Lifestyle Enterprise, Inc. v. United States , 896 F. Supp. 2d 1297 ( 2013 )

Slip Op. 13– 17
UNITED STATES COURT OF INTERNATIONAL TRADE
LIFESTYLE ENTERPRISE, INC., TRADE
MASTERS OF TEXAS, INC., EMERALD
HOME FURNISHINGS, LLC, RON’S
WAREHOUSE FURNITURE D/B/A
VINEYARD FURNITURE
INTERNATIONAL LLC,
Plaintiffs,
and
DREAM ROOMS FURNITURE
(SHANGHAI) CO., LTD., GUANGDONG
YIHUA TIMBER INDUSTRY CO., LTD.,
Consolidated Plaintiffs,
ORIENT INTERNATIONAL HOLDING
SHANGHAI FOREIGN TRADE CO., LTD.,
Intervenor Plaintiff,
.v. Before: Jane A. Restani, Judge
UNITED STATES, UNITED STATES Consol. Court No. 09-00378
DEPARTMENT OF COMMERCE,
Defendants,
and
AMERICAN FURNITURE
MANUFACTURERS COMMITTEE FOR
LEGAL TRADE, VAUGHAN-BASSETT
FURNITURE COMPANY, INC.,
Intervenor Defendants.
Consol. Court No. 09-00378 Page 2
OPINION
[Commerce’s Third Remand Results are sustained.]
Dated: February 5, 2013
Kristin H. Mowry, Jeffrey S. Grimson, Jill A. Cramer, Keith F. Huffman, Sarah M. Wyss,
and Susan L. Brooks, Mowry & Grimson, PLLC, of Washington, DC, and John D. Greenwald,
Cassidy Levy Kent (USA) LLP, of Washington, DC, for plaintiffs.1
William E. Perry, Garvey Schubert Barer, of Washington, DC, for consolidated plaintiff
Dream Rooms Furniture (Shanghai) Co., Ltd.
John D. Greenwald, Cassidy Levy Kent (USA) LLP, of Washington, DC, and Patrick J.
McLain, Wilmer, Cutler, Pickering, Hale & Dorr, LLP, of Washington, DC, for consolidated
plaintiff Guangdong Yihua Timber Industry Co., Ltd.
Nancy A. Noonan, John M. Gurley, and Matthew L. Kanna, Arent Fox LLP, of
Washington, DC, for intervenor plaintiff.
Stuart F. Delery, Principal Deputy Assistant Attorney General, Jeanne E. Davidson,
Director, Patricia M. McCarthy, Assistant Director, Stephen C. Tosini, Senior Trial Counsel,
Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC,
for defendants. Of counsel on the brief was Shana Hofstetter, Attorney, Office of the Chief
Counsel for Import Administration, U.S. Department of Commerce, for defendants.
J. Michael Taylor, Daniel L. Schneiderman, Joseph W. Dorn, and Prentiss L. Smith, King
& Spalding, LLP, of Washington, DC, for intervenor defendants.
RESTANI, Judge:
This matter is before the court following three previous remands. See Lifestyle
Enter., Inc. v. United States, 865 F. Supp. 2d 1284 (CIT 2012) (“Lifestyle III”); Lifestyle Enter.,
Inc. v. United States, 844 F. Supp. 2d 1283 (CIT 2012) (“Lifestyle II”); Lifestyle Enter., Inc. v.
1
Mowrey & Grimson, PLLC withdrew as counsel for Ron’s Warehouse Furniture on
January 6, 2011. The court gave Ron’s Warehouse Furniture thirty days to retain counsel. It has
not done so as of the date of this opinion.
Consol. Court No. 09-00378 Page 3
United States, 768 F. Supp. 2d 1286 (CIT 2011) (“Lifestyle I”). These cases involve challenges
to the final results of the administrative review of an antidumping (“AD”) order covering wooden
bedroom furniture from the People’s Republic of China (“PRC”) by the U.S. Department of
Commerce (“Commerce”). See Wooden Bedroom Furniture from the People’s Republic of
China: Final Results of Antidumping Duty Administrative Review and New Shipper Reviews, 74
Fed. Reg. 41,374 (Dep’t Commerce Aug. 17, 2009) (“Final Results”). The court ordered
Commerce to reconsider a variety of issues in its first remand, resulting in Commerce issuing its
Final Results of Redetermination Pursuant to Remand (Dep’t Commerce Aug. 26, 2011) (Docket
No. 132) (“First Remand Results”). Because Commerce again failed to support part of its
redetermination with substantial evidence, the court remanded two issues back to Commerce.
