Court Opinion

ID: 9911236
Source: CourtListenerOpinion
Date Created: 2023-12-19 19:01:35.651741+00
Date Added: 2024-06-11T12:57:05.883137
License: Public Domain

Slip Op. No. 23-184

             UNITED STATES COURT OF INTERNATIONAL TRADE

CVB, INC.,

                Plaintiff,

v.
                                                  Before: Stephen Alexander Vaden,
UNITED STATES,
                                                                   Judge
                Defendant,
                                                  Court No. 1:21-cv-00288 (SAV)
      and

BROOKLYN BEDDING, LLC, et al.,

               Defendant-Intervenors.

                                        OPINION

[Sustaining the International Trade Commission’s final affirmative injury
determination.]

                                                            Dated: December 19, 2023

Geoffrey M. Goodale, Duane Morris LLP, of Washington, DC, for Plaintiff CVB, Inc.
With him on the briefs were Andrew R. Sperl, Nathan J. Heeter, and Lauren E.
Wyszomierski, Duane Morris LLP, and Stephen G. Larson, Robert C. O’Brien, and
Paul A. Rigali, Larson LLP, of Los Angeles, CA.

Jane C. Dempsey, Office of the General Counsel, United States International Trade
Commission, of Washington, DC, for Defendant United States. With her on the
briefs were Dominic Bianchi, General Counsel; Andrea C. Casson, Assistant
General Counsel for Litigation; and Brian R. Soiset, Attorney-Advisor.

Mary Jane Alves, Cassidy Levy Kent (USA) LLP, of Washington, DC, for Defendant-
Intervenors Brooklyn Bedding, LLC; Corsicana Mattress Company; Elite Comfort
Solutions; FXI, Inc.; Innocor, Inc.; Kolcraft Enterprises, Inc.; Leggett & Platt, Inc.;
the International Brotherhood of Teamsters; and United Steel, Paper and Forestry,
Rubber, Manufacturing, Energy, Allied Industrial and Service Workers
International Union, AFL-CIO. With her on the briefs were Yohai Baisburd and
Sydney Reed.
Court No. 1:21-cv-00288 (SAV)                                                  Page 2

      Vaden, Judge:        CVB, Inc. (CVB) challenges the International Trade

Commission’s (ITC or the Commission) final affirmative injury determination in its

antidumping and countervailing duty investigations of mattresses from Cambodia,

China, Indonesia, Malaysia, Serbia, Thailand, Turkey, and Vietnam. See Compl. ¶

1, ECF No. 8; Mattresses from Cambodia, China, Indonesia, Malaysia, Serbia,

Thailand, Turkey, and Vietnam, 86 Fed. Reg. 26,545 (ITC May 14, 2021), J.A. at

14,715, ECF No. 60; Mattresses from Cambodia, China, Indonesia, Malaysia,

Serbia, Thailand, Turkey, and Vietnam (Final Determination), Inv. Nos. 701–TA–

645 and 731–TA–1495–1501 (Final), USITC Pub. No. 5,191 (May 2021), J.A. at

124,040, ECF No. 66. Defendant-Intervenors in support of the Commission’s final

affirmative injury determination are Brooklyn Bedding, LLC; Corsicana Mattress

Co.; Elite Comfort Solutions; FXI, Inc.; Innocor, Inc.; Kolcraft Enterprises, Inc.;

Leggett & Platt, Inc.; the International Brotherhood of Teamsters; and the United

Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and

Service   Workers    International   Union,    AFL-CIO     (collectively,   Defendant-

Intervenors). See Def.-Ints.’ Resp. to Pl.’s Mot. for J. on the Agency R. (Def.-Ints.’

Resp.) at 1, ECF No. 53. Before the Court is CVB’s Motion for Judgment on the

Agency Record. Pl.’s Mot. for J. on the Agency R. (Pl.’s Br.), ECF No. 48. CVB

contends that the Commission’s final affirmative injury determination is

unsupported by substantial evidence. Id. at 1–2. For the reasons set forth below,

the Court SUSTAINS the Commission’s determination.
Court No. 1:21-cv-00288 (SAV)                                              Page 3

                                 BACKGROUND

                                A. Procedural History

      On March 31, 2020, the Defendant-Intervenors petitioned the Department of

Commerce and the Commission to impose antidumping and countervailing duties

on imports of mattresses from Cambodia, China, Indonesia, Malaysia, Serbia,

Thailand, Turkey, and Vietnam (the Subject Countries). See Petition: Mattresses

from Cambodia, China, Indonesia, Malaysia, Serbia, Thailand, Turkey, and

Vietnam:   Antidumping and Countervailing Duty Petitions, J.A. at 1,000–3,951,

ECF No. 60. The Commission’s period of investigation covered calendar year 2017

through September 2020. Def.’s Resp. to Pl.’s Mot. for J. on the Agency R. (Def.’s

Resp.) at 6, ECF No. 51. On May 15, 2020, the Commission issued its preliminary

determination. See Mattresses from Cambodia, China, Indonesia, Malaysia, Serbia,

Thailand, Turkey, and Vietnam, 85 Fed. Reg. 30,984 (ITC May 21, 2020), J.A. at

9,046, ECF No. 60; Mattresses from Cambodia, China, Indonesia, Malaysia, Serbia,

Thailand, Turkey, and Vietnam, Inv. Nos. 701–TA–645 and 731–TA–1495–1501

(Preliminary), USITC Pub. No. 5,059 (May 2020), J.A. at 9,048–373, ECF No. 60.

Nearly one year later, on May 14, 2021, the Commission published its final

determination. See Final Determination, J.A. at 124,040–570, ECF No. 66.

                 B. Prior Mattresses from China Investigation

      In December 2019, three months before the underlying petition in this case,

the Commission published its final affirmative injury determination in an
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investigation of Chinese mattress imports. Mattresses from China, Inv. No. 731–

TA–1424 (Final), USITC Pub. No. 5,000 (December 2019), J.A. at 6,505–62, ECF

No. 60. In 2017 and 2018, Chinese imports accounted for roughly four-fifths of

cumulated subject imports. Final Determination at 39, J.A. at 124,081, ECF No. 66.

In 2019, Chinese imports constituted less than one-third of all imports while subject

imports from other countries rose by thousands of percent. Id. at 39–40, J.A. at

124,081–82. Between interim 2019 and interim 2020, Chinese imports declined to

almost nothing; but subject imports from other countries rose a further two hundred

percent. Id. at 40, J.A. at 124,082. These imports from other countries were often

from companies related to Chinese producers that no longer exported their products

to the United States. Id. At 39 n. 165, 40 n.168, J.A. at 124,081–82.

                           C. The Present Factual Record

      The Commission began its material injury investigation by defining the

“domestic like product.” Final Determination at 7–9, J.A. at 124,049–51, ECF No.

66; see also 19 U.S.C. § 1677(10).      The Commission defined the domestic like

product as:

              The products covered by this investigation are all types of
              youth and adult mattresses. The term “mattress” denotes
              an assembly of materials that at a minimum includes a
              “core,” which provides the main support system of the
              mattress, and may consist of innersprings, foam, other
              resilient filling, or a combination of these materials.
              Mattresses may also contain (1) “upholstery,” the material
              between the core and the top panel of the ticking on a
              single‐sided mattress, or between the core and the top and
              bottom panel of the ticking on a double‐sided mattress;
Court No. 1:21-cv-00288 (SAV)                                              Page 5

            and/or (2) “ticking,” the outermost layer of fabric or other
            material (e.g., vinyl) that encloses the core and any
            upholstery, also known as a cover.

            The scope of this investigation is restricted to only “adult
            mattresses” and “youth mattresses.” [. . . .] All adult and
            youth mattresses are included regardless of size or size
            description.

            The scope encompasses all types of “innerspring
            mattresses,” “non‐innerspring mattresses,” and “hybrid
            mattresses.” [. . . .]

            Mattresses covered by the scope of this investigation may
            be imported independently, as part of furniture or
            furniture mechanisms (e.g., convertible sofa bed
            mattresses, sofa bed mattresses imported with sofa bed
            mechanisms,      corner   group    mattresses,      day‐bed
            mattresses, roll‐away bed mattresses, high risers, trundle
            bed mattresses, crib mattresses), or as part of a set in
            combination with a “mattress foundation.” [. . . .]

            Excluded from the scope of this investigation are “futon”
            mattresses. [. . . . ]

            Also excluded from the scope are airbeds (including
            inflatable mattresses) and waterbeds, which consist of
            air‐ or liquid‐filled bladders as the core or main support
            system of the mattress. Also excluded is certain
            multifunctional furniture that is convertible from seating
            to sleeping [. . . .] Such furniture may, and without
            limitation, be commonly referred to as “convertible sofas,”
            “sofa beds,” “sofa chaise sleepers,” “futons,” “ottoman
            sleepers” or a like description.

