Court Opinion

ID: 9352174
Source: CourtListenerOpinion
Date Created: 2023-01-05 16:00:48.192221+00
Date Added: 2024-06-11T16:58:18.845342
License: Public Domain

Case: 22-1077     Document: 63    Page: 1    Filed: 01/05/2023

   United States Court of Appeals
       for the Federal Circuit
                   ______________________

     POKARNA ENGINEERED STONE LIMITED,
                  Plaintiff

                M S INTERNATIONAL, INC.,
                      Plaintiff-Appellant

                             v.

    UNITED STATES, CAMBRIA COMPANY LLC,
              Defendants-Appellees
             ______________________

                         2022-1077
                   ______________________

    Appeal from the United States Court of International
 Trade in No. 1:20-cv-00127-LMG, Senior Judge Leo M.
 Gordon.
                 ______________________

                  Decided: January 5, 2023
                   ______________________

    JONATHAN STOEL, Hogan Lovells US LLP, Washington,
 DC, argued for plaintiff-appellant. Also represented by
 MICHAEL JACOBSON, CRAIG A. LEWIS, NICHOLAS SPARKS.

     JOSHUA E. KURLAND, Commercial Litigation Branch,
 Civil Division, United States Department of Justice, Wash-
 ington, DC, argued for defendant-appellee United States.
 Also represented by BRIAN M. BOYNTON, TARA K. HOGAN,
 PATRICIA M. MCCARTHY; VANIA WANG, Office of the Chief
Case: 22-1077     Document: 63     Page: 2    Filed: 01/05/2023

 2                  POKARNA ENGINEERED STONE LIMITED     v. US

 Counsel for Trade Enforcement & Compliance, United
 States Department of Commerce, Washington, DC.

    LUKE A. MEISNER, Schagrin Associates, Washington,
 DC, argued for defendant-appellee Cambria Company
 LLC. Also represented by MICHELLE ROSE AVRUTIN,
 BENJAMIN JACOB BAY, NICHOLAS J. BIRCH, CHRISTOPHER
 CLOUTIER, ELIZABETH DRAKE, WILLIAM ALFRED FENNELL,
 JEFFREY DAVID GERRISH, KELSEY RULE, ROGER BRIAN
 SCHAGRIN.
                ______________________

     Before MOORE, Chief Judge, LOURIE and PROST, Circuit
                           Judges.
 LOURIE, Circuit Judge.
     MS International (“MSI”) appeals from a decision of the
 United States Court of International Trade (“the Trade
 Court”) sustaining the United States Department of Com-
 merce’s (“Commerce’s”) Final Determination in its Investi-
 gation of Quartz Surface Products (“QSPs”) from India. See
 Pokarna Engineered Stone Ltd. v. United States, 547
 F. Supp. 3d 1300 (Ct. Int’l Trade 2021) (“Decision”); Certain
 Quartz Surface Products from India: Final Determination
 of Sales at Less Than Fair Value and Final Negative Deter-
 mination of Critical Circumstances, 85 Fed. Reg. 25,391
 (Dep’t of Commerce May 1, 2020) (“Final Determination”).
 For the reasons provided below, we affirm.
                        BACKGROUND
      MSI is a U.S. importer of QSPs. QSPs are stone com-
 posite building materials that are used primarily for coun-
 tertops. Production of QSPs involves (1) the creation of a
 QSP slab from raw materials and (2) fabrication that trans-
 forms the slab into a finished product. In 2019, Cambria,
 a domestic quartz slab producer, filed a petition for impo-
 sition of antidumping duties on QSPs from India. MSI
 challenged Cambria’s standing to file the petition, alleging
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 POKARNA ENGINEERED STONE LIMITED      v. US                   3

