Renesas Technology America, Inc. v. United States , 27 Ct. Int'l Trade 1217 ( 2003 )

Slip Op. 03-105
UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE: RICHARD W. GOLDBERG, SENIOR JUDGE
NISSEI SANGYO AMERICA, LTD.,
Plaintiff,
v.
UNITED STATES, Court No. 00-00113
Defendant,
and
MICRON TECHNOLOGY, INC.,
Defendant-Intervenor.
[Plaintiff’s motion for summary judgment is granted; liquidation
instructions issued by U.S. Department of Commerce are remanded.]
Dated: August 18, 2003
Katten Muchin Zavis Rosenman (Michael E. Roll) for plaintiff
Nissei Sangyo America, Ltd.
Peter D. Keisler, Assistant Attorney General, David M.
Cohen, Director, Patricia McCarthy Assistant Director, Commercial
Litigation Branch, Civil Division, United States Department of
Justice; Patrick V. Gallagher, Office of the Chief Counsel for
Import Administration, United States Department of Commerce, Of
Counsel, for defendant United States.
Hale & Dorr, LLP (Michael D. Esch) for defendant-intervenor
Micron Technology, Inc.
OPINION
GOLDBERG, Senior Judge: Nissei Sangyo America, Ltd. (“NSA”),
moves for summary judgment upon the agency record pursuant to
USCIT R. 56.1, contesting the issuance of liquidation
Court No. 00-00113 Page 2
instructions contained in message numbers 9305211 and 9305212
(“Liquidation Instructions”) by the U.S. Department of Commerce
(“Commerce”) to the U.S. Customs Service1 (“Customs”), dated
November 1, 1999. The Liquidation Instructions ordered the
liquidation of NSA’s entries of Dynamic Random Access Memory
semiconductors of one megabit or above (“DRAMs”) at the
manufacturer’s cash deposit rate rather than the rates determined
for the manufacturer during the administrative reviews of May 6,
1996 and January 7, 1997.
For the reasons that follow, the Court holds that the
Liquidation Instructions are arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law. The Court
has jurisdiction over this matter pursuant to 28 U.S.C. §
1581(i).
I. BACKGROUND
NSA is an importer of Korean DRAMs manufactured by LG
Semicon Co., Ltd. (“LG Semicon”), formerly Goldstar Electron Co.,
Ltd. (“Goldstar”). NSA purchased DRAMs manufactured by Goldstar
from an unnamed reseller, and entered 38 shipments between
February 17, 1994 and April 28, 1995. At the time of entry, an
1
It has since become the U.S. Bureau of Customs and Border
Protection per the Homeland Security Act of 2002, § 1502, Pub. L.
No. 107-296, 116 Stat. 2135, 2308-09 (Nov. 25, 2002), and the
Reorganization Plan Modification for the Department of Homeland
Security, H.R. Doc. 108-32, p. 4 (Feb. 4, 2003).
Court No. 00-00113 Page 3
antidumping duty order was in effect covering DRAMs imported by
NSA. See Dynamic Random Access Memory Semiconductors of One
Megabit and Above from the Republic of Korea, Antidumping Duty
Order and Amended Final Determination, 58 Fed. Reg. 27,520 (May
10, 1993). Pursuant to the antidumping order of May 10, 1993,
Commerce issued suspension instructions on May 25, 1993 ordering
Customs to require NSA to post cash deposits of estimated
antidumping duties applicable to the merchandise at issue, and
such deposit was made. These suspension instructions provided
deposit rates for all entries at the manufacturer’s rate, and did
not provide separate rates for importers or resellers. Id. at
27,522.
On June 15, 1994, Commerce initiated an administrative
review of imports of DRAMs manufactured by Goldstar and Hyundai
Electronics Co., Ltd. (“Hyundai”), another Korean manufacturer of
DRAMs, that were imported into the United States from October 29,
1992 through April 30, 1994 (“POR 1”). Initiation of Antidumping
and Countervailing Duty Administrative Reviews and Request for
Revocation in Part, 59 Fed. Reg. 30,770 (June 15, 1994). Upon
conclusion of the administrative review, Commerce determined that
the dumping margin for Goldstar was 0.00%. Dynamic Random Access
Memory Semiconductors of One Megabit or Above from the Republic
of Korea, Final Results of Antidumping Duty Administrative
Review, 61 Fed. Reg. 20,216, 20,222 (May 6, 1996).
