Shanghai Tainai Bearing Co. v. United States
| Decision Date | 17 June 2022 |
| Docket Number | Slip-Op. No. 22-74,Consol. Court No. 1:22-cv-00038 |
| Citation | 582 F.Supp.3d 1299 |
| Parties | SHANGHAI TAINAI BEARING CO., LTD. and C&U Americas, LLC, Plaintiff, and Precision Components, Inc., Xinchang Newsun Xintianlong Precision Bearing Manufacturing Co., Ltd., and Hebei Xintai Bearing Forging Co., Ltd., Consolidated Plaintiffs v. UNITED STATES, Defendant. |
| Court | U.S. Court of International Trade |
David J. Craven, Craven Trade Law LLC, of Chicago, Illinois, for the Plaintiff.
Kelly A. Krystyniak, Trial Attorney, U.S. Department of Justice, of Washington, D.C., for the Defendant. With her on the brief were Brian M. Boynton, Principal Deputy Assistant Attorney General, Patricia M. McCarthy, Director, L. Misha Preheim, Assistant Director, U.S. Department of Justice, Commercial Litigation Branch, and Jesus N. Saenz, U.S. Department of Commerce, Office of the Chief Counsel for Trade Civil Division Enforcement and Compliance.
On February 24, 2022, Plaintiffs Shanghai Tainai Bearing Co., Ltd. and C&U Americas LLC (collectively, Plaintiffs) filed a twelve-count complaint challenging certain aspects of the Final Results published by the Department of Commerce (Commerce) in Tapered Roller Bearings and Parts Thereof, Finished and Unfinished from the People's Republic of China , 87 Fed. Reg. 1,120 (Jan. 10, 2022). On the consent of all parties, Judge Restani issued an order enjoining liquidation on February 28, 2022. ECF No. 9. Pursuant to CIT Rules 7 and 65(a), Plaintiffs now seek a further injunction. Plaintiffs move to enjoin Commerce and U.S. Customs and Border Protection (Customs) from collecting cash deposits at the rate set forth in the contested Final Results. In the alternative, Plaintiffs submit a petition for a writ of mandamus to the Court, seeking the same outcome. They propose an indefinite duration for this remedy, which they request cease only on the completion of this proceeding, including any remand or appeal therefrom. The Government opposes this remedy, Plaintiffs’ preferred duration for it, and the validity of both the injunction and alternative writ sought. For the reasons that follow, the Motion to enjoin Commerce and Customs from requiring Plaintiffs to pay cash deposits is DENIED . Plaintiffs’ request for a writ of mandamus is also DENIED .
On August 6, 2020, Commerce began an administrative review of the antidumping duty order covering tapered roller bearings (TRBs) from China as applied to the period from June 1, 2019, to May 31, 2020. See Initiation of Antidumping and Countervailing Duty Administrative Reviews , 85 Fed. Reg. 54,983, 54,990 (Dep't of Commerce Sept. 3, 2020); see also Initiation of Antidumping and Countervailing Duty Administrative Reviews , 85 Fed. Reg. 47,731 (Dep't of Commerce Aug. 6, 2020) (setting out Initiation Notice). Commerce determined that it could examine one company to achieve the investigation's goals, Plaintiff Shanghai Tainai Bearing Co., Ltd. (Shanghai Tainai). It selected the company because of the volume of its entries of the covered goods — it is the largest exporter of TRBs from China. See Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, from the People's Republic of China , 86 Fed. Reg. 36,099 (Dep't of Commerce July 8, 2021) (Prelim. Results) (P.R. 189) and accompanying Preliminary Decision Memorandum (PDM) at 2 (P.R. 181).
In early July 2021, Commerce provided preliminary results. Those results indicated Commerce observed several "deficiencies and inconsistencies" among documents from Shanghai Tainai's reporting of its data regarding factors of production. Def.’s Resp. at 4; see PDM at 15. Consequently, Commerce used facts available to account for Plaintiff's inaccurately reported factors of production data; Commerce did not apply adverse inferences at this early stage. PDM at 15–16. Commerce also noted that mandatory information remained missing from Shanghai Tainai's completed questionnaire responses. Among the most notable missing facts were "direct input bills of materials ... for production of subject merchandise," which Plaintiff needed to collect from its suppliers. Id. This information is a crucial baseline data set to validate Shanghai Tainai's factors of production. Id. Nonetheless, Commerce proceeded to calculate a preliminary, estimated, weighted-average dumping margin — 36.75% — by relying on the factors of production reported by Plaintiff, sans substantiating documentation. Prelim. Results, 86 Fed. Reg. at 36,100.
