Court Opinion

ID: 820156
Source: CourtListenerOpinion
Date Created: 2013-02-10 19:36:41.138102+00
Date Added: 2024-06-11T12:25:16.658736
License: Public Domain

Slip Op. 12-54

           UNITED STATES COURT OF INTERNATIONAL TRADE

Before: Nicholas Tsoucalas, Senior Judge
___________________________________
TIANJIN MAGNESIUM INTERNATIONAL     :
CO., LTD.                           :
                                    :
          Plaintiff,                :
                                    :
     v.                             : Consol. Court No.: 09-00012
                                    :
UNITED STATES,                      :
                                    :
          Defendant,                :
                                    :
          and                       :
                                    :
US MAGNESIUM, LLC,                  :
                                    :
          Defendant-Intervenor.     :
                                    :

                             OPINION

Held: The Final Results of Redetermination Pursuant to Voluntary
Remand issued by the Department of Commerce is affirmed.

                                           Dated: April 25, 2012

     Riggle & Craven, (David A. Riggle) for Tianjin Magnesium
International Co., Ltd., Plaintiff.

     Tony West, Assistant Attorney General; Jeanne E. Davidson,
Director, Claudia Burke, Assistant Director, Commercial Litigation
Branch, Civil Division, United States Department of Justice, (Renee
Gerber); Thomas M. Beline, Office of Chief Counsel for Import
Administration, United States Department of Commerce, Of Counsel,
for the United States, Defendant.

     King & Spalding, LLP, (Stephen A. Jones and Jeffrey B.
Denning) for US Magnesium, LLC, Defendant-Intervenor.

     TSOUCALAS, Senior Judge:   This matter comes before the Court

upon the Final Results of Redetermination Pursuant to Voluntary
Court No. 09-00012                                                             Page 2

Remand: Pure Magnesium from the People’s Republic of China (“Second

Redetermination”) issued by the Department of Commerce (“Commerce”)

on October 31, 2011.        Plaintiff, Tianjin Magnesium International

Co., Ltd. (“Tianjin”) filed Comments asserting that the Second

Redetermination was without support and requesting that the Court

remand     this    matter   to   Commerce      for      further   proceedings.

Defendant-Intervenor, US Magnesium, LLC (“US Magnesium”) filed

Comments stating that Commerce’s decision was well supported, and

urging the Court to affirm the Second Redetermination without

modification. For the reasons set forth below, the Court concludes

that   the   Second    Redetermination      is    supported       by   substantial

evidence     and   otherwise     in   accord     with    the   law     and    affirms

Commerce’s decision.

                                  BACKGROUND

       This case involves an administrative review of the antidumping

order on pure magnesium from the People’s Republic of China for the

period from May 1, 2006, through April 30, 2007.                             See Pure

Magnesium from the People’s Republic of China: Final Results of

Antidumping Duty Administrative Review, 73 Fed. Reg. 76,336 (Dec.

16, 2008) (“2006-2007 Final Results”).               At the conclusion of the

administrative review, Tianjin, a seller of pure magnesium for

export, was assigned a rate of 0.63%, and appeals were filed by

both Tianjin and US Magnesium.              On August 9, 2010, the Court

remanded the case for further proceedings after concluding that not
Court No. 09-00012                                                    Page 3

all of the surrogate values relied on in the 2006-2007 Final

Results were supported.      See Tianjin Magnesium Int’l Co., Ltd. v.

United States, 34 CIT __, 722 F. Supp. 2d 1322 (2010) (“Tianjin

I”).    On February 11, 2011, Commerce issued its Final Results of

Redetermination Pursuant to Court Remand Pure Magnesium from the

People’s Republic of China (“First Redetermination”).           While this

Court’s review of that First Redetermination was pending, Commerce

requested that the matter again be remanded so it could determine

whether to reopen the 2006-2007 administrative review based on the

factors announced by the United States Court of Appeals for the

Federal Circuit in Home Prods. Int’l, Inc. v. United States, 633

F.3d 1369 (Fed. Cir. 2011).        The Court granted Commerce’s request.

       To best understand the issues weighed by Commerce in this most

recent remand, attention must be given to events that occurred

during the first remand.      The Court first remanded this case, in

part, based on its conclusion that the record contained inadequate

support for the valuation given to waste magnesium, a manufacturing

process byproduct the sale of which could offset the normal value.

Tianjin I, 34 CIT at __, 722 F. Supp. 2d at 1336.           Whether Tianjin

was entitled to the offset was not in question when this matter was

first remanded.

