Smith Corona Corp. v. US

• Decision Date: 12 July 1991
• Docket Number: No. 88-11-00866.,88-11-00866.
• Parties: SMITH CORONA CORPORATION, Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

771 F. Supp. 389

15 CIT 355

SMITH CORONA CORPORATION, Plaintiff, v. UNITED STATES, Defendant.

No. 88-11-00866.

United States Court of International Trade.

July 12, 1991.

Stewart and Stewart, Eugene L. Stewart, Terence P. Stewart, James R. Cannon, Jr. and Todd C. Fineberg, Washington, D.C., for plaintiff.

Stuart M. Gerson, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civil Div., U.S. Dept. of Justice, Jane E. Meehan, Office of the Chief Counsel for Import Admin., U.S. Dept. of Commerce, Pamela A. Green, Washington, D.C., of counsel, for defendant.

Tanaka Ritger & Middleton, H. William Tanaka and Patrick F. O'Leary, Washington, D.C., for intervenor-defendants Bro. Industries, Ltd. and Brother Intern. Corp.

McDermott, Will & Emery, R. Sarah Compton and David J. Levine, Washington, D.C., for intervenor-defendant Nakajima All Co., Ltd.

OPINION & ORDER

AQUILINO, Judge:

The plaintiff has interposed a motion for partial judgment on the record compiled by the International Trade Administration, U.S. Department of Commerce ("ITA") sub nom. Portable Electric Typewriters From Japan Final Results of Antidumping Duty Administrative Review, 53 Fed.Reg. 40,926 (Oct. 19, 1988). As indicated, the review was carried out under the aegis of an antidumping-duty order for portable electric typewriters ("PETs") from Japan¹ and covered the years May 21, 1982 to May 20, 1983, May 21, 1983 to May 20, 1984, May 21, 1984 to April 30, 1985, and May 1, 1985 to April 30, 1986. It resulted in dumping margins for those respective periods of 0.62, 0.32, 0.44 and 4.00 percent for PETs manufactured by Brother Industries, Ltd. ("BIL").

BIL and its subsidiary Brother International Corp. ("BIC") have been participants in those review proceedings and brought an action of their own, CIT No. 88-11-00860, challenging the results thereof. Their motion for judgment on the agency record, which has been partially resolved sub nom. Brother Industries, Ltd. v. United States, 15 CIT ___, Slip Op. 91-58 (July 12, 1991), caused the plaintiff to file its motion for partial judgment on the same record per the following rationale:

... In that action No. 88-11-00860, both the defendant, International Trade Administration (ITA) and Smith Corona have conceded that certain errors were committed in the underlying agency determination that require a remand. Accordingly, this motion for partial judgment on the agency record is addressed specifically to those issues that Smith Corona wishes to pursue concerning the determination with respect to Brother. Should this Court determine in this action, too, that ITA erred, Smith Corona believes that the most efficient approach would be to remand all issues from both court actions simultaneously for consideration by the agency.²

Those issues, as articulated in the motion, are:

1. Whether ITA's conclusion that advertising expenses incurred by Brother as the "Official Typewriter of the Olympic Games" were "devoted exclusively" to Brother's EM-series office typewriters was supported by substantial evidence?

2. Whether ITA applied an improper legal standard, unsupported by its own regulations and precedent?

3. Whether, even assuming that the "Official Typewriter of the Olympics" was limited to promotion of office typewriters, a portion of the advertising expenses should have been allocated to portable electric typewriters sold by office equipment dealers?

4. Whether pursuant to 19 U.S.C. § 1677e(b)(3) ITA should have verified the allegation by Brother that no expenses were incurred during the period under review with respect to Brother's sponsorship of the 1988 Olympic Games?

5. Whether ITA properly adjusted foreign market value and U.S. price on account of credit costs incurred by Brother in the U.S. market, where ITA relied upon annual average credit costs submitted by Brother notwithstanding that the record established that credit terms were higher than average during three discrete promotional periods each year and varied by customer and period?

Jurisdiction of the court is pursuant to 28 U.S.C. § 1581(c).³

I

This court may not substitute its own judgment for that of the ITA even though it could come justifiably to a different conclusion had the court the burden of reviewing the matter de novo. Ipsco, Inc. v. United States, 13 CIT ___, ___, 710 F.Supp. 1581, 1583 (1989), aff'd in part, rev'd in part, 899 F.2d 1192 (Fed.Cir.1990), citing American Lamb Co. v. United States, 785 F.2d 994, 1001 (Fed.Cir.1986), and American Spring Wire Corp. v. United States, 8 CIT 20, 22, 590 F.Supp. 1273, 1276 (1984), aff'd sub nom. Armco Inc. v. United States, 760 F.2d 249 (Fed.Cir.1985). The standard of review is whether the agency determination is unsupported by substantial evidence on the record, or otherwise not in accordance with law. 19 U.S.C. § 1516a(b)(1)(B). The record is to be reviewed for "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Consolidated Edison Co. v. N.L.R.B., 305 U.S. 197, 229, 59 S.Ct. 206, 217, 83 L.Ed. 126 (1938).

