Papierfabrik August Koehler SE v. United States

Slip Op. 14-102

UNITED STATES COURT OF INTERNATIONAL TRADE
________________________________
PAPIERFABRIK AUGUST KOEHLER SE, :
:
Plaintiff, :
: Before: Nicholas Tsoucalas
v. : Senior Judge
:
UNITED STATES, : Court No.: 13-00163
:
Defendant, :
: PUBLIC VERSION
and :
:
APPLETON PAPERS INC., :
:
Defendant-Intervenor. :

OPINION

[Plaintiff’s motion for judgment on the agency record is denied.]

Dated:September 3, 2014

F. Amanda DeBusk, Matthew R. Nicely, John F. Wood, Eric S. Parnes,
Lynn G. Kamarck, and Alexandra B. Hess, Hughes Hubbard & Reed LLP,
of Washington, DC, for plaintiff.

Joshua E. Kurland, Trial Attorney, Commercial Litigation Branch,
Civil Division, U.S. Department of Justice, of Washington, DC, for
defendant. With him on the brief were Stuart F. Delery, Assistant
Attorney General, Jeanne E. Davidson, Director, and Reginald T.
Blades, Jr., Assistant Director. Of counsel on the brief was
Jessica M. Forton, Attorney, Office of the Chief Counsel for Trade
Enforcement and Compliance, U.S. Department of Commerce, of
Washington, DC.

Daniel L. Schneiderman and Gilbert B. Kaplan, King & Spalding LLP,
of Washington, DC, for defendant-intervenor.
Court No. 13-00163 Page 2

Tsoucalas, Senior Judge: Plaintiff Papierfabrik August

Koehler SE (“Koehler”) moves for judgment on the agency record

contesting the determination of the U.S. Department of Commerce

(“Commerce”) in Lightweight Thermal Paper From Germany: Final

Results of Antidumping Duty Administrative Review; 2010–2011, 78

Fed. Reg. 23,220 (Apr. 18, 2013) (“Final Results”). Commerce and

defendant-intervenor Appvion, Inc. (“Appvion”), 1 oppose Koehler’s

motion. For the following reasons, Koehler’s motion is denied.

BACKGROUND

Commerce initiated the third administrative review

(“AR3”) of lightweight thermal paper (“LWTP”) from Germany in

December 2011. Initiation of Antidumping and Countervailing Duty

Administrative Reviews and Request for Revocation in Part, 76 Fed.

Reg. 82,268, 82,269 (Dec. 30, 2011). At the onset, Commerce

requested data on Koehler’s home market sales, U.S. sales, and

costs. Sales Questionnaire (Jan. 6, 2012), Public Rec. 2 9–12.

Koehler provided timely responses to Commerce’s

questionnaire and certified to the accuracy and completeness of

its responses. See Koehler Resp. § A Questionnaire (Feb. 21,

2012), CR 2–4; Koehler Resp. §§ B&C Questionnaire (Feb. 27, 2012),

1 In May 2013, Appleton Papers Inc. changed its name to Appvion,
Inc. See Letter to Clerk of the Court, ECF No. 25 (June 21, 2013).

2 Hereinafter, documents in the public record will be designated
“PR” and documents in the confidential record will be designated
“CR” without further specification except where relevant.
Court No. 13-00163 Page 3

CR 5–14. On May 16, 2012, Commerce issued a supplemental

questionnaire requesting that Koehler clarify certain responses.

See First Supplemental Questionnaire (May 16, 2012), CR 47.

On May 18, 2012, the last day to submit new factual

information, Appvion submitted an affidavit from a confidential

source regarding Koehler’s home market sales. See Submission of

New Factual Information at 2–3 & Exh. 1 (May 18, 2012), CR 49 (“May

18th Letter”). Although Appvion withheld certain information from

disclosure, it provided a public summary in which it alleged that

Koehler “engaged in a scheme to defraud [Commerce] by intentionally

concealing certain otherwise reportable home market transactions.”

Id. at 2. Specifically, Appvion claimed that Koehler was “selling

48 gram thermal paper that it knows is destined for consumption in

Germany through various intermediaries in third-countries.” Id.

at 2–3. Appvion further alleged that Koehler undertook this

transshipment scheme “to artificially manipulate prices

attributable to those sales of 48 gram paper shipped directly to

its German customers.” Id. at 3.

Koehler initially denied the allegations, and objected

to Appvion’s bracketing 3 of certain information in its submission.

See Objections of Koehler to Over-Bracketing of Petitioner’s May

3 Single-bracketed information is confidential information that is
disclosed in accordance with an administrative protective order.
Double-bracketed information is confidential information that is
exempt from disclosure under an administrative protective order.
Court No. 13-00163 Page 4

18 New Fictional Information Letter at 1–8 (May 23, 2012), PR 92.

Commerce requested that Appvion provide further justification for

its bracketing of certain information, see Letter to Appvion re:

Submission of New Factual Information at 1 (June 1, 2012), PR 98,

but did not require disclosure. Koehler also requested an

extension of time to submit its supplemental questionnaire

response (“SQR”) and respond to Appvion’s allegations, Request for

Add’l Extension of Deadline for Submission of First SQR at 1–2

(June 4, 2012), PR 99, which Commerce granted in part. See Second

Request for Extension of SQR at 1 (June 5, 2012), PR 100.

