JMC Steel Group v. United States

Slip Op. 15-51

UNITED STATES COURT OF INTERNATIONAL TRADE

JMC STEEL GROUP,

Plaintiff,

ALLIED TUBE AND CONDUIT,
WHEATLAND TUBE, and UNITED
STATES STEEL CORPORATION,

Plaintiff-Intervenors,

v.

UNITED STATES,
Before: Mark A. Barnett, Judge
Defendant, Court No. 13-00022

AL JAZEERA STEEL PRODUCTS CO.
SOAG, VIETNAM HAIPHONG
HONGYUAN MACHINERY
MANUFACTORY CO., LTD.,
UNIVERSAL TUBE AND PLASTIC
INDUSTRIES, LTD., KHK
SCAFFOLDING & FORMWORK, LLC,
UNIVERSAL TUBE AND PIPE
INDUSTRIES, LLC, ZENITH BIRLA
(INDIA) LIMITED, and CONARES
METAL SUPPLY LIMITED,

Defendant-Intervenors.

OPINION

[The court sustains the International Trade Commission’s Redetermination.]

Dated: May 29, 2015

John R. Magnus, Tradewins LLC, of Washington, DC, for plaintiff.

Roger B. Schagrin and John W. Bohn, Schagrin Associates, of Washington, DC, for
plaintiff-intervenor Allied Tube and Conduit.
Court No. 13-00022 Page 2

Stephen P. Vaughn, Robert E. Lighthizer, and James C. Hecht, Skadden, Arps, Slate,
Meagher & Flom LLP, of Washington, DC, for plaintiff-intervenor United States Steel
Corporation.

Gilbert B. Kaplan and Brian E. McGill, King & Spalding, LLP, of Washington, DC, for
plaintiff-intervenor Wheatland Tube.

Karl von Schriltz, Attorney, Office of the General Counsel, Dominic L. Bianchi, General
Counsel, and Andrea C. Casson, Assistant General Counsel for Litigation, U.S.
International Trade Commission, of Washington, DC, for defendant.

David L. Simon, Law Offices of David L. Simon, of Washington, DC, for defendant-
intervenor Al Jazeera Steel Products Co. SAOG.

Donald B. Cameron, Julie C. Mendoza, R. Will Planert, Brady W. Mills, Mary S.
Hodgins, and Sarah S. Sprinkle, Morris, Manning & Martin LLP, of Washington, DC, for
defendant-intervenors Universal Tube and Plastic Industries, Ltd., KHK Scaffolding &
Formwork, LLC, and Universal Tube and Pipe Industries, LLC.

Max F. Schutzman, Ned. H. Marshak, and Kavita Mohan, Grunfeld, Desiderio, Lebowitz,
Silverman & Klestadt, LLP, of New York, NY, for defendant-intervenors Zenith Birla
(India) Ltd. and Conares Metal Supply Ltd.

Robert F. Gosselink and Jonathan M. Freed, Trade Pacific, PLLC, of Washington, DC,
for defendant-intervenor Vietnam Haiphong Hongyuan Machinery Manufactory Co., Ltd.

Barnett, Judge: This matter, which arises from the International Trade

Commission’s (“ITC” or “Commission”) antidumping and countervailing duty

investigations into certain circular welded carbon-quality steel pipe (“CWP”) from India,

Oman, the United Arab Emirates, and Vietnam (“subject imports”), returns to the court

following remand to the Commission in JMC Steel Group v. United States, 38 CIT __,

24 F. Supp. 3d 1290 (2014) (“JMC I”). 1 In that decision, the court ordered the

Commission to (1) “reconsider its findings with regard to lost sales and revenue, taking

1The court presumes familiarity with the background and procedural history of the case,
although relevant portions are summarized below.
Court No. 13-00022 Page 3

into account [the] argument that the structure of the domestic CWP market precludes

Plaintiffs from providing the ITC the lost sales and revenue information in the form and

manner in which it was sought,” and (2) “explain how it has evaluated the impact of

subject imports on the domestic industry within the context of the business cycle.” Id. at

__, 24 F. Supp. 3d at 1321. On February 9, 2015, the ITC filed its final negative injury

remand results, in which it again found no material injury or threat thereof to the

domestic industry. See Views of the Commission, USITC Pub. 4521, Inv. Nos. 701-TA-

482-484 and 731-TA-1191-1194 (Final) (Remand) (Feb. 2015) (“Remand Views”). 2

Plaintiff, JMC Steel Group, and Plaintiff-Intervenors, United States Steel Corporation

and Wheatland Tube, (“Plaintiffs”) challenge the remand results. 3 (See generally

Confidential Comments of JMC Steel Group, Wheatland Tube, and United States Steel

Corporation on the Commission’s Remand Determination (“Comments”) (ECF No.

