Slip Op. 04 - 71



## UNITED STATES COURT OF INTERNATIONAL TRADE

: VALKI A LI MITED, : : Plaintiff, :

: v. : Before: M USGRAV

E, JUDGE : UNI TED STATE S, : Court No. 02-00249 : Defend ant, : : and : : CARPENTER TECHNOLOGY CORP.; : CRUCIBL

E SPECIALTI

ES METALS DI

V. : CRUCIB LE ME TALS C ORP.; : ELEC TR OALLO Y CO RP .; SLAT ER ST EELS : CORP., FORT WAYNE SPECIALTY AL LOYS : DIVI SION; and THE UNI TED STEEL : WORKERS OF AMERI CA, AFL -CIO /CLC, :

: Defend

ant-I nterven ors. : : [Plaint iff exporter argue s error

in succe ssorship f

inding a t antidumpi

ng duty investig ation; plaintiff’ s USCIT Rule 56.2 motion denied, final determination by Commerce Department sustained.]

Decided: June 18, 2004 Cam eron & Ho rnbostel LLP, Washing ton DC ( Alexander W. Sierck

, Matthew J

. Martin , Mark D. Davis and Valerie E llis ), for the plaintiff. Peter D. Keisler , Assistan

t Attorne y G eneral ; David M. Cohen , Dire ctor, Civil Division, Commercial Litigation Branc h, United States Department of Justice ( A. David Lafer , Stephen C arl Tosini ); Office of Chief Counsel for Import Administration, U.S. Department of Commerce (

James K. Locket t ), of cou nsel, for the defe ndant. Collier Sh annon Sco tt, PLLC (

Robin H. Gilbert

), Washing

ton, D.C., for the d

efendantinterve nors.Court No. 02-00249 Page 2

1 In a procee ding such as this, a determination on the marginmust be mad

e. Commer

ce will therefore use “facts otherwise available” whe re information necessary

for a determination is not on the record. See 19 U .S .C . § 1 677 e(a ). If “an interested

party has fa

iled to cooperate by

not acting to the best of its ability to comply with a request for information” then Commerce “may use an inference th at is ad ve rs e t o t he in te re st s o f t ha t p ar ty i n selecting fr om among the fac ts otherw

ise available” which may

include information from the petition. 19 U.S.C. § 1677e(b).

OPINION After being selected

as a “mandatory

” respondent in the investigation of stainless steel bar (“SSB”) from the U

nited Kingdom, Crownridge Stainless Steels Limited decided to liquidate. See Notice of Final

Determination of Sales at Less Than Fair Value: Stainless Steel Bar From the United Kingdom , 67 Fed. Reg. 31 46 (Jan. 23, 2002). See Public Rec ord (“PD oc”) 162 ; see also Antidumping

Duty Order: Stainless Steel Bar from the United Kingdom , 67 Fed. Reg. 10381 (Mar. 7, 2002), PDoc 165. Valkia Limited purchased most of Crownridg e’s assets from the company ’s liquidator. During the investigation, the International Trade Administration (“ITA”), United States Department

of Commerce (“Commerce”or “the Department”) essential ly conclu ded th at Cro wnrid ge and Valkia had schemed to avoid responding to reque sts for infor mation , which warranted an adverse infere nce in se lecting

from fac ts otherw ise available. 1 Commerce theref ore dete rmined to impose antidumping duties of 125.77 percent margin ag ainst “Crownridge/Valkia.” Valkia brings this suit

contending that an adverse infere nce is not warranted because neither Crownridge’s direc tors nor it s liquidator had the legal authority to respond to Commerce’s antidu mp ing questionnaire once the company entered liquidation. Valkia also argues that Commerce’s successor-in-interest test is unlawfulas applied in this matter. The government and the defenda nt-in t ervenors contend that the final determination should be sustained as is. On the reasoning below, the Court sustains the final determination with respect to Valkia.Court No. 02-00249 Page 3

2 Confidential Record Document 1. When a d

umping pe

tition is fil ed, Commer

ce is required to determine whethe

r importe d mercha

ndise is be ing or is

likely to be sold in the United States at less thanits fair value, i.e. , the amount by which the price

charged for subject merc handise in the home or other comparative market (the “normal value”) exceeds the price charg ed for subje ct merchandise in the United States (the “U.S. price”). 19 U.S.C. §§ 1673(1), 1677(35). Background OnDecember 28, 2000, the petitioners filed an allegation of dumping of stainless steel bar (“SSB”) from cou

ntries inc luding th e United K ingdom, 2 which Commerce began to investigate on January 2, 2001. Notice of Initiation of Antidumping Duty Investigations: Stainless Steel Bar from France, German

y, Italy , Korea, Taiwan, and the United Kingdom , 66 Fed. Reg. 7620 (Jan. 24, 2001), PDoc 17. On Febr

uary 12, 2001, C ommerce

identifie d Crownri dge as

one of the three la rgest producers or exporters of stainless steel bar (“SSB”) from the United Kingdom and therefore made it a mandat ory responde nt to the inv estig a tion. See Notice of Preliminary Determination of Sales

at Less Than Fair Value and Postponement of Final Determination , 66 Fed. R eg. 4 0192 (Aug. 2, 2001), PDoc 109 (“

Preliminary Determination ”); PDoc 31. Immediately , on February 13, 2001, counsel for Crownridge informed Commerce that due to “th e uncertai nties presented by the pending antidumping investigation” and ong oing financial difficul ties, the “ members”

of Cro wnrid ge had previously re solved to liquidate the company as of February 6, 2001. See Memorandum to File re: Liquidation of Crownri dge (Com merce, July 5, 2001), PDoc 91 (“