In its SQR, Koehler admitted that “certain sales of 48-

gram [LWTP], which were shipped to a third country, were ultimately

delivered to customers in the German market, and should have been

reported by Koehler as home market transactions.” 4 SQR at 1 (June

27, 2012), CR 66. It described the nature of the transshipment

arrangements: Koehler shipped merchandise to intermediaries

outside of Germany [[

]]; the intermediaries [[

]] shipped it directly to the customer

in Germany. Id. at 2–3. According to Koehler, “[t]he impact of

this shipping arrangement was to [[

4 Although Koehler initially bracketed the majority of its
admission as confidential information, certain statements were
discussed publicly during AR3 and in the briefs.
Court No. 13-00163 Page 5

]].” Id. at 2. It

further explained that it made these arrangements in order to make

home market sales “[[

]].” Id. at 3. Despite this

admission, Koehler claimed that “these acts and omissions were

undertaken without the authority or knowledge of the Chief

Executive Officer, the Chief Financial Officer, the in-house

counsel, or the Board of Directors of Koehler.” Id. at 1.

Koehler also submitted new home market sales data

including the transshipped sales it omitted from its initial

questionnaire response. Id., Exh. S1-27. Commerce rejected this

data as “untimely filed factual information that was not solicited”

in the supplemental questionnaire. Rejection of Factual

Information Submission Filed by Koehler at 1 (July 5, 2012), PR

108. Koehler subsequently refiled its SQR without the transshipped

sales data. Resubmission of Portion of SQR (Aug. 2, 2012), CR 90.

Commerce issued its preliminary determination in

December 2012. LWTP From Germany; Preliminary Results of

Antidumping Duty Administrative Review; 2010–2011, 77 Fed. Reg.

73,615 (Dec. 11, 2012) (“Preliminary Results”). Because Koehler

transshipped certain home market sales and then omitted those sales

from its initial questionnaire responses, Commerce preliminarily
Court No. 13-00163 Page 6

applied total adverse facts available (“AFA”). See Preliminary

Results of Antidumping Duty Administrative Review: Application of

Total AFA to Koehler at 1, 11–16 (Dec. 3, 2012), CR 99. It selected

the petition rate of 75.36% as the AFA rate. Id. at 17. In its

final determination, Commerce upheld the Preliminary Results in

their entirety. See Issues and Decision Memorandum for the Final

Results of the 2010–2011 Administrative Review on LWTP from Germany

at 1 (Apr. 11, 2013), PR 176.

JURISDICTION and STANDARD OF REVIEW

The Court has jurisdiction pursuant to 28 U.S.C. §

1581(c) (2012) and section 516A(a)(2)(B)(iii) of the Tariff Act of

1930, 5 as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) (2012).

The Court will uphold Commerce’s determination unless it

is “unsupported by substantial evidence on the record, or otherwise

not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i).

Substantial evidence “means such relevant evidence as a reasonable

mind might accept as adequate to support a conclusion.” Universal

Camera Corp. v. NLRB, 340 U.S. 474, 477 (1951).

DISCUSSION

Koehler contests several aspects of the Final Results,

including: Commerce’s decision to reject its corrected sales data

and apply AFA; Commerce’s decision to apply total AFA; and

5
Further citations to the Tariff Act of 1930 are to the relevant
portions of Title 19 of the U.S. Code, 2012 edition.
Court No. 13-00163 Page 7

Commerce’s selection of the petition rate as Koehler’s AFA rate.

See Pl.’s Mem. Supp. R. 56.2 Mot. J. Agency R. at 12–15 (“Pl.’s

Mem.”). Because the Final Results were supported by substantial

evidence and consistent with law, Koehler’s motion must be denied.

I. Legal Framework for Application of AFA

Commerce may rely on facts otherwise available where

“necessary information is not available on the record” or a party

“withholds information that has been requested by [Commerce],”

“fails to provide such information by the deadlines for submission

of the information or in the form and manner requested,”

“significantly impedes a proceeding,” or provides information that

“cannot be verified.” 19 U.S.C. § 1677e(a).

Where a submission is deficient, Commerce “shall

promptly inform the person submitting the response of the nature

of the deficiency and shall, to the extent practicable, provide

that person with an opportunity to remedy or explain the deficiency

in light of the time limits.” Id. § 1677m(d). If the response is

unsatisfactory or untimely, Commerce may “disregard all or part of

the original and subsequent responses.” Id.

Notwithstanding a partial deficiency, Commerce “shall

not decline to consider” necessary information if (1) “the

information is submitted by the deadline established for its

submission,” (2) “the information can be verified,” (3) “the

information is not so incomplete that it cannot serve as a reliable
Court No. 13-00163 Page 8

basis for reaching the applicable determination,” (4) “the

interested party has demonstrated that it acted to the best of its

ability in providing the information and meeting the requirements

established by [Commerce] with respect to the information,” and

(5) “the information can be used without undue difficulties.” Id.

