Diamond Sawblades v. United States ( 2010 )

United States Court of Appeals
for the Federal Circuit
__________________________
DIAMOND SAWBLADES MANUFACTURERS
COALITION,
Plaintiff-Appellee,
v.
UNITED STATES,
Defendant-Appellee,
v.
SAINT GOBAIN ABRASIVES, INC.,
Defendant-Appellant,
and
EHWA DIAMOND INDUSTRIAL CO., LTD.,
Defendant-Appellant,
and
SHINHAN DIAMOND INDUSTRIAL CO., LTD.,
Defendant.
__________________________
2009-1274, -1275
__________________________
Appeal from the United States Court of International
Trade in case No. 06-00247, Senior Judge R. Kenton
Musgrave.
__________________________
Decided: July 6, 2010
DIAMOND SAWBLADES v. US 2
__________________________
DANIEL B. PICKARD, Wiley Rein LLP, of Washington,
DC, argued for plaintiff-appellee. With him on the brief
was MAUREEN E. THORSON.
CHARLES A. ST. CHARLES, Attorney, Office of the Gen-
eral Counsel, United States International Trade Commis-
sion, of Washington, DC, argued for defendant-appellee
United States. With him on the brief were JAMES M.
LYONS, General Counsel, and NEAL J. REYNOLDS, Assis-
tant General Counsel.
LYNN M. FISCHER FOX, Fischer Fox Global, PLLC, of
Washington, DC, argued for defendant-appellant Saint-
Gobain Abrasives, Inc.
JARROD M. GOLDFEDER, Akin Gump Strauss Hauer &
Feld LLP, of Washington, DC, argued for defendant-
appellant Ehwa Diamong Industrial Co., Ltd. With him
on the brief were SPENCER S. GRIFFITH, J. DAVID PARK and
LISA W. ROSS.
__________________________
Before BRYSON, LINN, and DYK, Circuit Judges.
Opinion for the court filed by Circuit Judge LINN. Opin-
ion dissenting-in-part filed by Circuit Judge DYK.
LINN, Circuit Judge.
This is an antidumping case. Saint Gobain Abrasives,
Inc. (“Saint Gobain”) and Ehwa Diamond Industrial Co.,
Ltd. (“Ehwa”) (collectively, “Appellants”) challenge two
decisions of the Court of International Trade. Both deci-
sions reviewed final determinations of the International
Trade Commission (“ITC” or “Commission”) on material
injury to a domestic industry by reason of imports of
3 DIAMOND SAWBLADES v. US
sawblades and parts thereof from Korea and China.
First, Appellants challenge a Court of International Trade
decision remanding for further consideration an original
Commission determination that there was neither mate-
rial injury nor threat of material injury to the domestic
diamond sawblade industry. Diamond Sawblades Mfrs.
Coal. v. United States, No. 06-00247 (Ct. Int’l Trade Feb.
6, 2008) (“DSMC I”). Second, Appellants challenge a
Court of International Trade decision sustaining the
Commission’s determination on remand, which affirmed
its original negative finding as to present material injury,
but found that there was a threat of material injury to the
domestic industry. Diamond Sawblades Mfrs. Coal. v.
United States, No. 06-00247 (Ct. Int’l Trade Jan. 13, 2009)
(“DSMC II”). Because the Court of International Trade
did not abuse its discretion when it ordered the remand in
DSMC I and because it correctly found that the Commis-
sion’s determination on remand was supported by sub-
stantial evidence in DSMC II, we affirm the Commission’s
affirmative finding that imports of sawblades and parts
thereof from China and Korea pose a threat of material
injury to the domestic industry.
BACKGROUND
Diamond sawblades are circular cutting tools with a
diamond-impregnated cutting surface, or blade, used
primarily to cut materials such as cement, marble, brick,
tile, and stone. Because various characteristics of the
sawblades affect how much the finished product will cost
and how it will be used, domestic producers and importers
collectively offer thousands of different variations of
diamond sawblades. The primary differentiating charac-
teristics are the type of blade rim, the diameter of the
blade, and the method of attaching the blade to a metal
core. There are two types of blade rims─segmented and
continuous. While there is some overlap between the two,
DIAMOND SAWBLADES v. US 4
segmented blades are more often employed in high-
volume construction projects. The blades typically range
in diameter from 4 inches to 70 inches. Sawblades
greater than 20 inches in diameter are typically custom-
made for professional use in commercial construction.
These large sawblades often require quick turnaround
from order to delivery and customer service from the
manufacturer in the field. Sawblades with diameters less
than 20 inches are generally produced in larger quantities
for contractors and individual consumers. Finally, there
are three primary ways to attach a blade to a metal
core─laser-welding, soldering, and sintering. Laser-
welding is generally used to produce segmented blades for
use in hand-held saws, soldering is mostly used for spe-
cialized commercial projects, and sintering is primarily
used for continuous rim blades with smaller diameters.
The domestic diamond sawblade market is supplied by
three sources: domestic producers, imports from the
subject countries of Korea and China, and imports from
other countries.
On May 3, 2005, the Diamond Sawblades Manufac-
turers Coalition and its nine individual members
(“DSMC”) filed a petition with the Commission alleging
that its defined industry in the United States had been
harmed by finished diamond sawblades and diamond
sawblade parts imported from China and Korea (“subject
imports”) and sold in the United States at “Less Than
Fair Value” (“LTFV”). The petition sought the imposition
of antidumping duties against the subject imports. After
affirmative preliminary findings by the Department of
Commerce that the imports in question were indeed being
sold at LTFV, the Commission commenced an investiga-
tion to determine whether the imports had caused or
threatened to cause a material injury to an industry in
5 DIAMOND SAWBLADES v. US
the United States. This investigation covered the period
from 2003 to 2005.
I. The Commission’s Original Determination
In conducting its investigation, the Commission com-
piled relevant data, sent out questionnaires to domestic
producers and importers of diamond sawblades, and held
hearings. Despite the wide variety of diamond sawblades,
the Commission determined that there was a single
domestic product most similar in characteristics and uses
to the foreign articles under investigation (“domestic like
product”) consisting of all diamond sawblades. Because it
found that there was “at least a reasonable overlap of
competition between and among subject imports from
China, subject imports from Korea, and the domestic like
product,” the Commission aggregated the subject imports
for purposes of its price effect and volume analysis.
