Mark David, a Div. of Baker, Knapp & Tubbs, Inc. v. United States , 24 F. Supp. 3d 1355 ( 2014 )


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  •                          Slip Op. 14-132
    UNITED STATES COURT OF INTERNATIONAL TRADE
    ________________________________
    MARK DAVID, A DIVISION OF        :
    BAKER, KNAPP & TUBBS, INC.,      :
    :
    Plaintiff,             : Before: Nicholas Tsoucalas,
    :          Senior Judge
    and                        :
    : Consol. Court No.: 13-00233
    BRYAN ASHLEY INTERNATIONAL,     :
    METROPOLIS MANUFACTURING, INC. :
    (DBA VAUGHAN BENZ), AND         :
    MGM RESORTS INTERNATIONAL       :
    DESIGN,                          :
    :
    Consolidated           :
    Plaintiffs,            :
    :
    v.                         :
    :
    UNITED STATES,                   :
    :
    Defendant,             :
    :
    and                    :
    :
    AMERICAN FURNITURE MANUFACTURERS:
    COMMITTEE FOR LEGAL TRADE and    :
    VAUGHAN-BASSETT FURNITURE CO., :
    INC.,                            :
    :
    Defendant-Intervenors.:
    OPINION
    [Plaintiff’s motion for judgment on the agency record is denied]
    Dated: November 18, 2014
    Alexander H. Schaefer and Hea J. Koh, Crowell & Moring LLP, of
    Washington, DC, for Mark David, a division of Baker, Knapp & Tubbs,
    Inc., plaintiff.
    Court No. 13-00233                                                            Page 2
    Peter Koenig, Squire Patton Boggs LLP, of Washington, DC, for Bryan
    Ashley International, Metropolis Manufacturing, Inc., and MGM
    Resorts International Design, consolidated plaintiffs.
    Stuart F. Delery, Assistant Attorney General, Jeanne E. Davidson,
    Director, Patricia M. McCarthy, Assistant Director, and Douglas G.
    Edelschick, Trial Attorney, Commercial Litigation Branch, Civil
    Division, U.S. Department of Justice, of Washington, DC, for
    defendant.   Of counsel on the brief was Shana A. Hofstetter,
    Attorney, Office of the Chief Counsel for Trade Enforcement and
    Compliance, U.S. Department of Commerce, of Washington, DC.
    Joseph W. Dorn, J. Michael Taylor and P. Lee Smith, King & Spalding
    LLP, of Washington, DC, for American Furniture Manufacturers
    Committee for Legal Trade and Vaughan-Bassett Furniture Company,
    Inc., defendant-intervenors.
    TSOUCALAS,        Senior    Judge:     Plaintiff,      Mark     David,    a
    division   of     Baker,   Knapp,      and    Tubbs,   Inc.    (“Mark      David”   or
    “Plaintiff”), moves for judgment on the agency record contesting
    defendant United States Department of Commerce’s (“Commerce”)
    determination      in   Wooden   Bedroom        Furniture     From   the    People’s
    Republic     of     China:     Final         Results   of     Antidumping       Duty
    Administrative Review; 2011, 78 Fed. Reg. 35,249 (June 12, 2013).
    Consolidated Plaintiffs, Bryan Ashley International, Metropolis
    Manufacturing, Inc., and MGM Resorts International Design, join
    and supplement Plaintiff’s motion.               See Pls. Adoption of Pl. Br.
    at 1–3.    Commerce and defendant-intervenors, American Furniture
    Manufacturers      Committee     for    Legal     Trade     and   Vaughan-Bassett
    Furniture Company, Inc., oppose Plaintiff’s motion.                  Def.’s Resp.
    to Pl.’s and Consolidated Pls.’ Rule 56.2 Mot. for J. on the Agency
    R. at 1–2.      The AFMC’s Resp. in Opp’n to Mark David’s Rule 56.2
    Court No. 13-00233                                            Page 3
    Mot. for J. on the Agency R. at 1.        For the following reasons,
    Plaintiff’s motion is denied.
