Stanley Works (Langfang) Fastening Sys. Co. v. United States

• Decision Date: 27 November 2017
• Docket Number: Slip Op. 17–156,Court No. 14–00112
• Citation: 279 F.Supp.3d 1172
• Parties: The STANLEY WORKS (LANGFANG) FASTENING SYSTEMS CO., LTD., and Stanley Black & Decker, Inc., Plaintiffs, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

279 F.Supp.3d 1172

The STANLEY WORKS (LANGFANG) FASTENING SYSTEMS CO., LTD., and Stanley Black & Decker, Inc., Plaintiffs,

v.UNITED STATES, Defendant.

Slip Op. 17–156

Court No. 14–00112

United States Court of International Trade.

Dated: November 27, 2017

Lawrence J. Bogard, Neville Peterson, LLP, of Washington, DC, argued for plaintiff. With him on the brief was Peter J. Bogard.

Stephen C. Tosini, Senior Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for defendant. With him on the supplemental brief were Joyce R. Branda, Acting Assistant Attorney General, Jeanne E. Davidson, Director, Patricia M. McCarthy, Assistant Director and Carrie A. Dunsmore, Trial Attorney. Of counsel on the brief was Justin Becker, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce of Washington, DC. With them on defendant's notice of supplemental authority dated July 6, 2015, was Benjamin C. Mizer, Principal Deputy Assistant Attorney General, and of counsel on the notice was Michael T. Gagain, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce of Washington, DC. With them on defendant's notice of supplemental authority dated November 7, 2017, was Chad S. Readler, Acting Assistant Attorney General.

OPINION

Katzmann, Judge:

Differential pricing—an analytical method used to identify the presence of targeted dumping wherein a class or kind of foreign merchandise is being or is likely to be sold in the United States at less than its fair value and prices differ significantly among producers, regions, or time periods—has been the subject of an evolving jurisprudence. The case before the court provides an occasion to consider myriad issues arising from the deployment of the differential pricing methodology. In the final results of the fourth antidumping duty administrative review of Certain Steel Nails from the People's Republic of China, the United States Department of Commerce International Trade Administration ("Commerce") found that respondents The Stanley Works (Langfang) Fastening Systems Co., Ltd. and Stanley Black & Decker, Inc. (collectively "Stanley") are subject to a weighted average antidumping duty margin of 3.92 percent. 79 Fed. Reg. 19,316, 19,316 –18 (Dep't Commerce Apr. 8, 2014) (Final Results of the Fourth Antidumping Duty Administrative Review) ("Final Results") and accompanying Issues and Decision Memorandum ("IDM"). Stanley now asserts that the Final Results are neither in accordance with law nor supported by substantial evidence. Pl.'s Mot. for J. on the Agency R., Sept. 16, 2014, ECF No. 23 ("Pl.'s Br."). The Government opposes Stanley's motion. ECF No. 30 ("Def.'s Br."). The court concludes that: (1) Commerce's use of differential pricing to identify the presence of targeted dumping is a reasonable interpretation of § 777A of the Tariff Act of 1930, codified at 19 U.S.C. § 1677f–1 (2012),¹ does not contravene congressional intent, and is lawful; (2) Stanley failed to exhaust its administrative remedies in arguing that Commerce applied its Meaningful Difference Test unreasonably; and (3) the Final Results do not contravene 19 C.F.R. § 351.414(f)(1)(i) and (f)(3) (2008).

BACKGROUND

I. Antidumping Investigations and Analytical Tools

In an antidumping investigation, Commerce determines whether a class or kind of foreign merchandise is being or is likely to be sold in the United States at less than its fair value, pursuant to 19 U.S.C. § 1673. There are three methodologies that Commerce may use in an investigation to calculate dumping margins in accordance with the Tariff Act of 1930, as amended by the Uruguay Round Agreement Act ("URAA"), Pub L. No. 103–465, 108 Stat. 4809 (1994). Mid Continent Nail Corp. v. United States, 846 F.3d 1364, 1369 (2017). Commerce can compare the weighted average of the normal values² to the weighted average of the export prices³ (or constructed export prices⁴ ) for comparable merchandise, per 19 U.S.C. § 1677f–1(d)(1)(A)(i), or compare the normal values of individual transactions to the export prices (or constructed export prices) of individual transactions for comparable merchandise, per § 1677f–1(d)(1)(A)(ii). 19 U.S.C. § 1677f–1(d)(1). These comparison methods are known, respectively, as the average-to average ("A–to–A") method and the transaction-to-transaction ("T–to–T") method. When certain criteria are met, Commerce may apply a third, alternative comparison method, the average-to-transaction ("A–to–T") method, wherein it compares averaged values to the values of individual transactions.⁵ Commerce uses this A–T methodology to determine whether a respondent has engaged in "targeted dumping," that is, sales at less-than-fair-value made to certain purchasers, in certain regions, or during certain periods of times, despite complementary sales at fair value elsewhere. See 19 U.S.C. § 1677f–1(d). Commerce may utilize the A–T method so long as two conditions are met:

(i) there is a pattern of export prices (or constructed export prices) for comparable merchandise that differ significantly among purchasers, regions, or periods of time, and

(ii) [Commerce] explains why such differences cannot be taken into account using a method described in paragraph (1)(A)(i) [the A–A methodology] or (ii) [the T–T methodology].