§ 1677m(e). The submission must satisfy all five conditions. Id.

Commerce may make an adverse inference in selecting from

amongst the facts available if the respondent “fail[s] to cooperate

by not acting to the best of its ability to comply with a request

for information.” Id. § 1677e(b). Commerce may use information

from the petition, the investigation, a prior administrative

review, or other information on the record. Id. When relying on

secondary information, Commerce “shall, to the extent practicable,

corroborate that information from independent sources that are

reasonably at [its] disposal.” Id. § 1677e(c).

II. Commerce’s decision to apply AFA was supported by
substantial evidence and consistent with law.

Commerce applied AFA because Koehler failed to cooperate

to the best of its ability with its request for complete and

accurate home market sales data. See CR 99 at 13–16. Koehler

argues that Commerce’s decision to apply AFA was erroneous because

Commerce ignored certain “key facts” demonstrating that it

cooperated with the review and because Commerce improperly

rejected the corrected home market sales data that would have
Court No. 13-00163 Page 9

enabled Commerce to calculate an accurate dumping margin. See

Pl.’s Mem. at 16–37. Because Commerce’s decision to apply AFA was

reasonable, the court rejects both of these arguments.

A. Koehler did not cooperate to the best of its ability with
Commerce’s request for home market sales data.

As noted above, Commerce may apply AFA where “an

interested party has failed to cooperate by not acting to the best

of its ability to comply with a request for information.” 19

U.S.C. § 1677e(b). “Compliance with the ‘best of its ability’

standard is determined by assessing whether the respondent has put

forth its maximum effort to provide Commerce with full and complete

answers” to a request for information. Nippon Steel Corp. v.

United States, 337 F.3d 1373, 1382 (Fed. Cir. 2003).

Here, Koehler’s admissions provided Commerce with

evidence of its failure to cooperate. Koehler concealed the German

destination of certain sales by transshipping merchandise through

intermediaries outside of Germany. See SQR at 1–4. It arranged

the transshipments so as to make home market sales at prices that

would have resulted in the dumping of its U.S. sales. See id. at

3. And, when Commerce requested that Koehler provide complete and

accurate home market sales data, Koehler omitted these sales from

its response. Id. at 1. Koehler did not attempt to provide a

full reporting of its home market sales until Appvion produced

evidence of the transshipments. See CR 49; SQR, Exh. S1-27. At
Court No. 13-00163 Page 10

a minimum, this evidence demonstrates that Koehler did not “put

forth its maximum effort to provide Commerce with full and complete

answers” to a request for information. Nippon, 337 F.3d at 1382.

Despite its admissions, Koehler contends that Commerce’s

conclusion was erroneous. See Pl.’s Mem. at 16–22, 36–37.

According to Koehler, “rogue employees” arranged the

transshipments without the knowledge or consent of their

“supervisors” or Koehler’s “senior management.” Id. at 17.

Insisting that its “senior management” did not discover the

transshipments until after the May 18th Letter, Koehler essentially

claims that its omissions were inadvertent. Id. at 18–19. Koehler

argues that it fully cooperated after this discovery,

investigating its home market sales reporting, disciplining

responsible employees, safeguarding against future misconduct, and

submitting complete home market sales data. Id. at 19–21. Koehler

claims that Commerce disregarded this evidence and thus

erroneously imposed AFA. Id. at 22. Koehler also argues that, at

the very least, Commerce should have considered these facts as

mitigating evidence, as other government agencies might in their

proceedings. See id. at 19 n.3, 22. This alternative

interpretation of the record, however, is neither legally nor

factually sufficient to warrant overturning Commerce’s decision.

First, Koehler’s argument that “supervisors” and “senior

management” were unaware of the transshipments is not supported by
Court No. 13-00163 Page 11

the record. The sole basis for this argument is Koehler’s own

statement that its Chief Executive Officer, Chief Financial

Officer, in-house counsel, and directors were unaware of the

transshipments. See SQR at 1. However, Koehler did not provide

Commerce with any evidence supporting this claim during the review,

and its attempt to extend this claim to the vaguely-titled

“supervisors” and “senior management” is similarly undocumented.

Id. In fact, Koehler admitted that [[

]]. See id. at 4–5 (“[[

]].”).