Court No. 00-00113 Page 4
On June 15, 1995, Commerce initiated a second administrative
review of imports of DRAMs manufactured by LG Semicon and Hyundai
that were imported into the United States from May 1, 1994
through April 30, 1995 (“POR 2”). Initiation of Antidumping and
Countervailing Duty Administrative Review, 60 Fed. Reg. 31,447(June 15, 1995). Commerce determined that the dumping margin for
LG Semicon was de minimis at 0.01%. Dynamic Random Access Memory
Semiconductors of One Megabit or Above from the Republic of
Korea, Final Results of Antidumping Duty Administrative Review,
62 Fed. Reg. 965, 968 (Jan. 7, 1997).
Subsequently, Defendant-Intervenor Micron Technology, Inc.
(“Micron”) filed an action in opposition to the rates determined
in POR 1 and POR 2 for LG Semicon. The Court of International
Trade and the Court of Appeals for the Federal Circuit sustained
the results of the first and second administrative reviews for LG
Semicon DRAMs. Micron Technology v. United States, 23 CIT 55, 44
F. Supp. 2d 216 (1999); Micron Technology v. United States, 23
CIT 208, 40 F. Supp. 2d 481 (1999).
In addition, prior to the conclusion of the Micron cases,
Commerce issued final results for a third administrative review
period covering LG Semicon and Hyundai DRAMs that were imported
from May 1, 1995 though April 30, 1996 (“POR 3”). During POR 3,
Commerce issued instructions to Customs to liquidate entries of
LG Semicon and Hyundai DRAMs during that period irrespective of
Court No. 00-00113 Page 5
the identity of the importer.
Upon conclusion of the Micron cases, Commerce instructed
Customs to assess antidumping duties on NSA’s imports of LG
Semicon DRAMs at the manufacturer’s cash deposit rate upon entry.
Commerce did not instruct Customs to liquidate NSA’s entries at
the rates determined for POR 1 or POR 2.
NSA contests the Liquidation Instructions and moves for
summary judgment on the grounds that the Liquidation Instructions
are arbitrary, capricious, an abuse of discretion, or otherwise
not in accordance with law and were issued without advance notice
to NSA. Commerce argues that the Court lacks subject matter
jurisdiction under 28 U.S.C. § 1581(i). Alternatively, Commerce
argues that NSA has not exhausted its administrative remedies or
that otherwise the Liquidation Instructions are rational and in
accordance with law.
II. STANDARD OF REVIEW
Assuming that the Court has jurisdiction pursuant to 28
U.S.C. § 1581(i), 28 U.S.C. § 2640(e) (1994) governs this case.
Section 2640(e) establishes the standard of review in an action
brought under 28 U.S.C. § 1581(i), providing that “[i]n any civil
action not specified in this section, the Court of International
Trade shall review the matter provided in section 706 of title
5.” Accordingly, the Court “shall hold unlawful and set aside
agency action, findings, and conclusions found to be arbitrary,
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capricious, an abuse of discretion, or otherwise not in
accordance with law.” 5 U.S.C. § 706.
III. DISCUSSION
A. The Court has residual jurisdiction under § 1581(i).
As a threshold matter, Commerce argues that the Court lacks
residual jurisdiction pursuant to 28 U.S.C. § 1581(i). Commerce
claims that NSA had an alternative remedy under § 1581(c). It
claims that NSA could have filed an independent request for an
administrative review and/or participated in POR 1 and POR 2
under § 1581(c). Commerce argues that this alternative remedy
renders § 1581(i) residual jurisdiction unavailable.
NSA argues that Commerce’s prior practice dictated that the
rates determined during the administrative review periods applied
to all importers of the subject merchandise. This was the
governing practice irrespective of whether the importer filed an
individual request for an administrative review. In support of
this argument, NSA points to Consolidated Bearings Company v.
United States, 25 CIT __, 166 F. Supp. 2d 580 (2001) and ABC
International Traders, Inc. v. United States, 19 CIT 787 (1995).