152).) For the reasons stated below, the remand results are sustained.

BACKGROUND AND PROCEDURAL HISTORY

A. The Administrative Proceedings

On October 26, 2011, Plaintiffs filed a petition with the ITC, alleging material

injury and threat of material injury by reason of the subject imports. See Circular

Welded Carbon-Quality Steel Pipe from India, Oman, United Arab Emirates, and

Vietnam, 76 Fed. Reg. 68,208 (ITC Nov. 3, 2011) (initiation of antidumping and

2 All citations to the Remand Views and to the agency record are to their confidential
versions.
3 Plaintiff-Intervenor Allied Tube and Conduit did not submit comments on the remand

results.
Court No. 13-00022 Page 4

countervailing duty investigations). In December 2012, the ITC published a final

determination, Circular Welded Carbon-Quality Steel Pipe from India, Oman, the United

Arab Emirates, and Vietnam, 77 Fed. Reg. 73,674 (ITC Dec. 11, 2012) (“Final

Determination”), and accompanying Views of the Commission, USCIT Pub. 4362, Inv.

Nos. 701-TA-482-484 and 731-TA-1191-1194 (Final) (Dec. 2012) (“Original Views”),

which examined a period of investigation (“POI”) of January 2009 through June 2012.

The Commission determined that subject imports and the domestic like product are

“generally fungible,” share the same channels of distribution, have a “reasonable

overlap” of competition, and that price is a significant factor in CWP purchasing

decisions. It found a significant increase in the volume of subject imports during the

POI, in absolute terms and relative to domestic consumption and production, but

concluded that the increase did not have significant adverse effects on the domestic

industry. Although the ITC observed that subject imports “pervasively undersold” the

domestic like product by significant margins during the POI, it nevertheless found “no

evidence” that subject imports significantly depressed or suppressed prices of the

domestic like product. The ITC also found that the domestic industry’s performance

improved in “almost every measure [during the POI] despite the weak recovery in CWP

demand” following the 2008 economic crisis and that there was no correlation between

subject import volume, market share, and underselling, on the one hand, and domestic

industry performance, on the other. The Commission thus determined that the subject

imports neither caused nor threatened to cause material injury to the domestic industry.

See generally Final Determination; Original Views.
Court No. 13-00022 Page 5

B. JMC I

Plaintiffs challenged the Final Determination on numerous grounds. (See

generally ECF Nos. 71, 76, 77, 82, 85.) In JMC I, the court addressed Plaintiffs’

arguments and affirmed, in part, and remanded, in part, the determination. Of

relevance to the present opinion, the court found that the ITC did not assume that

negative volume effects alone cannot warrant an affirmative injury determination and

also held that “the fact that the ITC found a significant increase in subject import volume

and market share does not compel an affirmative injury determination.” JMC I, 38 CIT

at __, 24 F. Supp. 3d at 1299. The court also affirmed the Commission’s findings that

there was no correlation between increased subject import volume and negative price

effects on the domestic like product, and between subject imports’ increased volume

and the domestic industry’s performance during the POI. Id. at __, 24 F. Supp. 3d at

1302-03, 1306-10.

The court, however, remanded the Final Determination to the ITC on two

grounds. First, the court questioned the Commission’s treatment of the domestic

producers’ lost sales and revenue allegations in the price effects analysis. Id. at __, 24

F. Supp. 3d at 1304-05. Plaintiffs had averred that they could not provide lost sales and

revenue information, in the form and manner requested by the Commission, due to the

structure of the domestic CWP market. The court held that, in such circumstances,

pursuant to 19 U.S.C. § 1677m(c), the Commission must “consider the ability of the

party to submit the information and may modify its requirements to avoid imposing an

unreasonable burden on the party when certain additional requirements are met. In
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certain cases, the Commission also is required to provide such parties any assistance

that is practicable.” Id. at __, 24 F. Supp. 3d at 1304-05 (citation omitted). The court

found that “[t]he record is ambiguous as to whether domestic interested parties took the

necessary steps to properly invoke these provisions and, if so, the extent to which the

Commission considered modifying its information requests or otherwise assisting these

parties in addressing the questions regarding lost sales and revenue.” Id at __, 24 F.