Diamond Sawblades and Parts Thereof from China and
Korea, Inv. Nos. 731-TA-1092-1093 (Final), USITC Pub.
3862, slip op. at 24 (July 2006) (“Original Determina-
tion”).
In its Original Determination, the Commission found
that during the period of investigation the volume of
subject imports significantly increased, the subject im-
ports significantly undersold the domestic like product,
and the domestic industry lost market share. However, it
found that this increase in volume and underselling did
not have a significant effect on prices for the domestic
product. In addition, the Commission noted that the
condition of the domestic industry was largely positive:
the industry remained profitable, the industry’s capacity
to produce diamond sawblade cores increased, and aggre-
gate capital expenditures increased over the period of
investigation. This lack of negative adverse effects was
attributed to the Commission’s finding that competition
DIAMOND SAWBLADES v. US 6
between the subject imports and the domestic like product
was limited by differences in: (1) the type of end user to
which sales are made; (2) the diameters of blades sold;
and (3) differences in blade type and manufacturing
process. The Commission found that the “large and
growing volume of subject imports was largely concen-
trated in size ranges and customer types other than those
served principally by the domestic industry.” Id. at 32.
Specifically, the Commission found that subject imports
had been focused on the demand for smaller diameter,
general use sawblades (“nearly half” of subject importer’s
U.S. shipment value was for sawblades less than 10
inches in diameter), while domestic producers were fo-
cused on the demand for larger diameter, professional-use
sawblades used in commercial construction (“nearly half”
of U.S. shipments were in sizes 14 inches and larger).
The Commission also noted that a “significant” percent-
age of the import sales were of sintered or continuous rim
sawblades and a “significant” percentage of the domestic
industry’s sales consisted of soldered or brazed segmented
products. Finally, the Commission found that import
sales were directed primarily to “branded” distributors
who sold to both end users and retailers, and that U.S.
producer sales were primarily to “other distributors” and
end users. Based on these findings of market segmenta-
tion and limited competition, the Commission found that
there was “no causal nexus between the subject imports
and the condition of the domestic industry.” Id. at 38.
The Commission listed the following facts in support
of its conclusion that there was a lack of negative price
effect on domestic products despite significant undersell-
ing: (1) the importance of non-price factors─availability,
delivery time, product consistency, product quality, and
reliable supply; (2) the increase in price for the domestic
product during the period in certain instances; (3) the
7 DIAMOND SAWBLADES v. US
decrease in price for the domestic product even when
subject import prices for that product increased or re-
mained the same in certain instances; and (4) the fact
that in 12 of 17 combinations in which U.S. producers’
prices trended downward, these decreases were accompa-
nied by increased volumes of the U.S. product─a
“price/volume” tradeoff. The commissioners unanimously
concluded that the domestic diamond sawblade industry
was not materially injured by reason of subject imports
from China and Korea.
Four of the six commissioners also concluded that the
domestic industry was not threatened with material
injury by reason of subject imports from China and Korea.
The majority based its conclusion on the strong overall
demand for diamond sawblades in the U.S. market, the
limited competition with subject imports, and the sturdy
financial performance of the domestic industry during the
period of investigation. Two of the six commissioners
dissented, finding that “import trends, together with
declining prices and the weakening condition of the
domestic industry, will result in material injury by reason
of subject imports unless antidumping orders are issued.”
Id. at 43. The dissent found the majority’s limited compe-
tition theory flawed, noting that: (1) overlap in usage
existed in the mid-range diameter category, with some 12
to 14 inch blades used in both professional and general
use markets; (2) the overwhelming majority of both U.S
produced and imported diamond sawblades were laser-
welded segmented blades; and (3) the products ultimately
were purchased and used by the same end users. The
dissent concluded that the domestic industry remained
profitable during the period of investigation due to ag-
gressive cost-cutting measures, but that the industry had
exhausted its options for averting adverse impacts and
thus was likely to suffer future material injury due to the
DIAMOND SAWBLADES v. US 8
rising volume of subject imports and large underselling
margins.
II. The Decision of the Court of International Trade in
DSMC I
DSMC challenged the Commission’s Original Deter-
mination at the Court of International Trade arguing that
it was not supported by substantial evidence and other-
wise was not in accordance with law pursuant to 19
U.S.C. § 1516a(b)(1)(B)(i). DSMC I, slip op. at 10. The
ITC and Appellants opposed. On review, the Court of
International Trade found problems with the logic and
evidentiary underpinnings of the Commission’s Original
Determination. First, the court found that “the Commis-
sion’s conclusion of attenuated competition based on
sawblade diameter is not supported by substantial evi-
dence of record” in any of the three defined catego-
ries─blade size, manufacturing process, and channels of
distribution. Id. at 13. The court noted that, in focusing
on the fact that “nearly half” of the subject imports com-
prised sawblades under 10 inches while “nearly half” of
domestic shipments were of sawblades over 14 inches, the
Commission did not appear to take into account that the
other half of all subject and domestic diamond sawblades
were sold in the mid-range sizes and therefore were
possibly competing. The court also found that almost all
of these mid-size diamond sawblades were laser-welded
and segmented. Finally, the court found that the Com-
mission had not provided adequate explanation of its
decision to divide the distributor channels into “branded”
and “other” and its conclusion that those distributor
channels serve different end users. In light of its deter-
mination that the Commission’s finding of limited compe-
tition could not be supported as explained, the court
concluded that the related findings dealing with volume,
price effects, impact, and threat analysis, along with the
9 DIAMOND SAWBLADES v. US
finding on limited competition, all need to be remanded
for reconsideration.
The court also found that the Commission had not
provided adequate explanation of its finding that the
price/volume tradeoff counteracted any negative price
effects because it had not pointed to any data indicating
that the volume increase was an adequate tradeoff for the
lowered prices. The court ordered that “[o]n remand, the
Commission must provide a more thorough explanation
for this finding, as well as an explanation as to how the
purported price/volume tradeoffs would indicate competi-
tion among domestic producers.” DSMC I, slip. op. at 23.
