Court Opinion

ID: 2739952
Source: CourtListenerOpinion
Date Created: 2014-10-06 18:01:36.447369+00
Date Added: 2024-06-11T10:32:56.331870
License: Public Domain

Slip Op. 14-118

            UNITED STATES COURT OF INTERNATIONAL TRADE
________________________________
MID CONTINENT NAIL CORP.,        :
                                 :
          Plaintiff,             : Before: Nicholas Tsoucalas,
                                 :          Senior Judge
     v.                          :
                                 : Court No.: 10-00247
UNITED STATES,                   :
                                 :
          Defendant,             :
                                 :
          and                    :
                                 :
TARGET CORP.,                    :
                                 :
          Defendant-Intervenor. :

                             OPINION

[Redetermination upon remand by the Department of Commerce was not
supported by substantial evidence nor in accord with the law.]

                                        Dated: October 6, 2014
Adam H. Gordon and Jordan C. Kahn, Picard Kentz & Rowe LLP, of
Washington, DC, for Mid Continent Nail Corporation, plaintiff.

Stuart F. Delery, Assistant Attorney General, Jeanne E. Davidson,
Director, and Patricia M. McCarthy, Assistant Director, Department
of Justice, Civil Division, Commercial Litigation Branch,
Washington, DC, for defendant.      Of counsel on the brief was
Nathaniel J. Halvorson, Attorney, Office of the Chief Counsel for
Trade Enforcement and Compliance, U.S. Department of Commerce, of
Washington, DC.

Marguerite E. Trossevin and James J. Jochum, Jochum Shore &
Trossevin, PC, of Washington, DC, for Target Corporation,
defendant-intervenor.
Court No. 10-00247                                                  Page 2

            Tsoucalas, Senior Judge:     before the court are the final

results    of   defendant   United   States   Department   of   Commerce’s

(“Commerce”) redetermination of its scope ruling on nails within

toolkits imported by Target Corporation (“Target”).             See Final

Results of Redetermination Pursuant to Remand Order, ECF No. 99

(Apr. 30, 2014) (“Third Remand Results”).        Commerce found that the

nails were outside the scope of the antidumping duty order on nails

from the People’s Republic of China (“PRC”) because they were part

of a mixed-media set.       Id. at 51.    Plaintiff Mid Continent Nail

Corp. (“MCN”) contests the Third Remand Results and requests

another remand of this case.         See Pl.’s Cmts. on Remand Results,

ECF No. 104 (June 27, 2014).         Commerce and defendant-intervenor

disagree, insisting that Commerce should affirm the Third Remand

Results.    See Def.-Int.’s Cmts. on Def.’s Redetermination Pursuant

to Remand Order, ECF No. 103 (June 27, 2014); Def.’s Cmts. on

Redetermination Pursuant to Remand Order, ECF No. 113 (July 31,

2014).

                               BACKGROUND

          A. Antidumping Duty Order and Initial Scope Ruling

            In August 2008, Commerce issued an antidumping order

covering steel nails from the PRC.       See Notice of Antidumping Duty

Order: Certain Steel Nails from the PRC, 73 Fed. Reg. 44,961 (Aug.

1, 2008) (“Nails Order”).      The Nails Order covers:
Court No. 10-00247                                                 Page 3

       certain steel nails having a shaft length up to 12
       inches. Certain steel nails include, but are not limited
       to, nails made of round wire and nails that are cut.
       Certain steel nails may be of one piece construction or
       constructed of two or more pieces. Certain steel nails
       may be produced from any type of steel, and have a
       variety of finishes, heads, shanks, point types, shaft
       lengths and shaft diameters.   Finishes include, but are
       not limited to, coating in vinyl, zinc (galvanized,
       whether by electroplating or hot-dipping one or more
       times), phosphate cement, and paint. Head styles
       include, but are not limited to, flat, projection,
       cupped, oval, brad, headless, double, countersunk, and
       sinker. Shank styles include, but are not limited to,
       smooth, barbed, screw threaded, ring shank and fluted
       shank styles. Screw-threaded nails subject to this
       proceeding are driven using direct force and not by
       turning the fastener using a tool that engages with the
       head. Point styles include, but are not limited to,
       diamond, blunt, needle, chisel, and no point. Finished
       nails may be sold in bulk, or they may be collated into
       strips or coils using materials such as plastic, paper,
       or wire.

