Samsung Electrs. Co. v. United States , 70 F. Supp. 3d 1350 ( 2015 )

Slip Op. 15-57
UNITED STATES COURT OF INTERNATIONAL TRADE
SAMSUNG ELECTRONICS CO., LTD.,
AND SAMSUNG ELECTRONICS
AMERICA, INC.,
PUBLIC
Plaintiffs,
Before: Leo M. Gordon, Judge
v.
Consol. Court No. 13-00098
UNITED STATES,
Defendant.
OPINION
[Motion for judgment on agency record denied; final determination of sales at less than
fair value sustained in part.]
Dated: June 12, 2015
Warren E. Connelly, J. David Park, Jarrod M. Goldfeder, and Phyllis L. Derrick,
Akin Gump Strauss Hauer & Feld LLP of Washington D.C. for Plaintiffs Samsung
Electronics Co., Ltd and Samsung Electronics America, Inc.
Daniel L. Porter, James P. Durling, Christopher A. Dunn, Ross E. Bidlingmaier,
and Claudia D. Hartleben, Curtis, Mallet-Prevost, Colt & Mosle of Washington, D.C. for
Consolidated Plaintiffs LG Electronics, Inc. and LG Electronics USA, Inc.
Jack A. Levy, Myles S. Getlan, James R. Cannon, Jr. John D. Greenwald, Matthew
Frumin, and Thomas M. Beline, Cassidy Levy Kent (USA) LLP of Washington, D.C. for
Plaintiff and Defendant-Intervenor Whirlpool Corporation.
Douglas G. Edelschick, Trial Attorney, Commercial Litigation Branch, Civil
Division, U.S. Department of Justice of Washington, DC for Defendant United States.
With him on the brief were Stuart F. Delery, Assistant Attorney General, Jeanne E.
Davidson, Director, Franklin E. White, Jr., Assistant Director. Of counsel on the brief was
Joanna V. Theiss, Attorney, Office of the Chief Counsel for Trade Enforcement and
Compliance for the United States Department of Commerce.
Consol. Court No. 13-00098 Page 2
Gordon, Judge: This consolidated action involves a U.S. Department of Commerce
(“Defendant” or “Commerce”) final determination in the less than fair value investigation
of large residential washers from the Republic of Korea. Large Residential Washers from
the Republic of Korea, 77 Fed. Reg. 75,988 (Dep’t of Commerce Dec. 26, 2012) (final
determ. LTFV investigation) (“Final Results”); see also Issues and Decision Memorandum
for the Antidumping Duty Investigation of Large Residential Washers from the Republic
of Korea, A-580-868 (Dep’t of Commerce Dec. 26, 2012), available at
http://enforcement.trade.gov/frn/summary/korea-south/2012-31104-1.pdf (last visited this
date) (“Decision Memorandum”). Before the court are the motions for judgment on the
agency record of Plaintiffs Samsung Electronics Co., Ltd. and Samsung Electronics
America, Inc. (collectively, “Samsung”), Consolidated Plaintiffs LG Electronics Inc. and
LG Electronics USA, Inc. (collectively, “LG”), and Consolidated Plaintiff Whirlpool
Corporation (“Whirlpool”). The court has jurisdiction pursuant to Section 516A(a)(2)(B)(i)
of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(i) (2012),1 and 28
U.S.C. § 1581(c) (2012).
This opinion addresses Whirlpool’s challenge to the Final Results. See Consol. Pl.
Whirlpool’s Mot. for J. on the Agency R. 1-50 (Sept. 27, 2013), ECF No. 46 (“Whirlpool
Br.”); Def.’s Consol. Resp. to Pls.’ Mots. for J. on the Agency R. 51-81 (Feb. 14, 2014),
ECF No. 62 (“Def. Resp.”); Consol. Def.-Intervenors LG Elecs., Inc.’s and LG Elecs. USA,
Inc.’s Resp. to Whirlpool Corp.’s Br. in Supp. of its Mot. for J. on the Agency R. 2-15
1
Further citations to the Tariff Act of 1930, as amended, are to the relevant provisions of
Title 19 of the U.S. Code, 2012 edition.
Consol. Court No. 13-00098 Page 3
(Mar. 7, 2014), ECF No. 66 (“LG Resp.”); Resp. Br. of Samsung Elecs. Co., Ltd. and
Samsung Elecs. Am., Inc., in Opp’n to Whirlpool Corp.’s Rule 56.2 Mot. for J. upon the
Agency R. 1-21 (Mar. 10, 2014), ECF No. 70 (“Samsung Resp.”); Reply Br. of Whirlpool
Corp. 1-37 (Apr. 21, 2014), ECF No. 83 (“Whirlpool Reply”).
Specifically, Whirlpool challenges (1) Commerce’s finding that LG was not affiliated
to its suppliers; (2) Commerce’s finding that LG properly reported all its costs; (3)
Commerce’s refusal to apply adverse facts available to LG due to LG’s rebate reporting;
(4) Commerce’s sales-below-cost test; (5) Commerce’s refusal to apply adverse facts
available to Samsung due to an affiliated retailer’s failure to cooperate; (6) Commerce’s
selection of the shipment date rather than the invoice date as the date of sale for certain
Samsung transactions; and (7) Commerce’s treatment of Samsung’s costs related to an
unforeseen event as direct warranty expenses rather than a different kind of direct
expenses. For the reasons set forth below, the court denies Whirlpool’s motion for
judgment on the agency record and sustains the Final Results for each of the issues
challenged by Whirlpool.
I. Standard of Review
The court sustains Commerce‘s “determinations, findings, or conclusions” unless
they are “unsupported by substantial evidence on the record, or otherwise not in
accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i). More specifically, when reviewing
agency determinations, findings, or conclusions for substantial evidence, the court
assesses whether the agency action is reasonable given the record as a whole. Nippon
Steel Corp. v. United States, 458 F.3d 1345, 1350-51 (Fed. Cir. 2006). Substantial
Consol. Court No. 13-00098 Page 4
evidence has been described as “such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion.” DuPont Teijin Films USA v. United States,
407 F.3d 1211, 1215 (Fed. Cir. 2005) (quoting Consol. Edison Co. v. NLRB, 305 U.S.
197, 229 (1938)). Substantial evidence has also been described as “something less than
the weight of the evidence, and the possibility of drawing two inconsistent conclusions
from the evidence does not prevent an administrative agency's finding from being
supported by substantial evidence.” Consolo v. Fed. Mar. Comm'n, 383 U.S. 607, 620
(1966). Fundamentally, though, “substantial evidence” is best understood as a word
formula connoting reasonableness review. 3 Charles H. Koch, Jr., Administrative Law and
Practice § 9.24[1] (3d ed. 2014). Therefore, when addressing a substantial evidence issue
raised by a party, the court analyzes whether the challenged agency action “was
reasonable given the circumstances presented by the whole record.” 8A West's Fed.