    Background
    In January 2005, Commerce issued an antidumping duty
    order covering wooden bedroom furniture (“WBF”) from the People’s
    Republic of China (“PRC”).   Notice of Amended Final Determination
    of Sales at Less Than Fair Value and Antidumping Duty Order: WBF
    From the PRC, 70 Fed. Reg. 329, 330 (Jan. 4, 2005).         Commerce
    acknowledged Shanghai Maoji Imp And Exp Co., Ltd. (“Maoji”) as
    qualifying for a separate rate status and assigned a dumping margin
    of 6.68%.     WBF From the PRC: Corrected Notice of Court Decision
    Not in Harmony With the Final Determination of Sales at Less Than
    Fair Value and Notice of Amended Final Determination of Sales at
    Less Than Fair Value and Antidumping Duty Order Pursuant to Court
    Decision, 76 Fed. Reg. 53,409, 53,411–53,412 (Aug. 26, 2011).
    Commerce initiated the seventh administrative review
    during the period of review beginning on January 1, 2011 through
    December 31, 2011.   WBF From the PRC: Initiation of Administrative
    Review, 77 Fed. Reg. 12,235, 12,237 (Feb. 29, 2012).      During the
    seventh administrative review, Commerce named Maoji as a mandatory
    respondent.    WBF From the PRC: Preliminary Results of Antidumping
    Duty Administrative Review; 2011, 78 Fed. Reg. 8493, 8494 (Feb. 6,
    2013) (“Preliminary Results”).      Maoji responded to Commerce’s
    antidumping questionnaire and supplemental questionnaires between
    Court No. 13-00233                                             Page 4
    July and October 2012. Decision Memorandum for Preliminary Results
    of Antidumping Duty Administrative Review: WBF from the PRC, at 3
    (February 1, 2013) (“Preliminary Decision Memorandum”).        During
    the review Maoji notified Commerce that it was not practicable for
    it to provide a response to the Section D questionnaire or the
    supplemental Section A questionnaire.      See Letter from Maoji to
    Commerce re: WBF from PRC (Aug. 3, 2012), Pub. Rec. 325, Attach.
    1 at 1. 1
    Commerce issued its preliminary results on February 6,
    2013.       Preliminary Results, 78 Fed. Reg. at 8493.       Commerce
    preliminarily determined that Maoji failed to answer all sections
    of Commerce’s questionnaire, and thus failed to establish its
    eligibility for a separate rate status.    
    Id. at 8494.
      As a result,
    Commerce treated Maoji as part of the PRC-wide entity.         
    Id. at 8494.
    Commerce also preliminarily determined that the PRC-wide
    entity, including Maoji, did not cooperate to the best of its
    ability during the review.       
    Id. at 8494.
       Therefore, Commerce
    relied on adverse facts available (“AFA”) to determine the dumping
    margin for the PRC-wide entity.     
    Id. at 8494.
      Commerce assigned
    an AFA rate of 216.01 percent to the PRC-wide entity, including
    Maoji, which was calculated based on a 2004-2005 New Shipper
    1 Hereinafter, documents in the public record will be designated
    “PR” without further specification except where relevant.
    Court No. 13-00233                                                    Page 5
    Review.     WBF From The PRC: Final Results of the 2004-2005 Semi-
    Annual New Shipper Reviews, 71 Fed. Reg. 70,739, 70,741 (December
    6, 2006).    Commerce stated that the rate had been corroborated in
    previously completed administrative reviews in which it found that
    the 216.01% rate for the PRC-wide entity was within “the range of
    the calculated margins on the record of the [fifth] administrative
    review.” Preliminary Results at 15.
    On     March     8,   2013,    Plaintiff,     Mark   David   USA
    (“Plaintiff”), an importer of WBF, filed case briefs with Commerce.
    WBF from the PRC: Issues and Decision Memorandum for the Final
    Results of Review, at 1 (June 5, 2013) (“Decision Memorandum”).
    Mark David contests whether the 216.01% margin, as assigned to
    Maoji as part of the PRC-wide entity was reasonable.
    Commerce maintained its preliminary findings in its
    Final Results.         WBF From the PRC: Final Results of Antidumping
    Duty Administrative Review; 2011, 78 Fed. Reg. 35,249, 35,249 (June
    12, 2013) (“Final Results”).
    JURISDICTION and STANDARD OF REVIEW
    This Court has jurisdiction pursuant to 28 U.S.C. §
    1581(c) (2006) and Section 516A(a)(2)(B)(iii) of the Tariff Act of
    1930 as amended, 19 U.S.C. §1516a(a)(2)(B)(iii)(2006).
