# United States **Court of Appeals**  **for the Federal Circuit**

______________________
CHANGZHOU HAWD FLOOR ING CO., LTD., DUNHUA CITY JISEN WOOD INDUSTRY CO., LTD., DUNHUA CITY DEXIN WOOD INDUSTRY CO., LTD., DALIAN HU ILONG WOODEN PRODUCTS CO., LTD., KUNSHAN YINGYI

NATURE WOOD INDUSTRY CO., LTD., KARLY WOOD PRODUCT LIMITED, FINE FURNITURE (SH ANGHAI) LIMITED, LUMBER LIQUIDATORS SERVICES, LLC, ARMSTRONG WOOD PRODU CTS (KUNSHAN) CO., LTD., Plaintiffs

- Appellants

HOME LEGEND, LLC, Plaintiff

v.
UNITED STATES, THE C OALITION FOR AMERICAN HARDWOOD PA RITY, Defendants

- Appellees

______________________
2015

- 1899, 2015

- 1901, 2015

- 1903, 2015

- 1904

______________________ Appeals from the United States Court of International Trade in No. 1:12

- cv

- 00020

- DCP, Judge Donald C. Pogue.

______________________
Decided: February 15, 2017

______________________CHANGZHOU HAWD FLOOR ING CO

. v. US 2

J EFFREY S. G RIMSON , Mowry & Grimson, PLLC, Washington, DC, argued for all plaintiffs

- appellants. Plaintiff

- appellant Fine Furniture (Shanghai) Limited also represented by K RISTIN H EIM M OWRY , J ILL A. C RAMER , S ARAH M. W YSS

.
G REGORY S. M ENEGAZ , DeKieffer & Horgan, PLLC, Washington, DC, for plaintiffs

- appellants Changzhou Hawd Flooring Co., Ltd

. , Dunhua City Jisen Wood Indu stry 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. Also represented by J AMES K EVIN H ORGAN , A LEXANDRA H. S ALZMAN

.
A RTHUR K. P URCELL , Sandler Travis & Rosenberg, P.A., New York, NY, for plaintiff

- appellant Lumber Li quidators Services, LLC . Also represented by M ARK L U DWIKOWSKI , K RISTEN S MITH , Washington, DC; M ICHELLE L. M EJIA , Chicago, IL.

H AROLD D EEN K APLAN , Hogan Lovells US LLP, Was hington, DC, for plaintiff

- appellant Armstrong Wood Pro ducts (Kunshan) Co

. , Ltd. Also represented by C RAIG A NDERSON L EWIS

.
T ARA K. H OG AN , Commercial Litigation Branch, Civil Division, United States Department of Justice, Washin gton, DC, argued for defendant

- appellee United States. Also represented by B ENJAMIN C. M IZER , J EANNE E. D AVIDSON , C LAUDIA B URKE ; S HELBY A NDERSON , Office of Chief C ounsel for Trade Enforcement and Compliance, United States Department of Commerce, Washington, DC.

J EFFREY S TEVEN L EVIN , Levin Trade Law PC, Bethe sda, MD, for defendant

- appellee The Coalition for Amer ican Hardwood Parity.CHANGZHOU HAWD FLOORING CO

. v. US 3

______________________
Before L OURIE , T ARANTO , and C HEN , Circuit Judges.

T ARANTO , Circuit Judge

. This case arises from the U.S. Department of Co mmerce’s antidumping

- duty investigation of multilayered wood flooring imports from the People’s Republic of Ch ina. The appellants here are Chinese entities that Co mmerce found had demonstrated their independence from the Chinese government and so deserved a “ separate ” antidumping

- duty rate, not the so

- called China

- wide rate that applies to entities that had not shown their ind ependence from t he Chinese government. Commerce did not individually investigate appellants to determine firm

specific dumping margins. Instead, it assigned them a rate that, though not specified numerically, was declared to be more than de minimis , even though it found zero or de minimis dumping margins for all three of the Chinese firms that it had individually investigated. The Court of International Trade affirmed that determination. Appellants contend that they are entitled to a de mi nimis rate

