Lifestyle Enter., Inc. v. United States

LIFESTYLE ENTERPRISE, INC., TRADE MASTERS OF TEXAS, INC.,EMERALD HOME FURNISHINGS, LLC,RON'S WAREHOUSE FURNITURE D/B/A VINEYARD FURNITURE INTERNATIONAL LLC, Plaintiffs,andDREAM ROOMS FURNITURE (SHANGHAI) CO., LTD.,GUANGDONG YIHUA TIMBER INDUSTRY CO., LTD., Consolidated Plaintiffs,ORIENT INTERNATIONAL HOLDING SHANGHAI FOREIGN TRADE CO., LTD., Intervenor Plaintiff,

v. UNITED STATES, UNITED STATES DEPARTMENT OF COMMERCE Defendants,andAMERICAN FURNITURE MANUFACTURERS COMMITTEE FOR LEGAL TRADE,VAUGHAN-BASSETT FURNITURE COMPANY, INC. Intervenor Defendants.

Slip Op. 12-116 Consol. Court No. 09-00378

UNITED STATES COURT OF INTERNATIONAL TRADE

Dated: September 7, 2012

DATED: September 7, 2012

Before: Jane A. Restani, Judge

Public Version

OPINION AND ORDER

[Commerce's Remand Results remanded in part and sustained in part.]

Jill A. Cramer, Kristin H. Mowry, Jeffrey S. Grimson, 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 and Matthew L. Kanna, Arent Fox LLP, of Washington, DC, for intervenor plaintiff.

Stuart F. Delery, Assistant Attorney General, Jeanne E. Davidson, Director, Patricia M. McCarthy, Assistant Director, Stephen C. Tosini, Senior Trial Counsel, Carrie A. Dunsmore, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for defendants. Of counsel on the brief was Shana Hofstetter, Office of Chief Counsel for Import Administration, U.S. Department of Commerce, for the defendants.

J. Michael Taylor, Joseph W. Dorn, Daniel L. Schneiderman, and Prentiss L. Smith, King & Spalding, LLP, of Washington, DC, for intervenor defendants.

Restani, Judge: This matter comes before the court following the court's decisions in Lifestyle Enterprise, Inc. v. United States, 768 F. Supp. 2d 1286 (CIT 2011) ("Lifestyle I"), in which the court remanded 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") to the U.S. Department ofCommerce ("Commerce" or the "Department") and Lifestyle Enterprise, Inc. v. United States, 844 F. Supp. 2d 1283 (CIT 2012) ("Lifestyle II"), in which the court remanded Final Results of Redetermination Pursuant to Remand (Dep't Commerce Aug. 26, 2011) (Docket No. 132) ("First Remand Results") to Commerce. For the reasons stated below, the court finds that Commerce complied with the court's remand instructions with regard to the selection of the surrogate value for wood input, but Commerce has not complied with the court's remand instructions regarding Orient's AFA rate. Thus, Commerce's Second Remand Results are sustained in part and remanded in part. See Final Results of Redetermination Pursuant to Second Remand (Dep't Commerce June 11, 2012) (Docket No. 183) ("Second Remand Results").

BACKGROUND

The facts of this case have been well-documented in the court's previous opinions. See Lifestyle I, 768 F. Supp. 2d at 1293 95; Lifestyle II, 844 F. Supp. 2d at 1286 87. The court presumes familiarity with these decisions but briefly summarizes the facts relevant to this opinion.

The plaintiffs, Lifestyle Enterprise, Inc. ("Lifestyle"), Orient International Holding Shanghai Foreign Trade Co., Ltd. ("Orient"), Guangdong Yihua Timber Industry Co., Ltd. ("Yihua Timber"), Dream Rooms Furniture (Shanghai) Co., Ltd., Ron's Warehouse Furniture, Emerald Home Furnishings, LLC, and Trade Masters of Texas, Inc., and intervnor defendants American Furniture Manufacturers Committee for Legal Trade and Vaughan-Bassett Furniture Company, Inc. (collectively "AFMC") challenged the Final Results of an administrative review of the antidumping ("AD") duty order on wooden bedroom furniture from the People's Republicof China ("PRC" or "China"), which assigned Orient a weighted average dumping margin² of 216.01% as part of the PRC-wide entity and Yihua Timber the dumping margin of 29.89%. See Final Results, 74 Fed. Reg. at 41,380; Wooden Bedroom Furniture from the People's Republic of China: Amended Final Results of Antidumping Duty Administrative Review and New Shipper Reviews, 74 Fed. Reg. 55,810, 55,811 (Dep't Commerce Oct. 29, 2009). Upon considering the parties' motions for judgment on the agency record, the court held, inter alia, that substantial evidence did not support denial of a separate rate for Orient and that the rate of 216.01% assigned to Orient was not corroborated. Lifestyle I, 768 F. Supp. 2d at 1296 99. The court also held that substantial evidence did not support Commerce's decision on the data set for wood inputs. Id. at 1301 02. The court remanded for reconsideration or further explanation. Id. at 1314 15. On remand, Commerce 1) found "that the information on the record corroborates the rate of 216.01 percent, as it relates to Orient," based on total adverse facts available ("AFA"), and 2) "continue[d] to find that it is appropriate to value wood inputs using [World Trade Atlas ("WTA")] import data." First Remand Results 8, 31. Despite Commerce's explanation, the court found that Commerce had not presented substantial evidence linking the source of the216.01% AFA rate to Orient and therefore "Commerce ha[d] failed to show some relationship between the AFA rate and the actual dumping margin." Lifestyle II, 844 F. Supp. 2d at 1291 (internal quotation marks and citations omitted). The court also found that Commerce had "failed to support its rejection of a volume-based approach," and instructed Commerce that "unless it chooses to reopen the record to gather more evidence, to use the volume data set for wood inputs." Id. at 1297 98.³