Seeking to resolve these gaps in reported information, Commerce provided Shanghai Tainai with a Supplemental Questionnaire (P.R. 191) before issuing its Final Results. Plaintiff failed to respond. Commerce also sent similar questionnaires to Shanghai Tainai's unaffiliated suppliers, who were similarly non-responsive. IDM at 7; see also Commerce's Request for Information Letter (Aug. 17, 2021) (P.R. 192).
On January 10, 2022, Commerce provided Final Results for its investigation. See Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, from the People's Republic of China , 87 Fed. Reg. 1,120 (Dep't of Commerce Jan. 10, 2022) (Final Results) (P.R. 222); see also accompanying Issues and Decision Memorandum (IDM) (P.R. 214). In its report, Commerce found that Shanghai Tainai's submitted allocation methodology could no longer be used to determine factors of production based on goods purchased from unaffiliated suppliers because the third parties had not cooperated with the Department. To substantiate Shanghai Tainai's claims, Commerce needed information regarding the factors of production from these unaffiliated suppliers. IDM at 10–14.
Because of this, Commerce applied partial adverse facts available for the missing factors of production data. This required supplanting Plaintiff's proffered data with similar information provided by its affiliated suppliers. Id. Commerce's justification lay in its conclusion that Shanghai Tainai could "induce compliance with requests" for data in the future. "Commerce chose Tainai as a mandatory respondent in this review because it accounted for the largest volume of entries of subject merchandise"; and because of "the quantity of TRBs that it purchased from suppliers, it is reasonable to conclude that [Shanghai] Tainai is an important customer to its Chinese TRB suppliers." IDM at 13. This status put Plaintiff "in a position to exercise its leverage over its TRB suppliers to induce them to cooperate." Id.
The magnitude of the missing data — it corresponded to the vast majority of subject merchandise — produced a much different rate than the one calculated according to Shanghai Tainai's estimated costs, which had appeared in the preliminary determination. See Tainai Calculation Memorandum at Attachment III, tab Exhibit SSD-1.1 () (P.R. 216–17, C.R. 209–10). Commerce observed this derives, in part, from Shanghai Tainai's position in the production of TRBs. Plaintiff does not develop or add value to the "finishing and grinding stages in the TRBs supply chain"; it buys components after those stages. IDM at 11. For that reason, the "extrapolation of data from certain affiliated suppliers to account for its unaffiliated suppliers’ [factors of production] usage rates is nothing more than speculation," fundamentally undermining Shanghai Tainai's allocation methodology. Id. Given these circumstances, Commerce applied a partial adverse inference to the facts available to produce a weighted-average dumping margin of 538.79 percent. Final Results 87 Fed. Reg. at 1,121. This result prompted Plaintiff's lawsuit, which challenges the allegedly incorrect calculations employed to arrive at Commerce's Final Results. ECF Nos. 1, 7.
The Tariff Act of 1930 authorizes Commerce to investigate alleged dumping activity. If documented, this activity is penalized by antidumping duties on the unfairly priced goods. Sioux Honey Ass'n v. Hartford Fire Ins. , 672 F.3d 1041, 1046 (Fed. Cir. 2012). The statute defines dumping as the sale of products in the United States by a foreign company at prices below their fair value. 19 U.S.C. § 1677b(a).
To impose antidumping duties, Commerce assesses whether goods are being sold at less than their fair value. 19 U.S.C. § 1673. If dumping has occurred, the International Trade Commission (ITC) then evaluates whether American domestic industries producing like goods are materially injured or threatened with material injury.
The ITC also determines whether the domestic growth of industries producing the same goods is threatened by the sale of the dumped product. Id. If dumping is documented to have "materially injured" or "threatened with material injury" a domestic industry, or "materially retarded" the establishment of a domestic industry, Commerce proceeds to impose antidumping duties. 19 U.S.C. § 1673(2)(A)–(B).
For individual companies under investigation, Commerce's action vis-à-vis duties begins when the Department preliminarily concludes that duties are appropriate. Its staff then publishes a detailed preliminary determination establishing the duty rates assessed for specific cases, providing baseline explanations for its findings. 19 U.S.C. § 1673b(d)(1). Afterward, Commerce orders exporters to post security for subject merchandise. Liquidation is suspended on "all entries of merchandise subject to the [preliminary] determination which are entered, or withdrawn from warehouse, for consumption on or after" publication of the preliminary determination or sixty days from publication of notice of initiation of the investigation. 19 U.S.C. § 1673b(d)(2)(A)–(B). The duty rates provided in the preliminary determination and a halt on liquidation are imposed for a minimum of four and a maximum of six months. 19 U.S.C. § 1673b(d)(3). Commerce then provides a final determination of duty rates. If its initial...
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