Am. Manufacturers of Multilayered Wood Flooring v. United States

1

AMERICAN MANUFACTURERS OF MULTILAYERED WOOD FLOORING, Plaintiff, v. UNITED STATES, Defendant and JIANGSU SENMAO BAMBOO AND WOOD INDUSTRY CO., LTD., et al., Defendant-Intervenors

No. 20-03948

Slip Op. 23-70

Court of Appeals of International Trade

May 5, 2023

[U.S Department of Commerce's final results are sustained in part, and remanded.]

Stephanie M. Bell, Wiley Rein LLP, of Washington, D.C argued for Plaintiff American Manufacturers of Multilayered Wood Flooring. With her on the brief were Timothy C Brightbill and Tessa V. Capeloto.

Sonia M. Orfield, Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., argued for Defendant the United States. With her on the brief were Brian M. Boynton, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Tara K. Hogan, Assistant Director. Of counsel on the brief was Rachel A. Bogdan, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce.

Stephen W. Brophy, Husch Blackwell LLP, of Washington, D.C., for DefendantIntervenors Jiangsu Senmao Bamboo and Wood Industry Co., Ltd., Jiangsu Keri Wood Co., Ltd., and Sino-Maple (Jiangsu) Co., Ltd. With him on the brief was Jeffrey S. Neeley.

Wenhui (Flora) Ji, Mowry &Grimson, PLLC, of Washington, D.C., for DefendantIntervenor Yihua Lifestyle Technology Co., Ltd. With her on the brief was Kristin H. Mowry and Sarah M. Wyss.

Mark R. Ludwikowski, Clark Hill PLC, of Washington, D.C., for Defendant-Intervenor Jiangsu Guyu International Trading Co., Ltd. With him on the brief was Courtney G. Taylor.

Ronald M. Wisla, Fox Rothschild LLP, of Washington, D.C., for Defendant-Intervenors Metropolitan Hardwood Floors, Inc., Galleher Corp., and Galleher LLC. With him on the brief were Lizbeth R. Levinson and Brittney R. Powell.

Before: Richard K. Eaton, Judge.

OPINION AND ORDER

Richard K. Eaton Judge.

This case involves a challenge to the final results of the U.S. Department of Commerce's ("Commerce" or the "Department") seventh administrative review of the antidumping duty order ("Order") covering multilayered wood flooring from the People's Republic of China ("China"). See Multilayered Wood Flooring From the People's Republic of China, 85 Fed.Reg. 78,118 (Dep't of Commerce Dec. 3, 2020) ("Final Results") and accompanying Issues and Decision Mem. (Nov. 20, 2020) ("Final IDM"), PR 468; see also Multilayered Wood Flooring From the People's Republic of China, 76 Fed.Reg. 76,690 (Dep't of Commerce Dec. 8, 2011), amended by Multilayered Wood Flooring From the People's Republic of China, 77 Fed.Reg. 5,484 (Dep't of Commerce Feb. 3, 2012) (Order).

Before the court is the motion for judgment on the agency record of Plaintiff American Manufacturers of Multilayered Wood Flooring ("Plaintiff"), "an ad hoc association whose members manufacture the domestic like product in the United States." Compl. ¶ 3, ECF No. 7; see Pl.'s Mem. Supp. Mot. J. Agency R., ECF No. 39 ("Pl.'s Br."); Pl.'s Reply Br., ECF No. 46. By its motion, Plaintiff asks the court to remand Commerce's determination of the zero percent dumping margin calculated for each of the two mandatory respondents: Jiangsu Guyu International Trading Co., Ltd. ("Guyu"), a Defendant-Intervenor in this case,^[1] and a collapsed entity comprised of Dalian Qianqiu Wooden Product Co., Ltd., Fusong Jinlong Wooden Group Co., Ltd., Fusong Jinqiu Wooden Product Co., Ltd., and Fusong Qianqiu Wooden Product Co., Ltd. (collectively, "Jinlong").^[2] See Pl.'s Br. at 4, 29. The determination of these zero percent margins resulted in a rate of zero percent as the "all-others" rate for those respondents not individually examined.^[3] See Final Results, 85 Fed.Reg. at 78,119. Plaintiff also contests this determination. See Pl.'s Br. at 28.

Plaintiff primarily contests Commerce's calculation of the surrogate financial ratio for manufacturing overhead and further argues that the surrogate values for labor and glue are unsupported by substantial evidence. See id. at 1-2.

Defendant the United States ("Defendant") opposes Plaintiff's motion and asks the court to sustain Commerce's Final Results. See Def.'s Resp. Br., ECF No. 43 ("Def.'s Br."). DefendantIntervenors, including Guyu, also ask the court to sustain Commerce's Final Results and deny Plaintiff's motion. See Def.-Int.'s Resp. Br., ECF No. 44 ("Guyu Br."); Def.-Ints.' Resp. Br., ECF No. 45 ("Metropolitan &Galleher Br."); Def.-Ints.' Resp. Br., ECF No. 41 ("Jiangsu Br."); Def.-Int.'s Resp. Br., ECF No. 42 ("Yihua Br.").