L iqu idation Memo ”), at Att. 2. Nonetheless, on February 20, 2001, Commerce sent Part A of the a

ntidumping

duty questionnaire toCrownrid ge concerning

their respec tive SSB sales in the U.S. and the U.K. over the period October 1, 1999 to September 30, 2000 (the “POI ”). PDoc 38. Whethe

r it e x pected a response to that, on February 26, 2001, Commerce contactedCourt No. 02-00249 Page 4

personnel at the U.S . Foreig n Commerc ial Servic e (“USF CS”) in London to ask them

for follow-up information on the Crownridge liquidation. Specifically , an ITA financial a nalyst asked whe

ther any of y ou know wh ether Cr

ownridg e was: 1. Liqui dated pie cemeal ( i.e. , its various capitol [

sic ] ass ets so ld by [th e accou ntin g f ir m handling the liquidation] to several different companies? - or - 2. Liqu idated wh olly to one/few investors who can/are operating Crownr idge’s fac ilities as a diff

erent legal entity , but basically in the same manne r as before the liquidation? Liquidation Memo at Att. 4 (e-mail of Feb. 26, 2001). USFCS personnel e-mailed back to the I TA analy st that “[t]he off

ic ial liquidator of Crownridge . . . as a result of my call to him[ is] checking to see whether any

of the asse ts of the now -defunc

t company

are still in productive use, either a s a continuation of the former enterprise or as a subsidiary of another firm.” Id . By e- mail of February 28, 2001, t

he USFCS pe

rsonnel s ubseque ntly reporte d that: [The liquidator] confirms that the Crownridge . . . pl ant at Milford Haven, Pembroke, Wales is no longe r in operat ion, and th at the y are now se eking a buyer for the site, plant and machiner y . Acc ordin

g to [t he liq uida tor], Crown ridge was a

small independent steel producer, running at a loss when the US an ti -d um pi ng in ve st ig at io n w as in it ia te d. Th e c om pa ny’ s fina ncial backers took legal advice, and when informed that the cost of defending the company’s

position in the United States was likely to be in excess of half a million pounds, they withdrew their f inancial support. Crownridge contends that the U.S. a

nti-dumpin

g invest igati o n was the event that tipped the company over the edge, and [the liquidator] believes that the incl us ion of Crown ridge in the anti-dumping petition has pr oved to be a “red f lag” to potentia l new inve stors. Id . at Att. 4. OnMarch 2 9, 200 1, cou nsel f or Cro wnrid ge faxed to Commerce copies of the February 6, 2001 extraordinary re solution passed by Crownridg e’s members, the February 6, 2001 appointment of the li quid ator o f Crow nridge pursuant to the Insolvency Act 1986 of the United

Kingdom, and a copy of a published notice to thateffect. Id . at Att. 3. On April 3, 2001, the USFCS e-mailed theCourt No. 02-00249 Page 5

ITA analyst conce

rning the then-current status of the Crow nridg e plant a

nd reite rated: “ No valid

o ffers have been received by the liquidator; the plant is completely closed down, a n d there i s n o stockpiled

product that could be sold or exported.” Liquidation Memo at Att. 1. The I TA analy st appare ntly made a further request for updated information, and on

April 18, 2001, USFCS personnel reported: Further

to my 02/28 e-mail, the capital assets of Crownridge are still avai lable for disposal from the liquidator. No serious offers have been rec eived since the company opted to liquidate, and none a re expected. The liquidator . . . blames the U.S. anti-dumping investigation for this sad situation, informing us that Crow

nridge ’s lawy

ers’ assessme

nt of the li

kely cost of defending the anti-dumping action caused whatever withdrawal of the company’s or

iginal financial backers, and that the continued action has effectively

killed off any prospect of a rescue by other firms. The pr obable outcome is a write-off of the C rownridge assets, leaving a de relict brownfield site and some scr a p ma ch in er y. There is no prosp ect of a ny change in circumstances, and nothing further that we can do to help y

ou with your inquiries . Ple ase let me know if this information is suffic iently final to clo se the books on th e Crow nridge affair. Id

. OnJune 15, 2001, a Commerce staff member sent an e-mail to Rhodri Phillips, who had been

a member of

Crownrid

ge’s bo ard of di

rector s prior to i

ts liquidat ion and (a s it turned

out) one of two principal investors who had been negotiating with the li quid ator t o purc hase t he Cro wnrid ge assets frombankrup tcy. See id . at Att. 5. The e-mail explained the Commerce was in the process of investigatingdumping of SSB from the U.K., that Crownridge wa s named a s a mandatory responde nt, and tha

t Commerc e had sen

t your company a que stionnaire ( attach ed), via Federal Express, soliciting certain sales an d cost informationto be used

in our ant idumping duty analy sis of you r c om pa ny. Your company’ s response to this questionnaire was due by March 29, 2001. However, to date we have not received any communication from you regarding this matter.Court No. 02-00249 Page 6 Alth ough we understand fr om . . . Crownr

idge’s former c ounsel in

this matter that your company

is currently unde

rgoing liquidation, we wish to advise y ou that your failure to respond to the Dep artment’ s question naire ma y r esult in the use of facts available under section 776 of the Tariff Act of 1930, as amended, in making our antidumping determina tio n with respect to your company. Should you decide to respond to the a ttached questionnaire, y

ou must do so no later

than June 25 , 2001. Giv en the sta tutory time const

raints inthis proceeding, we may not be able to consider y

our response in making our prelimina

ry determination cur

rently due on July

26, 2001, but may do so for the purposes of our final determination. . . . Id . (highlighting added). Commerce received no res ponse from Crownridge by the time allotted. Accordingly , on August 2, 2001, Commerce published its preliminary a ffirmative det ermination on t he matter of SSB fromthe United

Kingdom. Preliminary Determination , 66 Fed. Reg. 40192. Therein, Commerce assigned to Crownridge the “all others” margin of 6.85 percent in recognition of the apparent fact that Crownridge “was no longer in business.” Id . at 40193. OnSeptember 7, 2001, co unsel for petitioners informed Commerce that it had received informationwhich contradic ted what C ommerce had bee n informe d conce

rnin g Crownridge’s liquidation. PDoc. 127. At Commerc e’s req uest, this i nformati on was ma

de public in order to afford Crown ridge and/or other persons an d entities a n opportunity to comment upon it. See PDoc 134. Specific ally , the peti

tioners a lleged that a ve ry short time

into Crown

ridge’ s formal l iquidation its operations had bee

n taken ov er by

one of its major investment creditors. Operating as “Va lkia,” the “new” company

had sold some SSB which had been manufactured by Crownridg e. On October 19, 2001, Commerce

wrote to V alkia L

td. via Ke ith Neg al, who had been hired by Crownrid

ge to ad vise

o n possible work-out solutions and retained by V alkia post-liquidation, requesting tha t Valki a respond t o the alle gation i

n the peti tioners’ declaration by

November 2, 2001. PDoc 135. At thisCourt No. 02-00249 Page 7

time, Commerce

advised t hat “ failure to r

espond to this lette

r may result in t

he Depa rtment’s use of adverse infere

nces in determin ing an a ppropria te dumping margin for Crownridge /Valkia in the Department’s final determination . . . .” Id . (highlighting added). Valkia responded, by pr

e-hearing brief dated N ovember 2, 2001. PDoc 139. Therein , Valkia accepted that most of the allegations appeared to it to be “substantially corre ct” but argued that none of the points

raised by th e petitioners shoul d affec t Commerc e’s pre liminary determination bec ause neither Crownrid

ge nor any of its dire ctors ha

d the “le gal abi lity” to respond to Commerce’s questionnaire under the insolvency law of the United