Id. at 44,961–62.         The scope language also identifies several

exclusions    to    the   Nails   Order,   including   “roofing   nails,”

“corrugated nails,” “fasteners suitable for use in power-actuated

hand tools,” “thumb tacks,” nails of certain size specifications

that are “collated with adhesive or polyester film tape back with

a   heat     seal    adhesive,”    and     fasteners   meeting    certain

specifications.     Id. at 44,962.

             Target imports toolkits from the PRC, which include

various household tools.       See Mid Continent Nail Corp. v. United

States, 35 CIT __, __, 770 F. Supp. 2d 1372, 1375 (2011) (“MCN

I”).    Of particular relevance to the instant case, the toolkits
Court No. 10-00247                                              Page 4

“include a plastic container holding approximately fifty one-inch

brass coated steel nails.”   Id., 770 F. Supp. 2d at 1375.      Target

requested a scope ruling from Commerce that six of its tool kits

containing these nails are outside the Nails Order.       Id.; 770 F.

Supp. 2d at 1375.      Although it conceded that the nails in the

toolkit would be in-scope merchandise if considered on their own,

Target insisted that Commerce should focus on the toolkits as a

whole.   In support of its argument, Target noted that the Nails

Order did not mention nails packaged with non-scope merchandise

and that Commerce previously considered similar “mixed media”

items as a whole.    Id.

          Commerce issued its scope ruling in August 2010.         See

Final Scope Ruling – Certain Steel Nails from the PRC, Request by

Target (Aug. 10, 2010) (“Scope Ruling”).         Commerce first noted

that the 19 C.F.R. § 351.225(k)(1) factors (“(k)(1) factors”) were

not dispositive as to whether the scope covered brass coated steel

nails in toolkits.   Id. at 5.     Commerce then applied the 19 C.F.R.

§ 351.225(k)(2) factors (“(k)(2) factors”), considering the tool

kit as a set including the subject merchandise.         Id.   Based on

this analysis, Commerce found that the tool kits were outside the

scope of the Nails Order.    Id.

   B. Proceedings Before the Court of International Trade and
                     Remand Redeterminations
Court No. 10-00247                                                      Page 5

            This Court rejected Commerce’s analysis in the Scope

Ruling,    finding   that    Commerce    failed     to   articulate   adequate

reasoning for its decision to focus the scope inquiry on the

toolkits rather than the nails.          See MCN I, 35 CIT at __, 770 F.

Supp. 2d at 1379–83.        The Court remanded the Scope Ruling so that

Commerce could identify a test for making such a determination 1

and provide legal justification for that test.             Id. at __, 770 F.

Supp. 2d at 1382–83.

            On remand, Commerce found that it had the authority to

consider   mixed-media      items   as   a   set.    See   Final   Results   of

Redetermination Pursuant to Remand Order at 2–5 (Oct. 17, 2011)

(“First Remand Results”).       It then articulated a four-factor test

for answering the Walgreen question: (1) the practicability of

separating the component merchandise for repackaging or resale;

(2) the value of the component merchandise as compared to the value

of the product as a whole; (3) the ultimate use or function of the

component merchandise relative to the ultimate use or function of

the mixed-media set as a whole; and (4) any other relevant factors

that may arise on a product-specific basis.              Id. at 7–11.   Using

this test, Commerce found that the toolkit as a whole was the

1 Whether Commerce should focus a mixed-media scope inquiry on the
set as a whole or on the individual component that appears to be
within the scope of the order is referred to as the “Walgreen
question.”   This name refers to the decision of the Court of
Appeals for the Federal Circuit in Walgreen Co. of Deerfield, Inc.
v. United States, 620 F.3d 1350 (Fed. Cir. 2010).
Court No. 10-00247                                            Page 6

proper focus of the scope inquiry.         Id. at 11–14.    It then

determined that the toolkit was outside the scope of the Nails

Order.   Id. at 14–18.

           Upon review of the First Remand Results, the Court found

that Commerce’s analysis was improper because Commerce did not

have the authority to conduct a mixed-media analysis.       See Mid

Continent Nail Corp. v. United States, 36 CIT __, __, 825 F. Supp.

