Tianjin Magnesium International Co. v. United States , 836 F. Supp. 2d 1377 ( 2012 )

Slip Op. 12-54
UNITED STATES COURT OF INTERNATIONAL TRADE
Before: Nicholas Tsoucalas, Senior Judge
___________________________________
TIANJIN MAGNESIUM INTERNATIONAL :
CO., LTD. :
:
Plaintiff, :
:
v. : Consol. Court No.: 09-00012
:
UNITED STATES, :
:
Defendant, :
:
and :
:
US MAGNESIUM, LLC, :
:
Defendant-Intervenor. :
:
OPINION
Held: The Final Results of Redetermination Pursuant to Voluntary
Remand issued by the Department of Commerce is affirmed.
Dated: April 25, 2012
Riggle & Craven, (David A. Riggle) for Tianjin Magnesium
International Co., Ltd., Plaintiff.
Tony West, Assistant Attorney General; Jeanne E. Davidson,
Director, Claudia Burke, Assistant Director, Commercial Litigation
Branch, Civil Division, United States Department of Justice, (Renee
Gerber); Thomas M. Beline, Office of Chief Counsel for Import
Administration, United States Department of Commerce, Of Counsel,
for the United States, Defendant.
King & Spalding, LLP, (Stephen A. Jones and Jeffrey B.
Denning) for US Magnesium, LLC, Defendant-Intervenor.
TSOUCALAS, Senior Judge: This matter comes before the Court
upon the Final Results of Redetermination Pursuant to Voluntary
Court No. 09-00012 Page 2
Remand: Pure Magnesium from the People’s Republic of China (“Second
Redetermination”) issued by the Department of Commerce (“Commerce”)
on October 31, 2011. Plaintiff, Tianjin Magnesium International
Co., Ltd. (“Tianjin”) filed Comments asserting that the Second
Redetermination was without support and requesting that the Court
remand this matter to Commerce for further proceedings.
Defendant-Intervenor, US Magnesium, LLC (“US Magnesium”) filed
Comments stating that Commerce’s decision was well supported, and
urging the Court to affirm the Second Redetermination without
modification. For the reasons set forth below, the Court concludes
that the Second Redetermination is supported by substantial
evidence and otherwise in accord with the law and affirms
Commerce’s decision.
BACKGROUND
This case involves an administrative review of the antidumping
order on pure magnesium from the People’s Republic of China for the
period from May 1, 2006, through April 30, 2007. See Pure
Magnesium from the People’s Republic of China: Final Results of
Antidumping Duty Administrative Review, 73 Fed. Reg. 76,336 (Dec.
16, 2008) (“2006-2007 Final Results”). At the conclusion of the
administrative review, Tianjin, a seller of pure magnesium for
export, was assigned a rate of 0.63%, and appeals were filed by
both Tianjin and US Magnesium. On August 9, 2010, the Court
remanded the case for further proceedings after concluding that not
Court No. 09-00012 Page 3
all of the surrogate values relied on in the 2006-2007 Final
Results were supported. See Tianjin Magnesium Int’l Co., Ltd. v.
United States, 34 CIT __, 722 F. Supp. 2d 1322 (2010) (“Tianjin
I”). On February 11, 2011, Commerce issued its Final Results of
Redetermination Pursuant to Court Remand Pure Magnesium from the
People’s Republic of China (“First Redetermination”). While this
Court’s review of that First Redetermination was pending, Commerce
requested that the matter again be remanded so it could determine
whether to reopen the 2006-2007 administrative review based on the
factors announced by the United States Court of Appeals for the
Federal Circuit in Home Prods. Int’l, Inc. v. United States, 633
F.3d 1369 (Fed. Cir. 2011). The Court granted Commerce’s request.
To best understand the issues weighed by Commerce in this most
recent remand, attention must be given to events that occurred
during the first remand. The Court first remanded this case, in
part, based on its conclusion that the record contained inadequate
support for the valuation given to waste magnesium, a manufacturing
process byproduct the sale of which could offset the normal value.
Tianjin I, 34 CIT at __, 722 F. Supp. 2d at 1336. Whether Tianjin
was entitled to the offset was not in question when this matter was
first remanded.