Regardless, the “best of its ability” standard “does not

condone inattentiveness, carelessness, or inadequate record

keeping.” Nippon, 337 F.3d at 1382. Koehler was an “interested

party” to the review. See 19 U.S.C. § 1677(9) (defining an

interested party as “a foreign manufacturer, producer, or exporter

. . . of subject merchandise . . . .”). As such, Koehler was

required to “have familiarity with all of the records it maintains”

and “conduct prompt, careful, and comprehensive investigations of

all relevant records.” Nippon, 337 F.3d at 1382. Accordingly,

Commerce reasonably concluded that “Koehler [was] responsible for

the actions of its entire company, especially any actions that may

have an effect on its reporting to [Commerce].” CR 99 at 14.
Court No. 13-00163 Page 12

Furthermore, Koehler’s remedial efforts did not

reestablish its cooperation with the review. As Commerce noted,

Koehler began these efforts only after it was confronted with

allegations of misconduct. Id. at 15. Commerce reasonably

concluded that these efforts failed to “restore [its] confidence

in the reliability of [Koehler’s] home market sales data.” Id. at

16; see Tianjin Magnesium Int’l Co. v. United States, 36 CIT __,

__, 844 F. Supp. 2d 1342, 1348 (2012) (Tsoucalas, J.) (Commerce’s

argument that, “other than the established fabrications,” the

respondent fully cooperated was inconsistent with the purpose of

AFA). And, Koehler fails to identify any authority requiring

Commerce to consider these actions as a mitigating factor in its

determination. 6 In light of Koehler’s conduct, Commerce reasonably

determined that Koehler failed to cooperate to the best of its

ability. See Nippon Steel, 337 F.3d at 1382.

B. Commerce’s decision to reject Koehler’s untimely submission
of the previously unreported home market sales data was proper.

Koehler also argues that Commerce’s decision to apply

AFA was wrongful because it provided Commerce with the initially

unreported data. Pl.’s Mem. at 22–23. According to Koehler,

6
Commerce insists that the court should not address this argument
because Koehler did not raise it at the administrative level. See
Def.’s Mem. Opp’n Pl.’s R. 56.2 Mot. J. Agency R. at 37. Because
there is no authority supporting Koehler’s argument, the court
does not need to address this exhaustion claim.
Court No. 13-00163 Page 13

Commerce was required to accept and utilize this data, and its

decision to reject the data violated 19 U.S.C. § 1677m(d) and (e).

See id. at 23–35. Koehler also argues that this decision was

arbitrary and an abuse of discretion. Id. at 25, 26–29.

Koehler submitted the corrected data along with its SQR

on June 27, 2012, well after the deadlines for home market sales

information and new factual information expired. See SQR, Exh.

S1-27 (June 27, 2012). Although Koehler claims that Commerce

indicated that it would accept this data when granting Koehler’s

extension request, Commerce did not make any such representation.

See PR 100 at 1 (partially granting Koehler’s request for an

extension of time to reply to the supplemental questionnaire).

Koehler’s submission of its home market sales data was untimely

because, as noted above, it failed to cooperate with Commerce’s

initial request for that data. Although Koehler claims that

Commerce’s sole reason for rejecting the data was timeliness,

Commerce found that Koehler did not cooperate during the review.

See CR 99 at 11; PR 176 at 12. Because Koehler’s submission did

not satisfy all five conditions of section 1677m(e), Commerce was

not obligated to accept it. 7 See 19 U.S.C. § 1677m(e).

7 Koehler argues that Commerce erroneously determined that its
sales data was unverifiable because Commerce subsequently verified
Koehler’s sales data, including transshipped sales, during the
fourth administrative review (“AR4”). See Notice of Supplemental
Authority at 1–2 (July 9, 2014), ECF No. 113. However, because
Koehler cooperated during AR4, providing Commerce with timely and
Court No. 13-00163 Page 14

For similar reasons, Commerce was not required to accept

Koehler’s submission under 19 U.S.C. § 1677m(d). This Court has

held that the “remedial provisions” of section 1677m(d) “are not

triggered unless the respondent has met all of the five enumerated

criteria” of section 1677m(e). Tung Mung Dev. Co. v. United

States, 25 CIT 752, 789 (2001). Regardless, Commerce provided

Koehler with an opportunity to explain the omissions from its

initial questionnaire responses. See SQR at 1–5; 19 U.S.C. §

1677m(d) (directing Commerce to provide a party “with an

opportunity to remedy or explain the deficiency”). As noted above,

this explanation served as the basis for Commerce’s AFA decision.

And, Commerce’s decision was not an abuse of discretion,

as Koehler claims. Citing NTN Bearing Corp. v. United States, and

Timken U.S. Corp. v. United States, Koehler argues that Commerce

abused its discretion because it had ample time to analyze and use

the correct data during the review. See Pl.’s Mem. at 27.

“Commerce has broad discretion to establish its own rules governing

administrative procedures, including the establishment and

enforcement of time limits.” Yantai Timken Co. v. United States,

31 CIT 1741, 1755, 521 F. Supp. 2d 1356, 1370 (2007). Although

complete home market sales data, the facts of AR4 differ from the
instant case. See Issues and Decision Memorandum for the 2011-
2012 Final Results of the Administrative Review on LWTP from
Germany at 15 (June 11, 2014). Regardless, Koehler’s submission
did not satisfy section 1677m(e).
Court No. 13-00163 Page 15

the cases Koehler cites limit Commerce’s discretion to reject

untimely corrective submissions prior to the final results stage,

they are inapplicable here because they do not involve a failure

to cooperate. Timken U.S., 434 F.3d 1345, 1352–54 (Fed. Cir.

2006); NTN Bearing, 74 F.3d 1204, 1207–08 (Fed. Cir. 1995).

