Ghigi 1870 S.P.A. v. United States

547 F.Supp.3d 1332

GHIGI 1870 S.P.A. and Pasta Zara S.p.A., Plaintiffs,andAgritalia S.r.L. and Tesa S.r.L., Consolidated Plaintiffs,

v. UNITED STATES, Defendant,andRiviana Foods, Inc. and Treehouse Foods, Inc., Defendant-Intervenors.

Slip Op. 21-159

Consol. Court No. 20-00023

United States Court of International Trade.

November 30, 2021

David L. Simon, Law Offices of David L. Simon, PLLC, of Washington, D.C. argued for Plaintiffs Ghigi 1870 S.p.A. and Pasta Zara S.p.A., and Consolidated Plaintiffs Agritalia S.r.L. and Tesa S.r.L. With him on the brief were John J. Kenkel, Alexandra H. Salzman, and Judith L. Holdsworth, deKieffer & Horgan, PLLC, of Washington, D.C.

Sosun Bae, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., argued for Defendant United States. With her on the brief were Jeffrey Bossert Clark, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Reginald T. Blades, Jr., Assistant Director. Of counsel on the brief was Kirrin A. Hough, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, of Washington, D.C.

Elizabeth C. Johnson and David C. Smith, Jr., Kelley Drye & Warren, LLP, of Washington, D.C., argued for Defendant-Intervenors Riviana Foods, Inc. and Treehouse Foods, Inc. With them on the brief was Paul C. Rosenthal.

OPINION AND ORDER

Eaton, Judge:

Before the court is the motion for judgment on the agency record of Plaintiffs Ghigi 1870 S.p.A. ("Ghigi") and Pasta Zara S.p.A. ("Zara") (collectively, "Ghigi/Zara" or the "company"),¹ and Consolidated Plaintiffs Agritalia S.r.L. and Tesa S.r.L. See Pls.’ Mem. Supp. Mot. J. Agency R., ECF No. 33 ("Pls.’ Br."); Pls.’ Reply, ECF No. 46. By their motion, Ghigi/Zara, Agritalia, and Tesa (collectively, "Plaintiffs") challenge the final results of the U.S. Department of Commerce's ("Commerce" or the "Department") twenty-second administrative review of the antidumping duty order on certain pasta from Italy ("Order"),² covering the period from July 1, 2017, through June 30, 2018. See Certain Pasta From Italy, 85 Fed. Reg. 2,714 (Dep't Commerce Jan. 16, 2020) ("Final Results") and accompanying Issues and Decision Mem. (Jan. 10, 2020) ("Final IDM"), PR 181; see also Certain Pasta From Italy, 84 Fed. Reg. 48,114 (Dep't Commerce Sept. 12, 2019) ("Preliminary Results") and accompanying Decision Mem. (Sept. 6, 2019) ("PDM"), PR 156. In particular, Plaintiffs challenge (1) Commerce's use of adverse facts available and (2) its rejection of arguments, that were raised for the first time after verification, disputing Commerce's model-match method with respect to protein content and shape.

Defendant the United States and Defendant-Intervenors Riviana Foods, Inc. and Treehouse Foods, Inc.³ maintain that Commerce's use of adverse facts available and its rejection of Ghigi/Zara's post-verification arguments were lawful, and ask the court to sustain the Final Results. See Def.’s Resp. Opp'n Mot. J. Agency R., ECF No. 42; Def.-Ints.’ Resp., ECF No. 43.

Jurisdiction is found under 28 U.S.C. § 1581(c) (2018) and 19 U.S.C. § 1516a(a)(2)(B)(iii) (2018). For the reasons that follow, the court remands Commerce's adverse inferences determination.

BACKGROUND

On September 10, 2018, Commerce published its notice of initiation of the twenty-second administrative review of the Order. See Initiation of Antidumping & Countervailing Duty Admin. Revs., 83 Fed. Reg. 45,596 (Dep't Commerce Sept. 10, 2018). Commerce selected two mandatory respondents for individual examination: Ghigi/Zara and Industria Alimentare Colavita S.p.A.⁴

I. Ghigi's Reporting of U.S. Payment Date Information

On October 12, 2018, Commerce issued an initial questionnaire to Ghigi/Zara. See Dep't Commerce Initial Quest. (Oct. 12, 2018) ("Initial Quest."), PR 22. By its questionnaire, Commerce asked for information about the company's U.S. and home market sales. Among the U.S. sales information requested were the dates on which "payment was received from the customer" for the sales of Ghigi's U.S. affiliate (data field: PAYDATEU). See Initial Quest. at C-12. In response, Ghigi reported dates and amounts of payments in its U.S. database (the "Original Database"). See Ghigi/Zara Secs. B-D Quest. Resp. (Dec. 10, 2018), CR 38-58, PR 55.

