Legacy Classic Furniture, Inc. v. United States

867 F.Supp.2d 1321

LEGACY CLASSIC FURNITURE, INC., Plaintiff,

v.UNITED STATES, Defendant.

United States Court of International Trade.

Slip Op. 12–121.

Court No. 10–00352.

Sept. 19, 2012.

Mark E. Pardo, Washington, DC, Andrew T. Schutz, Max F. Schutzman, New York, NY, and Nikolas E. Takacs, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt, LLP, for Plaintiff.

Douglas G. Edelschick, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, for Defendant, and Nathaniel J. Halvorson, Attorney, Office of the Chief Counsel for Import Administration, United States Department of Commerce, of counsel. With them on the briefs were Stuart F. Delery, Assistant Attorney General, Jeanne E. Davidson, Director, Claudia Burke, Assistant Director.

OPINION & ORDER

CARMAN, Judge:

Plaintiff Legacy Classic Furniture, Inc. (“Plaintiff” or “Legacy”) disputes the results of the first court-ordered remand to the United States Department of Commerce (“Commerce”) regarding a scope determination in the antidumping duty order covering wooden bedroom furniture from China. Bedroom Furniture from the People's Republic of China: Scope Ruling on Legacy Classic Furniture, Inc.'s Heritage Court Bench (Nov. 22, 2010) (“ Final Scope Ruling ”); Notice of Amended Final Determination of Sales at Less Than Fair Value and Antidumping Duty Order: Wooden Bedroom Furniture from the People's Republic of China, 70 Fed. Reg. 329 (Jan. 4, 2005) (“ WBF Order ”). Pursuant to Plaintiff's motion for judgment on the agency record challenging Commerce's Final Scope Ruling, the Court sustained in part and remanded in part this case in Slip Opinion 11–157.¹

In Legacy I, the Court sustained Commerce's determination that the factors set forth in 19 C.F.R. § 351.225(k)(1)² are not dispositive but remanded for reconsideration Commerce's determination that the factors set forth in 19 C.F.R. § 351.225(k)(2)³ are dispositive. Accordingly, the Court set aside Commerce's determination that the Heritage Court Bench fell within the scope of the WBF Order and instructed Commerce to reconsider each of the factors listed under 19 C.F.R. § 351.225(k)(2) and to take into account in its analysis all of the evidence on the record. Commerce issued its Final Results of Redetermination Pursuant to Court Order (Mar. 26, 2012) (“ Remand Results ”), affirming its original determination that the Heritage Court Bench is within the scope of the WBF Order.

Upon review of the Remand Results, upon further examination of the record, and upon further consideration of the unique circumstances presented in this case, the Court reconsiders its initial decision regarding the (k)(1) factors and remands to Commerce to explain its policy where general language in the scope section of an antidumping duty order can be read to include the product at issue but other language in the scope section specifically excludes the product at issue. The Court also remands the (k)(2) factors because Commerce's conclusion in its Remand Results that the Heritage Court Bench is more like a chest than a bench is not supported by evidence on the record.

Background

The product at issue is Legacy's Heritage Court Bench—a piece of furniture that both sides agree serves simultaneously as a seating bench and a storage unit. It is described as “a backless wooden seating bench measuring 50 inches wide by 19 inches tall by 20 inches deep.” Final Scope Ruling at 2. The body of the bench is made from “solid hardwood with Okume Mahogany veneers and a cocoa brown wood finish.” Id. It has a top that consists “entirely of a padded leather surface,” is attached by hinges to the base, and has a cedar-lined interior storage area. Id. The scope of the WBF Order includes only specified chests but explicitly excludes all seating furniture, including benches. Id. at 3.