            Also excluded from the scope of this investigation are any
            products covered by the existing antidumping duty orders
            on uncovered innerspring units from China or Vietnam.

            Also excluded from the scope of this investigation are
            bassinet pads with a nominal length of less than 39
Court No. 1:21-cv-00288 (SAV)                                                 Page 6

               inches, a nominal width less than 25 inches, and a
               nominal depth of less than 2 inches.

               Additionally, also excluded from the scope of this
               investigation are “mattress toppers.” [. . . .]

Final Determination at 7–9, J.A. at 124,049–51, ECF No. 66 (internal citations

omitted).    No party challenges the like product definition, which includes many

mattress varieties. See Def.’s Resp. at 7, ECF No. 51 (“During the final phase, CVB

did not argue for another domestic like product definition or against cumulation,

and it does not challenge the Commission’s findings on these issues.”); Pl.’s Reply at

6–7, ECF No. 58 (agreeing that CVB did not challenge the domestic like product

determination and distinguishing its argument from a challenge to the domestic

like product determination).

         Mattresses are either boxed or flat-packed.   Both packaging methods are

included in the domestic like product definition. See Def.’s Resp. at 6–7, ECF No.

51; Pl.’s Reply at 4, ECF No. 58. Boxed mattresses are compressed and rolled into a

box for shipping, while flat-packed mattresses are boxed as-is and not compressed.

Statement of Brian Adams at 143:7–13, J.A. at 7,569, ECF No. 60. Shipping boxed

mattresses is typically cheaper and easier than shipping flat-packed mattresses

because boxed mattresses are smaller when packaged.         Id. at 144:7–17, J.A. at

7,570.     Consumers can transport boxed mattresses themselves or have them

delivered to their door, whereas flat-packed mattresses require specialized delivery.

Id. at 144:13–45:11, J.A. at 7,571–72. CVB argued throughout the administrative
Court No. 1:21-cv-00288 (SAV)                                                   Page 7

proceeding that the two packaging methods represent distinct, segmented markets

with little direct competition. See, e.g., Pl.’s Reply at 6, ECF No. 58 (“[C]ompetition

between the [flat-packed] and [boxed mattress] segments is highly attenuated”).

      The Commission based its U.S. industry data on responses from fifty-three

domestic producers that represented the vast majority of domestic production in

2019. Final Determination at III-1, J.A. at 124,193, ECF No. 66. It based its U.S.

import data on questionnaire responses from forty-nine companies that represented

the majority of U.S. imports from the subject countries. Id. at IV-1, J.A. at 124,223.

The foreign producer and exporter data was based on nineteen questionnaire

responses from companies that represent a significant portion of subject imports.

Id. at 4–5, J.A. at 124,046–47.1

      The Commission may issue an affirmative injury determination when it

concludes that an industry in the United States is materially injured or threatened

with material injury by reason of certain imports.           19 U.S.C. §§ 1671d(b),

1673d(b). In making this determination, the Commission must consider the volume

of subject imports, their effect on prices for the domestic like product, and their

impact on producers of the domestic like product. 19 U.S.C. § 1677(7)(B). The

statute defines “material injury” as “harm which is not inconsequential, immaterial,

or unimportant.”     19 U.S.C. § 1677(7)(A).      In assessing material injury, the

1 The Commission noted that sixteen responses were received to the final phase
questionnaires, and the Commission relied on three more preliminary phase questionnaires
in the absence of better data from Cambodia, Serbia, and Thailand.            See Final
Determination at 4–5, J.A. at 124,046–47, ECF No. 66.
Court No. 1:21-cv-00288 (SAV)                                                Page 8

Commission considers all relevant economic factors that bear on the state of the

industry in the United States.   19 U.S.C. § 1677(7)(C)(iii).   No single factor is

dispositive, and all relevant factors are considered “within the context of the

business cycle and conditions of competition that are distinctive to the affected

industry.” Id.

      The Commission began its Views by discussing the conditions of competition

in the industry.   It found that mattress demand “is tied to housing sales and

economic activity, particularly new home sales, housing starts, home resales,

interest rates, gross domestic product (“GDP”) growth, and consumer sentiment.”

Final Determination at 35, J.A. at 124,077, ECF No. 66. The Commission found

that demand trends were mixed, but up overall, with different types of mattresses

having different sales trends.   Id. at 36, J.A. at 124,078.    Demand for boxed

mattresses increased, but demand for flat-packed mattresses decreased. Id.

      Turning to supply, the Commission noted that domestic production served

about two-thirds of the domestic needs; subject imports served less than one-third;

and non-subject imports served the remainder. Id. at 37, J.A. at 124,079. The

Commission found that many domestic producers specialize in certain kinds of

mattresses, but a little less than a quarter of producers overlap between boxed

mattresses and flat-packed mattresses. Id. at 38, J.A. at 124,080. After discussing

industry consolidation and new investment, the Commission noted that domestic

production capacity for boxed mattresses increased by 121.2 percent during the
Court No. 1:21-cv-00288 (SAV)                                                 Page 9

period of investigation and a further 48.6 percent in interim 2020. Id. at 38–39,

J.A. at 124,080–81.     The Commission concluded its discussion of supply by

describing the near-total shift in subject imports away from China and toward other

countries during the period of investigation. Id. at 39–40, J.A. at 124,081–82.

      The Commission also considered substitutability. Id. at 41, J.A. at 124,083.

The Commission found a “moderately high degree of substitutability between

domestically produced mattresses and subject imports.” Id. It further found that

subject imports of boxed mattresses competed with flat-packed mattresses. Id. at

41–42, J.A. at 124,083–84.      Although most domestic production was flat-packed

mattresses and most imports were boxed mattresses, the Commission found “the

vast majority of responding purchasers reported that domestically produced

mattresses were interchangeable with and comparable to subject imported

mattresses.” Id. at 42, J.A. at 124,084. From reviewing the provided data, the

Commission concluded that: (1) boxed and flat-packed mattresses can usually be

made to the same specifications and are functionally interchangeable once

unpackaged; (2) packaging is unimportant to end consumers; (3) online retailers do

not provide search filters for packaging; and (4) “[c]onsumer indifference towards

mattress packaging is reflected in purchasing behavior at the wholesale level.” Id.

at 42–43, J.A. at 124,084–85.

      The ITC observed that “price is an important factor in purchasing decisions

for mattresses, although non-price factors are also important.” Id. at 44, J.A. at
Court No. 1:21-cv-00288 (SAV)                                                Page 10

124,086. Among those non-price factors, the Commission found that domestically

produced mattresses and subject imports were “comparable in terms of lead times

and channels of distribution” and “sold through the same channels of distribution.”

Id. at 45, J.A. at 124,087. The Commission noted that the domestic industry faced

about a ten percent increase in raw material costs during the period of

investigation. Id. at 46, J.A. at 124,088.

      Having considered the prevailing conditions of competition, the Commission

moved to the other statutory factors: the volume, price effect, and impact of subject

imports. 19 U.S.C. § 1677(7)(B)(i). In considering these factors, the Commission

must establish a causal connection between the subject imports and the material

injury. Gerald Metals, Inc. v. United States, 132 F.3d 716, 720 (Fed. Cir. 1997). The

statute ensures the Commission cannot “attribut[e] to subject imports an injury

whose cause lies elsewhere.” OCP S.A. v. United States, 47 CIT __, 2023 Ct. Intl.

Trade LEXIS 139 at *64 (citing Hynix Semiconductor, Inc. v. United States, 30 CIT

1208, 1222 (2006)).

      Each of the factors requires the Commission to consider the effects of subject

imports on the domestic industry. In its volume inquiry, the Commission must

consider the significance of the quantity of imports, not just the absolute number.

Id. at *39 (citing USX Corp. v. United States, 11 CIT 82, 85 (1987)). In its price

inquiry, the Commission must consider whether there has been “significant price

underselling” and whether “the effect of imports . . . otherwise depresses prices to a
Court No. 1:21-cv-00288 (SAV)                                                Page 11

significant degree[.]” 19 U.S.C. § 1677(7)(C)(ii). Finally, in its impact inquiry, the

Commission must consider “all relevant economic factors which have a bearing on

the state of the industry[.]” 19 U.S.C. § 1677(7)(C)(iii).

      The Commission found the volume of subject imports was significant, both in

absolute terms and relative to consumption. Final Determination at 48, J.A. at

124,090, ECF No. 66. For price effects, the Commission found that subject imports

sold for less than domestically produced mattresses in nearly every quarterly

comparison. Id. at 50, J.A. at 124,092.