 that Cambria failed to include QSP “fabricators” as domes-
 tic industry “producers” in its industry support calculation.
 MSI’s submission included letters that MSI had obtained
 from various fabricators that opposed Cambria’s petition.
 MSI alleged that, if the views of “fabricators” were included
 in the industry support calculation, then there would be in-
 sufficient industry support to proceed with the petition.
      Commerce initiated an investigation in May 2019. Cer-
 tain Quartz Surface Products from India and the Republic
 of Turkey: Initiation of Less-Than-Fair-Value Investiga-
 tions, 84 Fed. Reg. 25,529 (Dep’t of Commerce June 3, 2019)
 (“Initiation”) and accompanying Initiation Checklist (May
 29, 2019) (“Checklist”); J.A. 1002–1046. Commerce deter-
 mined that the fabricators did not perform sufficient pro-
 duction-related activities to be considered “producers” for
 purposes of determining industry support. Commerce
 stated that the information Cambria had submitted made
 it “clear that there are significant differences in the level of
 complexity and capital investment, employment, training
 and technical expertise, production processes, and type of
 equipment, between quartz surface slab producers and fab-
 ricators.” Checklist, Attachment II at 14; J.A. 1030. In
 particular, Commerce determined that the evidence estab-
 lished that “there are seven steps in the production of
 quartz surface products: (1) mixing raw materials, (2) com-
 bining, (3) dispensing and molding, (4) pressing, (5) curing,
 (6) cooling, and (7) polishing.” Checklist, Attachment II at
 15; J.A. 1031. In contrast, Commerce found that fabrica-
 tors engage in a process where they “(1) consult with cus-
 tomers, (2) develop engineering diagrams, (3) perform
 intricate cutting, and (4) perform various edge and surface
 finishing operations.” Checklist, Attachment II at 15; J.A.
 1031.
    In summary, Commerce found that fabricators have far
 lower capital investment, considerably less specialized
 knowledge, fewer employees, and utilize broadly available
 equipment compared to quartz slab production.          In
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 4                  POKARNA ENGINEERED STONE LIMITED      v. US

 conclusion, Commerce found that “the fabrication process
 does not change the fundamental physical characteristics
 imparted during the slab production process,” Checklist,
 Attachment II at 14; J.A. 1030, and that “producers” did
 not include “fabricators,” Checklist, Attachment II at 16;
 J.A. 1032.
      MSI and Pokarna Engineered Stone Ltd., a large In-
 dian exporter of QSPs, independently sought judicial re-
 view by the Trade Court of Commerce’s Final
 Determination. Their appeals were consolidated. The
 Trade Court determined that the term “producers” is not
 defined in the statute and further stated that, “[w]ithout a
 definition, there is no clear statutory answer as to whether
 ‘producers’ is broadly defined so as to include QSP fabrica-
 tors for purposes of Commerce’s industry support analy-
 sis.” Decision, 547 F. Supp. 3d at 1305. The Trade Court
 further held that Commerce’s interpretation of “producers”
 as entities that have a stake in the domestic industry was
 reasonable, and that Commerce’s reliance on the “sufficient
 production-related activities test” to interpret the term
 “producers” was lawful. Id. at 1305, 1306. The Trade
 Court further sustained Commerce’s determination that
 fabricators are not producers for industry support purposes
 as having been supported by substantial evidence. Id. at
 1309.
     In summary, Commerce determined, and the Trade
 Court sustained, that the term “producer” did not include
 “fabricators” for purposes of the industry support calcula-
 tion. MSI appealed. We have jurisdiction under 28 U.S.C.
 § 1295(a)(5).
                         DISCUSSION
     Commerce must impose antidumping duties on im-
 ported goods that are being sold, or are likely to be sold, in
 the U.S. at “less than fair value,” which could harm the
 U.S. domestic industry. 19 U.S.C. §§ 1673, 1677(34). Com-
 merce initiates antidumping investigations based on a
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 petition filed by the domestic industry alleging injury by
 unfairly traded imports. To initiate the investigation,
 Commerce must “determine if the petition has been filed
 by or on behalf of the industry” (i.e., whether there is ade-
 quate industry support). 19 U.S.C. § 1673a(c)(1)(A)(ii).
     The term “industry” is defined in the statute as “the
 producers . . . of a domestic like product, or those producers
 whose collective output of a domestic like product consti-
 tutes a major proportion of the total domestic production of
 the product.” 19 U.S.C. § 1677(4)(A). To be filed on behalf
 of the domestic industry, domestic producers or workers
 who support the petition must account for (1) at least 25
 percent of the total production of the domestic like product
 and (2) more than 50 percent of the production of the do-
 mestic like product produced by the portion of the industry
 expressing support or opposition to the petition. 19 U.S.C.
 § 1673a(c)(4)(A). “Domestic producers or workers” is de-
 fined as “interested parties who are eligible to file a peti-
 tion under [19 U.S.C. § 1673a(b)(1)].”             19 U.S.C.
 § 1673a(c)(5). “Interested parties” include “a manufac-
 turer, producer, or wholesaler in the United States of a do-
 mestic like product.” 19 U.S.C. § 1677(9)(C). The terms
 “manufacturer, producer, or wholesaler” are not defined by
 the statute.
      MSI raises two challenges on appeal. First, MSI ar-
 gues that Commerce erred in determining that the term
 “producer” in § 1677(9)(C) did not include “fabricators.”
 Second, MSI contends that Commerce’s finding that “fabri-
 cators” are not “producers” was not supported by substan-
 tial evidence. We address each argument in turn.
     We uphold a Commerce determination unless it is un-
 supported by substantial record evidence or is otherwise
 unlawful. Union Steel v. United States, 713 F.3d 1101,
 1106    (Fed.     Cir.    2013)     (quoting   19   U.S.C.
 § 1516a(b)(1)(B)(i)). A finding is supported by substantial
 evidence if a reasonable mind might accept the evidence as
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 6                  POKARNA ENGINEERED STONE LIMITED      v. US