Kingdom . Valkia t

hus arg ued that neither it nor Crownridge had “willfully failed” to cooperate with Commerce in this investigation. See id

. Nonethe less, following a public hearing, see PDoc 154 (Dec. 14, 2001), Commerce did alter its position with respect to Valkia in the final determination. See Issues and Decision Memorandum for the Final Determination of the Antidumping Duty Investigation of Stainless Steel Bar from the United Kingdom , PDoc 156 (Jan. 15, 2002) (“ Decision Memo ”). Commerce’s final determination issued on January

12, 2002 dr

ew an ad verse in ferenc e with re sp ect to “Crownridge/Valkia” and explained its reasoning as f

ollows: The Depa rtment’s prelimina

ry facts a vailable determination with

respec t to Crown ridge was based on information provided . . . by Crownridg e’s counsel and the U.S. Em

bassy inLondon which

indicated that the company did not have the ability to respond to the Department’s questionnaire. Based on the additional information that has come to our attention since that time, we have determined

that Valk ia is the success or-in-in

terest to Crownrid

ge and that it is more appropriate to apply an adverse inference unde r section 776(b) of the Act [19 U.S.C. § 1677e(b)] because we belie ve Crownr

idge an d its successor comp any Valki a did not c ooperat e to the be st of their

abilities in this procee ding. * * *

. . . Valkia . . . informed

us in its Nov ember 2, 2001 cas e brief respondi ng to the Department’s October 19, 2001 letter that: (1) with the financial backingCourt No. 02-00249 Page 8 of one of Cr

ownrid ge’s two principa

l investors, Valkia

had ag reed to purchas e Crownr idge’s assets in an arm’s length bidding process from the company’s

liquid ator in March 2001, the month after the company entered formal liquidation, but did no t formall y c lose the tr

ansacti on to purc

hase it until June 2001; (2) on February 26, 2 001, Va lkia traded and purchased on anarm’s length basis some finished SSB from a company t hat had been a secured credito r of Crownr idge an d that had

taken pos session of

that SSB under its prio r lien (or

security agree ment) onc e Crownr

idge we nt into liquidation; (3) on Ma

rch 7, 20 01, the liq

uidator a greed to all ow Valkia to occupy and use the plant

site w hile n egotia tion s were p endin g; and (4) V alkia issued its first invo ice of pr

oduction o f SSB on Ma

rch 14, 2 001. Desp ite Valkia’s claims that all of theseevents occurred without guarante e that final purchas e negotia

tions would

ultimately

be succe ssful, tha

t V alk ia never undertook

to honor or cover Crownridge’s obliga tions to credi

tors, and that it had no right to Crownridge’s books and records before the acquisition, the fact remains t hat these repres entation s are inc onsistent w ith th ose m ade by Crownridge’ s l iquidator to the U.S. Embassy prior to the Depa rtment’s pr eliminary

determination. The

re was no attempt t

o disclose these fa cts to the Department after issuance of the De partment’s questionnaire on February 20, 2001, or even after issuance of a follow- up e-mail from the Department to Rhodri Phillips, a principal of Crownridge who, according to Va lkia, was involved in the bidd

ing proc ess for the purcha se of Crownridge’s assets, on June 15, 2001. T

his e-mail notified

Mr. Phillips that the Department had yet to receive a questionnaire response from Crownridge whic h was due on March 29, 2001, and granted the company an additional op p ortunity until June 25, 2001 to

respond to it, and advised of the facts available consequence of non-response. . . . When the De partm ent ma de its preli minar y determi natio n to as sign Crown ridge a facts available margin, the De partment had rea son to believe, based on the fa

cts of re cord at t

hat tim e, inclu ding representations from Crownridge’s liquidator, thatCrownridge had completely closed down a nd that there were no prospects for the resumption of oper ations wit h respec t to the prod uc tion and sale of SSB by it or some other entity in the future. As later determined, and by V alkia’s o wn admissi on, as detailed ab ove, thes e facts were inaccurate. I

n addition, neither Crownridge nor Cr ownridge’s liquidator provided any e

vidence s ugges ting that Crownridge did not have access to the information. They mer ely indicated t hat it would not be releva nt, in their view, due to Crownridge’s decision n ot to continue business. However, they

failed to disclose accura te facts to the Department about the stat us of Crownr

idge or the succ ession of

Valkia to

its busines s, prior to the issua

nce of th e Depar

tment’s le tter in October 200 1. Noneth eless under liquidation under UK law[ ], anumber of Crownridge’s directors andCourt No. 02-00249 Page 9 management

and other relevant participants remained available, and indeed had returne d to work on the site e ither whi le stil l wit h Crow nridge or newly retained by Va lk ia a s ea rly a s M arc h 20 01. InJanu ary 2001, Crown ridge was still operating, and officially went [in]to liquidation on F ebr uar y 6, 2 001 . It was only a matter

of weeks, however, before Valkia beg an operations there as of March 6, 2001.