Supp. 3d at 1305. The court concluded that the ITC had, in effect, treated the domestic

industry’s inability to provide this information, in the form and manner requested, as an

adverse inference against it, without addressing the requirements of 19 U.S.C. § 1677e.

Id. The court remanded the issue and instructed the ITC to reconsider its findings with

regard to lost sales and revenue. Id. The court also ruled that “the Commission may

collect additional evidence relevant to this issue and reconsider any aspect of the Final

Determination which relied upon or took into consideration the Commission’s prior

findings regarding lost sales and revenue.” Id.

Second, the court found that the ITC, in assessing the effects of subject imports

on the domestic industry, did not “‘evaluate all relevant factors which have a bearing on

the state of the [CWP] industry in the United States . . . within the context of the

business cycle,’” as required by 19 U.S.C. § 1677(7)(C)(iii). Id. at __, 24 F. Supp. 3d at

1307 (ellipses in original) (quoting 19 U.S.C. § 1677(7)(C)(iii)). Specifically, the court

stated:

While the Commission referenced the dismal economic conditions
that affected the industry at the beginning of the POI, it did not clearly
address whether the improvements in nearly every measure of industry
Court No. 13-00022 Page 7

performance may appear significant because of the broader economic
recovery, thereby masking the injurious impact of subject imports on the
domestic industry. Without expressly discussing the effects of the economic
recovery on the domestic industry and explicitly addressing those effects in
contrast to the effects of subject imports, the court cannot assume that the
Commission has evaluated all relevant factors having a bearing on the state
of the industry within the context of the business cycle.
The court recognizes that certain other issues discussed in this
opinion (e.g., the use of pre-POI data . . . ) could be considered part of the
Commission’s proper consideration of the business cycle; however, in light
of the emphasis placed on the distortive effect of the 2009 economic
collapse, it was incumbent upon the Commission to be clear about how it
evaluated all relevant factors, particularly in the aftermath of the economic
collapse, in the context of the business cycle. The court therefore remands
the Commission’s determination so that the Commission may explain how
it has evaluated the relevant economic factors bearing on the state of the
domestic industry within the context of the business cycle. The Commission
may make additional determinations, including reconsidering issues
otherwise addressed and affirmed in this opinion, as are necessary to
account for such explanations.

Id. at __, 24 F. Supp. 3d at 1308 (internal citations and quotation marks omitted).

C. Remand Results

On remand, the ITC declined to reopen the record. Remand Views at 6 (citation

omitted). The Commission determined not to reconsider “those issues either affirmed

by the Court or not subject to appeal, and therefore adopt[ed] its findings, analysis, and

conclusions with respect to those issues in their entirety, including domestic like

product, domestic industry, negligibility, cumulation, legal standards, and conditions of

competition.” Id. at 6-7. It also adopted “those portions of the Original Views pertaining

to the analysis of volume, price, impact, and threat that were affirmed by the Court . . .

or not subject to appeal.” Id. at 7.
Court No. 13-00022 Page 8

In its revised lost sales and revenue analysis, the ITC noted that the court had

affirmed its finding that subject imports had no negative price effects on the domestic

like product. Id. at 10. The ITC then determined that it “ha[d] no need to rely on the

absence of confirmed lost sales and revenue allegations as further support for these

findings.” Id. In response to the court’s order that the Commission “tak[e] into account

Plaintiffs’ argument that the structure of the domestic CWP market precludes Plaintiffs

from providing the ITC the lost sales and revenue information in the form and manner in

which it was sought,” JMC I, 38 CIT at __, 24 F. Supp. 3d at 1321, the Commission

reexamined the record and found “no evidence that the domestic interested parties

invoked [19 U.S.C. § 1677m(c)], nor d[id] the domestic interested parties claim to have

done so” during the remand proceedings. Remand Views at 8 n.29. The Commission

clarified that it does not make adverse inferences against parties for failing to report lost

sales and revenue allegations because, inter alia, responses to lost sales and revenue

questions are voluntary. Id. at 10-11 (“Because the reporting of lost sales and revenue

allegations is voluntary, . . . the domestic interested parties’ alleged inability to report

such allegations . . . would not have constituted a failure . . . to cooperate to the best of

their ability . . . within the meaning of the statutory provision governing adverse

inferences.”) (citing 19 U.S.C. § 1677e(a)). When a party cannot respond to the best of

its ability to such a request, “the Commission’s practice has been to rely on the

information available, rather than resorting to the use of adverse inferences.” Id. at 11-