    This Court will uphold Commerce’s determination unless
    it is “unsupported by substantial evidence on the record, or
    otherwise        not    in    accordance     with       law.”    19   U.S.C.
    Court No. 13-00233                                                      Page 6
    §1516a(b)(1)(B)(i).       Substantial   evidence   “means      such   relevant
    evidence as a reasonable mind might accept as adequate to support
    a conclusion.” Universal Camera Corp. v. NLRB, 
    340 U.S. 474
    , 477
    (1951).
    Additionally, “courts look for a reasoned analysis or
    explanation for an agency’s decision as a way to determine whether
    a particular decision is arbitrary, capricious, or an abuse of
    discretion.” Wheatland Tube Co. v. United States, 
    161 F.3d 1365
    ,
    1369 (Fed. Cir. 1998). “An abuse of discretion occurs where the
    decision is based on an erroneous interpretation of the law, on
    factual findings that are not supported by substantial evidence,
    or   represent     an   unreasonable    judgment   in    weighing     relevant
    factors.” Welcom Prods., Inc. v. United States, 36 CIT ____, 
    865 F. Supp. 2d 1340
    , 1344 (2012) (citing Star Fruits S.N.C. v. United
    States, 
    393 F.3d 1277
    , 1281 (Fed. Cir. 2005). “An agency action is
    arbitrary when the agency offers insufficient reasons for treating
    similar situations differently.” SKF USA Inc. v. United States,
    
    263 F.3d 1369
    , 1382 (Fed. Cir. 2001).
    DISCUSSION
    Maoji does not dispute that they failed to participate
    fully in the review, and that they therefor can be subjected to an
    AFA rate. The issue before the court is instead whether Commerce’s
    application   of    the   216.01%   PRC-wide   AFA      rate   to   Maoji   was
    reasonable.      Plaintiff argues that the 216.01% PRC-wide AFA rate
    Court No. 13-00233                                                     Page 7
    was neither reliable nor relevant. See Pl.’s Mem. Supp. R. 56.2 J.
    Agency R. at 5–10 (“Pl.’s Mem.”). According to Plaintiff, Commerce
    applied an “outdated” and “unsupported” margin that did not reflect
    Maoji’s commercial reality.       
    Id. In antidumping
    duty proceedings involving merchandise
    from a non-market economy (“NME”), as is the case here, Commerce
    presumes   that    all   respondents     are   government   controlled     and
    therefore subject to the country-wide rate.            See Sigma Corp. v.
    United States, 
    117 F.3d 1401
    , 1405 (Fed. Cir. 1997).               Commerce
    does allow respondents to rebut this presumption, however, by
    establishing the absence of both de jure and de facto government
    control.   
    Id. Respondents who
    make this showing are eligible for
    a separate rate. 
    Id. When a
    company fails to rebut the presumption
    of   government   control,    Commerce    employs   that    presumption    and
    applies the country-wide rate to its merchandise.            See 
    id. Plaintiff does
    not appear to dispute Commerce’s finding
    that Maoji failed to rebut the presumption of government control
    in the Final Results.        During the review Maoji notified Commerce
    that it was not practicable for it to provide a response to the
    Section    D     questionnaire    or     the    supplemental     Section     A
    questionnaire.     See PR 325 attach. 1 at 1.         Commerce determined
    that Maoji was a part of the PRC-wide entity.          See Shandong Mach.
    Imp. & Exp. Co. v. United States, 
    33 CIT 810
    , 815 (2009).           Because
    Maoji failed to respond to Commerce’s questionnaires regarding its
    Court No. 13-00233                                                       Page 8
    separate rate eligibility during the review, Commerce reasonably
    concluded      that    Maoji    failed    to   demonstrate   its    absence   of
    government control.          See Sigma 
    Corp., 117 F.3d at 1405
    .
    The main issue for the court to evaluate is therefor
    whether Commerce’s application of the 216.01% PRC-wide AFA rate to
    Maoji, which has not demonstrated its independence from the PRC-
    wide entity, was reasonable.             A margin based upon AFA must be “a
    reasonably accurate estimate of the respondent’s actual rate,
    albeit with some built-in increase intended as a deterrent to non-
    compliance.”      F.Lli de Cecco di Filippo Fara S. Martino S.p.A. v.
