Skf Usa, Inc. v. U.S.

• Decision Date: 25 August 2008
• Docket Number: No. 2007-1502.,2007-1502.
• Citation: 537 F.3d 1373
• Parties: SKF USA, INC., SKF France S.A., SKF Aerospace France, SKF GmbH, and SKF Industrie S.P.A., Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee, and Timken U.S. Corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

537 F.3d 1373

SKF USA, INC., SKF France S.A., SKF Aerospace France, SKF GmbH, and SKF Industrie S.P.A., Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee, and Timken U.S. Corporation, Defendant-Appellee.

No. 2007-1502.

United States Court of Appeals, Federal Circuit.

August 25, 2008.

Herbert C. Shelley, Steptoe & Johnson LLP, of Washington, DC, argued for plaintiffs-appellants. With him on the brief were Alice A. Kipel and Susan R. Gihring.

Claudia Burke, Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee United States. With her on the brief were Jeffrey S. Bucholtz, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director. Of counsel on the brief were Mykhaylo A. Gryzlov and Deborah R. King, Attorney-Advisors, Office of the Chief Counsel for Import Administration, United States Department of Commerce, of Washington, DC.

Geert De Prest, Stewart and Stewart, of Washington, DC, argued for defendant-appellee Timken U.S. Corporation. With him on the brief were Terence P. Stewart and Lane S. Hurewitz. Of counsel was William A. Fennell.

Before MAYER, SCHALL, and LINN, Circuit Judges.

LINN, Circuit Judge.

SKF USA, Inc., SKF France S.A., SKF Aerospace France S.A.S., SKF GmbH, and SKF Industrie S.p.A. (collectively "SKF") appeal from the final judgment of the Court of International Trade affirming the U.S. Department of Commerce's ("Commerce's") revision of its model-match methodology and its ongoing zeroing methodology in calculating antidumping margins for ball bearings and related parts. SKF USA Inc., v. United States, 491 F.Supp.2d 1354 (Ct. Int'l Trade 2007). Because the Court of International Trade correctly determined that Commerce's zeroing practice and the revision of its model-match methodology were supported by substantial evidence and were in accordance with law, we affirm.

I. BACKGROUND

SKF imports ball bearings and related parts into the United States, which have been the subject of an antidumping investigation and subsequent annual reviews by Commerce. In performing these reviews, Commerce compares the imported products with "foreign like product" as required by 19 U.S.C. § 1677b(a)(1)(B). "Foreign like product" is defined as either identical merchandise, § 1677(16)(A), or similar merchandise, § 1677(16)(B) and (C). Determinations of similar (i.e., non-identical) merchandise are made using a model-match methodology developed by Commerce.

Beginning with the first administrative review, Commerce utilized a "family model-match methodology," whereby it grouped ball bearings into "families" based on exact matches of eight characteristics: 1) bearing design, 2) load direction, 3) number of rows of rolling elements, 4) precision rating, 5) dynamic load rating, 6) outside diameter, 7) inside diameter, and 8) width/height. Bearing models within a family were treated as equally similar to all other models sharing these eight characteristics, regardless of other product variations. When Commerce formulated the family model-match methodology in 1990, it grouped specific models of bearings into families "[t]o minimize the necessity for comparisons among an exceptionally large number of bearing models," and "to limit the need for adjustments for physical differences in merchandise and the need for model matching." J.A. at 129.

During the fourteenth administrative review, however, in a memorandum dated December 3, 2003, Commerce indicated that it was considering modifications to the model-match methodology. It explained that "[t]he family-based approach ... deviates from [Commerce's] normal practice in that [Commerce] ha[d] considered all models within a family to be equally similar," and that this methodology "was developed at a time ... when it was impossible for [Commerce] to identify the single most similar foreign like product" because "the technological resources available ... were far less powerful than they are now." Id. at 359. Thus, "a more complex model-match methodology ... would have been prohibitively expensive and time-consuming." Id. Commerce suggested changing the model-match methodology "in order to determine the single most similar comparison-market model, taking advantage of intervening technological developments," id. at 361, but explained that it would not attempt to implement any changes to the methodology in the ongoing 2002-2003 reviews, choosing instead to "solicit comments and invite rebuttal comments" before implementing the new methodology in the 2003-2004 reviews. Id. at 364.

