors are unambiguously covered by the scope of the PRC Nails Order based upon the plain meaning of the order and stated that the sources enumerated in 19 C.F.R. § 351.225(k)(1) likewise support Commerce's scope determination. See Final Scope Ruling at 10–13. Accordingly, Commerce determined that it did not need to consider the criteria under 19 C.F.R. § 351.225(k)(2) ("(k)(2) analysis"). Id. at 10. Commerce issued instructions, effective as of August 2, 2017, to U.S. Customs and Border Protection ("Customs" or "CBP") to continue to suspend liquidation of Midwest's strike pin anchors subject to the PRC Nails Order. See Liquidation Instructions, PD 29, bar code 3606729-01 (Aug. 11, 2017).

JURISDICTION AND STANDARD OF REVIEW

The Court has jurisdiction over Plaintiff's challenge to Commerce's scope determination pursuant to 19 U.S.C. § 1516a(a)(2)(B)(vi) and 28 U.S.C. § 1581(c) (2012),⁴ which grant the court authority to review actions contesting scope determinations that find certain merchandise to be within the class or kind of merchandise described in an antidumping or countervailing duty order. See 19 U.S.C. § 1516a(a)(2)(B)(vi) ; 28 U.S.C. § 1581(c). The court will uphold Commerce's determination unless it is "unsupported by substantial evidence on the record, or otherwise not in accordance with law ...." 19 U.S.C. § 1516a(b)(1)(B)(i).

DISCUSSION

I. Commerce's Determination that Midwest's Strike Pin Anchors are In Scope of the PRC Nails Order

Plaintiff argues that Commerce's determination that Midwest's strike pin anchors are unambiguously covered by the plain language of the PRC Nails Order is unsupported by substantial evidence. See Pl.'s Br. at 14–17. Defendant argues that Commerce's determination is in accordance with law and supported by substantial evidence because the physical description of Midwest's strike pin anchors unambiguously places them within the scope of the PRC Nails Order. See Def.'s Resp. Pl.'s Rule 56.2 Mot. J. Agency R. at 10–15, May 7, 2018, ECF No. 32 ("Def.'s Resp. Br."). In the alternative, Defendant contends that even if "there is some ambiguity in the scope language," (k)(1) sources, such as prior relevant scope determinations, the U.S. International Trade Commission's ("ITC") final material injury determination ("ITC Report"), and the petition to the underlying investigation all support Commerce's conclusion that strike pin anchors are covered by the order's scope. See id. at 15–19. For the reasons that follow, Commerce's scope determination is not supported by substantial evidence and is remanded to the agency. On remand, Commerce should proceed to a (k)(2) analysis, and may reopen the record if Commerce believes it is necessary, to clarify the scope of the PRC Nails Order.

The language of an antidumping duty order dictates its scope. See Duferco Steel, Inc. v. United States, 296 F.3d 1087, 1097 (Fed. Cir. 2002) (citing Ericsson GE Mobile Commc'ns, Inc. v. United States, 60 F.3d 778, 782 (Fed Cir. 1995) ). Commerce's regulations authorize it to issue scope rulings to clarify whether a particular product is within the scope of an order. See 19 C.F.R. § 351.225(a). To determine whether a product is within the scope of an antidumping order, Commerce looks at the plain language of that order. See Duferco, 296 F.3d at 1097. In addition to the scope language, Commerce will take into account descriptions of the merchandise contained in: (1) the petition; (2) the initial investigation; and (3) past determinations by the Commission and by Commerce, including prior scope determinations (collectively "(k)(1) sources"). 19 C.F.R. § 351.225(k)(1) ; see 19 C.F.R. § 351.225(d). When the (k)(1) sources are not dispositive, Commerce will initiate a formal scope inquiry and further consider:

(i) The physical characteristics of the product;

(ii) The expectations of the ultimate purchasers;

(iii) The ultimate use of the product;

(iv) The channels of trade in which the product is sold; and

(v) The manner in which the product is advertised and displayed.

19 C.F.R. § 351.225(k)(2).

Commerce has broad authority "to interpret and clarify its antidumping duty orders." Ericsson GE Mobile, 60 F.3d at 782 ; see also King Supply Co., LLC v. United States, 674 F.3d 1343, 1348 (Fed. Cir. 2012) (stating that Commerce is entitled to substantial deference with regard to interpretations of its own antidumping orders). However, Commerce may not interpret an order "so as to change the scope of that order, nor can Commerce interpret an order in a manner contrary to its terms." Eckstrom Indus., Inc. v. United States, 254 F.3d 1068, 1072 (Fed. Cir. 2001) (citing Wheatland Tube Co. v. United States, 161 F.3d 1365, 1370 (Fed. Cir. 1998) ). Furthermore, "[s]cope orders may be interpreted as including subject merchandise only if they contain language that specifically includes the subject merchandise or may be reasonably interpreted to include it." Duferco, 296 F.3d at 1089. Although the petition and the investigation proceedings may aid in Commerce's interpretation of the final order, the order itself "reflects the decision that has been made as to which merchandise is within the final scope of the investigation and is subject to the order." Id. at 1096.

The relevant scope language of the PRC Nails Order provides that

[t]he merchandise covered by this proceeding includes certain steel nails having a shaft length up to 12 inches.... Certain steel nails may be of one-piece construction or constructed of two or more pieces. Certain steel nails may be produced from any type of steel, and have a variety of finishes, heads, shanks, point types, shaft lengths and shaft diameters. Finishes include, but are not limited to, coating in vinyl, zinc

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