Court Opinion

ID: 619142
Source: CourtListenerOpinion
Date Created: 2011-12-19 16:16:06+00
Date Added: 2024-06-11T08:34:16.790051
License: Public Domain

NOTE: This disposition is nonprecedential.

United States Court of Appeals
    for the Federal Circuit
         __________________________

  PAKFOOD PUBLIC COMPANY LIMITED,
     THAI UNION FROZEN PRODUCTS
            PUBLIC CO., LTD.,
   AND THAI UNION SEAFOOD CO., LTD.,
                Plaintiffs,

                     AND

       ANDAMAN SEAFOOD CO., LTD.,
 CHANTHABURI FROZEN FOOD CO., LTD.,
   CHANTHABURI SEAFOODS CO., LTD.,
     PHATTHANA SEAFOOD CO., LTD.,
  PHATTHANA FROZEN FOOD CO., LTD.,
   THAILAND FISHERY COLD STORAGE
            PUBLIC CO., LTD.,
THAI INTERNATIONAL SEAFOODS CO., LTD.,
  SEA WEALTH FROZEN FOOD CO., LTD.,
      AND RUBICON RESOURCES, LLC,
            Plaintiffs-Appellants,

                       v.
             UNITED STATES,
             Defendant-Appellee,

                     AND

     THE DOMESTIC PROCESSORS,
          Defendant-Appellee,

                     AND
2                                PAKFOOD PUBLIC CO v. US

    AD HOC SHRIMP TRADE ACTION COMMITTEE,
                Defendant-Appellee.
              __________________________

                      2011-1282
              __________________________

   Appeal from the United States Court of International
Trade in consolidated case nos. 09-CV-0430, 09-CV-0443,
09-CV-0445, and 09-CV-0447, Chief Judge Donald C.
Pogue.
              __________________________

              Decided: December 19, 2011
              __________________________

    WALTER J. SPAK, White & Case LLP, of Washington,
DC, for plaintiffs-appellants. With him on the brief was
JAY C. CAMPBELL.

    STEPHEN C. TOSINI, Senior Trial Counsel, Commercial
Litigation Branch, Civil Division, United States Depart-
ment of Justice, of Washington, DC, for defendant-
appellee, United States. With him on the brief were TONY
WEST, Assistant Attorney General, JEANNE E. DAVIDSON,
Director, and PATRICIA M. MCCARTHY, Assistant Director.

    ELIZABETH J. DRAKE, Stewart and Stewart, of Wash-
ington, DC for defendant-appellee, The Domestic Proces-
sors. With her on the brief were GEERT M. DEPREST and
TERENCE P. STEWART.       Of counsel on the brief was
EDWARD T. HAYES, Leake & Anderson, LLP, of New
Orleans, Louisiana.

   NATHANIEL M. RICKARD, Picard Kentz & Rowe, LLP,
of Washington, DC, for defendant-appellee, Ad Hoc
PAKFOOD PUBLIC CO   v. US                          3

Shrimp Trade Action Committee. With him on the brief
were JORDAN C. KAHN and ANDREW W. KENTZ.
             __________________________

      Before LINN, PROST, and MOORE, Circuit Judges.
LINN, Circuit Judge.

    Andaman Seafood Co., Ltd., Chanthaburi Frozen
Foods Co., Ltd., Chanthaburi Seafoods Co., Ltd.
(“Chanthaburi”), Phatthana Seafood Co., Ltd. (“Phat-
thana”), Phatthana Frozen Food Co., Ltd., Thailand
Fishery Cold Storage Public Co., Ltd., Thai International
Seafoods Co., Ltd., Sea Wealth Frozen Food Co., Ltd., and
Rubicon Resources, LLC (collectively, “Rubicon” or “Rubi-
con Group”) appeal from the Court of International
Trade’s affirmance of the United States Department of
Commerce’s (“Commerce”) refusal to grant Chanthaburi
and Phatthana an offset for certain interest income when
calculating dumping margins during its administrative
review of the antidumping duty orders on certain frozen
warmwater shrimp from Brazil, Ecuador, India, and
Thailand. See Pakfood Public Co. Ltd. v. United States,
724 F. Supp. 2d 1327, 1353-57 (Ct. Int’l Trade 2011),
made final by Consol. Court No. 09-00430 (Jan. 18, 2011)
(“Judgment”). Because the Court of International Trade
correctly found that Rubicon failed to establish that
Commerce unreasonably departed from settled practice,
and because Rubicon fails to support any other basis for
error, this court affirms.