Finally, the court found that the Commission’s refusal
to investigate allegations of lost sales and lost revenues
because they were incomplete was not a remandable error
because it was within the Commission’s discretion.
However, the court cautioned that “the information con-
tained in the lost sales allegations may be of greater
importance on remand, and that some investigation of the
incomplete allegations may then be appropriate.” Id. at
21. In addition, the court remanded the agency’s volume,
impact, and threat findings since they relied on the
flawed limited competition finding.
III. The Commission’s Determination on Remand
In the time between the Commission’s Original De-
termination and the court’s remand, the composition of
the Commission changed. Two commissioners were
replaced with new appointees. In the remand proceed-
ings, “the Commission reopened the record to obtain
additional information from purchasers about the degree
of competition between subject imports and the domestic
like product.” Diamond Sawblades and Parts Thereof
from China and Korea, Inv. Nos. 731-TA-1092-1093, slip
op. at 2 (May 14, 2008) (“Remand Determination”). The
DIAMOND SAWBLADES v. US 10
Commission sent supplemental questions solely to pur-
chasers that had responded to the initial questionnaires
during the original investigation. All interested parties
filed comments on DSMC I and the supplemental record,
but the Commission did not hold an additional hearing.
On May 14, 2008, the Commission filed its determina-
tion on remand. Once again, the Commission unani-
mously found that the domestic industry as a whole had
not suffered material injury by reason of the subject
imports from China and Korea. The Commission reiter-
ated that although subject imports increased significantly
and undersold the domestic like product by significant
margins during the period of investigation, the industry
was able to maintain its production, sales, and profitabil-
ity because of considerable increases in demand and the
industry’s success in reducing expenses and improving
productivity.
The two new commissioners joined the remaining dis-
senting commissioner from the Original Determination in
finding that there was an affirmative threat of material
injury. This led to a tie vote of three to three on the issue
of threat of material injury. Because a tie vote is deemed
to be an affirmative determination pursuant to 19 U.S.C.
§ 1677(11), the Remand Determination found there was a
threat of material injury to the domestic diamond saw-
blade industry by imports from China and Korea. The
Commission’s reversal of its threat determination was
based, in part, upon its reversal on the issue of competi-
tion. The prevailing commissioners (the “majority”) found
an overlap in usage by the professional and general-use
market, especially in the mid-range diameter category. In
addition, the majority found that both imported and U.S.-
produced diamond sawblades were laser-welded, seg-
mented blades. Finally, the majority found that although
“the type of distributor (branded or other) for domestic
11 DIAMOND SAWBLADES v. US
and imported diamond sawblades frequently differs, the
products ultimately are purchased and used thereafter
largely by the same types of end users.” Id. at 7. Based
on these findings, the majority concluded that “the record
leaves no doubt that there is considerable overlap in the
mid-range sizes and that U.S.-, Chinese-, and Korean-
produced finished diamond sawblades compete with each
other in the same end-user markets and across the range
of product sizes.” Id. at 12.
The majority also found that although demand grew
significantly during the period of investigation, this
growth was not expected to continue. In addition, the
majority found that the volume of subject imports was
likely to continue to rise in part because of the increasing
production capacity of the importers. Based on those
findings, the majority predicted a significant negative
impact on the domestic industry’s sales volumes, produc-
tion levels, profitability, market share, and prices. Thus,
the majority concluded that “based on import trends,
declining prices, flattening demand, the domestic indus-
try’s weakening condition, and its diminished opportuni-
ties to reduce expenses or improve productivity, the
industry is threatened with material injury by reason of
the cumulated subject imports.” Id. at 3-4.
The dissent disagreed with the majority’s conclusion
that competition in the industry was not limited by a
market divided by sawblade characteristics. Instead, the
dissent adopted the majority’s opinion in the Original
Determination, finding that competition was severely
limited by the type of end user to which sales were made,
the size ranges of the blades sold, and differences in blade
type and manufacturing process. The dissent noted that
while there was competition in the mid-range sizes, this
competition was further limited by differences in channel
of distribution, customer types, and blade types. It ex-
DIAMOND SAWBLADES v. US 12
plained that “because prices for the product from the
same source (domestic, China, or Korea) vary, in many
instances, dramatically, for the same narrowly defined
product depending on whether the product is sold to a
branded or other distributor, there are very real differ-
ences between these two customer types.” Id. at 61. The
dissent also stated that since the Commission’s customary
practice is to examine only direct purchasers, not those
purchasers further down the distribution chain, analysis
of the ultimate end users was irrelevant.
IV. The Decision of the Court of International Trade in
DSMC II
Appellants challenged the Remand Determination in
the Court of International Trade arguing that the Com-
mission was incorrect when, on remand, it found that
there was substantial competition between the subject
imports and the domestic like product. The Court of
International Trade affirmed the Remand Determination,
finding that: (1) substantial evidence supports the finding
that competition was not attenuated by blade size, process
of manufacture, type of end user, or channel of distribu-
tion; (2) substantial evidence supports the finding of
flattening demand and increasing subject imports; (3)
substantial evidence supports the finding that subject
importers had the ability to infiltrate the professional
sawblades sector; (4) the decision to cumulate subject
imports in its threat analysis was not unreasonable; (5)
the Commission’s threat finding was based on substantial
evidence; and (6) Appellants failed to exhaust their ad-
ministrative remedies and therefore waived any argu-
ment that the Commission failed to apply the Bratsk test.
Id. at 7-26; see Bratsk Aluminum Smelter v. United
States, 444 F.3d 1369 (Fed. Cir. 2006) (outlining a re-
quirement that the Commission include an explanation of
13 DIAMOND SAWBLADES v. US
the effect of non-subject imports in a material injury
analysis).