 adequate to support the finding. Consol. Edison Co. v.
 NLRB, 305 U.S. 197, 229 (1938). “[W]here two different,
 inconsistent conclusions may reasonably be drawn from
 the evidence in record, an agency’s decision to favor one
 conclusion over the other is the epitome of a decision that
 must be sustained upon review for substantial evidence.”
 In re Jolley, 308 F.3d 1317, 1329 (Fed. Cir. 2002).
      To determine whether a company engages in “sufficient
 production-related activities” to be considered a “pro-
 ducer,” Commerce considers six factors. The International
 Trade Commission (“ITC”) originated these factors and
 uses them in determining whether an entity is part of a
 domestic industry. The factors are as follows: (1) the source
 and extent of the entity’s capital investment; (2) the tech-
 nical expertise involved in its U.S. production activities;
 (3) the value added to the product in the U.S.; (4) employ-
 ment levels; (5) the quantity and type of parts sourced in
 the U.S.; and (6) any other costs and activities in the U.S.
 directly leading to production of the like product. See, e.g.,
 Checklist, Attachment II at 10; J.A. 1026.
                               I
     We first consider MSI’s challenge to Commerce’s deter-
 mination that the term “producer” in §§ 1673a and
 1677(9)(C) does not include “fabricators.” MSI argues that
 Commerce acknowledged that “fabricators” are “producers”
 of the domestic like product and thus acted unlawfully by
 excluding “fabricators” from its industry support calcula-
 tions. MSI asserts that § 1673a(c)(4)(B) provides two lim-
 ited exceptions excluding U.S. producers from industry
 support calculations: (1) when producers are related to for-
 eign producers and (2) when producers are importers. MSI
 contends that neither exception applies here, so Commerce
 was required under § 1673a(c)(4)(D) to gather additional
 information on industry support before initiating the inves-
 tigation. In the absence of such additional information,
 Commerce was required to terminate the investigation.
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     MSI further contends that under Chevron step one,
 Commerce’s decision to exclude certain U.S. producers of
 the domestic like product from its definition of the domestic
 industry and industry support calculation violated the
 clear terms of the statute. Even though “producer” is not
 defined in the statute, MSI asserts, the absence of a defini-
 tion does not equate to ambiguity at Chevron step one. MSI
 asserts that the ordinary meaning of the term “producer”
 is sufficient, and thus proceeding to step two is not re-
 quired.
     Cambria and the government respond that MSI’s claim
 that Commerce found “fabricators” to be “producers” and
 then excluded them from the industry support calculation
 without meeting a statutory exception is a mischaracteri-
 zation of Commerce’s findings. Cambria and the govern-
 ment further respond that Commerce did not act
 unlawfully by excluding QSP fabricators from its industry
 support calculations. Cambria and the government agree
 that the statute is silent with respect to the term “pro-
 ducer” and so Commerce lawfully proceeded to Chevron
 step two, filling the gap in the statute by reasonably inter-
 preting “producer” to mean a company that performs suffi-
 cient production-related activities in the U.S. such that it
 has a stake in the domestic industry.
      We first note that Cambria and the government are
 correct in stating that MSI’s contention that Commerce
 found “fabricators” to be “producers” is a mischaracteriza-
 tion of Commerce’s findings. Commerce did not find “fab-
 ricators” to be “producers.” Instead, Commerce stated that
 “fabricators do not perform sufficient production-related
 activities to qualify as domestic producers of [QSPs].”
 Checklist, Attachment II at 16; J.A. 1032. To say that fab-
 ricators do not perform sufficient production-related activ-
 ities to be considered producers does not equate with MSI’s
 contention that Commerce found fabricators to be produc-
 ers and then excluded them from the industry support cal-
 culation.
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 8                  POKARNA ENGINEERED STONE LIMITED      v. US