In the Second Remand Results, Commerce chose not to reopen the record and recalculated the valuation of wood inputs using NSO volume-based data. Second Remand Results 1, 7. Commerce also calculated a new AFA rate of 130.81% for Orient. Id. at 9. Plaintiff Lifestyle challenges Commerce's determination regarding Orient's AFA rate. Cmts. of Lifestyle Enterprise, Inc., Trade Masters of Texas, Inc. and Emerald Home Furnishings, LLC on Department of Commerce June 11, 2012 Final Results of Redetermination Pursuant to Second Remand 12 ("Lifestyle Cmts."). Yihua Timber challenges Commerce's use of NSO volume-based data to value wood inputs.⁴ Yihua's Cmts. on Commerce's Final Results of Redetermination Pursuant to Second Remand 1 ("Yihua Timber Cmts."). The Government and AFMC ask the court to sustain the Second Remand Results. Def.'s Resp. to Pls.' Remand Cmts. 1 ("Def.'s Resp."); AFMC's Cmts. Concerning Commerce's Final Results of RedeterminationPursuant to Second Remand 1 ("AFMC Cmts.").⁵

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction pursuant to 28 U.S.C. § 1581(c). The court will not uphold Commerce's final determination in an AD review if 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

I. Orient's AFA Rate

Lifestyle argues that Orient's AFA rate was not reasonably reflective of Orient's commercial reality, punitive, and "aberrantly high and egregiously out of line with the rate calculated for Yihua [Timber], a comparable company." Lifestyle Cmts. 8 9, 11. Specifically, Lifestyle contends that Commerce used an insufficient percentage of Yihua Timber's sales, yielding an excessively high AFA rate.⁶ Id. at 9 10. This claim has merit.

If an interested party has failed to cooperate in not providing valid data upon which Commerce can calculate an AD rate, Commerce may calculate a rate using inferences which are "adverse to the interests of that party in selecting from among the facts otherwise available." 19 U.S.C. § 1677e(b). In doing so, Commerce may rely on information derived from the petition, a final determination in the investigation, any previous review, or any other information placed on the record. Id. "An AFA rate must be 'a reasonably accurate estimate of the respondent's actual rate, albeit with some built-in increase intended as a deterrent to non-compliance.'" Gallant Ocean (Thai.) Co. v. United States, 602 F.3d 1319, 1323 (Fed. Cir. 2010) (quoting F.lli de Cecco di Filippo Fara S. Martino S.p.A. v. United States, 216 F.3d 1027, 1032 (Fed. Cir. 2000)). "Commerce may not select unreasonably high rates having no relationship to the respondent's actual dumping margin." Id. Although the exact limits of the corroboration requirement are not clear here, corroboration pursuant to 19 U.S.C. § 1677e(c) is not sought because Commerce selected a margin based on information from the current POR. The AFA rate selected by Commerce nevertheless must be supported by substantial evidence. Selection of an AFA rate based on minuscule data will not suffice. An AFA rate must not be aberrant or punitive, and should bear a rational relationship to respondent's commercial reality.⁷ See KYD, Inc. v. United States, 607 F.3d 760, 767 68 (Fed. Cir. 2010) (Commerce's determination is not punitive where it is in accordance with statutory requirements); Essar Steel Ltd. v. United States, 678 F.3d 1268, 1276 (Fed. Cir. 2012) ("The imposition of adverse facts can be inappropriate if itis overly punitive.").⁸

In the draft Second Remand Results, Commerce calculated a new AFA rate for Orient based on Yihua Timber's revised dumping margin of 40.74% and "added an additional amount to ensure compliance by only selecting Yihua Timber's sales transactions that produced positive margins," thereby assigning Orient an...