19 U.S.C. § 1677f–1(d)(1)(B).

In contrast to the section of the statute covering investigations, the section which addresses administrative reviews— 19 U.S.C. § 1677f–1(d)(2) —contains no provision specifying the comparison method applicable to administrative reviews.⁶ Commerce has stated that it promulgated 19 C.F.R. § 351.414(b)⁷ to fill this gap in the statute:

19 C.F.R. 351.414(b) describes the methods by which NV [Normal Value] may be compared to export price or constructed export price in less-than-fair-value investigations and administrative reviews (i.e., A to–A, T–to–T, and A–to–T). These comparison methods are distinct from each other. When using T–to–T or A–to–T comparisons, a comparison is made for each export transaction to the United States. When using A–to–A comparisons, a comparison is made for each group of comparable export transactions for which the export prices, or constructed export prices, have been averaged together (i.e., for an averaging group). The Department does not interpret the Act or the SAA [Statement of Administrative Action] to prohibit the use of the A–to–A method in administrative reviews, nor does the Act or the SAA mandate the use of the A–to–T method in administrative reviews. 19 C.F.R. 351.414(c)(l) (2012) fills the gap in the statute concerning the choice of a comparison method in the context of administrative reviews. In particular, the Department determined that in both less-than-fair value investigations and administrative reviews, the A–to–A method will be used "unless the Secretary determines another method is appropriate in a particular case" .... [Commerce also] look [s] to practices employed by the Department in investigations for guidance on this issue.⁸

IDM at 19 (quoting 19 C.F.R. § 351.414(c)(l) ); see Statement of Administrative Action, accompanying the URAA, H.R. No. 103–316, vol. 1 (1994), reprinted in 1994 U.S.C.CAN. 4040 ("SAA").⁹

To execute the statutory dictates of 19 U.S.C. § 1677f–1(d)(1)(B)(i), supra n.5, and to determine specifically whether to apply an alternate comparison method, Commerce conducts an analysis known as differential pricing. Preliminary Decision Memorandum ("PDM") at 14, P.R. 258, accompanying Certain Steel Nails from the People's Republic of China: Preliminary Results of the Fourth Antidumping Duty Administrative Review, 78 Fed. Reg. 56,861 (Dep't Commerce Sept. 16, 2013), P.R. 257. The differential pricing analysis consists of three tests, segregated into two stages. See Apex Frozen Foods Private Ltd. v. United States, 862 F.3d 1337, 1342 n.2 (Fed. Cir. 2017) ; PDM at 15.

In the first stage, Commerce utilizes two tests to determine whether there exists a pattern of prices that differ significantly, such that an alternative comparison method should be considered, pursuant to 19 U.S.C. § 1677f–1(d)(1)(B)(i). PDM at 15. Commerce begins by applying the Cohen's d test ("CDT"), which it characterizes as "a generally recognized statistical measure of the extent of the difference between the mean of a test group and the mean of a comparison group."¹⁰ Id.

First, for comparable merchandise, the Cohen's d test is applied when the test and comparison groups of data each have at least two observations, and when the sales quantity for the comparison group accounts for at least five percent of the total sales quantity of the comparable merchandise. Then, the Cohen's d coefficient is calculated to evaluate the extent to which the net prices to a particular purchaser, region or time period differ significantly from the net prices of all other sales of comparable merchandise. The extent of these differences can be quantified by one of three fixed thresholds defined by the Cohen's d test: small, medium or large. Of these thresholds, the large threshold provides the strongest indication that there is a significant difference between the means of the test and comparison groups, while the small threshold provides the weakest indication that such a difference exists. For this analysis, the difference was considered significant if the calculated Cohen's d coefficient is equal to or exceeds the large (i.e., 0.8) threshold.

PDM at 15.

Thus, the net price to a particular purchaser, region or time period "passes" the CDT if its calculated Cohen's d coefficient is 0.8 or greater. Commerce next applies the Ratio Test, wherein it assesses the extent of the significant price differences for all sales as measured by the CDT:

If the value of sales to purchasers, regions, and time periods that pass the Cohen's d test account for 66 percent or more of the value of total sales, then the identified

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