      It is undisputed that the term “producers” is not de-
 fined in the statute. However, we need not employ a Chev-
 ron analysis as urged by MSI because our precedent has
 already interpreted the term “producers.” In Eurodif S.A.
 v. United States, we held that Commerce’s interpretation
 of the term “producer” as an entity with sufficient produc-
 tion-related activities such that it has a stake in the domes-
 tic industry in question was not unreasonable. 411 F.3d
 1355, 1360–61 (Fed. Cir. 2005). At issue in Eurodif was
 whether domestic utilities or foreign enrichers of uranium
 were “producers” of low enriched uranium for purposes of
 determining whether there was sufficient industry support
 to begin an antidumping and countervailing duty investi-
 gation. Id. at 1358. Commerce determined that, “to be a
 producer, an entity must have a ‘stake’ in the domestic in-
 dustry in question,” further defining having a stake as “un-
 dertaking the actual production of the domestic like
 product within the United States.” Id. at 1360 (citations
 and internal quotation marks omitted). The Trade Court
 sustained Commerce’s determination, and we affirmed,
 holding that there was no basis to conclude that Com-
 merce’s interpretation of the term “producer” was unrea-
 sonable or not in accordance with the law. Id. at 1360–61.
 The question in Eurodif and the question here are the
 same: was Commerce’s definition of “producer” for pur-
 poses of an industry support calculation reasonable? As in
 Eurodif, we answer here in the affirmative. Thus, Eurodif
 controls. Accordingly, we find no error in Commerce’s de-
 fining a producer as one having a stake in the industry.
      To determine whether fabricators had a sufficient
 “stake” in the industry to be considered producers of QSPs,
 Commerce employed the sufficient production-related ac-
 tivities test. In using the test, Commerce observed that
 QSP producers create QSPs by “(1) mixing raw materials,
 (2) combining, (3) dispensing and molding, (4) pressing,
 (5) curing, (6) cooling, and (7) polishing.” Checklist, At-
 tachment II at 15; J.A. 1031. In contrast, Commerce
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 observed that QSP slab fabricators use what is already pro-
 ducer-made QSPs and “(1) consult with customers, (2) de-
 velop engineering diagrams, (3) perform intricate cutting,
 and (4) perform various edge and surface finishing opera-
 tions” on already existing QSPs. Checklist, Attachment II
 at 15; J.A. 1031. Commerce concluded that the six factors
 did not support the conclusion that fabricators were pro-
 ducers of the domestic like product. We find no error in
 Commerce’s use of the sufficient production-related activi-
 ties test, and we further hold that the use of the test was
 reasonable in determining the definition of “producer” and
 whether fabricators had a sufficient “stake” in the U.S. in-
 dustry to be considered producers.
     In summary, we affirm Commerce’s interpretation of
 the term “producers” as an entity that requires a stake in
 the domestic industry. We further affirm Commerce’s use
 of the sufficient production-related activities test to deter-
 mine that the fabricators did not have a sufficient stake in
 the domestic industry and thus did not qualify as “produc-
 ers” for purposes of calculating industry support.
                               II
     We next consider MSI’s challenge to the Trade Court’s
 holding that Commerce’s finding that “fabricators” are not
 “producers” was supported by substantial evidence.
     MSI contends that, even if Commerce could lawfully
 employ the sufficient production-related activities test, its
 decision was not supported by substantial evidence be-
 cause Commerce failed to consider evidence and to articu-
 late a satisfactory explanation for its decision. MSI asserts
 that none of Cambria’s exhibits reveals a rational connec-
 tion between Commerce’s asserted facts and the choices it
 made, and that Commerce did not conduct a critical exam-
 ination of Cambria’s claims. MSI notes that the Trade
 Court acknowledged that Commerce could have reached an
 alternative finding.
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 10                 POKARNA ENGINEERED STONE LIMITED    v. US