See Lifestyle II, 844 F. Supp. 2d at 1298.
Although Commerce complied with the court’s directions in the second remand as
to the valuation of wood inputs in its AD methodology, Commerce failed to provide substantial
evidence to properly corroborate the adverse facts available (“AFA”) rate assigned to Orient
International Holding Shanghai Foreign Trade Co., Ltd. (“Orient”). See Lifestyle III, 865 F.
Supp. 2d at 1291–92, 1294; Final Results of Redetermination Pursuant to Second Remand (Dep’t
Commerce June 11, 2012) (Docket No. 183) (“Second Remand Results”). As a result, the court
again remanded this matter to Commerce so that the agency could comply with the court’s
previous instructions that it select a corroborated AFA rate, which reflects Orient’s “commercial
reality.” Lifestyle III, 865 F. Supp. 2d at 1289–90. On remand, Commerce selected a new rate of
83.55% for Orient using a significant sample of verified sales data from a comparable producer.
See Final Results of Redetermination Pursuant to Third Remand (Dep’t Commerce Dec. 4, 2012)
Consol. Court No. 09-00378 Page 4
(Docket No. 208) (“Third Remand Results”) at 7. Because Commerce complied with the court’s
remand instructions and the objections of the intervenor defendants are without merit, the court
sustains Commerce’s redetermination.
BACKGROUND
The court previously has set out the facts of this case in three previous opinions.
See Lifestyle III, 865 F. Supp. 2d at 1287–88; Lifestyle II, 844 F. Supp. 2d at 1286–87; Lifestyle
I, 768 F. Supp. 2d at 1293–95. The court, however, summarizes below the facts relevant to this
limited remand.
Lifestyle Enterprise, Inc. (“Lifestyle”), Orient, Guangdong Yihua Timber Industry
Co., Ltd. (“Yihua Timber”), Dream Rooms Furniture (Shanghai) Co., Ltd., Ron’s Warehouse
Furniture d/b/a Vineyard Furniture, Emerald Home Furnishings, LLC, and Trade Masters of
Texas, Inc. (collectively “plaintiffs”) as well as intervenor defendants American Furniture
Manufacturers Committee for Legal Trade and Vaughan-Bassett Furniture Company, Inc.
(collectively “AFMC”) challenged the Final Results. All of these challenges were either
dismissed or resolved in previous remands with the exception of the challenge to the weighted
average dumping margin2 assigned to Orient. See generally id. In its Final Results, Commerce
2
A dumping margin is the difference between the normal value (“NV”) of merchandise
and the price for sale in the United States. See 19 U.S.C. § 1673e(a)(1); 19 U.S.C. § 1677(35).
Unless the nonmarket economy methodology is used, NV is either the price of the merchandise
when sold for consumption in the exporting country or the price of the merchandise when sold
for consumption in a similar country. 19 U.S.C. § 1677b(a)(1). An export price or constructed
export price is the price that the merchandise is sold for in the United States. 19 U.S.C.
§ 1677a(a)–(b). Under the nonmarket economy AD methodology applied here, Commerce
calculates NV “on the basis of the value of the factors of production utilized in producing the
merchandise and to which shall be added an amount for general expenses and profit plus the cost
of containers, coverings, and other expenses.” 19 U.S.C. § 1677b(c)(1). Surrogate values from
market economy countries are used as a measure of these costs. 19 U.S.C. § 1677b(c)(4).