Forms, National Courts § 3:6 (5th ed. 2015).
Separately, the two-step framework provided in Chevron, U.S.A., Inc. v. Natural
Res. Def. Council, Inc., 467 U.S. 837, 842-45 (1984), governs judicial review of
Commerce's interpretation of the antidumping statute. See United States v. Eurodif S.A.,
555 U.S. 305, 316 (2009) (Commerce's “interpretation governs in the absence of
unambiguous statutory language to the contrary or unreasonable resolution of language
that is ambiguous.”). The court first considers whether Congressional intent on the issue
is clear. Dupont, 407 F.3d at 1215. When a “court determines Congress has not directly
addressed the precise question at issue, . . . the question for the court is whether the
agency's answer is based on a permissible construction of the statute.” Chevron, 467
Consol. Court No. 13-00098 Page 5
U.S. at 843. Under Chevron’s second prong, the court must defer to Commerce's
reasonable construction of the statute. See, e.g., Eurodif, 555 U.S. at 316; Union Steel v.
United States, 713 F.3d 1101, 1106–10 (Fed.Cir.2013).
II. Discussion
Whirlpool makes seven multipart arguments in opposition to the Final Results.
A. Exhaustion
As a preliminary matter, Defendant and Samsung both respond that Whirlpool
failed to exhaust certain arguments: (1) that Commerce improperly rejected a factual
submission and (2) that Samsung was able to compel its affiliate to act on a prior
occasion. Whirlpool Br. at 32-36. Defendant and Samsung explain that Whirlpool failed
to raise either issue in its administrative case brief. Def. Resp. at 73, 75; Samsung Resp.
at 11-14. Defendant also contends that Whirlpool did not raise any of the exceptions to
the exhaustion requirement in its opening brief “despite a manifest exhaustion problem.”
Def. Resp. at 73.
Whirlpool replies that it preserved its rejected submission argument. Whirlpool
Reply at 23-26. Whirlpool explains that it twice attempted to submit the relevant
arguments and exhibits, and that Commerce twice issued rejection memoranda outlining
the agency’s reasoning. Id. at 24. Whirlpool cites to Itochu Bldg. Prods. v. United States,
733 F.3d 1140 (Fed. Cir. 2013), a case that, according to Whirlpool, considered and
rejected “almost identical” exhaustion arguments to those Defendant and Samsung raise
here. Whirlpool Reply at 25. Whirlpool also argues that “the issue of whether Samsung
could compel [its affiliated retailer] was squarely before Commerce” because Whirlpool in
Consol. Court No. 13-00098 Page 6
its administrative case brief contended that Samsung did not exert “maximum efforts” to
compel cooperation. Id. at 22 (quoting Whirlpool Case Brief, 32-42 (Dep’t of Commerce
Oct. 31, 2012), CD 3122 (“Whirlpool Admin. Br.”)).
The court agrees with Defendant and Samsung that exhaustion is appropriate in
these circumstances. When reviewing Commerce's antidumping determinations, the U.S.
Court of International Trade is mandated by statute to require exhaustion of administrative
remedies “where appropriate.” 28 U.S.C. § 2637(d). “This form of non-jurisdictional
exhaustion is generally appropriate in the antidumping context because it allows the
agency to apply its expertise, rectify administrative mistakes, and compile a record
adequate for judicial review-advancing the twin purposes of protecting administrative
agency authority and promoting judicial efficiency.” Carpenter Tech. Corp. v. United
States, 30 CIT 1373, 1374-75, 452 F.Supp.2d 1344, 1346 (2006) (citing Woodford v. Ngo,
548 U.S. 81, 88-90 (2006)). The court “generally takes a ‘strict view’ of the requirement
that parties exhaust their administrative remedies before the Department of Commerce
in trade cases.” Corus Staal BV v. United States, 502 F.3d 1370, 1379 (Fed. Cir. 2007).
An important corollary to the exhaustion of administrative remedies is Commerce's
own regulatory requirement that parties raise all issues within their administrative case
briefs. 19 C.F.R. § 351.309(c)(2) (2014) (“The case brief must present all arguments that
continue in the submitter's view to be relevant to the final determination.”); Mittal Steel
Point Lisas Ltd. v. United States, 548 F.3d 1375, 1383 (Fed. Cir. 2008) (parties are
2
“CD” refers to a document contained in the confidential administrative record. “PD”
refers to a document contained in the public administrative record.
Consol. Court No. 13-00098 Page 7
“procedurally required to raise the[ir] issue before Commerce at the time Commerce [is]
addressing the issue”); see also 19 U.S.C. § 1677f(i)(3)(A) (“the administering authority
shall include . . . an explanation of the basis for its determination that addresses relevant
arguments, made by interested parties”). This requirement works in tandem with the
exhaustion requirement and promotes the same twin purposes of protecting
administrative agency authority and promoting judicial efficiency.
Whirlpool had the opportunity during this proceeding to address the rejected
submission and the affiliate’s past cooperation, but chose not to do so. By declining to
argue or develop either issue in its administrative case brief, Whirlpool signaled that both
issues no longer merited attention from Commerce. Whirlpool thereby undermined
Commerce’s ability to analyze both issues in the Decision Memorandum and in turn
deprived the court of a fully developed record on the contested issues. Furthermore,
Commerce’s regulatory requirement that parties raise all issues within their administrative
case briefs carries the force of law, and the court cannot simply ignore it. Exhaustion is
therefore appropriate here because it serves the twin purposes of protecting
administrative agency authority and promoting judicial efficiency.
The court also notes that Itochu does not apply here. The U.S. Court of Appeals
for the Federal Circuit in Itochu explained that 19 C.F.R. § 351.309(c)(2) did not apply to
the voluntary submission made during a changed-circumstances review at issue in that
appeal. Itochu, 733 F.3d at 1145 n.1. This action does not involve a changed-
circumstances review, but rather a less than fair value investigation to which the
Consol. Court No. 13-00098 Page 8
regulation requiring a party to raise all issues in an administrative case brief applies.
19 C.F.R. 351.309(c)(2); Itochu, 733 F.3d at 1145 n.1.
Lastly, Samsung contends that Whirlpool makes an argument in its confidential
opening brief about Samsung’s invoicing that did not appear in Whirlpool’s administrative
case brief. Samsung maintains that Whirlpool has therefore failed to exhaust its
administrative remedies on this issue. Samsung Resp. at 17-18. Whirlpool does not
respond to this argument in its reply brief. Whirlpool Reply at 29-32. Because Whirlpool
failed to raise this argument below, the court agrees with Samsung that requiring
exhaustion is appropriate in these circumstances as well.