12.
Court No. 13-00022 Page 9

With regard to the second remanded issue, the ITC reassessed the domestic

industry’s performance in the context of the business cycle, and, in particular, whether

the economic downturn in 2009 and subsequent recovery masked injury to the domestic

industry by subject imports. Id. at 16-27. The ITC found that the domestic industry

improved “markedly during the POI according to every measure except market share,

capacity, and employment,” although the domestic industry faced weak CWP demand

due to the lackluster economic recovery. Id. at 18 (citing Original Views at 34-37)

(adopting full discussion of domestic industry’s performance in Original Views). Stated

differently, the ITC concluded that the tepid economic recovery did not obscure injury to

the domestic industry.

The ITC also contrasted the effects of the economic recovery with those of

subject imports to discern whether subject imports had a significant adverse impact on

the domestic industry that was distinguishable from the business cycle. The

Commission concluded, for several reasons, that “the domestic industry’s recovery

would not have been significantly stronger but for the increase in subject import volume

and market share.” Id. at 23. First, the absence of a significant decline in the domestic

industry’s performance, irrespective of trends in subject import volume, market share,

and underselling, was “consistent with the weak recovery in CWP demand during the

period.” Id. at 23-24 (noting increased U.S. shipments, stable market share compared

to 2000-2008, increased prices in three of four pricing products and average value of

U.S. shipments, reduced ratio of cost of goods sold (“COGS”) to net sales, and

improved, though irregular, operating income and operating income margin). Second,
Court No. 13-00022 Page 10

there was no correlation between the performance of the domestic industry and subject

import market share, underselling, or the size of the underselling margins. Id. at 25-26

(citing Original Views at 30-32, 38-39; Staff Report at Tables V-1-4, VI-1). Finally, “the

significant presence of competitively-priced nonsubject imports in the U.S. market

throughout the POI further undermines any possible relationship between subject import

competition and the domestic industry’s performance during the period.” Id. at 26 (citing

Staff Report at Tables IV-3, IV-10, C-1, App. D).

After addressing these remand issues, the ITC concluded that it was

unnecessary to “reconsider issues otherwise addressed and affirmed by the Court” in

JMC I. Id. at 7. In a 4-2 vote, the ITC again determined that subject imports neither

caused nor threatened to cause material injury to the domestic industry. Id. at 1.

Plaintiffs now challenge the remand results on three grounds. They contest, as

unsupported by substantial evidence or not in accordance with law, (1) the ITC’s alleged

use of the absence of lost sales allegations to support its finding of no negative volume

effects, (Comments at 11-13); (2) the ITC’s alleged failure to explain why the domestic

industry’s loss of market share to subject imports did not lead to an affirmative injury

determination, (Comments at 4-11); and (3) its finding of no correlation between subject

import volume and the domestic industry’s financial performance, (Comments at 13-25).

STANDARD OF REVIEW

The standard of review applicable to a challenge to a remand determination is

the same as that applicable to an original agency determination: the court will uphold an

agency determination that is supported by substantial evidence and otherwise in
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accordance with law. 19 U.S.C. § 1516a(b)(1)(B)(i); Spa v. E.I. Dupont de Nemours, 26

CIT 1357, 1360-61 (2002), aff’d, Ausimont SpA v. United States, 90 F. App’x 399 (Fed.

Cir. 2004). Substantial evidence is “‘such relevant evidence as a reasonable mind

might accept as adequate to support a conclusion.’” Huaiyin Foreign Trade Corp. (30)

v. United States, 322 F.3d 1369, 1374 (Fed. Cir. 2003) (quoting Consol. Edison Co. v.

N.L.R.B., 305 U.S. 197, 229 (1938)). “[T]he court may not reweigh the evidence or

substitute its own judgment for that of the agency.” Usinor v. United States, 28 CIT

1107, 1111, 342 F. Supp. 2d 1267, 1272 (2004) (citation omitted).

