Nat'l Nail Corp. v. United States

• Decision Date: 12 June 2019
• Docket Number: Consol. Court No. 16-00052,Slip Op. 19–71
• Citation: 390 F.Supp.3d 1356
• Parties: NATIONAL NAIL CORP., Plaintiff, Shandong Oriental Cherry Hardware Group Co., Ltd., Consolidated-Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

390 F.Supp.3d 1356

NATIONAL NAIL CORP., Plaintiff,Shandong Oriental Cherry Hardware Group Co., Ltd., Consolidated-Plaintiff,

v.UNITED STATES, Defendant.

Slip Op. 19–71

Consol. Court No. 16-00052

United States Court of International Trade.

June 12, 2019

Adams C. Lee, Harris Bricken McVay Sliwoski, LLP, of Seattle, WA, argued for Plaintiff National Nail Corp.

Brittney R. Powell, Fox Rothschild LLP, of Washington, DC, argued for Consolidated-Plaintiff Shandong Oriental Cherry Hardware Group Co., Ltd. With her on the brief were Lizbeth R. Levinson and Ronald M. Wisla.

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 Chad A. Readler, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director. Of Counsel on the brief was Jessica R. DiPietro, Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, of Washington, DC.

OPINION and ORDER

Eaton, Judge:

This case involves a challenge to the United States Department of Commerce's ("Commerce" or the "Department") final results of the sixth administrative review of the antidumping duty order on imports of certain steel nails from the People's Republic of China. See Certain Steel Nails From the People's Rep. of China , 73 Fed. Reg. 44,961 (Dep't Commerce Aug. 1, 2008) ("Order"); see also Certain Steel Nails From the People's Rep. of China , 81 Fed. Reg. 14,092 (Dep't Commerce Mar. 16, 2016), amended by 81 Fed. Reg. 19,136 (Dep't Commerce Apr. 4, 2016), and accompanying Issues and Dec. Mem. (Mar. 7, 2016), P.R. 259 ("Final IDM") (collectively, "Final Results"). The period of review was August 1, 2013, through July 31, 2014. Certain Steel Nails From the People's Rep. of China , 80 Fed. Reg. 53,490 (Dep't Commerce Sept. 4, 2015), and accompanying Dec. Mem. for the Prelim. Results (Aug. 28, 2015), P.R. 217 ("Prelim. Dec. Mem.") at 1 (collectively, "Preliminary Results").

In National Nail Corp. v. United States , 42 CIT ––––, 279 F. Supp. 3d 1372 (2018) (" National Nail I "),¹ the court remanded the Final Results. In its remand order, the court directed Commerce to "evaluate the evidence on the record regarding [Consolidated-Plaintiff Shandong Oriental Cherry Hardware Group Co., Ltd.'s ("Shandong"² ) ] eligibility for a separate [dumping] rate, including the information it submitted in response to Section A of Commerce's questionnaire [regarding corporate structure], and determine whether such evidence demonstrates an absence of de jure and de facto control by the Chinese government." National Nail I , 42 CIT at ––––, 279 F. Supp. 3d at 1379. The court further directed that "if Commerce determines that Shandong is eligible for a separate rate, it shall determine a separate rate" for the company. Id.

Commerce's remand results are now before the court. See Final Results of Redetermination Pursuant to Remand Order in National Nail Corp. v. United States , 279 F.Supp.3d 1372 (2018) ("Remand Results"). In the Remand Results, Commerce determined, under protest,³ that Shandong was eligible for a separate dumping rate. See Remand Results at 6. Commerce did not, however, determine a rate using the production and U.S. sales information that Shandong placed on the record in response to Commerce's questionnaires. Rather, Commerce assigned Shandong the highest rate from any prior segment—the China country-wide dumping rate of 118.04 percent⁴ —based on "total adverse facts available."⁵ Remand Results at 19.

Commerce's decision to use "total adverse facts available" rested on its conclusion that Shandong's reported production and sales information was incomplete, inaccurate, or unreliable, and that, therefore, none of it was usable. See Remand Results at 15-17. Thus, Commerce found that "necessary information" was missing from the record. On this basis, Commerce found that the use of "facts otherwise available," pursuant to 19 U.S.C. § 1677e(a) (2012),⁶ was authorized. See Remand Results at 17 ("[T]he application of facts available is warranted because [Shandong] failed to provide necessary information requested by Commerce, in the form and manner requested, and significantly impeded our ability to conduct the review."). Additionally, Commerce found that Shandong had failed to comply with Commerce's requests for information to "the best of its ability," and applied an adverse inference to all of the facts available for sales and production. See 19 U.S.C. § 1677e(b)⁷ ; see also Remand Results at 17-18 ("[B]ecause [Shandong's] deficiencies were so pervasive, impeding Commerce's ability to conduct its review, and [Shandong] did not cooperate to the best of its ability, Commerce determined that total [adverse facts available] ... was warranted."). As noted, Shandong was assigned the 118.04 percent rate. In the immediately preceding administrative review, Shandong Oriental Cherry Hardware Group Co., Ltd. (exclusive of its affiliates) was found to be eligible for a separate rate and was assigned the rate of 16.62 percent. Certain Steel Nails from the People's Rep. of China , 80 Fed. Reg. 18,816, 18,817 (Dep't Commerce Apr. 8, 2015) (final results of fifth admin. review).