. . . [T]he De

partmen t finds tha

t Valkia i s the succ essor-in -intere st to Crownridge. The entir

e busines s complex of

Crownrid

ge was transfe rred to Valkia, with oper

ational c ontrol he ld

by V alkia

in March 2001 and full legal control from J

une 13, 2001 (prior to the final submission deadline for Crown ridge of June 25, 2001). According to information from Crownridge , Valkia, or the petitioners which has not been denied, the fo llow ing has occurred: Crownridge’s production assets were tra nsfe rred, Valkia pur chased and sold Crownridge product to Crownridge customers, Valkia has overlappingownersh

ip and mai ntained p art of the seni or management and the plant management and s ales direct or pos itio ns of t he form er Cro wnrid ge operation, and has co nt in ue d C ro wn ri dg e’ s c om me rc ia l a ct iv it y. Clearly, the U.K. liquid at or concl

uded that his pendin

g sales arrang ements wi

th Valkia were of adequ

ate streng thto agree on March 7, 2001 to Valkia occ upying a nd using Crownridge’s site a nd ma chin ery

with e ffec

t fro m Mar

ch 6, 2001. [ ] The same liquidator, acting “[f]or and on behalf of Crownridge ”, provided contradictory

information to t he De partmen t (via the U.S. Embas sy i

n London), which is one vital pa rt o f the Dep artment’ s finding s of failu re to coopera te and the appropriateness of taking an a dverse inf

erence. These findi ngs and analysis howe ver do not rely on the

liquidator alone, who was appointed to wind up Crownridge’s business a nd transf er assets to cred

itors. [ ] Other members of the Crown ridge management and staff clear ly remained availab le through

this time, a nd we n ote th at the direct ors of Crown ridge owed a duty to work pro-ac

tively with the liquidator in bringing maters to a conclusionand

could have worked with the Department.[ ] We note also that Mr. Negal had been retained by Crownridge in October

2000 t o help salva ge the co mpany, and

that he was retained by Valkia to such effect that the liquidator wrote to him onMarch 7, 2001. According to Valkia and Valkia’s counsel (former

ly Cr ownridg e’s coun sel)[ ], Crow nridge ’s books a

nd records remained at the Crownridg e offic e in L ondon, ev en afte r its closing . Some kind of response by

Crownridge could have been made be fore June 25, 2001, but the company chose

not to. The fact t hat Cr ownri dge was under liquidation, given the circu mstance s in whichits business was quickly being tr ansferred to Valkia, does not prevent th e Depa rtment fr

om conclu

ding tha t Valkia i s the succ essor-in -intere st to Crownridge. If the new company operates as the same business entity as theCourt No. 02-00249 Page 10 former company, the De

partment will accord the new co mp an y the same antidumping treatment as the predecessor. See Final Results of Antidumping Duty Administra tive Review: Large Power Trans

formers F

rom Italy , 52 FR 46806 (Dec. 1 0, 1987). As t he Co urt of I

nternat ional Tra de conc luded in upholding our determination above that the second Italian company

was the successor of the first original business i n liquidati on, “[t]he u

ltimate question was whether the ac tivities in Italy were ‘old’ or ‘new’. The ag ency found them to be old . . . .” Nuove Industrie Elettriche di Legnano S.p.A. v. United States , 14 C .I .T. 334 , 34 2 (Ju ne 1, 1990). Like

wise, we find that t

he old activities of

Crownri dge ar

e being continue d by

Valkia. Accordin

g to informationfrom Crownridge, Valkia, or the petitioners which has not been denied, the follow

ing has o ccurre d: Valkia

has some o f the sa

me prin cipal owners and plant

manage r and sal es director; it has the same prod uction facil itie s; it has maintained the same supplier relationships; and it has maintained

the same customer relationships. In conside ring these factor s , therefore, for purposes of the final determination, we have deemed Valkia the successor in intere st

to Crownridge, and as such find i t appr opria te to a ssign it the margin otherwise applicable to Crownridge, in accordance with our normal practice. * * * In this case, we have

determined

that Crow

nridge ’s repr

esentat ions prior to the preliminary de

termination were misleading and incomplete and that the company failed to cooperate [in accordance w ith 19 U.S.C. § 1677e(b)] by notacting to the bes t of its abi lity to comply

with the D epartme

nt’s req uests for information. Therefore, an adverse inference is warranted.

. . . Moreover, even though Cr

ownridg e itself w ent into liq uidation, it is cle ar that t

he key personnel and information were present through out all this

time and that the combined commercial activities of Crownridge and Valkia continue d with very little ga p in comme

rcial a ct ivities. Th

us, we conclude that these companies had

the abilit y to coopera te, but ha d a reas on and str

ategy not to do so. Decision Memo at 14-18 (footnotes omitted). OnJanuary 23, 2002, Commerce issued its final determination of sales at less than fair value. 67 Fed. Reg. 3146. On March 7, 2002, Commerce imposed A ntidumpi ng Duty Or der: Stai nless Steel Bar from The United Kingdom , 67 Fed. Reg. 10381 (Mar. 7, 2002). This action followed.Court No. 02-00249 Page 11

Discussion The Court has jurisdiction over the matter pursuant to 19 U.S.C. § 1516a(a )(2) an d 28 U.S.C. § 1581(c). The standard

of review is whether the challenged agenc y determination is “unsupported by substantial evidence on the record, or otherwise not in ac cordance with law.” 19 U.S.C. § 15 16a(b)(1)(B)(i). Substantial evidence is “such relevant evidence a s a reasonable mind m igh t accept as adequate to support a conclusion.” Matsushita Elec. Indus. Co. v. United States , 750 F.2d 927, 933 (Fe d. Ci r. 198 4) (qu otin g Consolidated Edison Co. v. NLRB , 305 U.S. 197, 229 (1938), and Universal Camera Corp. v . NLRB , 340 U.S. 474, 477 (1951)). This standard requires “something less than the w eight of

the evide nce, and the possi

bility of drawing two in

consiste nt co nclusions fr om the evidence does not prevent an administrative ag ency’s f inding from being suppor ted b y substantial evidence.” Consolo v. Federal Maritime Comm’n , 383 U.S. 607, 620 (1966). However, substantial evidence supporting the agency ’s determination must be based on the whole record, and

a reviewing court must take into account not only that whichsupports the agency ’s conclusion, but also “whatever in the record fairly detracts from its weight.” Melex USA, Inc. v. United States , 19 CIT 1130, 1132, 899 F. Supp . 632, 635 (1 995) ( citi ng Universal Camera Corp. v. NLRB , 340 U.S. 474, 478, 488 (1951)). I Valkia’s principle

argume nt is that Crownridge’s liquidator and directors were without the legal authority

to respon d to Commerce’s questionnaire as a matter of U.K. law onc e Crownridge’s members resolved to liquidate the company . If so, the fact that the liquidator did not respond to the questionnaire and subsequently made apparent misstatements are irrelevant to the f inal analysis.Court No. 02-00249 Page 12