* * *
Appellants challenge both Court of International
Trade decisions and request that we reinstate the Com-
mission’s Original Determination. In the alternative,
Appellants request that we vacate the Court of Interna-
tional Trade’s affirmance of the Remand Determination in
DSMC II and remand the case to the Court of Interna-
tional Trade for further proceedings. DSMC responds by
arguing that both Court of International Trade decisions
were correct. First, DSMC asserts that the Commission’s
Original Determination could not be sustained on the
bases proffered by the agency and therefore the Court of
International Trade’s remand order was correct. Second,
DSMC argues that the Court of International Trade’s
affirmance of the Remand Determination is correct and
should be affirmed. The ITC on behalf of the United
States, Defendant-Appellee, responds to this appeal by
supporting both Commission decisions─the Original
Determination and the Remand Determination─as being
supported by substantial evidence and in accordance with
law. Thus, the ITC joins Appellants in requesting that we
reinstate the Commission’s Original Determination.
However, in the event we affirm the Court of Interna-
tional Trade’s remand of the Original Determination, the
ITC joins DSMC in requesting that we affirm the Court of
International Trade’s affirmance of the Remand Determi-
nation.
We have jurisdiction to review both DSMC I and
DSMC II pursuant to 28 U.S.C. § 1295(a)(5). Altx, Inc. v.
United States, 370 F.3d 1108, 1116 (Fed. Cir. 2004).
DIAMOND SAWBLADES v. US 14
DISCUSSION
I. Standard of Review
“We review the [Court of International Trade’s]
evaluation of Commission factual determinations by
stepping into the shoes of the Court and duplicating its
review, evaluating whether Commission determinations
are unsupported by substantial evidence or otherwise not
in accordance with law.” Allegheny Ludlum Corp. v.
United States, 287 F.3d 1365, 1369 (Fed. Cir. 2002) (cita-
tions omitted). Although such review amounts to repeat-
ing the work of the Court of International Trade, we have
noted that “this court will not ignore the informed opinion
of the Court of International Trade.” Suramerica de
Aleaciones Laminadas, C.A. v. United States, 44 F.3d 978,
983 (Fed. Cir. 1994). Substantial evidence is “such rele-
vant evidence as a reasonable mind might accept as
adequate to support a conclusion.” Universal Camera
Corp. v. NLRB, 340 U.S. 474, 477 (1951) (internal quota-
tion marks omitted). In addition, the “substantiality of
evidence must take into account whatever in the record
fairly detracts from its weight.” Id. at 488. We review
decisions of the Court of International Trade that remand
decisions of the Commission for further explanation
(based on an inability to evaluate on the basis of the
record before the court) with the more deferential abuse-
of-discretion standard. Altx, 370 F.3d at 1117; Taiwan
Semiconductor Indus. Ass’n v. Int’l Trade Comm’n, 266
F.3d 1339, 1344 (Fed. Cir. 2001).
All parties agree, correctly, that we review the Court
of International Trade’s decision in DSMC II by consider-
ing whether the Remand Determination is supported by
substantial evidence. Allegheny Ludlum, 287 F.3d at
1369. The parties disagree, however, as to the appropri-
ate standard for review of the Court of International
15 DIAMOND SAWBLADES v. US
Trade’s DSMC I order. Appellants and the ITC contend
that the Court of International Trade, in DSMC I,
squarely addressed the sufficiency of the evidence sup-
porting the Commission’s decision by explicitly rejecting
the Commission’s limited competition findings on the
ground that they were unsupported by the evidence of
record. Therefore, they argue we should review the
Commission’s Original Determination for substantial
evidence. DSMC, on the other hand, contends that the
abuse-of-discretion standard should apply to our review of
DSMC I because to the extent the Court of International
Trade “declined to find the [Original Determination]
supported by substantial evidence, it did so in the context
of being unable to conduct substantial evidence review,
due to the need for further explanation of the agency’s
conclusions.” DSMC’s Br. 10-11 (internal quotation
marks and citations omitted).
Appellants and the ITC assert that Altx and Taiwan
Semiconductor allow for the abuse-of-discretion standard
of review only when the Court of International Trade does
not evaluate the substantiality of the Commission’s
evidence and limits its remand order to further explana-
tion without any requirement that the Commission un-
dertake additional investigation. They point to language
in DSMC I referring to “substantial evidence” as confir-
mation that the court here made an explicit substantiality
finding and that the court’s request for further explana-
tion was solely within the context of this finding. See,
e.g., DSMC I, slip op. at 13 (stating that “the Commis-
sion’s conclusion of attenuated competition based on
sawblade diameter is not supported by substantial evi-
dence of record”); id. at 15 (stating that the “ITC’s finding
of attenuated competition based on manufacturing proc-
ess is unsupported by substantial evidence”). However,
simply using the words “substantial evidence” or referring
DIAMOND SAWBLADES v. US 16
to the evidence of record in an opinion is not dispositive of
the issue. In fact, in Taiwan Semiconductor, this Court
used an abuse-of-discretion standard to review a remand
order by the Court of International Trade, which used
language very similar to that used in DSMC I. 266 F.3d
at 1344; Taiwan Semiconductor Indus. Ass’n v. United
States, 59 F. Supp. 2d 1324, 1332 (Ct. Int’l Trade 1999)
(“Therefore, the Court cannot conclude that the Commis-
sion’s determination that the increase in volume of the
subject imports was significant is supported by substan-
tial evidence absent an explanation of how they are
significant in light of the dominant presence of non-
subject imports.”) Instead, the deciding factor in deter-
mining what standard of review applies is “whether the
record before [the Court of International Trade] need[ed]
further explanation in order for the court to understand
and properly evaluate the agency’s action.” Taiwan
Semiconductor, 266 F.3d at 1344. Such a determination
“lies within the discretion of the [Court of International
Trade].” Id.Similarly, in Altx, we held that because the two Court
of International Trade remand orders on review did not
“require[] additional investigation by the Commission, nor
did either of the remand decisions alter a Commission
determination in any substantive regard,” review of the
decisions was under an abuse-of-discretion standard. 370
F.3d at 1117. Again, we made this finding despite the
Court of International Trade’s use of language relating to
substantial evidence review in its remand order. For
example, in Altx, Inc. v. United States, 167 F. Supp. 2d
1353, 1360 (Ct. Int’l Trade 2001), the Court of Interna-
tional Trade stated that “[t]he Commission does not
support its reasoning with substantial evidence.” The
Court of International Trade in Altx subsequently clari-
fied that because of this failing, “the court is unwilling at
17 DIAMOND SAWBLADES v. US
this point to uphold the Commission’s conclusion regard-
ing the significance of subject import volumes as based on
substantial evidence in light of the lack of explanations as
to potentially meaningful conflicting evidence. The court
therefore remands to the Commission for further consid-
eration and clarification of the issues. . . .” Id. at 1364.