Plaintiff National Nail Corp. is a U.S. importer of subject merchandise produced and exported during the period of review by Consolidated-Plaintiff Shandong, a mandatory respondent (collectively, "Plaintiff" or "National Nail"). National Nail disputes Commerce's use of "total adverse facts available" to assign a rate for the respondent. Specifically, National Nail argues that Commerce's use of "facts otherwise available," as to Shandong's factors of production and U.S. sales,⁸ was not supported by substantial evidence because Shandong provided the production and sales information that Commerce asked for in the form and manner requested. National Nail also contends that substantial evidence does not support Commerce's finding that Shandong failed to comply with the Department's information requests to "the best of its ability." Thus, for Plaintiff, Commerce's decision to find "unusable" all of the production and sales information Shandong provided and, instead, to use "total adverse facts available" to arrive at a dumping margin for Shandong lacks the support of substantial evidence and is not in accordance with law. See National Nail's Cmts. on Remand Results 5, ECF No. 70 ("NN's Cmts."). For its part, Shandong "agrees with and adopts the comments filed by National Nail Corp. in response to Commerce's remand results." Shandong's Cmts. on Remand Results 1, ECF No. 71.

Defendant the United States, on behalf of Commerce, urges the court to sustain the Remand Results. See Def.'s Resp. Pls.' Cmts. on Remand Results, ECF No. 74 ("Def.'s Resp. Cmts.").

Jurisdiction is found under 28 U.S.C. § 1581(c) (2012) and 19 U.S.C. § 1516a(a)(2)(B)(iii).

Commerce's application of total adverse facts available in the Remand Results is neither supported by substantial evidence nor in accordance with law.⁹ That is, neither the law nor the facts support the Department's findings (1) that none of Shandong's factors of production or its U.S. sales information was usable, and (2) that Shandong failed to comply with Commerce's requests for production and sales information to the best of its ability. Therefore, the court remands this matter to Commerce for further action in accordance with this Opinion and Order.

BACKGROUND

I. Administrative Review Proceeding

On September 30, 2014, Commerce commenced the sixth administrative review of the Order at the request of, among others, Mid Continent Steel & Wire, Inc., a U.S. producer of steel nails and the petitioner in the proceeding, and The Stanley Works (Langfang) Fastening Systems Co., Ltd. and Stanley Black & Decker, Inc. ("Stanley"), a producer and importer of steel nails from China. See Initiation of Antidumping and Countervailing Duty Admin. Revs. , 79 Fed. Reg. 58,729 (Dept. Commerce Sept. 30, 2014) ; see also Mid Continent Steel & Wire, Inc.'s Req. for Admin. Rev. (Aug. 29, 2014), P.R. 3; Stanley's Req. for Admin. Rev. (Aug. 28, 2014), P.R. 1.

The Order described the steel nails included in its scope, and expressly excluded others. Among the merchandise excluded from the Order were "fasteners suitable for use in powder-actuated hand tools, not threaded and threaded, which are currently classified under [Harmonized Tariff Schedule of the United States subheadings] 7317.00.20 and 7317.00.30." Order, 73 Fed. Reg. at 44,961.

Commerce selected two mandatory respondents for individual review, Shandong and Stanley. Because China is a nonmarket economy country,¹⁰ each company was sent Commerce's standard nonmarket economy antidumping questionnaire seeking information on factors of production¹¹ (Section D); U.S. sales¹² (Section C); and corporate structure¹³ (Section A). See Commerce's Orig. Questionnaire (Nov. 20, 2014), P.R. 31, ECF No. 52-6. Between April 2015 and July 2015, Commerce issued supplemental questionnaires. Responses were received between May 2015 and August 2015.

A. Factors of Production Information

With respect to Shandong's factors of production, Commerce and Shandong went back and forth on an acceptable reporting method. Initially, Commerce asked Shandong to report the actual or estimated amounts of the factors of production used to make the subject merchandise solely on a CONNUM-specific basis.¹⁴ Commerce's Orig. Questionnaire at D-2, D-6. Later, when Shandong made it clear that, because of the way it kept its records and because of its production processes, it could only report some factors of production (e.g. , wire rod used in the wire-drawing workshop¹⁵ ) on a CONNUM-specific basis, and that it could report other factors of production (e.g. , chemicals and water used in the electrogalvanization or "EG" workshop) on a "production-group"¹⁶ basis, Commerce agreed that Shandong could report...