      Based on the moderately high degree of substitutability between
      subject imports and the domestic like product, the importance of price
      in purchasing decisions, and the pervasive underselling, as well as the
      purchase cost data, we find that subject import underselling was
      significant during the period of investigation. The significant
      underselling by cumulated subject imports contributed to subject
      imports gaining sales and market share at the domestic industry’s
      expense during the period of investigation.

Id. at 52, J.A. at 124,094. The Commission therefore determined that imports had

significant adverse effects on domestic like product prices.      Id. at 56, J.A. at

124,098.

      In its impact analysis, the Commission found that low-priced subject imports

kept prices low despite rising U.S. consumption. Id. at 58, J.A. at 124,100. The

Commission based its determination that imports significantly impacted the

domestic industry on reduced capacity utilization, high end-of-period inventories,

slight reductions in sales, and changes in research and development and capital

expenditures.    Id. at 58–73, J.A. at 124,100–15.       Having found that all three
Court No. 1:21-cv-00288 (SAV)                                               Page 12

statutory factors were satisfied under the prevailing conditions of competition, the

Commission concluded that the domestic industry was “materially injured by

reason of imports of mattresses” from the subject countries.      Id. at 73, J.A. at

124,115.

                                D. The Present Case

      On July 13, 2021, CVB filed a complaint with this Court, alleging that the

Commission’s injury determination was unsupported by substantial evidence or

otherwise not in accordance with law. Compl. ¶ 39, ECF No. 8. CVB argues that

the Commission’s determination is unsupported by substantial evidence because:

(1) The Commission improperly ignored record evidence that the U.S. mattress

market is sharply segmented and that competition in it is highly attenuated; (2) it

improperly ignored record evidence showing significant non-price reasons for

increases in subject imports; (3) its determination that subject imports depressed or

suppressed the prices of domestic like products is unsupported without either price

convergence or signs of falling domestic prices; and (4) its determination that

subject imports had a significant impact on the domestic industry improperly failed

to consider the mattress industry’s segmentation between boxed and flat-packed

mattresses. Pl.’s Br. at 2–4, ECF No. 48. CVB filed its Motion for Judgment on the

Agency Record on March 28, 2022; the Commission filed its response on June 13,

2022; Intervenors filed their response on July 1, 2022; and CVB filed its reply on
Court No. 1:21-cv-00288 (SAV)                                             Page 13

August 1, 2022. Pl.’s Br., ECF No. 48; Def.’s Resp., ECF No. 51; Def.-Ints.’ Resp.,

ECF No. 53; Pl.’s Reply, ECF No. 58.

      The crux of CVB’s argument is that boxed mattresses and flat-packed

mattresses occupy different segments of the mattress market — with producers and

purchasers concentrating on one or the other and only highly attenuated

competition existing between the two.       CVB argues that any domestic industry

injury reflected a demand shift away from flat-packed mattresses toward boxed

mattresses and was not a consequence of unfairly priced imports. The parties agree

that boxed mattresses are, as a general matter, cheaper than flat-packed

mattresses. Oral Argument Transcript (Oral Arg. Tr.) at 7:21–22; 37:19, ECF No.

75. Because the domestic industry produced mostly flat-packed mattresses and

subject imports consisted almost exclusively of boxed mattresses, this demand shift

resulted in an increased market share for imports at the expense of the domestic

industry. See Pl.’s Br. at 9, ECF No. 48.

      At oral argument, the Court focused on the Commission’s use of statistics to

support its conclusion that a significant share of producers and purchasers of

mattresses overlapped between flat-packed and boxed mattresses. If true, this

would tend to undermine CVB’s claim of market segmentation and attenuated

competition. First, the Court noted that the Commission opportunistically treated

companies that merged during the period of investigation as single companies in

order to reach the conclusion that “[n]early a quarter (12) of responding domestic
Court No. 1:21-cv-00288 (SAV)                                              Page 14

producers produced both [flat-packed] and [boxed mattresses] in 2019, with these

producers accounting for [a majority] of [boxed mattress] production that year[.]”

Final Determination at 38, J.A. at 124,080, ECF No. 66; Oral Arg. Tr. at 25:1–20,

ECF No. 75. Tempur Sealy acquired Comfort in 2018, and Leggett & Platt acquired

Elite in 2019. In each case, the acquiring company produced primarily flat-packed

mattress; and its merger target predominately produced boxed mattresses. The ITC

treated them as four separate entities throughout its Final Determination — except

the one time it found it convenient to treat the four companies as only two entities

to inflate the market share of producers that manufactured both flat-packed and

boxed mattresses. See id. Second, the Court noted the Commission’s questionable

purchaser data summary, which concluded that “[c]onsumer indifference toward

mattress packaging is reflected in purchasing behavior at the wholesale level” in

part because “[e]leven of [nineteen] responding purchasers reported purchasing

and/or importing both [boxed and flat-packed mattresses].” Final Determination at

43, J.A. at 124,085, ECF No. 66; see also Oral Arg. Tr. at 27:22–28:1, ECF No. 75.

The Court noted that most purchasers who reported buying both packaging types

purchased vastly more of one mattress type than the other and that “there are only

two . . . that had anything close to parity in their purchases of [boxed mattresses]

and flat-pack mattresses.” Oral Arg. Tr. at 27:22–28:1, ECF No. 75. The Court

characterized the Commission’s use of statistics as “legerdemain.” Id. at 26:16. The

Commission responded that, although these portions of its Final Determination
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were “very inarticulately written,” they amounted only to “harmless error.” Id. at

65:2–3.

      The Court recognized that the ITC changed its approach in the final pages of

its Views.   Id. at 41:16–25 (characterizing the last portion of the Views as an

“alternative holding.”). After spending much of the document struggling against the

evidence for a polarized mattress market, the Commission directly answered CVB’s

rejoinder. It found that the domestic boxed mattress sector, considered separately

from the domestic flat-packed mattress sector, was injured by subject imports. See

Final Determination at 69–73, J.A. at 124,111–15, ECF No. 66. Specifically, the

Commission found that, although domestic boxed mattress producers “improved

their performance by most measures during the period of investigation,” their

performance “would have been appreciably stronger during the period of

investigation but for the significant volume and increase in volume of low-priced

subject imports that displaced domestic industry shipments from the U.S. market

and depressed domestic like product prices to a significant degree, including the

prices of [boxed mattress] products.”     Id. at 69–70, J.A. at 124,111–12.      The

Commission cited record evidence in support of this finding, including: (1) low

factory capacity utilization despite increased U.S. boxed mattress consumption, (2)

“subject imports of [boxed mattresses] increased their share of overall apparent U.S.

consumption by more than domestically produced [boxed mattresses] during the

period[,]” and (3) questionnaire responses from domestic boxed mattress producers
Court No. 1:21-cv-00288 (SAV)                                               Page 16

indicated that imports adversely impacted returns on their investments. See id. at

70–72, J.A. at 124,112–14. In other words, imports of boxed mattresses retarded

the growth of domestic boxed mattress manufacturers’ sales.

      The Court ordered the parties to submit supplemental letter briefs

addressing whether the Commission’s “alternative holding” that considered the

domestic boxed mattress industry in isolation allowed for the Commission’s

mishandling of market polarization statistics to be harmless error.      See Minute

Order, ECF No. 71. In its supplemental brief, the Commission argued (1) “there has

been no error” with respect to its handling of statistics; (2) “any lack of perfect

clarity is unfortunate, but not deceptive”; and (3) were the Court to find that the

Commission’s statistics were in error, “such error is harmless and does not warrant

a remand.” Def.’s Supp. Br. at 2, ECF No. 79. The Commission asserted that it

derived its finding of a high degree of overlap between boxed and flat-packed

mattress manufacturers from a table that used data from 2019 only, and the

relevant corporate acquisitions took place in 2018 and 2019. See id. at 2–4; see also

Final Determination at III-3–6, J.A. at 124,195–98, ECF No. 66 (tabulating U.S.

producer shares of flat-packed and boxed mattresses in 2019). Although the table

treated the four producers separately and the Commission combined them to make

its finding, the Commission “indicat[ed] in the corresponding footnote (n. 156) that

‘although [boxed mattress] producers Comfort and Elite completed separate

domestic producers’ questionnaire responses, Tempur Sealy acquired Comfort in
Court No. 1:21-cv-00288 (SAV)                                             Page 17

2018 and Leggett & Platt acquired Elite in 2019.’” Def.’s Supp. Br. at 3–4, ECF No.