DISCUSSION

As discussed above, in JMC I, the court remanded the ITC’s determination with

regard to two issues: (1) the ITC’s treatment of the domestic producers’ lost sales and

revenue allegations in its price effects analysis and (2) its evaluation of the domestic

industry in the context of the business cycle. The court affirmed all other aspects of the

Final Determination. While the court authorized the Commission to reconsider any

aspect of the Final Determination that relied upon or took into consideration its prior

findings on the remanded issues, the Commission determined to affirm its original

findings in the price effects analysis, without considering lost sales and revenue

allegations, and provided further explanation of the role of the business cycle in the

domestic industry’s performance. In making those findings, the Commission found it

unnecessary to reconsider any other aspect of its Final Determination. Therefore, the

Commission’s findings, apart from the two issues remanded for further consideration,

are effectively final.
Court No. 13-00022 Page 12

A. Lost Sales and Revenue Allegations

In JMC I, the court ordered the ITC to reevaluate its treatment of the domestic

producers’ lost sales and revenue allegations in its price effects analysis to account for

Plaintiffs’ assertion that they could not provide lost sales and revenue information, in the

form and manner requested by the Commission, due to the structure of the domestic

CWP market. The court further concluded that the ITC had, in effect, treated the

domestic industry’s inability to provide this information as an adverse inference against

it, without addressing the requirements of 19 U.S.C. § 1677e.

In the remand results, the ITC expressly abandoned the use of lost sales and

revenue allegations in the price effects analysis. Remand Views at 10. It noted that the

court had affirmed its finding that subject imports had no negative price effects on the

domestic like product and, therefore, concluded that it “ha[d] no need to rely on the

absence of confirmed lost sales and revenue allegations as further support for these

findings.” Id. (footnote omitted). The Commission also clarified that it does not make

adverse inferences against parties for failing to report lost sales and revenue

allegations; rather, when a party does not submit lost sales and revenue allegation

reports, “the Commission’s practice has been to rely on the information available, rather

than resorting to the use of adverse inferences.” Id. at 10-12.

Because the Commission expressly abandoned any reliance on the lack of

verifiable lost sales and revenue allegations in making its remand determination, the

Commission has addressed the court’s concern that the agency improperly used the
Court No. 13-00022 Page 13

domestic producers’ failure to provide lost sales and revenue allegations as a basis for

an adverse inference against the domestic industry.

Plaintiffs now assert that the ITC unlawfully used the absence of lost sales

allegations to support its finding of a lack of negative volume effects in the remand

results. (Comments at 11-13.) They aver that the Commission should have treated the

increase in subject import volume and market share between 2009 and 2011 as

evidence of lost sales. According to Plaintiffs, by using its longstanding methodology,

the Commission repeated the error that the court found in the ITC’s price effects

analysis in JMC I, i.e. that it may have failed to account for Plaintiffs’ assertions that

they could not provide the lost sales information in the form and manner requested by

the Commission due to the structure of the domestic CWP market and, therefore, made

an unlawful adverse inference against them. (Comments at 12-13 (citing JMC I, 38 CIT

at __, 24 F. Supp. 3d at 1304-05).)

In the Remand Views, the Commission explicitly adopted the volume arguments

and findings in the Original Views. Remand Views at 7. The Commission did not take

into account the absence of verifiable lost sales allegations when conducting those

analyses. See Original Views at 28-29. In fact, in the Remand Views, the language

that provides the basis for Plaintiffs’ objection merely describes the methodology the

ITC customarily employs when analyzing lost sales and revenue. Remand Views at 10

n.40. This explanation of standard practice does not indicate that the Commission used

the absence of lost sales allegations in its evaluation of subject imports’ volume effects

as Plaintiffs allege.
Court No. 13-00022 Page 14

In certain prior cases, the court has held that in markets with fungible goods,

such as CWP, “volume rather than anecdotal evidence may be the best indicator of lost

sales.” Granges Metallverken AB v. United States, 13 CIT 471, 481, 716 F. Supp. 17,

26 (1989) (citations omitted). However, the court has never required the Commission to

examine volume in lieu of anecdotal evidence for such purposes. See Copperweld

Corp. v. United States, 12 CIT 148, 169-70, 682 F. Supp. 552, 572 (1988) (noting lack

of any statutory provision requiring ITC to perform any particular type of analysis of lost

sales or revenue allegations) (citing Me. Potato Council v. United States, 9 CIT 293,

302, 613 F. Supp. 1237, 1245 (1985)). It is not enough for Plaintiffs simply to proffer an

alternate methodology to that relied upon by the agency, even if that alternate

methodology is reasonable and not inconsistent with the statute. 4 Plaintiffs must

demonstrate that the ITC could not properly rely on its selected methodology,

something they have failed to do. The court will not disturb the ITC’s analysis of subject

import volume and market share, notwithstanding the fungible nature of CWP. See

JMC I, 38 CIT at __, 24 F. Supp. 3d at 1304.