                       I. BACKGROUND

    This appeal arises from Commerce’s administrative
review of the antidumping duty order on shrimp from
Thailand for the period of February 1, 2007, through
January 31, 2008. Certain Frozen Warmwater Shrimp
from Brazil, Equador, India and Thailand, 73 Fed. Reg.
4                                   PAKFOOD PUBLIC CO v. US

18754 (Dep’t Commerce Apr. 7, 2008). The members of
the Rubicon Group participated in the review as manda-
tory respondents.

    In answering Commerce’s antidumping questionnaire,
Chanthaburi and Phatthana each reported certain inter-
est income on 12-month-term interest bearing accounts as
an offset to financial expenses. Rubicon listed these
accounts as “non-current” (i.e. long-term) assets but
contended that they were required as collateral to secure
operational loans and lines of credit and, therefore, should
be treated differently than Commerce would otherwise
treat long-term assets. According to Rubicon, interest on
these deposits was related to daily operations and entitled
to an offset.

    Commerce acknowledged that these deposits were re-
quired as a condition for Chanthaburi and Phatthana to
obtain credit. Nonetheless, Commerce declined to allow
the requested offset, explaining that “it is [Commerce’s]
practice to allow a respondent to offset financial expenses
only with short-term interest income generated from a
company’s current assets and working capital accounts”
and that because the deposits “were appropriately classi-
fied as non-current assets . . . [Commerce did] not con-
sider these compensating balances to be liquid working
capital reserves which would be readily available for the
companies to meet their daily cash requirements.” Pak-
food, 724 F. Supp. 2d at 1354 (quotation omitted).

     Rubicon then initiated this action in the Court of In-
ternational Trade, contending that Commerce’s refusal to
allow the claimed offset was not in accordance with its
established practice, but, in fact, was contrary to past
determinations. The Court of International Trade af-
firmed Commerce’s decision, explaining that Rubicon had
failed to carry its burden of proving that Commerce had
departed from established practice without reason. Id. at
PAKFOOD PUBLIC CO   v. US                           5
1357 (quoting Consol. Bearings v. United States, 412 F.3d
1266, 1269 (Fed. Cir. 2005)).

    Following remand on other grounds, the case returned
to the Court of International Trade, which entered final
judgment affirming the final results of the administrative
review. Judgment at 1. Rubicon timely appealed and this
court has jurisdiction under 28 U.S.C. § 1295(a)(5).

                       II. DISCUSSION

                  A. Standard of Review

     This court reviews the decision of the Court of Inter-
national Trade de novo, “apply[ing] anew the same stan-
dard used by the court, and . . . will uphold Commerce’s
determination unless it is unsupported by substantial
evidence on the record, or otherwise not in accordance
with law.” U.S. Steel Corp. v. United States, 621 F.3d
1351, 1357 (Fed. Cir. 2010) (citation omitted). “Substan-
tial evidence is such relevant evidence as a reasonable
mind might accept as adequate to support a conclusion.”
Id. (quotation omitted).

