Welcom Prods., Inc. v. United States
| Decision Date | 27 September 2012 |
| Docket Number | Court No. 11-00370,Slip Op. 12 - 124 |
| Parties | WELCOM PRODUCTS, INC., Plaintiff, v. UNITED STATES, Defendant, and GLEASON INDUSTRIAL PRODUCTS, INC., and PRECISION PRODUCTS, INC. Defendant-Intervenors. |
| Court | U.S. Court of International Trade |
Before: R. Kenton Musgrave, Senior Judge
OPINION
J. Kevin Horgan, Judith L. Holdsworth and Gregory S. Menegaz, of deKieffer & Horgan PLLC, Washington, D.C., for plaintiff.
Joshua E. Kurland, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Washington, D.C., for defendant. With her on the brief were Stewart F. Delery, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Claudia Burke, Assistant Director. Of counsel on the brief was Nathaniel J. Halvorson, Attorney, Office of Chief Counsel for Import Administration, U.S. Department of Commerce.
Matthew P. Jaffe, Neville Peterson LLP, Washington, D.C., for defendant-intervenors.Musgrave, Senior Judge: In this case, the U.S. Department of Commerce, International Trade Administration ("Commerce") found that one model of hand truck was within the scope of an antidumping order while two others were not. Plaintiff claims that Commerce erred in finding the one model within scope because it previously found that similar models were outside the scope of the order, while defendant-intervenors claim that Commerce erred by finding the two other models outside scope. The government defends Commerce's actions on both counts. For the reasons explained below, plaintiff's request for remand is granted, and defendant-intervenor's request for reversal of the scope findings is denied.
In 2004, Commerce entered an antidumping duty order on certain varieties of hand trucks manufactured in China. See Notice of Final Determination of Sales at Less Than Fair Value: Hand Trucks and Certain Parts Thereof from the People's Republic of China, 69 Fed. Reg. 60,980 (Dep't Commerce, Oct. 14, 2004). The antidumping order's scope includes a "utility cart exclusion" which provides in relevant part as follows:
Excluded from the scope are small two-wheel or four-wheel utility carts specifically designed for carrying loads like personal bags or luggage in which the frame is made from telescoping tubular material measuring less than 5/8 inch in diameter. . . .
Notice of Antidumping Duty Order: Hand Trucks and Certain Parts Thereof From the People's Republic of China, 69 Fed. Reg. 70,122 (Dec. 2, 2004) ("Order").
Commerce analyzed the utility cart exclusion in a scope ruling involving plaintiff WelCom Products, Inc.'s ("WelCom") 2004 Magna Cart model at the time of the original antidumping investigation that gave rise to the antidumping order. See Memo from Analysts to Jeffrey A. May, Scope Exclusion/Clarification Requests (Sept. 3, 2004) (P.D. 2 at Ex. 2) ("2004Magna Cart Ruling"). In the 2004 Magna Cart Ruling, Commerce concluded that a telescoping center tube attached between a cross member and the toe plate was part of the cart's frame and that the utility cart exclusion applied because that tube measured less than 5/8" in diameter. 2004 Magna Cart Ruling at 15. Commerce stated that "[s]ince the scope exclusion does not specify that the frame be exclusively constructed of telescoping tubular material less than 5/8" in diameter, or further define which parts of the frame must telescope, a reasonable interpretation of the scope exclusion language is that the primary focus should be on the diameter of the tubular material comprising the telescoping section(s) of the frame." Id. at 16.
Commerce construed this interpretation of the utility cart exclusion in a 2008 scope ruling concerning WelCom's MCX model hand truck. See Memo from Katharine G. Huang to Stephen J. Claeys, Request by WelCom Products (MCX Magna Cart) (May 12, 2008) Ex. 3 to WelCom Scope Request ("MCX Ruling"). Unlike the 2004 model, the MCX model lacked the center telescoping tube and featured telescoping side rails comprised of three segments, only one of which measured less than 5/8" in diameter. The MCX Ruling stated that "[c]onsistent with the 2004 Magna Cart Scope Ruling . . . since both telescoping sections are integral components of the frame, and we have determined that the frame does not have to be exclusively constructed of telescoping material less than 5/8 inch in diameter, it is reasonable to focus our analysis on whether either telescoping section of the frame is less than 5/8 inch in diameter." MCX Ruling at 15. Because one section of the telescoping frame was less than 5/8" in diameter, the MCX was determined to be outside the scope of the Order. Id. Other scope rulings affirmed this result. See Ex. 6 to WelCom Scope Request at 6 (June 10, 2009 SafcoScope Ruling) and Ex. 7 to WelCom Scope Request at 5-6 (Mar. 26, 2010 Packard Scope Ruling).