On the other hand, in Nippon Steel Corp. v. United
States, we found the proper standard of review to be
substantial evidence when the Court of International
Trade remanded a final determination to the Commission,
giving it two options on how to proceed: “[1] reopen the
record in order to obtain substantial evidence to support
its adverse impact conclusion or [2] make a determination
that subject imports will have no adverse impact should
the orders be revoked.” 391 F. Supp. 2d 1258, 1284 (Ct.
Int’l Trade 2005). On appeal, we found the remand order
analogous to a case where the remand order “dictated
that the Commission enter a negative determination.”
Nippon Steel Corp. v. Int’l Trade Comm’n, 494 F.3d 1371,
1378 (Fed. Cir. 2007). The Court of International Trade
in Nippon Steel evaluated the evidence and found it
lacking to such an extent that it ordered the Commission
either to obtain more data or change its position entirely,
thereby indicating an actual review of the evidence. As
such, on appeal, a review using the substantial evidence
standard was warranted.
In the present case, the court reviewed the Commis-
sion’s Original Determination under the Administrative
Procedure Act (“APA”) standard of review set forth in
Motor Vehicle Manufacturers Ass’n v. State Farm Mutual
Automobile Insurance Co., 463 U.S. 29 (1983). Using this
standard, the court found that the Commission had not
“‘articulate[d] a satisfactory explanation for its action
including a rational connection between the facts found
and the choice made.’” DSMC I, slip op. at 11 (quoting
DIAMOND SAWBLADES v. US 18
State Farm, 463 U.S. at 43). As in Taiwan Semiconductor
and Altx, the court, in remanding the Original Determina-
tion to the Commission, did not require additional inves-
tigation, nor did it alter the Commission determination in
any substantive respect. Instead, the court simply re-
quired the Commission to explain in greater detail its
decision and reasoning such that the court would have a
basis for proper review. Although the court referred
explicitly to “substantial evidence” in its remand order,
each time it did so, the court also made clear that it found
the Original Determination suffered from incomplete
explanation. The court could not properly review the
Commission’s conclusions based on its explanations and
its citations to the data.
For example, when analyzing the Commission’s find-
ing that competition was limited based on sawblade
diameter, the court stated that the Commission’s conclu-
sion was “not supported by substantial evidence of re-
cord.” DSMC I, slip op. at 13. However, at the end of that
analysis the court explained that the Commission “fail[ed]
to offer an explanation as to how this data reflects at-
tenuated competition based on blade size.” Id. at 15.
While the court used the words “limited” and “attenuated”
at different places in its opinion, it is apparent that it did
not ascribe different meanings to those words, but used
them synonymously to describe the Commission major-
ity’s finding that competition between subject imports and
domestic industry was reduced because the market was
divided based on various blade properties. The court thus
clarified that it was not requiring the Commission to
change its position or to gather more data on this issue,
but instead was looking for a reasoned explanation incor-
porating the contrary record evidence. Similarly, when
analyzing the Commission’s finding that competition was
limited based on manufacturing process, the court stated
19 DIAMOND SAWBLADES v. US
that the conclusion was “unsupported by substantial
evidence of record and cannot be sustained.” Id. at 15.
Again, however, at the end of that analysis, the court
made clear that it also found that the Commission’s
explanation was lacking⎯stating that the Commission
“offer[ed] no explanation as to how its data, which indi-
cate that foreign and domestic sawblades in the midrange
sizes are both laser welded and segmented, show attenu-
ated competition.” Id. at 16. Finally, when discussing the
Commission’s finding on price/volume tradeoff, the court
stated that it could not find that a single footnote, “with-
out further explanation, constitutes either ‘substantial
evidence of record’ or ‘a reasoned explanation’ for the
ITC’s determination.” Id. at 23. Further, while the court
noted that additional investigation of the lost sales issue
might be appropriate, it specifically noted that this par-
ticular issue was not a basis of the remand and whether
more investigation was necessary was left to the Commis-
sion’s discretion. Id. at 21.
Therefore, the court in DSMC I remanded the Origi-
nal Determination to the Commission because it could not
properly evaluate the Commission’s conclusions based on
the evidence of record. Thus, we review the Court of
International Trade’s decision in DSMC I to determine
whether the court abused its discretion by remanding to
the Commission for further explanation.
II. The Commission’s Original Determination
The first question on appeal in the present case is
whether the Court of International Trade, in DSMC I,
abused its discretion by ordering a remand of the Com-
mission’s Original Determination for further explanation.
“In reviewing the trial court’s discretion, this court exam-
ines its reasons for remand for any legal error.” Taiwan
Semiconductor, 266 F.3d at 1344. The primary reason the
DIAMOND SAWBLADES v. US 20
court gave for seeking additional explanation from the
Commission was that it could not reconcile the Commis-
sion’s finding of limited competition with the data of
record. In our view, the Court of International Trade’s
decision to remand was justified on several grounds.
