Yuasa-General Battery Corp. v. US

• Decision Date: 22 May 1987
• Docket Number: Court No. 85-04-00483.
• Citation: 661 F. Supp. 1214
• Parties: YUASA-GENERAL BATTERY CORPORATION, General Battery Corporation, Plaintiffs, v. UNITED STATES, United States International Trade Commission, Defendants, and Taiwan Electric Appliance Manufacturers Association et al., Intervenor-Defendants.
• Court: U.S. Court of International Trade

661 F. Supp. 1214

YUASA-GENERAL BATTERY CORPORATION, General Battery Corporation, Plaintiffs, v. UNITED STATES, United States International Trade Commission, Defendants and Taiwan Electric Appliance Manufacturers Association et al., Intervenor-Defendants.

Court No. 85-04-00483.

United States Court of International Trade.

May 22, 1987.

Brownstein Zeidman and Schomer, Washington, D.C. (Steven P. Kersner and Donald S. Stein), for plaintiffs.

Office of General Counsel, U.S. International Trade Commission, Washington, D.C. (Lyn M. Schlitt, Michael P. Mabile and Judith M. Czako), for defendants.

Ablondi & Foster, P.C., Washington, D.C. (Italo H. Ablondi, F. David Foster and Sturgis M. Sobin), for intervenor-defendants.

Opinion & Order

AQUILINO, Judge:

The U.S. International Trade Commission ("ITC") has reached a preliminary determination that there is no reasonable indication that an industry in

the United States is materially injured or threatened with material injury ... by reason of imports from Taiwan of 12-volt motorcycle batteries, provided for in item 683.05 of the TSUS ..., which are alleged to be sold in the United States at less than fair value (LTFV).¹

The companies who petitioned the ITC for relief commenced this action for judicial review of the foregoing negative determination. Their motion for judgment on the agency record, however, relies heavily on an issue of law which has since been resolved by the Court of Appeals for the Federal Circuit in a manner adverse to plaintiffs' position.

I

The standard of judicial review of a preliminary ITC determination is whether it is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. 19 U.S.C. § 1516a(b)(1)(A).

Plaintiffs' transcendent point is that the scope of the Commission's authority in making a preliminary determination under the Trade Agreements Act of 1979 is circumscribed by a showing of mere "possibility" of injury on their part and by a proscription of weighing of conflicting evidence on the ITC's part in accordance with Republic Steel Corporation v. United States, 8 CIT 29, 591 F.Supp. 640 (1984), and Jeannette Sheet Glass Corporation v. United States, 9 CIT ___, 607 F.Supp. 123 (1985).

The plaintiffs contend that the ITC failed to follow these cases in reaching its determination. The record herein supports this contention, and the defendants admit as much. See generally Defendants' Memorandum, pp. 12-40. That is:

The Commission respectfully renews its contention that, in a preliminary antidumping or countervailing duty ... investigation, the Commission may — indeed, must — evaluate all of the evidence on the record, including evidence obtained from parties opposing the petition for relief, in order to determine whether there is reasonable indication of material injury, or threat thereof, by reason of allegedly unfair imports....

The Commission respectfully notes its disagreement with the Court's rulings in Republic Steel Corp. ... regarding the parameters of the "reasonable indication" standard applicable to Commission preliminary investigations ... that an affirmative preliminary determination merely "commences" an investigation.... Thus, under that ruling, the Commission's preliminary determination is "pre-investigatory" ... and the Commission may not conduct an "investigation" by obtaining and weighing conflicting evidence to reach its determination. Id. at 12-14 (emphasis in original, footnote omitted).

This position of the ITC has now been sustained on appeal. That is, American Lamb Company v. United States, 9 CIT ___, 611 F.Supp. 979 (1985), followed Republic Steel and Jeannette on the basis of stare decisis. The court, however, certified an interlocutory appeal from its remand order which resulted in a decision by the Federal Circuit that the "ITC's method of proceeding in applying the statutory reasonable indication standard does not contravene but accords with clearly discernible legislative intent and is sufficiently reasonable." American Lamb Company v. United States, 785 F.2d 994, 1004 (Fed.Cir. 1986). In other words, "Congress intended application of a narrow judicial review standard" id., and a "reviewing court must accord substantial weight to an agency's interpretation of a statute it administers", 785 F.2d at 1001, citing Zenith Radio Corporation v. United States, 437 U.S. 443, 450-51, 98 S.Ct. 2441, 2445, 57 L.Ed.2d 337 (1978), and Udall v. Tallman, 380 U.S. 1, 16, 85 S.Ct. 792, 801, 13 L.Ed.2d 616 (1965). Thus, the holding of Republic Steel relied on below in American Lamb and in other actions was reversed.

