SKF USA Inc. v. United States

2013 CIT 131

Opinion

Slip Op. 13-131

UNITED STATES COURT OF INTERNATIONAL TRADE

SKF USA INC., SKF FRANCE S.A., SKF AEROSPACE FRANCE S.A.S., SKF INDUSTRIE S.P.A., SOMECAT S.P.A., SKF GMBH, and SKF (U.K.) LIMITED,

Plaintiffs,

v. Before: Timothy C. Stanceu, Judge

UNITED STATES, Court No. 10-00284

Defendant,

and

THE TIMKEN COMPANY,

Defendant-intervenor.

OPINION

[Affirming the Department’s use of zeroing in the final results of the twentieth administrative reviews of antidumping duty orders on ball bearings and parts thereof and declaring unlawful the Department’s policy, rule, or practice of issuing liquidation instructions fifteen days after the publication of final results of an administrative review]

Dated: October 25, 2013

Herbert C. Shelley, Steptoe & Johnson LLP, of Washington, DC, for plaintiffs. With him on the brief were Alice A. Kipel and Laura R. Ardito.

L. Misha Preheim, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for defendant. With him on the brief were Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, and Claudia Burke, Assistant Director. Of counsel on the brief was Shana Hofstetter, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, of Washington, DC.

Geert M. De Prest, Stewart and Stewart, of Washington, DC, for defendant-intervenor. With him on the brief was Terence P. Stewart. Court No. 10-00284 Page 2

Stanceu, Judge: Plaintiffs SKF USA Inc., SKF France S.A., SKF Aerospace France

S.A.S., SKF Industrie S.p.A., Somecat S.p.A., SKF GmbH, and SKF (U.K.) Limited

(collectively, “SKF”) contest the final determination (“Final Results”) issued by the International

Trade Administration, U.S. Department of Commerce (“Commerce” or the “Department”), in the

twentieth administrative reviews of antidumping orders on imports of ball bearings and parts

thereof (“subject merchandise”) from France, Germany, Italy, Japan, and the United Kingdom

for the period May 1, 2008 through April 30, 2009 (“period of review”). Compl. ¶ 1

(Sept. 15, 2010), ECF No. 2; see Ball Bearings and Parts Thereof From France, Germany, Italy,

Japan, and the United Kingdom: Final Results of Antidumping Duty Administrative Reviews,

Final Results of Changed-Circumstances Review, and Revocation of an Order in Part,

75 Fed. Reg. 53,661 (Sept. 1, 2010) (“Final Results”). Plaintiffs challenge the Department’s use

of the zeroing methodology in the twentieth administrative reviews to determine SKF’s

weighted-average dumping margins.1 Compl. ¶¶ 31-35. Plaintiffs also challenge the

Department’s policy, rule, or practice of issuing liquidation instructions to U.S. Customs and

Border Protection (“Customs” or “CBP”) fifteen days after the date on which the final results of

a review are published (the “fifteen-day policy”). Id. ¶¶ 13-18.

Before the court is plaintiffs’ motion for judgment upon the agency record, made

pursuant to USCIT Rules 56.2 (for the claim challenging the use of zeroing in the Final Results)

1 In their motion for judgment on the agency record, plaintiffs withdraw two of their four original claims: (1) that Commerce erred in deducting constructed export price (“CEP”) profit from the U.S. sales price for all CEP sales, including sales of Somecat S.p.A. bearings exported by SKF (U.K.) Limited’s SNFA operations, resulting in double-counting of profit, Compl. ¶¶ 19-22 (Sept. 15, 2010), ECF No. 2; and (2) that Commerce erred in using home market freight and packing expenses incurred by entities other than SKF Industrie S.p.A. and SKF France S.A. to cap home market freight and packing revenues charged by SKF Industrie S.p.A. and SKF France S.A., Compl. ¶¶ 23-30. Br. in Supp. of SKF’s Rules 56.1 and 56.2 Mot. for J. upon the Agency R. 1-2 (Oct. 7, 2011), ECF No. 52-1. Court No. 10-00284 Page 3

and 56.1 (for the claim challenging the fifteen-day policy). Pls.’ Mot. for J. upon the Agency R.