On October 12, 2010, WelCom asked Commerce to determine whether three of its Magna Cart hand trucks (models MC2, MCI and MCK) were within the scope of the Order. WelCom Request for Scope Clarification (Oct. 8, 2010). Commerce preliminarily concluded that the MCK, MC2 and MCI did not qualify for the utility scope exclusion on May 9, 2011. Hand Trucks and Certain Parts Thereof from the People's Republic of China (PRC): Preliminary Scope Ruling - WelCom Products (May 9, 2011) ("Preliminary Scope Ruling"). In the Preliminary Scope Ruling, Commerce reversed the earlier rulings' interpretations of the utility cart scope exclusion. The MC2 and MCI models, which resembled the cart in the 2004 Magna Cart Ruling, were preliminarily found within scope because Commerce decided the single vertical telescoping tube was not part of the frame. Preliminary Scope Ruling at 7. The MCK model, which resembled the MCX model and the other models ruled outside scope in 2008, was deemed in scope because its telescoping frame rails were not entirely less than 5/8" in diameter. Id.
After considering comments by the parties, Commerce ultimately found the MC2 and MCI models were outside the scope of the Order and the MCK model was within its scope. See Hand Trucks and Certain Parts Thereof from the People's Republic of China (PRC): Final Scope Ruling - WelCom Products (MC2 Magna Cart, MCI Magna Cart, and MCK Magna Cart), Memorandum from Steve Bezirganian, International Trade Analyst to Christian Marsh, Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations (Sept. 6, 2011) ("Final Scope Ruling"). Commerce reversed its preliminary finding on the MC2 and MCImodels in deference to the 2004 Magna Cart Ruling's finding that the center telescoping arm was part of the frame.
The MCK model, although similar to a model found outside scope in the three later rulings, was found in scope in the Final Scope Ruling because the telescoping portion of the frame was not entirely less than 5/8" in diameter. The earlier rulings were found to have "improperly expanded" the 2004 Magna Cart Ruling's interpretation of the scope language. Final Scope Ruling at 17. Commerce determined that in order to fit within the exclusion, the entire telescoping portion of the frame must be less than 5/8" in diameter. Id. at 16. The MCK model was in scope because two sections of the telescoping frame were more than 5/8" in diameter.
Plaintiff WelCom challenges the Final Scope Ruling's determination that the MCK model is in scope; defendant-intervenors Gleason Indus. Prod., Inc. and Precision Prod., Inc. ("Gleason") challenge the determination that the MC2 and MCI models are outside the scope of the Order. All three models at issue here are two-wheel utility carts which but for the utility cart exclusion would fall within the scope of the Order.
WelCom argues the utility cart exclusion does not "require" that all telescoping portions of the frame be less than 5/8" in diameter. Plaintiff's Memorandum in Support of its Motion for Judgment on the Agency Record ("Pl. Memo"), at 15. Commerce erred by not following the MCX ruling and its progeny because the MCK model is indistinguishable in construction and features with the MCX and Safco/Packard models involved in the earlier rulings. Pl. Memo at 20. WelCom argues that the case should be decided according to thefactors set forth in 19 C.F.R. § 351.225(k)(1). Pl. Memo at 16, citing Duferco Steel Inc. v. United States, 296 F.3d 1087 (Fed. Cir. 2002) and Arcelormittal Stainless Belg. N.V. v. United States, 2011 Ct. Intl. Trade LEXIS 82, Slip Op. 11-82, at *6-7 (CIT, July 12, 2011) ( Duferco).
WelCom argues Commerce incorrectly construed the 2004 Magna Cart Ruling because that ruling provides that the entire telescoping portion of the frame need not be less than 5/8" in diameter. Pl. Memo at 8, 21. Commerce overturned findings made in its earlier MCX line of rulings without providing adequate reasoning for its reversal of its position. Id. WelCom also argues Commerce failed to address its argument that the 2004 Magna Cart was not reflected in the ITC's injury analysis. Id. at 26-27. In addition, WelCom argues, the MCK model should be outside the scope because there are no similar hand trucks being made in the U.S. Pl. Memo at 17, 31. The matter should be remanded to Commerce for an explanation of why it found the lack of U.S. production of similar merchandise "irrelevant". Id. at 27, quoting Final Scope Ruling at 18.
Gleason argues that Commerce erred by finding the MC2 and MCI models were outside scope in the Final Scope Ruling. Memorandum of Points and Authorities in Support of Gleason's Motion for Judgment on the Agency Record ("Gleason Memo") at 8. Commerce erred by relying on the 2004 Magna Cart scope ruling. Id. According to Gleason, Commerce's decision is unsupported by...
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