2d 1290, 1296 (2012) (“MCN II”).     The Court remanded for further

proceedings consistent with its opinion that “the nails in question

here are unambiguously subject to the Nails Order, and there is no

support in the law or the record for concluding otherwise.”    Id.,

825 F. Supp. 2d at 1296.

           In its second redetermination, Commerce issued a ruling

consistent with the Court’s decision in MCN II.   See Final Results

of Redetermination Pursuant to Remand Order at 5 (Mar. 7, 2012)

(“Second Remand Results”).    Specifically, Commerce found that the

nails in the toolkits were within the scope of the Nails Order.

Id.   The Court upheld the Second Remand Results in their entirety,

see Mid Continent Nail Corp. v. United States, 36 CIT __, __, Slip

Op. 12-97 at 1 (July 25, 2012), and Commerce appealed to the United

States Court of Appeals for the Federal Circuit (“CAFC”).

                         C. CAFC Determination

           On appeal, the CAFC reversed the CIT’s opinion in MCN

II.   See Mid Continent Nail Corp. v. United States, 725 F.3d 1295,
Court No. 10-00247                                                        Page 7

1301 (Fed. Cir. 2013) (“MCN III”).             Specifically, the CAFC found

that the CIT’s holding that Commerce lacked authority to conduct

a mixed-media inquiry was erroneous.            It also found that Commerce

had yet to reasonably interpret the Nails Order in such a way as

to justifiably exclude the nails in Target’s toolkits from the

scope, noting that the fourth factor of the mixed-media test was

overly broad.      Id.    The CAFC provided Commerce with guidance for

its remand redetermination, stating that “any implicit mixed-media

exception to the literal scope of the order must be based on

preexisting public sources,” and that “Commerce may attempt to

draw an ascertainable standard from these rulings if they were

publicly available at the time the [Nails Order] was issued . . .

.”   Id. at 1305.

                     D. Third Remand Redetermination

               In its third remand results, Commerce attempted to find

a test by which it could determine whether to focus its scope

ruling on the mixed-media set as a whole or on the individual

component.       Third Remand Results at 6–17.           First, Commerce noted

that   “mixed-media”      scope    inquiries    “involve     merchandise   that

includes a component that appears to at least have some superficial

overlap with the literal language of the order, but also consists

of elements that do not appear to be covered by the literal

language of the order.”          Id. at 6.     Commerce also noted that the

outcome   of    these    scope    inquiries    depends    largely   on   whether
Court No. 10-00247                                                      Page 8

Commerce treats the set as a whole or whether it focuses on the

individual component that appears to be covered by the order.             Id.

            Next, Commerce surveyed the available scope rulings on

“mixed-media” products to determine whether there was a common

analytical framework for determining the proper focus a “mixed-

media” scope inquiry.          Id. at 9–16.      Commerce altered the four-

factor test it previously articulated in the First Remand Results

taking into account these rulings and the CAFC’s ruling in MCN

III, listing the factors as (1) the “unique language of the order”;

(2) the “practicability of separating the component merchandise

for repackaging or resale”; (3) the “value of the component

merchandise as compared to the value of the product as a whole”;

and (4) the “ultimate use or function of the component merchandise

relative to the ultimate use or function of the mixed-media set as

a whole”.    Id. at 17.    Where Commerce finds that it should analyze

the product as a whole set it will move straight to the (k)(2)

factors,    but   where   it    will   analyze    the   individual   component

Commerce will make its scope determination based on the (k)(1)

factors.    Id. at 20.

            Commerce then applied this test to Target’s toolkits.

Id. at 23–26.     Commerce found that the language of the Nails Order

describes the nails in question but does not address merchandise

contained in toolkits, the packaging of nails with other products,

or the arrangement of the nails upon importation.              Id. at 23–24.
Court No. 10-00247                                                    Page 9

As for the relative value of the nails, Commerce found that it was

very small in light of Target’s statement that the total value of

the nails was a “small percentage” of the value of the toolkit as

a whole.    Id. at 24.    Commerce also determined that separating and

repackaging the nails was not practicable because the nails were

packaged with non-subject fasteners in a smaller case within the

toolkit.    Id. at 24–25.        Finally, Commerce found that the use of

the nails, fastening two objects together, was complementary to

but distinct from the use of the toolkit, which was “provid[ing]

a convenient collections of tools and accessories for the intention

of home repair and maintenance.”          Id. at 25.   It added that there

was   a   variety   of   tools    and   accessories,   each   of   which   had

specialized uses, so the choice of toolkit would not be based

exclusively on the type of nail inside tool kit.              Id. at 25–26.