Pursuant to Rules 56.1 and 56.2 (Oct. 7, 2011), ECF No. 52 (“Pls.’ Mot.”). Opposing plaintiffs’

motion are defendant United States and defendant-intervenor, the Timken Company (“Timken”),

the petitioner in the original investigation. Def.’s Opp’n to Pls.’ Mot. for J. upon the Agency R.

(Dec. 6, 2011), ECF No. 54 (“Def.’s Opp’n”); Resp. Br. of the Timken Co. Opposing the Rule

56.2 Mot. of SKF USA Inc., et al. (Dec. 6, 2011), ECF No. 55 (“Def.-intervenor’s Opp’n”).

For the reasons stated herein, the court determines that plaintiffs are not entitled to relief

on their claim challenging the Department’s use of zeroing. The court also determines that

plaintiffs are entitled to a declaratory judgment on their claim that the fifteen-day policy is

unlawful as applied to plaintiffs in the effectuation of the Final Results.

I. BACKGROUND

Commerce initiated the twentieth administrative reviews on June 24, 2009. Initiation of

Antidumping and Countervailing Duty Admin. Reviews and Requests for Revocation In Part,

74 Fed. Reg. 30,052 (June 24, 2009). On April 28, 2010, Commerce published its preliminary

determination. Ball Bearings and Parts Thereof From France, Germany, Italy, Japan, and the

United Kingdom: Preliminary Results of Antidumping Duty Admin. Reviews, Preliminary Results

of Changed-Circumstances Review, Rescission of Antidumping Admin. Reviews In Part, and

Intent To Revoke Order In Part, 75 Fed. Reg. 22,384 (Apr. 28, 2010). On September 1, 2010,

Commerce published the Final Results, which stated the Department’s intent to issue liquidation

instructions to Customs fifteen days after that publication date. Final Results,

75 Fed. Reg. at 53,663.

On September 15, 2010, plaintiffs filed their summons, Summons, ECF No. 1, and

complaint, Compl. 1, and on October 7, 2011, plaintiffs moved for judgment on the agency Court No. 10-00284 Page 4

record, Pls.’ Mot. 1. Defendant and defendant-intervenor filed responses to this motion on

December 6, 2011. Def.’s Opp’n 1; Def.-intervenor’s Opp’n 1.

On June 4, 2012, the court ordered this action stayed until thirty days after the final

resolution of all appellate proceedings in Union Steel v. United States, CAFC Court

No. 2012-1248, which involved a claim challenging the Department’s use of zeroing in an

administrative review of an antidumping duty order similar to the zeroing claim presented in this

action. Order, ECF No. 67.

On April 16, 2013, the Court of Appeals for the Federal Circuit (“Court of Appeals”)

issued its decision in Union Steel, affirming the Department’s use of zeroing in an administrative

review. Union Steel v. United States, 713 F.3d 1101, 1103 (Fed. Cir. 2013). Pursuant to the

court’s Order, the stay expired on July 10, 2013.

II. DISCUSSION

A. Jurisdiction and Standards of Review

Section 201 of the Customs Courts Act of 1980 grants this court subject matter

jurisdiction over this action. 28 U.S.C. § 1581(c) (for the claim challenging the use of zeroing),

1581(i) (for the claim challenging the fifteen-day policy).2 For plaintiffs’ claim contesting the

Final Results, the court is directed to “hold unlawful any determination, finding, or conclusion

found . . . to be unsupported by substantial evidence on the record, or otherwise not in

accordance with law.” See Tariff Act of 1930 (“Tariff Act”) § 516A, 19 U.S.C. § 1516a(b)(1).

For plaintiffs’ claim challenging the fifteen-day policy, the court must “hold unlawful and set

aside agency action, findings, and conclusions found to be . . . arbitrary, capricious, an abuse of

2 All statutory citations herein are to the 2006 edition of the U.S. Code. Court No. 10-00284 Page 5

discretion, or otherwise not in accordance with law.” Administrative Procedure Act (“APA”)

§ 706(2), 5 U.S.C. § 706(2); 28 U.S.C. § 2640(e).