Commerce’s decision here was proper given Koehler’s failure to

cooperate. Yantai Timken, 31 CIT at 1755, 521 F. Supp. 2d at 1370.

Finally, Koehler insists that Commerce arbitrarily

enforced the deadline for new factual information because it

subsequently accepted Appvion’s July 9, 2012 submission. Pl.’s

Mem. at 25. This is simply incorrect. An interested party may

“submit factual information to rebut, clarify, or correct factual

information” in a supplemental questionnaire response within ten

days of that response. 19 C.F.R. § 351.301(c)(1)(v) (2012).

Appvion’s submission was a timely rebuttal of the SQR, therefore

Commerce properly accepted that information. Id.

Ultimately, the court finds no reason to overturn

Commerce’s decision to apply AFA.

III. Commerce reasonably applied total AFA.

Next, Koehler argues that even if AFA was appropriate,

application of total AFA was not. See Pl.’s Mem at 37. Koehler

contends that its conduct affected only a discrete amount of sales

and Commerce erroneously ignored the home market sales, U.S. sales,

and costs data that Koehler properly submitted. See id. at 39–
Court No. 13-00163 Page 16

40. According to Koehler, Commerce had no basis to apply total

AFA because it could still calculate an accurate margin. Id. It

insists that Commerce could have used the properly submitted data

to calculate the dumping margin, while using sales data for

products similar to the transshipped merchandise to fill the gap

in the record. Id. at 42. Koehler adds that in prior cases where

fraudulent conduct justified the application of total AFA, the

respondent’s conduct was far more egregious than its own. See

Pl.’s Reply Br. at 5–8.

The term total AFA is not defined by statute. Commerce

uses the term “total AFA” to refer to the “application of [AFA]

not only to the facts pertaining to specific sales for which

information was not provided, but to the facts respecting all of

respondents’ sales encompassed by the relevant antidumping duty

order.” Shandong Huarong Mach. Co. v. United States, 30 CIT 1269,

1271 n.2, 435 F. Supp. 2d 1261, 1265 n.2 (2006). Accordingly,

total AFA is appropriate “where none of the reported data is

reliable or usable.” Zhejiang Dunan Hetian Metal Co. v. United

States, 652 F.3d 1333, 1348 (Fed. Cir. 2011). Additionally, the

Court has found Commerce’s reliance upon total AFA proper where

missing information was “core, not tangential.” Since Hardware

(Guangzhou) Co. v. United States, 34 CIT __, __, Slip Op. 10-108

at 21 (Sept. 27, 2010) (citing Shanghai Taoen Int’l Trading Co. v.

United States, 29 CIT 189, 199 n.13, 360 F. Supp. 2d. 1339, 1348
Court No. 13-00163 Page 17

n.13 (2005)). In contrast, Commerce properly relies on partial

AFA where the deficiency is only “with respect to a discrete

category of information.” Foshan Shunde Yongjian Housewares &

Hardware Co. v. United States, 35 CIT __, __, Slip Op. 11-123 at

33 (Oct. 12, 2011).

As noted above, Commerce may not discard information if

it satisfies the five enumerated conditions of section 1677m(e).

See 19 U.S.C. § 1677m(e). However, this Court previously found it

reasonable for Commerce to interpret the term “information” in

section 1677m(e) to encompass “all the information submitted by an

interested party.” Steel Auth. of India v. United States, 25 CIT

482, 486, 149 F. Supp. 2d 921, 928 (2001); see Mukand, Ltd. v.

United States, 38 CIT __, __, Slip Op. 13-41 at 13 (Mar. 25, 2013)

(acknowledging that Commerce’s interpretation of “information” is

reasonable). The Court recognized that “if [Commerce] were forced

to use the partial information submitted by respondents,

interested parties would be able to manipulate the process by

submitting only beneficial information.” Steel Auth., 25 CIT at

487, 149 F. Supp. 2d at 928. And, as a result, “[r]espondents,

not [Commerce], would have the ultimate control to determine what

information would be used for the margin calculation[,]” which

would be “in direct contradiction to the policy behind the use of

facts available.” Id., 149 F. Supp. 2d at 928.
Court No. 13-00163 Page 18

Here, Commerce applied total AFA because Koehler’s

conduct “undermin[ed] the credibility and reliability of Koehler’s

data overall,” and “significantly imped[ed] [Commerce]’s ability

to conduct the instant review.” CR 99 at 12. It found that

Koehler’s failure to report the transshipped sales was a “material

omission” that prevented Commerce from “rely[ing] upon any of

Koehler’s submitted information to calculate an accurate dumping

margin.” Id. Without reliable sales data, Commerce determined

that it could not calculate the normal value and was “unable to

perform any comparisons to U.S. prices.” Id. at 13. Accordingly,

Commerce concluded that total AFA, rather than partial AFA, was

appropriate. Id.

Commerce’s decision to apply total AFA was reasonable.

This was not, as Koehler suggests, a case where the respondent’s

conduct affected only a discrete category of information. Cf.

