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Changzhou Hawd Flooring Co., Ltd. v. United States

United States Court of Appeals, Federal Circuit

January 10, 2020

CHANGZHOU HAWD FLOORING CO., LTD., DUNHUA CITY DEXIN WOOD INDUSTRY CO., LTD., DALIAN HUILONG WOODEN PRODUCTS CO., LTD., KUNSHAN YINGYI-NATURE WOOD INDUSTRY CO., LTD., KARLY WOOD PRODUCT LIMITED, Plaintiffs-Appellants
v.
UNITED STATES, Defendant-Appellee DUNHUA CITY JISEN WOOD INDUSTRY CO., LTD., FINE FURNITURE (SHANGHAI) LIMITED, ARMSTRONG WOOD PRODUCTS (KUNSHAN) CO., LTD. Plaintiffs-Cross-Appellees LUMBER LIQUIDATORS SERVICES, LLC, HOME LEGEND, LLC Plaintiffs COALITION FOR AMERICAN HARDWOOD PARITY, Defendant-Cross-Appellant

          Appeals from the United States Court of International Trade in No. 1:12-cv-00020-LMG, Senior Judge Leo M. Gordon.

          Gregory S. Menegaz, DeKieffer & Horgan, PLLC, Washington, DC, argued for plaintiffs-appellants and for plaintiff-cross-appellee Dunhua City Jisen Wood Industry Co., Ltd. Also represented by James Kevin Horgan, Alexandra H. Salzman.

          Jill Cramer, Mowry & Grimson, PLLC, Washington, DC, argued for plaintiff-cross-appellee Fine Furniture (Shanghai) Limited. Also represented by Kristin Heim Mowry, Bryan Cenko, Jeffrey S. Grimson, Sarah M. Wyss, James Beaty.

          Harold Deen Kaplan, Hogan Lovells U.S. LLP, Washington, DC, for plaintiff-cross-appellee Armstrong Wood Products (Kunshan) Co., Ltd. Also represented by Craig A. Lewis.

          Claudia Burke, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellee. Also represented by Joseph H. Hunt, Jeanne Davidson; Mercedes Morno, Office of the Chief Counsel for Trade Enforcement and Compliance, United States Department of Commerce, Washington, DC.

          Timothy C. Brightbill, Wiley Rein, LLP, Washington, DC, argued for defendant-cross-appellant. Also represented by Stephanie Manaker Bell, Tessa V. Capeloto, Jeffrey Owen Frank, Maureen E. Thorson.

          Before Moore, Taranto, and Chen, Circuit Judges.

          TARANTO, CIRCUIT JUDGE.

         These appeals involve the United States Department of Commerce's investigation, under 19 U.S.C. §§ 1673-1673h, of dumping into the United States of multilayered wood flooring from the People's Republic of China (the "subject merchandise" or "merchandise"). The investigation was before us in Changzhou Hawd Flooring Co. v. United States, 848 F.3d 1006 (Fed. Cir. 2017) (Changzhou CAFC 2017). Commerce individually investigated the dumping margins of three firms-the largest exporters of the subject merchandise by volume. Id. at 1009. Commerce also identified what the parties have called "separate-rate firms"-Chinese exporters and producers whose dumping margins Commerce did not individually investigate but that Commerce found to be independent from the government of China (a nonmarket economy) and so should be assigned an antidumping-duty rate separate from the "China-wide rate" ultimately assigned to firms lacking such independence. Id. Two subsets of such (non-individually investigated) separate-rate firms are before us: appellants, which did not even ask Commerce for individual review of their dumping margins; and cross-appellees ("voluntary-review firms"), which asked Commerce for such review but were denied. Before us are questions about Commerce's ultimate treatment of those two subsets of separate-rate firms.

         Commerce eventually found dumping and issued an antidumping duty order for the merchandise under 19 U.S.C. §§ 1673d(c)(2), 1673e. It is undisputed that Commerce properly decided not to terminate the investigation, but instead to issue an order, upon finding a non-de minimis positive dumping margin for the exporters and producers that were part of the China-wide entity, even though Commerce also found, ultimately, that all three individually investigated firms had zero dumping margins and freed those firms from further obligations relating to the order. It is also undisputed before us that Commerce properly applied the zero rate for the three individually investigated firms to the non-individually investigated separate-rate firms.