B. Plaintiffs Are Not Entitled to Relief on their Claim Challenging the Use of Zeroing

Plaintiffs challenge the Department’s use of zeroing to calculate SKF’s weighted-average

dumping margins in the twentieth administrative reviews. Br. in Supp. of SKF’s Rules 56.1 and

56.2 Mot. for J. upon the Agency R. 11 (Oct. 7, 2011), ECF No. 52-1 (“Pls.’ Br.”). To calculate

a weighted-average dumping margin in an administrative review, Commerce determines both the

normal value and the export price (“EP”), or, if the EP cannot be determined, the constructed

export price (“CEP”), for the subject merchandise under review. Tariff Act § 751, 19 U.S.C.

§ 1675(a)(2)(A)(i). Commerce then determines a dumping margin by calculating the amount by

which the normal value exceeds the EP or CEP. Id. §§ 1675(a)(2)(A)(ii), 1677(35)(A). When

Commerce determines a dumping margin using zeroing, as it did in the twentieth administrative

reviews, it assigns a value of zero, not a negative margin, where the normal value is less than the

EP or CEP. Union Steel, 713 F.3d at 1104. Finally, Commerce aggregates these margins to

calculate a weighted-average dumping margin. 19 U.S.C. § 1677(35)(B).

In Union Steel, the Court of Appeals affirmed the Department’s use of zeroing in

circumstances analogous to those presented by this case. Union Steel, 713 F.3d at 1103. The

court considers Union Steel dispositive of the zeroing claim raised in this action and sustains the

Department’s use of zeroing in the Final Results.

C. Plaintiffs Are Entitled to a Declaratory Judgment on the Department’s Fifteen-Day Policy

In the Final Results, Commerce stated its intention to “issue liquidation instructions to

CBP 15 days after publication of these final results of reviews.” Final Results, 75 Fed. Reg.

at 53,663. Plaintiffs’ remaining claim challenges the Department’s application of this fifteen-day Court No. 10-00284 Page 6

policy with respect to SKF. Pls.’ Br. 5. Plaintiffs ask this court to find, either under collateral

estoppel or on the merits, that the Department’s application of the fifteen-day policy was

unlawful. Pls.’ Br. 6-8. Despite this policy, plaintiffs successfully obtained an injunction

preventing liquidation of their subject merchandise. See Order (Sept. 21, 2010), ECF No. 13

(granting consent motion for preliminary injunction). Therefore, the only relief available is a

declaratory judgment that the fifteen-day policy was contrary to law as applied to plaintiffs.

Plaintiffs argue that the Department’s choice of a fifteen-day liquidation timeline was

unlawful because the Department failed to show that it had “considered any alternatives to or any

relevant factors competing with the time deadline set by 19 U.S.C. § 1504(d),” including the

ability of parties to seek meaningful judicial review. Pls.’ Br. 2, 6. Plaintiffs also argue that the

fifteen-day policy “unacceptably burdens and causes injury to SKF[] and is arbitrary and

capricious.” Id.

Plaintiffs’ collateral estoppel argument relies on this Court’s previous determinations that

the fifteen-day policy was unlawful as applied to SKF upon completion of one or more

administrative reviews of the antidumping duty orders at issue in this action. Id.at 6, 7. This

Court’s decision regarding the nineteenth administrative reviews held that Commerce failed to

provide adequate reasoning for its decision to apply its fifteen-day policy to SKF, concluding as

follows:

Commerce offers nothing beyond an unsupported conclusion that the 15-day rule is reasonable and a recitation of language from a prior decision of this court. Missing is any reasoned discussion of the Department’s weighing of the competing factors that must inform a decision to allow only fifteen days for the filing of the summons, complaint, motion for injunction, and, should consent to an injunction not be forthcoming, an application for a temporary restraining order. While pointing to the six-month deemed liquidation period as the reason for the 15-day rule, the Decision Memorandum offers no explanation of why the Department decided to afford Customs all but fifteen days of that period in order to accomplish the liquidation of entries. Court No. 10-00284 Page 7

SKF USA Inc. v. United States, 35 CIT __, __, 800 F. Supp. 2d 1316, 1328 (2011) (citations

omitted). This court awarded a declaratory judgment that the application of the fifteen-day

policy to SKF’s subject merchandise in the nineteenth administrative reviews was contrary to

law. Id.