B. Affiliation Between LG and its Suppliers
Whirlpool challenges Commerce’s finding that LG was not affiliated with certain
input suppliers. Whirlpool Br. at 11-19; see also Decision Memorandum at 48-51. The
statute defines “affiliated persons” as persons that have at least one of a number of
relationships, including “[a]ny person who controls any other person and such other
person.” 19 U.S.C. § 1677(33)(G). The statute further provides that “a person shall be
considered to control another person if the person is legally or operationally in a position
to exercise restraint or direction over the other person.” 19 U.S.C. § 1677(33). In making
the determination of whether “control” exists, Commerce’s regulations provide that it will
consider inter alia “[c]orporate or family groupings; franchise or joint venture agreements;
debt financing;” and critically for this case, “close supplier relationships.” 19 C.F.R.
§ 351.102(b)(3); see also Statement of Administrative Action, H.R. Doc. No. 103-316, vol.
1 at 838 (1994) (control sufficient to establish affiliation may be demonstrated “for
Consol. Court No. 13-00098 Page 9
example, through . . . close supplier relationships”) (“SAA”). Not all close supplier
relationships are control relationships, however. A close supplier relationship is a control
relationship under the statute when “the supplier or buyer becomes reliant upon the
other.” SAA at 838 (emphasis added).
Despite a comprehensive discussion by Commerce in the Decision Memorandum
addressing the issue of affiliation against a well-developed factual record, see Decision
Memorandum at 48-51, Whirlpool challenges the issue of affiliation through an elaborate,
multi-part argument that the administrative record mandates that LG is affiliated with
certain suppliers.
Whirlpool begins with a “legal” challenge. Whirlpool argues that “Commerce plainly
adopted a standard of exclusivity as a prerequisite to finding affiliation” that “is not found
in the statute or Commerce’s regulations and does not reflect a reasonable interpretation
of either.” Whirlpool Br. at 16, 19. Whirlpool, however, does not apply the Chevron
framework to the applicable statutory language. See id. at 16-19. Whirlpool also does not
mention or apply the standard of review applicable to Commerce’s interpretation of its
own regulations. See id.; see also Am. Signature, Inc. v. United States, 598 F.3d 816,
827 (Fed. Cir. 2010) (citing Reizenstein v. Shinseki, 583 F.3d 1331, 1335 (Fed. Cir. 2009))
(explaining standard of review for agency interpretations of its own regulations).
Whirlpool’s insistence that Commerce “plainly adopted a standard of exclusivity” is
a mischaracterization of the Decision Memorandum and Commerce’s collapsing analysis.
Rather than “adopt a standard of exclusivity,” Commerce simply applied its standard
collapsing analysis, crediting as important the specific fact that LG’s suppliers did not
Consol. Court No. 13-00098 Page 10
exclusively supply LG. This is therefore not a “legal” issue, but instead a more
straightforward substantial evidence issue involving the relative weight Commerce
accorded “exclusivity” in determining whether LG’s suppliers were reliant on LG. See
Whirlpool Br. at 15-17 (“Commerce’s decision to find that LG and certain input suppliers
were not affiliated through a close supplier relationship rested almost entirely on its finding
that the suppliers did not exclusively supply LG.”).
When framed properly as a substantial evidence issue, Whirlpool’s arguments are
unavailing. Whirlpool contends that Commerce weighed the duration and terms of the
supply agreements and the suppliers’ profitability too heavily in its analysis. Whirlpool
explains that LG maintained loan agreements with its suppliers that extended over longer
terms than the supply agreements, and that the suppliers were profitable because of the
loans and other help provided by LG. Whirlpool also argues that “Commerce
misunderstood the relevance of LG supplying raw materials for less than market value to
its suppliers,” insisting that this arrangement “tied the suppliers to LG” suggesting a
potential for control. Id. at 18. Whirlpool argues that the record instead supports a finding
that LG had the potential to control its suppliers. Specifically, according to Whirlpool, LG:
(1) purchased an overwhelming majority of certain suppliers’ production; (2) transferred
raw materials to suppliers at less than market price; (3) provided no-interest loans to four
suppliers and specified how those loans were to be used; (4) provided technical
assistance to increase suppliers’ productivity; (5) replaced suppliers’ old facilities;
(6) “partnered” with suppliers “to venture into foreign markets;” and (7) collaborated with
Consol. Court No. 13-00098 Page 11
suppliers and met customers together; and engaged in other business proprietary activity
with suppliers indicative of an affiliation. Id. at 13-17.
These arguments are ultimately not responsive to the substantial evidence
standard of review because they fail to address the whole administrative record. Whirlpool
does not account for the record information that detracts from Whirlpool’s preferred
affiliation outcome. An administrative record for an antidumping investigation may support
two or more reasonable, though inconsistent, determinations on a given issue. Whirlpool’s
argument just emphasizes that portion of the administrative record that supports its
preferred outcome. For Whirlpool to prevail on judicial review on fact-intensive issues like
control and affiliation, the administrative record must support one and only one
determination. In other words, Commerce’s conclusion that LG’s suppliers were not
affiliated with LG would have to have been unreasonable because the overwhelming
weight of information and argument on the administrative record demonstrates that they
were affiliated with LG.
Here, that was not the case. The issue of affiliation was arguable. Despite the “high
level of cooperation and convenience that LG and its suppliers employ in their commercial
relationships,” Commerce found that “record evidence regarding the suppliers’ sales
establishes that LG’s input suppliers could, and did, look to other unaffiliated buyers of
their goods,” and reasonably concluded that arrangement “belies the existence of a
relationship in which the suppliers have become ‘reliant’ on LG.” Decision Memorandum
at 49. Commerce explained that it also considered “(i) the terms and provisions of supply
agreements; (ii) the relative percentage that sales to LG represented of each of the
Consol. Court No. 13-00098 Page 12
suppliers’ total sales; (iii) the terms of any financing agreements with the suppliers; and
(iv) the overall profitability of the suppliers.” Id. Commerce found that the supply
agreements were short-term in nature, were renewable at either party’s option, and did
not prohibit sellers from selling to other buyers. Commerce also found that no supplier
sold exclusively to LG, and that the suppliers were all profitable. Id. at 49-50. Commerce
noted that LG does not assume any risk in extending credit to its suppliers because the
agreements require the suppliers to post collateral in the form of credit guarantees from
commercial banks. Id. at 50. Commerce concluded that LG’s suppliers are not reliant on
LG, and that therefore, LG’s relationship with its suppliers is not a control relationship
under the statute.
The information and argument on the administrative record was not so one-sided
to require Commerce to find that LG’s suppliers were reliant upon LG. The court therefore
cannot, on this administrative record, direct Commerce by affirmative injunction to find
that LG is affiliated with its suppliers.