Additionally, NSA points to two notices recently published by
Commerce. See “Antidumping and Countervailing Duty Proceedings:
Assessment of Antidumping Duties,” 68 Fed. Reg. 23,954 (May 6,
2003) (“Final Notice”); “Antidumping or Countervailing Duty
Order, Finding, or Suspended Investigation; Amendment to Notice
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of Opportunity To Request Administrative Review,” 68 Fed. Reg.
26,288 (May 15, 2003) (“Amendment to Final Notice”). NSA argues
that these notices constitute Commerce’s admission that the
Liquidation Instructions constituted a change from its past
practice without notice and that, prior to the issuance of the
Liquidation Instructions, entries for a given importer such as
NSA were liquidated at the rate determined for the producer of
the subject merchandise in the administrative review.
The merits of this action and the resolution of the
jurisdictional issue are intertwined. Pursuant to § 1581(i), the
Court does not possess jurisdiction to decide issues relating to
antidumping law if review is specifically provided for by other
subparagraphs of § 1581. “[I]t is well established that the
residual jurisdiction of the court under [sub]section 1581(i)
‘may not be invoked when jurisdiction under another [sub]section
of § 1581 is or could have been available, unless the relief
provided under that other subsection would be manifestly
inadequate.’” Consolidated, 25 CIT at __, 166 F. Supp. 2d at 583(quoting Ad Hoc Comm. of Fla. Producers of Gray Portland Cement
v. United States, 22 CIT 902, 906, 25 F. Supp. 2d 352, 357 (1998)
(internal citation omitted) (emphasis in original)).
In Consolidated, Commerce issued liquidation instructions
that required Customs to assess antidumping duties on the
plaintiff-importer’s entries of the subject merchandise at the
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cash deposit rates in effect at the time of entry instead of at
the weighted-average rates determined for the subject merchandise
in the amended final results of the administrative review. The
plaintiff-importer contested the instructions on the grounds that
they were arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law, and requested that Customs
apply the liquidation rates determined in the administrative
review. The court found that it “[was] appropriate to exercise
residual jurisdiction because jurisdiction under other
subsections of section 1581 [was] not available.” Id. at 583.
The court explained that:
Commerce’s liquidation instructions also are not
reviewable under subsection 1581(c) because they
were not part of the Final Results or the Amended
Final Results. Rather, such instructions are
issued after relevant final determinations are
published and, accordingly, it was impossible for
[the importer] to contest the instructions as
required under 19 U.S.C. § 1516a(a)(2)(B)(iii)
(1994). . . [F]inally, none of the other
subsections of section 1581 of Title 19 provides a
viable basis for jurisdiction. Id.
In the instant case, Commerce did not publish the
Liquidation Instructions until November 1, 1999. This was after
the final results of POR 1 and POR 2 were published on May 6,
1996 (61 Fed. Reg. 20,216) and January 7, 1997 (62 Fed. Reg.
965), respectively. The Liquidation Instructions changed
Commerce’s prior instructions in message number 7128114 issued
for POR 2, dated May 8, 1997. Those instructions ordered Customs
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to liquidate “all entries covered by the [Order] at the rates
established in the administrative reviews for the three Korean
manufacturers: Goldstar, Hyundai, and Samsung.” In addition, the
reasoning set forth in ABC dictated that in the absence of
another or “all other” rate, all importers of the subject
merchandise were covered by the review. Thus, it was reasonable
for NSA to assume that its entries would be liquidated at the
administrative review rates and that it need not file an
independent request for an administrative review pursuant to §
1581(c). NSA, as an importer of DRAMs covered in POR 1 and POR
2, should have been able to rely on such assessment without
apprehension that Commerce would change its mind later and change
the properly assessed rates. Consolidated, 25 CIT at __, 166 F.
Supp. 2d at 593.
Likewise, in ABC, the court held that the manufacturers’
rates determined in the administrative review applied to the
plaintiff-reseller since there was no other rate that could have
applied:
Absent an applicable reseller, or even an ‘all
other’ rate, [the plaintiff] should have known
that it would have been assigned the only existing
rates, that is, the manufacturers’ duty rates
determined in the final results of the various
administrative reviews. The fact that no review
was requested to establish rates for the resellers
at issue, or for ABC individually, does not compel
Commerce to apply the automatic assessment
regulation in this case. In fact, Commerce is
compelled to apply the manufacturers’ rates as
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determined on review, because no reseller rates
exist. ABC, 19 CIT at 790.
