OMG, Inc. v. United States

• Decision Date: 29 May 2018
• Docket Number: Court No. 17–00036,Slip Op. 18–63
• Parties: OMG, INC., Plaintiff, v. UNITED STATES, Defendant, and Mid Continent Steel & Wire Inc., Defendant–Intervenor.
• Court: U.S. Court of International Trade

321 F.Supp.3d 1262

OMG, INC., Plaintiff,

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

Slip Op. 18–63

Court No. 17–00036

United States Court of International Trade.

May 29, 2018

Ned H. Marshak, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP, of New York, NY, argued for plaintiff. With him on the brief were David M. Murphy and Andrew T. Schutz.

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 was Nikki Kalbing, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce of Washington, DC.

Adam Gordon, The Bristol Group PLLC, of Washington, DC, argued for defendant-intervenor. With him on the brief was Ping Gong.

OPINION

Katzmann, Judge:

A prominent psychologist once suggested that it must be tempting "if the only tool you have is a hammer, to treat everything as if it were a nail." ABRAHAM MASLOW, PSYCHOLOGY OF SCIENCE: A RECONNAISSANCE 15–16 (1966). Plaintiff OMG, Inc. ("OMG") believes that the Department of Commerce ("Commerce") made such an error, and challenges Commerce's determination that zinc anchors imported by OMG fall within the scope of the Antidumping and Countervailing Duty Orders on Certain Steel Nails from the Socialist Republic of Vietnam. Certain Steel Nails from the Socialist Republic of Vietnam: Final Scope Ruling on OMG, Inc.'s Zinc Anchors (Feb. 6, 2017), P.D. 29 ("Final Scope Ruling"); Certain Steel Nails from the Socialist Republic of Vietnam: Countervailing Duty Order, 80 Fed. Reg. 41,006 (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 (July 13, 2015) (collectively the "Orders"). OMG argues that its anchors are not steel nails and, therefore, do not fall within the scope of the orders and that Commerce's analysis and scope determination is unsupported by substantial evidence on the record and is otherwise not in accordance with law. Compl., Feb. 21, 2017, ECF No. 7; Pl.'s Mot. For J. on the Agency R. and Br. in Supp., June 29, 2017, ECF No. 26 ("Pl.'s Br."); Pl's Reply, Nov. 30, 2017, ECF No. 34. The court concludes that Commerce's determination was not in accordance with law, for the reasons stated below.

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. Huzhou Muyun Wood Co., Ltd. v. United States, 42 CIT ––––, ––––, 279 F.Supp.3d 1215, 1218 (2017) (citing Sioux Honey Ass'n v. Hartford Fire Ins. Co., 672 F.3d 1041, 1046 (Fed. Cir. 2012) ). Similarly, a foreign country may countervailably subsidize 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 Huzhou, 279 F.Supp.3d at 1218–19. 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.

However, 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., LLC v. United States, 851 F.3d 1375, 1382 (Fed. Cir. 2017). 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 a section 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, 889 (1983) as codified in 19 C.F.R. § 351.225(k)(2).² Polites, 755 F.Supp.2d at 1355.

B. Factual and Procedural History of this Case

In May 2014, Mid Continent Steel & Wire ("Mid Continent") petitioned Commerce to impose antidumping and countervailing duties on steel nails from a number of countries, including the Socialist Republic of Vietnam ("Vietnam"). Certain Steel Nails from the Socialist Republic of Vietnam: OMG Scope Request: Zinc Anchors ("Scope Ruling Request") at Ex. 10, Petition for the Imposition of Antidumping and Countervailing Duties, P.D. 1–5 (May 29, 2014). In July 2015, after having determined that dumping was occurring, Commerce issued the antidumping and countervailing duty Orders covering certain steel nails from Vietnam. The scope of the Orders reads in full:

The merchandise covered by the Orders is certain steel nails having a nominal shaft length not exceeding 12 inches. Certain steel nails include, but are not limited to, nails made from round wire and nails that are cut from flat-rolled steel. Certain steel nails may consist of a one piece construction or be constructed of two or more pieces. Certain steel nails may be produced from any type of steel, and may have any type of surface finish, head type, shank, point type and shaft diameter. Finishes include, but are not limited to, coating in vinyl, zinc (galvanized, including but not limited to electroplating or hot dipping one or more times), phosphate, cement, and paint. Certain steel nails may have one or more surface finishes. Head styles include, but are not limited to, flat, projection, cupped, oval, brad, headless, double, countersunk, and sinker. Shank styles include, but are not limited to, smooth, barbed, screw threaded, ring shank and fluted. Screw-threaded nails subject to this proceeding are driven using direct force and not by turning the nail using a tool that engages with the head. Point styles include, but are not limited to, diamond, needle, chisel and blunt or no point. Certain steel nails may be sold in bulk, or they may be collated in any manner using any material.

Excluded from the scope of the Orders are certain steel nails packaged in combination with one or more non-subject articles, if the total number of nails of all types, in aggregate regardless of size, is less than 25. If packaged in combination with one or more non-subject articles, certain steel nails remain subject merchandise if the total number of nails of all types, in aggregate regardless of size, is equal to or greater than 25, unless otherwise excluded based on the other exclusions below.

Also excluded from the scope are certain steel nails with a nominal shaft length of one inch or less that are (a) a component of an unassembled article, (b) the total number of nails is sixty (60) or less, and (c) the imported unassembled article falls into one of the following eight groupings: 1) builders' joinery and carpentry of wood that are classifiable as windows, French-windows and their frames; 2) builders' joinery and carpentry of wood that are classifiable as doors and their frames and thresholds; 3) swivel seats with variable height adjustment; 4) seats that are convertible into beds (with the exception of those classifiable as garden seats or camping equipment); 5) seats of cane, osier, bamboo or similar materials; 6) other seats with wooden frames (with the exception of seats of a kind used for aircraft or motor vehicles); 7) furniture (other than seats) of wood (with the exception of i) medical, surgical, dental or veterinary furniture; and ii) barbers' chairs and similar chairs, having rotating as well as both reclining and elevating movements); or 8) furniture (other than seats) of materials other than wood, metal, or plastics (e.g., furniture of cane, osier, bamboo or similar materials). The aforementioned imported unassembled articles are currently classified under the following Harmonized Tariff Schedule of the

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