United States Court of Appeals
for the Federal Circuit
__________________________
WALGREEN CO. OF DEERFIELD, IL.,
Plaintiff-Appellant,
v.
UNITED STATES,
Defendant-Appellee.
__________________________
2010-1136
__________________________
Appeal from the United States Court of International
Trade in case No. 08-CV-0372, Judge Judith M. Barzilay.
__________________________
Decided: October 8, 2010
__________________________
MARK STUART ZOLNO, Katten Muchin Rosenman LLP,
of Washington, DC, for plaintiff-appellant. With him on
the brief were ERIC R. ROCK and BENJAMIN H. SHANBAUM.
L. MISHA PREHEIM, Trial Attorney, Commercial Liti-
gation Branch, Civil Division, United States Department
of Justice, of Washington, DC, for defendant-appellee
United States. With him on the brief were TONY WEST,
Assistant Attorney General, JEANNE E. DAVIDSON, Direc-
tor, and REGNALD T. BLADES, JR., Assistant Director.
__________________________
WALGREEN CO v. US 2
Before RADER, Chief Judge, LINN, and DYK, Circuit
Judges.
LINN, Circuit Judge.
Walgreen Co. of Deerfield, IL (“Walgreen”) appeals
the affirmance by the Court of International Trade (“CIT”)
of a determination by the Department of Commerce
(“Commerce”) in Final Scope Ruling: Antidumping Duty
Order on Certain Tissue Paper from the People’s Republic
of China, United States Department of Commerce Memo-
randum from James C. Doyle, Director, Office 9, to
Stephen J. Claeys, Deputy Assistant Secretary for Import
Administration, Scope Inquiry No. A-570-894 (Sept. 19,
2008) (“Final Scope Ruling”), that certain tissue paper
contained in Walgreen’s “Gift Bag to Go” gift bag sets are
within the scope of an earlier antidumping order covering
certain tissue paper from the People’s Republic of China,
Notice of Amended Final Determination of Sales at Less
than Fair Value and Antidumping Duty Order: Certain
Tissue Paper Products from the People’s Republic of
China, 70 Fed. Reg. 16,223-01 (Dep’t of Commerce Mar.
30, 2005) (“Final Order”). Because Commerce’s Final
Scope Ruling is supported by substantial evidence, we
affirm.
BACKGROUND
When domestic producers suspect that competing
goods are being sold in the United States at less than fair
value (i.e., being “dumped”), they may petition Commerce
to impose duties on the importer. Duferco Steel Co. v.
United States, 296 F.3d 1087, 1089 (Fed. Cir. 2002).
Commerce first makes an initial determination “of
whether there is a reasonable basis to believe or suspect
that the merchandise is being sold, or is likely to be sold,
at less than fair value.” 19 U.S.C. § 1673b(b)(1)(A).
Commerce then makes a “final determination of whether
3 WALGREEN CO v. US
the subject merchandise is being, or is likely to be, sold in
the United States at less than its fair value.” Id.
§ 1673d(a)(1). As relevant here, “subject merchandise” is
“the class or kind of merchandise that is within the scope
of an . . . [antidumping] order.” Id. § 1677(25). In the
final determination, Commerce defines the scope of prod-
ucts that are subject to the antidumping order.
“[B]ecause the descriptions of subject merchandise
contained in [Commerce’s] determinations must be writ-
ten in general terms,” Commerce may issue “‘scope rul-
ings’ that clarify the scope of an order . . . with respect to
particular products.” 19 C.F.R. § 351.225(a). The im-
porter may present its arguments for why its products do
not fall within the scope of the antidumping order, and
members of the domestic industry may reply with
counterarguments.
Commerce makes its scope rulings in one or two steps:
(k) [I]n considering whether a particular
product is included within the scope of an
order . . . the Secretary will take into ac-
count the following:
(1) The descriptions of the merchandise
contained in the petition, the initial inves-
tigation, and the determinations of the
Secretary (including prior scope determi-
nations) and the Commission.
(2) When the above criteria are not dis-
positive, the Secretary will further con-
sider:
(i) The physical characteristics of the
product;
(ii) The expectations of the ultimate pur-
chasers;
WALGREEN CO v. US 4
(iii) The ultimate use of the product;
(iv) The channels of trade in which the
product is sold; and
(v) The manner in which the product is
advertised and displayed.