According to the collateral estoppel doctrine, “once a court has decided an issue of fact or

law necessary to its judgment, that decision may preclude relitigation of the issue in a suit on a

different cause of action involving a party to the first case.” Allen v. McCurry,

449 U.S. 90, 94 (1980) (citation omitted). Collateral estoppel applies in this instance because the

Department’s rationale for implementing the final results of the twentieth administrative reviews

according to its fifteen-day policy does not differ materially from the reasoning the court found

inadequate as to the nineteenth administrative reviews. Compare SKF USA Inc., 35 CIT at __,

800 F. Supp. 2d at 1328, and Issues & Decision Mem., A-100-001, ARP 04-09, at 30

(Sept. 1, 2010) (Admin.R.Doc No. 1423), available at

http://enforcement.trade.gov/frn/summary/MULTIPLE/2010-21839-1.pdf (last visited

Oct. 21, 2013) (“Decision Mem. (AR 20)”), with Issues & Decision Mem., A-100-001,

ARP 04-08, at 12 (Aug. 25, 2009), available at

http://enforcement.trade.gov/frn/summary/multiple/E9-20980-1.pdf (last visited Oct. 21, 2013)

(“Decision Mem. (AR 19)”).

In this case, Commerce offered the same three reasons in support of its fifteen-day policy

that it offered for the nineteenth administrative reviews. With respect to both the nineteenth and

twentieth sets of administrative reviews, Commerce described its policy as “based upon

administrative necessity” due to the holding in International Trading Co. v. United States,

281 F.3d 1268 (Fed. Cir. 2002), that the six-month period for liquidation of entries by Customs Court No. 10-00284 Page 8

established by 19 U.S.C. § 1504(d) begins from the publication of the final results of an

administrative review.3 Decision Mem. (AR 20) 30; Decision Mem. (AR 19) 12. Both times,

Commerce stated that “[e]xtreme consequences follow from deemed liquidation, specifically the

government’s inability to collect duties calculated.” Decision Mem. (AR 20) 30; Decision Mem.

(AR 19) 12. In each instance, Commerce also stated that its revised fifteen-day policy, which

followed its previous policy of issuing liquidation instructions within fifteen days of publication

of final results, accords with this Court’s decision, which pertained to the sixteenth

administrative reviews, that the right provided in 19 U.S.C. § 1516a(c)(2) implies “some

reasonable opportunity in which a plaintiff may seek to obtain the specific type of injunction

described” in the statute. Decision Mem. (AR 20) 30; Decision Mem. (AR 19) 12 (both citing

SKF Inc. v. United States, 33 CIT 370, 385, 611 F. Supp. 2d 1351, 1364 (2009)).

The remaining discussion of the fifteen-day policy in the Decision Memoranda for both

the twentieth and nineteenth administrative reviews focuses on refuting arguments made by SKF.

These two very similar discussions do not provide a basis on which the court could conclude that

the issue decided in the nineteenth administrative reviews is different from the issue presented by

this case.

In summary, Commerce provided a rationale for applying its fifteen-day policy to

implement the twentieth administrative reviews that is not distinguishable in any material way

from the one it offered to support the application of the policy in the nineteenth administrative

3 Under Section 504(d)(2) of the Tariff Act, 19 U.S.C. § 1504(d), an entry is generally treated as liquidated at the “duty, value, quantity, and amount of duty asserted by the importer of record” if not liquidated within six months of the date Customs and Border Protection receives notice from the Department of Commerce or other appropriate agency, or a court with jurisdiction over the entry, that suspension of liquidation required by statute or court order has been removed. Court No. 10-00284 Page 9

reviews. As a result, the issue litigated by the parties in this action already has been considered

and decided by this Court in a previous case that culminated in a declaratory judgment in favor

of plaintiffs. The court therefore declines, on the basis of collateral estoppel, to consider the

merits of defendant’s argument in support of the fifteen-day policy as applied to implement the

twentieth administrative reviews and will award plaintiffs declaratory relief.

III. CONCLUSION

For the reasons discussed above, the court denies plaintiffs’ request for relief on their

claim challenging the use of zeroing in the Final Results. With respect to their second claim,

plaintiffs are entitled to a declaratory judgment that the Department’s fifteen-day policy was

contrary to law as applied to them. Judgment will be entered accordingly.

/s/ Timothy C. Stanceu Timothy C. Stanceu Judge

Dated: October 25, 2013 New York, New York