Court Opinion

ID: 4183090
Source: CourtListenerOpinion
Date Created: 2017-07-03 18:02:44.412015+00
Date Added: 2024-06-11T07:47:18.525631
License: Public Domain

Slip Op. 17-77

                UNITED STATES COURT OF INTERNATIONAL TRADE

  SHANDONG DONGFANG BAYLEY
  WOOD CO., LTD.,

                         Plaintiff,                   Before: Timothy C. Stanceu, Chief Judge
                 v.
                                                      Court No. 17-00094
  UNITED STATES,

                         Defendant.

                                            OPINION

[Dismissing the action for lack of subject matter jurisdiction]

                                                                    Dated: July 3, 2017

       Gregory S. Menegaz, deKieffer & Horgan, PLLC, of Washington, D.C., for plaintiff.
With him on the brief were Alexandra H. Salzman, J. Kevin Horgan, John J. Kenkel, and Judith
L. Holdsworth.

        Tara K. Hogan, Commercial Litigation Branch, Civil Division, U.S. Department of
Justice, of Washington, D.C., for defendant. With her on the brief were Chad A. Readler, Acting
Assistant Attorney General, Jeanne E. Davidson, Director, and Claudia Burke, Assistant
Director. Of counsel on the brief was Jessica R. DiPietro, Office of the Chief Counsel for Trade
Enforcement & Compliance, U.S. Department of Commerce.

       Stanceu, Chief Judge: Plaintiff Shandong Dongfang Bayley Wood Co., Ltd. (“Bayley”)

initiated this action on May 2, 2017, seeking certain declaratory and equitable relief following

the publication of the preliminary results of a countervailing duty investigation. Compl.

(May 2, 2017), ECF No. 2. Plaintiff seeks a writ of mandamus to compel the International Trade

Administration, U.S. Department of Commerce (“Commerce” or the “Department”) to take

certain actions, including considering a questionnaire response submitted by Bayley, conducting

a verification of Bayley, and assigning Bayley a lower cash deposit rate. Pl. Dongfang Bayley
Court No. 17-00094                                                                            Page 2

Wood Co., Ltd. Petition for Writ of Mandamus (May 2, 2017), ECF No. 7 (“Pl.’s Mandamus

Petition”). Plaintiff also moves for expedited consideration of its petition for a writ of

mandamus. Pl.’s Mot. for Expedited Consideration of Application for Writ of Mandamus and

for an Order to Show Cause why the Court Should Not Shorten the Time for Def.’s Resp.

Thereto (May 2, 2017), ECF No. 8. In that motion, plaintiff urges the court to limit to 14 days

the period (normally, 30 days) within which defendant may respond to its petition. Id. at 2. On

May 24, 2017, defendant moved to dismiss for lack of subject matter jurisdiction. Def.’s Mot. to

Dismiss and Resp. in Opp. to Pl.’s Application for Writ of Mandamus (May 24, 2017), ECF

No. 17 (“Def.’s Mot. to Dismiss”). Bayley responded to the motion to dismiss on June 1, 2017.

Pl.’s Resp. to Def.’s Mot. to Dismiss and Reply in Supp. of its Application for a Writ of

Mandamus (June 1, 2017), ECF No. 19 (“Pl.’s Resp.”). Defendant replied on June 20, 2017.

Def.’s Reply to Pl.’s Resp. in Opp. to Mot. to Dismiss (June 20, 2017), ECF No. 24. On

June 22, 2017, plaintiff filed a letter to “inform[] the Court of developments subsequent to the

filing of its briefs” (the “Letter”). Letter Pertaining to Events Subsequent to Briefing in

Underlying Administrative Proceedings 1 (June 22, 2017), ECF No. 25 (“Pl.’s Letter”).

       Because it lacks subject matter jurisdiction, the court must dismiss this action.