79; see also id. at 38 n.156, J.A. at 124,080. The Commission explained that it

included this footnote “specifically to inform how it had tabulated the data and to

provide its reasoning” and that “it was a factually accurate finding, which

reasonably accounted for company acquisitions[.]” Def.’s Supp. Br. at 4, ECF No.

79.

      The ITC next addressed the standard for harmless error. It cited case law in

support of its argument that errors are harmless where, even including the error,

substantial evidence supports the Commission’s determination. Id. at 4–5 (citing

U.S. Steel Grp. v. United States, 96 F.3d 1352, 1363–65 (Fed. Cir. 1996) for the

proposition that errors are harmless where other evidence, taken as a whole, was

sufficient to support the conclusion).   The Commission argued that substantial

evidence still supports its material injury finding because it defined a single

domestic like product that encompassed all mattresses within the scope of its

investigation, which CVB did not challenge. Id. at 5–6. Because the Commission

analyzed the domestic industry as a whole, it was not legally required to analyze

different segments of the domestic industry and assess the impact to each

independently. Id. In a footnote, the Commission also asserted that, even if it

treated Elite and Comfort — the two boxed mattress producers that merged with

flat-packed mattress producers — separately, “there would still be the same 12

domestic producers that produced both [flat-packed] and [boxed mattresses] in
Court No. 1:21-cv-00288 (SAV)                                               Page 18

2019, accounting for a smaller but not insignificant portion of U.S. [boxed mattress]

production . . . that year.” Id. at 4–5, n.6. The Commission concluded by once again

noting that it

         addressed [CVB’s] arguments with respect to the performance of
         [boxed mattress] producers and found that subject imports had an
         impact on this subset of the domestic industry, negatively affecting
         their capacity utilization rates, sales revenues and operating and net
         income, and returns on investments as subject imports surged into the
         U.S. market and displaced domestically produced [boxed mattresses]
         and significantly depressed prices for this product.

Id. at 9.

         The Defendant-Intervenors’ supplemental brief endorsed the Commission’s

brief.      See Def.-Ints.’ Supp. Br. at 1–2, ECF No. 81.     Defendant-Intervenors

similarly argued that the Commission’s statistical summary “while inartful, is

accurate and does not constitute an error”; and even if the Court were to find that

the Commission was in error, such error was harmless.          Id.   The Intervenors

acknowledged that the Commission changed its “tabulation methodology” when

summarizing Table III-1 but claimed that “[i]n footnote 156 on page 38 of its Views,

the Commission attempted to alert the reader” of the change. Id. at 4. Although

“this footnote might have been phrased more artfully . . . it still shows that the

Commission did try to be transparent about this limited instance where it combined

U.S. producer data due to the Leggett & Platt/Elite and Tempur Sealy/Comfort

transactions.” Id. at 4–5. Further, the table “only presented data for 2019 and
Court No. 1:21-cv-00288 (SAV)                                              Page 19

given that the transactions had occurred in mid-2018 and January 2019, it was not

unreasonable to point to combined data in this instance.” Id. at 5.

      Invoking the harmless error standard, Defendant-Intervenors assert that

“Courts have previously affirmed Commission determinations containing an error,

where the outcome would have been the same because the error did not detract from

the substantial evidence as a whole supporting the Commission’s decision.” Id. at

8–9. They claim that “the path of the Commission’s decision here is discernible

even without” the misleading statistical summary because the Commission’s Views

“set forth all issues material to its conclusion[.]” Id. at 9. Defendant-Intervenors

contend that, even if the Commission’s creative statistics detract from its

conclusion, the Commission’s decision was “otherwise reasonable and supported by

the record as a whole.” Id. at 10.

      CVB had the last word. Its brief argued that (1) the Commission was in

error; (2) the error was not harmless because it prejudiced CVB and because, after

correcting the error, the Commission’s material injury determination is not

supported by substantial evidence; and (3) the final pages of the Final

Determination were not supported by substantial evidence and therefore do not

function as an alternative holding. Pl.’s Supp. Br. at 1–2, ECF No. 84. CVB first

offered its standard of harm, writing without citation to authority that “[e]rror is

not harmless if the Commission cannot say for certain that its ultimate injury

finding would not have changed in light of the error.” Id. at 4. CVB then explained
Court No. 1:21-cv-00288 (SAV)                                                  Page 20

how it believed it had been harmed by the Commission’s misleading statistical

summary, as “the error contributed to the Commission’s refusal to meaningfully

engage with CVB’s market polarization argument and to evaluate properly the

conditions of competition in the mattress industry.” Id. at 3.

        CVB rejected the Commission’s and Defendant-Intervenors’ assertion that

the Commission did not need to address CVB’s attenuated competition argument,

claiming that the law requires the Commission to evaluate “all relevant economic

factors within the context of the business cycle and conditions of competition that

are distinctive to the affected industry.” Id. at 3 (citing 19 U.S.C. § 1677(7)(C)(iii)).

CVB wrote that “the Commission must comply with the statute no matter how a

respondent allegedly structures its arguments.” Id. Plaintiff acknowledged that

there may be situations where the Commission is not required to engage in a

market segmentation analysis but argued that § 1677(7)(C)(iii) made it necessary

here.   Id. at 5.   It also criticized the Commission’s and Defendant-Intervenors’

attempts to “justify the Commission’s mathematical legerdemain” and argued that

“the record clearly supports a finding of market polarization when the error is

removed.” Id. at 6. CVB invoked the Commission’s purchaser data summary for

support. Id.

        CVB closed by arguing that the Views’ final pages could not function as an

“alternative holding” because they were not supported by substantial evidence. See

id. at 7. Plaintiff asserted that the domestic boxed mattress industry suffered no
Court No. 1:21-cv-00288 (SAV)                                              Page 21

injury, noting that the domestic industry gained market share during the period of

investigation.   See id.   It quoted the Commission’s admission that “‘domestic

producers of [boxed mattresses] improved their performance by most measures

during the period of investigation.’” Id. at 8 (quoting Def.’s Resp. at 45, ECF No.

51). CVB cited cases where this Court sustained the Commission’s finding of no

material injury when the domestic industry’s performance improved during the

period of investigation. Id. at 8–9.     It faulted the Commission for “merely

assum[ing] that the cause of the unused capacity was subject imports, and not some

other cause such as raw material shortages . . . or an inability to produce [boxed

mattresses] to the same standard as importing producers.” Id. at 9 (citing to record

evidence that seven importers indicated that subject imports were superior in

quality).

      With briefing and argument concluded, the Court considers the claims of the

parties.

                 JURISDICTION AND STANDARD OF REVIEW

      This Court has jurisdiction over this action pursuant to 28 U.S.C. § 1581(c).

The Court must assess the factual and legal findings underpinning the

Commission’s determinations and “hold unlawful any determination, finding or

conclusion . . . unsupported by substantial evidence on the record, or otherwise not

in accordance with law.” 19 USC § 1516a(b)(1)(B)(i). Substantial evidence is “such

relevant evidence as a reasonable mind might accept as adequate to support a
Court No. 1:21-cv-00288 (SAV)                                                 Page 22

conclusion.” Consol. Edison Co. of New York v. NLRB, 305 U.S. 197, 229 (1938). It

must be “more than a scintilla, and must do more than create a suspicion of the

existence of the fact to be established.”       NLRB v. Columbian Enameling &

Stamping Co., 306 U.S. 292, 300 (1939). However, “the possibility of drawing two

inconsistent conclusions from the evidence does not prevent an administrative

agency’s finding from being supported by substantial evidence.” Matsushita Elec.

Indus. Co. v. United States, 750 F.2d 927, 933 (Fed. Cir. 1984).

      This Court’s review of the Commission’s determination is limited to the

administrative record that was before the agency. 19 U.S.C. § 1516a(b)(2)(A). To

determine if substantial evidence exists, the Court considers “the record as a whole,

including evidence that supports as well as evidence that ‘fairly detracts from the

substantiality of the evidence.’” Nippon Steel Corp. v. United States, 337 F.3d 1373,

1379 (Fed. Cir. 2003) (quoting Atlantic Sugar, Ltd. v. United States, 744 F.2d 1556,

1562 (Fed. Cir. 1984)). The Court assesses whether the Commission succeeded in

putting forward a reasoned explanation by “mak[ing] the necessary findings and

hav[ing] an adequate evidentiary basis for its findings.” In re NuVasive, Inc., 842

F.3d 1376, 1382 (Fed. Cir. 2016) (internal citations omitted).          To meet this

threshold, the Commission must not only “examine the relevant data and articulate

a satisfactory explanation for its action,” it must also provide “a rational connection

between the facts found and the choice made.” Id.
Court No. 1:21-cv-00288 (SAV)                                                Page 23

                                   DISCUSSION

      At the heart of CVB’s argument lies the claim that the Commission

unreasonably determined that boxed mattresses and flat-packed mattresses are not

a segmented market. See Pl.’s Br. at 2–4, ECF No. 48 (summarizing argument as

containing four distinct claims, but with the first, second, and fourth claims being

dependent on distinguishing data about boxed and flat-packed mattresses). CVB

argues that boxed mattresses experienced most of the competition from subject

imports, but the domestic boxed mattress industry thrived during the period of

investigation. Id. at 9. In contrast, the domestic flat-packed mattress industry

contracted; but there were relatively few imports of flat-packed mattresses.       Id.