First, the court pointed out that the data to which the
Commission cited in support of its finding that “nearly
half” of the subject shipments were in smaller sized
blades, while “nearly half” of domestic shipments were of
larger sized blades, also showed that the other half of
both subject and domestic imports were concentrated in
the two middle diameter ranges (10 to 12 inches and 12 to
14 inches). DSMC I, slip op. at 8. Appellants and the ITC
argue that the Commission properly justified the limited
competition finding despite the significant overlap in the
mid-range by explaining that competition was further
attenuated by differences in blade type, manufacturing
process, and type of end users. 1 However, the court also
found this aspect of the Commission’s explanation inade-
quate. Specifically, the court pointed out that the record
showed that in the mid-range blade category, most of the
blades were segmented and laser-welded for both import-
ers and domestic producers. DSMC I, slip op. at 16 (Table
II-1). Therefore, neither blade type nor manufacturing
process significantly limited competition in the mid-range
category. Finally, the court noted that the Commission
based the subdivisions of “branded” and “other” on the
type of customer to whom the distributors primarily sold
1 The Court of International Trade did err in stat-
ing that “more subject imports were concentrated in the
two midrange categories than the two small-blade catego-
ries.” DSMC I, slip op. at 15. The numbers in the rele-
vant table, Table I-1, actually show that this was true for
only one of the three years listed in the table─2005.
However, this misstatement was harmless as the Court’s
logic did not depend on this particular fact.
21 DIAMOND SAWBLADES v. US
(“branded” predominantly sold small sawblades to end-
users and “other” sold mostly large sawblades), but the
court concluded that the data did not support these classi-
fications. Id. at 16-18. In fact, data referencing customer
types did not suggest that branded or other distributors’
customer bases could reliably be identified. Id. A remand
based on the Commission’s confusing and potentially
incorrect analysis was not an abuse of discretion.
An additional ground that supports the Court of In-
ternational Trade’s remand in DSMC I was the failure to
adequately explain the Commission’s finding that a
price/volume tradeoff offset any negative price effects due
to subject imports. The record before the court contained
no data regarding the costs of production, meaning there
was no way to tell whether the lowered prices translated
into increased profits. Id. at 21-23. Appellants and the
ITC argue that this price/volume tradeoff conclusion was
merely secondary to the Commission’s overall conclusion
that subject imports were not a cause of significant price
effects. Instead, they point out that the Commission also
relied on other factors as evidence that the subject im-
ports were not a cause of negative price effects including:
the importance of non-price factors in purchasing deci-
sions; the limited competitive overlap; the limited correla-
tion between subject import prices and the prices of
domestic diamond sawblades; the lack of negative impact
on domestic producers’ shipments; the only modest in-
crease in cost of goods sold as a percentage of net sales;
and the lack of significant confirmed lost sales or lost
revenues. While the court acknowledged these multiple
bases for the Commission’s price effects finding, the court
did not find this discussion sufficient to overcome what it
saw as an unreasonable conclusion regarding
price/volume tradeoff. Id. It was not an abuse of discre-
tion for the court to require additional explanation from
DIAMOND SAWBLADES v. US 22
what it saw as a failure to adequately explain its conclu-
sion regarding price/volume tradeoff.
Finally, the Commission’s finding of threat relied on
its inadequate limited competition analysis. The court
thus stated that it was in “substantial doubt whether the
[Commission] would have made the same ultimate finding
with the erroneous findings removed from the picture.”
Id. at 13 (internal quotation marks omitted).
Because the Commission’s determination of limited
competition was not adequately explained in light of the
record evidence, the Court of International Trade’s re-
mand order was not an abuse of discretion. We decline to
disturb the decision in DSMC I.
III. The Commission’s Remand Determination
Having concluded that the Original Determination
should not be reinstated, we turn to Appellants’ argument
that the Remand Determination was not supported by
substantial evidence. Appellants’ main argument is that
on remand, the Commission majority ignored the record
evidence showing limited competition, as determined by
the majority in the Original Determination. Appellants
contend that the Commission assumed that the mere
existence of some overlap in sales by subject and domestic
producers was sufficient to conclude that they compete
head-to-head across all size ranges. Specifically, Appel-
lants assert that the Commission ignored the fact that
much of the increase in subject import volumes was in
size ranges and to customer types to which the domestic
industry did not sell, and that the Commission also ig-
nored differences between distributors. Appellants also
argue that the Commission’s threat of material injury
finding was based on the following unsupported findings:
(1) demand was “flattening”; (2) import volumes would
continue to increase; (3) underselling by imports would
23 DIAMOND SAWBLADES v. US
continue; (4) the domestic industry would not maintain its
strong profitability; and (5) subject imports could service
the professional construction sector. Finally, Appellants
assert that the Commission improperly declined to apply
the non-subject replacement test outlined in Bratsk. 444
F.3d 1369.
The Commission’s factual determinations are “pre-
sumed to be correct,” and “[t]he burden of proving other-
wise shall rest upon the party challenging such decision.”
28 U.S.C. § 2639(a)(1). After reviewing the record, we
agree with DSMC and the ITC that substantial evidence
supports the views of the Commission on each of the
matters raised by Appellants on appeal. Accordingly,
finding neither legal error nor insufficient evidence in the
Commission’s Remand Determination, we affirm the
decision of the Court of International Trade in DSMC II.
The concern underlying the Court of International
Trade’s remand in DSMC I─that the Commission had not
adequately explained its limited competition finding─was
cured by the Commission in the Remand Determination,
as the majority found that competition was not so limited.
Instead, the Commission found significant overlap in
imported and domestic mid-range sawblades. This con-
clusion was supported by substantial evidence. As ex-
plained in DSMC I, the record shows that approximately
half of imports and domestic products were in the mid-
range category and a majority of those were laser-welded.
DSMC I, slip op. at 14-16 (Table I-1, Table II-1). In
addition, a majority of both imported and domestic saw-
blades were both laser-welded and segmented. Interna-
tional Trade Comm’n Staff Report, I-23 (Table I-2) (June
5, 2006) (“Original Staff Report”). The Commission’s
finding of substantial competition is also supported by the
record relating to methods of distribution. For example,
the record shows that half of responders reported that
DIAMOND SAWBLADES v. US 24
domestic producers and subject importers always, fre-
quently, or sometimes compete in selling midrange saw-
blades to both professional users and contractors for
general use. Int’l Trade Comm’n Staff Report, III-4 (Table
III-2) (April 7, 2008) (“Remand Staff Report”). In addi-
tion, only 9 out of 39 responders indicated that sawblades
used by professionals and individual consumers never
compete. Id. III-5 (Table III-3). While there is also some
support in the record for a contrary finding, the conclu-
sion reached by the Commission need not be the only one
possible from the record. “Even if it is possible to draw
two inconsistent conclusions from evidence in the record,
such a possibility does not prevent [the Commission’s]
determination from being supported by substantial evi-
dence.” Am. Silicon Techs. v. United States, 261 F.3d
1371, 1376 (Fed. Cir. 2001).