                                         I. BACKGROUND

       Commerce published notice of its initiation of a countervailing duty (“CVD”)

investigation of certain hardwood plywood products from the People’s Republic of China

(“China” or the “PRC”) in late 2016 for the period of January 1 through December 31, 2015

(“period of investigation” or “POI”). Certain Hardwood Plywood Products From the People’s

Republic of China: Initiation of Countervailing Duty Investigation, 81 Fed. Reg. 91,131, 91,132

(Int’l Trade Admin. Dec. 16, 2016). Along with Linyi Sanfortune Wood Co., Ltd.

(“Sanfortune”), Commerce identified Bayley as one of two “mandatory” respondents, i.e.,
Court No. 17-00094                                                                           Page 3

respondents that it would investigate individually, concluding that these two Chinese

producers/exporters “accounted for the largest volume of exports of the merchandise under

consideration during the POI.” Decision Mem. for the Prelim. Affirmative Determination:

Countervailing Duty Investigation of Certain Hardwood Plywood Products from the People’s

Republic of China, C-570-052, at 2 (Int’l Trade Admin. Apr. 17, 2017) available at

http://enforcement.trade.gov/frn/summary/prc/2017-08328-1.pdf (last visited June 19, 2017)

(“Prelim. Decision. Mem.”).

       Commerce published the preliminary results of the CVD investigation (“Preliminary

Results”) on April 25, 2017. Certain Hardwood Plywood Products From the People’s Republic

of China: Preliminary Affirmative Countervailing Duty Determination, Preliminary Affirmative

Critical Circumstances Determination, in Part, and Alignment of Final Determination With

Final Antidumping Duty Investigation, 82 Fed. Reg. 19,022 (Int’l Trade Admin. Apr. 25, 2017).

Commerce preliminarily assigned Bayley a countervailable subsidy rate of 111.09%. Id.

at 19,023. Commerce did not assign this rate based on a review of countervailable subsidies

provided to Bayley but instead relied upon its authority under section 776 of the Tariff Act

of 1930 (“Tariff Act”) to use an inference that is adverse to a non-cooperating party when

selecting from among “facts otherwise available.” See 19 U.S.C. § 1677e(a), (b). Plaintiff

initiated this action following the publication of the Preliminary Results.

                                          II. DISCUSSION

       In reaching the Preliminary Results, Commerce found that Bayley withheld necessary

information that Commerce requested, failed to provide information within established

deadlines, and significantly impeded this proceeding by not fully disclosing its affiliation with

certain specified other entities. Prelim. Decision Mem. 24-31. Bayley raises several claims in its

complaint, all of which stem from these findings.
Court No. 17-00094                                                                             Page 4

       In Count I, Bayley alleges that Commerce acted contrary to law in rejecting a

questionnaire response submitted by Bayley and an affiliate. Compl. ¶ 33. Plaintiff claims, in

Count II, that Commerce “unlawfully applied total adverse facts” in response to an allegation by

the petitioner in the investigation “of a ‘control’ relationship between Bayley and a U.S.

customer without issuing a single supplemental questionnaire to Bayley on the subject, contrary

to 19 U.S.C. § 1677m(d), which requires the Department to identify deficiencies and provide a

respondent the opportunity to cure deficiencies.” Id. at ¶ 35. In Count III, Bayley claims that

“[t]he Department’s preliminary adverse findings, and certainly its pronouncements that the

decisions were final, were inappropriate and arbitrary and capricious,” alleging, inter alia, that

Bayley fully complied with the Department’s instructions and that Commerce improperly failed

to investigate claims that would have benefitted Bayley. Id. at ¶ 37. Finally, in Count IV

plaintiff claims that Commerce unlawfully refused to conduct a verification of Bayley although

conducting a verification of the other mandatory respondent. Id. at ¶ 39.