. After the Court of International Trade re ndered its decision in this case, our court made clear that the “separate rate” method used by Commerce here is a departure from the congressionally approved “expected method” applicable when all of the individually invest igated firms have a zero or de minimis rate , which is the case here, and that certain findings are necessary to justify such a departure. Albemarle Corp. & Subsidiaries v. United States , 821 F.3d 1345, 1348 (Fed. Cir. 2016). Under the “expected method,” a ppellants would be ent itled to a de minimis rate. Because Commerce did not make the findings needed to justify departing from the expected method
, we vacate the Court of International Trade’s judgment
, and we remand.CHANGZHOU HAWD FLOOR ING CO

. v. US 4

I In 2010, the Department of Commerce initiated an antidumping

- duty investigation of multilayered wood flooring from China
, based on a petition filed by the Coalition for American Hardwood Parity under 19 U.S.C. § 1673a(b) . Multilayered Wood Flooring f rom the People’s Republic of China: Ini tiation of Antidumping Duty Investigation, 75 Fed. Reg. 70
, 714 (Dep’t of Co mmerce Nov. 18, 2010)

. In order to select particular Ch inese firms to be individually investigate d as mandatory respondents, Commerce sent questionnaires to the Ch inese exporters and producers identified in the petition
, asking about the quantities and value of the goods at issue sent to the United States

. Id. at 70,717

– 18

. Of the 190 recipients of the questionnaire, 80 timely responded. Multi layered Wood Flooring from the Peopl e’s Republic of China: Preliminary Determination of Sales at Less Than Fair Value, 76 Fed. Reg. 30
, 656 , 30,657 (Dep’t of Co mmerce May 26, 2011)

. Commerce selected “the three largest exporters (by volume)” as mandatory respondents. Id. at 30,658. Althou gh several firms offered to be ind ividually investigated as voluntary respondents, id. , the three mandatory respondents are the only firms that Commerce individually investigated in this investigation. See Changzhou Hawd Flooring Co. v. United States , 44 F. Supp. 3d 1376, 138 9 n.31 , 1390 (Ct. Int’l Trade 2015).
Commerce deems China to be a nonmarket economy, and it presume s that each Chinese exporter and producer is state -controlled, and thus covered by a single China

wide antidumping

- duty rate , but a firm may rebut the presumption. See Changzhou Wujin Fine Chem. Factory Co. v. United States , 701 F.3d 1367, 1370 (Fed. Cir. 2012). Here, Commerce determined that 74 firms established their independence from the Chinese government. See Multilayered Wood Floo ring f rom the People’s Republic of China: Final Determination of Sales at Less Than Fair Value, 76 Fed. Reg. 64
, 318
, 64,321

– 22 (Dep’t of CommerceCHANGZHOU HAWD FLOORING CO

. v. US 5

Oct. 18, 2011)

. For those 74 firms

— not individually investigated, but not covered by the China

- wide rate

— Com merce had to calculate a “separate rate.” Commerce published its Final Determination on O ctober 18, 2011, finding that the subject merchandise was being sold at less than fair value (dumped) in the United State s. Id. at 64
, 318

. Commerce determined that one of the three mandatory respondents had a de minimis dumping margin, but it assigned margins of 3.98% and 2.63% to the other two mandatory respondents. See i d. at 64,323. After a voluntary remand from the Court of International Trade
, Commerce revised the mandatory respondents’ dumping margins , finding all three to be

zero or de minimis

. J.A. 101941. Commerce calculated the “separate rate
, ” not by simply us ing the zero/ de min imis rate s for the three mandatory respondents , but by averaging those three zero figures with the 25.62% rate it adopted as the China

- wide rate —y ielding a separate rate of 6.41%. J.A. 101 942. On review, the Court of International Trade affirmed the dumping margins for the mandatory respondents but remanded for further explanation of how the separate rate related to economic reality. Baroque Timber Indus. (Zhongshan) Co. v. United States , 971 F. Supp. 2d 1333, 1336 (Ct. Int’l Trade 2014 ). On remand, Commerce reasoned that the separate rate for the period of invest igation should not be drawn entirely from the three ma ndatory respondents, all having a de minimis rate. Commerce gave two reasons. First , Commerce said, “if [any of] the 110 companies [that did not respond to the quantity