Id. § 351.225(k)(1-2). If Commerce determines that the
application for a scope ruling and the criteria in
§ 351.225(k)(1) (“(k)(1) criteria”) are sufficient to deter-
mine whether the products fall within the scope of the
final antidumping order, Commerce issues a final scope
ruling. Id. § 351.225(d). If not, Commerce initiates a
scope inquiry to consider the criteria enumerated in §
351.225(k)(2) (“(k)(2) criteria”), which then results in a
final scope ruling. Id. § 351.225(e).
The genesis of this case was a petition filed by mem-
bers of the domestic industry, asking Commerce to deter-
mine that certain competing tissue papers were being sold
in violation of the antidumping laws. On September 21,
2004, Commerce issued a preliminary determination on
the petition, finding that there is a reasonable basis for
belief that subject merchandise was being sold at less
than fair value. Certain Tissue Paper Products and
Certain Crepe Paper Products from the People’s Republic
of China: Notice of Preliminary Determinations of Sales at
Less Than Fair Value, Affirmative Preliminary Determi-
nation of Critical Circumstances and Postponement of
Final Determination for Certain Tissue Paper Products,
69 Fed. Reg. 56,407-19 (Dep’t Commerce Sept. 21, 2004)
(“Preliminary Determination”). Commerce then made a
final determination that subject merchandise was being
dumped. Notice of Final Determination of Sales at Less
Than Fair Value: Certain Tissue Paper Products from the
People’s Republic of China, 70 Fed. Reg. 7475-01 (Dep’t
Commerce Feb. 14, 2005) (“Final Determination”). In that
final determination, Commerce explicitly adopted an
5 WALGREEN CO v. US
Issues and Decisions Memorandum for the Antidumping
Duty investigation of Certain Tissue Paper Products from
the People’s Republic of China, 70 ITADOC 7475 (Feb. 3,
2005) (“I&D Memo”) as part of its decision. Final Deter-
mination, 70 Fed. Reg. at 7476. Commerce then amended
certain details of the Final Determination, and released
its Final Order. In the Final Order, Commerce conclu-
sively laid out the scope of its antidumping determination.
In full, Commerce defined the scope as follows:
The tissue paper products subject to this
order are cut-to-length sheets of tissue pa-
per having a basis weight not exceeding 29
grams per square meter. Tissue paper
products subject to this order may or may
not be bleached, dye-colored, surface-
colored, glazed, surface decorated or
printed, sequined, crinkled, embossed,
and/or die cut. The tissue paper subject to
this order is in the form of cut-to-length
sheets of tissue paper with a width equal
to or greater than one-half (0.5) inch. Sub-
ject tissue paper may be flat or folded, and
may be packaged by banding or wrapping
with paper or film, by placing in plastic or
film bags, and/or by placing in boxes for
distribution and use by the ultimate con-
sumer. Packages of tissue paper subject to
this order may consist solely of tissue pa-
per of one color and/or style, or may con-
tain multiple colors and/or styles.
The merchandise subject to this order does
not have specific classification numbers
assigned to them under the HTSUS. Sub-
WALGREEN CO v. US 6
ject merchandise may be under one or
more of several different subheadings, in-
cluding: 4802.30; 4802.54; 4802.61; 4802.62;
4802.69; 4804.31.1000; 4804.31.2000; 4804.31.4020;
4804.31.4040; 4804.31.6000; 4804.39; 4805.91.1090;
4805.91.5000; 4805.91.7000; 4806.40; 4808.30;
4808.90; 4811.90; 4823.90; 4820.50.00; 4802.90.00;
4805.91.90; 9505.90.40. The tariff classifica-
tions are provided for convenience and
customs purposes; however, the written
description of the scope of this order is
dispositive.
Excluded from the scope of this order are
the following tissue paper products: (1)
tissue paper products that are coated in
wax, paraffin, or polymers, of a kind used
in floral and food service applications; (2)
tissue paper products that have been per-
forated, embossed, or die-cut to the shape
of a toilet seat, i.e., disposable sanitary
covers for toilet seats; (3) toilet or facial
tissue stock, towel or napkin stock, paper
of a kind used for household or sanitary
purposes, cellulose wadding, and webs of
cellulose fibers (HTSUS 4803.00.20.00 and
4803.00.40.00).
Final Order, 70 Fed. Reg. at 16223-24.
On February 5, 2008, Walgreen requested a scope rul-
ing from Commerce that five of its gift bag sets were not
within the scope of the Final Order. The sets contain a
gift bag, a crinkle bow, and one to six sheets of tissue
paper. The tissue paper comprises from six to eleven
percent of the cost of the gift bag sets.