       Following   the   Court’s    remand   in   August,   2010,   Commerce

concluded that there was not adequate evidence in the record to

properly value the waste magnesium, and it issued to Tianjin a
Court No. 09-00012                                                              Page 4

supplemental questionnaire.       Second Redetermination at 4.                  In its

response to that supplemental questionnaire, Tianjin continued to

claim entitlement to the waste magnesium byproduct offset, and it

provided    documentation    supporting     that       claim       such    as    sales

invoices, sales ledger entries, and other accounting records.                      See

Response to the Supplemental By-product Questionnaire by Tianjin

Magnesium International, Co., Ltd. (Oct. 19, 2010), Public Rec. 6,

Confidential Rec. 2 (“Supplemental Response”).1

     On November 2, 2010, US Magnesium filed its Rebuttal Factual

Information    and   Petitioner’s      Comments      On      TMI’s    Supplemental

Byproduct    Response   (Nov.    2,    2010),   PR     10    (“Rebuttal”).          US

Magnesium’s Rebuttal included a copy of Commerce’s verification

report from the administrative review for the 2007-2008 period of

review.     See Verification of the Sales and Factors Responses of

Tianjin     Magnesium    International,         Ltd.        in     the     2007-2008

Administrative    Review    of   the   Antidumping          Duty   Order    on    Pure

Magnesium from the People’s Republic of China (Nov. 4, 2009),

Rebuttal, Exhibit 1 (“2007-2008 Verification Report”).                          In the

2007-2008 Verification Report, Commerce stated that it was notified

by Tianjin’s suppliers that there had been no byproduct sales prior

to April 2007.       In other words, there were no byproduct sales

during the 2006-2007 period of review at issue in this case.

     1
      Hereinafter all documents in the public record will be
designated “PR” and all documents in the confidential record
designated “CR.
Court No. 09-00012                                                            Page 5

Commerce    stated    that       this    disclosure    was    made    in   Tianjin’s

presence.    Second Redetermination at 14.

     Based on this information, US Magnesium argued that Tianjin

was not entitled to the byproduct offset. In support, US Magnesium

pointed out that Tianjin’s Supplemental Response, in which it

asserted its entitlement to a byproduct offset, was filed more than

a year after the 2007-2008 Verification Report was issued, and

therefore Tianjin must have been aware that there were no sales

entitling it to an offset.              See Rebuttal at 9.      Commerce decided,

however, that it could not consider the 2007-2008 Verification

Report, because it did not exist at the time Commerce made its

initial determination in the 2006-2007 Final Results.                          First

Redetermination at 17.            In the First Redetermination, Commerce

still considered Tianjin eligible for the byproduct offset.

     Review of this First Redetermination was pending when Commerce

sought     another    remand      to     consider     reopening      the   2006-2007

administrative review pursuant to the factors in Home Products,

which is the remand currently at issue.                      On remand, Commerce

determined    that    there      existed     clear    and    convincing    evidence

sufficient    to     make    a    prima    facie     case    that    the   2006-2007

administrative review was tainted by fraud.                 Commerce specifically

relied on the information set forth above that there had, in fact,

been no byproduct sales during the 2006-2007 period, as well as

evidence that the vouchers submitted to show such sales were
Court No. 09-00012                                                 Page 6

fabricated.     Second Redetermination at 9-10.        This evidence led

Commerce to conclude that Tianjin intentionally misrepresented its

entitlement to a byproduct offset, and that it did so to lower its

margin. Id. at 10. Commerce also stated that although it normally

considers its administrative reviews final and conclusive, this

case presented circumstances weighing in favor of reopening the

review.     Commerce noted that Tianjin’s misrepresentations were

material because when relied on by Commerce, they resulted in a

lower margin for Tianjin.       Id. at 14-15.     Commerce also concluded

that Tianjin’s fraud was discovered within a reasonable time, and

noted that Tianjin’s entries from the 2006-2007 period of review

remained unliquidated because of an injunction.         Id. at 15-16.

     Based on this evidence, Commerce determined that it was

appropriate to reopen the record of the 2006-2007 administrative

review.   Commerce prepared draft results wherein it concluded that

Tianjin was not entitled to the byproduct offset and calculated

Tianjin’s margin to be 21.24%.            Id. at 18.      However, after

receiving     comments   from   the    parties,   Commerce   revised   its

determination and concluded that Tianjin’s behavior significantly

impeded the review pursuant to Section 766(a)(2)(C) of the Tariff

Act of 1930, as amended, 19 U.S.C. § 1677e(a)(2)(C) (2006).2

Second Redetermination at 27.         Pursuant to 19 U.S.C. § 1677e(b),

     2
      All further citations to the Tariff Act of 1930 are to the
relevant provisions of Title 19 of the United States Code, 2006
edition.
Court No. 09-00012                                                  Page 7

Commerce further concluded that Tianjin failed to cooperate to the

best of its ability, and applied an adverse facts available rate of

111.73%, which rate had already been calculated for a respondent

other than Tianjin in the 2006-2007 review.

                          STANDARD OF REVIEW

     As stated in Tianjin I, the Court has jurisdiction over this

matter   pursuant    to   28   U.S.C.   §   1581(c)   and    19     U.S.C.

§1516a(a)(2)(B)(iii).      Additionally,    the   Court     will    uphold

Commerce’s determinations in administrative reviews unless they are

“unsupported by substantial evidence on the record, or otherwise

not in accordance with law.”     19 U.S.C. § 1516a(b)(1)(B)(i).

                               ANALYSIS

     Whether Commerce was justified in reopening the 2006-2007

review turns on an interpretation of the Home Products decision.

