United States Court of International Trade
Denial of Defense Counsel’s Motion to Withdraw
In United States v. International Trading Services, LLC and Julio Lorza, Court No. 12-135, Slip-Op. 15-106 (September 23, 2105), the court denied Defense counsel’s motion to withdraw as counsel for defendant where such withdrawal would leave defendant International Trading Services, LLC (International Trading) without counsel in the suit. Defense counsel had the burden to show that withdrawal would be accomplished without material adverse effect on interests of his client International Trading. Defense counsel argued that International Trading ceased operation and was dissolved. However, under Florida law, even as a dissolved corporation, International Trading is still amenable to suit. According to the court, leaving the corporation without an attorney, would prejudice it tremendously. The court found that Defense counsel did not meet his burden of showing good cause to withdraw. Because Defense counsel’s motion did not identify substitute counsel or show how International Trading would defend itself in the suit, the court denied the motion.
Remand Results Regarding Diamond Sawblades Sustained
In Diamond Sawblades Manufacturers’ Coalition v. United States, Court No. 13-87, Slip Op. 15-105 (September 23, 2015), the court reviewed the final results of remand (“Redetermination” or “RR”) and the parties’ arguments thereon regarding the final results of the first administrative review of diamond sawblades and parts thereof covering the 2009-2010 period. See Diamond Sawblades and Parts Thereof from the People’s Republic of China (“PRC”), 78 Fed. Reg. 11143 (Feb. 15, 2013). The remand focused on Commerce’s reduction of the “PRC-wide” rate of antidumping duty from 194.09% to 82.12%. For the following reasons, the court sustained the remand determination.
As part of the final results, Commerce determined the PRC-wide rate to be 164.09% based on non-cooperation from the entities comprising the PRCwide entity. For purposes of the administrative review, a separate “ATM entity” was found to consist of the three companies found to be affiliated in the underlying investigation (Advanced Technology & Materials Co., Ltd., Beijing Gang Yan Diamond Products Co., and Yichang HXF Circular Saw Industrial Co., Ltd.) combined with additional affiliates AT&M International Trading Co., Ltd., and Cliff International Ltd. On remand Commerce found that the PRC-wide rate was required to account for the inclusion of the ATM entity in the PRC-entity. ATM’s previous rate based on information on the record was .15%. Commerce found, however, that it did not have the necessary sales and production information to calculate that portion of the margin that represents the remaining but unspecified portion of the PRC-wide entity, but it also determined that no part of the PRC-wide entity had failed to cooperate to the best of its ability. Commerce determined to use a simple average of the previously assigned PRC-wide rate and the calculated margin for the ATM entity. Commerce thus revised the PRC-wide rate to 82.12% to account for the ATM entity’s inclusion in among the PRC-wide entity. Diamond Sawblades Manufacturers’ Coalition (“DSMC”) and ATM contested these findings.
While ATM argued for a separate rate, DSMC also argued for separate rates where the adjustment of the PRC-wide rate according to one cooperative respondent would manipulate the entire rate and benefit those respondents who have been not cooperating. Commerce argued that because ATM is found to be state controlled, it could not qualify for a separate rate, and that Commerce had to group its pricing behavior with other PRC entities. The reduced PRC-wide rate reflects ATM’s activity. The court determined that Commerce reasonably took a simple average between the known rate for ATM and the prior rate for all the state-controlled companies, considering that Commerce had no information about what proportion of the PRC-wide entity ATM comprised -- and therefore could not calculate a more precise weighted average. The court held in favor of Commerce’s remand decision and sustained the findings accordingly.