- and

- value questionnaires] had chosen to coope rate, the examined company’s rate would have been above de minimis

. . . and would have been assigned to the separate rate plaintiffs as a separate rate in the Fi nalCHANGZHOU HAWD FLOOR ING CO

. v. US 6

Determination .” J.A. 102099. 1 Second, merely as confi rmation, Commerce pointed to the recent results of its first administrative review under 19 U.S.C. § 1675
, in which Commerce found dumping even for imports made after the announcement of the anti dumping

- duty order, no twithstanding that “the discipline of an antidumping order often results in lower or no margins

. . . as companies may change their pricing practices to eliminate the price discrimination found in the period of investigation.” J.A. 102100. That result, Commerce said, confirmed the likelihood that it would have found above

- de minimis dumping had it investigated more individual firms during the investigation

. Id. On that basis, although Commerce did not reaffirm its 6.41% rate for the “separate rate” (not individually investigated) Chinese entities, it declared that they would be subject to a rate that it did not specify but declared to be more than de minimis

. 2 Appellants challenged that determination in t he Court of International Trade . That court affirmed, co n-

1 Of the 1 10 entities that did not respond to the
qua n tity

- and

- value questionnaires, Commerce removed

one , located in Taiwan, from the investigation. J.A. 10142 4.

2 Commerce also determined that it need not calc ulate a specific separate rate for all but one of the separate

rate litigants (appellant Changzhou Hawd Flooring Company) because “the rate determined in the first administrative review supersedes the cash deposit rate established in the final determination of the investig ation.” J.A. 102100. As to Changzhou Hawd Flooring, Commerce announced that it would conduct an individual investigation
, J.A. 102102 , b ut it decided to delay the actual investigation until after the Court of International Trade reviewed th e remand determination. See Changzhou Hawd Flooring , 44 F. Supp. 3d at 1382 & n.13.CHANGZHOU HAWD FLOORING CO

. v. US 7

cluding that “Commerce’s determination regarding the
group

. . . is based on a reasonable reading of the law and record evidence.” Changzhou Hawd Flooring , 44 F. Supp. 3d at 1380. The court held that Commerce’s methodology was permissible because the statute allow s “any reason able method.” Id. at 1384. After one further remand, which brought Changzhou Hawd Flooring within the “separate rate” applicable to government

- independent but not individually investigated firms, the Court of Intern ational Trade entered a final judgment. Changzhou Hawd Flooring Co. v. United States , 77 F. Supp. 3d 1351, 1359

– 60 (Ct. Int’l Trade 2015). 3 Appellants, who are separate

- rate entities, have tim ely appealed the above

- de minimis separate rate , arguing for a de minimis separate rate

. They assert that, al though no rate was numerically specified, the assignment of an above

- de minimis rate harms them because it su bject s them to the antidumping

- duty order and its contin uing consequences, including subsequent periodic reviews under 19 U.S.C. § 1675 , whereas assigning them a de minimis rate in this investigation would remove them from the order and relieve them from its consequences

. See 19 C.F.R. § 351.204(e) (1) (excludin g from final dete rmination “any exporter or producer for which the Secr e-

3 In Changzhou Hawd Flooring , 44 F. Supp. 3d at 1390, the court held to be arbitrary and capricious Co mmerce’s decision to conduct a full individual investigation of Changzhou Hawd Flooring so late in the investigation. On remand, Commerce applied the same above

- de min imis but unspecified separate rate to Changzhou Hawd Flooring that it applied to the other separate

- rate firms. The Court of International Trade approved that decision. Changzhou Hawd Flooring , 77 F. Supp. 3d at 1359. Commerce does not challenge the rejection of its attempt to individually investigate Changzhou Hawd Flooring.CHANGZHOU HAWD FLOOR ING CO