On the same issue of affiliation, Whirlpool argues that Commerce erroneously
deviated from a past administrative precedent in which it found affiliation. Whirlpool Br. at
15 (citing Certain Welded Stainless Steel Pipe from Taiwan, 62 Fed. Reg. 37,543 (Dep’t
of Commerce July 14, 1997) (final results admin. review) (“Steel Pipe”)). There is a
general principle of administrative law that “an agency must either follow its own
precedents or explain why it departs from them.” See generally, 2 Richard J. Pierce,
Administrative Law Treatise § 11.5, at 1037 (5th ed. 2010). Here, rather than arbitrarily
deviating from a prior precedent, Commerce reasonably explained that the relationship
Consol. Court No. 13-00098 Page 13
at issue in Steel Pipe featured many indicia of control that were not present in this
instance. The respondent in Steel Pipe “had full-time access to its supplier’s computer
system, as well as physical custody of the supplier’s signature stamp,” and “the supplier
pledged its entire inventory and accounts receivable directly to the respondent’s bank
without any consideration, or even a written agreement.” Decision Memorandum at 50-
51 (citing Steel Pipe, 62 Fed. Reg. at 37,549-50); see also Steel Pipe, 62 Fed. Reg. at
37,550 (finding control through a close supplier relationship in part because the
respondent was the exclusive stainless steel supplier to the alleged affiliate and because
there was no evidence the alleged affiliate ever looked elsewhere for stainless steel
products). Whirlpool does not address these distinguishing facts. See Whirlpool Br. at 15.
As a final note, Whirlpool raises for the first time a brand new argument on this
issue in its reply brief. Whirlpool’s opening brief argues that Commerce “ignored” two
facts. This argument lacks any basis because Commerce addressed those facts in its
Decision Memorandum. Compare Whirlpool Br. at 17 (“Commerce ignored the fact that
each supplier’s sales to LG accounted for a very substantial proportion of its total sales,”
and “Commerce ignored that the zero interest loan provided by LG to the suppliers bound
[the suppliers] to LG for terms of [numerous] years.”) with Decision Memorandum at 49
(“Another factor we considered in our analysis was the relative percentage that sales to
LG represented of each of the supplier’s total sales,” and “we also examined the terms of
any financing agreements with the suppliers.”). Nevertheless, in its reply brief Whirlpool
identifies five additional facts that Commerce supposedly “ignored.” Whirlpool Reply at 8-
11. Whirlpool may not introduce these new arguments for the first time in its reply. See
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SmithKline, 439 F.3d at 1320; see also Scheduling Order at 4 (June 13, 2013), ECF No.
22 (“The reply brief may not introduce new arguments.”).
The court therefore sustains Commerce’s conclusion that LG is not affiliated to its
suppliers through a close supplier relationship.
C. Unaccounted Costs of Production for LG
Whirlpool argues that Commerce failed to address its argument that LG’s cost of
production may not reflect certain “costs related to specific sub-assemblies for washers
supplied by certain suppliers.” Whirlpool Br. at 19. Whirlpool cites record evidence
showing that LG provided loans to its suppliers and that LG shared engineers, know-how,
and equipment with its suppliers. According to Whirlpool, Commerce “dispatched this
important contention with one blithe comment,” and that remand is therefore necessary
“for further investigation.” Id. at 20-21 (citing Decision Memorandum at 51).
Commerce responded to Whirlpool’s contention that LG’s cost of production did
not include certain expenditures by explaining that it “verified that LG had accounted for
all appropriate manufacturing, G&A, and financing expenses in its reported costs.”
Decision Memorandum at 51. “Verification is a spot check and is not intended to be an
exhaustive examination of a respondent’s business.” Monsanto Co. v. United States,
12 CIT 937, 944, 698 F. Supp. 275, 281 (1988); see also Micron Tech v. United States,
117 F.3d 1386, 1396 (Fed. Cir. 1997); U.S. Steel Group v. United States, 22 CIT 104,
107, 998 F. Supp. 1151, 1154 (1998); PMC Specialties Group Inc. v. United States,
20 CIT 1130, 1134 (1996). Commerce is “not required . . . [to] trace through every number
of the response–a representative sample is sufficient.” Micron, 117 F.3d at 1396.
Consol. Court No. 13-00098 Page 15
Commerce inferred that LG properly reported its financing and technical support costs
because Commerce was able to reconcile a representative sample of LG’s costs during
verification. Although brief, Commerce’s explanation provides a reasonably discernable
path that addresses Whirlpool’s contention. Decision Memorandum at 51; see NMB
Singapore Ltd. v. United States, 557 F.3d 1316, 1321-22 (Fed. Cir. 2009) (The court must
sustain a determination “‘of less than ideal clarity’” where Commerce’s decisional path is
reasonably discernable. (quoting Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins.
Co., 463 U.S. 281, 286 (1974))).
Whirlpool would have preferred if Commerce had identified direct evidence
indicating that LG reported its financing and technical support costs. See Whirlpool Br. at
19-21; Whirlpool Reply at 12-13. Whirlpool does not, however, demonstrate why
Commerce’s inference that LG did report financing and technical support costs is
unreasonable. For example, Whirlpool does not show that the sample Commerce verified
was not statistically valid, and Whirlpool does not analyze the adequacy of Commerce’s
verification procedures. Whirlpool also does not explain why LG should have separately
itemized its financing and technical support costs in its responses. See Whirlpool Br. at
19-21; Whirlpool Reply at 12-13. All Whirlpool offers is its own negative inference about
the absence of direct evidence. That alone is insufficient to undermine the
reasonableness of Commerce’s inference from the available record evidence. Daewoo
Elecs. Co. v. Int’l Union of Elec., Elec., Technical, Salaried & Mach. Workers, AFL-CIO,
6 F.3d 1511, 1520 (Fed. Cir. 1993) (“The question is whether the record adequately
Consol. Court No. 13-00098 Page 16
supports the decision of [Commerce], not whether some other inference could reasonably
have been drawn.”). The court therefore sustains this aspect of the Final Results.
D. Departure from Past Practice in not Applying AFA to LG
Whirlpool argues that Commerce unreasonably departed from its past practice in
not applying partial adverse facts available (“AFA”) to LG for LG’s reporting of three rebate
programs: REBATE1U, REBATE5H, and REBATE4U. Whirlpool Br. at 21-27. Once
again, the court is not persuaded.
Commerce uses facts otherwise available under 19 U.S.C. § 1677e when
“necessary information is not available on the record” or when “an interested party . . .
withholds information that has been requested by [Commerce], . . . fails to provide such
information by the deadlines for submission of the information or in the form and manner
requested[,] . . . significantly impedes a proceeding[,] . . . or . . . provides such information
but the information cannot be verified.” 19 U.S.C. § 1677e(a). Commerce “may use an
inference that is adverse . . . in selecting from among the facts otherwise available” when
an interested party “fails to cooperate by not acting to the best of its ability to comply with
a request for information.” Id. § 1677e(b).