Gerber Food (Yunnan) Co. v. United States, 29 CIT 753, 764–67, 387

F. Supp. 2d 1270, 1281–83 (2005) (total AFA was inappropriate where

respondent’s failure to disclose its export agency arrangement did

not affect the data necessary to calculate the dumping margin).

Koehler views its conduct too narrowly. Here, Koehler manipulated

its sales data by concealing certain home market sales detrimental

to its dumping margin. See SQR at 1–4. The effects of this

conduct extended beyond the omitted sales because Commerce could

not make the comparisons between the normal value and U.S. prices
Court No. 13-00163 Page 19

necessary for calculating the dumping margin. See Steel Auth., 25

CIT at 486, 149 F. Supp. 2d at 927 (recognizing that accurate home

market sales, U.S. sales, costs, and constructed value data are

“necessary” to the dumping margin calculation). Because Koehler’s

sales data was incomplete and unreliable, Commerce reasonably

concluded that it could not calculate the dumping margin using

this data. See Mukand, 37 CIT at __, Slip Op. 13-41 at 14 (the

respondent’s “persistent failure to report size-based costs made

the remaining information so incomplete that it could not ‘serve

as a reliable basis for reaching a final determination’”); Steel

Auth., 25 CIT at 487, 149 F. Supp. 2d at 928 (total AFA was

appropriate where respondent provided “flawed and unverifiable”

data necessary to calculate the dumping margin).

Koehler’s insistence that Commerce could have simply

applied partial AFA by plugging in Koehler’s home market sales

data for products other than 48-gram LWTP in place of the

transshipped sales is unconvincing. As noted above, Commerce

controls the dumping margin calculation, not the respondent. See

Steel Auth., 25 CIT at 487, 149 F. Supp. 2d at 928. Commerce could

not determine the dumping margin without complete and reliable

sales data and, therefore, reasonably declined to use the

selectively submitted information of an uncooperative respondent.

Id., 149 F. Supp. 2d at 928.
Court No. 13-00163 Page 20

And, contrary to Koehler’s claims, the relative

egregiousness of Koehler’s conduct does not distinguish this case.

Koehler insists that Commerce erroneously compared the instant

case to those in which parties destroyed, hid, and forged

documents, or repeatedly submitted false documents. See Pl.’s

Reply Br. at 5–8. Koehler contends that, in contrast to those

cases, it “engaged in consistent efforts to provide accurate

information to Commerce.” Id. at 8. But this argument is

unavailing because it does not alter the fact that Koehler

concealed sales information from Commerce that was essential to

calculating the dumping margin. SQR at 1–4. That other companies

engaged in conduct that was possibly more egregious does not

undermine Commerce’s decision. Commerce determined that it could

not calculate the dumping margin based on Koehler’s data and,

therefore, reasonably applied total AFA. Steel Auth., 25 CIT at

487, 149 F. Supp. 2d at 928.

IV. Commerce properly selected and corroborated the AFA rate.

The final issue before the court concerns Commerce’s

selection of the petition rate as the AFA rate. A margin based

upon AFA must be “a reasonably accurate estimate of the

respondent’s actual rate, albeit with some built-in increase

intended as a deterrent to non-compliance.” F.Lli de Cecco di

Filippo Fara S. Martino S.p.A. v. United States, 216 F.3d 1027,

1032 (Fed. Cir. 2000). “[A]lthough a higher AFA rate creates a
Court No. 13-00163 Page 21

stronger deterrent, Commerce may not select unreasonably high

rates having no relationship to the respondent’s actual dumping

margin.” Gallant Ocean (Thai.) Co. v. United States, 602 F.3d

1319, 1323 (Fed. Cir. 2010) (citing de Cecco, 216 F.3d at 1032).

“Commerce must select secondary information that has some

grounding in commercial reality.” Id. at 1324.

These standards grow out of 19 U.S.C. § 1677e(c), which

provides that when Commerce relies on secondary information, it

“shall, to the extent practicable, corroborate that information

from independent sources that are reasonably at [its] disposal.”

19 U.S.C. § 1677e(c). To corroborate secondary information,

Commerce must find that it has “probative value.” KYD, Inc. v.

United States, 607 F.3d 760, 765 (Fed. Cir. 2010). Secondary

information has “probative value” if it is both reliable and

relevant to the respondent. Mittal Steel Galati S.A. v. United

States, 31 CIT 730, 734, 491 F. Supp. 2d 1273, 1278 (2007).

First, Koehler challenges Commerce’s use of the petition

rate. See Pl.’s Mem. at 44–47. Koehler insists that petition

rates are “inherently unreliable,” and that the 75.36% figure has

been “discredited” by individual rates Commerce assigned Koehler

during the investigation and subsequent reviews. Id. at 44–45.

Koehler adds that the petition rate does not reflect commercial

reality because it was over eleven times higher than Koehler’s

previous highest margin, based on another company’s information,
Court No. 13-00163 Page 22

and derived from a constructed value methodology. Id. at 45–47.

