Timken U.S. Corp. v. U.S.

• Decision Date: 31 August 2005
• Docket Number: No. 05-1030.,05-1030.
• Citation: 421 F.3d 1350
• Parties: TIMKEN U.S. CORPORATION, Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee, and NSK Ltd., NSK-RHP Europe Ltd., RHP Bearings Ltd., NSK Bearings Europe Ltd., and NSK Corporation, Defendants-Appellees, and NTN Bearing Corporation of America, NTN Bower Corporation, NTN-BCA Corporation, and NTN Corporation, Defendants-Appellees, and SKF USA Inc. and SKF GMBH, Defendants, and FAG Kugelfischer Georg Schafer AG, the Barden Corporation (U.K.) Limited, the Barden Corporation, FAG Italia S.P.A., and FAG Bearings Corporation, Defendants-Appellees, and Koyo Seiko Co., Ltd. and Koyo Corporation of U.S.A., Defendants.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1350

421 F.3d 1350

TIMKEN U.S. CORPORATION, Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee, and NSK Ltd., NSK-RHP Europe Ltd., RHP Bearings Ltd., NSK Bearings Europe Ltd., and NSK Corporation, Defendants-Appellees, and NTN Bearing Corporation of America, NTN Bower Corporation, NTN-BCA Corporation, and NTN Corporation, Defendants-Appellees, and SKF USA Inc. and SKF GMBH, Defendants, and

FAG Kugelfischer Georg Schafer AG, the Barden Corporation (U.K.) Limited, the Barden Corporation, FAG Italia S.P.A., and FAG Bearings Corporation, Defendants-Appellees, and

Koyo Seiko Co., Ltd. and Koyo Corporation of U.S.A., Defendants.

No. 05-1030.

United States Court of Appeals, Federal Circuit.

August 31, 2005.

Geert M. De Prest, Stewart and Stewart, of Washington, DC, argued for plaintiff-appellant. With him on the brief were Terence P. Stewart and William A. Fennell. Of counsel were Jordan Taylor and Lane S. Hurewitz.

Marc A. Bernstein, Attorney, Office of the General Counsel, United States International Trade Commission, of Washington, DC, argued for defendant-appellee United States. With him on the brief were James M. Lyons, General Counsel, and Andrea C. Casson, Acting Assistant General Counsel.

Matthew P. Jaffe, Crowell & Moring, LLP, of Washington, DC, for defendants-appellees NSK Ltd., et al. With him on the brief was Robert A. Lipstein.

Donald J. Unger, Barnes, Richardson & Colburn, of Chicago, Illinois, for defendants-appellees NTN Bearing Corporation of America, et al. With him on the brief were Kazumune V. Kano and David G. Forgue.

Mark E. Pardo, Grunfeld, Desiderio, Lebowitz, Silverman and Klestadt LLP, of New York, New York, argued for defendants-appellees FAG Kugelfischer Georg Schäfer AG, et al. On the brief were Max F. Schutzman, Andrew B. Schroth, and Adam M. Dambrov. Of counsel was William F. Marshall.

Before MAYER, RADER, and DYK, Circuit Judges.

DYK, Circuit Judge.

Timken U.S. Corporation ("Timken") appeals from the judgment of the Court of International Trade, affirming the determination of the International Trade Commission ("Commission") on the agency record. Timken U.S. Corp. v. United States, 2004 WL 1781348, No. 00-08-00385 (CIT Aug. 9, 2004). We conclude that the statutory directive that the Commission address "relevant arguments . . . made by interested parties" is a codification of preexisting standards of judicial review. We further conclude that the Commission properly considered relevant economic factors in the context of the relevant business cycle. Because we conclude that the Commission's determination under the relevant standard of judicial review is in accordance with law, not arbitrary or capricious, and supported by substantial evidence, we affirm the judgment of the Court of International Trade.

BACKGROUND

In 1989 the Commission determined domestic industry was being materially injured by reason of imports of cylindrical roller bearings ("CRBs") being sold at lower than fair value in the United States. Antidumping duties were accordingly imposed on CRB imports from France, Germany, Italy, Japan, Sweden, and the United Kingdom.

After the antidumping duties were imposed, the performance of the domestic CRB industry underwent a dramatic improvement. In nominal terms, domestic consumption of CRBs more than tripled between 1987 and 1998. Capacity utilization increased and stood at over 80 percent in 1998. The number of production workers more than doubled between 1987 and 1998.

In 1999, the Commission instituted five-year reviews to determine whether the revocation of the antidumping orders would likely lead to a continuation or recurrence of material injury on a domestic industry. In order to revoke the antidumping order, the Commission was required to consider various statutory factors including any likely volume effects, price effects and impact of imports resulting from the revocation. The Commission conducted a full review including a public hearing, allowing interested parties to comment. A wide variety of comments was received.