         What is disputed is Commerce's decision not to free the non-individually investigated separate-rate firms from all obligations accompanying issuance of the order. Specifically, Commerce ruled that, although (because of the zero rate) such firms' merchandise initially would not be subject to cash deposits upon entry, the merchandise would remain subject to other obligations-notably, suspension of liquidation of entries, with the ultimate duty to be determined later, generally in an administrative review under 19 U.S.C. § 1675, in which such firms would have to participate and in which the duty might increase above the de minimis level, thereafter requiring cash deposits. The appeal and cross-appeal before us involve disputes about that ruling, which the parties have referred to as disputes about "including" these firms within "the order" (or keeping them "subject to" it) versus "excluding" them from it-terminology we will use.

         When Commerce's ruling was challenged before the Court of International Trade (Trade Court), that court affirmed in part and reversed in part. It affirmed inclusion of appellants in the order, but it held that Commerce had not justified inclusion of the voluntary-review firms in the order. Changzhou Hawd Flooring Co. v. United States, 324 F.Supp.3d 1317, 1321 (Ct. Int'l Trade 2018) (Changzhou CIT 2018). Appellants challenge the first of those holdings, while a domestic industry coalition (cross-appellant) challenges the second of those holdings (which cross-appellees defend). We affirm the judgment of the Trade Court.

         I

         In Changzhou CAFC 2017, we ordered a remand for Commerce to reconsider whether there was an adequate reason for assigning the non-individually investigated separate-rate firms a rate different from the zero rate Commerce had assigned to the individually investigated firms. 848 F.3d at 1012-13. Acting pursuant to our remand, Commerce determined that there was no such reason and therefore assigned a zero rate to the non-individually investigated separate-rate firms. Final Results of Redetermination Pursuant to Court Order, at 8 (issued Feb. 15, 2017) (Redetermination); J.A. 453. That determination is not challenged now. But Commerce also ruled that those firms should be kept subject to, not excluded from, the order. Re-determination at 10-14, 19-27; J.A. 455-59, 464-72. That ruling is now before us.

         In support of the no-exclusion ruling, Commerce reasoned "that there is generally a key distinction in the statutory scheme between" two groups of producers and exporters: those "who have been individually investigated and which receive individual weighted average dumping margins that are zero or de minimis"; and those "who have not been individually investigated, and are, therefore, subject to the all others rate, which is based upon the individual weighted-average dumping margins which are zero or de minimis." Redetermination at 11; J.A. 456. Commerce also relied on a regulation, adopted to implement the Uruguay Round Agreements Act, Pub. L. No. 103-465, 108 Stat. 4809 (1994), that says that Commerce "will exclude from an affirmative final determination . . . any exporter or producer for which [Commerce] determines an individual weighted-average dumping margin . . . of zero or de minimis." 19 C.F.R. § 351.204(e)(1) (emphasis added); see Redetermination at 12-13; J.A. 457-58 (also relying on Commerce's explanations in promulgating the regulation in 1996-1997). Commerce further stated its policy judgment supporting its position: "policy considerations weigh in favor of treating exclusion as an extraordinary measure, and one that should only be available in limited circumstances to companies that have been subject to individual investigation and all that entails (i.e., providing full and complete questionnaire responses, cooperating with the Department, subject to verification, etc.)." Redetermination at 25; J.A. 470. Finally, while noting that firms can ask to be individually investigated as voluntary respondents, Redetermination at 13; J.A. 458, Commerce declared, without further policy explanation, that its position-"that companies that have not been individually examined are not eligible for exclusion" from an order-applies even to a firm that "requested to be a voluntary respondent" and supplied "full questionnaire responses" in the investigation, Redetermination at 24, 16; J.A. 469, 461.

         The Trade Court reviewed Commerce's ruling in cases properly brought to it under 19 U.S.C. § 1516a and 28 U.S.C. § 1581(c). The court generally upheld Commerce's decision to keep subject to the antidumping order those separate-rate firms with a zero rate that were not individually investigated. Changzhou CIT 2018, 324 F.Supp.3d at 1321. The Trade Court concluded that the statutory scheme does not unambiguously resolve this exclusion issue and that Commerce's policy requiring individual examination before exclusion was generally reasonable and was not at odds with the statutory framework. Id. at 1325-26. But the Trade Court drew a different conclusion as to one subset of separate-rate firms with a zero rate: the voluntary-review firms. The court concluded that Commerce had not adequately justified keeping under the order a zero-rate firm that had supplied full questionnaire responses and sought, but was denied, the opportunity to provide evidence that it was not engaged in dumping. Id. at 1326-27. On that basis, the Trade Court reversed the denial of exclusion as to voluntary-review firms before it. Id.

         Appellants appeal the Trade Court's upholding of their continuing inclusion in the antidumping duty order. Cross-appellant Coalition for American Hardwood Parity cross-appeals the Trade Court's judgment requiring exclusion of the voluntary-review firms on the present record. Commerce has not taken a position on the voluntary-review-firm issue ...


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