3 Valk ia al so emphas izes that th e decisi on to liquid ate was c onsidere d as a poss ible eventua lity long pri or to the p etitioners’ filing of the pe tition and t

hat it was cumulativ e, not sole ly the result of the antidumping investigation, although this was the tipping point. I t also underscores that Crownridge’s legal

counsel were discharged

when the company

went into liquidation, and that it was not until October

19, 2001 that “Crownridge/Valkia” was advised that “ failure to respon d to this le tt er ma y result in the Department’s use of adverse infere nces in de

termining an appro priate dumping margin fo r Crownridge/Valkia in the Department’s fina l determination[.]” PDoc 135

(continued...) Valkia stresses that a U.K . liquidati on is not mere ly a reor ganization. Under U.K. law, at liquidation the board’s and members’ power over the company ce ases, and

the appointed liquidator acts as a fiduciary

to wind up the company’s a ffairs for the benefit of the company’s c

reditors. He must prese

rve and swell the c ompany ’s assetsfor the c ompany ’s cred itors, and only the liquidator

or persons sanctioned by

him or the relevant creditor’s or members’ committee is authorized to dea l with the assets, liabilities, bank account, and employ ees of the company . Pl.’s Br. at 11-12 (citations omitted). Valkia argues that an antidumping questionnaire cannot lo gicall y be consider ed an “a sset” to be preserved, and responding to one would have depleted the remaining corpora te a sset s and subjected the liquidator to suit for violating his duties towards creditors under the Ins olvency Act 1986. Pl.’s Br. at 13-14, referencing Bailey, G

roves & Smith, Corporate Insol vency , Ch. 10 (“Liquidators”) § 10.32 (Butterworths, London, 2002), and Fletcher, The Law of Insolvency (Sweet & Maxwell, 1996), p. 506 (discussing §§ 91(2) and 103 of the I nsolvency Act)

. Furthermore, Valkia argue s, any

response from Crow

nridge would have been a futile gesture be cause the company was being liquidate d, rende

ring a margin d

etermina tion with only prospective eff

ect mea ningles s. Thus, Va lk ia argues that the administrative record doe s not contain substantial evidence to support an adverse infere nce sinc e it does not evince “willful” failu re to c ooperat

e with Comme

rce in its investigation, either by

the Crownridge directors or by the liquidator. 3Court No. 02-00249 Page 13

3 (...continued) (italics added). To which Valkia did, in fact, respond, as requested. See PDoc 139. Prior thereto, Commerce questionnaire apparently gave Crownridge the choic e of whether or not to respond. The government characterizes the issue a s whether Commerce ’s decis ion to appl y an adve rse inference was in accorda

nce with law. Def’s Br. at 15-16. I t contends that Valkia has not offered credibl e support for its contention that Commerce’s interpretation of the relevant provisionsof the Insolvency

Act 1986 was unlawful and that the matters Valkia refe r enced rath er confirm Commerce’s conclusi o n that Crownridge possessed authority to respond through either the liquidato r or its corporate officials. Id . Quoting from Comme

rce’s a naly sis: The liquidator, carry

ing authority a

nd discretion, could have arranged for an answer. Under UK law, the directors have an ongoing dut y to remain proactive with the liquidator in handling the winding up af fa ir s o f t he co mp an y. The liquidator

focuses on secur

ing and finalizing

asset dist

ribution to creditors and other

s. See R v McCredie; R v French (1999) Times, 5 October (Court of A pp eal: Hen

ry LJ and H olland an

d Hallett JJ) (in Le

xis-Nexis, Halsbury’s

Laws of Engla

nd a n d Monthly Review) which held that, on winding up of a company, company office rs owed the compan

y a duty to comply with Section 208(1), which required co-operation with the liquidator on a pro-active, rather

than a re active, basis in

disclosing

company propert y unknownto the liquidator. Further, the commercial responsibilities relating to assets and documents were a co ntin uing, rather than a once for a ll time, duty and did not depend on a pr ior request from the liquidator. Decision Memo , at 17 n.5. See Def’s Br. at 16. The petitioners view the matter somewhat differently, emph asi zing that the liquidator as Cr ow nr id ge ’s re pr es en ta ti ve ac tu al ly “ did provide information” – information which proved to be “misleading and fals e .” Def-Int’s B r. at 16-17 (footnote omitted, emphasis in original). The petitioners also point out that Valkia repeatedly asserted “as a matter of

fact” t hat Cr ownri dge did nothave the ability to respond to the a ntidumping questionnaire once it entered liquidation. SeekingCourt No. 02-00249 Page 14

to hoist Valkia by its own petard, the pe titioners argue t

hat Valki a did not provide any fa ctual support for this c laim

to Commerce and does so only be latedly here

. The petitioners argue that the Courtshould “reject

Valkia’s late attempt to provide some factual basis for its arg uments.” Id . at 17. Address ing thislatter point first, the Court construes the petitioners’ argument as a motion to strike directed at

a copy of a

n e-mail attached to Valkia’s brief from the Te chnical Section of The Insolvency

Service, U.K. Department of Trade a nd Industry

. See Pl.’s Br. Ex. 9. The copy is an e

mail “enquiry”

which asked The Insolvency Service whether “there [is] any authority to support the position that the liquidator is under no obligation to respond to a questionna ire addr essed to a company (now in liquidation) from a

. . . non-U.K. governmental age ncy[,]” to which the Technica l Section responded,

broadly speaking, there is nothing contained within the insolvency legislation that requi res a li quidator

to provide

informat ion reg arding

the compa

ny t o any parties o ther tha

n the cre ditors. However, if requir ements a re imposed under other legislation, e.g. , Employment Protection Regulations, Health & Safety legisla tion, etc ., the liqu

idator wo uld norma

lly c omply

wi th those require ments. Id

. The submission is within the realm of Valkia’s permissible argument. See Nuove In dustrie , supra , 14 CIT at 337-39, 739 F. Supp. at 1570-72. The motion to strike is therefor e denied. Regarding