In Bottom Mount Combination Refrigerator-Freezers from Korea, 77 Fed. Reg.
17,413 (Dep’t of Commerce Mar. 26, 2012) (“Refrigerators”), Commerce applied partial
AFA to LG because LG failed to disclose its rebate allocation methodology to
Commerce’s satisfaction and because LG’s rebate allocation methodology produced
distortions. Issues and Decision Memorandum for the Antidumping Duty Investigation of
Bottom Mount Refrigerator Freezers from the Republic of Korea, A-580-865, at 40-49,
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59-69 (Dep’t of Commerce Mar. 16, 2012), available at http://enforcement.trade.gov/
frn/summary/korea-south/2012-7237-1.pdf (last visited this date) (“Refrigerators
Memorandum”). Whirlpool insists that LG’s rebate reporting in this investigation is
similarly flawed. Commerce discovered at verification that a time lag between the dates
of sales eligible for rebates under the REBATE1U program and the dates LG paid those
rebates caused underreporting of rebate amounts and revealed the possibility that LG’s
two-year rebate reporting window was not sufficiently large to capture all rebates
applicable to POI sales. Whirlpool Br. at 23-24. Commerce also discovered that LG’s
records permitted allocation of all rebates under the REBATE5H and REBATE4U
programs by time period even though “LG claimed it had ‘insufficient information’” to do
so. Id. at 24 (quoting LG U.S. Verification Report at 24 (Dep’t of Commerce Oct. 16, 2012),
PD 446). Whirlpool argues that these deficiencies show that LG knew its methodology
would not capture all rebate amounts and would cause distortions, and that LG possessed
but did not report information that permitted a more specific rebate allocation. According
to Whirlpool, these same problems led Commerce to apply partial AFA to LG in
Refrigerators. Id. at 23-26.
In Refrigerators, Commerce found that LG did not act to the best of its ability in
reporting its home market “sell-out” rebates” because:
1) LG's methodology resulted in rebate amounts which were excessive and
not consistent with its commercial activity; 2) LG attempted to mask the
unreasonable results of its chosen methodology by capping its reported
amounts at 50 percent of gross unit price (rather than requesting guidance
from the Department as to an acceptable methodology); and 3) LG failed to
disclose its capping methodology in its initial questionnaire response, and
Consol. Court No. 13-00098 Page 18
when it finally disclosed the cap, it only did so as a note in an exhibit
attached to a supplemental response, rather than in the narrative itself.
Refrigerators Memorandum at 40-41. Commerce in Refrigerators then detailed LG’s
many attempts to hide the true nature of its rebate programs and highlighted the
distortions that LG’s rebate reporting produced. Id. 41-49. Commerce made similar
findings about other LG rebate programs in Refrigerators:
After analyzing the facts on the record, we find that LG’s methodology for
calculating [LG’s U.S. lump sum and sell-out rebates] was distortive
because: 1) LG’s methodology (before adjustment) resulted in rebates
ranging from negative amounts to rates significantly exceeding gross unit
price; and 2) LG’s modification to this methodology via an arbitrary cap and
floor did not make the results more reasonable (but instead only masked
the distortion). Moreover, we find that LG did not act to the best of its ability
because it: 1) did not respond fully to the Department’s supplemental
questions; 2) stated inaccurate information in its questionnaire responses;
3) did not disclose its methodology until verification; and 4) failed to request
guidance from the Department as to an acceptable methodology (but rather
tried to mask what the company itself recognized as unreasonable results
by spreading what it considered to be excess amounts over other, unrelated
sales).
Id. at 59; see id. at 59-69.
By contrast, Commerce below recognized LG’s “substantial effort” at cooperating
and resolving issues that emerged during verification:
As an initial matter, we recognize that LG has put forth substantial effort and
resources to address the rebate reporting deficiencies identified in
Refrigerators in order to provide a more accurate methodology for reporting
rebates in this investigation. As LG outlines in its case brief, LG has
provided substantial information for the record to describe and document its
rebate reporting methodology. Among other things, LG solicited a meeting
with Department officials on this topic early in the investigation to seek
guidance as to how it should reports its rebates. LG submitted extensive
questionnaire and supplemental questionnaire responses addressing
rebate reporting, and engaged in a thorough examination of rebate reporting
during the two sales verifications. Although the petitioner contends that LG’s
Consol. Court No. 13-00098 Page 19
overall methodology is flawed, it only provided three sets of rebate
examples where it identifies specific issues with LG’s rebate reporting. As
discussed further below, only with respect to one of these sets of rebates
do we find cause to adjust LG’s reporting. Otherwise, we accept LG’s rebate
reporting as reasonable and non-distortive.
a) REBATE1U
As the petitioner states, during the CEP sales verification, we identified two
issues concerning the reporting of LG’s sell-in rebates. We disagree with
the petitioner that these issues demonstrate the overall inaccuracy and
distortiveness of LG’s rebate reporting. Rather, they represent the only
significant issues which arose from a thorough examination of LG’s
methodology. LG fully disclosed its methodology in reporting these rebates
in its questionnaire responses, and we obtained the necessary information
at verification to revise the reported amounts in a manner we believe is more
representative of these rebates. Consequently, we find no basis to conclude
that LG’s REBATE1U reporting is distortive, nor that LG did not act to the
best of its ability in reporting REBATE1U. Thus, there is no basis to apply
AFA in adjusting REBATE1U.
....
With respect to the two-year window LG used to reconcile accrual amounts
with actual rebate payments, we observed at verification that this
methodology may not fully account for volume-based rebates because the
window ended at December 31, 2011, and rebate claims for the year 2011
may have continued through 2012. At our request, LG performed an
additional analysis at verification and showed that expanding the window
for an additional six months captured additional rebate amounts. This
revision of LG’s methodology, we believe, provides a reasonable means of
matching rebates paid after the POI with the sales made during the POI.
Accordingly, we have adjusted the reported REBATE1U amounts using the
information derived from the additional six-month period, as provided at
verification. . . .
b) REBATE5H and REBATE4U
....
The petitioner points to results derived from a detailed examination of
specific sales selected at verification, where the Department obtained
information that indicated it may have been possible to allocate certain
Consol. Court No. 13-00098 Page 20
rebates reported in these categories on a more specific basis. As we noted
in our verification reports, LG was able to obtain additional detailed rebate
information beyond its electronic records for the relatively small number of
sales examined at verification, however, “it did not perform this manual
exercise for the thousands of rebate programs applicable to the sales of
hundreds of thousands of washing machine units during the POI.”
Moreover, our examination of other rebate programs reported under these
variables supported LG’s explanation that a more specific allocation was
not possible. Given the extremely large number of sales and rebate
programs involved in this investigation, and the time and resource restraints
LG faced in meeting the questionnaire response deadlines, along with the
fact that LG reported most rebates on a more specific basis, we find LG’s
REBATE5H and REBATE4U reporting methodology reasonable and, thus,
we do not agree with the petitioner that we should find that LG failed to
cooperate by not acting to the best of its ability and to apply AFA for these
rebates.
