Zhejiang Native Produce & Animal By-Prods. Import & Export Corp. v. United States

• Decision Date: 06 September 2011
• Docket Number: Court No. 02-00057
• Court: U.S. Court of International Trade
• Parties: ZHEJIANG NATIVE PRODUCE & ANIMAL BY-PRODUCTS IMPORT & EXPORT CORP., et al., Plaintiffs, v. UNITED STATES, Defendant, and THE AMERICAN HONEY PRODUCERS ASSOCIATION and THE SIOUX HONEY ASSOCIATION, Def.-Ints.

ZHEJIANG NATIVE PRODUCE & ANIMAL BY-PRODUCTS IMPORT & EXPORT CORP., et al., Plaintiffs,

v. UNITED STATES, Defendant,andTHE AMERICAN HONEY PRODUCERS ASSOCIATION and THE SIOUX HONEY ASSOCIATION, Def.-Ints.

Court No. 02-00057

UNITED STATES COURT OF INTERNATIONAL TRADE

Dated: September 6, 2011

Before: Richard K. Eaton, Judge

OPINION AND ORDER

[The United States Department of Commerce's Results of Redetermination Pursuant to Remand are remanded.]

Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP (Bruce M. Mitchell, Mark E. Pardo, and Ned H. Marshak), for plaintiffs Zhejiang Native Produce & Animal By-Products Import & Export Corp., Kunshan Foreign Trade Co., China (Tushu) Super Food Import & Export Corp., High Hope International Group Jiangsu Foodstuffs Import & Export Corp., National Honey Packers & Dealers Association; Alfred L. Wolff, Inc.; C.M. Goettsche & Co., China Products North America, Inc., D.F. International (USA) Inc., Evergreen Coyle Group, Inc., Evergreen Produce, Inc., Pure Sweet Honey Farm, Inc., and Sunland International, Inc.

Tony West, Assistant Attorney General; Jeanne E. Davidson, Director, Reginald T. Blades, Jr. , Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Jane C. Dempsey); Office of the Chief Counsel for Import Administration, United States Department of Commerce (Sapna

Sharma), of counsel, for defendant United States.

Kelley Drye & Warren, LLP (Michael J. Coursey and R. Alan Luberda), for defendant-intervenors the American Honey Producers Association and the Sioux Honey Association.

Eaton, Judge: This case involves the Department of Commerce's (the "Department" or "Commerce") finding of critical circumstances in the final results of Honey From the People's Republic of China ("PRC"), 66 Fed. Reg. 50,608, 50,610 (Dep't of Commerce Oct. 4, 2001) (notice of final determination of sales at less than fair value), as amended by Honey from the PRC, 66 Fed. Reg. 63,670 (Dep't of Commerce Dec. 10, 2001) (notice of amended final determination of sales at less than fair value and antidumping duty order) (the "Final Results"). It is now before the court following the most recent remand order directing the Department to reconsider its critical circumstances determination. See Zhejiang Native Produce & Animal By-Products Imp. & Exp. Corp. v. United States, 34 CIT _, Slip-Op. 10-30 (Mar. 24, 2010) (not reported in the Federal Supplement) ("Zhejiang IV"). In remanding the case, the court observed that "Commerce has the authority to exercise its discretion to apply any other reasonable method or look to any other reasonable time period in making its critical circumstances determination." Id. at _, Slip Op. 10-30 at 20.

On December 8, 2010, Commerce filed the Results ofRedetermination Pursuant to Remand (the "Second Remand Results"), finding that critical circumstances existed for Zhejiang Native Produce & Animal By-Products Import & Export Corp. ("Zhejiang") because "record evidence demonstrates that importers knew or should have known that the exporter was selling the subject merchandise at less than its fair value. . . ." Second Remand Results at 42.

Plaintiffs¹ ask the court find that critical circumstances did not exist. The defendant-intervenors support the Second Remand Results in their entirety.² Commerce, in addition to seeking to have the Second Remand Results sustained, asks for a further remand so that it might use the same methodology, as employed here, for the other named plaintiffs.

The court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (2006) and 19 U.S.C. §§ 1516a(a)(2)(A)(i)(II) and (B)(i) (2006). For the reasons set forth below, the Second Remand Results arenot supported by substantial evidence and the matter is remanded to Commerce with instructions.

BACKGROUND

In 1994, Commerce initiated an unfair trade investigation of honey from the PRC. Subsequently, the investigation was halted and the Department entered into a suspension agreement with the PRC. See Honey From the PRC, 60 Fed. Reg. 42,521 (Dep't of Commerce Aug. 16, 1995) (suspension of investigation) (the "Suspension Agreement"). The Suspension Agreement was in effect from August 16, 1995 through August 16, 2000. Honey From the PRC, 65 Fed. Reg. 46,426 (Dep't of Commerce July 28, 2000) (termination of suspended antidumping duty investigation).