7 WALGREEN CO v. US
Commerce’s scope ruling was in two parts. Commerce
first determined that Walgreen’s gift bag sets were not
unique products, but “merely subject merchandise pack-
aged with non-subject merchandise.” Final Scope Ruling
at 11. Commerce also relied on statements in the Pre-
liminary Determination and the I&D Memo, that explic-
itly included within the scope of the duty investigation,
subject merchandise packaged with non-subject merchan-
dise. Final Scope Ruling at 11. Commerce analogized
Walgreen’s gift bag sets to the products at issue in a prior
scope ruling. Recommendation Memo -- Final Scope
Ruling on the Request by Texsport for Clarification of the
Scope of the Antidumping Duty Order on Porcelain-on-
Steel Cooking Ware from the People’s Republic of China at
4, U.S. Dep’t of Commerce Memorandum from Richard
Moreland, Director, Office of Antidumping Compliance, to
Joseph A. Spetrini, Deputy Assistant Secretary for Com-
pliance, Scope Inquiry No. A-570-506 (Aug. 8, 1990)
(“Texsport”) (concluding that an outdoor cooking set
including teakettles, skillets, frypans, cups and plates,
was within the scope of an anti-dumping order covering
teakettles, skillets and frypans). Commerce distinguished
a large number of prior scope determinations involving
unrelated antidumping orders, termed by Walgreen the
“mixed media scope rulings.” 1 In distinguishing those
rulings, Commerce considered the sets of products in-
volved in those determinations to be “unique products,” in
contrast to what it considered to be simply the packaging
of subject merchandise with non-subject merchandise
here. Commerce next determined that because the tissue
paper included in the gift bag set, when considered sepa-
rately, was unambiguously within the scope of the Final
Order, the (k)(1) criteria were sufficient to find that
1 For cases comprising the “mixed media scope
rulings,” see Opening Br. of Pl.-Appellants 19-20.
WALGREEN CO v. US 8
Walgreen’s gift bag sets were within the scope of the Final
Order. Commerce thus concluded that it need not con-
sider the (k)(2) criteria. Final Scope Ruling at 14.
The Court of International Trade affirmed, in part be-
cause of the deferential standard of review. Walgreen Co.
of Deerfield, IL. v. United States, Slip Op. 09-122, 2009
WL 3458009 (Ct. Int’l Trade Oct. 28, 2009) (“CIT Op.”).
Walgreen appealed. We have jurisdiction under 28
U.S.C. § 1295(a)(5).
DISCUSSION
In reviewing Commerce’s scope decision, we step into
the shoes of the CIT and apply the same deferential
“substantial evidence” standard of review that it applied
to its review of Commerce’s determination. Sango Int’l,
L.P. v. United States, 484 F.3d 1371, 1378 (Fed. Cir.
2007). This means that we will affirm the CIT’s affir-
mance of Commerce’s scope ruling unless the record lacks
“such relevant evidence as a reasonable mind would
accept as adequate to support the conclusion reached.”
Id. (citing Consol. Edison v. Nat’l Labor Relations Bd.,
305 U.S. 197, 224 (1938)). While we grant deference to
Commerce’s own interpretation of its antidumping orders,
“Commerce cannot ‘interpret’ an antidumping order so as
to change the scope of that order, nor can Commerce
interpret an order in a manner contrary to its terms.”
Duferco Steel Inc. v. United States, 296 F.3d 1087, 1095
(Fed. Cir. 2002) (internal citations omitted).
Here, it is undisputed that the tissue papers included
in Walgreen’s gift bag sets are “cut-to-length sheets of
tissue paper having a basis weight not exceeding 29
grams per square meter . . . with a width equal to or
greater than one-half (0.5) inch.” See Final Order, 70 Fed.
Reg. at 16,223. The tissue papers do not fall within any of
9 WALGREEN CO v. US
the enumerated exceptions to the Final Order. See id. at
16,224. Moreover, the Final Order specifically includes
within its scope such tissue paper that is “packaged . . . by
placing [it] in plastic or film bags, and/or placing [it] in
boxes for distribution and use by the ultimate consumer.”
Id. at 16,223. The question thus presented is whether the
packaging of the tissue paper in gift bag sets takes it out
of the scope of the Final Order.
Walgreen argues that Commerce was required to con-
duct a scope inquiry on the entire gift bag set, rather than
separate the set into its constituent components. That is,
Walgreen contends that the “particular product” to be
analyzed in the scope ruling should have been the gift bag
set as a whole, because that was how Walgreen “pre-
sented the issue to [Commerce]” when it initiated the
scope ruling, and because the retail unit for sale was the
gift bag set. Walgreen then argues that because the Final
Order did not consider gift bag sets, the (k)(1) criteria are
not dispositive, and Commerce was required to consider
the so-called Diversified Products criteria of (k)(2). 2
Walgreen relies on the “mixed media scope rulings” and
distinguishes Texsport, just as it did to Commerce and the
CIT.