A

Here, the ITA verified Brother questionnaire responses for the 1985-86 or sixth-review period. See Confidential Record Document ("ConfDoc") 110. Thereafter, the petitioner alluded anew⁴ to possible benefits to Brother's U.S. PET sales arising out of the sponsorship of the Olympic games and requested further investigation as to effect upon domestic prices.⁵ The ITA thereupon directed the petitioner's suggested questions on the matter to Brother. See R.Doc 379. See also R.Doc 349.

Brother's response indicated that it had acquired a license on April 27, 1982 from the Los Angeles Olympic Operating Committee ("LAOOC") to promote typewriters generally and worldwide. The plaintiff claims, nevertheless, that advertising expenses for the 1984 games began "accruing" as early as royalty payments made in January 1981.⁶ In either event, after the license issued, Brother expended increasing amounts, using 1984 Olympics symbols, to promote typewriters in Japan and overseas, some of which⁷ were accounted for in the pricing of PETs sold in the United States. That accounting is not being challenged here. However, the response also indicated that BIL did not include newspaper, magazine and billboard advertising expenses in calculating costs allocable to U.S. PET sales

since all magazine, newspaper and billboard advertisements depict an EM series office typewriter. As such these advertisements are not generic office typewriter advertisements and, according to the policy enunciated during the December 14, 1987 meeting, not allocable to those sales....

We advertise "Electronic Office Typewriters" with the Olympic Mark both in the U.S. and Japan. Samples of all types of Olympic advertisements are attached. These advertisements are inserted in magazines, newspapers, etc. in order to promote our electronic office typewriters.

ConfDoc 132, pp. 19, n. 1 and 20.

Prior to publication of the preliminary results, the petitioner argued that the 1984 Olympics advertising expenses were "attributable to typewriters used in offices and, as such, should be allocated at a minimum to sales of all typewriters sold by Brother for use in the office including the so-called `compact office' PETs within the scope of the antidumping duty order." ConfDoc 134, p. 7 (emphasis in original). Apparently, the preliminary results included ITA agreement in the form of an adjustment to the exporter's sales prices of certain PET models sold through office equipment dealers. At the subsequent hearing, the petitioner argued, among other things, that expenses for all advertisements displaying "Official Typewriter of the Olympics" should be allocated to all sales. Brother countered that the 1984 Olympics advertising was not related to PETs but to other products and that deduction of the expenses would be contrary to agency practice in other proceedings⁸ and also "an abrupt reversal" of the treatment of those expenses in the preceding review determination. The contention apparently proved convincing, as the ITA explained:

... We disregard advertising expenses when such expenses are incurred exclusively for models outside the scope of that order. In the previous review, we determined that Brother's 1984 Olympic advertising campaign was devoted exclusively to Brother's EM-series office machines. SCM has not submitted convincing evidence that Brother's PET models directly benefited from the Olympic advertisements. Furthermore, it would be inappropriate to allocated sic some of these expenses, which have been determined to be attributable to Brother's office typewriters, to PET models simply because they are sold through OEDs. We consider the advertising to be related to particular products, not to a particular channel of distribution.⁹

B

The plaintiff restates the facts of record now at length. In question are eight styles of advertisement¹⁰ which were run in magazines and newspapers and on a billboard in New York City's Times Square, copies of which have been appended to plaintiff's memorandum. The billboard depicted an EM-200 electronic typewriter frontally along with the words "Official Typewriter of the 1984 Olympic Games". The magazines and newspapers printed large-type messages a la

"To strive towards excellence. To attain it. That's the spirit of the gold ... and that's the spirit behind Brother" Pattern 3;

"History in the Making" Pattern 7;

"Gear-Up For The Olympics With Brother" Pattern 8;

"brother IS BETTER" Pattern 6;

"If it's the `Official Typewriter of the Los Angeles 1984 Olympic Games' you know its quality, you know it's brother" Pattern 1.

Most of these proclamations contained further blandishment in smaller-print, from which the plaintiff quotes the following:

"Brother has justifiably been designated the official typewriter of the 1984 Los Angeles Olympic Games."

"Brother strove towards excellence ... and attained it." Pattern 3

"The Olympics. For

...