Linyi City Kangfa Foodstuff Drinkable Co. v. United States

2016 CIT 89
United States Court of International Trade·Decided September 21, 2016·No. 15-00184·Published

Opinion

Slip Op 16 - 89

UNITED STATES COURT OF INTERNATIONAL TRADE

:

LINYI CITY KANGFA FOODSTUFF : DRINKABLE CO., LTD., and : ZHANGZHOU GANGCHANG CANNED : FOODS CO., LTD., :

Plaintiffs, :

:

v. : Before: R. Kenton Musgrave, Senior Judge :

UNITED STATES, : Court No. 15-00184 :

Defendant, :

:

and :

:

MONTEREY MUSHROOMS, INC., :

:

Defendant-Intervenors. :

:

OPINION

[Sustaining fifteenth administrative review of antidumping duty order on certain preserved mushrooms from the PRC.]

Decided: September 21, 2016

Lizbeth R. Levinson and Ronald M. Wisla, Kutak Rock LLP, of Washington, DC, for the plaintiff.

Justin R. Miller, Senior Trial Counsel, U.S. Department of Justice, Civil Division, International Trade Field Office, of New York, NY, for the defendant. With him on the brief were Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia McCarthy, Assistant Director. Of Counsel on the brief was Shelby M. Anderson, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, DC.

Michael J. Coursey and John M. Herrmann, Kelly Drye & Warren LLP, of Washington, DC, for the defendant-intervenors.

Court No. 15-00184 Page 2

Musgrave, Senior Judge: The plaintiffs, Linyi City Kangfa Foodstuff Drinkable Co.

Ltd. (“Kangfa”) and Gangchang Canned Foods Co., Ltd. (“Gangchang”), exporters of subject merchandise from the People’s Republic of China (“PRC”), contest aspects of Certain Preserved Mushrooms from the PRC: Final Results of Antidumping Duty Administrative Review; 2013-2014; and Partial Rescission of Review, 80 Fed. Reg. 32355 (June 8. 2015) (“Final Results”), public document (“PDoc”) 142, and accompanying final results decision memorandum dated June 1, 2015, PDoc 137 (“IDM”), as compiled by the U.S. International Trade Administration of the U.S. Department of Commerce (“Commerce”). Specifically, the plaintiffs challenge Commerce’s selection of surrogate values for labor, for steam coal, and for glass jars and metal caps. In the interest of brevity this opinion will presume general familiarity with Commerce’s non-market economy (“NME”) surrogate valuation methodology.

Background

The plaintiffs were interested parties to the proceeding and their standing here is uncontested. Initiated pursuant to requests from the petitioner and respondent parties,1 the Final Results concern the fifteenth administrative review, covering the period February 1, 2013 to January 31, 2014 (“POR”), of the underlying antidumping duty order sub nom. Notice of Amendment of Final Determination of Sales At Less Than Fair Value and Antidumping Duty Order; Certain Preserved Mushrooms from the PRC, 64 Fed. Reg. 8308 (Feb. 19, 1999).

For the proceeding, the plaintiffs were selected as mandatory respondents, and both cooperated with Commerce thereat in responding to all information requests. Commerce determined

1 See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Request for Revocation in Part, 79 Fed. Reg. 18262, 18269 (Apr. 1, 2014), PDoc 6.

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preliminary antidumping duty rates of 78.69% and 102.87% for Kangfa and Gangchang, respectively. Certain Preserved Mushrooms from the PRC: Preliminary Results of Antidumping Duty Administrative Review; 2013-2014, 79 Fed. Reg. 71746 (Dec. 3, 2014) (“Preliminary Results”), PDoc 152. For the Final Results, the margins were 75.67% and 99.71%, respectively. Final Results, 80 Fed. Reg. at 32357. The plaintiffs then timely commenced this suit, see ECF Nos. 7 (July 2, 2015) & 8 (July 17, 2015), and liquidation of entries covered by the POR are currently suspended pursuant to consented-to enjoinder, see ECF No. 10. The matter being assigned to the undersigned shortly thereafter, the plaintiffs’ motion for judgment was taken under advisement. Cf. ECF No. 45.

Jurisdiction and Standard of Review Commerce’s final results are to be sustained unless they are “unsupported by substantial evidence on the record or otherwise not in accordance with law.” 19 U.S.C. §l516a(b)(1)(B). In practice, this means that the record must contain sufficient evidence to substantiate the conclusion, finding, or inference drawn thereon or therefrom. See, e.g., PAM, S.p.A. v. United States, 582 F.3d 1336, 1339 (Fed. Cir. 2009) (“more than a mere scintilla,” substantial evidence is “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion”), quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1951).

Discussion

I

Turning to the surrogate valuation of labor for the Final Results, during the review proceeding the plaintiffs described their production of subject merchandise as a two-stage process. In the first stage, two affiliates of the plaintiffs grew fresh mushrooms, and in the second stage the

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plaintiffs processed the fresh mushrooms into subject merchandise, i.e., preserved mushrooms. See PDoc 49 at D-3 to D-7; PDoc 48 at D-2 to D-3. The plaintiffs each separately reported the amounts of indirect and direct labor at both stages of the production process. See CDoc 19 at Exhibits D-3 and D-4 (reporting factors of production for “Fresh Mushroom” and “Canned Mushroom”); CDoc 17 at Exhibit D-3 (describing factors, and separately identifying direct and indirect labor consumed in the fresh and canned mushroom processing stages) and Exhibits D-4-1 and D-4-2 (providing factors of production of “Fresh Mushroom” and “Canned Mushroom”).

In the Preliminary Results, Commerce valued labor using the only surrogate value on the record. In particular, Commerce derived a surrogate value from the line item “Manufacture of Food Products and Beverages” of Chapter 6A of the International Labor Organization (ILO) Yearbook of Labor Statistics, which is Commerce’s preferred valuation source for labor. See PDoc 115 at 8, 122 at 2-3, 123 at 2-3; Antidumping Methodologies in Proceedings Involving Non-Market Economies: Valuing the Factor of Production: Labor, 76 Fed. Reg. 36092, 36092-94 (June 21, 2011) (“Labor Methodologies”) (announcing intention to use ILO Yearbook Chapter 6A data “as its primary source of labor cost data in NME antidumping proceedings,” as it “reflects all costs related to labor including wages, benefits, housing, training, etc.”).

As in their administrative case brief, the plaintiffs here argue that Commerce should have used two different surrogate values to value labor. While they agree it was appropriate to value their canning labor using Chapter 6A data, they argue Commerce should have used data from Chapter 5A to value the labor consumed in the comparatively more labor-intensive process of growing mushrooms. See Pls.’ Br. at 8-11. According to the plaintiffs, it is “self-evident” that

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Chapter 5A data are “more specific to the direct and indirect labor factors of production reported by the growers for the cultivation of fresh mushrooms” than Chapter 6A data for manufacturing food and beverage products. Id. at 9. In relying on Chapter 6A data, the plaintiffs contend, Commerce not only failed to follow its own policy of using industry-specific labor rates, resulting in vastly overinflated labor cost due to the proportionally larger number of labor hours required in the mushroom growing stage, id. at 9-10 (citing Labor Methodologies), it relied on a “surrogate value that has no rational relationship to agricultural labor inputs”, id. at 11.

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