                        B. Analysis

    Rubicon argues on appeal that Commerce’s denial of
the claimed offset was an unreasonable departure from
past practice. Rubicon asserts that while Commerce
generally allows an offset only for interest earned on
current assets when calculating net financial expenses
under 19 U.S.C. § 1677b(b)(3) & (e), “Commerce allows
respondents to submit proof that interest on long-term
investments is related to current operations.” Gulf States
Tube Div. of Quanex Corp. v. United States, 981 F. Supp.
630, 651 (Ct. Int’l Trade 1997). Rubicon argues that the
6                                    PAKFOOD PUBLIC CO v. US

practice of allowing such offsets for interest on long-term
assets is evidenced by Dynamic Random Access Memory
Semiconductors of One Megabit or Above from the Repub-
lic of Korea (“DRAMs”), 64 Fed. Reg. 69694, 69707 (Dep’t
Commerce Dec. 14, 1999), aff’d following appeal on other
grounds by Hyundai Elec. Indus. Co. v. United States, 342
F. Supp. 2d 1141, 1161 (Ct. Int’l Trade 2004). Rubicon
states that, in DRAMs, Commerce allowed an offset that
was no different from the one sought by Rubicon and that
any deviation from that practice is therefore unreason-
able.

     According to Rubicon, because Commerce’s stated ra-
tionale is that “‘income from long-term financial assets . . .
is related to investing activities and is not associated with
the general operations of the company’ . . . , Commerce
must permit an offset for interest income from long-term
financial assets that are associated with the company’s
general operations.” Appellants’ Br. 11 (emphasis in
original) (quoting Silicon Metal from Brazil, 71 Fed. Reg.
7517 (Dep’t Commerce Feb 13, 2006), Issues and Decision
Memorandum at Comment 4). Rubicon further asserts
that the failure to recognize interest income related to
general operations “violates Commerce’s statutory obliga-
tion to calculate dumping margins ‘as accurately as
possible.’” Id. at 12 (quoting Rhone Poulenc, Inc. v. United
States, 899 F.2d 1185, 1191 (Fed. Cir. 1990)).

    The United States, the Domestic Processors, and the
Ad Hoc Shrimp Trade Action Committee (collectively,
“Appellees”) respond that Commerce has a long estab-
lished practice of allowing offsets only for interest earned
on current assets and that this practice has been affirmed
by the Court of International Trade. Appellees explain
that DRAMs was a one-time deviation from this practice,
which Commerce has repudiated as inconsistent with its
established practice. Appellees also argue that the single
quote from Gulf States, 981 F. Supp. at 651, that Com-
PAKFOOD PUBLIC CO   v. US                            7
merce “allows respondents to submit proof that interest
on long-term investments is related to current opera-
tions,” does not overcome the substantial evidence of
Commerce’s established practice.

    Appellees argue further that Commerce’s practice is
reasonable and reasonably explained: Commerce does not
allow offsets for interest on non-current accounts because
the underlying asset is not liquid and therefore not avail-
able to fund operations. Appellees explain that, by con-
trast, cash accounts and capital reserves are necessary to
fund operations such that interest earned on such assets
directly reduces the cost of those operations.

     There is no dispute in this case that Commerce en-
gaged in authorized statutory gap-filling on an issue
where the anti-dumping statute is silent. See Chevron
U.S.A., Inc. v. Natural Resources Defense Council, Inc.,
467 U.S. 837, 843 (1984) (“[I]f the statute is silent or
ambiguous with respect to the specific issue, the question
for the court is whether the agency’s answer is based on a
permissible construction of the statute.”). Because Rubi-
con frames this appeal as relating to Commerce’s imper-
missible deviation from established practice, this is the
only issue we address.

    To challenge Commerce’s determination as an unrea-
soned departure from past practice, Rubicon had the
burden of showing that “Commerce consistently followed
a contrary practice in similar circumstances and provided
no reasonable explanation for the change in practice.”
Consol. Bearings, 412 F.3d at 1269 (quotation omitted);
Huvis Corp. v. United States, 570 F.3d 1347, 1353 (Fed.
Cir. 2009) (Commerce’s deviation from an established
practice will not be disturbed if “its methodology is per-
missible under the statute and . . . it had good reasons for
the new methodology.”); see also Nat’l Cable & Telecomm.
Ass’n v. Brand X Internet Servs., 545 U.S. 967, 981 (2005)
8                                   PAKFOOD PUBLIC CO v. US

(“Agency inconsistency is not a basis for declining to
analyze the agency’s interpretation under the Chevron
framework. . . . For if the agency adequately explains the
reasons for a reversal of policy, change is not invalidating,
since the whole point of Chevron is to leave the discretion
provided by the ambiguities of a statute with the imple-
menting agency.” (quotation omitted)).