In that decision, the Court of Appeals dealt with the question of

whether remand is required when evidence is presented             that the

proceedings below were tainted by material fraud. Stating that the

Court of International Trade’s discretion on whether to remand is

not unlimited, the Court of Appeals held that

     where a party brings to light clear and convincing new
     evidence sufficient to make a prima facie case that the
     agency proceedings under review were tainted by material
     fraud, the Trade Court abuses its discretion when it
     declines to order a remand to require the agency to
     reconsider its decision in light of the new evidence.

Home Prods., 633 F.3d at 1378. The Court of Appeals clarified that
Court No. 09-00012                                                             Page 8

Commerce    need   not   reopen    the     administrative     proceedings        just

because evidence of fraud existed, and stated that in making the

decision to reopen or not, Commerce can consider “the interests in

finality,    the   extent     of     the    inaccuracies      in    the    .    .    .

administrative     review,    whether       fraud   existed    in   the     .    .   .

administrative review, the strength of the evidence of fraud, the

level of materiality, and other appropriate factors.” Id. at 1381.

     The posture of this case is different than Home Products in

that here, the evidence of Tianjin’s fraud was raised before

Commerce at the administrative level instead of before the court as

it was in Home Products.           See id. at 1375.      Tianjin argues that

Commerce erred in two primary ways when it made the threshold fraud

finding and reopened the review: (1) Commerce did not conduct an

analysis of the elements of fraud, and (2) Tianjin’s conduct did

not rise to the level of fraud.

     Taking up Tianjin’s first argument, the Court concludes that

there is nothing in the Home Products decision that requires a

threshold analysis and finding regarding each of the elements of

fraud.     First, Home Products itself does not engage in such a

rigorous analysis.         Furtermore, the Court of Appeals did not

require remand only when evidence is presented that a participant

in the administrative proceedings committed fraud, either at common

law as proposed by Tianjin, or otherwise. Home Products sets forth

a   less    rigorous     standard,    requiring      remand    when       “evidence
Court No. 09-00012                                                        Page 9

sufficient to make a prima facie case that the agency proceedings

under review were tainted by material fraud” is presented.                Id. at

1378.     The “prima facie case” prescribed by Home Products is not

whether a party has committed common law fraud, but rather whether

the proceedings themselves were “tainted by material fraud.”3 This

inquiry    is   broader,    and    less   exacting,   than    a   determination

regarding whether the conduct of a party has met the legal elements

of fraud.

      Given this conclusion regarding the Home Products standard,

the   Court     concludes   that     Commerce’s    determination       that   the

proceedings     below   were      “tainted   by   material    fraud”    is    well

supported by substantial evidence in the record.             Throughout these

proceedings, Tianjin attempted to insulate itself from the lack of

byproduct sales by stating that it was Tianjin’s suppliers who sold

byproduct and kept the requisite paperwork.                  See, e.g., Pl.’s

Comments on the Second Redetermination of October 31, 2011 at 6.

However, by the time Tianjin submitted its Supplemental Response in

October 2010, it was undoubtedly aware that there had been no

byproduct sales during the 2006-2007 administrative review period.

Only Tianjin claimed entitlement to a byproduct offset in its

October 2010 Supplemental Response, and only Tianjin filed the

      3
      “Taint” is defined as “(1) To imbue with a noxious quality
or principle. (2) To contaminate or corrupt. (3) To tinge or
affect slightly for the worse.” Black’s Law Dictionary 1466 (7th
ed. 1999).
Court No. 09-00012                                                    Page 10

paperwork     with    Commerce   purporting    to    justify   that   claim.

Furthermore, as can be seen by the disparity in 0.63% margin

imposed on Tianjin in the 2006-2007 Final Results, and the 21.24%

margin Commerce was going to impose before deciding to apply

adverse facts available, Tianjin’s claimed offset was material in

that it stood to benefit from a greatly reduced margin if Commerce

applied the byproduct offset.

     Finally,     the   Court    concludes    that   Tianjin’s   conduct   was

egregious enough to warrant Commerce’s determinations that Tianjin

had impeded its investigation and failed to act to the best of its

ability.      See Nippon Steel Corp. v. United States, 337 F.3d 1373,

1382 (Fed. Cir. 2003) (“While the [‘best of its ability’] standard

does not require perfection and recognizes that mistakes sometimes

occur,   it    does   not   condone   inattentiveness,    carelessness,    or

inadequate record keeping.”).4

     Based on the foregoing, and the Court’s review of the Second

Redetermination and all other pleadings and papers filed herein, it

is hereby

     ORDERED that the Final Results of Redetermination Pursuant to

Voluntary Remand issued by the Department of Commerce is affirmed

     4
      The Court notes that in addition to its arguments against
Commerce’s interpretation of Home Products, Tianjin also argues
that Commerce erroneously applied zeroing in the Second
Redetermination. Given Commerce’s application of adverse facts
available, and the Court’s conclusion that this determination was
supported by substantial evidence, the Court need not reach the
issue of zeroing.
Court No. 09-00012                                       Page 11

without modification, and this matter is dismissed.

                                        /s/ NICHOLAS TSOUCALAS
                                            Nicholas Tsoucalas
                                               Senior Judge

Dated: April 25, 2012
       New York, New York