Similarly, at the time of entry, a § 1581(c) request by NSA was
wholly unnecessary, thereby failing to provide an adequate remedy
under the reasoning set forth in ABC. Finally, Commerce does not
present the argument that any other subsection of § 1581 provided
NSA with an adequate remedy, and the Court finds no other
subsection of § 1581 applicable.
Accordingly, the Court exercises jurisdiction over the
matter under 28 U.S.C. § 1581(i).
B. The exhaustion doctrine does not dictate dismissal of NSA’s
claim.
Commerce argues that the exhaustion doctrine applies since
Commerce never had an opportunity to properly consider NSA’s
argument. This was allegedly because NSA never presented the
issue to Commerce in the appropriate administrative proceeding.
NSA asserts that the exhaustion doctrine does not apply to the
instant case because its circumstances qualify it as an
exception. Specifically, NSA maintains that it had no reason to
expect that Commerce would refuse to apply the manufacturer’s
rates to its entries. Alternatively, NSA claims that the issue
at hand is of a purely legal nature that requires no further
agency involvement.
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The exhaustion doctrine requires that a party present its
claims to the relevant administrative agency for the agency’s
consideration before bringing these claims to the Court.
Consolidated, 25 CIT at __, 166 F. Supp. 2d at 586 (citing
Compensation Comm’n of Alaska v. Aragon, 329 U.S. 143, 155
(1946)). However, there is no absolute requirement of exhaustion
in the Court of International Trade in non-classification cases.
Id. (citing Alhambra Foundry Co. v. United States, 12 CIT 343,
346-47, 685 F. Supp. 1252, 1255-56 (1988)). Thus, the Court has
the discretion to determine proper exceptions to the doctrine of
exhaustion. Id.Exceptions to the requirement of exhaustion have been found
where requiring it (1) would be futile or (2) would be
“inequitable and an insistence of a useless formality.” See
Rhone Poulenc, S.A. v. United States, 7 CIT 135, 153, 583 F.
Supp. 607, 610 (1984); United States Canes Sugar Refiners’ Ass’n
v. Block, 3 CIT 196, 201, 544 F. Supp. 883, 887 (1982). A second
exception exists where the “question is one of law and does not
require further factual development and, therefore, the court
does not invade the province of the agency by considering the
question.” See id.The circumstances in the instant case fall under the “pure
question of law” exception to the exhaustion doctrine. In
Consolidated, the court set out the requirements for the “pure
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question of law” exception as follows: (a) plaintiff’s argument
is new; (b) this argument is of a purely legal nature; (c) the
inquiry shall require neither further agency involvement nor
additional fact finding or opening up the record; and (d) the
inquiry shall neither create undue delay nor cause expenditure of
scarce time and resources. See Consolidated, 25 CIT at __, 166
F. Supp. 2d at 587. This instant case presents a pure question
of law that fits squarely within this exception for the reasons
that follow: (a) NSA’s presents a new argument to the Court; (b)
the inquiry involves a question of law — namely, whether
Commerce’s liquidation instructions are arbitrary and capricious;
(c) the inquiry does not require any special expertise by
Commerce and/or the development of a special factual record
either before or after the Court’s consideration of the issue;
and (d) for the reason mentioned in part (c), judicial inquiry
here will not create undue delay or unnecessary expenditure. Id.C. The Liquidation Instructions are arbitrary, capricious, an
abuse of discretion, or otherwise not in accordance with
law.
NSA argues that the Liquidation Instructions are arbitrary,
capricious, and contrary to law, and were issued without advance
notice to NSA. Commerce contends that the Liquidation
Instructions are rational and in accordance with law, and were
issued within the scope of its authority.
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Commerce argues that since NSA did not argue that LG Semicon
knew its goods were destined for export to the United States, NSA
is not covered by the administrative reviews. In support of its
argument, Commerce refers to the “knowledge test” upheld in NSK
Ltd. v. United States, 190 F. 3d 1321, 1334 (Fed. Cir. 1999).
