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 VINEYARDFURNITURE INTERNATIONAL LLC, Plaintiffs,andDREAM ROOMS FURNITURE (SHANGHAI) CO., LTD.,GUANGDONG YIHUA TIMBER INDUSTRY CO., LTD., Consolidated Plaintiffs,ORIENT INTERNATIONAL HOLDINGSHANGHAI 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.

Consol. Court No. 09-00378

UNITED STATES COURT OF INTERNATIONAL TRADE

Dated: March 28, 2012

Before: Jane A. Restani, Judge

Public Version

OPINION AND ORDER

[Commerce's Remand Results remanded in part, affirmed in part.]

Jill A. Cramer, Mowry & Grimson, PLLC, of Washington, DC, and John D. Greenwald, Cassidy Levy Kent (USA) LLP, of Washington, DC, argued for plaintiffs. With them on the brief were Kristin H. Mowry, Jeffrey S. Grimson, Sarah M. Wyss, and Susan L. Brooks.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 James 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.

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

J. Michael Taylor, King & Spalding, LLP, of Washington, DC, argued for intervenor defendants. With them on the brief were Joseph W. Dorn, Daniel L. Schneiderman, and Prentiss Lee Smith.

Restani, Judge: This matter comes before the court following the court's decision in Lifestyle Enterprise, Inc. v. United States, 768 F. Supp. 2d 1286 (CIT 2011), 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 United States Department of Commerce ("Commerce" or the "Department"). For the reasons stated below, the court finds that Commerce failed to comply with the court's remand instructions with regard to two contested issues.

BACKGROUND

The facts of this case have been well-documented in the court's previous opinion. See Lifestyle Enter., 768 F. Supp. 2d at 1293 95. The court presumes familiarity with that decision 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 defendant-intervenors 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 Republic of China ("PRC" or "China"), which assigned Orient a weighted average dumping margin² of216.01% 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, 55,810 (Dep't Commerce Oct. 29, 2009). Upon considering the parties' motions for judgment on the agency record, the court held 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 Enter., 768 F. Supp. 2d at 1296 99. The court also held that substantial evidence did not support the Department's decisions on the data set for wood inputs, the choice of tariff heading for the surrogate value of medium density fiberboard, whether two companies produced comparable merchandise or used a comparable production process, negative export pricing, and surrogate labor value.³ Id. at 1314 15. The court remanded for reconsideration or further explanation. Id.

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"), 2) "continue[d] to find that it is appropriate to value wood inputs using [World Trade Atlas ("WTA")] import data," and 3) "decided not to rely on the financial statements of DiretsoDesign[.]"⁴ Remand Results at 8, 18, 31. Despite Commerce's recent explanation, defendant-intervenor AFMC continues to contest whether Commerce presented substantial evidence in its decisions to rely on WTA weight-based data for wood inputs and not to rely on the financial statements of Diretso Design. AFMC's Comments Concerning Commerce's Final Results of Redetermination Pursuant to Remand at 1 2 ("AFMC's Cmts."). Plaintiff Lifestyle challenges whether Commerce properly corroborated Orient's rate. Comments of Lifestyle Enterprise, Inc., Trade Masters of Texas, Inc. and Emerald Home Furnishings, LLC on Department of Commerce July 26, 2011 Final Results of Redetermination Pursuant to Court Remand at 12 ("Lifestyle Cmts."). The Government and consolidated plaintiff, Yihua Timber, ask the court to sustain the Remand Results. Def.'s Resp. to Pls.' Remand Cmts. at 1 ("Def.'s Resp."); Cmts. of Consolidated Pl. Guangdong Yihua Timber Ind. Co., Ltd. on the Commerce Dep't's Remand Determination at 1 ("Yihua Timber Cmts.").

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

During an AD review, when "an interested party has failed to cooperate by not acting to the best of its ability to comply with a request for information from the administering authority . . . the administering authority . . . may use an inference that is adverse to the interests of that party in selecting from among the facts otherwise available." 19 U.S.C. § 1677e(b). The AD duty rate under such circumstances is known as an AFA rate and may be based on information obtained from: "(1) the petition, (2) a final determination in the investigation under this subtitle, (3) any previous review under . . . [19 U.S.C. § 1675] or determination under . . . [19 U.S.C. § 1675b], or (4) any other information placed on the record." Id. Lifestyle challenges the Remand Results on the grounds that Orient's selected AFA rate of 216.01% violates 19 U.S.C. § 1677e(c) because Commerce corroborated the rate with data that were not probative and therefore the rate is not supported by substantial evidence. Lifestyle Cmts. at 4 7. Because Commerce failed to corroborate the rate with data that tied the AFA rate to Orient's commercial reality, the court remands the matter to Commerce.

Pursuant to 19 U.S.C. § 1677e(c), "[w]hen the administering authority . . . relies on secondary information rather than on information obtained in the course of an investigation or review, the administering authority . . . shall, to the extent practicable, corroborate that information from independent sources that are reasonably at their disposal." 19 U.S.C. § 1677e(c). Here, the AFA rate of 216.01% is from the 2004 05 review of a new shipper company, Shenyang Kunyu Wood Industry Co., Ltd. ("Kunyu"), and thus is secondary information. Lifestyle Enter., 768 F. Supp. 2d at 1297. Commerce must, therefore, corroboratethis information "to the extent practicable."⁵ 19 U.S.C. § 1677e(c); see also Gallant Ocean (Thai.) Co. v. United States, 602 F.3d 1319, 1324 (Fed. Cir. 2010). In order to corroborate an AFA rate, Commerce must show that it used "reliable facts" that had "some grounding in commercial reality." Gallant, 602 F.3d at 1324 (internal quotation marks omitted). In doing so, Commerce must tie the AFA rate to the commercial reality of the particular respondent under review. Id. (finding transaction-specific margins insufficient for corroboration where "Commerce did not identify any relationship between the small number of unusually high dumping transactions with [defendant's] actual rate").⁶

Congress's intent for "an adverse facts available rate to be a reasonably accurate estimate of the respondent's actual rate, albeit with some built-in increase intended as a deterrent to non-compliance" limits what Commerce may permissibly impose on a non-compliant respondent. F.Lli De Cecco Di Filippo Fara S. Martino S.p.A. v. United States, 216 F.3d 1027,1032 (Fed. Cir. 2000) (invalidating the 46.67% AFA rate imposed by Commerce because, inter alia, it "was many times higher than [respondent's] actual dumping margin"). Regardless of the manner of corroboration, Commerce cannot select a rate that does not reflect a reasonable estimate of a respondent's actual rate. An aberrantly high AFA rate or a rate diverging significantly from calculated rates for similarly situated participating companies normally indicates that a particular AFA rate may not reflect a respondent's commercial reality.⁷ In the past, Commerce has permissibly...