These arguments are unavailing, however, because Commerce is

expressly permitted by statute to rely on secondary information

such as the petition rate when applying AFA. See 19 U.S.C. §

1677e(b); Hubscher Ribbon Corp. v. United States, 38 CIT __, __,

979 F. Supp. 2d 1360, 1369 (2014) (“Although courts are generally

suspicious of petition rates, . . . Congress has not foreclosed

their use.”). Commerce’s reliance on the petition rate is proper

insofar as it establishes the commercial reality of that rate with

adequate corroboration. 19 U.S.C. § 1677e(c).

Furthermore, Koehler’s previous margins are not

indicative of its commercial reality during AR3 and are, in fact,

inadequate for the purpose of establishing Koehler’s AFA rate.

Koehler cooperated during the investigation and the first review,

but during AR3 Koehler concealed sales that would have resulted in

a higher normal value and, accordingly, a higher dumping margin.

SQR at 1–4. Accordingly, it was reasonable for Commerce to reject

the established rates and instead select a rate which accounted

for this conduct along with a “built-in increase” for deterrence

purposes. See de Cecco, 216 F.3d at 1032.

Turning to Commerce’s corroboration exercise, Commerce

relied upon transaction-specific margins for Koehler’s sales

during the second administrative review (“AR2”). See PR 99 at 18.

Although it noted that sources of corroboration were limited,
Court No. 13-00163 Page 23

Commerce found that the transaction-specific margins reflected

commercial reality because they were based upon Koehler’s actual

sales data from the previous period of review. See PR 176 at 18–

19. And, because the petition rate “fell within the range” of

these transaction-specific margins, which stretched as high as

144.625%, Commerce found that the petition rate was probative of

Koehler’s commercial reality. Id. at 19. Commerce acknowledged

that the 144.625% margin was the only margin above the petition

rate, but continued to rely on the data because: (1) the petition

rate was significantly lower than the 144.625% margin; (2) the

transaction-specific margins did not account for the sales Koehler

transshipped during AR2, which would have increased the margins;

and (3) the CAFC found that Commerce may rely on a respondent’s

transaction-specific margins as corroboration even if only a small

percentage exceed the AFA rate. See id. at 19–20.

Koehler insists that this was inadequate because

Commerce solely relied on the single transaction-specific margin

above the petition rate out of the [[ ]] observations during

AR2, roughly [[ ]]% of all observations. Pl.’s Mem. at 49–50.

It compares this case to Gallant Ocean, noting that corroboration

was improper there “because Commerce did not identify any

relationship between the small number of unusually high dumping

transactions with Gallant’s actual rate.” Id. at 52 (citing

Gallant Ocean, 602 F.3d at 1324). Koehler also argues that
Court No. 13-00163 Page 24

Commerce’s reliance on the 144.625% margin was unreasonable

because the sale was actually an “error,” as demonstrated by the

low quantity and price. 8 Id. at 51.

The court finds that Commerce adequately corroborated

the petition rate. Here, Commerce tied the petition rate to

Koehler’s commercial reality using Koehler’s actual sales data. CR

99 at 19; cf. Gallant Ocean, 602 F.3d at 1324 (Commerce failed to

connect Gallant’s commercial reality to a small amount of data

sourced from other respondents during a different proceeding).

Although only one sale from AR2 produced a margin above the

petition rate, that sale established an upper-limit for the range

of transaction-specific margins in which the petition rate fell.

See PAM, S.p.A. v. United States, 582 F.3d 1336, 1340 (Fed. Cir.

2009) (finding that Commerce’s corroboration analysis was

reasonable even though only 0.5% of the transactions produced

8 Koehler also argues that Commerce cannot rely on Koehler’s AR2
data because it found that data to be unreliable and applied total
AFA during the remand of AR2. Notice of Supplemental Authority at
1–3 (July 2, 2014), ECF No. 109. According to Koehler, “Commerce
cannot have it both ways,” the data cannot be both reliable and
unreliable. Id. at 3. However, the remand results of AR2 are not
on the record of AR3. See QVD Food Co. v. United States, 658 F.3d
1318, 1324–25 (Fed. Cir. 2011) (“Judicial review of antidumping
duty administrative proceedings is normally limited to the record
before the agency in the particular review proceeding at issue and
does not extend to subsequent proceedings.”). Moreover, that
Commerce found Koehler’s data to be unreliable for the purpose of
calculating a weighted average dumping margin does not affect its
use of transaction-specific margins from that data for the separate
purpose of corroborating an AFA rate.
Court No. 13-00163 Page 25

margins exceeding the AFA rate). Courts have questioned Commerce’s

ability to establish a respondent’s commercial reality with a small

amount of data, see Dongguan Sunrise Furniture Co. v. United

States, 37 CIT __, __, 931 F. Supp. 2d 1346, 1356 (2013) (finding

that “Commerce’s reliance on minuscule percentages of sales to

determine the partial AFA rates” was unreasonable); but see PAM,

582 F.3d at 1340, but the facts of this case substantially support

Commerce’s reliance on the transaction-specific margins.