On July 7, 2004, Commerce issued a memorandum outlining the revised model-match methodology and indicating that although it intended to use the new methodology, it reserved the right to make further modifications based on comments received or data collected during the course of the 2003-2004 reviews. Commerce summarized its proposed methodology as follows:

We recommend that we select the single most similar comparison-market model among only those models that are in the same family, as redefined above (i.e., bearing design, load direction, number of rows, and, if we determine it appropriate, precision grade), on the basis of that model that is closest in terms of inner diameter, outer diameter, width, load rating, and, if appropriate, precision grade. We recommend further that we resolve ties by selecting the single home-market model whose variable cost of manufacturing is closest to that of the U.S. model.

Id. at 439. Thus, under the new methodology, Commerce would identify models in the comparison market and the U.S. market that share four of the physical characteristics of the old methodology. After finding an identical match of these characteristics, Commerce would then identify a "most similar" model based upon a comparison of the remaining characteristics.

On May 13, 2005, Commerce issued its preliminary results for the fifteenth administrative review using the new methodology. Antifriction Bearings and Parts Thereof from France, Germany, Italy, Japan, Singapore, and the United Kingdom: Preliminary Results and Partial Rescission of Antidumping Duty Administrative Reviews, 70 Fed.Reg. 25,538 (Dep't of Commerce May 13, 2005). Commerce also released a memorandum providing the revised model-match methodology and addressing comments received. In this memorandum, Commerce explained that "[b]ecause there is a statutory preference for using price-to-price comparisons and the technological constraints that led us to adopt the simplified family methodology are no longer operative, we find compelling reasons to change the model-matching methodology...." J.A. at 482. Under the revised methodology, Commerce "identif[ies] the single most similar model within the [redefined] family of bearings using a sum-of-the-deviations model-matching methodology with a 40-percent cap on the sum of the deviations, resolving ties among bearings with the same sum of the deviations using the smallest [difference-in-merchandise] adjustment." Id. at 492. Commerce indicated that it would "consider all arguments presented in case and rebuttal briefs and, if appropriate, revise this methodology for the final results of reviews." Id. at 478.

On September 16, 2005, Commerce published the final results of its fifteenth antidumping administrative review of ball bearings and parts thereof from various countries imported from May 1, 2003 to April 30, 2004. Ball Bearings and Parts Thereof From France, Germany, Italy, Japan, Singapore and the United Kingdom: Final Results of Antidumping Duty Administrative Reviews, 70 Fed.Reg. 54,711 (Dep't of Commerce Sep. 16, 2005) ("Final Results"). In a related memorandum, Commerce indicated that "[t]his new model-matching methodology is much closer to [its] normal matching practice than is the family-matching methodology in that it allows [Commerce] to select the single most-similar model and allows [Commerce] to avoid rejecting reasonable price-to-price comparisons between models with slightly different physical characteristics." Memorandum from Barbara E. Tillman, Acting Deputy Assistant Sec'y for Import Admin., U.S. Dep't of Commerce, to Ronald K. Lorentzen, Acting Assistant Sec'y for Import Admin., U.S. Dep't of Commerce, Issues and Decision Memorandum for the Antidumping Duty Administrative Reviews of Ball Bearings and Parts Thereof from France, Germany etc. for the Period of Review May 1, 2003, through April 30, 2004, at 19 (Sept. 12, 2005) ("Issues & Decision Memo"). Commerce explained that it had "solicited extensive comments" and "incorporated numerous suggestions" before adopting the new methodology. Id. It concluded that "compelling reasons exist to change the model-match methodology," that it now possessed "the technological capacity to use a more accurate methodology," and that "[t]he new methodology is substantially more accurate than the family-matching methodology." Id. at 20.

In calculating SKF's weighted-average dumping margins, Commerce also employed its usual methodology in which dumped sales are not offset by non-dumped sales—a practice known as zeroing. SKF challenged these results before the Court of International Trade, which sustained Commerce's Final Results. SKF timely appealed. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(5).

II. DISCUSSION

A. Standard of Review

We review the Court of International Trade's decisions regarding Commerce's antidumping determinations de novo, applying the same standard of review to Commerce's determinations as did that court. Carpenter Tech. Corp. v. United States, 510 F.3d 1370, 1372 (Fed.Cir. 2007) (citations omitted). Thus, Commerce's antidumping determinations must be sustained unless they are "unsupported by substantial evidence on the record, or otherwise not in accordance with law." Id. at 1373 (quoting 19 U.S.C. § 1516a(b)(1)(B)(i)).

SKF argues that the Court of...