    United States, 
    216 F.3d 1027
    , 1032 (Fed. Cir. 2000).                “[A]lthough
    a higher AFA rate creates a stronger deterrent, Commerce may not
    select unreasonably high rates having no relationship to the
    respondent’s actual dumping margin.”            Gallant Ocean (Thai.) Co. v.
    United States, 
    602 F.3d 1319
    , 1323 (Fed. Cir. 2010) (citing de
    
    Cecco, 216 F.3d at 1032
    ).     “Commerce   must   select   secondary
    information that has some grounding in commercial reality.”                   
    Id. at 1324.
    These standards grow out of 19 U.S.C. § 1677e(c), which
    provides that when Commerce relies on secondary information, it
    “shall, to the extent practicable, corroborate that information
    from independent sources that are reasonably at [its] disposal.”
    19 U.S.C. § 1677e(c).             To corroborate secondary information,
    Commerce must find that it has “probative value.”                  KYD, Inc. v.
    Court No. 13-00233                                                           Page 9
    United States, 
    607 F.3d 760
    , 765 (Fed. Cir. 2010).                     Secondary
    information has “probative value” if it is both reliable and
    relevant to the respondent.            Mittal Steel Galati S.A. v. United
    States, 
    31 CIT 730
    , 734, 
    491 F. Supp. 2d 1273
    , 1278 (2007).
    Plaintiff relies heavily on Lifestyle Enter., Inc. v.
    United States to support its argument that the 216.01% rate was
    unreasonable.      Lifestyle Enterprise, Inc. v. United States, 35 CIT
    ___, ___, 
    768 F. Supp. 2d 1286
    (2011) (“Lifestyle I”), after
    remand, 36 CIT ___, 
    844 F. Supp. 2d 1283
    (2012) (“Lifestyle II”),
    after   second    remand,      36   CIT   ___,    
    865 F. Supp. 2d 1284
       (2012)
    (“Lifestyle III”), after third remand, 37 CIT ___, 
    896 F. Supp. 2d 1297
    (2013) (“Lifestyle IV”).             Pl’s Mem. at 7–9.         Specifically,
    Plaintiff contends that this Court previously discredited the
    application of the 216.01% PRC-wide AFA in Lifestyle I.                 The court
    disagrees.        In   Lifestyle     I,   importers     challenged     the    third
    administrative review of WBF from the PRC.                See Lifestyle I, 768
    F.   Supp.   2d   at   1292.        Orient,   a   mandatory   respondent,       was
    originally subject to an antidumping margin of 216.01%.                     See 
    id. at 1297.
        However, in Lifestyle I, Orient was not assigned the
    PRC-wide rate because “Orient had affirmatively demonstrated an
    absence of de jure or de facto control.”                 See 
    id. at 1296–1297,
    1298 n. 12 (“Commerce did not assign the PRC-wide rate per se, but
    rather selected the same rate based on separate considerations.”).
    Furthermore, the Court found in Lifestyle I that Commerce failed
    Court No. 13-00233                                                          Page 10
    to address the “dramatic increase in Orient’s rate from 7.68% to
    216.01%.”     
    Id. at 1299.
            Because Orient qualified for separate
    rate status, the Court in Lifestyle I held that Commerce was
    required    to    either      explain    its    determination    or     corroborate
    Orient’s AFA rate so that it relates to Orient’s commercial
    reality.     
    Id. at 1298–1299.
              Contrary to Plaintiff’s assertion,
    the Court in Lifestyle I did not hold that the PRC-wide rate is
    uncorroborated.
    Following     three      subsequent    remands     where    the   Court
    instructed Commerce to calculate an AFA rate which has some
    grounding in Orient’s commercial reality, the Court in Lifestyle
    IV sustained Commerce’s findings in its Third Remand Results of
    WBF from the PRC, applying a rate of 83.55% to Orient’s exports of
    WBF.   Lifestyle 
    IV, 896 F. Supp. 2d at 1301-1302
    .                       The Court
    determined       that   the    rate     was    sufficiently   corroborated      and
    reflected Orient’s commercial reality.              