Nor do we find persuasive Appellants’ arguments re-
garding the Commission’s findings on threat of material
injury. The record shows that a majority of importers,
domestic producers, and other U.S. purchasers reported
that they did not expect demand to change in the fu-
ture─thereby providing substantial evidence for the
Commission’s finding that demand was “flattening.”
Original Staff Report II-33. The Commission also based
its finding that import volumes would continue to in-
crease on substantial evidence. During the period of
investigation, the evidence shows that the volume of
subject imports increased significantly both in value and
in quantity. Remand Determination App. 1. The market
share of subject imports also increased during the period
of investigation, while the market share of domestic
producers declined. Id. In addition, subject importers
predicted an increase in capacity, production, and inven-
tory. Original Staff Report, VII-4, VII-10 (Table VII-2,
Table VII-7). The Commission’s finding that subject
25 DIAMOND SAWBLADES v. US
importers had the ability to infiltrate the larger-sized
(greater than 20 inches in diameter) professional-use
market was supported by the evidence that subject im-
porters significantly increased the sales of these blades
during the period of inquiry. Id. IV-9, IV-10 (Table IV-4)
(indicating that U.S. sales of large sawblades from China
more than doubled in value between 2003 and 2005 and
U.S. sales of large sawblades from Korea increased 143
percent in value during that same time period). This
evidence supports the Commission’s conclusion that the
volume of subject imports was likely to continue to rise
and that underselling by subject imports would continue.
The record also reveals that in addition to falling market
share, the domestic industry’s aggregate operating in-
come, aggregate operating income margins, and aggregate
return on assets all decreased during the period of in-
quiry, thus supporting the Commission’s conclusion that
the domestic industry would not maintain its strong
profitability. Remand Determination App. 1.
We have considered the other arguments made by
Appellants regarding a lack of substantial evidence for
the conclusions of the Remand Determination, but find
them unpersuasive.
Finally, Appellants assert that the Commission im-
properly declined to apply the non-subject replacement
test outlined in Bratsk to its threat determination. In
Bratsk, we required the Commission to assess “whether
non-subject imports would have replaced the subject
imports without any beneficial effect on domestic produc-
ers.” Bratsk, 444 F.3d at 1375. The parties dispute
whether this analysis is limited to present injury findings
or if it also applies to threat findings. The Commission
did not apply the analysis, stating that Bratsk “do[es] not
apply to affirmative determinations based on threat of
material injury, where a prospective (i.e., forward-looking)
DIAMOND SAWBLADES v. US 26
analysis is involved.” Remand Determination at 25 n.152.
The Court of International Trade declined to address the
issue because “at no point in the investigation did the
respondents assert that nonsubject imports played any
causal role in the condition of the domestic industry.”
DSMC II, slip op. at 25. We agree with the Court of
International Trade that Appellants failed to exhaust
their administrative remedies on this issue. Ehwa points
to several sentences in its pre-hearing and post-hearing
briefs to the Commission during the original investigation
as evidence that they did not waive this issue. However,
these isolated statements are simply not enough to indi-
cate that Appellants effectively presented this issue to the
Commission. In addition, before the Court of Interna-
tional Trade, counsel for Ehwa acknowledged that he did
not raise the issue before the Commission in a timely
manner. Id. The general rule is that courts “should not
topple over administrative decisions unless the adminis-
trative body not only has erred but has erred against
objection made at the time appropriate under its prac-
tice.” United States v. L.A. Tucker Truck Lines, Inc., 344
U.S. 33, 37 (1952). Accordingly, we decline to address this
argument.
CONCLUSION
We find that the Court of International Trade did not
abuse its discretion in remanding the Original Determina-
tion to the Commission for further explanation and there-
fore we affirm DSMC I. We also affirm the Court of
International Trade’s decision in DSMC II affirming the
Commission’s Remand Determination as supported by
substantial evidence.
AFFIRMED
United States Court of Appeals
for the Federal Circuit
__________________________
DIAMOND SAWBLADES MANUFACTURERS
COALITION,
Plaintiff-Appellee,
v.
UNITED STATES,
Defendant-Appellee,
v.
SAINT GOBAIN ABRASIVES, INC.,
Defendant-Appellant,
and
EHWA DIAMOND INDUSTRIAL CO., LTD.,
Defendant-Appellant,
and
SHINHAN DIAMOND INDUSTRIAL CO., LTD.,
Defendant.
__________________________
2009-1274, -1275
__________________________
Appeal from the United States Court of International
Trade in case no. 06-00247, Senior Judge R. Kenton
Musgrave.
__________________________
DIAMOND SAWBLADES v. US 2
DYK, Circuit Judge, dissenting-in-part.
In my view, the majority’s decision rests on a misread-
ing of the Court of International Trade’s decision. In the
majority’s view, the Court of International Trade did not
set aside the International Trade Commission’s (“ITC” or
“Commission”) original determination on substantial
evidence grounds, but solely on the ground that the
Commission had failed to provide an adequate explana-
tion for its determinations that there was neither mate-
rial injury nor threat of material injury to the domestic
diamond sawblade industry. See Majority Op. 18-19.
I think that the Court of International Trade’s deci-
sion rested upon two grounds—lack of substantial evi-
dence and failure to provide an adequate explanation. See
Diamond Sawblades Mfrs. Coal. v. United States, No. 06-
00247 (Ct. Int’l Trade Feb. 6, 2008) (“DSMC I”). The
court repeatedly stated that it found a lack of substantial
evidence on various points. See DSMC I, slip op. at 13
(“The court finds that the Commission’s conclusion of
attenuated competition based on sawblade diameter is not
supported by substantial evidence of record.”); id. at 15
(“[The] ITC’s finding of attenuated competition based on
manufacturing process is unsupported by substantial
evidence of record and cannot be sustained.”); id. at 23.