During the review process, Timken (seeking the continuation of the antidumping duties) urged the Commission to collect data on prices in third-country markets in addition to those in the United States. The Commission asked producers and importers to "compare market prices of cylindrical roller bearings in your home [foreign] market, the United States, and third-country markets, if known." J.A. at 1421.

In their responses to Commission questions, a few interested parties submitted information indicating that prices in the United States market were higher than prices in some third-country markets, though there was no extensive compilation of the prevailing market prices for CRBs in various third-country markets. Based on the limited data tending to show higher United States prices compared to some third-country markets, Timken argued that the revocation of antidumping duties would lead importers to divert sales of CRBs from third-countries with lower prices into the United States markets, and that the additional imports would then depress prices in the United States. J.A. at 485-86. Timken, among other arguments, also argued that the dramatic improvements in the domestic CRB industry were partly attributable to a favorable upswing in the business cycle of the general manufacturing sector, and that the domestic industry remained at risk of material injury when the business cycle turned downward.

Despite Timken's arguments, the Commission's final determination revoked the antidumping orders on CRBs from France, Germany, Italy, Japan, the United Kingdom, and Sweden. 65 Fed.Reg. 39,925 (June 28, 2000). The Commission found that revocation of the antidumping orders was not likely to result in a significant additional volume of imports because most major subject foreign producers were affiliated with domestic producers and thus were unlikely to increase import volumes or reduce prices to the extent of harming their domestic affiliates, and noted that, despite falling duty rates for the subject countries, imports from subject countries had grown at a slower rate than non-subject imports. Certain Bearings from China, France, Germany, Hungary, Italy, Japan, Romania, Singapore, Sweden, and the United Kingdom, Nos. AA1921-143, 731-TA-341, 731-TA-343-345, 731-TA-391-397, 731-TA-399 (Int'l Trade Comm'n June 2000) ("Final Determination"). The Commission also found that, in any event, because of the significant growth in demand, "even a different conclusion on likely volume would not lead [it] to reach an affirmative determination regarding likelihood of recurrence or continuation of material injury." Id. at 53 n. 371. Additionally, the Commission found no likely significant price effects because of no likely volume effects, and further because prices in the CRB market are less elastic due to customization and the importance of non-price factors; and that any increase in imports were unlikely to have significant effect on domestic industry given the strong and growing demand for CRBs. Id. at 54. In evaluating the likely price effects upon revocation, the Commission noted the general lack of pricing data. Id. ("The pricing data gathered in the course of these reviews covers very few sales of either domestic or imported CRBs."). The Commission's decision was predicated on a staff report that concluded that the parties were in disagreement as to prices in third-countries, stating the argument that "the evidence regarding whether prices in the United States are higher than elsewhere is controvertible and, in the absence of clear evidence, the Commission should not take this factor into account." J.A. at 349. However, the final determination made no specific mention of third-country prices or their effect on the possibility of foreign producers diverting their product into the United States market. Additionally, the Commission did not address the effects of the business cycle on demand.

Timken filed suit in the Court of International Trade, challenging the Commission's final determination on the bases, inter alia, that the Commission failed to address the evidence of lower third-country prices and that the Commission failed to consider the relevant business cycle. The Court of International Trade rejected the contention that the Commission should have explicitly considered whether third-country prices were lower and, if so, whether that would likely lead to continuation or recurrence of material injury, holding that "[a]lthough the Commission did not explicitly reference each piece of evidence it examined, the Court is satisfied that it considered all the relevant data in rendering the Final Determination." Timken U.S. Corp. v. United States, 310 F.Supp.2d 1327, 1340 (CIT 2004). The court nonetheless remanded to the Commission to reconsider its final determination and "further explain the Commission's findings in the context of the CRBs [sic] business cycle." Id. at 1346.¹

On remand, the Commission found that although in some industries, "record information about the product at issue indicates well recognized and regular growth cycles, life cycles, or seasonality," the CRB industry did not involve such a product and "we do not find the CRB industry to be characterized by a regular and measurable business cycle." J.A. at 412. The Commission in particular noted that CRBs are used in a wide variety of industries, comprise only a small share of the cost in those industries, and are manufactured for highly specialized uses for which there are few ready substitutes. In light of these factors the Commission concluded that downturns in demand from particular customers or industries would have limited effect on the CRB industry as a whole. Id. The Commission reaffirmed its prior determination, revoking the antidumping orders.

The Court of International Trade affirmed the Commission's remand determination in its entirety. Timken appeals to this...