    Id. Unlike Orient
    in Lifestyle I, here, Maoji failed to
    qualify for separate rate status.                As a result it received the
    PRC-wide AFA rate.       Because Maoji was part of the PRC-wide entity,
    Commerce was not required to calculate a separate AFA rate relevant
    to Maoji’s commercial reality.            See Peer 
    Bearing, 32 CIT at 1313
    ,
    
    587 F. Supp. 2d
    at 1327 (“[T]here is no requirement that the PRC-
    wide entity rate based on AFA relate specifically to the individual
    company.”).      Commerce was only required to corroborate the rate to
    Court No. 13-00233                                                     Page 11
    the PRC-wide entity.      See 
    id. Therefore, Plaintiff’s
    reliance on
    Lifestyle I is misplaced.       Lifestyle I does not call into question
    the PRC-wide rate as applied to the PRC-wide entity, rather it
    only discredits its application to Orient, which successfully
    established the absence of both de jure and de facto government
    control.    
    Id. Plaintiff also
      argues     that   Commerce    has   previously
    applied significantly lower rates to cooperating respondents in
    nine   other   administrative    reviews     of   WBF   in   support   of   its
    contention that the rate is unreliable.            Pl.’s Mem. at 8–9.       The
    court does not find that these rates support Plaintiff’s argument.
    The rates that Plaintiff relies on were assigned to cooperating
    separate rate respondents.       See 
    id. The rates
    were not assigned
    to respondents who were considered to be a part of the PRC-wide
    entity.    Plaintiff does not show how these rates conflict with a
    rate applied to a respondent who fails to qualify for separate
    rate status.      In the instant case, as discussed above, unlike the
    nine cooperating respondents, Maoji is an uncooperative respondent
    that was found to be a part of the PRC-wide entity.
    Additionally, Plaintiff insists that the “continued use”
    of the 216.01% margin in the Final Results is “contrary to this
    Court’s    precedent    and   disregards    information      that   decisively
    rejects the reliability or relevance of the PRC-wide entity rate.”
    Pl.’s Mem. at 9. Plaintiff’s argument is unpersuasive. This Court
    Court No. 13-00233                                                      Page 12
    has noted that, “[u]nlike other sources of information, there are
    no     independently   verifiable      sources     for   calculated     dumping
    margins, other than previous administrative determinations.”               Peer
    Bearing Co.-Changshan v. United States, 
    32 CIT 1307
    , 1314, 587 F.
    Supp. 2d 1319, 1328 (2008).         Therefore, when calculating the AFA
    rate for the PRC-wide entity, “the reliability of the calculation
    stems from its basis in prior verified information in previous
    administrative reviews,” and “[i]f Commerce chooses a calculated
    dumping margin from a prior segment of the proceeding, it is not
    necessary to question the reliability of the margin if it was
    calculated from verified sales and cost data.”              
    Id., 587 F. Supp.
    2d at 1328.    Here, Commerce calculated the rate based on the 2004-
    2005 New Shipper Review.      Decision Memorandum at 9–10.            During a
    2009    administrative   review   of    WBF,     Commerce   corroborated    the
    216.01% rate for the PRC-wide entity.          
    Id. at 10.
        Commerce deemed
    this rate to be relevant to this administrative review.                 
    Id. at 10.
       As discussed, Plaintiff failed to provide evidence indicating
    that this rate was unreliable.         Because the 216.01% rate has been
    corroborated for the PRC-wide entity, and the evidence Plaintiff
    provided lacked probative value, Commerce’s determination was
    reasonable.    See Peer 
    Bearing, 32 CIT at 1314
    , 
    587 F. Supp. 2d
    at
    1328.
    Finally, Plaintiff argues that the PRC-wide rate is
    punitive. Pl.’s Mem. 10–11.            The court disagrees.           Plaintiff
    Court No. 13-00233                                                Page 13
    insists that Commerce failed to support Maoji’s rate increase from
    6.68% in previous reviews to the present 216.01% rate applied here.
    As discussed above, Maoji had previously qualified for separate
    rate status, and subsequently lost it in this review, therefore
    Maoji’s previous rate is irrelevant in the instant case. The court
    finds that the 216.01% rate is supported by substantial evidence,
    thus “an AFA dumping margin determined in accordance with the
    statutory requirements is not a punitive measure.”         KYD, Inc. v.
    United States, 
    607 F.3d 760
    , 768 (Fed. Cir. 2010).
    Conclusion
    For   all   the   foregoing   reasons,   the   court   sustains
    Commerce’s Final Results.     Plaintiff’s motion for judgment on the
    agency record is denied.
    /s/ Nicholas Tsoucalas
    Nicholas Tsoucalas
    Senior Judge
    Dated: November 18, 2014
    New York, New York