Because each factor of the test indicated that Commerce should

evaluate the toolkits as a whole, Commerce determined that it

should focus the scope inquiry on the toolkits rather than the

steel nails.    Id. at 26.

            Because it was focusing on the toolkits as a whole,

Commerce moved directly to an analysis of the (k)(2) factors.              Id.

Commerce analyzed each of the six toolkits at issue, determining

that they “include some merchandise that at least superficially

meets the physical description of the merchandise subject to the

Nails Order and some merchandise which clearly does not meet the
Court No. 10-00247                                                       Page 10

physical description of the merchandise subject to the Nails Order.

Id. at 26–29.     Commerce also noted that the brass coated nails

contained within the toolkits comprise, at most, a tangential

feature in the advertising” of Target’s toolkits.              Id. at 29–30.

Commerce also noted that the display of the toolkits varied across

Target stores: in some cases the toolkits were displayed alongside

subject nails, but in other stores the toolkits were not displayed

by subject nails. Id. at 30. Commerce also found that the channels

of trade factor was inconclusive, as the toolkits and nails shared

certain channels of trade, but there were also channels of trade

that   were   distinct    for   the   two   products.         Id.   at   30–31.

Additionally, Commerce found that the expectations of the ultimate

purchaser differed as between toolkits and nails, because the

purchaser of the former expected to purchase an assortment of tools

for an assortment of functions at a price of $25 to $60, while a

purchaser of in-scope nails would expect more nails and a lower

price.   Id. at 31.      Commerce noted that the majority of the tools

in Target’s toolkits are not used with nails.           Id.    Commerce made

similar findings with regard to the ultimate use of the product,

as Target’s toolkits serve to “aid in various repair tasks” in the

home, while the in-scope nails are used to hang or fasten objects.

Id. at 32.    Noting that three of the five (k)(2) factors support

a finding that the toolkits are outside the scope of the Nails

Order, and that the other two factors were inconclusive, Commerce
Court No. 10-00247                                           Page 11

found that Target’s toolkits were outside the scope of the Nails

Order.   Id. at 32.

           Commerce also addressed comments by the parties on its

determination relevant to the instant litigation.     First, Commerce

rejected MCN’s assertion that the determination was unauthorized

rule making because it was simply resolving a gap in the statute

and regulations by clarifying existing procedures and providing a

justification for those procedures.   Id. at 35.    Second, Commerce

rejected MCN’s argument that the prior scope rulings were not

publicly available because they the scope rulings were “available

in [Commerce]’s Central Records Unit public reading room and listed

in the quarterly published list of scope rulings.”        Id. at 38.

Finally, Commerce found that, contrary to MCN’s insistence, both

the mixed-media analysis and the (k)(2) factors analysis were

supported by substantial evidence and consistent with law.     Id. at

42–51.

                JURISDICTION and STANDARD OF REVIEW

           The Court has jurisdiction pursuant to 28 U.S.C. §

1581(c) (2006) and section 516A(a)(2)(B)(vi) of the Tariff Act of

1930, 2 as amended, 19 U.S.C. § 1516a(a)(2)(B)(vi) (2006).

2 All further references to the Tariff Act of 1930 will be to the
relevant provisions of Title 19 of the United States Code, 2006
edition, and all applicable supplements thereto.
Court No. 10-00247                                                Page 12

          The Court must uphold Commerce’s scope determination

unless it is “unsupported by substantial evidence on the record,

or   otherwise   not    in   accordance     with   law.”   19   U.S.C.   §

1516a(b)(1)(B)(i). When reviewing a scope ruling, the Court grants

“significant deference to Commerce’s interpretation of its own

orders.” Allegheny Bradford Corp. v. United States, 28 CIT 830,

842, 342 F. Supp. 2d 1172, 1183 (2004).       “However, Commerce cannot

‘interpret’ an antidumping order so as to change the scope of that

order, nor can Commerce interpret an order in a manner contrary to

its terms.”   Duferco Steel, Inc. v. United States, 296 F.3d 1087,

1095 (Fed. Cir. 2002) (citing Eckstrom Indus., Inc. v. United

States, 254 F.3d 1068, 1072 (Fed. Cir. 2001)).