Jurisdiction lies under 28 U.S.C. § 1581(c) and 19 U.S.C. § 1516a(a)(2)(A)(i)(I), (B)(iii).^[4]For the following reasons, the court finds that Commerce's calculations of the manufacturing overhead ratio, and the surrogate labor value are unsupported by substantial evidence and remands these calculations to Commerce for action consistent with this Opinion and Order. Because the court finds that Commerce's determination of the surrogate glue value is supported by substantial evidence, it is sustained. Because the separate rate (i.e., the "all-others" rate) for the respondents not individually examined depends on the margin assigned to the mandatory respondents, the court also remands the all-others rate determination.

BACKGROUND

The antidumping duty Order on multilayered wood flooring from China has been in place since 2011. See Order, 76 Fed.Reg. at 76,690.

On December 3, 2018, Commerce published a notice of opportunity for interested parties^[5]to request an administrative review of the Order. See Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity To Request Administrative Review, 83 Fed.Reg. 62,293 (Dep't of Commerce Dec. 3, 2018).

After receiving requests to conduct an administrative review from interested parties, including Plaintiff, Commerce initiated the seventh review of the Order on March 14, 2019, covering the December 1, 2017, to November 30, 2018, period of review ("POR"). See Initiation of Antidumping and Countervailing Duty Administrative Reviews, 84 Fed.Reg. 9,297 (Dep't of Commerce Mar. 14, 2019); Letter from Wiley Rein LLP to Sec'y of Commerce (Dec. 31, 2018) ("Request for Administrative Review"), PR 27. On May 21, 2019, Guyu and Jinlong were selected as mandatory respondents. See Mem. from Sergio Balbontin &Alexis Cherry to Irene Darzenta Tzafolias, re: Antidumping Administrative Review of Multilayered Wood Flooring from the People's Republic of China: Respondent Selection (May 21, 2019) ("Resp. Selection Mem.") at 6, PR 208, CR 116 (noting Guyu and Jinlong "account[ed] for the largest volume of subject merchandise imports during the POR").

On February 6, 2020, Commerce issued its preliminary results. See Multilayered Wood Flooring From the People's Republic of China, 85 Fed.Reg. 6,911 (Dep't of Commerce Feb. 6, 2020) ("Preliminary Results") and accompanying Preliminary Decision Mem. (Jan. 31, 2020) ("PDM"), PR 387. In the Preliminary Results, Commerce calculated a zero percent dumping margin for each of the mandatory respondents. See Preliminary Results, 85 Fed.Reg. at 6,912. Using the weighted average of this dumping margin, the Department determined a zero percent rate for the respondents not individually examined (the "all-others" rate). See id.

On December 3, 2020, Commerce published its Final Results. See Final Results, 85 Fed.Reg. at 78,118. In the Final Results, Commerce modified its calculations to incorporate revisions to the financial ratios. See Mem. from Alexis Cherry &Sergio Balbontin to File, re: Antidumping Duty Administrative Review of Multilayered Wood Flooring from the People's Republic of China; 2017-2018: Surrogate Values for the Final Results (Nov. 20, 2020) ("Final SV Mem.") at 2, PR 475. Even with these modifications, Commerce continued to calculate a zero percent margin for the mandatory respondents and to determine a zero percent rate for the respondents not individually examined (the "all-others" rate). See Final Results, 85 Fed.Reg. at 78,119.

STANDARD OF REVIEW

The court will sustain a determination by Commerce 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).

LEGAL FRAMEWORK

In an antidumping case, Commerce must determine whether goods are being sold, or are likely to be sold, in the United States at less than fair value. See 19 U.S.C. § 1673. To make this determination, Commerce compares normal value and export price. See id. § 1677b(a).

To determine normal value, when subject merchandise is exported from a nonmarket economy ("NME") country^[6] such as China, Commerce uses surrogate values both for the various factors of production used to make the subject merchandise, and for general expenses and profit. See Nantong Uniphos Chems. Co. v. United States, 43 CIT,, 415 F.Supp.3d 1345, 1352-53 (2019); see also Heze Huayi Chem. Co. v. United States, 45 CIT,, 532 F.Supp.3d 1301, 1318 (2021) (citation omitted). Factors of production include, but are not limited to, the "hours of labor required," the "quantities of raw materials employed" (e.g., the input for glue), and "amounts of energy and other utilities consumed." 19 U.S.C. § 1677b(c)(3)(A)-(C). To determine general expenses and profit, "Commerce usually calculates separate values for [1] selling, general and administrative ('SG&A') expenses, [2] manufacturing overhead and [3] profit." Shanghai Foreign Trade Enters. Co. v United States, 28 CIT 480, 482, 318 F.Supp.2d 1339, 1341 (2004). Financial ratios are used "to account for those production inputs that cannot be wholly attributed to a finite batch of subject merchandise." CP Kelco U.S., Inc. v. United States, 39 CIT,, No. 13-00288, ...