First, as a result of Koehler’s conduct, the record

lacked data essential to establishing Koehler’s commercial

reality. This Court has recognized that corroboration may be “less

than ideal” where the sole respondent in a proceeding fails to

cooperate “because the uncooperative acts of the respondent has

deprived Commerce of the very information that it needs to link an

AFA rate to [respondent’s] commercial reality.” Hubscher, 38 CIT

at __, 979 F. Supp. 2d at 1369 (quoting Qingdao Taifa Group Co. v.

United States, 35 CIT __, __, 780 F. Supp. 2d 1342, 1349 (2011)).

This was certainly the case here: Koehler was the sole respondent

and omitted sales data necessary to determine its commercial

reality. SQR at 1–4. In contrast, Commerce had established rates

for “over a dozen” mandatory respondents in Gallant Ocean. See

Gallant Ocean, 602 F.3d at 1324.

Furthermore, the AR2 margins are artificially low. As

Koehler admitted, it began transshipping merchandise during the
Court No. 13-00163 Page 26

review period of AR2. See SQR at 1–2. Accordingly, the normal

value Commerce used to calculate the transaction-specific margins

did not include some of the highest-priced home market sales. PR

176 at 19–20. Although the extent to which these sales would have

raised the margins is unclear, it was reasonable for Commerce to

conclude that the actual AR2 margins exceeded those which Commerce

calculated using the data Koehler provided. Id. at 20.

Moreover, there is no evidence that Commerce simply

“cherry-picked” the highest margin, as Koehler insists. Commerce

did not select the 144.625% margin as Koehler’s actual AFA rate,

but instead used it to establish an upper boundary for a range of

transactions that reflected Koehler’s commercial reality. See PR

176 at 19. And, in fact, the petition rate was well below the

144.625% margin. See id.

Koehler’s argument that the 144.625% margin was

aberrational is also unpersuasive. Koehler claims that there is

evidence to demonstrate this fact, but it did not request that

Commerce reopen the record for this evidence until its case brief.

See Koehler’s Case Brief at 49 (Jan. 17, 2013), CR 101. Despite

its claim that it did not have an opportunity to present any

evidence against the AR2 data until this stage, see Pl.’s Mem. at

51, the record indicates that Appvion placed the AR2 data onto the

record of AR3 in May 2012, see May 18th Letter, Exh. 35, CR 55, and

requested that Commerce use the 144.625% margin as the AFA rate in
Court No. 13-00163 Page 27

July 2012. See Response to Koehler’s July 16, 2012 Letter at 10–

11 (July 24, 2012), CR 88. Thus, Koehler was aware that Commerce

might use the AR2 data and had an opportunity to respond to

Appvion’s arguments earlier in the review, but failed to act.

Without any explanatory evidence concerning the sale at

issue, Koehler simply argues that Commerce cannot rely on the sale

because it had a lower quantity and lower price than the other

U.S. sales. See Pl.’s Mem. at 49–51. However, Commerce reasonably

determined that the numerical differences alone were insufficient

to undermine the reliability of the 144.625% margin. See PSC VSMPO

-AVISMA Corp. v. United States, 35 CIT __, __, 755 F. Supp. 2d

1330, 1338 & n.10 (2011), aff’d 498 Fed. App’x 995 (Fed. Cir. 2013)

(the fact that a sale had the highest transaction-specific margin

“by a wide margin” was insufficient to show that the sale was

“irregular” or “aberrational”); U.S. Steel Corp. v. United States,

34 CIT __, __, 712 F. Supp. 2d 1330, 1342 (2010) (rejecting

Plaintiff’s “attempts to prove distortion simply by pointing to

contrasting figures”). Accordingly, Commerce reasonably concluded

that the sale was part of Koehler’s commercial experience.

Ultimately, Commerce properly determined that the

petition rate was a reasonably accurate estimate of Koehler’s

commercial reality with a “built-in increase” for deterrence

purposes. See de Cecco, 216 F.3d at 1032. Although the petition
Court No. 13-00163 Page 28

rate exceeded Koehler’s previous margins, 9 it was not punitive

because it was properly corroborated. See KYD, 607 F.3d at 768

(“[A]n AFA dumping margin determined in accordance with the

statutory requirements is not a punitive measure.”). Accordingly,

Commerce properly selected the AFA rate. 19 U.S.C. § 1677e(c).

CONCLUSION

In accordance with the foregoing, the court finds that

the Final Results were supported by substantial evidence and in

accordance with law in their entirety. Plaintiff’s motion is

denied in full. Judgment will be entered accordingly.

/s/ Nicholas Tsoucalas
Nicholas Tsoucalas
Senior Judge
Dated: September 3, 2014
New York, New York

9 Koehler also compared the petition rate to a 2.71% margin it
calculated using the data it submitted, including the rejected
home market sales data. Pl.’s Reply Br. at 32–33. Koehler claims
this data was on the record, but Commerce retained the submissions
“solely for the purposes of establishing and documenting the basis
for its decision for rejecting the documents.” PR 108 at 2; 19
C.F.R. § 351.104(a)(2)(ii). Because this data was not part of the
record for the Final Results, the court declines to consider the
2.71% rate. See QVD, 658 F.3d at 1324–25.