CVB therefore argues the downturn cannot be attributed to subject imports but

instead to a marketplace shift characterized by increased boxed mattress demand

and declining flat-packed mattress demand. Id. CVB believes that the Commission

unreasonably found that there was not a segmented market between boxed and flat-

packed mattresses. Id. at 8–17. The Commission responds that it fully considered

and analyzed the data, and CVB’s primary objection is simply that the Commission

came to conclusions opposite CVB’s preference. See generally Def.’s Resp. at 17–26,

ECF No. 51.

      The Court first analyzes three sections of the Commission’s Views that were

not supported by substantial evidence: (1) the discussion of specialization in the

industry, (2) the characterization of mattress purchasers’ specialization, and (3) the
Court No. 1:21-cv-00288 (SAV)                                                    Page 24

analysis of purchaser questionnaires. Final Determination at 38, 43–44, J.A. at

124,080, 124,085–86, ECF No. 66. The Court then turns to the question of harmless

error. The Court finds that the Commission’s misleading statistical summaries are

harmless error. Because the Court holds that there remains sufficient reasoning in

the Commission’s Views to uphold its injury determination as supported by

substantial evidence, the determination is SUSTAINED.2

                               I. The Commission’s Errors

       The Commission’s Views contain errors that center around a common theme.

For much of its Views, the Commission employed mathematical obfuscation and

statistical chicanery to make the mattress industry appear less segmented than it

is.   When it addressed producer specialization, the Commission tried to make

producers appear less specialized. To do this, it treated two pairs of companies that

merged during the period of investigation as two single companies that produced

both boxed and flat-packed mattresses, rather than as four companies that each

2 The determination is sustained except with respect to Malaysia.   Plaintiff CVB does not
possess standing to challenge the Commission’s determination with respect to Malaysia.
Def.’s Resp. at 1, ECF No. 51. But see Oral Arg. Tr. at 55:5–16, ECF No. 75 (preserving
standing argument for appeal). It is well-established that each subject country is its own,
unique determination, even when the Commission cumulates imports from multiple
countries for its injury determination. See, e.g., Shandong TTCA Biochemistry Co. v.
United States, 34 CIT 582, 589–90 (2010) (collecting cases). A party requires standing to
challenge the determination for each country. Because CVB conceded there is no evidence
it imports mattresses from Malaysia, it cannot show any injury from the Malaysia
determination and therefore lacks standing to challenge the Commission’s determination
with respect to Malaysia. Oral Arg. Tr. at 55:5–16, ECF No. 75; see also TransUnion LLC
v. Ramirez, 141 S. Ct. 2190, 2200 (2021) (“To have Article III standing to sue in federal
court, plaintiffs must demonstrate, among other things, that they suffered a concrete harm.
No concrete harm, no standing.”).
Court No. 1:21-cv-00288 (SAV)                                            Page 25

specialized in one or the other.   To make purchasers seem less specialized, the

Commission reported that eleven of nineteen purchasers bought both boxed and

flat-packed mattresses but conveniently omitted that almost all of those eleven

purchased far more of one packaging type than the other. Finally, the Commission

omitted important context from its description of purchaser surveys, giving the

impression that wholesale purchasers did not care about packaging type. Each

error demonstrates the Commission’s unfortunate attempt to paint a perfect picture

of an unsegmented market.

                            A. Producer Specialization

      The Commission’s first error is its analysis of producer specialization.

During the period of investigation, two pairs of domestic producers merged. Final

Determination at III-9–10, J.A. at 124,201–02, ECF No. 66. Throughout the Views,

the Commission treated those domestic producers as four separate companies.

However, in its analysis of producer specialization, it treated the producers that

merged as two companies instead of four; and it gave no explanation for making the

change. The reason is self-evident. It was more convenient to treat them as two

companies because doing so gave the impression that more domestic producers

manufacture both boxed and flat-packed mattresses.

      The Commission summarized its findings regarding producer specialization:

            Although two of the three largest domestic producers of
            [boxed mattresses] produced no [flat-packed mattresses],
            the three largest producers of [flat-packed mattresses]
            also produced [boxed mattresses]. Nearly a quarter (12)
Court No. 1:21-cv-00288 (SAV)                                               Page 26

             of responding domestic producers produced both [flat-
             packed mattresses] and [boxed mattresses] in 2019, with
             these producers accounting for [a majority] of [boxed
             mattress] production that year, and nearly half (21) of all
             responding producers reported production of [boxed
             mattresses].

Id. at 38, J.A. at 124,080, (internal citations omitted). To support its claims, the

Commission relies primarily on Table III-1. Id. Table III-1 is a chart that lists for

each U.S. producer in 2019 its share of total mattress production, boxed mattress

production, and flat-packed mattress production. Id. at III-3–6, J.A. at 124,195–98.

      First, the Commission states that two of the three largest domestic producers

of boxed mattresses produced no flat-packed mattresses. Id. at 38, J.A. at 124,080.

According to the table, the three largest domestic producers of boxed mattresses are

Elite, Innocor, and Purple, none of which produce flat-packed mattresses. Id. at III-

3–4, J.A. at 124,195–96. Looking at the Commission’s chart, it therefore appears

that all three of the largest domestic boxed mattress producers manufactured no

flat-packed mattresses in 2019. However, Leggett & Platt — a flat-packed mattress

producer — acquired Elite in a deal completed in January 2019. Id. at 38 n.156,

J.A. at 124,080. The Commission apparently chose to treat them as one entity in

2019, allowing the Commission to say that one — rather than zero — of the three

largest domestic producers of boxed mattresses also produced flat-packed

mattresses. The Commission did not explain its decision to treat the two companies

as one entity, even though Elite’s data was reported separately in the Commission’s
Court No. 1:21-cv-00288 (SAV)                                                     Page 27

own charts and Elite continued to operate separately.3 See id. at III-3–4, III-9–10,

J.A. at 124,195–96, 124,201–02. It also does not explain why it treated Elite as a

separate entity everywhere else in the Views.

       The Commission next states that the twelve producers that produced both

kinds of mattresses represented a majority of domestic boxed mattress production

in 2019. Id. at 38, J.A. at 124,080. But when the Court manually summed the

data, it sums to less than a quarter, as presented by the Commission in the chart.

Id. at III-3–6, J.A. at 124,195–98. The only way to reach a majority of production is

to include Comfort and Elite with their respective acquirers, Tempur Sealy and

Leggett & Platt. Once again, the Commission elsewhere treats these entities as

separate.    It repeatedly references fifty-three companies, not fifty-one; the

acquisitions were not coextensive with the period of investigation; and the

Commission treats Comfort and Elite as separate entities from Tempur Sealy and

Leggett & Platt at almost every other point in its determination. See, e.g., id. at 37–

39, J.A. at 124,079–81. Compare id. at 36, n.156, J.A. at 124,080 (treating Comfort

and Elite as “domestic producers [that] produced both [flat-packed] and [boxed]

mattresses in 2019” to create a useful statistic), with id. at 69, n.305, J.A. at

124,111 (listing “domestic producers that produced [boxed mattresses] but no [flat-

packed mattresses] in 2019” and including both Comfort and Elite). No explanation

for the statistical gimmick appears.

3 The same is true of the Comfort/Tempur Sealy acquisition.      See Final Determination at
III-3–6, III-9–10, J.A. at 124,195–98, 124,201–02, ECF No. 66.
Court No. 1:21-cv-00288 (SAV)                                              Page 28

      Second, the Commission found that the three largest domestic producers of

flat-packed mattresses also produced boxed mattresses. Id. at 38, J.A. at 124,080.

The Commission is correct; it is strictly true that the three largest domestic

producers of flat-packed mattresses also produced boxed mattresses. However, this

fails to tell the whole story. Although the three companies produced both boxed and

flat-packed mattresses, each produced multiples more flat-packed mattresses. The

three largest domestic flat-packed mattress producers are Serta Simmons, Tempur

Sealy, and Corsicana. Each company’s market share in flat-packed mattresses is at

least fifteen times greater than its share of the domestic boxed mattress market.

Id. at III-3–6, J.A. at 124,195–98.