Valkia’ s substant

ive points , it

would be i

ncorre ct to assume that determining the margin of dumping for a company which ha s cease d to opera te is irre levant. It is tr

ue that th e marg in determined

at the init ial invest igation is prospe ctive in e ffect, however the ma rgins of allinvestigated companies are relevant to an “all others” ra te which, under current practice, would b e d etermined

as a weighted a

verag e of in dividual margins from the investigation. The marg in for a defunctCourt No. 02-00249 Page 15

businesswould also be relevant to a subsequent purchaser of its assets if, as happened here, such a purchaser is determined to be the operation’s succ essor in interest. Valkia stresses that the p otential l iabili ty of the l iquidator for malfeasance or negligence prohibited

him from responding to Commerce, but it also notes that there is “an absence of author

ity under U.K. insol

vency legisla tion reg arding

the liquida

tor’s duti es to provide information regarding Crown ridge to partie s other th an the c reditors .” Pl.’s B r. at 13 ( citation omitted). V alkia wou ld therefore agreethat U.K. lawon the subject was a matter of interpretation. Cf. Insolvency Act 1986 § 87 (conse quence s of reso lution to wi nd up; effect on

busin ess a

nd sta tus of comp any ) (1)(“[i]n

caseof a voluntary w

inding up, the company

shall from the commencement of the winding up cease to carry on its business, except so far as may be re quire d for its beneficial winding up), (2) (“[h]owever, the corporate state and corporate powers of th e c om pa ny, notwithsta

nding a nyt hing to the contrary

in its articles, continue until the c ompany is dissolved); § 165 (voluntary winding up) (“[t]he liquidator may, without sanc tion, exercise either of the powers specified in Part I I of that Schedule (institution and defence of proceedings; ca rrying on the business of the company ) and any of the general powers specifie d in Part II I of tha t Schedul e); id ., Schedu

le 4, Part II (4) (pow er to bring or defend any

actionor other

legal proceed

ing in the name and on behalf of the company) , Part II (5 ) ( po we r t o c ar ry o n the business of the company so f ar as may be necessary

for its beneficial winding up), Part III (13) (p ower t o do al l such other thin gs as may be ne cessary for winding up the

c omp any's affairs and distributing its assets); Pl.’s Br. Ex. 9 (“if requirements ar e imposed under other legislation, . . . the liquidator would normally comply with those requireme nts”). An“absence of

authority ” is not the

equivale nt of pros cribed c onduct. Se ction 87 c learly authorizes the carry

ing on of such “business” “as may be required” to wind up the company , andCourt No. 02-00249 Page 16

4 It may be that “ignorance of

the law is

no excuse, ” but to require a bankrupt to obtain the benefit of legal counsel

in order to proper ly r espond to an antidumping questionnaire is inequitable. Commerce must therefore accord due sensitivity to the degree of familiarity or expertise o f th e person appointed to wind up the affairs of the b ankrupt with U.S. antidumping procedure. For example , in this instance Commerce ’s standard instructions to Crownridge enclosed with its standard questionnaire essentially inf ormed tha t if Crownridge did not respond, then the administrative determination may

be based upon “facts available” (a nd as dis tinguish ed from “ adverse facts available). See , e.g. , Liquidation Memo at Att. 5 (e-mail of June 15, 2001 from Commerce to Rhodri Phillips). To the accounting professional charg ed with Crownridge’s liquidation, it would not necessa rily have been unreasonable to conclude that there was a choice in whether to re spond: taken at face value, the instruction appears to assert that if Crownridge chose not to participate, Commerce would “do

its best” to make a determination based on whatever facts happen to be available at the time, and that it would be a waste of time and remaining company assets to res pon d, since the

(continued...) Commerce implicitly

interpre te d the provision as empowering the liquidator to respond to the questionnaire as “required business” à la reportingfor purposes of Crown or VAT taxes. The Court must def er to the agency ’s interpretation in the absence of proof that it was unlawf ul. See Nuove Industrie , sup ra , 14 CIT at 338-39, 7 39 F. Supp . 1571-72(analog izing USCI

T Rule 44.1 to Fed.R.Ci v.P. 44.1 and the analy sis of Baumberg er v. Clark

, 390 F.2d 485, 488 (D.C. Cir. 1968). Cf. Swarts v. Hammer , 194 U.S. 441, 444, 24 S.Ct. 695, 696 (1904) (“[b]y the transfer to the trustee no mysterious or pecu liar o wners hip o r qual itie s are gi ven to the property . . . ther e is nothing in that to withdraw it from the necessity of protection by

the State a nd municip ality , or which should exempt it from its obligations to either”). Disregard of Commerc e’s questionnaire thereforeran the risk of being interpreted as a business decision bea ring the risk of noncompliance. Valkia argues that Crownridge’s “ non-responsiveness” was not willful in view of the circumstances of liquidation, and the argument is somewhat persuasive when considered in view of the fact t ha t Commerc e initially

conclude d that the

liquidator

was oper

ating c onsistent w

ith its statutory duties in not responding to its requests for information. See Preliminary Determination

. 4Court No. 02-00249 Page 17

4 (...continued) company is about to

cease t o exist (and, after a

ll, an investigation into the margin of dumping for a particular company is g

rounded upon sound analy sis of relevant facts rather than mere conjecture and speculation, is it not?). In other words, Commerce’s questionnaire “re ques t” does not necessa rily evince i nte rpretat ion as “in

centive ” to part

icipate t hat opposi

ng coun sel appa

rently favors. At any rate , Commerce did accord to Crownridge fa vorable consideration for n on responsiveness in the preliminary determination.

5 Valkia argues that the only “misstatement” of record, the e-ma il from USF CS personnel, is a “mere scintilla.” It may well be the case tha

t the e-mail embo dies more the thoughts of the USFC than answers from the liquidator, but the Court concludes that its contents reflect more than a mere scintilla, and there is no basis in the record to doubt its apparent objectivity in summarizing the liquidator’s responses to the questions posed. But, to the extent that Valkia’s argument invokes an inabi lity to res pond because of the lack of

resources for responding

to Commerce’s requests for information, 19 U.S.C. § 1677m(c) requires Commerce to avoid “ imposing an unrea sonable

burden on [aninterested] party” a nd to provide “any assistance that

is practi cable in

supplying such infor

mation.” Commerce presumably stands at the ready to do so, co

nsistent withits statutory

duties, bu

t in the ab sence of

notifica tion of dif ficulty in respondi ng, it ca nnot. Be that as it may, the liquidator was ce rtainly not within his rights or duties in providing the misinformation that wound up, albeit as hearsay , on this administrative record. 5 That circumstance

co loredCommerce’s interpretation and undermined the streng th of Valkia’s position that Crownridge’s non-responsiveness had not been willful. Valkia contends that such misinformation

was ultra vires , in derogation of the liquidator’s res ponsibi lities to Crownridge, and certainly not authorized