4 When evaluating challenges to the ITC’s choice of methodology, the court will affirm
the chosen methodology as long as it is reasonable. Shandong TTCA Biochemistry Co.
v. United States, 35 CIT __, __, 774 F. Supp. 2d 1317, 1327 (2011) (citing U.S. Steel
Grp. v. United States, 96 F.3d 1352, 1361-62 (Fed. Cir. 1996)); accord Hynix
Semiconductor, Inc. v. United States, 30 CIT 1208, 1210, 1215, 431 F. Supp. 2d 1302,
1306, 1310-11 (2006). When presented with a challenge to the Commission’s
methodology, the court examines “not what methodology [Plaintiffs] would prefer, but
. . . whether the methodology actually used by the Commission was reasonable.”
Shandong TTCA Biochemistry Co., 35 CIT at __, 774 F. Supp. 2d at 1329 (citation and
internal quotation marks omitted).
Court No. 13-00022 Page 15

The court therefore sustains the Commission’s treatment of lost sales and

revenue allegations.

B. The Business Cycle

In JMC I, the court ordered the ITC to explain how it evaluated the relevant

economic factors bearing on the state of the domestic industry within the context of the

business cycle, as required by 19 U.S.C. § 1677(7)(C)(iii). Specifically, the court

ordered the Commission to address whether the improvements in nearly every measure

of the domestic industry’s performance during the POI may have appeared significant

due to the economic collapse in 2009 and subsequent economic recovery, thereby

masking the injurious impact of subject imports on the domestic industry.

In the remand results, the ITC undertook a two-part analysis of the business

cycle and its effects on the domestic industry. It first examined the effects of the

economic recovery on the performance of the domestic industry “in the context of the

severe economic downturn in 2009 that depressed apparent U.S. consumption to a

level 37.5 percent below that in 2008, and the weak demand recovery thereafter.”

Remand Views at 16-17 (footnote omitted) (citations omitted).

The Commission found that the domestic industry’s performance improved in

nearly every measure, except market share, capacity, and employment, during the POI,

even though CWP demand remained weak. Id. at 18 (footnote and citations omitted).

Growth in U.S. consumption led to increased production and U.S. shipments by the

domestic industry. Id. (citing Staff Report at Tables III-3, IV-9, C-1). Although the

domestic industry’s market share fell during the POI, the ITC concluded that the
Court No. 13-00022 Page 16

disproportionate effect of the recession on imports had made the 2009 rate unusually

high and, therefore, exaggerated the decline in market share. Id. (citing Staff Report at

Table C-1).

Although the domestic industry’s capacity fell during the POI, the Commission

attributed the decline to the recession rather than subject imports. Id. at 19 (citing

Original Views at 30). Moreover, the decline, in conjunction with increased production,

boosted the capacity utilization rate, and capital investment remained stable. Id. (citing

Original Views at 42-43; Staff Report at Tables III-3, C-1)).

Employment in the domestic industry fell between 2009 and 2011, but hours

worked and wages paid rose due to increased production and shipments. Id. (citing

Staff Report at Tables III-7, C-1). From interim 2011 to interim 2012, industry

employment and wages rose, and hours worked remained steady. Id. at 19-20 (citing

Staff Report at Tables III-7, C-1). The domestic industry’s productivity was unchanged

between 2009 and 2011, and peaked in interim 2012. Id. at 20 (citing Staff Report at

Tables III-7, C-1).

The domestic prices for three of four pricing products increased during the POI,

as did the average unit value of the domestic industry’s U.S. shipments, and the

domestic industry’s COGS to net sales ratio declined. The ITC found these trends

“[c]onsistent with recovering demand.” Id. (citing Original Views at 30-32).

The ITC found that the domestic industry’s recovering sales and prices directly

led to improved financial performance. Operating income grew from a loss equivalent to

negative 15.1 percent of net sales in 2009, to a positive 3.5 percent of net sales in 2010
Court No. 13-00022 Page 17

and 2.3 percent of net sales in 2011. Id. (citing Staff Report at Tables VI-1, C-1).

Although the domestic industry did not return to the performance levels that it had

enjoyed prior to 2008, the Commission concluded that this tempered performance

stemmed from “the anemic recovery in CWP demand during the POI,” and not subject

imports. Id. at 21-22 (footnote and citation omitted).

In the second part of its business cycle analysis, the Commission compared the

effects of the economic downturn and recovery on the domestic industry with those of

subject imports on the domestic industry to discern “whether subject imports had a

significant adverse impact on the domestic industry that [was] distinguishable from the ill

effects of the economic downtown of 2009 and the weak recovery thereafter.” Id. at 23.