Commerce evaluated whether the Heritage Court Bench was within the scope of the WBF Order according to the factors and procedure set out in 19 C.F.R. § 351.225(k). Final Scope Ruling at 4. This regulation specifies that when Commerce is “considering whether a particular product is included within the scope of an order,” it will “take into account” the following factors: “(1) The descriptions of the merchandise contained in the petition, the initial investigation, and the determinations of the Secretary (including prior scope determinations) and the Commission.” 19 C.F.R. § 351.225(k)(1). Commerce determined that the (k)(1) factors were not dispositive. Final Scope Ruling at 6. Thus Commerce proceeded to the next subsection of factors: “(i) [t]he physical characteristics of the product; (ii) [t]he expectations of the ultimate purchasers; (iii) [t]he ultimate use of the product; (iv) [t]he channels of trade in which the product is sold; and (v) [t]he manner in which the product is advertised and displayed.” 19 C.F.R. § 351.225(k)(2). In its Remand Results, Commerce found that “the record is mixed with respect to the criterion under 19 C.F.R. § 351.225(k)(2)(iv) and (v),” but “[did] not find that this mixed record is enough to change the conclusions reached with respect to the criterion under 19 C.F.R. § 351.225(k)(2)(i-iii).” Remand Results at 18.

Standard of Review

The Court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (2006). For scope determinations, the Court sustains determinations, findings or conclusions of Commerce 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). 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) (“Wheatland Tube ”).

Discussion

I. Redetermination of the (k)(2) Factors

This Court reviews Commerce's Remand Results and corresponding comments. Commerce conceded that the record is inconclusive for the two factors of (iv) channels of trade and (v) manner displayed and advertised. Remand Results at 14–17. Therefore Commerce made its redetermination upon the three factors of (i) physical characteristics, (ii) customer expectations, and (iii) ultimate use. This Court reviews all the factors upon which Commerce based its redetermination. Each factor will be addressed in turn.

A. Physical Characteristics of the Product

Regarding the factor of physical characteristics of the product, Commerce determined that “the primary element of the product is its box structure and lid, elements consistent with certain storage chests.” Remand Results at 7. Plaintiff countered that “[t]he shape and height of the Heritage Court Bench and its other physical characteristics are entirely consistent with those of a bench.” Pl.'s Comments in Opp'n to Final Results of Redetermination Pursuant to Court Order (“Pl.'s Opp'n”) at 5. Further, Plaintiff advanced that “[t]he fact that the Heritage Court Bench would continue to fulfill its primary function as a bench even without its storage component supports the contrary position that its function as a bench is the primary element.” Pl.'s Opp'n at 7. While it has a rectangular shape and the seat does function as a lid for the storage area, the record clearly indicates that the Heritage Court Bench—case in point, the name of the product—is undisputedly a bench. Commerce conceded that the Heritage Court Bench “has some, albeit limited, attributes of an excluded product” ( e.g., a bench) but nevertheless concluded that the product “possesses all of the physical characteristics of a subject chest.” Remand Results at 7.

Upon review of the numerous definitions of the subject chests in the WBF Order, contrary to Commerce's conclusion, the Heritage Court Bench does not possess all of the physical characteristics of any of the subject chests. In fact, the Heritage Court Bench only arguably fits into the residual provision of a footnoted definition of a general chest. See WBF Order at 332, n.5. In contrast, the Heritage Court Bench not only unambiguously falls under the explicit exclusion for a “bench” but also the basket provision for all “seating furniture” under the list of items that is excluded from the scope. Id. (“The scope of the Petition excludes ... benches ... and other seating furniture.”)

In support of its conclusion, Commerce stated that

simply because one could sit on the product does not mean it should principally be viewed as seating furniture that is excluded from the scope. If that were the case, the language in the scope covering a large box with a lid would be nullified because many boxes with a flat lid could be used for seating even if they do not come with a padded leather covering.

Remand Results at 6. Commerce's speculation is specious. First, the product at issue does indeed have a padded leather covering so speculating that the scope language would be nullified if a product did not have a padded leather covering is fallacious. Determining that the Heritage Court Bench is outside of the scope will not open the floodgate of exclusions to any product that can be sat upon. For example, a milk crate can be sat upon but that does not make it seating furniture. The determinative factor is that the furniture is designed for seating. The Heritage Court Bench is seating furniture precisely and simply because it is designed with padded leather covering for seating. The seating function is not incidental as Commerce insinuated in its conclusion. The record clearly indicates that seating is one of the main functions of the Heritage Court Bench. Furthermore, the record also demonstrates that the padded leather covering is one of the main design features of the product. The Court finds Commerce's reasoning that the seating function is incidental or secondary to the Heritage Court Bench to be arbitrary and capricious. Therefore, Commerce's conclusion that the most prominent...