                               DISCUSSION

                        I. Commerce’s Methodology

          MCN contests the following aspects of Commerce’s method

for answering the Walgreen question in its Third Remand Results:

(1) Whether Commerce’s refusal to conduct notice and comment

rulemaking was consistent with the requirements of the APA; (2)

whether Commerce complied with the direction of the CAFC in MCN

III when deriving the mixed media test; and (3) whether Commerce’s

application of its four factor mixed media test was supported by

substantial evidence.

     A. Commerce was not required to conduct notice-and-comment
                              rule making.
Court No. 10-00247                                               Page 13

          The first issue before the court is whether Commerce’s

attempt to answer the Walgreen’s question through its adoption of

the four-factor mixed media test violated the notice-and-comment

rule   making   procedures     required     under   the   Administrative

Procedures Act (“APA”).

          MCN argues that Commerce’s adoption of the four-factor

mixed media test was improper because Commerce promulgated a new

rule without the notice-and-comment rulemaking procedures required

under the APA. Pl.’s Cmts. at 6. MCN insists that the APA mandates

that a test of this nature must “occur with particularized notice

and comment” procedures.       Id.      MCN also insists that the CAFC

recognized the benefit of formal rule-making for this issue in MCN

III and that Commerce could have reasonably foreseen the need for

such rule-making given the need to “address mixed media scope

inquiries in a comprehensive manner.”        Id. at 10.

          The   court   must   reject    MCN’s   arguments.    The    CAFC

specifically spoke to this issue in MCN III, stating that “Commerce

may attempt to draw an ascertainable standard” from “pre-existing

public sources” as long as they were publicly available at the

time the Nails Order was issued.     MCN III, 725 F.3d at 1305.      Thus,

the CAFC explicitly granted Commerce the ability to attempt to

support a mixed media standard without conducting notice-and-

comment under the APA in their Third Remand Results, so long as
Court No. 10-00247                                        Page 14

Commerce’s test complied with the CAFC’s MCN III guidelines.     See

id.

      B. Commerce’s mixed media test failed to comply with the
                    direction of the CAFC in MCN III

          The next issue before the court is whether Commerce’s

mixed media test complied with the CAFC’s instructions in MCN III.

As discussed above, in MCN III, the CAFC instructed Commerce that

“any implicit mixed-media exception to the literal scope of the

order must be based on preexisting public sources,” and that

“Commerce may attempt to draw an ascertainable standard from these

rulings if they were publicly available at the time the [Nails

Order] was issued . . . .”   MCN III, 725 F.3d at 1305.

          The court must first address whether Commerce relied on

publicly available scope determinations issued before the Nails

Order to support its mixed media test in the Third Remand Results.

The scope rulings Commerce relied on were published quarterly in

the Federal Register, and were available for public viewing in

Commerce’s Public File Room.     See Third Remand Results at 18.

Because these scope rulings were publically available, this court

will allow Commerce to attempt to support its mixed media analysis

based on sources that were publically available at the time the

Nails Order was issued.

          Commerce constructed its mixed media test in order to

answer the Walgreen question, which addresses whether Commerce
Court No. 10-00247                                           Page 15

should focus its scope ruling on the mixed media set as a whole or

on the individual components. Third Remand Results 6–17. Commerce

relied on prior scope rulings in order to construct the mixed media

test from a common set of analytical principles.       Id. at 9–17.

The mixed media test consisted of four factors: (1) the “unique

language of the order”; (2) the “practicability of separating the

component merchandise for repackaging or resale”; (3) the “value

of the component merchandise as compared to the value of the

product as a whole”; and (4) the “ultimate use or function of the

component merchandise relative to the ultimate use or function of

the mixed-media set as a whole.”      Id. at 17.   Commerce insists

that “these four factors articulate the common principles relied

upon in [its] prior scope rulings and throughout [its] past

practice.”    Id. at 17.