Results Remanded to Commerce
In Maverick Tube Corporation et al., v. United States, Court No.14-444, Slip Op. 15-107 (September 24, 2015). This matter was before the court on plaintiff Maverick Tube Corporation’s (“Maverick”), consolidated plaintiffs Çayirova Boru Sanayi ve Ticaret A.Ş., and Tosçelik Profil ve Sac Endüstrisi A. Ş.’s (collectively “Çayirova”), and plaintiff-intervenor United States SteelCorporation’s (“U.S. Steel”) motions for judgment on the agency record pursuant to USCIT Rule 56.2. These parties contested the U.S. Department of Commerce’s (“Commerce”) final determination in the antidumping (“AD”) investigation of oil country tubular goods (“OCTG”). Plaintiffs contested the final determination on four grounds. First, they argue that Borusan’s home market sales were part of an effort to create a “fictitious market” and thus Commerce’s reliance on those sales in calculating Borusan’s normal value was not supported by substantial evidence. Second, they disagreed with Commerce’s decision not to treat standard J55 OCTG separately from upgradeable J55 OCTG. Third, they challenged Commerce’s decision to reject factual information showing that Borusan failed to report a potential affiliation. Fourth, they argue the inclusion of certain Borusan export price sales in its U.S. sales database was improper because Borusan knew those sales would be re-exported to a third country. Finally, they argue that Commerce improperly granted Borusan and Yücel (collectively, “respondents”) duty drawback adjustments. The government also requested a remand to review Yücel’s duty drawback adjustments.
Çayirova challenged Commerce’s Final Determination on two grounds. First, Çayirova argued that Commerce improperly denied two-thirds of Yücel’s duty drawback adjustment. Second, Çayirova argued that Commerce’s calculation of its CV profit based on Tenaris’s financial statements was not supported by substantial evidence.
As to plaintiffs’ fictitious market allegations, the court found that they were untimely as they should have been brought to Commerce’s attention early in the investigation. Moreover, the court found that the home market sales were verified by Commerce and determined to be legitimate. Finally, the plaintiffs have failed to satisfy their burden to show that such sales were outside the ordinary course of business.
With regard to separating treatment of different kinds of OCTG, the court found substantial evidence in treating the two grades as one. There was no mandatory manner in matching US products with home market products, and as long as the court finds reason in the methodology, it will sustain Commerce’s findings.
As to rejection of factual information (regarding Borusan’s alleged affiliations), which was untimely filed and did not comply with regulations, Commerce was within its discretion to reject such data.
Petitioners next argued that Commerce should have excluded certain Borusan sales from its U.S. sales database in calculating its export price. However, Commerce verified that the OCTG at issue were delivered to the United States, were entered for consumption, and discovered information in support of including sales. The court asked Commerce to further explain its error in order to determine whether remand should issue because of this matter. As to Yücel’s drawback, the court understood the need for remand where additional information was to be reviewed and the court was skeptical that such a drawback adjustment should be allowed. Thus, the court granted this remand request.
With regard to Cayirova’s challenge to the use of the Tenaris financial statement for purposes of constructed value, the court did not agree with Commerce that profit reflected in the Tenaris data represented the best information available. Tenaris is a massive multinational producer of predominantly premium seamless OCTG that had no production or sales in Turkey during the POI. According to the court, in light of the other record evidence Commerce could have used and in the light of the fact that Commerce did not even attempt to calculate a profit cap, the calculation of Yücel’s CV profit was remanded to Commerce.
Because Commerce has to consider the constructed value determination for Cayirova, the court does not specifically resolve Çayirova’s claims relative to Commerce’s determination that its non-OCTG products are not in the “same general category of products” as OCTG products. Accordingly, Commerce was asked to reexamine its determination on remand. Moreover, Commerce was to reexamine the application of alternative (ii) (weighted averaging) based on Borusan’s home sales as a potential CV profit.
Plaintiff’s Motion for Summary Judgment Denied; Defendant’s Cross Motion for Summary Judgment Granted
In Composite Technology, Inc. v. United States, Court No. 13-205, Slip Op. 15-110 (September 28, 2015), the court denied plaintiff’s claim to classify its wooden door rails and stiles under Harmonized Tariff Schedule of the United States (HTSUS) Subheadings 4412.99.51 as “Plywood, veneered panels and similar laminated wood: Other: Other: With at least one outer ply of nonconiferous wood: Other: Other.”