. v. US 8

tary determines an individual weighted

- average dumping margin

. . . rate of zero or de minimis ”); Dupont Teijin Films USA, LP v. United States
, 407 F.3d 1211, 1216 (Fed. Cir. 200 5 ); Tu ng Mung Dev. Co. v. United States
, 354 F.3d 1371, 1375 n.3 (Fed. Cir. 2004); see also 19 U.S.C. § § 1673b(b)(3), 1673d( a)(4) (disregarding weighted dumping margin that is de minimis ). Commerce does not disagree that appellants have a stake in challenging t he above

- de minimis rate. We ha ve jurisdiction under 28 U.S.C. § 1295(a)(5).

II
“Commerce ’ s determination will be sustained unless it is unsupported by substantial evidence on the record, or otherwise not in accordance with law.” Yangzhou Bestpak Gifts & Crafts Co. v. United States , 716 F.3d 1370, 1377 (Fed. Cir. 2013) ; 19 U.S.C. § 1516a(b)(1)(B)(i)

. A ppellants argue that Commerce erred by not relying on the three mandatory respondents’ zero/ de minimis rates to generate

a de minimis “ separate rate. ” We agree that Commerce has not justified its departure from that method. In investigations involving exporters from market economies, 19 U.S.C. § 1673d(c)(5) establishes the method for determining t he rate for entities that are not individ ually investigated
, the so

- called all

- others rate . Commerce has relied on th at statutory provision in determining the separate rate for exporters and producers from non market economies that demonstrate their independence from the government but that are not individually inve stigated

. See Albemarle , 821 F.3d at 1348. The statute says that w here the “estimated weighted average dumping margins established for all exporters and producers individually investigated are zero or de minimis margins
, or are determined entirely under [19 U.S.C. § 1677e], ” Commerce “ may use any reasonable method to establish the estimated all

- others rate for exporters and producers not individually investigated,CHANGZHOU HAWD FLOORING CO

. v. US 9

including averaging the estimated weighted average dumping margins determined for the exporters and producers individ ually investigated.” 19 U.S.C. § 1673d(c)(5)(B). But t he Statement of Administrative Action accompanying the Uruguay Round Agreements Act

— which Congress has de emed “authoritative,” 19 U.S.C. § 3512(d)

— states that the “expected method” is to “weight

- average the zero and de minimis margins and margins determined pursuant to the facts available
, provided that volume data is available.” Uruguay Round Agreements Act, Statement of Administrative Ac tion, H.R. Rep. No. 103

- 316, vol. 1, at 873 (1994)
, reprinted in 1994 U.S.C.C.A.N. 4040, 4201 ( quoted in Albemarle , 821 F.3d at 1352 & n.5 ). 4 If Commerce reasonably concludes that “this method is not feasible” or would result “in an average that would not be reasonably reflective of pote n-

4 The la nguage of “margins determined pursuant to the facts available” refer s to margins determined under 19 U.S.C. § 1677e

. The statutory context, 19 U.S.C. § 1673d(c)(5)(B) , makes clear that the language refers to margins so determined for firms that are indivi dually investigated. Commerce has not suggested that, in th e present case, there are any such § 1677e

- based margins to be included in the average . Thus, o nly “zero and de minimis mar gins” are part of the average here. In this respect, the case is unlike Yangzhou Bestpak Gifts & Crafts Co. v. United States , 716 F.3d 1370 (Fed. Cir. 2013), where Commerce calculated a “separate rate” b y averag ing the two individually investigated firms’ rates —one de minimis
, the other a high § 1677e

- based rate. This court h eld Commerce’s result to be unreason ably high on the record in the particular case. Id. at 1377

– 81. Here, i n contrast, there is no issue of an unreasonably high average of the individually investigated firms’ rates; as in Albemarle , 821 F.3d at 1349, the average in this case is zero or de minimis

.CHANGZHOU HAWD FLOOR ING CO

. v. US 10

tial dumping margins for non

- investigated exporters or producers,” it “may use other reasonable methods.” Id.
Albemarle explains that Congress thus expressed a preference for the expected meth od, 821 F.3d at 1351