Consol. Court No. 09-00378 Page 5
assigned an AFA rate to Orient of 216.01%, the same rate assigned to the PRC-wide entity. Final
Results, 74 Fed. Reg. at 41,380. After the court determined that Commerce lacked substantial
evidence to support the rate assigned to Orient and remanded the case, Commerce continued to
apply the 216.01% rate to Orient, finding “that the information on the record corroborates the
rate of 216.01 percent, as it relates to Orient . . . .” First Remand Results at 31. Commerce
corroborated its determination based on sales data provided by Yihua Timber, which showed a
small number of sales transactions at or above a 180% margin. Id. at 35–36. The court again
found that Commerce failed to support with substantial evidence its selection of a 216.01% rate
for Orient. Lifestyle II, 844 F. Supp. 2d at 1291.
During the second remand, Commerce calculated a new AFA rate for Orient of
130.81%, relying on a limited set of sales data from Yihua Timber, a cooperating party in the
investigation. Second Remand Results at 17. On review, the court found that Commerce lacked
substantial evidence to support the new rate in light of both the limited sales data used to
corroborate the new rate and the discrepancy between Orient’s rate and the rates assigned to other
separate-rate entities throughout several segments of the proceedings. Lifestyle III, 865 F. Supp.
2d at 1290–92. Accordingly, the court remanded the matter to Commerce again for it to comply
with the court’s previous instruction “to start with the highest rate calculated for a comparable
respondent or respondents and then add an additional amount to ensure compliance.” Id. at 1291
(quoting Lifestyle II, 844 F. Supp. 2d at 1291 n.13) (highlighting the need for additional
corroboration where the AFA rate is in multiples of 100%).
In its third redetermination, Commerce assigned Orient an AFA rate of 83.55%.
Third Remand Results at 7. AFMC challenges the new rate as too low to provide the deterrent
Consol. Court No. 09-00378 Page 6
effect intended by the AFA statute and continues to argue for the rate initially set by Commerce
in its Final Results. See AFMC’s Comments Concerning Commerce’s Final Results of
Redetermination Pursuant to Third Remand (“AFMC Comments”) at 2. Plaintiffs do not object
to the new rate. See Comments of Lifestyle Enterprise, Inc. et al. on Department of Commerce
December 6, 2012 Final Results of Redetermination Pursuant to Third Remand. Defendants
respond that Commerce has complied with the court’s instructions in Lifestyle III and claim that
AFMC’s proposed rates have either been previously rejected by this court or are no better
supported than the rate selected by Commerce. See Def.’s Resp. to AFMC’s Remand Comments
at 5–6.
JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction pursuant to 28 U.S.C. § 1581(c). The court will uphold
Commerce’s redetermination in an AD review unless it is “unsupported by substantial evidence
on the record, or otherwise not in accordance with law . . . .” 19 U.S.C. § 1516a(b)(1)(B)(i).
DISCUSSION
AFMC claims that the new AFA rate selected by Commerce for Orient is “not
sufficiently adverse and does not further the purpose of the statutory provision.” AFMC
Comments at 2. AFMC instead argues that Commerce should apply the original 216.01% AFA
rate, which it contends is corroborated. Id. Even if the previous rate is not supported, AFMC
argues that Commerce should have used the single highest non-aberrational transaction-specific
margin.3 Id. at 3. AFMC’s argument lacks merit.
3
Before the agency, AFMC alternatively argued that Commerce should have used the
highest 10% by margin of Yihua Timber’s sales to calculate Orient’s dumping margin, rather
(continued...)
Consol. Court No. 09-00378 Page 7
Where a respondent to an AD investigation fails to cooperate by not providing
valid data for Commerce to consider in calculating an AD rate, Commerce may use facts
otherwise available to fill the information gap. 19 U.S.C. § 1677e(a). Additionally, if
Commerce determines that “an interested party has failed to cooperate by not acting to the best of
its ability . . . ,” Commerce is permitted to use inferences “adverse to the interests of that party in
selecting from among the facts otherwise available.” 19 U.S.C. § 1677e(b). When adverse
inferences are applied, Commerce may look to information contained in the petition, a final
determination in the investigation, any previous review, or any other information placed on the
record. Id. In doing so, Commerce may select a rate high enough to deter companies from
refusing to cooperate, but the rate may not be so high so as to be punitive. Gallant Ocean (Thai.)