      MSI further contends that Commerce’s findings are en-
 titled to little deference because the ITC, which originated
 the sufficient production-related activities test, reached
 the opposite conclusion, determining that “fabricators”
 were “producers” in a related investigation. Further, MSI
 argues that the ITC issued U.S. producer questionnaires to
 fabricators in related antidumping investigations, which
 foreshadowed its findings that fabricators are producers.
     Cambria and the government respond that MSI fails to
 meet the burden for establishing that Commerce’s determi-
 nation was not supported by substantial evidence. Cam-
 bria and the government contend that MSI merely asks for
 a reweighing of the evidence, which is not a valid basis for
 overturning Commerce’s determination. Cambria and the
 government assert that Commerce analyzed and addressed
 all arguments and evidence and noted that Commerce is
 prohibited from reconsidering industry support after an in-
 vestigation is initiated.
     Cambria and the government further respond that
 Commerce and the ITC can reach separate determinations
 on the same issue, and that the ITC had sent producer
 questionnaires to fabricators in a separate investigation
 does not alone imply that the ITC would find the fabrica-
 tors to be producers without further information.
     We agree with Cambria and the government that Com-
 merce’s determination was supported by substantial evi-
 dence. Commerce carefully considered the record evidence,
 including Cambria’s exhibits that contain multiple exam-
 ples of differences between producers and fabricators.
 Commerce relied on several exhibits illustrating the differ-
 ences in cost between establishing a QSP production plant
 and a fabrication shop. Pet’r’s Resp. to MSI’s Comments
 on Standing, Exs. 3–5; J.A. 944–968. Commerce also relied
 on several exhibits discussing business operations of suc-
 cessful fabrication businesses, the equipment fabrication
 businesses use, and the smaller number of employees
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 POKARNA ENGINEERED STONE LIMITED      v. US                  11

 fabrication businesses have compared to production com-
 panies. Pet’r’s Resp. to MSI’s Comments on Standing,
 Ex. 7; J.A. 971–976. We note, as did the Trade Court, that
 MSI is unable to point to anything other than Commerce’s
 adverse finding that fabricators are not producers as evi-
 dence of Commerce’s alleged failure to consider the evi-
 dence in front of it. Decision, 547 F. Supp. 3d at 1308.
 Finally, that the Trade Court stated that Commerce could
 have reached an alternative finding is not sufficient to es-
 tablish that Commerce’s finding was not supported by sub-
 stantial evidence. Mitsubishi Heavy Indus. Ltd v. United
 States, 275 F.3d 1056, 1062 (Fed. Cir. 2001) (“[T]he possi-
 bility of drawing two inconsistent conclusions from the ev-
 idence does not prevent an administrative agency’s finding
 from being supported by substantial evidence.”). In conclu-
 sion, MSI does not meet its burden in establishing that
 Commerce’s determination was not based on substantial
 evidence.
      We further note that there is no requirement that Com-
 merce and ITC reach the same conclusion on the same is-
 sue. In fact, we have repeatedly held that Commerce and
 the ITC can reach separate determinations on the same is-
 sue. Hosiden Corp. v. Advanced Display Mfrs. of Am., 85
 F.3d 1561, 1568 (“The division of responsibility between
 the [ITC] and Commerce is integral to the statutory
 scheme,” and this “division of labor has been upheld even
 where it has resulted in decisions which are difficult to rec-
 oncile . . . .” (citations omitted)); Torrington Co. v. United
 States, 747 F. Supp. 744, 748 (Ct. Int’l Trade 1990) (stating
 that Commerce and the ITC reaching two different conclu-
 sions is not unanticipated under the law), aff’d, 938 F.2d
 1278 (Fed. Cir. 1991); Algoma Steel Corp. v. United States,
 688 F. Supp. 639, 644 (Ct. Int’l Trade 1988) (“This division
 of labor has been upheld even where it has resulted in de-
 cisions which are difficult to reconcile.”), aff’d, 865 F.2d 240
 (Fed. Cir. 1989), cert. denied, 492 U.S. 919 (1989). Con-
 gress has indicated the same. Statement of Administrative
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 12                POKARNA ENGINEERED STONE LIMITED    v. US

 Action accompanying the Uruguay Round Agreements Act,
 H.R. Doc. No. 103–316, at 858 (1994) (stating that Com-
 merce and the ITC could reach different decisions regard-
 ing which entities should be part of the domestic industry,
 “even where this may lead to somewhat different results in
 individual cases”).
     Commerce and the ITC perform different functions and
 have different goals. Here, Commerce has interpreted the
 term “producer” with the goal of determining which parties
 have a stake in the domestic industry and how to calculate
 that industry support. The ITC has, in contrast, inter-
 preted the term “producer” to determine whether the do-
 mestic industry has suffered a material injury as a result
 of imports. Thus, the ITC’s determination of the meaning
 of “producers” remains separate and apart from Com-
 merce’s, and any differences do not change the present out-
 come.
     In summary, Commerce’s determination was sup-
 ported by substantial evidence, and that Commerce and
 the ITC may have come to different conclusions regarding
 whether fabricators were producers plays no role in our de-
 termination whether Commerce’s determination was based
 on substantial evidence.
                        CONCLUSION
     We have considered MSI’s remaining arguments, but
 we find them unpersuasive. For the foregoing reasons, the
 decision of the Trade Court is affirmed.
                       AFFIRMED