Case: 21-2312 Document: 57 Page: 1 Filed: 08/11/2022
NOTE: This disposition is nonprecedential.
United States Court of Appeals for the Federal Circuit ______________________
HYUNDAI ELECTRIC & ENERGY SYSTEMS, FKA HYUNDAI HEAVY INDUSTRIES CO., LTD., Plaintiff-Appellee
ILJIN ELECTRIC CO., LTD., HYOSUNG HEAVY INDUSTRIES CORPORATION, FKA HYOSUNG CORPORATION, Plaintiffs
v.
UNITED STATES, Defendant
HITACHI ENERGY USA INC., FKA ABB ENTERPRISE SOFTWARE INC., Defendant-Appellant ______________________
2021-2312 ______________________
Appeal from the United States Court of International Trade in No. 1:18-cv-00066-MAB, Judge Mark A. Barnett. ______________________
Decided: August 11, 2022 ______________________
Case: 21-2312 Document: 57 Page: 2 Filed: 08/11/2022 2 HYUNDAI ELECTRIC & ENERGY SYSTEMS v. US
RON KENDLER, White & Case LLP, Washington, DC, argued for plaintiff-appellee. Also represented by DAVID EDWARD BOND.
ROBERT ALAN LUBERDA, Kelley Drye & Warren, LLP, Washington, DC, argued for defendant-appellant. Also represented by MELISSA M. BREWER, DAVID C. SMITH, JR. ______________________
Before NEWMAN, STOLL, and STARK, Circuit Judges. NEWMAN, Circuit Judge. This appeal is from the decision on the fourth adminis- trative review of certain large power transformers manu- factured in the Republic of Korea by Hyundai Electric & Energy Systems and other entities (“Hyundai”), respond- ents in this administrative review. Hitachi Energy USA, Inc. appeals the final decision of the Court of International Trade, setting a zero dumping margin. 1 Sale in the United States of imported products at less than fair value is called “dumping.” The Department of Commerce is authorized to impose duties measured as the difference between the sales price in the foreign market and in the United States. Dumping investigations may be commenced on petition by “an interested party.” 19 U.S.C. § 1671a (citing definition at 19 U.S.C. § 1677(9)). Parties to the administrative review may appeal to the Court of In- ternational Trade and then the Federal Circuit. BACKGROUND The power transformers that are the subject of this re- view were imported from August 2015 through July 2016. Administrative reviews generally start with a
Case: 21-2312 Document: 57 Page: 3 Filed: 08/11/2022 HYUNDAI ELECTRIC & ENERGY SYSTEMS v. US 3
questionnaire from Commerce. Hyundai responded to Commerce’s questions, and reported price changes involv- ing certain components of the transformers sold in Korea. Hyundai provided records stating which components of its home market transformers should be considered foreign like products, and which should not. 2 In one reported sale, Hyundai identified two compo- nents as non-subject merchandise, but Commerce later de- termined that those components are foreign like products. Commerce found that if complete sales figures were used for these components, as would be required if the compo- nents had been deemed foreign like products, the dumping margin would increase. Commerce found Hyundai’s reports reflected a misrep- resentation of Commerce’s investigation. Commerce con- sequently determined that Hyundai’s reported pricing in Korea was “unreliable,” and Commerce applied total ad- verse facts available and imposed a dumping margin of 60.81%, making an adverse inference, as the statute au- thorizes. Hyundai Heavy Indus. Co. v. United States, No 1:18-cv-00066-MAB, (May 14, 2018), ECF 19-6 at 16–18, 22 (“Commerce Issues & Decision Memorandum”). Hyundai appealed, and the Court of International Trade vacated Commerce’s decision on the ground that Hyundai had properly reported data related to “accesso- ries” not at issue on this appeal. Hyundai Heavy Indus. Co. v. United States, 393 F. Supp. 3d 1293, 1316–17 (Ct. Int’l Trade 2019) (“CIT Decision 1”). The court remanded to
Case: 21-2312 Document: 57 Page: 4 Filed: 08/11/2022 4 HYUNDAI ELECTRIC & ENERGY SYSTEMS v. US
Commerce for more complete explanation. On remand, Commerce largely affirmed its prior decision, stating that Hyundai’s understatement of home market prices by inconsistently treating a certain part as subject merchandise for certain sales and nonsubject for other home market sales, undermines Commerce’s ability to calculate an accurate margin for Hyun- dai, justifying, as described above, the use of total adverse facts available for Hyundai’s margin calcu- lation. Department of Commerce Remand Results, Hyundai Heavy Indus. Co. v. United States, No. 1:18-cv-00066, (Dec. 19, 2019), ECF 92-1 at 21–22 (“First Remand Dec.”). In the First Remand Decision, Commerce declined to consider certain information submitted by Hyundai, stat- ing that “Hyundai’s reporting of its home market gross unit prices, inclusive of the price of within-scope parts, has been an issue in other administrative segments under this or- der.” First Remand Dec. at 17–18. Commerce stated that it does “not have the documentation to determine the accu- racy of the sales prices for all the other home market sales” provided by Hyundai. Id. On this ground, Commerce re- jected Hyundai’s pricing information, holding that using Hyundai’s potentially unreliable information would cause undue difficulties. Id. at 19 (citing 19 U.S.C. § 1677m(e)(5)). Commerce also referred to Hyundai’s misre- porting of certain price information in the Third Adminis- trative Review, which covered the year before the sales at issue on this appeal. See Hyundai Heavy Indus., Co. v. United States, 332 F. Supp. 3d 1331 (Ct. Int’l Trade 2018). In the First Remand, Commerce applied an adverse in- ference against Hyundai, also because Commerce deter- mined that Hyundai had not complied with Commerce’s requests to the best of its ability. Commerce explained: Hyundai had the opportunity to provide complete