The government argues that the Final Order unambi-
guously covers Walgreen’s gift bag sets, because Com-
merce properly categorized the sets as “subject
merchandise packaged with non-subject merchandise,”
Final Scope Ruling at 13, which was explicitly within the
scope of the I&D Memo that was incorporated into the
Final Determination. See I&D Memo (“[A]ll subject
2 Prior to codification in § 351.225(k)(2), these
factors appeared in the CIT’s decision in Diversified
Prods. Corp. v. United States, 572 F.Supp. 883 (Ct. Int’l
Trade 1983).
WALGREEN CO v. US 10
merchandise – cut-to-length tissue paper – is subject to
this proceeding, whether or not it is sold or shipped with
non-subject merchandise.”). The government supports
Commerce’s position and relies on Final Determination of
Sales at Less Than Fair Value: Fresh Cut Roses from
Ecuador, 60 Fed. Reg. 7019 (Department of Commerce
Feb. 6, 1995) (“Fresh Cut Roses”), for the proposition that
subject merchandise packaged with non-subject merchan-
dise may be included in the scope of the order. Finally,
the government supports Commerce’s reliance on Tex-
sport.
Walgreen’s first argument rests on the faulty premise
that Commerce does not have discretion to determine that
a set of related products is merely a combination of sub-
ject and non-subject merchandise, and not a unique
product. Under Walgreen’s theory, a particular product
should be considered a “mixed media” set when it is so
presented in the petition initiating the scope ruling. Such
a rule would allow importers to frame the issue in the
scope ruling to eliminate any dispositive use of (k)(1) to
find that a product is within the scope of an antidumping
order. But, as we said in Duferco, “[i]t is the responsibil-
ity of the agency, not those who initiated the proceedings,
to determine the scope of the final orders.” 296 F.3d at
1097. Walgreen’s rule would undermine Commerce’s
discretion at the very heart of its expertise: the applica-
tion of its own orders to particular facts. We decline to
adopt such a rule.
Walgreen also appears to argue that because its gift
bag sets and the products at issue in the “mixed media
scope rulings” are “retail packages containing various
components presented together to perform a particular
function,” Opening Br. of Pl.-Appellants 21, Commerce
was required to consider Walgreen’s product a “mixed
media” set and to address it under the (k)(2) criteria.
11 WALGREEN CO v. US
However, the “mixed media scope rulings” do not purport
to define generally applicable criteria for what constitutes
a “mixed media” set, and they do not take into account the
unique language of the Final Order in this case.
In the Final Scope Ruling – Antidumping Duty Order
on Certain Cased Pencils from the People’s Republic of
China (PRC) – Request by Fiskars Brands, Inc. at 12,
United States Department of Commerce Memorandum
from Wendy J. Frankel, Director, AD/CVD Operations,
Office 8, to Barbara Tillman, Acting Deputy Assistant
Secretary for Import Administration, Scope Inquiry No.
A-570-827 (June 3, 2005), one of the “mixed media scope
rulings” relied on by Walgreen, Commerce determined
that a drawing compass and pencil combination product
was not subject to an antidumping order covering pencils.
Commerce found that “[t]he merchandise subject to this
scope request is the multi-piece compass/pencil product
and not the pencils individually, which are only minor
components of the compass/pencil products.” Id. at 11.
Because such “mixed media” sets were not explicitly
discussed in the antidumping order, the (k)(1) criteria
were not dispositive of the scope inquiry, and Commerce
was required to consider the (k)(2) criteria in making its
scope ruling. Id. at 5. In so doing, Commerce noted that
it “has previously addressed scope inquiries covering
mixed media sets using the factors listed in 19 C.F.R.