Plaintiff’s merchandise covers wooden door pine cap rails and stiles which are 9.5 mm thick pine caps laminated to a base of laminated poplar wood layers. While plaintiff argued that they are veneered panels classifiable under Heading 4412, the court disagreed. Because the subject merchandise contains face plies more than 6mm thick, they conflict with the language of Headings 4412, 4408, and their explanatory notes. Moreover the subject merchandise is not made from a core of “blocks, laths, or battens” and is made from wood. Therefore, it may not be classified as “similar laminated wood” in Heading 4412. Thus, the court agreed with Customs’ classification under 4421.90.97, as “Other articles of wood: Other: Other: Other.
Defendant Liable for $2,651,312.18 for Giving Power of Attorney to Broker
In United States v. Pacheco, Court No. 14-289, Slip Op. 15-111 (September 29, 2015), court granted plaintiff’s default judgment against defendant Jeanette Pacheco (“Pacheco”) for $2,651,312.18 for fraud under 19 U.S.C. § 1592. Pacheco was approached in a nightclub by Dionicio Bustamente (“Bustamente”) who offered her $200 for her signature on a Power of Attorney, allowing him to do Customs business and to enter dried peppers commercially into the United States. Little did Pacheco know that Bustamente was undervaluing these peppers as he filed 36 entries of the dried peppers. Customs and Border Protection (“Customs”) asked for documentation to support the value of entered dried peppers to which Pacheco failed to respond. When Pacheco failed to redeliver the merchandise as per a Food and Drug Administration Notice of Action, Customs issued a penalty notice for $2,651,312.18. Customs filed suit, and the court now reviews the motion for default judgment.
Because Pacheco entered the dried peppers ant $.11 per kilogram, and because this undervaluation influenced Customs’ decision regarding the admissibility of the goods, the court found a violation of section 1592. Specifically, had the peppers been valued at $3.75 per kilogram, Customs could have issued a liquidated damages claim for $6,856,650 for the failure to redeliver, and the surety should have issued a bond for a significantly higher amount. Rather, Pacheco obtained a lower bond amount because of this misrepresentation. Further, according to the court, Pacheco may be held liable for her agent Bustamente’s actions even if she did not consent or approve to such actions. Finally, because there were no mitigating circumstances, the court granted the full claimed amount of $2,651,312 against Defendant for providing misleading information and failing to comply with lawful demands for records.
Section 580 Interest Granted; However Equitable Prejudgment Interest was Denied
In United States v. American Home Assurance Company, Court No. 10-185, Slip Op. 15-112 (September 30, 2015), the court awarded prejudgment interest under 19 U.S.C. § 580, but denied equitable prejudgment interest to the government. The background was simple. American Home Assurance Co. (“AHAC”) issued a continuous bond on behalf of JCOF International, Inc. (“JCOF”) who imported freshwater crawfish tailmeat from a Chinese exporter. The tailmeat was subject to a 1996 antidumping duty order issued by the U.S. Department of Commerce. JCOF made two entries of the tailmeat and claimed a duty rate of 0% when such tailmeat should have been entered under the 223% dumping rate. Commerce instructed Customs to liquidate JCOF’s 2001 entries under the 223 percent rate, and JCOF failed to pay it. Commerce then sought payment from AHAC and filed suit. The court held AHAC liable for the unpaid duties, denied the government statutory prejudgment interest under 19 U.S.C. § 580 (2012), and awarded the government equitable pre- and postjudgment interest. United States v. Am. Home Assurance Co. (AHAC CIT 14-7), 38 CIT __, 964 F. Supp. 2d 1342 (2014). The Federal Circuit reversed on the denial of the section 580 interest. United States v. Am. Home Assurance Co. (AHAC CAFC), 789 F.3d 1313 (Fed. Cir. 2015). At issue, before the court was the amount of the section 580 interest, and whether prejudgment equitable interestin addition to section 580 interest should be awarded.
The court granted the government section 580 interest in the amount of $299,411 which is the total liability amount of $600,000 for 3036 days at 6% per annum. However, the court did not grant equitable prejudgment interest where the statute fully compensated plaintiff, and “where equity operates in the absence of the statute.” Slip Op. at pg. 5. Thus, the court denied equitable prejudgment interest, because to do so would overcompensate the government. For these reasons, the court awarded the government $299,441.10 in prejudgment interest under 19 U.S.C. § 580 but denied the government equitable prejudgment interest.