Commerce thereafter issued a supplemental questionnaire and asked Ghigi to "[i]nclude the field PAYDATEU with the weighted-average payment in the U.S. sales database." See Dep't Commerce Secs. A-C Suppl. Quest. (Feb. 8, 2019) at 17, PR 67. Commerce also instructed Ghigi to "[p]rovide a calculation worksheet for [credit expenses associated with a particular U.S. sale] that identifies each component of the calculation." Dep't Commerce Secs. A-C Suppl. Quest. at 17. In other words, Commerce supplemented its original request by asking Ghigi to add weighted-average payment date information to its U.S. sales database, along with a calculation worksheet for certain credit expenses. In response, Ghigi submitted a revised U.S. sales database (the "Revised Database"). Ghigi/Zara Secs. A-C Suppl. Quest. Resp. (Mar. 14, 2019), CR 76-179, PR 84.

After the questionnaire period had concluded, Commerce conducted verification of Ghigi's U.S. constructed export price sales, pursuant to a request by the petitioners, the Defendant-Intervenors.⁵ See Req. for Verification (Dec. 19, 2018), PR 61. At verification, Ghigi for the first time informed Commerce that "the payment dates in the most recent U.S. sales database [i.e. , the Revised Database] [were] incorrect due to a programming error in the U.S. payment date (PAYDATEU) data field." PDM at 16 (citing Ghigi/Zara Post-Verification Cmts. (July 18, 2019) at 7-9, CR 337-338, PR 140). Commerce found that as a result of the programming error "Ghigi reported the U.S. payment date incorrectly for most of its U.S. sales." PDM at 16.

In its post-verification comments and case brief, Ghigi/Zara argued that Commerce should have used the payment dates reported in the Original Database, instead of the Revised Database, because they were closer to the correct payment dates. See Ghigi/Zara Post-Verification Cmts. at 7-9; see also Ghigi/Zara Case Br. (Oct. 23, 2019) at 32-37, PR 167 (same). Ghigi proposed this plan after verification, and apparently was asking Commerce to either verify its Original Database, or use unverified payment dates. In its decision memoranda, Commerce declined, stating:

Commerce's practice is to rely on the most recently submitted databases as the basis for verification because such data is responsive to Commerce's most recent supplemental questions. Thus, we ... find that it is not appropriate to use the payment date information from a prior U.S. sales database.

PDM at 16 (footnote omitted); see also Final IDM at 12-13.

Unable to verify the dates in the Revised Database, Commerce found that the use of facts otherwise available, pursuant to 19 U.S.C. § 1677e(a)(2)(D), was warranted. Additionally, Commerce applied adverse inferences, pursuant to 19 U.S.C. § 1677e(b)(1)(A), when selecting from among the facts available. See PDM at 16-17; see also Final IDM at 13. As adverse facts available, Commerce "applied the longest period between shipment date and payment date for any sale on the record of the review for purposes of imputed credit expenses for Ghigi's U.S. sales." PDM at 17; see also Final IDM at 13.

II. Ghigi/Zara's Reporting of Protein Content and Shape

A. Protein Content

In the initial questionnaire, as it had done in the past, Commerce instructed Ghigi/Zara to report "the percentage of protein in the pasta sold, as stated on the label of the respective product"⁶ in the United States and Italy.⁷ See, e.g., Initial Quest. at C-7 (emphasis added). Commerce further instructed Ghigi/Zara to code as a "1" pasta with a protein content of 12.50 percent or more, and a "2" pasta with a protein content of between 10 and 12.49 percent. See Dep't Commerce Req. for Revised U.S. Sales Database (June 26, 2019), PR 133. The initial questionnaire invited Ghigi/Zara to contact the Commerce official identified on the questionnaire's cover page if it had any questions: "If you have questions, we urge you to consult with the official in charge named on the cover page." See Initial Quest. (General Instructions).

In its initial Section C response on U.S. sales, Ghigi/Zara coded the protein content of its finished pasta products sold in the United States as a "2," meaning a protein content of less than 12.50 percent, in line with the protein content of a "standard" pasta product. Ghigi/Zara did not, however, rely on the protein content stated on its products’ U.S. packaging label. Rather, the company converted the protein percentage on the label to reflect the amount of protein measured under Italian protocols,⁸ and coded the protein content based on that conversion. See, e.g., Ghigi Sales Verification Report (Aug. 1, 2019), PR 146.

Ghigi/Zara did not inform Commerce of the conversion it made in its questionnaire responses. Notwithstanding this omission, the company certified that it had complied with Commerce's instructions. See, e.g., Pls.’ Br. 13 ("Ghigi/Zara did not flag this as a particular issue, responding ‘Ghigi/Zara report the protein content in accordance with the instruction.’ ").

At verification, Commerce compared Ghigi/Zara's protein content coding to the percentages stated on the packaging label of finished pasta products. Commerce thus learned that the company had failed to code according to the label. Subsequently, Commerce instructed Ghigi/Zara to recode the protein content in accordance with the label. See Req. for Revised U.S. Sales Database.

Ultimately, in accordance with Commerce's instruction, Ghigi/Zara reported the protein content of its pasta sold in the United States as a "1," based on the protein content indicated on the U.S. packaging labels (i.e., without converting the protein content under the Italian protocol), but it did so under...