The Commission first noted the absence of “a significant decline in domestic industry

performance during the POI that could support a significant adverse impact finding.” Id.

It then examined the domestic industry’s performance during the POI and reiterated that

it improved by most measures, “irrespective of trends in subject import volume, market

share, and underselling.” Id. Citing to increased U.S. shipments, market share levels

“that compared favorably to th[ose] during the 2000-2008 period,” higher prices on three

of four pricing products, rising average unit values of U.S. shipments, higher operating

income and operating income margins, and lower COGS to net sales ratios, the ITC

reaffirmed that “[t]hese improvements . . . were consistent with the weak recovery in

CWP demand during the period.” Id. at 23-24 (footnotes and citations omitted).

Further analysis led the ITC to conclude that the presence of subject imports in

the domestic market did not significantly affect the domestic industry’s performance. It
Court No. 13-00022 Page 18

found no correlation between domestic industry performance trends and subject import

market share or underselling. 5 Id. at 24-26. Subject imports took significant market

share from the domestic industry only between 2009 and 2010, a period which

coincided with improvement in the domestic industry “by almost every measure,”

including a swing in its operating income margin from negative 15.1 percent to a

positive 3.5 percent. Id. at 24 (citing Staff Report at Tables IV-10, VI-1, C-1). Between

2010 and 2011, subject imports’ 1.4 percent gain in market share occurred “largely at

the expense of nonsubject imports.” Id. Nevertheless, the domestic industry’s income

and operating income margin fell. Id. at 25 (citing Staff Report at Tables IV-10, VI-1, C-

1). The domestic industry’s operating income and operating income margin peaked in

interim 2011, when the market share of subject imports also peaked, and fell in interim

2012, although subject import volume and market share fell as well. Id. (citing Staff

Report at Tables IV-10, VI-1, C-1).

The Commission also found that the significant underselling by subject imports,

which occurred throughout the POI, did not significantly depress or suppress the prices

of the domestic like product. Id. (citing Original Views at 30-32). During the POI, the

domestic industry increased prices on three of four pricing products, increased the

average unit value of U.S. shipments, improved the metal margin, and reduced its

COGS to net sales ratio. Id. at 25-26 (citing Original Views at 30-32). This lack of

correlation between domestic industry performance and subject import underselling

5The court affirmed these findings in JMC I. 38 CIT at __, 24 F. Supp. 3d at 1302-03,
1309-10.
Court No. 13-00022 Page 19

continued even when accounting for the prevalence and degree of underselling. Id. at

26 (citing Staff Report at Tables V-1-4, VI-1). Between 2009 and 2010, the domestic

industry’s performance improved “markedly by most measures,” even though the

prevalence of subject import underselling rose, and the margin of underselling was at its

highest point of the POI. Id. (citing Staff Report at Tables V-1-4, VI-1). Although the

prevalence of underselling increased further in 2011, the domestic industry’s

performance improved, with the exceptions of its operating income and operating

income margin. Id. (citing Staff Report at Tables V-1-4, VI-1). The domestic industry’s

operating income margin reached a peak in interim 2011, despite underselling by

subject imports in all quarterly comparisons, and that operating income margin declined

in interim 2012, even though the prevalence and margin of underselling by subject

merchandise fell. Id. (citing Staff Report at Tables V-1-4, VI-1).

The Commission examined nonsubject imports and found that they held a higher

market share, and had lower prices, than subject imports and the domestic like product

during the POI. Id. (citing Staff Report at Tables IV-3, IV-10, C-1, App. D). According to

the ITC, this data demonstrated that “nonsubject import competition was no less a factor

in the U.S. market than subject imports.” Id. at 27. For example, the only significant

decrease in the domestic industry’s operating income and operating income margin

occurred between interim 2011 and interim 2012, when subject imports lost market

share to nonsubject imports, and not the domestic industry. Id. (citing Staff Report at

Tables IV-10, V-I). The ITC thus concluded that the significant presence of competitive
Court No. 13-00022 Page 20

nonsubject imports in the U.S. market undermined the possibility of a link between

subject imports and the domestic industry’s performance. Id. at 26.

On the basis of this analysis, the Commission determined that the domestic

industry’s improved performance during the POI stemmed from the economic collapse

in 2009 and the subsequent, albeit tepid, recovery. Id. at 27. The presence of subject

imports, by contrast, “did not significantly impede the domestic industry’s progress.” Id.

