Max Fortune Indus. Ltd. v. United States

853 F.Supp.2d 1258

34 ITRD 1719

MAX FORTUNE INDUSTRIAL LTD., and Max Fortune (FZ) Paper Products Company Ltd., Plaintiffs,

v. UNITED STATES, Defendant,andSeaman Paper Company of Massachusetts, Defendant–Intervenor.

United States Court of International Trade.

Slip Op. 12–87.

Court No. 10–00306.

June 18, 2012.

Francis J. Sailer, Andrew Thomas Schutz, Elaine Fang Wang, Mark E. Pardo, and Ned Herman Marshak, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt, LLP, of New York, NY, for Plaintiffs.

Loren Misha Preheim, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, for Defendant. On the briefs were Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, Reginald T. Blades, Jr., Assistant Director, United States Department of Justice, and Scott D. McBride, Senior Attorney, International Trade, United States Department of Commerce, of Washington, DC.

Adam Henry Gordon and Robert Edward DeFrancesco, III, Wiley Rein, LLP, of Washington, DC, for Defendant–Intervenor.

Opinion

CARMAN, Judge:

Plaintiffs Max Fortune Industrial Ltd. and Max Fortune (FZ) Paper Products Company, Ltd. (collectively referred to as “Max Fortune” or “Plaintiffs”) have brought this case to challenge the U.S. Department of Commerce's (“Commerce”) final results in the fourth administrative review of Certain Tissue Paper Products from the People's Republic of China: Final Results of the 2008–2009 Antidumping Duty Admin. Rev., 75 Fed.Reg. 63,806 (Oct. 18, 2010) (“ Final Results ”). Max Fortune, a respondent in the underlying review, has moved for judgment on the agency record pursuant to Rule 56.2 of the Rules of the U.S. Court of International Trade. The United States—Defendant in this case—and Seaman Paper Company of Massachusetts—Petitioner in the underlying review and Defendant–Intervenor in this case (“Seaman MA,” “Petitioner,” or “Defendant–Intervenor”)—oppose Plaintiffs' motion. This Court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (2006).

For the reasons set forth below, this Court holds that Commerce's application of total adverse facts available (“AFA”) is supported by substantial evidence on the record and otherwise in accordance with law and that Plaintiffs were afforded a fair proceeding.

I. Background

A. Procedural History of Antidumping Case

On March 30, 2005, Commerce issued an antidumping duty order on certain tissue paper products from the People's Republic of China (“PRC”). Notice of Amended Final Determination of Sales at Less than Fair Value and Antidumping Duty Order: Certain Tissue Paper Products from the People's Republic of China, 70 Fed.Reg. 16,223 (Mar. 30, 2005) (“Antidumping Duty Order”). Max Fortune was a respondent ¹ in the original investigation. All respondents received a 112.64% duty margin, which was also the country wide rate. Id. at 16,224. Subsequently, four administrative reviews and an expedited sunset review were conducted. Because of the unusual fluctuation of Max Fortune's dumping margin throughout the case history, a summary of Max Fortune's duty margins for the corresponding periods of review (“POR”) is set forth below:

The fourth administrative review is at issue in this appeal. The POR is March 1, 2008 to February 28, 2009.

B. Statement of Facts

On March 2, 2009, Commerce published a notice of opportunity to request an administrative review of the Antidumping Duty Order. Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity to Request Admin. Rev., 74 Fed.Reg. 9,077 (Mar. 2, 2009). Petitioner Seaman MA claims that “over the course of each of these reviews, rumors concerning Max Fortune's production operations persisted.” Resp. Br. of Seaman Paper Company of Massachusetts, Inc. (“Def.-Int. Br.”) at 7. Accordingly, Seaman MA hired a private company, a foreign market researcher (“FMR”),² to investigate Max Fortune's production operations.

On March 31, 2009, Commerce received a timely request from Seaman MA to review Max Fortune. Certain Tissue Paper Products from the People's Republic of China: Preliminary Results of the 2008–2009 Admin. Rev., 75 Fed.Reg. 18, 812 (Apr. 13, 2010) (“ Preliminary Results ”). Consequently, on April 29, 2009, Commerce issued an antidumping questionnaire to Max Fortune. Id.

