Pam, S.P.A. v. U.S.

• Decision Date: 14 September 2005
• Docket Number: Slip Op. 05-124.,Court No. 04-00082.
• Citation: 395 F.Supp.2d 1337
• Parties: PAM, S.P.A. & JCM, Ltd., Plaintiff, v. UNITED STATES, Defendant, and A. Zerega's & Sons, Dakota Growers Pasta Co., New World Pasta Co. & American Italian Pasta Co., Defendant-Intervenors.
• Court: U.S. Court of International Trade

395 F.Supp.2d 1337

PAM, S.P.A. & JCM, Ltd., Plaintiff, v. UNITED STATES, Defendant, and A. Zerega's & Sons, Dakota Growers Pasta Co., New World Pasta Co. & American Italian Pasta Co., Defendant-Intervenors.

Slip Op. 05-124.

Court No. 04-00082.

United States Court of International Trade.

September 14, 2005.

David L. Simon (David L. Simon), Washington, D.C., for Plaintiff PAM, S.p.A.

Rodriguez, O'Donnell, Ross, Fuerst, Gonzalez, Williams & England, PC (Lara A. Austrins, Michael A. Johnson), Chicago, Illinois, for Plaintiff JCM, Ltd.

Peter D. Keisler, Assistant Attorney General; David M. Cohen, Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice; Jeanne M. Davidson, Deputy Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice; Ada E. Bosque, Patricia M. McCarthy, Stefan Shaibani, Commercial Litigation Branch, Civil Division, U.S. Department of Justice; Rachael E. Wenthold, Office of Chief Counsel, U.S. Department of Commerce, for Defendant, of counsel.

Collier Shannon Scott, PLLC (Paul C. Rosenthal, David C. Smith, Jr.), Washington, D.C., for Defendant-Intervenors.

OPINION

CARMAN, Judge.

Plaintiffs PAM, S.p.A. ("PAM") and JCM, Ltd. ("JCM")¹ appeal the United States Department of Commerce's ("Commerce" or "Defendant") final results of Certain Pasta from Italy, 69 Fed.Reg. 6,255 (Dep't Commerce Feb. 10, 2004) (final determination) [hereinafter Final Results]. Plaintiffs challenge the initiation of the review, the application of adverse facts and selection of the highest antidumping margin. Plaintiffs move for judgment upon the agency record. For the following reasons, this Court grants Plaintiffs' motions for judgment on the agency record, holds void ab initio the initiation of the sixth antidumping administrative review as to PAM, and directs Commerce to rescind the sixth antidumping administrative review as to PAM.

PROCEDURAL HISTORY

This Court's Preliminary Injunction Order of March 15, 2004, enjoined the government from liquidating subject entries through completion of the appellate process. This Court did not sign the proposed order that was submitted with Plaintiffs' motion but rather issued an order enjoining the government from liquidating subject entries during the pendency of this litigation and ordering "that the entries subject to this injunction shall be liquidated in accordance with the final decision in the action as provided in 19 U.S.C. § 1516a(e) []. Accordingly, liquidation shall remain suspended under this injunction during the pendency of this litigation." PAM, S.p.A. v. United States, No. 04-00082 (CIT Mar. 15, 2004) (order granting preliminary injunction).

On March 29, 2004, Defendant filed a Motion for Partial Reconsideration of this Court's preliminary injunction order. The parties submitted a Joint Stipulation of Facts on April 30, 2004. On June 10, 2004, this Court issued an opinion denying Defendant's request for reconsideration of the preliminary injunction and holding that proper duration of the preliminary injunction was through completion of the appellate process. See PAM, S.p.A. v. United States, 28 CIT ___, 347 F.Supp.2d 1362 (2004). This Court presently considers Plaintiffs' motions for judgment upon the agency record, Defendant and Defendant-Intervenors' responses and Plaintiffs' replies.

BACKGROUND

On July 1, 2002, Commerce published Certain Pasta from Italy, 67 Fed.Reg. 44,172, 44,173 (Dep't Commerce July 1, 2002) (opportunity to request administrative review). In response, members of the domestic pasta industry, who are defendant-intervenors in this case, submitted a request for administrative review of eight respondent companies, including PAM. (See Public Record ("P.R.") at 11.) PAM itself did not request a review. Petitioners served their request for an administrative review upon the respondent companies, except for PAM. On August 27, 2002, Commerce published in the Federal Register a notice of initiation of its sixth antidumping administrative review covering the period of July 1, 2001, through June 30, 2002, listing PAM and twelve other companies as respondents. Certain Pasta from Italy, 67 Red. Reg. 55,000, 55,002 (Dep't Commerce Aug. 27, 2002) (initiation of antidumping duty investigation). On August 28, 2002, counsel for PAM entered appearance in the administrative review. (P.R. at 16.) On August 29, 2002, Commerce sent out questionnaires to the respondents, including PAM. On September 3, 2002, PAM notified Commerce via letter that PAM was not properly served with a request for review and requested an extension of time to file its answer. (P.R. at 33.) A series of requests for and granting of extensions ensued, with PAM responding to the questionnaires but continuing to object to lack of service. (See, e.g., P.R. at 18, 33, 98.) In May 2003, Commerce conducted verification and found that PAM underreported its home sales in its answers to the questionnaires. (P.R. at 305.)