This decision also resolves — negatively — plaintiffs' primary point. See American Lamb Company v. United States, 785 F.2d at 998, n. 4.

II

As indicated above, the plaintiffs presented their motion for judgment prior to the decision of the Court of Appeals, which necessarily has an impact on their other points:

A. Definition of Like Product

The plaintiffs challenge the ITC's analysis of the merchandise at issue. The Trade Agreements Act, 19 U.S.C. § 1677(4)(A), defines "industry" in general to mean "the domestic producers as a whole of a like product", which term is defined in subparagraph (10) of section 1677 as

a product which is like, or in the absence of like, most similar in characteristics and uses with, the article subject to an investigation under this subtitle.

The plaintiffs characterize the proceeding below as having been "directed against Taiwanese motorcycle batteries being sold or offered for sale in the replacement motorcycle market"². Their petition stated further:

... This replacement market is separate and distinct from the market for original equipment manufacturers ("OEM"). To date, the Taiwanese product has not been sold, or offered for sale, in the OEM market. Consequently, this petition is addressed to the problems of the U.S. manufacturers selling in the replacement market. R.Doc.1, p. 11, n. 3.

Despite this attempted refinement, the ITC determined to define the merchandise under investigation in such a manner as to encompass the entire market for 12-volt motorcycle batteries in the United States, not just that for replacements. See Pub. 1654 at 3-4. Counsel for the defendants contend:

Under section 1677 (10), the Commission's decision regarding like product is made on the basis of the characteristics and uses of the product under investigation, not on its marketing and distribution. There are no differences in characteristics and uses between 12-volt motorcycle batteries sold in the original equipment (OE) market, and those sold in the replacement market. 12-volt motorcycle batteries sold as original equipment are identical in characteristics to 12-volt motorcycle batteries with the same specifications sold as replacement parts. Whether sold as original equipment or as replacement equipment, they share the same basic use as a source of electrical power for motorcycles. Batteries for the OE market and batteries for the replacement market are manufactured in the same plants, using the same production processes, equipment, and employees. A different distribution system or a different end user using the product for the same purpose is not a sufficient basis upon which to decide that two like products exist.³

This position, which has support in the record, is in accordance with law within the meaning of 19 U.S.C. § 1516a(b)(1)(A), and it was not arbitrary, capricious or an abuse of discretion for the ITC to have taken such an approach. In reaching this conclusion, the court does not intend to imply that the Commission did not have discretion to reach its determination via the route urged by the petitioners, rather that it was not required to do so by the Trade Agreements Act.

B. Material-Injury Analysis

Plaintiffs' motion challenges the ITC's failure to find reasonable indication of material injury within the meaning of that act⁴ on three grounds, to wit, (1) it "erred in its analysis of import trends", (2) the Commission erred in concluding that the "difficulties" of the other American manufacturer, the Exide Corporation, were caused by factors other than Taiwanese imports and (3) its "analysis of price suppression/depression in the U.S. market and of lost sales distorted the findings" made by the staff. Plaintiffs' Brief, pp. 29-37.

Initially, it is useful to point out that the ITC had rendered a final determination, albeit negative, sub nom. Motorcycle Batteries from Taiwan, 47 Fed.Reg. 13,609, USITC Pub. 1228, in March 1982. Thus, the Commission was not writing on an original slate in this matter. In particular, that investigation had led to a listing of motorcycle-battery imports for the period 1978 to September 1981. See USITC Pub. 1228 at A-24, A-34.

Plaintiffs' first specification of error centers on the ITC's use of the word "comparable"⁵ in assessing the levels of imports in 1979 and 1980 and in 1984. See Plaintiffs' Brief, pp. 29-30. While this point has some merit in view of the statistics compared, any implicit error is harmless. Moreover, the investigation found that the two domestic producers had themselves contributed to these figures by importing batteries from Taiwan. See Confidential Document ("ConfDoc") 12 at A-7; Pub. 1654 at 5, A-18.

Plaintiffs' other two specifications relate to causation. The defendants argue that, since the ITC found no reasonable indication of material injury, it was not obligated to consider the relationship between the condition of the domestic industry and the challenged imports, relying on American Spring Wire Corporation v. United States, 8 CIT 20, 23, 590 F.Supp. 1273, 1276 (1984), aff'd sub nom. Armco Inc. v. United States, 760 F.2d 249 (Fed.Cir.1985). See Jeannette Sheet Glass Corporation v. United States, 9 CIT at 164, 607 F.Supp. at 132 (ITC not required to reach issue of causation in absence of finding of injury or retardation during preliminary investigation of alleged dumping)....