On September 15, 2009, the Petitioner alleged that Max Fortune lied to Commerce about its use of third party suppliers and packers and placed on the agency record a large number of documents detailing Max Fortune's sales transactions and supporting the allegations that Max Fortune did not report multiple affiliates and unaffiliated suppliers of raw materials and converting services involved in their production of the subject merchandise exported to the United States during the POR. Letter from Petitioner to Commerce, Re: Submission of Factual Information and Analysis Regarding Max Fortune, dated September 15, 2009 (C.R.³ 20) (“Petitioner Sept. 15th Submission”). These voluminous documents directly tied to specific United States sales reported by Max Fortune. The FMR obtained these documents from a Chinese Informant.⁴

On October 19, 2009, Max Fortune, represented by Shanghai Yuet Fai Commercial Consulting Company, Ltd.,⁵ denied both allegations, asserting that none of the affiliates, suppliers or services listed by the Petitioner were involved in the production or sale of its subject merchandise. Letter from Max Fortune to Commerce, Re: Response to Petitioner's Factual Info Submission, dated Oct. 19, 2009 (C.R. 22). Max Fortune explained that it was contracted to pack paper for a Chinese trading company ⁶ and decided to outsource this service to a Chinese processing and packing company.⁷ Max Fortune stated its involvement with these other two companies were “merely commission transactions,” and therefore, Max Fortune decided not to list these transactions or companies in its factors of production (“FOP”) to Commerce. Br. in Supp. of Pls.' R. 56.2 Mot. for J. upon the Agency Record (“Pls.' Mot.”) at 6. Max Fortune reasserted that it “did not outsource its packing services for its production of subject merchandise shipped to the United States to any packers or processors during the POR” and “questioned the veracity of the information provided by” the FMR. Pls.' Mot. at 7.

On October 26, 2009, Commerce met with the Petitioner to get clarification of the documents and allegations that it had placed on the record. Def.'s Opp. to Pls.' Mot. for J. upon the Agency Record (“Def.'s Opp.”) at 4. Shortly thereafter, there was an incident ⁸ that affected the Chinese Informant, which Max Fortune claims compromised the authenticity and reliability of the documents placed on the record. Pls.' Mot. at 7–8.

On December 16, 2009, Commerce conducted a telephonic interview with the FMR to confirm its credentials and procedures because it noted that the Petitioner's “submission had been gathered and analyzed by a foreign market researcher.” Def.'s Opp. at 4.

On December 20, 2009, Commerce issued verification agendas to Max Fortune and the Chinese Informant. Id. On January 8, 2010, the Chinese Informant appeared as an interested party in the proceeding for the purposes of the verification. Def.-Int. Br. at 13. From January 11 to 18, 2010, Commerce conducted verification at Max Fortune. Pls.' Mot. at 10. Commerce also conducted verification at the Chinese Informant's facilities.⁹ Def.'s Opp. at 4. Despite the above-referenced incident that affected the Chinese Informant, Commerce stated that it was able to verify with “source documentation in the [Chinese Informant's] possession” the information that was placed on the record from the Petitioner. Def.'s Opp. at 20.

Comparing the information from Max Fortune and the Chinese Informant during verification, Commerce decided that “the Chinese Informant supplied much more detailed ... documents on the record with regard to a number Max Fortune's United States transactions than those supplied by Max Fortune” and the Chinese Informant's documents were “of a higher quality and a larger quantity.” Def.'s Opp. at 20 (emphasis in original).

On April 13, 2010, Commerce issued its preliminary results, applying total AFA and assigning a 112.64% duty margin to Max Fortune. Preliminary Results at 18,814–815. On May 5, 2010, Max Fortune retained U.S.-based counsel who appeared in the proceeding and also represents Max Fortune in the current litigation. Pls.' Mot. at 14. Pursuant to 19 U.S.C. § 1677f(c)(1) and 19 C.F.R. §§ 351.304–305, Max Fortune's new counsel was permitted to review the proprietary submissions and data. On June 1, 2010, Max Fortune's counsel asserted that the Petitioner's submissions were abusively “over-bracketed.” Letter from Grunfeld to Commerce, Re: Obj. to Petitioner's Double Brackets and Claims of Proprietary Treatment, dated June 1, 2010 (P.R. ¹⁰ 134; C.R. 55). Commerce declined to reveal the name of the FMR, which was double-bracketed, to Max Fortune or its counsel. Def.'s Opp. at 33–34.

On October 18, 2010, Commerce issued its final results, affirming both its preliminary application of total AFA and the resultant assignment of a 112.64% duty margin to Max Fortune. Final Results.

II. Standard of Review

For administrative reviews of antidumping duty orders, this 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). This Court must defer to Commerce's reasonable interpretation of a statute even if it might have adopted another interpretation had the question first arisen in a judicial proceeding. Zenith Radio Corp. v. United States, 437 U.S. 443, 450, 98 S.Ct. 2441, 57 L.Ed.2d 337 (1978).

III. Discussion

Max Fortune challenges Commerce's application of total AFA and decision to keep confidential the documents under the APO as unsupported by substantial evidence on the record or otherwise...