Midwest Fastener Corp. v. United States

435 F.Supp.3d 1262

MIDWEST FASTENER CORP., Plaintiff,

v. UNITED STATES, Defendant,andMid Continent Steel & Wire, Inc., Defendant-Intervenor.

Slip Op. 20-28

Court No. 17-00231

United States Court of International Trade.

March 4, 2020

Robert Kevin Williams and Mark Rett Ludwikowski, Clark Hill PLC, of Chicago, IL, for plaintiff, Midwest Fastener Corp.

Sosun Bae, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for defendant. With her on the brief were Patricia M. McCarthy, Assistant Director, Jeanne E. Davidson, Director, and Joseph H. Hunt, Assistant Attorney General. Of Counsel was Vania Y. Wang, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, DC.

Adam Henry Gordon and Ping Gong, The Bristol Group PLLC, of Washington, DC, for defendant-intervenor, Mid Continent Steel & Wire, Inc.

OPINION AND ORDER

Kelly, Judge:

Before the court is the U.S. Department of Commerce’s ("Commerce") remand redetermination filed pursuant to the court’s order in Midwest Fastener Corp. v. United States, 42 CIT ––––, ––––, 348 F. Supp. 3d 1297, 1306 (2018) (" Midwest I"). See Final Results of Redetermination Pursuant to Ct. Remand, Apr. 25, 2019, ECF No. 61 ("Remand Results").

On August 2, 2017, Commerce issued the final scope ruling determining that Midwest Fastener Corp.’s ("Midwest" or "Plaintiff") strike pin anchors were included within the scope of the antidumping duty ("ADD") order covering certain steel nails from the People’s Republic of China ("PRC"). See [ADD] Order on Certain Steel Nails from the [PRC]: Final Ruling on Midwest Fastener Strike Pin Anchors, (Aug. 2, 2017), ECF No. 21-3 ("Final Scope Ruling"); see also Certain Steel Nails from the [PRC], 73 Fed. Reg. 44,961 (Dep't Commerce Aug. 1, 2008) (notice of [ADD] order) ("PRC Nails Order"). In Midwest I, the court explained that the phrase "nails ... constructed of two or more pieces," as it is used in the PRC Nails Order, is ambiguous and, therefore, Commerce’s conclusion that Midwest’s strike pin anchors were in scope was unsupported by substantial evidence. Midwest I, 42 CIT at ––––, 348 F. Supp. 3d at 1300–04, 1306. As a result, the court ordered Commerce to initiate a formal scope inquiry and conduct 19 C.F.R. § 351.225(k)(2) (2017)¹ analysis ("(k)(2) analysis") on remand. Id. ²

On remand, Commerce continues to assert that the scope language covers Midwest’s strike pin anchors. Remand Results at 7–11. Commerce also, under respectful protest, conducted a (k)(2) analysis and likewise concludes that Midwest’s strike pin anchors are in scope. Id. at 11–19. Finally, Commerce states that in light of its determination on remand, it intends to instruct CBP that only the pin component of Midwest’s strike pin anchor is dutiable under the PRC Nails Order. Remand Results at 25–26. For the reasons that follow, Commerce’s determination on remand continues to be unsupported by substantial evidence.

BACKGROUND

The court assumes familiarity with the facts as set forth in the previous opinion and recounts the facts relevant to the issues currently before the court. See Midwest I, 42 CIT at ––––, 348 F. Supp. 3d at 1299–1300. On June 8, 2017, Midwest requested Commerce issue a scope ruling excluding its strike pin anchors from the scope of the PRC Nails Order. See Midwest Fastener Scope Req.: Strike Pin Anchors at 1–2, 4–12, PD 19, bar code 3579812-01 (June 8, 2017) ("Pl.’s Scope Ruling Req.").³ Midwest is an importer of the strike pin anchors at issue. Midwest’s strike pin anchors have four components—a steel pin, a threaded body, a nut and a flat washer.⁴ Pl.’s Scope Ruling Req. at 2; see also Final Scope Ruling at 10; Def.’s Resp. Parties’ Cmts. on [Remand Results ] at 3, June 27, 2019, ECF No. 67 ("Def.’s Reply to Cmts."). Midwest avers that the pin component is not meant to be removed from the anchor and can only be removed with the aid of a claw hammer or pliers. Pl.’s Scope Ruling Req. at 3; see also Final Scope Ruling at 4; Remand Results at 4; Def.’s Reply to Cmts. at 3. The strike pin anchor is prepared for use by first drilling a hole through an object, and then drilling another hole into the masonry upon which the object is to be attached. See Pl.’s Scope Ruling Req. at 3, 9; see also Final Scope Ruling at 4–5; Remand Results at 4; Def.’s Reply to Cmts. at 3. After the two holes are aligned, the anchor is pushed through the hole in the object and into the hole in the masonry. See Pl.’s Scope Ruling Req. at 3, 9; see also Final Scope Ruling at 5; Remand Results at 4; Def.’s Reply to Cmts. at 3. The nut and washer components are then tightened to orient and position the anchor, and the pin component is subsequently struck with a hammer. See Pl.’s Scope Ruling Req. at 3, 9; see also Final Scope Ruling at 5; Remand Results at 4; Def.’s Reply to Cmts. at 3.