Following the Court’s remand in August, 2010, Commerce
concluded that there was not adequate evidence in the record to
properly value the waste magnesium, and it issued to Tianjin a
Court No. 09-00012 Page 4
supplemental questionnaire. Second Redetermination at 4. In its
response to that supplemental questionnaire, Tianjin continued to
claim entitlement to the waste magnesium byproduct offset, and it
provided documentation supporting that claim such as sales
invoices, sales ledger entries, and other accounting records. See
Response to the Supplemental By-product Questionnaire by Tianjin
Magnesium International, Co., Ltd. (Oct. 19, 2010), Public Rec. 6,
Confidential Rec. 2 (“Supplemental Response”).1
On November 2, 2010, US Magnesium filed its Rebuttal Factual
Information and Petitioner’s Comments On TMI’s Supplemental
Byproduct Response (Nov. 2, 2010), PR 10 (“Rebuttal”). US
Magnesium’s Rebuttal included a copy of Commerce’s verification
report from the administrative review for the 2007-2008 period of
review. See Verification of the Sales and Factors Responses of
Tianjin Magnesium International, Ltd. in the 2007-2008
Administrative Review of the Antidumping Duty Order on Pure
Magnesium from the People’s Republic of China (Nov. 4, 2009),
Rebuttal, Exhibit 1 (“2007-2008 Verification Report”). In the
2007-2008 Verification Report, Commerce stated that it was notified
by Tianjin’s suppliers that there had been no byproduct sales prior
to April 2007. In other words, there were no byproduct sales
during the 2006-2007 period of review at issue in this case.
1
Hereinafter all documents in the public record will be
designated “PR” and all documents in the confidential record
designated “CR.
Court No. 09-00012 Page 5
Commerce stated that this disclosure was made in Tianjin’s
presence. Second Redetermination at 14.
Based on this information, US Magnesium argued that Tianjin
was not entitled to the byproduct offset. In support, US Magnesium
pointed out that Tianjin’s Supplemental Response, in which it
asserted its entitlement to a byproduct offset, was filed more than
a year after the 2007-2008 Verification Report was issued, and
therefore Tianjin must have been aware that there were no sales
entitling it to an offset. See Rebuttal at 9. Commerce decided,
however, that it could not consider the 2007-2008 Verification
Report, because it did not exist at the time Commerce made its
initial determination in the 2006-2007 Final Results. First
Redetermination at 17. In the First Redetermination, Commerce
still considered Tianjin eligible for the byproduct offset.
Review of this First Redetermination was pending when Commerce
sought another remand to consider reopening the 2006-2007
administrative review pursuant to the factors in Home Products,
which is the remand currently at issue. On remand, Commerce
determined that there existed clear and convincing evidence
sufficient to make a prima facie case that the 2006-2007
administrative review was tainted by fraud. Commerce specifically
relied on the information set forth above that there had, in fact,
been no byproduct sales during the 2006-2007 period, as well as
evidence that the vouchers submitted to show such sales were
Court No. 09-00012 Page 6
fabricated. Second Redetermination at 9-10. This evidence led
Commerce to conclude that Tianjin intentionally misrepresented its
entitlement to a byproduct offset, and that it did so to lower its
margin. Id. at 10. Commerce also stated that although it normally
considers its administrative reviews final and conclusive, this
case presented circumstances weighing in favor of reopening the
review. Commerce noted that Tianjin’s misrepresentations were
material because when relied on by Commerce, they resulted in a
lower margin for Tianjin. Id. at 14-15. Commerce also concluded
that Tianjin’s fraud was discovered within a reasonable time, and
noted that Tianjin’s entries from the 2006-2007 period of review
remained unliquidated because of an injunction. Id. at 15-16.
Based on this evidence, Commerce determined that it was
appropriate to reopen the record of the 2006-2007 administrative
review. Commerce prepared draft results wherein it concluded that
Tianjin was not entitled to the byproduct offset and calculated
Tianjin’s margin to be 21.24%. Id. at 18. However, after
receiving comments from the parties, Commerce revised its
determination and concluded that Tianjin’s behavior significantly
impeded the review pursuant to Section 766(a)(2)(C) of the Tariff
Act of 1930, as amended, 19 U.S.C. § 1677e(a)(2)(C) (2006).2
Second Redetermination at 27. Pursuant to 19 U.S.C. § 1677e(b),
2
All further citations to the Tariff Act of 1930 are to the
relevant provisions of Title 19 of the United States Code, 2006
edition.
Court No. 09-00012 Page 7
Commerce further concluded that Tianjin failed to cooperate to the
best of its ability, and applied an adverse facts available rate of
111.73%, which rate had already been calculated for a respondent
other than Tianjin in the 2006-2007 review.
STANDARD OF REVIEW
As stated in Tianjin I, the Court has jurisdiction over this
matter pursuant to 28 U.S.C. § 1581(c) and 19 U.S.C.
§1516a(a)(2)(B)(iii). Additionally, the Court will uphold
Commerce’s determinations in administrative reviews 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).
ANALYSIS
Whether Commerce was justified in reopening the 2006-2007
review turns on an interpretation of the Home Products decision.