Case: 21-2312 Document: 57 Page: 5 Filed: 08/11/2022 HYUNDAI ELECTRIC & ENERGY SYSTEMS v. US 5
and accurate information with respect to its report- ing of home market gross unit prices, and indeed, as the sample sales documentation demonstrates, possessed the information, but failed to provide such information to Commerce. Therefore, Com- merce finds that Hyundai did not act to the best of its ability and impeded Commerce’s conduct of the review; accordingly, the use of adverse inference is warranted in selecting from the available facts. First Remand Dec. at 18–19. Hyundai again appealed. The Court of International Trade rejected Commerce’s determination, stating that, Hyundai “provided the information to Commerce but disa- greed with the agency as to whether it related to foreign like product.” Hyundai Heavy Indus. Co. v. United States, 485 F. Supp. 3d 1380, 1400 (Ct. Int’l Trade 2020) (“CIT De- cision 2”). In particular, the court stated that “Only after issuing the Preliminary Results did Commerce question whether the parts at issue were foreign like product.” Id. at 1401. The court also stated that Commerce “could not definitively ‘determine whether Hyundai understated [its] home market gross unit prices.’” Id. (citing Commerce Is- sues & Decision Memorandum at 17, alteration original). The court further found an absence of substantial evidence to support Commerce’s application of total adverse facts available. CIT Decision 2, 485 F. Supp. 3d at 1389. The court determined that the record supported only the appli- cation of partial, neutral facts available to fill certain gaps caused by Hyundai’s misunderstanding of the scope of Commerce’s review. The court stated: Commerce infers that [Hyundai]’s entire home market sales database was unreliable based solely on [Hyundai]’s failure to report properly its inclu- sion of Parts A or B in just two of its home market sales. Indeed, Commerce had documentation for several other home market sales which did not
Case: 21-2312 Document: 57 Page: 6 Filed: 08/11/2022 6 HYUNDAI ELECTRIC & ENERGY SYSTEMS v. US
include Parts A or B. Not only are the two sales at issue a limited portion of the document-supported home market sales, it is not clear how these two sales undermined the reliability of other docu- mented sales which did not include Parts A or B. CIT Decision 2, 485 F. Supp. 3d at 1399 (citations omitted). Accordingly, the court determined that “Commerce’s find- ing that it had ‘no basis in the record for determining what [the] home market gross unit prices should be for the over- whelming majority of sales’ is simply unsupported specula- tion and not based on substantial evidence.” Id. (quoting First Remand Dec. at 30–31, alteration original). On the Second Remand, Commerce applied partial neutral facts available and arrived at a dumping margin of zero. Hyundai Heavy Indus. Co. v. United States, No. 1:18- cv-00066, (Apr. 6, 2021) ECF 154 (“Second Remand Dec.”). Hitachi appealed, but the Court of International Trade af- firmed Commerce’s zero margin decision. This appeal fol- lowed. DISCUSSION Hitachi seeks vacatur of CIT Decision 2 and CIT Deci- sion 3, and reinstatement of the dumping margin of 60.81% imposed by the First Remand Decision. “The Court of International Trade reviews Commerce’s determinations in an antidumping duty review to ascertain if that decision is supported by substantial evidence on the entirety of the record, and is in accordance with law.” Sharp Corp. v. United States, 63 F.3d 1092, 1095 (Fed. Cir. 1995). The Federal Circuit applies the same standard of review to Commerce’s determination. Id. Hyundai argues that any past issues of compliance in the Third Administrative Review should not be the basis for applying an adverse inference in a subsequent review. Hyundai states that it is improper to rely on assertedly
Case: 21-2312 Document: 57 Page: 7 Filed: 08/11/2022 HYUNDAI ELECTRIC & ENERGY SYSTEMS v. US 7
deficient past behavior to condemn a later administrative review. Hyundai Br. 30–31. See, Qingdao Sea-Line Trad- ing Co. v. United States, 766 F.3d 1378, 1387 (Fed. Cir. 2014) (“[E]ach administrative review is a separate exercise of Commerce’s authority that allows for different conclu- sions based on different facts in the record.”). Hitachi argues that the Court of International Trade substituted its own view for that of Commerce, in charac- terizing Commerce’s analysis as speculative. Hitachi states that Commerce had the authority to penalize Hyun- dai in this Fourth Administrative Review for Hyundai’s lack of cooperation in the Third Administrative Review. Hitachi stresses that Hyundai bore the burden of establish- ing the administrative record in this Fourth Review. Hyundai is correct that the information provided for each review must be evaluated independently. In the Third Review Hyundai did “not directly challenge Com- merce’s factual finding that [Hyundai] withheld infor- mation, such as the proper reporting of the part in question.” Third Review, 332 F. Supp. 3d at 1345. Here, in contrast, Hyundai denies withholding any information, and Commerce did not charge Hyundai with withholding any information at any stage of this review. Instead, “Com- merce requested and [Hyundai] provided documentation for certain home market sales, including a complete break- down between foreign like product and non-foreign like product along with detailed narrative explanation and sup- porting documentation for the relevant categorization.” CIT Decision 2, 485 F. Supp. 3d at 1401 (internal quotation marks omitted). Commerce’s reference to “an issue” with Hyundai’s reporting in the Third Administrative Review does not suggest present misfeasance in the context of Hyundai’s responses here. First Remand Dec. at 18. The Court of International Trade correctly so held.