    In its effort to show that Commerce had an earlier
contrary practice that it consistently applied in similar
circumstances, Rubicon musters one instance, DRAMs,
where Commerce actually did what Rubicon contends it
should have done here. Commerce has since repudiated
DRAMs as contrary to its established practice. See Poly-
ethylene Retail Carrier Bags From Thailand, Final Re-
sults of Antidumping Duty Administrative Review, 74 Fed.
Reg. 65,751 (Dep’t Commerce Dec. 11, 2009), Final Re-
sults of Antidumping Duty Administrative Review at 9
Cmt. 4 (“We do not consider our decision in [] DRAMs to
be consistent with our normal practice of only permitting
an offset for short-term interest income generated from a
company’s current assets and working capital accounts.”).

    As the Court of International Trade correctly ex-
plained, Commerce has a consistent practice of not allow-
ing offsets for interest earned on non-current assets:

    [R]egardless of the nature of Commerce’s practice
    . . . in the past, at the time of the instant review,
    Commerce had clearly established a practice of al-
    lowing income expense offsets solely for short-
    term income from current assets and working
    capital accounts. As early as 2005, and as late as
    just eight months prior to the publication of its
    Preliminary Results in this review . . . Commerce
    reiterated [this practice].
PAKFOOD PUBLIC CO   v. US                            9
Pakfood, 724 F. Supp. 2d at 1355-56, n.52 (gathering
cases) (citations omitted).

    Rubicon finds no fault with the Court of International
Trade’s documentation of the multiple cases where Com-
merce applied the same practice it applied here. Rubi-
con’s reliance on DRAMs, a single inconsistent case in the
face of a plurality of subsequent consistent cases, does not
provide substantial evidence that Rubicon’s treatment at
the hands of Commerce represented a departure from
past practice consistently applied in similar circum-
stances. See U.S. Steel, 621 F.3d at 1357; Consol. Bear-
ings, 412 F.3d at 1269.

    Rubicon quotes Gulf States, which contains the
statement, “Commerce allows respondents to submit proof
that interest on long-term investments is related to
current operations.” This statement is but a passing
reference in a case which affirmed Commerce’s refusal to
allow an offset for certain long-term interest. Gulf States,
981 F. Supp. at 1038. This single out-of-context charac-
terization of Commerce’s practice by the Court of Interna-
tional Trade does not rebut the substantial evidence of
Commerce’s actual established practice.         This court
therefore agrees with the Court of International Trade’s
conclusion that:

   Because [Commerce’s] decision with regard to the
   Rubicon Group’s interest income is consistent
   with Commerce’s prior decisions restricting offsets
   to short-term income, as well as with [Com-
   merce’s] explanations that, because current assets
   and working capital accounts are necessary to
   meet a company’s daily cash requirements,
   [Commerce] will grant offsets only where the in-
   come in question derives from such assets . . . ,
   Rubicon has failed to establish that Commerce
10                                  PAKFOOD PUBLIC CO v. US

     “consistently followed a contrary practice in simi-
     lar circumstances.”

Pakfood, 724 F. Supp. 2d at 1357 (quoting Consol. Bear-
ings, 412 F.3d at 1269).

    Because substantial evidence supports the conclusion
that Commerce did not depart from its past practice, the
question of whether Commerce provided a reasonable
explanation for such a departure need not be addressed.

                        III. CONCLUSION

    For the foregoing reasons, the decision of the Court of
International Trade is affirmed.

                       AFFIRMED