             In the first set of scope rulings relied on by Commerce

to support its mixed media test, Commerce focused on the product

as a whole and found the requested product to be outside the class

or kind of merchandise subject to the order.        See Final Scope

Ruling – Antidumping Duty Order on Certain Cased Pencils from the

PRC – Request by Creative Designs Naturally Pretty     (February 9,

1998) (concluding that pencils contained within a vanity set were

not subject to the order on pencils from the PRC)(“Vanity Set Scope

Ruling”);     See Final Scope Ruling – Antidumping Duty Order on

Certain Cased Pencils from the PRC – Request by Dollar General
Court No. 10-00247                                                     Page 16

Corporation at 3, (April 6, 2001) ("The issue presented by this

scope inquiry is whether Dollar’s [stationery sets], which include

a 3 1/4-inch or 4 1/2-inch pencil, are within the scope of the

order on certain cased pencils from the PRC.”) (“Stationery Sets

Scope Ruling”);    See Final Scope Ruling – Antidumping Duty Order

on   Certain   Cased   Pencils   from   the   PRC   –   Request   by   Target

Corporation Regarding “Hello Kitty Fashion Totes” at 4, (September

29, 2004) ("[Commerce] observe[d] that the Totes include a single

pencil which, considered individually, is covered by the scope of

the order. The Totes are multimedia sets, however . . . [and] the

scope of the order does not contemplate mixed-media sets.”)(“Totes

Scope Ruling”);    See Final Scope Ruling - Antidumping Duty Order

on   Certain   Cased   Pencils   from   the   PRC   -   Request   by   Target

Corporation, (March 4, 2005) (concluding that art sets containing

subject pencils and other non-subject art supplies were outside

the scope of the order) (“Art Sets Scope Ruling”); See Final Scope

Ruling - Antidumping Duty Order on Certain Cased Pencils from the

PRC - Request by Fiskars Brands, Inc., (June 3, 2005) (concluding

that compasses containing subject pencils were outside the scope

of the order) (“Compass Scope Ruling”)         See Final Scope Ruling -

Antidumping Duty Order on Certain Lined Paper Products from the

People's Republic of China, Request by Avenues in Leather, Inc.,

(May 8, 2007) (concluding that padfolio containing subject lined

paper pads were outside the scope of the order) (“Padfolios Scope
Court No. 10-00247                                                         Page 17

Ruling”)        See Certain Lined Paper Products from the People's

Republic of China - Davis Group of Companies Corp. Scope Ruling

Request, (February 21, 2008) (concluding that padfolios containing

subject lined paper pads were outside the scope of the order)

(“Davis Padfolios Scope Ruling”).

            In the second set of scope rulings relied on by Commerce

to support its mixed media test, Commerce focused on the component

and found the requested product to be within the class or kind of

the merchandise subject to the order.             See Recommendation Memo --

Final Scope Ruling on the Request by Texsport for Clarification of

the Scope of the Antidumping Duty Order on Porcelain-on-Steel

Cooking Ware from the PRC, (August 8, 1990) (concluding that

porcelain-on-steel cookware imported as part of a camping set was

subject    to    the     order)   (“Cookware     Scope   Ruling”);   See    Final

Determination of Sales at Less Than Fair Value: Fresh Cut Roses

from   Ecuador,     60    Fed.    Reg.   7019,   (February   6,   1995)    (roses

individually dutiable in mixed flower bouquet) (“Bouquets Scope

Ruling”).