      The relative shares of boxed and flat-packed mattresses in domestic

production are also important. The Commission reported that in 2019 flat-packed

mattresses were the substantial majority of domestic production, and boxed

mattresses were less than a quarter of domestic production. Id. at III-19, J.A. at

124,211. Correcting for this domestic production ratio, for every one thousand flat-

packed mattresses Serta Simmons produced in 2019, it produced only twelve boxed

mattresses; for every one thousand flat-packed mattresses Tempur Sealy produced,

it produced seventeen boxed mattresses; for every one thousand flat-packed

mattresses Corsicana produced, it produced sixteen boxed mattresses.            The

Commission’s statement that the three largest domestic producers of flat-packed

mattresses also produced boxed mattresses obscured the fact that their boxed
Court No. 1:21-cv-00288 (SAV)                                                Page 29

mattress production was negligible. The Commission is obligated to draw from the

evidence all inferences the evidence reasonably demands, not just those that are

convenient. See Allentown Mack Sales & Serv., Inc. v. NLRB, 522 U.S. 359, 378

(1998) (The Commission must draw “all those inferences that the evidence fairly

demands.”). The Commission failed to do so here.

      Third, the Commission stated, “Nearly a quarter (12) of responding domestic

producers produced both [flat-packed mattresses] and [boxed mattresses] in 2019,

with these producers accounting for [a majority] of [boxed mattress] production that

year[.]” Final Determination at 38, J.A. at 124,080, ECF No. 66. Of the twelve

companies that produced both mattress types in 2019, five produced virtually none

of one kind. Id. at III-3–6 124,195–98 (providing data that Ashley, Estee, Jeffco,

Old West, and Salt Lake each produced far less than one percent of U.S. production

of one kind of mattress). Of the remaining seven domestic manufacturers, four have

stark production differences: Corsicana produced more of one type of mattress than

the other by a ratio of 63-to-1; Kolcraft had a ratio of 74-to-1; Serta Simmons had a

ratio of 83-to-1; and Tempur Sealy had a ratio of 60-to-1. Id. Of the remaining

three companies, Solstice had a ratio of nearly 11-to-1; Leggett & Platt, of nearly 5-

to-1; and the lone balanced producer, Carpenter, had a nearly 1-to-1 ratio.4 Id.

4Some producers manufactured more flat-packed mattresses, and others produced more
boxed mattresses. These ratios represent either flat-packed-to-boxed or boxed-to-flat-
packed, depending on what packaging type the producer predominantly made.
Court No. 1:21-cv-00288 (SAV)                                             Page 30

Again, the Commission failed to provide necessary context by drawing all those

inferences fairly demanded by the evidence.

      The Commission must fairly analyze the data. See Allentown Mack Sales &

Serv., 522 U.S. at 378. Here, the evidence demanded acknowledgement that nearly

every producer is highly specialized. The Commission’s failure to do so was not

merely “inartful.” It misread the data in question. See Def.-Ints.’ Supp. Br. at 1,

ECF No. 81. The law charges the Commission with explaining how it views the

evidence before it.   When it changes methodologies in analyzing the data, the

Commission must acknowledge and justify any inconsistent treatment.            See

Wheatland Tube Co. v. United States, 161 F.3d 1365, 1369–70 (Fed. Cir. 1998)

(reviewing courts look for “a reasoned analysis or explanation” and can only affirm

when the agency’s path is “reasonably discernible”).      Because the Commission

opportunistically combined production figures only when it found it useful to avoid

CVB’s market segmentation objections, the Commission has failed to support its

findings on producer specialization with substantial evidence.

                      B. Mattress Purchasers’ Specialization

      The Commission’s second error is its analysis of purchaser specialization. As

with producer specialization, the Commission ignored or failed to provide important

context in its analysis of purchaser specialization. This gave the false impression

that purchasers are indifferent about mattress packaging. Not so. Out of nineteen

purchasers, only three purchased flat-packed and boxed mattresses in numbers
Court No. 1:21-cv-00288 (SAV)                                              Page 31

approaching parity. The other sixteen purchased far more of one packaging type

than the other, and eight of the nineteen (42%) exclusively purchased one packaging

type. The Commission papered over these statistics to make purchasers appear less

specialized and therefore make the market appear less segmented.

      The Commission reported that “[c]onsumer indifference towards mattress

packaging is reflected in purchasing behavior at the wholesale level” in part

because “[e]leven of [nineteen] responding purchasers reported purchasing and/or

importing both [boxed and flat-packed mattresses].” Final Determination at 43,

J.A. at 124,085, ECF No. 66. The Commission cites its purchaser questionnaires

but does not provide a detailed analysis of their responses. The data demonstrate

significant bifurcation in wholesale purchasing decisions.   Eight of the nineteen

purchasers buy only one kind of mattress packaging; and eight of the remaining

eleven wholesale mattress purchasers are highly specialized. Wayfair purchases

one type of mattress more than another at nearly a 10-to-1 ratio; Amazon at a 15-to-

1 ratio; Home Depot at a 5-to-1 ratio; Nebraska Furniture Mart at a 12-to-1 ratio;

Rooms to Go at a 50-to-1 ratio; Target at a 13-to-1 ratio; Transform at a 62-to-1

ratio; and Overstock at a 6.5-to1 ratio. J.A. at 102,831, ECF No. 66 (Wayfair); id.

at 103,156 (Amazon); id. at 103,086 (Home Depot); id. at 103,051 (Rooms to Go); id.

at 102,935 (Target); id. at 102,865 (Transform); J.A. at 108,419, ECF No. 65
Court No. 1:21-cv-00288 (SAV)                                                   Page 32

(Nebraska Furniture Mart); J.A. at 102,977, ECF No. 73 (Overstock).5 Only Berrios

and Bob’s Discount Furniture had a roughly 1-to-1 ratio with Costco at about 2-to-1.

J.A. at 103,268, ECF No. 73 (Berrios); id. at 103,122 (Costco); id. at 111,476 (Bob’s

Discount).

      The Commission must fairly analyze the data and draw all inferences the

data reasonably demands. See Allentown Mack Sales & Serv., 522 U.S. at 378. It is

true that eleven of nineteen purchasers buy both boxed and flat-packed mattresses,

but the data once again show this statistic is misleading. Only three of nineteen

wholesale purchasers buy boxed and flat-packed mattresses in similar quantities.

Sixteen of nineteen wholesale purchasers either purchase only one kind of mattress

packaging or purchase overwhelmingly one kind of packaging.               No reasonable

person could review this data and determine that it shows wholesale purchasers are

“indifferent” to packaging. See Goss Graphics Sys., Inc. v. United States, 22 CIT

983, 1004 (1998), aff’d, 216 F.3d 1357 (Fed. Cir. 2000) (The Commission has

“discretion to make reasonable interpretations of the evidence.”) (emphasis added).

Most purchasers strongly favor one packaging type over the other. The Commission

should have acknowledged this data and provided its views. Its failure to do so is

error. See Allentown Mack Sales & Serv., Inc., 522 U.S. at 378.

5 These ratios represent either flat-packed-to-boxed or boxed-to-flat-packed, depending on

what packaging type the purchaser predominantly bought.
Court No. 1:21-cv-00288 (SAV)                                                 Page 33

                           C. Purchaser Survey Rankings

      The Commission’s third error is found in its analysis of purchaser surveys.

Again, the Commission ignored or failed to provide important context that

undermined the Commission’s conclusion that packaging type is irrelevant to

purchasers. The Commission wrote that “[a]lthough 11 purchasers reported that

packaging was very important to their purchasing decisions, only two purchasers

ranked packaging among the top three factors driving their purchasing decisions,

consistent with the large number of purchasers reporting purchases of both [boxed

and flat-packed mattresses].” Final Determination at 44, J.A. at 124,086, ECF No.

66. In a footnote, the Commission added that “[a]lthough responding purchasers

were free to rank ‘Packaging (i.e., [boxed] or flat packed mattresses)’ among their

top three purchasing factors, as among the purchasing factors enumerated in the

purchasers’ questionnaire, only two did so.” Id. at 44, n.185, J.A. at 124,086.