The action of striking the pin component expands the anchor body and results in the fastening of the desired item against the masonry. See Pl.’s Scope Ruling Req. at 3, 9; see also Final Scope Ruling at 5; Remand Results at 4; Def.’s Reply to Cmts. at 3.

In Midwest I, the court determined that Commerce’s conclusion that Midwest’s strike pin anchors are within the scope of the PRC Nails Order was unsupported by substantial evidence. See Midwest I, 42 CIT at ––––, 348 F. Supp. 3d at 1300–06. The court examined various dictionary definitions and concluded that although the definitions could identify the physical characteristics of a nail, "none of the definitions consulted by the court identify or define a nail that is constructed of two or more pieces." Id. at ––––, 348 F. Supp. 3d at 1302. The court held that neither the plain language of the PRC Nails Order nor any sources identified under 19 C.F.R. § 351.225(k)(1) "explain what it means for a product to be a nail constructed of two or more pieces." Id. at ––––, 348 F. Supp. 3d at 1302. The court concluded that Commerce could not support its determination that strike pin anchors are nails constructed of two or more pieces, unless it clarifies the ambiguous phrase, "constructed of two or more pieces," and supported any subsequent determination with record evidence. See id. at ––––, 348 F. Supp. 3d at 1303–04. The Final Scope Ruling was remanded for Commerce to conduct a formal scope inquiry and (k)(2) analysis. See id. at ––––, 348 F. Supp. 3d at 1306.

On remand, Commerce reopened the administrative record and invited parties to submit new factual information clarifying the PRC Nails Order’s phrase "nails ... constructed of two or more pieces[ ]" and addressing the function of the anchor component in relation to the pin component. See Remand Results at 5–6; see also PRC Nails Order, 73 Fed. Reg. at 44,961 ; 19 C.F.R. § 351.225(e). Commerce further explicated its view of the scope language by interpreting the phrase "nail ... constructed of two or more pieces," as nails that match the physical characteristics enumerated in the PRC Nails Order, "plus some additional piece or pieces[,]" not limited by function or material. See Remand Results at 10. Commerce, also, under respectful protest, carried out a (k)(2) analysis, specifically considering the physical characteristics of the goods, the expectations of the ultimate purchasers, the ultimate use of the product, the channels of trade in which the product is sold, and the manner in which the product is advertised and displayed, and restated its view that Midwest’s strike pin anchors were in scope. Remand Results at 11–19. Commerce indicated that it intends to instruct CBP that only the pin component of Midwest’s strike pin anchor is subject to duties under the PRC Nails Order. See id. at 10–11, 21.

Midwest challenges Commerce’s definition of the relevant phrase as "illogical" and argues that Commerce has not complied with the court’s remand order because the phrase remains ambiguous. See Pl.’s Cmts. on [Remand Results ], May 28, 2019, ECF No. 64 ("Midwest’s Cmts."). Mid Continent challenges Commerce’s proposed instructions, but supports Commerce’s conclusion that under a (k)(2) analysis Midwest’s strike pin anchors are covered by the scope of the PRC Nails Order. See Def-Int.’s Cmts. on [Remand Results ] at 2–5, May 28, 2019, ECF No. 63 ("Mid Continent’s Cmts.").

JURISDICTION AND STANDARD OF REVIEW

The Court has jurisdiction pursuant to section 516A(a)(2)(B)(vi) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(vi) and 28 U.S.C. § 1581(c) (2012),⁵ which grant the court authority to review actions contesting scope determinations that find certain merchandise to be within the class or kind of merchandise described in an antidumping or countervailing duty order. See 19 U.S.C. § 1516a(a)(2)(B)(vi) ; 28 U.S.C. § 1581(c). The court will uphold Commerce’s determination unless 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). "The results of a redetermination pursuant to court remand are also reviewed ‘for compliance with the court’s remand order.’ " Xinjiamei Furniture (Zhangzhou) Co. v. United States, 38 CIT ––––, ––––, 968 F. Supp. 2d 1255, 1259 (2014) (quoting Nakornthai Strip Mill Public Co. v. United States, 32 CIT 1272, 1274, 587 F. Supp. 2d 1303, 1306 (2008) ).

DISCUSSION

Plaintiff argues that Commerce failed to comply with the court’s instructions to clarify the ambiguous phrase "constructed of two or more pieces." See Midwest’s Cmts. at 1–2. Plaintiff further argues that Commerce’s (k)(2) analysis is unsupported by substantial evidence. See id. at 3–5. Defendant responds that Commerce’s remand redetermination is supported by substantial evidence and complies with the court’s remand order. See Def.’s Reply to Cmts. at 6–16. For the reasons that follow, Commerce’s determination that Midwest’s strike pin anchors are within the scope of the PRC Nails Order is unsupported by substantial evidence.

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