In that decision, the Court of Appeals dealt with the question of
whether remand is required when evidence is presented that the
proceedings below were tainted by material fraud. Stating that the
Court of International Trade’s discretion on whether to remand is
not unlimited, the Court of Appeals held that
where a party brings to light clear and convincing new
evidence sufficient to make a prima facie case that the
agency proceedings under review were tainted by material
fraud, the Trade Court abuses its discretion when it
declines to order a remand to require the agency to
reconsider its decision in light of the new evidence.
Home Prods., 633 F.3d at 1378. The Court of Appeals clarified that
Court No. 09-00012 Page 8
Commerce need not reopen the administrative proceedings just
because evidence of fraud existed, and stated that in making the
decision to reopen or not, Commerce can consider “the interests in
finality, the extent of the inaccuracies in the . . .
administrative review, whether fraud existed in the . . .
administrative review, the strength of the evidence of fraud, the
level of materiality, and other appropriate factors.” Id. at 1381.
The posture of this case is different than Home Products in
that here, the evidence of Tianjin’s fraud was raised before
Commerce at the administrative level instead of before the court as
it was in Home Products. See id. at 1375. Tianjin argues that
Commerce erred in two primary ways when it made the threshold fraud
finding and reopened the review: (1) Commerce did not conduct an
analysis of the elements of fraud, and (2) Tianjin’s conduct did
not rise to the level of fraud.
Taking up Tianjin’s first argument, the Court concludes that
there is nothing in the Home Products decision that requires a
threshold analysis and finding regarding each of the elements of
fraud. First, Home Products itself does not engage in such a
rigorous analysis. Furtermore, the Court of Appeals did not
require remand only when evidence is presented that a participant
in the administrative proceedings committed fraud, either at common
law as proposed by Tianjin, or otherwise. Home Products sets forth
a less rigorous standard, requiring remand when “evidence
Court No. 09-00012 Page 9
sufficient to make a prima facie case that the agency proceedings
under review were tainted by material fraud” is presented. Id. at
1378. The “prima facie case” prescribed by Home Products is not
whether a party has committed common law fraud, but rather whether
the proceedings themselves were “tainted by material fraud.”3 This
inquiry is broader, and less exacting, than a determination
regarding whether the conduct of a party has met the legal elements
of fraud.
Given this conclusion regarding the Home Products standard,
the Court concludes that Commerce’s determination that the
proceedings below were “tainted by material fraud” is well
supported by substantial evidence in the record. Throughout these
proceedings, Tianjin attempted to insulate itself from the lack of
byproduct sales by stating that it was Tianjin’s suppliers who sold
byproduct and kept the requisite paperwork. See, e.g., Pl.’s
Comments on the Second Redetermination of October 31, 2011 at 6.
However, by the time Tianjin submitted its Supplemental Response in
October 2010, it was undoubtedly aware that there had been no
byproduct sales during the 2006-2007 administrative review period.
Only Tianjin claimed entitlement to a byproduct offset in its
October 2010 Supplemental Response, and only Tianjin filed the
3
“Taint” is defined as “(1) To imbue with a noxious quality
or principle. (2) To contaminate or corrupt. (3) To tinge or
affect slightly for the worse.” Black’s Law Dictionary 1466 (7th
ed. 1999).
Court No. 09-00012 Page 10
paperwork with Commerce purporting to justify that claim.
Furthermore, as can be seen by the disparity in 0.63% margin
imposed on Tianjin in the 2006-2007 Final Results, and the 21.24%
margin Commerce was going to impose before deciding to apply
adverse facts available, Tianjin’s claimed offset was material in
that it stood to benefit from a greatly reduced margin if Commerce
applied the byproduct offset.
Finally, the Court concludes that Tianjin’s conduct was
egregious enough to warrant Commerce’s determinations that Tianjin
had impeded its investigation and failed to act to the best of its
ability. See Nippon Steel Corp. v. United States, 337 F.3d 1373,
1382 (Fed. Cir. 2003) (“While the [‘best of its ability’] standard
does not require perfection and recognizes that mistakes sometimes
occur, it does not condone inattentiveness, carelessness, or
inadequate record keeping.”).4
Based on the foregoing, and the Court’s review of the Second
Redetermination and all other pleadings and papers filed herein, it
is hereby
ORDERED that the Final Results of Redetermination Pursuant to
Voluntary Remand issued by the Department of Commerce is affirmed
4
The Court notes that in addition to its arguments against
Commerce’s interpretation of Home Products, Tianjin also argues
that Commerce erroneously applied zeroing in the Second
Redetermination. Given Commerce’s application of adverse facts
available, and the Court’s conclusion that this determination was
supported by substantial evidence, the Court need not reach the
issue of zeroing.
Court No. 09-00012 Page 11
without modification, and this matter is dismissed.
/s/ NICHOLAS TSOUCALAS
Nicholas Tsoucalas
Senior Judge
Dated: April 25, 2012
New York, New York