      The Commission’s statements imply that the question involved ranking from

a pre-selected list. It did not. The question merely provided a blank space and

some examples: “Major purchasing factors.Please list, in order of their importance,

the main factors your firm considers in deciding from whom to purchase mattresses

(examples include availability, extension of credit, contracts, price, quality, range of

supplier’s product line, traditional supplier, etc.).”   Despite packaging not being

listed as a factor for this question, many wholesale purchasers’ questionnaire

responses told a more nuanced story about what drove their decisions. See, e.g.,
Court No. 1:21-cv-00288 (SAV)                                              Page 34

U.S. Purchasers’ Questionnaire of Bob’s Discount Furniture, J.A. at 111,481,

111,490, ECF No. 66 (listing three factors other than packaging but earlier stating

that “[w]e expect the industry to continue towards [boxed mattresses] due to

customer preference and convenience/portability of the product”); U.S. Purchasers’

Questionnaire of Burlington, J.A. at 102,902, 102,915, ECF No. 65 (listing three

non-packaging factors as most important but purchasing zero boxed mattresses);

U.S. Purchasers’ Questionnaire of American Signature, J.A. at 103,013, 103,028,

ECF No. 66 (listing three non-packaging factors as most important but purchasing

zero flat-packed mattresses); U.S. Purchasers’ Questionnaire of Rooms to Go, J.A. at

103,051, 103,065 (listing “[p]roduct features and specifications” as third most

important and purchasing a 50-to-1 ratio of flat-packed-to-boxed mattresses).

      Although it is not the Court’s domain to reweigh the evidence, it is the

Court’s domain to require that the Commission weigh all the evidence in the record

— not just the evidence that supports its decision. See Nippon Steel Corp., 337 F.3d

at 1379 (requiring examination of “the record as a whole, including evidence that

supports as well as evidence that fairly detracts from the substantiality of the

evidence”) (internal quotation omitted). The manufacturers’ data combined with

the wholesale purchasers’ data tell a much more complicated story than the

Commission’s initial line that packaging is irrelevant. It was error to not examine

this data on the record and explain what it meant for the Commission’s ultimate

decision. See In re NuVasive, Inc., 842 F.3d at 1382 (requiring the ITC to “examine
Court No. 1:21-cv-00288 (SAV)                                                  Page 35

the relevant data and articulate a satisfactory explanation for its action[,]” so that it

provides “a rational connection between the facts found and the choice made”). The

only thing the Commission has proven is the truth of the adage that “There are

three kinds of lies: Lies, Damned Lies, and Statistics.” Mark Twain, Chapters from

My Autobiography – XX, NORTH AMERICAN REVIEW 465, 471 (July 5, 1907).6

                                   II. Harmless Error

      The Commission need not have gone to such lengths to avoid addressing the

segmentation in the U.S. mattress market. When the Commission finally engaged

with CVB’s arguments and addressed the domestic boxed mattress industry as a

distinct segment, the Commission found injury to that segment. These findings are

supported by substantial evidence. Contrary to CVB’s assertions, the Commission

did not need to go further and conduct a formal market segmentation analysis.

Because, even with the Commission’s errors, there is still substantial evidence to

support the Commission’s ultimate injury finding, the Commission’s errors were

harmless. It is on this basis that the Court will sustain the Commission’s Final

Determination.

                                    A. Legal Standard

      The principle of harmless error applies to judicial review of agency action.

See Vermont Yankee Nuclear Power Corp. v. Nat. Res. Def. Council, Inc., 435 U.S.

519, 558 (1978) (“Administrative decisions should be set aside . . . only for

6 Twain attributes this adage to British Prime Minister Benjamin Disraeli.
Court No. 1:21-cv-00288 (SAV)                                               Page 36

substantial procedural or substantive reasons[.]”); Intercargo Ins. Co. v. United

States, 83 F.3d 391, 394 (Fed. Cir. 1996) (“It is well settled that principles of

harmless error apply to the review of agency proceedings.”). Injury determinations

by the Commission are no different. See, e.g., CP Kelco US, Inc. v. United States, 38

CIT 1511, 1529–31 (2014) (applying the principle of harmless error to an injury

determination by the Commission), aff'd, 623 F. App’x 1012 (Fed. Cir. 2015).

      The touchstone of the harmless error inquiry is prejudice. If the errors did

not change the ultimate result of the agency action, they are harmless. Put another

way, if the Commission’s injury determination is still supported by substantial

evidence — even with the errors — the errors are harmless; and the Commission’s

determination may be sustained. See Belton Indus., Inc. v. United States, 6 F.3d

756, 761 (Fed. Cir. 1993) (“Commerce’s violation did not prejudice appellees.

Accordingly, Commerce’s violation was harmless error.”); CP Kelco US, 38 CIT at

1529 (finding any potential error harmless because “[the Commission’s] ultimate

injury finding would not have changed”).         The Court thus looks past the

Commission’s clumsy efforts to dodge CVB’s arguments and now examines where

the Commission squarely addressed CVB’s objections regarding harm to domestic

boxed mattress manufacturers.

                   B. The Commission’s Errors Were Harmless

      In the final pages of its Views, the Commission found that — even when

examining only domestic producers who exclusively manufactured boxed mattresses
Court No. 1:21-cv-00288 (SAV)                                             Page 37

— subject imports injured the domestic industry.     The Commission forthrightly

acknowledged that domestic boxed mattress manufacturers “improved their

performance” during the period of investigation, but it found that these

manufacturers could have performed even better if not for the subject imports.

Final Determination at 69–73, J.A. at 124,111–114, ECF No. 66. In support, the

Commission pointed to the low capacity utilization of domestic boxed mattress

factories, which it attributed to the subject imports.   Id.   Substantial evidence

supports this portion of the Commission’s Views, and it is enough to sustain the

Commission’s ultimate injury finding.     See 19 U.S.C. § 1677(7)(B) (requiring

findings as to volume, price effects, and impact to sustain a material injury

determination). Accordingly, the final section of the Commission’s analysis renders

its earlier errors harmless.

      When the Commission finally turned to addressing CVB’s arguments and

examined domestic producers of boxed mattresses, it found subject imports injured

those producers. Final Determination at 69–70, J.A. at 124,111–112, ECF No. 66.

The Commission observed that these producers improved their performance during

the period of investigation. Id. This improvement was expected because boxed

mattress imports from China decreased dramatically in the wake of an antidumping

order, and the domestic industry invested in increasing boxed mattress production

capacity. Id. at 69–72, J.A. at 124,111–14. However, the Commission found that,

but for the subject imports “displac[ing] domestic industry shipments . . . and
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depress[ing] domestic like product prices to a significant degree,” domestic boxed

mattress producers would have improved their performance even more. Id. at 70,

J.A. at 124,112.

      In particular, the Commission pointed to domestic manufacturers’ excess

production capacity at a time when the market for boxed mattresses grew. Id. at

70–71, J.A. at 124,112–113. Capacity utilization “remained low over the [period of

investigation]” and decreased from 2019 to 2020.       Id. at 70, J.A. at 124,112.

Although domestic producers of boxed mattresses grew their share of U.S. mattress

consumption, importers saw their share of the market grow more — even as

domestic producers had unused capacity. Id. at 71, J.A. at 124,113.

      The Commission concluded that low-priced imports caused this excess

domestic manufacturing capacity.     Id. at 70–72, J.A. at 124,112–114.      It also

rejected arguments that factors other than price explained the low utilization of

domestic manufacturing plants. Id. at 70, n.308, J.A. at 124,112. The Commission

found a “moderately high degree of substitutability” between domestically produced

mattresses and imports based on reports from domestic producers, importers, and

purchasers.   Id. at 28–29, J.A. at 124,070–71.       The majority of responding

purchasers said domestic boxed mattresses and imports were similar “in terms of

product range, quality, and reliability of supply,” undercutting any argument that a

deficiency in one of those factors explained imports’ advantage. Id. at 70, n.308,

J.A. at 124,112.   The Commission also noted domestic producers’ low rate of
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warranty claims, indicating the quality of their products.      Id.   These findings

undermine the argument that low quality, and not subject imports, led to low

capacity utilization. Compare Pl.’s Supp. Br. at 9, ECF No. 84 (“[T]he Commission

merely assumes that the cause of the unused capacity was subject imports, and not

some other cause such as . . . an inability to produce [boxed mattresses] to the same

standard as importing producers.”), with Final Determination at 70, n.308, J.A. at

124,112, ECF No. 66 (finding that “[n]on-price differences cannot explain the . . .

low rates of capacity utilization because a majority of responding purchasers

reported that domestically produced mattresses were comparable to subject imports

in . . . quality” and “domestic producers of [boxed mattresses] experienced low

warranty return rates”).