by Valkia, howe

ver the petitioners correctly point out that such missta tements a re no les s attributa ble to Crownridge. The liquidator is the company ’s statutory repr esentative, and the Court cannot conclude on the bas is of the r

ecord that it was e

r roneous for Commerce to conclude thatCourt No. 02-00249 Page 18

Crown ridge had not acted to the best of its ability in the investig ation. Valkia’s contention might be more appropriately

directed against the liquidator rather than Commerc e, but it is only in the context of finding Valkia to be a successor in interest that the matter ha s significance. II Inthe antidumping context, Commerce is concern ed with how a new enterprise can be expected to act in the future. Commerce’s traditional position has been that the d egree of contin uity between the “old” and “new” enterprises, a s evident in changes in (1) manag ement, (2) production facilitie s, (3) supplier relationships, and (4) customer base, answer s that question. Valkia challenges this success or-in-in

terest te st as per se and therefore arbitrary

and capricious, or at least unlawful as applied in this insta

nce, by analog y to the test of suc cession u sed in the counter vailing duty context, whe re the conc ern is whe ther new ownersh ip of a pr eviously -subsidize d company

eliminate s th e financial benefits conferred. The counterva iling “same person” test examines continuity of (1) businessoperations, (2) production, (3) assets and liabilities, and (4) company personnel, however it has recen

tly bee n determined per se in application and therefore an unlawful abdica tion of Commerce’s duty to analy ze the substance of the trans action to deter mine whet

her the new entity received notonly a financia

l contribution but also a benefit. See Delverde v. United States , 202 F.3d 1360 (Fed. Ci

r. 2000); Acciai Spec iali Terni S.p.A v. United States , Slip Op. 02-10 (CIT Feb. 1, 2002); Allegheny Ludlum Corp. v. United States , 26 CIT ___, 182 F. Supp. 2d 1357 (2002), opinion after remand , 26 CIT ___, 246 F. Supp. 2d 1304 (2002), aff’d , 367 F.3d 1339 (Fed. Cir. 2004). As the petitioners point out, Commerce apparently recognizes that the two tests are different considerations for different contexts. Cf

. Final Resu lts of Rede terminati on Pursuan t to Court Remand, Allegheny Ludlum Corp et al. v. United States , Consol. Court No, 99-09-00566 at 13-14Court No. 02-00249 Page 19

(Dec. 20, 2000)(curre ntly availab le at http: //ia. ita.doc. gov/re mands/99- 09-00566 .htm) (distinguishing between successor-in-inter est and same-person tests). Nonetheless, Valkia argues that whether there are

any ostensible differences between the tests, they

are ide ntical in their ef fect. Both tests serve to impose a rate that has been calculate d f or one co mpany agains ta new company , regardless of whether the ne w company ha s been created through an arm’s leng th purchase. . . . Even if the Court accepts Commerce’s extraordinari l y broad definition of succe ssor-in- interest test [ sic ], the lim i ted rec ord in this c ase does not provide adequate factual information for Commer ce to make a reasoned determination of successorship regarding Valkia. Rather, the s o call edfact s in suppor

t of Commer

ce’s de terminat ion are l imited to unsupported

allegations by

the petitioning members of the U. S. in du st ry, statemen ts allegedly

made by the liquidator, who wa s not authorized to speak for Valkia, a nd the sta tements in

the November pre-hearing brief submitted to Commerce

by V alkia after Valkia had finally

been made aware that

its own oper at ions were un

der cons ideration. But Va lkia’s sta tements are mischaracterized. For

example, contrary to the [g overnment’s] assertion that[] “many senior management officials transfe rred to Valkia,[ ]” the record identifies only one

individual from Crownrid ge – a c onsultant

brough t in to salva ge the now defunct company ’s operations – who became a member of the senior management team at Valkia. Pl.’s Rep. at 6 ( footnote

omitted). Respondin

g, the g overnme

nt and the peti tion ers point out that whether there is insufficient information on the record to find successorship, Commerce coul d conclude that Valk

ia is Crownr

idge’s success or in inter

est on the basis of facts otherwise available. If the result of a “test” inquiry is not predetermined or automatic, then it has not been applied ina per se

manner. In the

counter vailing duty context, c ongre ssional pr oscription again st per se testing is plain from 19 U.S.C. § 1677(5)(F ), which ins tructs that a change in ownership does not

necessa rily mean that the enterprise is no longer countervailable . The absence of a parallel provision inthe antid

umping st

atutes do es not dimin

ish the ar gument a gainst per se

testing as abdication ofCourt No. 02-00249 Page 20

6 Cf. Marine Harvest (Chile) S.A. v. United States , 244 F . Supp. 2d 1364 (2002) (co ntradictory

and therefore unreasonable a nalysis of post-merg er entity in compar ison o f administrative and changed circumstance s proceedings). Commerce’s analy

tic responsibil i ties, but “if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the age ncy' s answer is based on

a p ermissibl e constructionof the statute.” Chevron U .S.A., In c. v. Natu ral Resour ces Defe nseCouncil, Inc. , 467 U.S. 837, 842-43, 104 S.Ct. 2778, 2782 (1984). Os te ns ib ly, in the antidumping context Commerce recognizes that the successorship inquiry is based up on on the totality of the circumstance s of each case. See , e.g. , Notice of Initiation of Changed Circumstances Antidumping Duty Administrative Review : Certain St a inless Steel Butt-W eld Pipe and Tube Fittings From Japan , 67 Fe d. Reg. 39676, 39676-77 (June 10, 2002); Brass Sheet and Strip from Canada : Notice of Final Results of Antidumping Administrative Review , 57 Fed. Reg . 20460, 20 461 (May 13, 1992) . In a

ny e vent, Comme

rce must c learly

articula te consistent reasoning on why certain factors weigh for or ag ainst finding successorship, 6 the critical inquiry b eing wh ether one can re asonably expect tha

t a chang e in contr

ol has elim

inated th e past unfair trade pr actice to which the acquir

ed ass et s had been previously employed, a c onsideration whichis not depe

ndent upo n the representa ti ons o f new management. See , e.g. , Nuove In dustrie , supra (successor-in-interest finding based upon a transfer out of