On August 7, 2003, Commerce published its preliminary results of the sixth antidumping administrative review finding that total adverse facts were appropriate due to PAM's underreporting and applying the highest calculated antidumping margin of 45.49 percent to imports of PAM's pasta covered by the scope of the review. Certain Pasta from Italy, 68 Fed.Reg. 47,020 (Dep't Commerce Aug. 7, 2003) (preliminary results of antidumping administrative review). On February 10, 2004, Commerce published its final results, which affirmed its decisions in the preliminary results. Final Results, 69 Fed.Reg. at 6,255. Plaintiff timely appealed the final results in this Court.

PARTIES' CONTENTIONS

A. Plaintiffs' Contentions

Plaintiffs contend that the review should be void ab initio because petitioners failed to serve their request in violation of regulation 19 C.F.R. § 351.303(f)(3)(ii) (2002). (Principal Br. of Pl. for J. upon Agency R. ("PAM's Br.") at 1; Principal Br. of Pl. JCM, Ltd. in Supp. of Mot. Pursuant to R. 56.2 for J. upon the Agency R. ("JCM's Br.") at 2-3.) It is undisputed that petitioners never served PAM. (PAM's Br. at 5; Def.'s Mem. in Opp'n to Pls.' R. 56.2 Mot. for J. upon the Agency R. ("Def.'s Opp'n") at 11.) PAM repeatedly objected to this lack of service and requested that Commerce rescind the review, but Commerce declined. To preserve its rights, PAM actively participated in the review. (PAM's Br. at 5.)

Plaintiffs insist that Commerce must comply with its own rules. (PAM's Br. at 13; JCM's Br. at 17-18.) PAM bases its argument on the "express nature of the rule and fact that [the regulation] contains its own penalty for failure to comply" rather than on a showing a prejudice. (PAM's Br. at 7 n. 3.) PAM posits that Commerce would not promulgate an "unimportant" regulation. (Id. at 9.) According to PAM, the importance of this service requirement is further supported by "the fact that the rule stands alone in its own subsection of the regulations." (Id. at 9.) PAM submits this service rule is "clear and unambiguous," stating that if the petitioner neither serves the exporter nor "make[s] a reasonable attempt to do so then [Commerce] may not accept the request for review." (Id. at 5.) JCM notes that there was no "reasonable attempt" made by petitioners to cure the service defect. (JCM's Br. at 17; see also Reply Br. of PAM S.p.A. ("PAM's Reply") at 6.) PAM further asserts this service rule confers benefit on the "requestee," not Commerce. (PAM's Br. at 8; PAM's Reply at 3.)

Plaintiffs also argue that Commerce erred in applying adverse facts available to PAM. (PAM's Br. at 23; JCM's Br. at 38.) PAM admits that it omitted sales of a material quantity. (PAM's Br. at 24.) PAM avers, however, that the omissions do not justify application of adverse facts available because some sales were omitted on the advice of counsel and other omissions resulted from a minor clerical error in its computer program. (Id.) Moreover, PAM argues that some omitted sales were "outside the ordinary course of business." (Id. at 24-25.) Because it "used its best efforts to answer the questionnaire," PAM asserts that the application of adverse facts available is unlawful. (Id. at 33.)

B. Defendant's Contentions

Defendant contends that it has "the discretion to relax or modify its procedural rules for the orderly transaction of business before it." (Def.'s Opp'n at 8.) According to Defendant, the regulation at issue confers no important procedural benefit, and Plaintiff was not substantially prejudiced by violation of the regulation. (Id. at 12-13) (citing Am. Farm Lines v. Black Ball Freight Serv., 397 U.S. 532, 538-39, 90 S.Ct. 1288, 25 L.Ed.2d 547 (1970).) Therefore, Commerce argues that its "determination not to rescind its administrative review of PAM is supported by substantial evidence and in accordance with law." (Def.'s Opp'n at 13.) Defendant also argues it acted within its discretion because Commerce listed PAM in the notice of initiation in the Federal Register and granted PAM extensions to respond to the questionnaires. (Def.'s Opp'n at 15.) Defendant calculates that lack of service deprived PAM of no more than seventeen days of preparation time but afforded twenty-nine additional days through extensions. (Id. at 18.) Thus, Commerce suggests that PAM "suffered no prejudice as a result of the deficiency in service." (Id. at 15.)

It is undisputed that PAM omitted a "material quantity" of its sales. (PAM's Br. at 24.) Commerce claims that it discovered during verification that PAM only reported about one-third of its home market sales. (Def.'s Opp'n at 24; Reply Br. of Pl. JCM, Ltd. in Supp. of Mot. Pursuant to R. 56.2 for J. upon the Agency R. ("JCM's Reply") at 8-9 n. 3.) Based upon this underreporting, Defendant contends that PAM did not "cooperate to the best of its ability in responding to Commerce's questionnaires," and thus, Commerce is statutorily entitled to resort to adverse facts available. (Def.'s Opp'n at 25.) Defend...