Decision Memorandum at 39-41 (footnotes and citations omitted).
As Defendant and LG describe in their responses, see Def. Resp. at 66-70; LG
Resp. at 10-15, LG’s level of cooperation in Refrigerators differed from its level of
cooperation in this investigation. In Refrigerators LG submitted misleading and inaccurate
questionnaire responses, hid the full nature of its rebate programs, and refused to seek
guidance from the agency in preparing its questionnaire responses. Commerce also
found that LG’s rebate reporting was distortive. Refrigerators Memorandum at 40-49, 59-
69. Here, LG sought guidance from Commerce early in the investigation on how to report
rebates. Additionally, LG submitted over 1,000 pages of questionnaire and supplemental
responses concerning its rebate reporting, and engaged in a thorough examination of its
rebate reporting during both sales verifications. Commerce found that LG “provide[d] a
reasonable means” of solving issues with its REBATE1U program at verification by
expanding the number of rebates it reported. Decision Memorandum at 40. Commerce
Consol. Court No. 13-00098 Page 21
explained that “there is no basis to apply AFA in adjusting REBATE1U” because of LG’s
cooperation, and accepted LG’s REBATE5H and REBATE4U reporting as “reasonable
and non-distortive.” Id. at 39. Most important, Commerce distinguished the present case
from Refrigerators by explaining that LG “put forth substantial effort and resources to
address the rebate reporting deficiencies identified in Refrigerators.” Id. In the court’s
view, Commerce provided a reasonable explanation for treating this situation differently
than Refrigerators and therefore did not act arbitrarily in refusing to apply partial AFA to
LG.
E. Commerce’s Sales Below Cost Test
Whirlpool argues that Commerce’s sales-below-cost test violates clear statutory
language because it does not account for level of trade. Whirlpool Br. at 5-11. The court
is not persuaded. Under 19 U.S.C. § 1677b(b), Commerce may exclude home market
sales made at less than the cost of production from its determination of normal value if
such sales “have been made within an extended period of time and in substantial
quantities.” 19 U.S.C. § 1677b(b)(1). Commerce explained below that it “has, over time,
developed a consistent, predictable and reasonable practice in this regard to perform the
sales-below-cost test and the ‘substantial quantities’ test on a model specific basis.”
Decision Memorandum at 43. Under this methodology, if below-cost sales represent
20 percent or more of the volume of sales of a specific model of subject merchandise,
Commerce may exclude those below-cost sales. “[A]ll sales of a given model, regardless
of [levels of trade], are aggregated for purposes of determining the percentage that were
below cost.” Decision Memorandum at 41. This approach has been sustained as a
Consol. Court No. 13-00098 Page 22
reasonable interpretation of 19 U.S.C. § 1677(b). See Mitsubishi Heavy Indus., Ltd. v.
United States, 22 CIT 541, 563-65, 15 F. Supp. 2d 807, 826-28 (1998) (sustaining
Commerce’s sales-below-cost test as reasonable under Chevron step two), after remand,
23 CIT 326, 54 F. Supp. 2d 1183 (1999), after remand, 24 CIT 275, 97 F. Supp. 2d 1204(2000), aff’d, 275 F.3d 1056 (Fed. Cir. 2001) (same); NSK Ltd. v. United States, 28 CIT
1535, 1549-53, 346 F. Supp. 2d 1312, 1326-29 (2004), aff’d, 481 F.3d 1355 (Fed. Cir.
2007) (same).
Whirlpool nevertheless challenges this longstanding, court-approved
methodology, arguing that the statute requires Commerce to disaggregate home market
sales by level of trade before determining whether below-cost sales represent 20 percent
or more of the volume of sales of a specific model. Whirlpool Br. at 5-9. By way of
example, Whirlpool explains that sales below cost represent more than 20% of LG’s sales
made at particular levels of trade when considering groups of sales at each level of trade
in isolation. Id. at 7-8. Section 1677b(b), though, only requires Commerce to consider
whether a respondent made home market sales at less than cost of production “within an
extended period of time and in substantial quantities.” 19 U.S.C. § 1677b(b)(1). The
statute provides no explicit instructions on whether to aggregate sales or not before
considering whether they meet those criteria. Id. Moreover, the phrase “level of trade”
does not appear alongside “extended period of time and in substantial quantities” or
anywhere else in § 1677b(b). Id. The SAA also explains that “the cost test generally will
be performed on no wider than a model-specific basis” without any mention of “level of
trade.” SAA at 832; see also H.R. Rep. No. 571, 93rd Cong., 1st Sess. 71 (1973)
Consol. Court No. 13-00098 Page 23
(discussing sales below cost without reference to “level of trade”); S. Rep. No. 1298, 93rd
Cong., 2d Sess. 173 (1974) (same). Similarly, the level of trade provision in § 1677b(a)
describes how Commerce adjusts normal value “[i]n order to achieve a fair comparison
with the export price or constructed export price,” without instructing Commerce to alter
the set of sales used to calculate normal value. 19 U.S.C. § 1677b(a)(7) (describing
requirements for comparing foreign like product sales to U.S. sales by similar levels of
trade, but not referencing foreign like product sales made below cost); see also 19 C.F.R.
§ 351.412(a) (same).
Section 1677b(b)’s references to “sales of foreign like product under consideration
for the calculation of normal value” are not clear instructions to group sales by level of
trade as Whirlpool claims. 19 U.S.C. § 1677b(b). Rather, as Defendant and LG explain,
the statute is silent as to the overlap between level of trade and sales below cost, meaning
Congressional intent on this issue is not clear. In the absence of clear Congressional
intent on how to resolve the specific issue, Commerce’s interpretation governs so long as
it is reasonable. See Eurodif, 555 U.S. at 316. Commerce’s long-standing sales-below-
cost test addresses the statute’s explicit “extended period of time and in substantial
quantities” criteria as well as the SAA’s specification that Commerce conduct the test on
no wider than a model-specific basis. Whirlpool identifies a different approach based on
level of trade that, in its view, has certain advantages and would have led to a different
determination below. Whirlpool, however, fails to demonstrate that its preferred approach
is the only correct interpretation of the statute. Whirlpool Br. at 5-9. The court therefore
agrees with Defendant and LG that Commerce’s established sales-below-cost test, which
Consol. Court No. 13-00098 Page 24
does not account for level of trade, must be sustained as a reasonable interpretation of
an otherwise silent statutory provision.