            MCN argues that the scope rulings Commerce relied upon

to articulate the four-factor test it used in the Third Remand

Results “cannot and do not create a generally applicable analytical

framework” for addressing the Walgreen question.              Id. at 17.      MCN

insists that the scope rulings are isolated, contradictive, and

generally do not provide any guidance to respondents.                Id.
Court No. 10-00247                                           Page 18

           MCN notes that, in MCN III, the CAFC recognized a

presumption that components of a mixed media set that meet the

physical specifications of an order are presumed to be within the

scope of that order.     Id. at 10.    MCN also notes that Commerce

recognized that the nails in Target’s toolkits, if analyzed alone,

would be subject to the Nails Order.   Id.   MCN argues that Commerce

failed to overcome this presumption, instead providing an “outcome

determinative” analysis that relied on scope rulings that were

“entirely devoid of reasoning that could provide guidance for

future cases.”     Id. at 11.   Ultimately, MCN concludes that the

“ad-hoc” determinations did not provide a standard or consistent

practice upon which to base Commerce’s methodology.       Id. at 12–

13.   MCN also argues that Commerce should have relied on evidence

like the Harmonized Tariff Schedule of the United States (“HTSUS”)

to consider whether there was sufficient evidence to overcome the

presumption that the nails in Target’s toolkits were subject to

the Nails Order.

           The court finds that Commerce failed to comply with the

direction of the CAFC for the following reasons.     First, Commerce

failed to demonstrate how the “unique language of the order” is

relevant to its mixed media test. Commerce supported the inclusion

of this factor by attempting to identify a standard derived from

the Cookware Scope Ruling and Bouquets Scope Ruling.    Third Remand

Results at 7–11.
Court No. 10-00247                                                    Page 19

            The prior scope rulings Commerce relies on to support

including the unique language of the order as a factor in its mixed

media test fail to support an ascertainable mixed media standard.

Unlike in the instant case where the scope language is silent, in

both the Cookware Scope Ruling and the Bouquets Scope Ruling, the

language of the order clearly addresses all of the relevant

merchandise in the mixed media set.          For instance, in the Cookware

Scope    Ruling,    Commerce    determined    whether    “kitchenware”    and

“cookware” imported together as part of a mixed media set were

subject to the order.          Commerce found that only the “cookware”

within     the     set   was    dutiable     because    “kitchenware”      was

“specifically excluded from the order.”          Cookware Scope Ruling at

4.   Because the scope language was clear, Commerce declined to

conduct a mixed media analysis.            Id. at 2.     Similarly, in the

Bouquets Scope Ruling, Commerce once again avoided conducting a

mixed    media   analysis   when   determining    whether   roses     imported

within bouquets including non-dutiable flowers would be subject to

the order at issue.      Bouquets Scope Ruling, 60 Fed. Reg. at 7022.

The language of the order contemplated bouquets, eliminating any

need for Commerce to conduct a mixed media analysis.            Id.

            In the Third Remand Results, Commerce insists that the

language of the order controls the mixed media analysis and

“informs the application” of the remaining factors in its mixed

media test.      Third Remand Results at 21.           Commerce argues that
Court No. 10-00247                                                              Page 20

“[b]y    looking     at    the   language      of    the    order,   [Commerce]     can

determine where such an analysis is warranted, either from the

silence of the order or language in the order speaking to these

factors.” Id.        Commerce failed to support this contention. Apart

from the fact that both of these scope rulings involve a mixed

media    set,    neither     scope     ruling       contemplated     a    mixed   media

analysis.       Furthermore, it is well established that “the process

must begin with the language of the order, which provides the

‘predicate for the interpretive process,’” but these scope rulings

do not provide guidance with regards to how this factor is relevant

to a mixed media analysis.               MCN III 725 F.3d at 1303 (citing

Duferco Steel, Inc. v. United States, 296 F.3d 1087, 1097 (Fed.

Cir. 2002)).         Where the scope language is clear, like in the

Cookware Scope Ruling and Bouquets Scope Ruling, “scope analysis

[is] at an end.”          See id.

               Secondly, the Cookware Scope Ruling and Bouquets Scope

Ruling cannot be reconciled with the seven other scope rulings

Commerce cited in its Third Remand Results.                  None of the remaining

scope rulings contain orders which clearly address the subject

merchandise or the mixed media set.                  The remaining scope rulings

appear    to    be   isolated       examples    of    how    the   test    is   outcome

determinative as to whether Commerce finds that the mixed media

set is subject to the order.             All of the remaining scope rulings

contain an ambiguous order, and rely on the (k)(2) factors in order
Court No. 10-00247                                            Page 21

to justify excluding the subject merchandise from the scope of the

order.    Additionally, the nine scope rulings rely on a number of

different bases for excluding a product from the scope of an order.