351.225(k)(2).” Id. However, Commerce did not set forth
a bright line rule for determining whether imports should
be analyzed as “mixed media” sets, or as combinations of
products. Instead, Commerce properly exercised its
discretion under the facts and circumstances of the case
before it, concluding that the imported products should be
considered “mixed media” sets. See also Final Scope
Ruling--Antidumping Duty Order on Certain Cased
Pencils from the People’s Republic of China--Request by
WALGREEN CO v. US 12
Dollar General Corporation at 3, U.S. Dep’t of Commerce
Memorandum from Tom Futtner, Acting Office Director,
AD/CVD Enforcement, Group II, Office IV, to Holly Kuga,
Acting Deputy Assistant Secretary Import Administra-
tion, Scope Inquiry No. A-570-827 (Apr. 6, 2001) (“The
issue presented by this scope inquiry is whether Dollar’s
stationary sets, which include a 3 ¼-inch or 4 ½ -inch
pencil, are within the scope of the order on certain cased
pencils from the PRC.”); Final Scope Ruling--
Antidumping Duty Order on Certain Cased Pencils from
the People’s Republic of China--Request by Target Corpo-
ration Regarding “Hello Kitty Fashion Totes” at 4, U.S.
Dep’t of Commerce Memorandum from Laurie Parkhill,
Director, Office 8, AD/CVD Enforcement, to Jeffrey May,
Deputy Assistant Secretary for Import Administration,
Scope Inquiry No. A-570-827 (Sept. 29, 2004) (“[We]
observe[] that the Totes include a single pencil which,
considered individually, is covered by the scope of the
order. The Totes are multimedia sets, however . . . [and]
the scope of the order does not contemplate mixed-media
sets.”).
These ad hoc determinations do not require that Wal-
green’s gift bag sets be considered “mixed media” sets.
Walgreen acknowledges that Commerce has adopted no
formal definition of a “mixed media” set. Each case must
be decided on the particular facts. Cf. Sango Int’l L.P. v.
United States, 567 F.3d 1356, 1363 (Fed. Cir. 2009) (not-
ing that “Commerce is not required as a matter of law to
consider components separately simply because they are
packaged, sold, and advertised separately”); Texsport at 4
(analyzing the subject merchandise elements of a camping
cookware set as within the scope of an antidumping order
though packaged and sold with non-subject merchandise).
Cf. also Crawfish Processors Alliance v. United States, 483
F.3d 1358, 1363-64 (Fed. Cir. 2007) (ruling that etouffee
13 WALGREEN CO v. US
made with crawfish tail meat was not within the scope of
an antidumping order covering “prepared” crawfish tail
meat because the meat was “‘substantially transformed’
by its preparation process,” and distinguishing a prior
scope ruling regarding canned tomatoes on its facts as
non-transformative).
The primary source in making a scope ruling is the
antidumping order being applied (and the prior scope
determinations applying that order), not necessarily the
scope rulings made in unrelated antidumping orders.
Commerce correctly determined on the facts presented in
this case that the components of the gift bag sets did not
interact in any way or otherwise represent a unique
product. Having so concluded, it then properly deter-
mined, based on the (k)(1) criteria and the language of the
Final Order, that the tissue paper contained in the gift
bag sets fell within the scope of the antidumping order.
We note that Commerce went on to rely on expansive
language in the I&D Memo that suggested that the scope
of the investigation should be read broadly: “[W]e stress
that all subject merchandise – cut-to-length tissue paper –
is subject to this proceeding, whether or not it is sold or
shipped with non-subject merchandise.” I&D Memo 7475.
The CIT also relied in part on that language in affirming
Commerce’s determination. See CIT Op. at 5. This court
has made clear that it is the language of Commerce’s final
order that defines the scope of the order albeit “with the
aid of the antidumping petition, the factual findings and
legal conclusions adduced from the administrative inves-
tigations, and the preliminary order.” Duferco Steel, 296
F.3d at 1097 (quoting Smith Corona Corp. v. United
States, 915 F.2d 683, 685 (Fed. Cir. 1990)). While the
petition, factual findings, legal conclusions, and prelimi-
nary orders can aid in the analysis, they cannot substitute
for the language of the order itself, which remains the
WALGREEN CO v. US 14
“cornerstone” in any scope determination. Id. Thus,
Commerce was correct in focusing its analysis on the
language of the Final Order and the clear guidance it
provided. Commerce was able to exercise its discretion
based on the language of the Final Order in determining,
on the facts presented, that the gift bag sets were not
unique products and that the tissue paper contained
therein retained its individual character. While Com-
merce and the CIT also referred to the expansive lan-
guage in the I&D Memo, Commerce’s determination was
not solely in reliance thereon and thus was not lacking in
substantial evidence support properly predicated on the
language of the Final Order.
CONCLUSION
Because substantial evidence supported Commerce’s
decision that, based on the language of the Final Order,
the (k)(1) criteria were dispositive of the scope determina-
tion, this court affirms the decision of the Court of Inter-
national Trade affirming Commerce’s Final Scope Ruling.
AFFIRMED