Case: 21-2312 Document: 57 Page: 8 Filed: 08/11/2022 8 HYUNDAI ELECTRIC & ENERGY SYSTEMS v. US
The decision in Deacero S.A.P.I. de C.V. v. United States, 996 F.3d 1283, 1297 (Fed. Cir. 2021), on which Hi- tachi relies, is not to the contrary. There the respondent provided “at best, inconsistent representations, and fail[ed] to timely explain and meaningfully support those represen- tations,” and Commerce found that the behavior was par- ticularly egregious in a party “knowledgeable of the process” of administrative reviews. Id. at 1292. This court conducted a thorough review of the respondent’s actions be- fore affirming. See id. at 1297. Here, in contrast, the rec- ord supports the Court of International Trade’s determination that Hyundai’s misunderstanding of the scope of Commerce’s request was limited, and reflected the best of Hyundai’s ability. Hyundai’s past behavior did not warrant application of an adverse inference and did not create undue difficulty in using Hyundai’s data. Substantial evidence does not support Commerce’s ini- tial decision to disregard all of Hyundai’s price information as unreliable. As the Court of International Trade dis- cussed, there were two components of the transformers that Hyundai stated were not subject merchandise, and these components affected the price of only one home mar- ket sale. CIT Decision 2, 485 F. Supp. 3d at 1399. Hitachi argues that Hyundai’s misclassification of certain compo- nents as non-subject merchandise was “methodological” and called into question the rest of Hyundai’s data. How- ever, substantial evidence supported Commerce’s Second Remand finding: that using Hyundai’s data did not cause undue difficulties. The Court of International Trade applied the rule that “Commerce can only use facts otherwise available to fill a gap in the record.” Zhejiang DunAn Hetian Metal Co. v. United States, 652 F.3d 1333, 1348 (Fed. Cir. 2011). Here, the gap was small, and the record shows that Hyundai’s mistake affected only one sale. In Zhejiang, we reversed the decision allowing Commerce to use total adverse facts
Case: 21-2312 Document: 57 Page: 9 Filed: 08/11/2022 HYUNDAI ELECTRIC & ENERGY SYSTEMS v. US 9
available where a respondent’s reporting created only a small gap in the record. Id. Accordingly, the Court of In- ternational Trade correctly determined that Commerce’s initial application of total adverse facts available was spec- ulative in light of the record, which demonstrated that most of Hyundai’s price information was reliable. CIT De- cision 2, 485 F. Supp. 3d at 1399. Hitachi disputes this reasoning and argues that the higher tariff should be reinstated. Commerce’s final deci- sion held that an adverse inference was not warranted, and that absent an adverse inference, a dumping margin was not established. As the Court of International Trade con- cluded, there was not substantial evidence on which to base an adverse inference. CIT Decision 2, 485 F. Supp. 3d. at 1401. The First Remand, in which Commerce had applied adverse inferences, did not identify any evidence that Hyundai did not cooperate to the best of its ability. In Nip- pon Steel Corp. v. United States, 337 F.3d 1373, (Fed. Cir. 2003), this court recognized that compliance to the best of a respondent’s ability “does not require perfection and rec- ognizes that mistakes sometimes occur.” Id. at 1382. The Court of International Trade found that Hyundai complied with Commerce’s requests to the best of its abil- ity, and that any mistakes were inadvertent and were cor- rected without undue difficulty. CIT Decision 2, 485 F. Supp. 3d at 1400–01. Substantial evidence supported this finding and Commerce’s Second Remand determination of zero dumping margin. CONCLUSION We affirm the decision of the Court of International Trade, affirming Commerce’s Second Remand decision, which determined that a dumping margin was not estab- lished. AFFIRMED
Footnotes
[1] Hyundai Heavy Indus. Co. v. United States, 527 F. Supp. 3d 1374 (Ct. Int’l Trade 2021) (“CIT Decision 3”).
[2] Identical goods sold in a respondent’s home market are “foreign like product.” 19 U.S.C. § 1677(16). Goods falling outside the scope are “non-subject merchandise.” Id. at § 1677(25).