Co. v. United States, 602 F.3d 1319, 1323 (Fed. Cir. 2010). Accordingly, “Commerce may not
select unreasonably high rates having no relationship to the respondent’s actual dumping
margin.” Id. As with all of Commerce’s determinations in an AD case, the final rate must be
supported by substantial evidence. 19 U.S.C. § 1516a(b)(1)(B)(i). The Federal Circuit has
identified what seems to be the outer limits of how little data Commerce must look to in
corroborating a high AFA rate, but it has not created a floor below which Commerce may not
select an AFA rate. See PAM, S.p.A. v. United States, 582 F.3d 1336, 1340 (Fed. Cir. 2009); Ta
Chen Stainless Steel Pipe, Inc. v. United States, 298 F.3d 1330, 1339 (Fed. Cir. 2002).
In the Third Remand Results, Commerce adopted a methodology in which it
3
(...continued)
than the highest 15% Commerce opted to use in the Third Remand Results. Third Remand
Results at 9. AFMC did not raise this argument in its latest remand comments before the court,
and so the court limits its consideration of AFMC’s challenge to the general claim that the rate is
not sufficiently adverse in light of the purpose of the AFA statute.
Consol. Court No. 09-00378 Page 8
began with Yihua Timber’s calculated AD margin, based on verified sales data, and then
narrowed the selection of sales data to increase Orient’s margin in a way which provided
respondents with an incentive to cooperate without departing from “the mainstream of sales from
this cooperating respondent.” Third Remand Results at 6–7. Commerce opted to continue to
rely on Yihua Timber’s sales data because, like Orient, Yihua Timber was one of the two largest
exporters of the subject merchandise, and the record contains sufficient sales and production data
for Yihua Timber. Id. at 6. This allowed Commerce to undertake a detailed analysis of Orient’s
likely sales based on the sample invoice Orient provided earlier in the review. Id. Using the
sample invoice, Commerce was able to match the products sold by Orient to those sold by Yihua
Timber. Id. Commerce then ranked the product-matched Yihua Timber sales by the magnitude
of the dumping margin. Id. at 7. Commerce decided to look at only the top 15% of these ranked
Yihua Timber sales. Id. Commerce then took the simple average of these weighted-average
dumping margins for each product type to arrive at an 83.55% margin for Orient. Id. This rate is
more than double the margin assigned to Yihua Timber (40.74%), the most comparable
cooperative respondent, but as indicated the margin is not challenged by Orient or those
purchasing its products. Id. at 6–7.
AFMC’s challenge lacks legal support based on either applicable statutes or case
law. Although the statute permits Commerce to use adverse inferences in calculating an AFA
rate for a non-cooperating respondent, it is silent as to how adverse these inferences must be. See
19 U.S.C. § 1677e(b). Additionally, as noted above, both this court and the Federal Circuit have
repeatedly required Commerce to select rates which are not overly punitive or devoid of some
grounding in the respondent’s commercial reality. See, e.g., Lifestyle III, 865 F. Supp. 2d at
Consol. Court No. 09-00378 Page 9
1289–90. Although AFMC points to cases where, based on the particular facts of those cases,
the Federal Circuit has permitted minimal corroboration to support high AFA rates, it has not
identified any case law requiring Commerce to impose a higher AFA rate because the rate was
not sufficiently adverse. AFMC Comments at 3. So long as Commerce has selected an AFA rate
properly corroborated by substantial evidence, it alone has discretion in deciding the magnitude
of the “built-in increase intended as a deterrent to non-compliance.” See Gallant, 602 F.3d at
1323. As indicated, in this case, Commerce imposed a rate that is more than twice that of the
other comparable respondent, Yihua Timber. Third Remand Results at 6–7. AFMC offered no
basis on which the court could reject this margin as insufficiently adverse.
CONCLUSION
Orient’s AFA rate is supported by substantial evidence, and therefore
Commerce’s Third Remand Results are SUSTAINED. Judgment will be entered accordingly.
/s/ Jane A. Restani
Jane A. Restani
Judge
Dated: February 5, 2013
New York, New York