In 2000, following the termination of the Suspension Agreement, and at the urging of the domestic industry, Commerce initiated a second investigation. Honey from Argentina and the PRC, 65 Fed. Reg. 65,831 (Dep't of Commerce Nov. 2, 2000) (initiation of antidumping duty investigations) (the "Second Investigation"). During the course of the Second Investigation, the petitioners alleged the existence of critical circumstances. See 19 U.S.C. § 1673b(e)(1). If the criteria for critical circumstances are met, then antidumping duties are made effective ninety days earlier than the effective date of antidumping duties in the absence of critical circumstances. 19 C.F.R. § 351.206(a)(2010).

Commerce identified the period of investigation (the "POI") as January 1, 2000, through June 30, 2000, a period during which the Suspension Agreement was in effect. Thus, during the course of its investigation the Department used the POI to determine both if respondents were dumping their merchandise, and for the purpose of determining if critical circumstances were present. See Honey From the PRC, 66 Fed. Reg. 24,101, 24,106 (Dep't of Commerce May 11, 2001) (notice of Preliminary Results of sales at less than fair value) ("Preliminary Results").

Following the investigation, Commerce's final determination contained an affirmative dumping finding. Honey From the PRC, 66 Fed. Reg. 50,608 (Dep't of Commerce Oct. 4, 2001) (notice of final determination of sales at less than fair value), as amended by Honey from the PRC, 66 Fed. Reg. 63,670 (Dep't of Commerce Dec. 10, 2001) (notice of amended final determination of sales at less than fair value and antidumping duty order). The final determination also contained an affirmative finding of critical circumstances, based upon Commerce's frequently employed 25% method for imputing knowledge of dumping to respondents. Final Results, 66 Fed. Reg. at 50,610. This imputation of knowledge of dumping was predicated on the Department's practice of considering

margins of 25 percent or more for [export price] salessufficient to impute knowledge of dumping . . . . In other words, in cases where, as here, export price is calculated by reference to sales made to unaffiliated purchasers in the United States, and Commerce determines that the antidumping duty margin with respect to those sales is 25% or more, Commerce "imputes" knowledge of dumping to the importer . . . .

Zhejiang Native Produce & Animal By-Products Import & Export Corp. v. United States, 27 CIT 1827, 1842-43 (2003) (not published in the Federal Supplement) (footnote omitted; first alteration in original) ("Zhejiang I"). Commerce found that, based on the 25% method, "there is evidence of the knowledge of dumping . . . [that was] demonstrated by the fact that Zhejiang, Kunshan, High Hope, and the PRC-wide entity all have dumping margins of over 25 percent." Id. at 1843 (citation omitted).

Plaintiffs sought judicial review of the Final Results in this Court and, among other things, objected to the use of Commerce's 25% methodology, arguing that compliance with the Suspension Agreement foreclosed the imputation of knowledge of dumping. The court found for the Department, and held that the Suspension Agreement did not prevent Commerce from imputing knowledge of dumping using its 25% method. Id. at 1849-50. Therefore, the court sustained Commerce's affirmative critical circumstances determination. Id. at 1851.

Plaintiffs appealed Zhejiang I to the Federal Circuit. On appeal, plaintiffs again argued that the existence of the Suspension Agreement prevented the imputation of knowledge ofdumping using Commerce's 25% methodology. The Federal Circuit held that plaintiffs' compliance with the Suspension Agreement precluded a finding that knowledge of sales at less than fair value could be imputed using the Department's 25% methodology during the POI. See Zhejiang Native Produce & Animal By-Products Imp. & Exp. Corp. v. United States, 432 F.3d 1363, 1368 (Fed. Cir. 2005) (citation omitted) ("Zhejiang II") ("As Zhejiang states, 'it strains credibility to suggest that Commerce could establish minimum prices for honey designed to "prevent the suppression or undercutting of price levels of the United States honey products" and then determine that U.S. importers purchasing honey in accordance with these pricing guidelines should have known these sales would be found to be at less than fair value.' When all factors are considered, there is not substantial evidence to support the finding of critical circumstances."). Therefore, the Federal Circuit reversed the court's critical circumstances holding, and remanded the case "for appropriate further proceedings." Id.

The court then remanded the matter to Commerce for reconsideration of the critical circumstances issue. Zhejiang Native Produce & Animal By-Products Imp. & Exp. Corp. v. United States, 30 CIT 715, 725-26 (2006) (not published in the Federal Supplement) ("Zhejiang III"). Pursuant to the Federal Circuit ruling, in its remand instructions the court directed Commerce tofurther consider "its critical circumstances finding, provided that in no event shall Commerce impute to plaintiffs any knowledge prohibited by the [Federal Circuit]'s decision . . . ." Id.

Following remand, Commerce filed its Remand Redetermination, finding that critical circumstances did not exist.³ The court remanded again, explaining that the Federal Circuit's decision in Zhejiang II did not prevent the Department from considering analyses other than the 25% methodology or time periods other than the POI, in making its critical circumstances...