Third Remand Results at 9–16.      For instance, in the Vanity Set

Scope Ruling Commerce found as a “threshold matter” that it would

treat the vanity set as a whole set, rather than analyzing the

pencils included in the set individually. See Third Remand Results

at 11; Vanity Set Scope Ruling at 4.        Commerce determined the

answer to the Walgreen question on the basis that the pencil

included within the vanity set was only a “minor component” of the

mixed media set.     Vanity Set Scope Ruling at 4.   This resulted in

Commerce limiting its analysis of the (k)(2) factors to only the

whole set, and thus, Commerce determined that the vanity set was

excluded from the scope of the order on pencils from the PRC.    Id.

at 4–8.   Furthermore, in the Compass Scope Ruling, Commerce chose

to answer the Walgreen question primarily by weighing the (k)(2)

factors and concluding that the purchaser’s ultimate expectation

was to obtain a “drawing tool” as opposed to obtaining a pencil to

be used for writing.      Compass Scope Ruling at 8.     Contrary to

Commerce’s assertions, these scope rulings appear to answer the

Walgreen question based on the facts and circumstance in each

particular case, and do not identify a broader ascertainable mixed

media standard.
Court No. 10-00247                                                        Page 22

              Thirdly,    Commerce   argues    that   its    mixed    media   test

occurs “within the context” of the (k)(1) factors.                   Third Remand

Results at 36.      It is unclear to the court how this test occurs

within the (k)(1) factors.         Commerce relies on scope rulings which

answer the Walgreen’s question based on the (k)(2) factors.                   See

Vanity Set Scope Ruling; Stationery Sets Scope Ruling; Totes Scope

Ruling; Art Sets Scope Ruling; Compass Scope Ruling; Padfolios

Scope Ruling; Davis Padfolios Scope Ruling.                 Thus, in the Third

Remand Results, Commerce attempts to imbed its test within the

(k)(1) factors by using “ad-hoc” determinations that do not provide

an “ascertainable standard that would allow importers to predict

how Commerce would treat their mixed media products.”                   MCN III,

725 F.3d at 1305.

              Furthermore, MCN correctly notes that in MCN III the

CAFC did in fact recognize a presumption that components of a mixed

media set that meet the physical specifications of an order are

presumed to be within the scope of that order.                See MCN III, 725

F.3d at 1304.     In this case, neither party disputes the fact that

the   nails    contained    in    Target’s    toolkits   “meet    the    physical

characteristics of the nails subject to the scope of the Nails

Order.” Third Remand Results at 28–29. The CAFC stated that “[i]n

order   to     overcome    this    presumption    Commerce       must    identify

published guidance issued prior to the date of the original

antidumping order . . . that provides a basis for interpreting the
Court No. 10-00247                                               Page 23

order contrary to its literal language.”      See MCN III, 725 F.3d at

1304.   Here, Commerce failed to explicitly address how its mixed

media test reflects this presumption at any point in the Third

Remand Results.

          Ultimately, Commerce’s mixed media test fails to comply

with the instructions the CAFC articulated in MCN III, which

required Commerce to draw an ascertainable mixed media standard

from information that was publically available at the time the

Nails Order was issued.     These nine scope rulings do not identify

a coherent and ascertainable standard encompassing all of the

factors in Commerce’s mixed media test, and thus, they do not

provide guidance that would allow importers to predict how Commerce

would treat their mixed media products.       Because Commerce’s test

is inconsistent with MCN III, this court declines to find whether

Commerce’s application of its four-factor mixed media test was

supported by substantial evidence.

                              Conclusion

          For the reasons discussed above, this case is remanded

to Commerce for further proceedings consistent with this opinion,

it is hereby

          ORDERED    that   the   Final   Results   of   Redetermination

Pursuant to Remand Order is to be remanded to the United States

Department of Commerce for reconsideration of its mixed media

standard in accordance with the United States Court of Appeals for
Court No. 10-00247                                       Page 24

the Federal Circuit’s decision in Mid Continent Nail Corp. v.

United States, 725 F.3d 1295 (Fed. Cir. 2013).

                                       /s/ Nicholas Tsoucalas
                                         Nicholas Tsoucalas
                                            Senior Judge
Dated:    October 6, 2014
         New York, New York