       In section 516A of the Tariff Act, Congress specifically has provided for the judicial

review in the U.S. Court of International Trade of certain determinations issued under the

antidumping duty (“AD”) and countervailing duty laws. See 19 U.S.C. § 1516a(a). A

preliminary affirmative countervailing duty determination is not among those reviewable

determinations, although review in this Court of a final affirmative countervailing duty

determination is expressly authorized. See 19 U.S.C. § 1516a(a)(2)(B) (making reviewable

“[f]inal affirmative determinations by the administering authority . . . under section 1671d . . . of

this title”). Should Commerce reach a final affirmative countervailing duty determination in the

ongoing investigation, Bayley will have the opportunity to contest that determination upon

publication and, specifically, the opportunity to assert the claims it includes in its complaint.
Court No. 17-00094                                                                              Page 5

This Court potentially would have subject matter jurisdiction of such an action according to

28 U.S.C. § 1581(c).

       Bayley asserts jurisdiction under this Court’s “residual” jurisdiction provision, 28 U.S.C.

§ 1581(i). Compl. ¶ 3. Resort to this jurisdictional provision is available only if the remedy

potentially available in an action brought according to 28 U.S.C. § 1581(c) would be “manifestly

inadequate.” NEC Corp. v. United States, 151 F.3d 1361, 1368 (Fed. Cir. 1998) (quoting

Miller & Co. v. United States, 824 F.2d 961, 963 (Fed. Cir. 1987)).

       “It is incumbent upon the plaintiff properly to allege the jurisdictional facts, according to

the nature of the case.” McNutt v. Gen. Motors Acceptance Corp. of Ind., 298 U.S. 178, 182

(1936). Bayley, therefore, bears the burden of demonstrating the manifest inadequacy of its

remedy under 19 U.S.C. § 1516a(a)(2)(B) and 28 U.S.C. § 1581(c). This it has failed to do.

       Bayley states in its complaint that the current due date for issuance of the final

determination is August 30, 2017 and that Commerce may extend this deadline to

November 5, 2017. Compl. ¶ 11. In the concluding paragraph, the complaint alleges that

“[u]nless corrected by the timely intervention of this Court, the Department’s refusal to verify

will significantly impair Bayley’s ability to meaningfully participate in the countervailing duty

investigation with respect to the issue of its affiliations, in violation of the express procedural

protections afforded it under the countervailing duty statute.” Id. at 15. Although maintaining

that “[t]his Court has jurisdiction by reason of 28 U.S.C. § 1581(i)(2) and (4),” id. ¶ 3, plaintiff

alleges in its complaint no facts from which the court may conclude that the remedy available

upon its contesting a final affirmative CVD determination (if there is one in the administrative

proceeding) is manifestly inadequate.

       Bayley makes certain allegations in its petition for mandamus, in its motion to expedite,

and in its reply to the motion to dismiss, that bear generally on the question of whether the
Court No. 17-00094                                                                            Page 6

remedy available under 19 U.S.C. § 1516a(a) is manifestly inadequate. These allegations are,

generally, that the 111.09% cash deposit rate is causing it competitive harm by preventing it

from exporting. See, e.g., Pl.’s Mandamus Petition 19 (“Bayley will suffer tens of millions of

dollars in lost sales, commencing immediately, as a result of the Department’s failure to fulfill its

clear investigatory duties.”); Pl.’s Resp. 15 (stating that the rate “is 100 margin points higher

than the entire Chinese industry” and that “Bayley is missing out on millions of dollars’ worth of

sales now”). These arguments fail to suffice, not only because they are not grounded in factual

allegations made in the complaint, but also because, even had they been, they would be

insufficient to demonstrate the inadequacy of the judicial review mechanism Congress provided

in 19 U.S.C. § 1516a(a)(2)(B) and 28 U.S.C. § 1581(c).