Whirlpool argues in the alternative that Commerce’s sales-below-cost test is
unlawful because it “lacks the power to persuade” under the four factors outlined in
Skidmore v. Swift & Co., 323 U.S. 576 (1944), which Whirlpool insists applies here
because Commerce describes its sales-below-cost test in an agency manual. Id. at 9-11
(citing Christensen v. Harris County, 529 U.S. 576, 587 (2000)). The court, though,
reviews Commerce’s statutory interpretations articulated in antidumping proceedings
under Chevron. Pesquera Mares Australes Ltda., 266 F.3d 1372, 1382 (Fed. Cir. 2001).
Commerce has explained its sales-below-cost test in many antidumping proceedings over
the years. See, e.g., Ball Bearings and Parts Thereof from France, Germany, Italy, Japan,
and the United Kingdom, 67 Fed. Reg. 55,780 (Dep’t of Commerce Aug. 30, 2002) (final
results admin. reviews); see also Mitsubishi Heavy Indus., 22 CIT at 564, 15 F. Supp. 2d
at 827 (sustaining Commerce’s sales-below-cost test as reasonable under Chevron). It
did so again here. See Decision Memorandum at 41-43. Chevron is therefore the
appropriate standard of review, not Skidmore.
F. Samsung’s Uncooperative Retailer and AFA
Whirlpool seeks a remand directing Commerce to apply adverse facts available to
Samsung. See Whirlpool Br. at 27-31, 35-39. Whirlpool contended during the
investigation that Samsung had submitted falsified cost and home market sales data,
which to Whirlpool demonstrated “that Samsung had engaged in fraudulent manipulation
of its accounting system to systematically falsify its entire accounting system.” Decision
Consol. Court No. 13-00098 Page 25
Memorandum at 61, 67. Commerce sought information from one of Samsung’s affiliated
retailers to address Whirlpool’s fraud allegation, but the retailer refused to cooperate.
Further Discussion of Comments 16-19 in the Issues and Decision Memorandum, 1
(Dep’t of Commerce Dec. 18, 2012), CD 324 (“Supplemental Decision Memorandum”).
Commerce ultimately “found no evidence of falsified data or fraudulent conduct,” and
declined to apply total AFA to Samsung despite the affiliated retailer’s noncooperation.
Decision Memorandum at 67-68, 73.
In essence, Whirlpool argues that Samsung could have compelled its affiliated
customer to participate but did not, meaning that Samsung did not cooperate to the best
of its ability. Whirlpool contends that the shared family ownership between Samsung and
its affiliated retailer positioned Samsung to compel its affiliate to cooperate. Whirlpool
Reply at 20; Whirlpool Br. at 35-36. Whirlpool also challenges Commerce’s treatment of
other facts that weighed on its conclusion. In particular, Whirlpool highlights the affiliate’s
cooperation during the Refrigerators investigation, and points out that Samsung only used
management-level employees to communicate with the affiliate rather than higher-level
officers or directors. In Whirlpool’s view, Samsung’s effort at obtaining its affiliated
retailer’s cooperation was “half-hearted.” Whirlpool Br. at 38.
Whirlpool’s argument is unpersuasive on this administrative record. Commerce
reasonably found that Samsung demonstrated it could not compel its affiliated retailer to
cooperate, and more broadly that Samsung acted to the best of its ability. See Decision
Memorandum at 67-72; Supplemental Decision Memorandum at 6-10. Commerce
explained that it took numerous special steps in response to Whirlpool’s fraud allegation,
Consol. Court No. 13-00098 Page 26
including: (1) issuing a supplemental questionnaire on the allegation to Samsung,
(2) reviewing Samsung’s response and other relevant data, (3) postponing verification of
Samsung to ensure Commerce had adequate time to prepare, (4) meeting with
Whirlpool’s counsel and accounting expert to help Commerce prepare for verification,
(5) staffing Commerce’s verification with two sales analysts and two consultants,
(6) requesting data from the home market customer (who ultimately refused to
cooperate), (7) conducting a “surprise” visit to another Samsung home market customer
(who did cooperate), (8) using several “surprise” testing methods that Whirlpool’s
accounting consultant recommended and that Commerce did not disclose to Samsung in
advance, and (9) conducting extensive testing of Samsung’s accounting system,
including the data Whirlpool flagged as indicative of fraud. Decision Memorandum at 67-
70. Commerce detailed steps Samsung took to accommodate each of these requests.
See id. Further, Commerce described Samsung’s “significant efforts” in trying to obtain
cooperation from the affiliated retailer. Commerce noted that Samsung contacted its
affiliate within one day of Commerce’s notification of the need to verify the affiliate’s
purchase data, and that Samsung communicated with the affiliate about cooperating with
the investigation several times. Supplemental Decision Memorandum at 8.
Whirlpool stresses the shared family grouping in arguing that Samsung could
compel its affiliate to cooperate. Commerce, though, reasonably found that other
evidence on the record softened the relative impact of the shared family grouping. As
Commerce explained below, none of the enumerated factors besides “family groupings”
applies to Samsung and its affiliated retailer. Samsung and its directors did not have any
Consol. Court No. 13-00098 Page 27
significant stock ownership in the affiliated retailer. Samsung and the affiliated retailer
shared no corporate board members or managers. Commerce could not find any
evidence of intertwined operations between the two companies. Id. at 8. Importantly,
Samsung provided documentation of events affecting its relationship with its affiliate3
undermining Whirlpool’s insistence that Samsung could compel its affiliate to act by virtue
of the shared family grouping. Id. at 10. Commerce also explained that there was “no
evidence that Samsung secured [its affiliate’s] cooperation in [Refrigerators] through
compulsion” and that “the timing of these events indicates that [the retailer] and Samsung
may have been on better terms during [Refrigerators] while their relationship deteriorated
to the point that [the retailer] was no longer willing to advance Samsung’s interests
through its cooperation with [Commerce’s] requests.” Id. In sum, Commerce found little
evidence indicating that Samsung might actually be legally or operationally in a position
to exercise restraint or direction over its affiliate. Coupled with the steps Samsung took at
Commerce’s behest to obtain the retailer’s cooperation, Commerce reasonably found that
Samsung could not compel its retailer to cooperate.
G. Date of Sale
During the proceeding Commerce selected shipment date as the date of sale for
Samsung’s transactions because Commerce determined that the material terms of sale
were set by that date. Supplementary Decision Memorandum at 23. Pursuant to
3
“Samsung provided documentation demonstrating that it was involved in [[
]]” with its affiliated retailer. Supplemental Decision
Memorandum at 10.
Consol. Court No. 13-00098 Page 28
regulation Commerce normally uses the date of invoice as the date of sale, but “may use
a date other than the date of invoice if [Commerce] is satisfied that a different date better
reflects the date on which the exporter or producer establishes the material terms of sale.”