In their comments on the Remand Views, Plaintiffs criticize the Commission’s

business cycle analysis. They do not, however, articulate a challenge to the

Commission’s methodology or contend, with any specificity, that the agency’s

determination is not supported by substantial evidence. (See, e.g., Comments at 9-10,

16.) Rather, it appears that Plaintiffs simply do not like the result of the Commission’s

analysis.

The court finds that the Commission satisfactorily accounted for the effects of the

business cycle on the domestic industry’s performance. The ITC’s analysis cites to

substantial evidence supporting its analysis of the effects of the business cycle as

distinct from those of subject imports on the domestic industry. By doing so, the

Commission “explain[ed] how it has evaluated the impact of subject imports on the

domestic industry within the context of the business cycle,” as the court ordered in JMC

I, 38 CIT at __, 24 F. Supp. 3d at 1321, and fulfilled the requirements of 19 U.S.C.

§ 1677(7)(C)(iii). See Hynix Semiconductor, Inc., 30 CIT at 1226-27, 431 F. Supp. 2d at

1344 (noting that business cycle analysis aims to ensure that positive business cycle

trends do not mask unfair trading practices). While Plaintiffs might prefer that the
Court No. 13-00022 Page 21

Commission had undertaken a different type of analysis with regard to the business

cycle, the question is whether the Commission’s methodology was reasonable, not

whether it was the preferred methodology of Plaintiffs. Shandong TTCA Biochemistry

Co., 35 CIT at __, 774 F. Supp. 2d at 1329. The Commission’s business cycle analysis

complied with the court’s remand order and the statute; accordingly, the analysis is

sustained.

C. Plaintiffs’ Other Arguments

1. The Impact of Product Fungibility on the Commission’s Volume
Analysis

Plaintiffs maintain that the Commission has an obligation to explain “why the

negative volume impact of subject imports alone was not sufficient to require an

affirmative determination under the statutory definition of material injury.” (Comments at

4, 9-10.) They argue that the fungibility of subject imports with the domestic like product

ensures that an increase in subject import volumes “would likely be in substantial part”

at the expense of the domestic industry, particularly its share of the U.S. market.

(Comments at 6-8 & n.8.) Plaintiffs therefore aver that the increase in the volume of

subject imports during the POI necessitates that the ITC “identif[y] the other evidence

that nullifies the significance of fungibility so as to support a negative determination.”

(Comments at 6.)

Plaintiffs already have raised, (see ECF No. 71 at 13), and the court rejected, the

argument that the fungibility of subject imports and the domestic like product, in

conjunction with the increased volume of subject imports during the POI, necessitate a
Court No. 13-00022 Page 22

negative injury determination or further explanation by the Commission. JMC I, 38 CIT

at __, 24 F. Supp. 3d at 1298-99. The court will not reconsider these issues here. Kori

Corp. v. Wilco Marsh Buggies & Draglines, Inc., 761 F.2d 649, 657 (Fed. Cir. 1985)

(“The law of the case doctrine is that courts should generally refuse to reopen what has

been decided.”) (citation and quotation marks omitted). While the court provided that

the ITC could have reconsidered this issue on remand to the extent that its prior

consideration “relied upon or took into consideration [its] prior findings” on the business

cycle or lost sales and revenue issues, JMC I, 38 CIT at __, 24 F. Supp. 3d at 1305, the

Commission was not required to reconsider the issue and Plaintiffs’ arguments do not

suggest otherwise.

2. The Correlation Between Subject Imports and the Domestic
Industry’s Financial Performance

Plaintiffs argue that the Commission’s correlation analyses of the effects of

subject import volume and prices, and the financial performance of the domestic

industry, are erroneous because the ITC ignored record evidence that indicated the

contrary. (Comments at 13-25.)

In JMC I, the court affirmed the Commission’s findings of no correlation between

subject import volume and the domestic industry’s financial performance, and subject

import prices and the domestic industry’s financial performance. 38 CIT at __, 24 F.

Supp. 3d at 1302-03, 1309-11. Plaintiffs’ arguments do not suggest that the

Commission was required to reconsider these findings on remand and, therefore, the

court will not reconsider them. Kori Corp., 761 F.2d at 657.
Court No. 13-00022 Page 23

Conclusion

For the reasons provided above, the court sustains the ITC’s remand results. A

judgment follows.

/s/ Mark A. Barnett
Mark A. Barnett, Judge

Dated: May 29, 2015
New York, New York