Further, the court vacated and remanded the Commis-
sion’s volume finding, its price-effects determination, its
impact finding, and its threat analysis as it found these
conclusions to “rest, in part, upon ‘findings of subsidiary
fact, or inferences therefrom’ that the court deems unsup-
portable.” Id. at 24.
Significantly, in its later decision in Diamond Saw-
blades Manufacturers Coalition v. United States, No. 06-
00247 (Ct. Int’l Trade Jan. 13, 2009) (“DSMC II”), in
3 DIAMOND SAWBLADES v. US
describing its holding in DSMC I, the Court of Interna-
tional Trade stated that “[i]n its opinion, the court found
that the ITC had failed to provide an adequate explana-
tion or substantial evidentiary support for certain ITC
findings relating to the degree of competition between
subject imports and the domestic product.” DSMC II, slip
op. at 2 (emphasis added). The Commission, in its deter-
mination on remand, also viewed the Court of Interna-
tional Trade’s decision in DSMC I as resting upon both
grounds, stating that
In [DSMC I], the Court found that the Commis-
sion’s conclusion that competition between the
subject imports and the domestic like product was
attenuated based on sawblade diameter differ-
ences (Slip Op. at 13-15) and sawblade manufac-
turing process differences (Slip Op. at 15-16) was
not supported by substantial evidence of record.
The Court further found that the Commission
failed to explain adequately its conclusion, also in
the context of its limited competition analysis,
that “branded distributors” and “other distribu-
tors” served different end users. Slip Op. at 16-18.
The Court also instructed the Commission on
remand to provide a more thorough explanation of
its finding that domestic producers’ price declines
in certain instances reflected a volume/price
tradeoff.
Diamond Sawblades & Parts Thereof from China &
Korea, Inv. Nos. 731-TA-1092-, -1093, slip op. at 1-2 (Int’l
Trade Comm’n May 14, 2008) (emphases added). The
ITC, in its brief on appeal, argues that the court engaged
in substantial evidence review, observing that in DSMC I,
“the [Court of International Trade] did not merely remand
the Commission’s determinations for further explanation.
DIAMOND SAWBLADES v. US 4
Instead, it explicitly rejected the Commission’s limited
competition findings on the grounds they were ‘unsup-
portable.’” Defendant-Appellee ITC’s Br. 22-23 n.7.
While the remand for further explanation appears to
have been justified, it seems to me that the remand,
insofar as it was on based on substantial evidence
grounds, was improper. Initially, I note that the Court of
International Trade appears to have mischaracterized the
ITC’s finding as involving a finding of “attenuated compe-
tition.” The primary definition of “attenuated” would
imply “thin” or “slender” competition. See Webster’s Third
New International Dictionary 141 (unabr. 2002). The
Commission never used that phrase, but rather described
the competition as “limited.”
In my view, the Commission’s limited competition
finding was supported by substantial evidence. The
Commission found that competition between the subject
imports and domestic merchandise was limited by saw-
blade diameter size. The Commission observed that
nearly half of subject imports were sold within the small-
diameter sector of the market, wherein the domestic
producers made only 6.3 percent of their commercial
sales. Similarly, nearly half of domestic sawblades were
sold to the large-diameter sector, while only 7 percent of
Chinese imports and 14 percent of Korean imports were.
The Commission found that there were physical differ-
ences in domestic sawblades as compared to subject
imports and that these differences affected the end use of
the sawblades, further supporting a finding of limited
competition. The Commission also found that competition
was limited by customer type as domestic and subject
suppliers made the bulk of their sales to different dis-
tributor types, with subject suppliers making approxi-
mately 74 percent of their distributor sales to “branded”
distributors, while the domestic industry made 71.8
5 DIAMOND SAWBLADES v. US
percent of its sales to non-“branded” distributors. The
Commission also observed that domestic producers sold a
significant share of their blades directly to end users,
whereas subject blades were more often used in other
applications. Although there was indeed some competi-
tion in the mid-range sizes, the Commission considered
this overlap, and properly found overall competition
between the domestic and foreign industries to be limited.
While the Court of International Trade did not err in
requiring the Commission to further explain why the
competition that did exist did not create a threat of mate-
rial injury, the limited competition finding itself was
supported by substantial evidence.
We have long held that the Commission is entitled to
receive deference for its reasoned fact findings. See, e.g.,
Nippon Steel Corp. v. United States, 458 F.3d 1345, 1359
(Fed. Cir. 2006) (“So long as there is adequate basis in
support of the Commission’s choice of evidentiary weight,
the Court of International Trade, and this court, review-
ing under the substantial evidence standard, must defer
to the Commission.”). It is not the role of the reviewing
court to “refind[] the facts . . . or interpos[e] its own de-
terminations” in such proceedings. Nippon Steel Corp. v.
Int’l Trade Comm’n, 345 F.3d 1379, 1381 (Fed. Cir. 2003).
The majority recognized this principle in reviewing the
court’s opinion in DSMC II for substantial evidence,
remarking that
[w]hile there is also some support in the record for
a contrary finding, the conclusion reached by the
Commission need not be the only one possible
from the record. “Even if it is possible to draw two
inconsistent conclusions from evidence in the re-
cord, such a possibility does not prevent [the
Commission’s] determination from being sup-
ported by substantial evidence.” Am. Silicon
DIAMOND SAWBLADES v. US 6
Techs. v. United States, 261 F.3d 1371, 1376 (Fed.
Cir. 2001).
Majority Op. 24. Here, the Court of International Trade
appears to have exceeded its reviewing authority in
DMSC I in remanding the Commission’s original deter-
mination as being unsupported by substantial evidence.
Under these circumstances it seems to me that the
remand to the Commission was partly wrong and partly
right—partly wrong in finding a lack of substantial evi-
dence; party right in remanding for further explanation.
The question then becomes how to resolve this case—a
question of some complexity which has not been briefed
by the parties and as to which I express no opinion. I
respectfully dissent from the majority’s decision insofar as
it holds that the Court of International Trade’s decision in
DSMC I does not rest on substantial evidence grounds.