liquidation of the “entire

business

c o mplex” including

producti ve asset s, land, c ontract s, patent s, and “a ll commer

cial ac tivity ;” management’s position on success orship dependant upon which would result in lowest margin). Valkia co ntends that relevant to the question of how it could be expected to act with the assets of Crown ridge from liquidation is the fact of record that Crownridge’s investors we re at odds over

theCourt No. 02-00249 Page 21

disposition of the Crownridge assets at liquidation, and its representation tha t thei r respective negotiations with the liquidator were competitive has not been co ntested. Valkia po ints out tha t only Mr. Negal was identified as senior manag ement, and it is further apparent that he had been hired by Crown ridge only for a short time as a work-out consultan t to try to salvag e Crownridge’s operati ons. Alth ough Valkia

does not address the fact that the plant manage ment and sales director positions are overl appin g, which would presumably te nd toward finding con

tinuity in cost and pricing decisionm aking, Valkia emphasize s that it employed neither the for mer CEO nor the former financial director of Crownridge, thus removing the influence of those individuals over such matters. Further, Valkia argues, the acquisition excluded a small-diameter SSB drawing line and therefor e it did not acquire the “entire” complex of Crownridge (althoug h the petitioners point

out thatthe production l i ne remai ned on -sit e). Lastl y, Valkia compl ains t hat Co mmerc e ignor ed the fact t hat Cr ownri dge and Valkia used different distributors for the U.S. market, but it ar gu es that the

third and fourth factors of the successor-in-interest test are any way irre levant

because such intangibles are precise ly what effect the worth of any acquisition, e.g. , most asse t purcha ses from b ankruptc y r esult in continue d servic ing of th e old cust omer bas e and re liance u

pon existing

supplier s. Obviously

, the facts of this matter

are les s “telling” on the is sue of suc cessorship than those considered

in Nuove In dustrie

. Nonethe less, it isapparent from the Decision Memo that Commerce at least considered the facts of recor d in reaching its determination. While the Court might reach a different conclusi on were

it to review the administrative record de novo , “the possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative ag ency’s f inding frombeing supported by

substantial evidence.” Consolo , supra , 383 U.S. a t 620. But , Valkia

also makes a signif

icant poi nt in stres sing tha

t it was an arm’s le ngth purchas er of the

Crownrid

ge asse tsCourt No. 02-00249 Page 22

7 It would also appear to be a universa lly a ccepte d proposit

ion among

nations wi

threspect for propert y rights that it is incumbent upon the seller to convey good, clean, unencumbered title, unless the part

ies other wise agree that title may be conveyed bearing contingencie s. See , e.g. , UniformComme rcial Code § 2-312 (warranty of title); 1980 United Nations Convention on Contract s for the Internati onal Sale of Goods, U.N. Doc. No. A/CONF. 97/19 (1981), Art. 41 (seller’s obligation to deliver free and c lear of claims unless otherwise agre ed). and th at im pu ti ng it wi th re sp on si bi li ty f or Crownri dge’s non-responsiveness and the liquidator’s misstateme

nts is a misa

pplication of the su

ccessorship test. Valkia’s position is t hat it was not its “brother’s keeper

” or in a p osition to in sist on (or assist with) Crownrid

ge’s c omplianc e with U.S. antidumping law. The record indeed reflec ts that all parties, including Valkia, expressed surprise over the discovery of the

liquidator’s apparent misstatements which wound up on the record. Howeve r, as part of it s due diligence, a putative purchaser would insist upon full disclosure of a ll outstanding matters on a contemplated sale of assets tha

t could re asonably

affec t their use

and enjoy

ment. Cf. , e.g. , Burbach Broadcasting Co. of Dela ware v. El

kins Radio

Corp ., 278 F.3d 401 (4th Cir. 2002); Union Pacific Resources Grou p, In c. v. Rhone-Poulenc, Inc. , 247 F.3d 574 (5th Cir. 2001). 7 Commerce does not

sit at a ne gotiation table

as some kind of “party ,” creditor or otherwise, when enforcing U.S. trade law, but the consequence of an antidumping investigation is a kind of contingency

whichmay aff

ect the value of the business being considered. Cf. Jeanneret v. Vichey , 693 F.2d 259 (2nd Cir. 1982) (remanding to address ef fect on v alue of pai nting tr ansacte d in violation of exportrestr icti ons). Durin g negoti ation s over the di spos itio n of th e Crow nridge assets, if Valkia ha

d been a lert to the possibility

of being deemed a successor in inter est by Commerce, a

nd assuming a

desire to procee d with the a

cquisition nonethel ess, it wou

ld have be en in Valk

ia’s bes tCourt No. 02-00249 Page 23

interest either to insist that the seller be prope rly responsi ve to Comme

rce or e lse obtain

reliable legal opinion (if not instruction) that Commerce’s requests for information could be ignore d. The administ

rative record here shows nothing of the sort. Of course, Commerce never informed the Crownridge liquidator about the consequences of suc cessorship out of liquidationfor purposes o f the antidumping investigation. On the other hand, the preliminary information gave Commerce no reason to do so. And yet this entire matter mig hthave been avoided had Commerce simply informed the liquidator or those associa

ted with Cr

ownridg e of rea sons for c ontinued i nterest in the disposition of Crownridge’s assets. But, on the other

hand, Va lkia can not claim u

naware ness of the antidumping investigation, being essentia

lly c omprised

of at l eas t one former Crownridge member and othe r apparently

key individua ls involved in the Crownridge operation, and the successor-in-interest test can hardly , by now, be said to

be an ali en conc ept in the administr

ation of U .S. antidum

ping law . While Crown ridge may

not have had the be

nefit of c ounsel wit

h respec t to such c onsidera tion, ther e is no indication in the administrative record that Valkia was likewise situated in its negotiations over the Crown ridge ass ets . If

Valkia never considered the potential impact of the antidumping investigation on their acquisition as part of its due diligence prior to consummation, neither the rec ord nor U.K. law evinces a reasonable basis for not doing so.Court No. 02-00249 Page 24

Conclusion For the fore going

reaso ns, Comme rce’s decision to draw an adverse inf erence in the selection of facts otherwise available and its conclusion that plaintiff Va lkia L imited is the

success or in interest of the relevant business of Crownridge Stainless Steels L imited is supported by substantial evidence and is in accordance w ith law. Judgment will enter accordingly

.

/s/ R. Kenton Musgrave R. KENTON MUSGRAVE, JUDGE Dated: June 18, 2004 New York, New York