      When comparing the use of available manufacturing capacity between flat-

packed   mattress   manufacturers     and   boxed   mattress   manufacturers,    the

Commission determined that boxed mattress manufacturers had more unused

manufacturing capacity. Final Determination at 70, n.308, J.A. at 124,112, ECF

No. 66. This discredits raw material shortages as a cause of the low utilization

because flat-packed and boxed mattresses use similar inputs so that any raw

material shortage should have affected both similarly. Compare Pl.’s Supp. Br. at 9,

ECF No. 84 (“[T]he Commission merely assumes that the cause of the unused

capacity was subject imports, and not some other cause such as raw material

shortages[.]”), with Final Determination at 70, n.308, J.A. at 124,112, ECF No. 66
Court No. 1:21-cv-00288 (SAV)                                              Page 40

(“While we recognize that the domestic [boxed mattress] producers’ reduced rate of

capacity utilization in interim 2020 partly reflects raw material shortages, their

capacity utilization rates remained low . . . relative to domestic [flat-packed

mattress] producers . . . and there is no evidence that [boxed mattress] producers

were incapable of utilizing more of their reported capacity[.]”). It also undercuts

CVB’s argument that examining domestic boxed mattress manufacturers separately

would lead to a determination of no injury. See Pl.’s Supp. Br. at 1–2, ECF No. 84.

At least for capacity utilization, treating domestic boxed mattress producers

separately hurts rather than helps CVB.

      Plaintiff points to prior decisions of this Court affirming Commission

determinations of no injury where the domestic industry grew during the period of

investigation and suggests the same result should apply here. See Pl.’s Supp. Br. at

7–8, ECF No. 84. Not so. That the Commission could have come to a different

conclusion does not mean its conclusion here was unsupported by substantial

evidence. See Vermont Yankee, 435 U.S. at 558 (administrative review is supposed

to “insure a fully informed and well-considered decision, not necessarily a decision

the judge[] . . . would have reached”). The standard of review the Court must apply

is determinative.   As the Supreme Court has explained, “[T]he possibility of

drawing two inconsistent conclusions from the evidence does not prevent an

administrative agency’s findings from being supported by substantial evidence.”

Consolo v. Fed. Maritime Comm’n, 383 U.S. 607, 620 (1966).        Further, the law
Court No. 1:21-cv-00288 (SAV)                                              Page 41

prohibits the Commission from finding that there is no material injury to an

industry “merely because . . . the performance of that industry has recently

improved.” 19 U.S.C. § 1677(7)(J). The Commission can find injury to the domestic

industry even when the domestic industry’s performance improved by some metrics

over the course of the period of investigation.   See, e.g., OCTAL Inc. v. United

States, 539 F. Supp. 3d 1291, 1311–13 (CIT 2021) (affirming the Commission’s

finding of injury despite an increase in profit for the domestic industry during the

period of investigation when other factors, including capacity utilization, suggest

injury). Indeed, § 1677(7)(C)(iii) directs the Commission to evaluate “all relevant

economic factors” when conducting its impact analysis, including “actual and

potential negative effects on. . . growth[.]” The statute allows the Commission to

consider whether the domestic industry grew less than it otherwise would have. Cf.

19 U.S.C. § 1677(7)(J) (“The Commission may not determine that there is no

material injury or threat of material injury to an industry in the United States

merely because that industry is profitable or because the performance of that

industry has recently improved.”).

      For sixty-nine pages, the Commission dodges and ducks to avoid separately

addressing domestic boxed mattress producers as CVB argued it should. The

Commission buried important information and engaged in statistical chicanery. See

Oral Arg. Tr. at 29:7–14, ECF No. 75 (describing the Commission’s actions as

“mathematical legerdemain”).    The Commission persisted with its strategy even
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after oral argument.        See Def.’s Supp. Br. at 4–5, n.6, ECF No. 79 (only

acknowledging in a footnote that the Commission’s disparate treatment of

companies that merged during the period of investigation resulted in a threefold

increase in the percentage of domestic mattresses produced by companies making

both flat-packed and boxed mattresses); see also Pl.’s Supp. Br. at 3–4, ECF No. 84.

None of this was necessary.      In the final section of its Views, the Commission

addressed CVB’s argument and reached the same ultimate finding of injury in a

manner that satisfies the substantial evidence standard. Rather than attempting to

paint a perfect picture, the Commission could have addressed CVB’s arguments

directly from the beginning. Instead, the Commission prevails only because of the

final section of its Views and the harmless error principle. Candor should be option

one, not the last resort.

      C. The Commission Was Not Required to Conduct a Formal Market
                          Segmentation Analysis

      In a final argument, CVB says that the Commission needed to conduct a

“proper market segmentation analysis” to satisfy its statutory obligation to

“evaluate all relevant economic factors described in this clause within the context of

the business cycle and conditions of competition that are distinctive to the affected

industry.” Pl.’s Supp. Br. at 5, ECF No. 84 (quoting 19 U.S.C. § 1677(7)(C)(iii)).

CVB acknowledges the many cases holding the Commission need not conduct a

formal market segmentation analysis but nonetheless argues that such an analysis

was necessary here. See id.; Def.’s Supp. Br. at 6–7, ECF No. 79 (listing cases).
Court No. 1:21-cv-00288 (SAV)                                              Page 43

Courts will defer to the Commission’s methodology when it is reasonable, even if a

plaintiff presents a reasonable alternative. JMC Steel Grp. v. United States, 39 CIT

649, 657 (2015) (“It is not enough for Plaintiffs simply to proffer an alternate

methodology to that relied upon by the agency, even if that alternate methodology is

reasonable and not inconsistent with the statute.”).       Because the Commission

reasonably found that subject imports injured the domestic industry, the

Commission satisfied its statutory obligations. See supra Section II-B.

      Absent a statutory command, this Court cannot force a specific methodology

onto the Commission. See Vermont Yankee, 435 U.S. at 546–47 (instructing courts

not to mandate procedures beyond those explicitly required by Congress); Perez v.

Mortg. Bankers Ass’n, 575 U.S. 92, 100 (2015) (citing Vermont Yankee and

abrogating a doctrine that “imposes on agencies an obligation beyond” the

Administrative Procedure Act’s requirements); U.S. Steel Grp., 96 F.3d at 1362

(“This court has no independent authority to tell the Commission how to do its job.

We can only direct the Commission to follow the dictates of its statutory mandate.

So long as the Commission’s analysis does not violate any statute and is not

otherwise arbitrary and capricious, the Commission may perform its duties in the

way it believes most suitable.”). Instead, the Court asks whether the Commission’s

methodology complied with the relevant statutes and finds substantial evidentiary

support. See U.S. Steel Grp., 96 F.3d at 1362. Here, it did.
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      No statute requires the Commission to conduct a market segmentation

analysis. The Commission cites many cases holding that it was not obligated to

conduct a market segmentation analysis. See Def.’s Supp. Br. at 6–7 (listing cases);

see also Full Member Subgroup of Am. Inst. of Steel Constr., LLC v. United States,

547 F. Supp. 3d 1211, 1233 (CIT 2021) (“[T]he Commission was not required to

analyze the impact of subject imports on different segments of the domestic

industry.”), aff’d, No. 2022-1176, 2023 WL 5761126 (Fed. Cir. Sept. 7, 2023); ITG

Voma Corp. v. United States Int'l Trade Comm'n, 253 F. Supp. 3d 1339, 1354 (CIT

2017) (rejecting an argument that the Commission was required to engage in a

market segmentation analysis because “the law imposes no such requirement”),

aff’d, 753 F. App’x 913 (Fed. Cir. 2019). CVB meanwhile cites no caselaw to support

its stance. The statute instructs the Commission to “evaluate all relevant economic

factors described in this clause within the context of the business cycle and

conditions of competition that are distinctive to the affected industry.” 19 U.S.C. §

1677(7)(C)(iii). This general instruction does not obligate the Commission to use

any specific methodology. See United Steel, Paper & Forestry, Rubber, Mfg., Energy,

Allied Indus. & Serv. Workers Int'l Union, AFL-CIO, CLC v. United States, 348 F.

Supp. 3d 1328, 1333 (CIT 2018) (“The statute does not provide further guidance,

giving the Commission discretion to assess the conditions of competition in a

particular industry.”). Finding no support in caselaw or statutory text, the Court

finds the Commission was not required to conduct a formal market segmentation
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analysis. The final section of its Views addressed imports’ effects on the domestic

boxed mattress market segment separately and that suffices.

                                 CONCLUSION

     The Commission’s determinations are reviewed under the substantial

evidence standard. 19 U.S.C. § 1516a(b)(1)(B)(i). Here, the Commission’s errors

were needless but ultimately harmless. When the Commission stopped trying to

dodge the issue and instead directly addressed harm to domestic boxed mattress

manufacturers, it made the necessary findings to have its decision supported by

substantial evidence. It is on this basis that the Commission’s final affirmative

injury determination is SUSTAINED, and Plaintiff’s Motion for Judgment on the

Agency Record is respectfully DENIED.

                                            /s/    Stephen Alexander Vaden
                                                        Judge

Dated: December 19, 2023
       New York, New York