– 54
, a pr eference reflecting how Commerce selects mandatory respondents
, i d. at 1353. Here, Commerce chose the exporters whose quantity

- and

- value questionnaires indicated that they were the largest exporters by volume
, as expressly authorized by 19 U.S.C. § 1677f

- 1(c)(2) ( 2010 ). 5 Albemarle explains : “The very fact that the statute contemplates using data from the largest volume exporters suggests an assumption that those data can be viewed as representative of all exporters.” 821 F.3d at 1353. “The statute assu mes that, absent [evidence that the largest exporters are not representative], reviewing only a limited number of exporters will enable Commerce to reasonably approximate the margins of all known exporters.” Id. “[T]he representativeness of the invest iga ted exporters is the essential characteristic that just ifies an ‘all others’ rate based on a weighted average for such respondents.” Id. (quoting Nat’l Knitwear & Sport swear Ass’n v. United States , 779 F. Supp. 1364, 1373 –74 (Ct. Int’l Trade 1991 ) ). And, recognizing that the pr esumption of representativeness may be overcome, Albemarle holds that, in order to depart from the expected method, “Commerce must find based on substantial evidence that there is a reasonable basis for concluding that the separate respondents’ dumping is different.” Id. Pointing to Albermarle ’s observ ation that the mand atory respondents in that case accounted for “ a majority of the market, ” id. at 1353, Commerce argues that Albemarle ’s requirement of a showing of unrepresentativene ss for departing from the expected method does not apply

5 The section was amended in 2012, but the rel evant language is unchanged. 19 U.S.C. § 1677f

- 1(c)(2).CHANGZHOU HAWD FLOORING CO

. v. US 11

where the mandatory respondents do not account for “ a majority of the market. ” Appellee’s Br. 22. But that argument takes too narrow a view of Albemarle . The court did not rely for its statutory a nalysis on the obse rvation that the particular respondents accounted for a

“ majority of the market .” It relied on the statutory stan dards for selecting mandatory respondents under § 1677f

1(c)(2) , which, the court held
, ma k e the mandatory r espondents representative unless evidence shows othe rwise. Albemarle , 821 F.3d at 1353. Th e statutory standards

— involving either a statistical sample, 19 U.S.C. § 1677f

- 1(c)(2)(A), or the largest exporters by volume, id. § 1677f

- 1(c)(2)(B)

— are not tied to a “majori ty” share of a “market,” of the imports at issue, or any other class or collection

. Thus, the mandatory respondents in this matter are assumed to be representative . Under Albemarle , Co mmerce could not deviate from the expected method unless it found, base d on substantial evidence, that the separate

rate firms’ dumping is different from that of the mandat ory respondents. But it has not done so. Commerce did articulate a reason addressing firms that did not respond to the quantity

- and

- value questio nnaires: it said that th ose firms likely “would have cooperated with the Department’ s investigation if they could have obtained a low rate.” J.A. 102119. But that r ationale does not suggest the needed inference about the separate

- rate firms, all of which did respond to the que stionnaires

. Indeed, under Commerce’s reasoning , the separate

- rate firms’ decisions to respond to the questio nnaires might suggest that they are more similar to other firms, like the mandatory respondents, that responded. And Commerce m ay have suggested the same when, in its first “final determination,” it calculated the separate rate by averaging the rates of the two mandatory respondents that had margins above de minimis

. Multilayered Wood Flooring from the People’s Republic of China: Final D e-CHANGZHOU HAWD FLOOR ING CO

. v. US 12

termination of Sales at Less Than Fair Value, 76 Fed. Reg. at 64,322.
III
Because Commerce ha s not made the findings nece ssary to justify depart ing from the “expected method” here, we vacate the judgment of the Court of International Trade
, and we remand with instructions to remand to Commerce for it to reconsider its separate

- rate determ ination. We find it unnecessary to address appellants’ other challenges to the separate

- rate determination

. Costs awarded to appellants.
VACATED AND REMANDED