19 C.F.R. § 351.401(i); see generally Yieh Phui Enter. Co. v. United States, 35 CIT ___,
___, 791 F. Supp. 2d 1319, 1322-24 (2011) (describing in detail Commerce’s date of sale
regulation). Whirlpool argues that Commerce erred in selecting shipment date rather than
invoice date as the date of sale for a particular subset of Samsung’s transactions that
according to Whirlpool involved changes to material terms after shipment date. Whirlpool
Br. at 39-44.
Commerce, though, did not agree with Whirlpool that the underlying agreements
between Samsung and its customers materially changed. Supplemental Decision
Memorandum at 23-24. Instead, as Commerce reasonably explained, an event occurred4
during shipment that triggered a conditional item within Samsung’s customer agreements,
which provided that Samsung would compensate its customers for that particular event.
Id. at 23. Commerce explained that Samsung and its customers contemplated the event,
and provided for Samsung to make payments to its customers for such an event. To
Commerce the changes Whirlpool identifies were therefore not material changes to the
underlying sales agreements, but rather the unremarkable result of conditional terms
within the sales agreements applying to these particular transactions. Id. at 23-24. There
4
[[ ]].
Consol. Court No. 13-00098 Page 29
is evidentiary support within the record for a reasonable mind to so conclude. The court
therefore sustains Commerce’s selection of shipment date as the date of sale.
H. Warranty Expenses
Commerce treated certain Samsung expenses5 as direct warranty expenses, and
as a consequence reduced Samsung’s constructed export price. Supplemental Decision
Memorandum at 18 (citing 19 U.S.C. § 1677a(d)(1)(B)). In keeping with its past practice,
however, Commerce did not reduce Samsung’s constructed export price by the full
amount of the event expenses. Commerce relies “on a company’s three-year average of
warranty expenses . . . in place of the [period of investigation] warranty expenses if there
is evidence that the [period of investigation] expenses are not representative of a
respondent’s historical experience, thereby mitigating the impact of warranty claims that
may by nature occur at irregular intervals.” Issues and Decision Memorandum for the
Antidumping Duty Investigation of Crystalline Silicon Photovoltaic Cells, Whether or not
Assembled into Modules, from the People’s Republic of China, A-570-979, at 80 (Dep’t
of Commerce Oct. 9, 2012), available at http://enforcement.trade.gov/frn/summary/
prc/2012-25580-1.pdf (last visited this date) (citing Wooden Bedroom Furniture from the
People’s Republic of China, 76 Fed. Reg. 49,729 (Dep’t of Commerce Aug. 11, 2011)
(final results admin. review); Chlorinated Isocyanurates from Spain, 74 Fed. Reg. 50,774(Dep’t of Commerce Oct. 1, 2009) (final results admin. review)). Whirlpool agrees with
5
[[
]], affecting “a significant number of washers.” Supplemental Decision
Memorandum at 10.
Consol. Court No. 13-00098 Page 30
Commerce’s decision to reduce Samsung’s constructed export price to account for the
event expenses. Whirlpool, though, disputes Commerce’s treatment of those expenses
as warranty expenses and seeks a remand directing Commerce to reduce Samsung’s
constructed export price by the full amount.
Whirlpool alleges that “Commerce acted contrary to law by re-categorizing these
expenses as warranty expenses,” believing that Commerce must categorize expenses in
accordance with a respondent’s accounting system when that system complies with
generally accepted accounting principles. See Whirlpool Br. at 47. Whirlpool, however,
again does not identify a clear statutory provision that prohibits Commerce from treating
the event expenses as warranty expenses or evaluate the reasonableness of
Commerce’s interpretation under Chevron step two. See id. at 44-50; Whirlpool Reply at
33-37. The court therefore cannot identify a “legal” issue here.
The main thrust of Whirlpool’s argument is instead that Commerce unreasonably
treated these expenses as warranty expenses (a substantial evidence argument).
Whirlpool argues that Samsung maintained a monthly warranty reserve that it used to
cover “actual warranty expenses,” such as the cost of parts for repair, service fees, and
scrapping defective units. Whirlpool Br. at 47-50. Whirlpool further argues that Samsung
did not cover the expenses using this warranty reserve, and did not otherwise treat those
expenses as warranty expenses in its own accounting system. Id. Whirlpool also argues
that certain specific expenses6 Samsung incurred are more analogous to direct expenses
6
[[ ]] expenses.
Consol. Court No. 13-00098 Page 31
that are not direct warranty expenses. Whirlpool contends that these expenses are a
direct and unavoidable consequence of specific sales and incident to bringing the subject
merchandise from Korea to the place of delivery. Id. at 47. Lastly, although Whirlpool
concedes that Commerce has previously treated certain kinds of expenses7 as warranty
expenses in Crystalline Silicon Photovoltaic Cells, Whether or not Assembled into
Modules, from the People’s Republic of China, 77 Fed. Reg. 63,791 (Dep’t of Commerce
Oct. 17, 2012) (final LTFV determ.) (“Solar Cells”), Whirlpool nevertheless argues that the
particular expenses here are distinguishable, and that Samsung did not experience these
expenses in “irregular intervals . . . over a three year period.” Id.The court does not agree with Whirlpool. Commerce below explained that it
consistently treats expenses like those in Solar Cells as warranty expenses, and
reasonably found that Samsung’s expenses are similar to those in Solar Cells.
Supplemental Decision Memorandum, at 19.8 Commerce also noted that a typical
warranty claim might include expenses similar to those Samsung incurred here.9 The
court is not convinced that the purported differences Whirlpool details in its brief
undermine Commerce’s reasonable conclusion that Samsung’s expenses were similar to
warranty expenses. See id. Furthermore, Samsung experienced the event only once
during the period of investigation, which reasonably led Commerce to find that the
7
[[ ]] expenses.
8
Specifically, Commerce explained that “[[
]].” Supplemental Decision Memorandum at 19.
9
Specifically, expenses associated with [[
]].
Consol. Court No. 13-00098 Page 32
associated expenses were not representative of Samsung’s historical warranty expenses.
In the court’s view Commerce reasonably calculated a three-year average warranty
expenses for Samsung in harmony with past practice. Id. (citing Honey from Argentina,
71 Fed. Reg. 26,333 (Dep’t of Commerce May 4, 2006)).
Samsung’s treatment of the expenses in its own accounting system may support
an alternative calculation of constructed export price, but the court does not agree with
Whirlpool that Commerce’s treatment is unreasonable merely because of this possibility.
Whirlpool’s arguments amount to the identification of a potential reasonable alternative
finding Commerce could have made on the same facts. In any event, Commerce’s
treatment of Samsung’s expenses was reasonable. The court therefore will sustain this
issue.
III. Conclusion
For the foregoing reasons, the court sustains the Final Results for each of the
issues Whirlpool has raised in its motion for judgment on the agency record. Judgment
will be entered accordingly.
/s/ Leo M. Gordon
Judge Leo M. Gordon
Dated: June 12, 2015
New York, New York