Commerce’s argument is flawed. The knowledge test that was
upheld in NSK only applies to the producer, LG Semicon, and
speaks nothing of the application of the administrative reviews
to the importer, NSA. See generally id. The knowledge test as
it stands in NSK is inapplicable to this case. Therefore,
Commerce asks the Court to hold that the knowledge test stands
for the proposition that the importer is only covered by an
administrative review if the producer knew that its goods were
destined for export to the United States. See Defendant’s
Response in Opposition to Plaintiff’s Motion for Judgment upon
the Agency Record, 20. However, Commerce has not spoken of this
application of the knowledge test in the past. Additionally,
Commerce failed to speak of this application of the knowledge
test in the liquidation instructions issued in POR 1 and POR 2
and, thereby, issued the contested instructions without
explaining the basis for its action. Therefore, this application
of the knowledge test was unwarranted. See Consolidated, 25 CIT
at __, __, 166 F. Supp. 2d at 589, 590 (“If the Department of
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Commerce fails to explain the basis for its liquidation
instructions, Commerce’s action is arbitrary and capricious.”).
In Consolidated, the court found arbitrary and capricious
liquidation instructions that changed Commerce’s previous
practice of liquidating at the rate determined in the
administrative review but instead liquidated at the cash deposit
rate. The court found the instructions arbitrary, in part,
because they were not clear to the plaintiff and were completely
contrary to instructions that were issued previously. The court
saw the following problems with Commerce’s action:
Considering that on September 9, 1997, Commerce
already instructed Customs to liquidate certain
entries subject to the review at certain rates, it
is entirely unclear to this Court why, almost a
year later, Commerce felt compelled to issue the
liquidation instructions at issue if, as Commerce
now contends, the conclusions contained in these
liquidation instructions were already self-evident
from the very same record and from the previously
issued September 9, 1997, instructions. . . . Such
action by Commerce shows that Commerce
contemplated a scenario under which certain
entries of the [subject merchandise], including
[the merchandise] manufactured by the [plaintiff-
importer] could have been liquidated at one rate
prior to the issuance of the contested liquidation
instructions and an entirely different rate after
the issuance of [said] instructions. Id. at 592.
The Court finds the same problem with the Liquidation
Instructions in the instant case. Commerce issued new
instructions on November 1, 1999 and, thereby, changed its past
practice of liquidating at “the rate established for the most
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recent period for the manufacturer of the merchandise.” 61 Fed.
Reg. 20,216, 20,222. The Liquidation Instructions were issued
without notice to NSA, which had no reason to know that Commerce
would change the instructions and require it to request a
separate and independent administrative review. Commerce’s past
practice and the reasoning set forth in ABC and Consolidated gave
NSA a reasonable expectation that their entries were covered by
the rates established in POR 1 and POR 2, and therefore that they
would not need to file an independent request for an
administrative review. The Final Notice and Amendment to Final
Notice appear to acknowledge Commerce’s past liquidation
practice. See 68 Fed. Reg. 23,954; 68 Fed. Reg. 26,288. NSA had
no reason to know that their entries were not covered by the
rates determined in POR 1 and POR 2. Commerce failed to explain
the basis for the Liquidation Instructions at issue and failed to
provide NSA with notice of the change. See Consolidated, 25 CIT
at __, 166 F. Supp. 2d at 590. Therefore, the Liquidation
Instructions are arbitrary, capricious, an abuse of discretion,
or otherwise not in accordance with law. Id.IV. CONCLUSION
For the aforementioned reasons, the Court finds that
jurisdiction attaches under 28 U.S.C. § 1581(i) and that NSA’s
claim is not precluded by the exhaustion doctrine. In addition,
Court No. 00-00113 Page 16
for the reasons stated herein, the Court finds that the
Liquidation Instructions are arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law.
Pursuant to this opinion, this case is remanded to Commerce
to (1) rescind the Liquidation Instructions and (2) issue new
instructions ordering Customs to liquidate and/or re-liquidate
NSA’s entries at the antidumping rates determined for LG Semicon
during POR 1 and POR 2.
Richard W. Goldberg
Senior Judge
Date: August 18, 2003
New York, New York