       Bayley has not shown that the court’s entertaining the objections Bayley raises now is the

only means by which it may pursue an adequate remedy, i.e., one that will allow Bayley a

meaningful opportunity to demonstrate an entitlement to a different rate, and fails even to

demonstrate that the jurisdictional path it advocates necessarily would be superior to the judicial

review mechanism Congress explicitly provided. In this case, Commerce has not completed the

investigation but, according to Bayley’s own complaint, will do so later this year. Nevertheless,

Bayley seeks remedies that would require the court, based on the incomplete administrative

record made to date, to delve into the merits of a determination that is not yet final, including

“[s]etting Bayley’s provisional measures rate at 9.89%, the rate for ‘all others,’ pending further

investigation” and “[g]ranting Plaintiff such other relief as the Court may deem appropriate to

ensure that the Department considers the remainder of this investigation in accordance with law

and an open mind.” Compl. 14. As defendant points out, Congress intended for a preliminary

affirmative CVD determination to be “reviewable, if at all, only in connection with the review of

the final determination.” Def.’s Mot. to Dismiss 8 (quoting H.R. Rep. No. 96-1235,
Court No. 17-00094                                                                            Page 7

at 48 (1980), reprinted in 1980 U.S.C.C.A.N. 3729, 3760). Bayley argues, further, that

“Bayley’s importers will also suffer millions in economic harm by reason of the Department’s

instructions to collect 111% CVD duties retroactively from them for 90 days prior to

April 25, 2017” but makes no argument that this is imminent harm to Bayley showing that the

ordinary means of obtaining judicial review of a Commerce determination will be inadequate in

the circumstances of this litigation. Pl.’s Mandamus Petition 19.

       Finally, nothing in plaintiff’s June 22, 2017 Letter changes the foregoing analysis as to

jurisdiction. In the Letter, plaintiff makes a number of allegations concerning the countervailing

duty investigation and the Department’s parallel antidumping duty investigation. Pl.’s Letter.

Plaintiff alleges that Commerce has failed to issue it certain questionnaires, see Pl.’s Letter 1

(“the Department has not issued any supplemental questionnaires to Bayley subsequent to its

Preliminary Determination”), and plaintiff concludes that this failure “further demonstrat[es] that

the Department has effectively finished its investigation of Bayley and made a final decision in

the Preliminary Determination.” Pl.’s Letter 2. Commerce does not make a “final decision” in a

preliminary determination; it makes a preliminary determination. See, e.g., 19 C.F.R.

§ 351.205(a) (“Whether the Secretary’s preliminary determination is affirmative or negative, the

investigation continues.” (emphasis added)). Plaintiff posits that the final determination will

contain a certain result, but the countervailing duty investigation is not yet complete and the final

determination is still pending.

       In its Letter, Bayley also objects to actions Commerce is alleged to have taken in the AD

investigation that, as to Bayley, are similar or equivalent to those it took in the CVD

investigation. Bayley concedes, however, that the AD investigation is ongoing, Commerce

having only recently issued a preliminary determination therein. Pl.’s Letter 2 (“On

June 16, 2017, the Department made its Preliminary Determination in the related Antidumping
Court No. 17-00094                                                                            Page 8

Duty investigation of Hardwood Plywood from China.”). Bayley argues that Commerce “will

not verify Bayley in either the AD or CVD investigation without an order from this Court.”

Id. at 5. Plaintiff asserts that “[c]ounsel to Bayley has been contacted by the Department to

schedule verification for the other respondents starting as early as the middle of July” and that

“[t]hus, immediate action by this Court is even more pressing and necessary.” Id. Judicial

review of an affirmative final AD determination, if there is one, will also be potentially available

to Bayley. Plaintiff’s allegations in the Letter, which fail to demonstrate that the remedy

available under this jurisdictional path would be inadequate, do not suffice to allow the court to

exercise jurisdiction according to 28 U.S.C. § 1581(i).

                                        III. CONCLUSION

       Because plaintiff has failed to meet its burden of demonstrating that the remedy

potentially available to it under 19 U.S.C. § 1516a(a)(2)(B) and 28 U.S.C. § 1581(c) is

manifestly inadequate, this action must be dismissed for lack of subject matter jurisdiction.

Judgment will enter accordingly.

                                                             /s/ Timothy C. Stanceu
                                                             Timothy C. Stanceu
                                                             Chief Judge

Dated: July 3, 2017
       New York, New York