Slip Op. 04-18
United States Court of International Trade
NEW WORLD PASTA COMPANY,
Plaintiff,
v.
UNITED STATES, Before: Pogue, Judge
Defendant, Court No. 03-00105
and
PASTIFICIO GAROFALO S.p.A. and
PASTIFICIO GUIDO FERRARA, S.r.L.,
Defendant-Intervenors.
[Plaintiff’s motion for judgment on the agency record denied;
judgment entered for Defendant.]
Decided: March 1, 2004
Collier Shannon Scott, PLLC (Jennifer E. McCadney, Paul C.
Rosenthal, David C. Smith, Jr.) for Plaintiff New World Pasta
Company.
Peter D. Keisler, Assistant Attorney General, David M. Cohen,
Director, Jeanne E. Davidson, Deputy Director, Ada Bosque, Trial
Attorney, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, Marisa Beth Goldstein, Attorney, Office
of the Chief Counsel for Import Administration, U.S. Department
of Commerce, Of Counsel, for Defendant United States.
Hunton & Williams LLP (Richard P. Ferrin, Douglas J. Heffner,
William Silverman) for Defendant-Intervenor Pastificio Garofalo
S.p.A.
Law Offices of David L. Simon (David L. Simon) for Defendant-
Intervenor Pastificio Guido Ferrara, S.r.L.
Court No. 03-00105 Page 2
OPINION
POGUE, Judge: In an administrative appeal, Plaintiff
challenges aspects of decisions made by the Department of
Commerce (“Commerce”) concerning two of the investigated
companies in Certain Pasta From Italy, 68 Fed. Reg. 6,882,
6,882-84 (Dep’t Commerce Feb. 11, 2003) (notice of final results
of antidumping duty administrative review and determination not
to revoke in part) (“Final Determination”).1 With regards to the
first company, Pastificio Garofalo S.p.A. (“Garofalo”),
Plaintiff challenges Commerce’s decision not to “collapse”
1
Commerce’s Final Determination incorporates by reference
the agency’s Issues and Decision Memorandum. Final
Determination, 68 Fed. Reg. at 6,883 (citing Dep’t of Commerce
Mem. from Bernard T. Carreau, Deputy Assistant Sec’y for Imp.
Admin., to Faryar Shirzad, Assistant Secretary for Imp. Admin.,
Issues and Decisions for the Final Results of the Fifth
Antidumping Duty Administrative Review, P.R. Doc. No. 134, Pl.’s
Pub. Ex. 2. (Feb. 3, 2003) (“Decision Memorandum”)). The
Decision Memorandum, in turn, incorporates by reference a prior
memorandum. Decision Memorandum, P.R. Doc. No. 134, Pl.’s Pub.
Ex. 2 at 9 (citing Dep’t of Commerce Mem. from The Team, to
Melissa G. Skinner, Director, Office of AD/CVD Enforcement VI,
Whether to Collapse Pastificio Garofalo S.p.A. (Garofalo) and
Pastificio Antonio Amato & C. S.p.A. (Pastificio Amato) in the
Final Results, C.R. Doc. No. 59, Pl.’s Conf. Ex. 8 (February 3,
2003) (“Final Collapsing Memo”)). The Final Collapsing Memo
incorporates by reference still another memorandum. Final
Collapsing Memo, C.R. Doc. No. 59, Pl.’s Conf. Ex. 8 at 1-3
(citing Dep’t of Commerce Mem. from The Team, to Melissa G.
Skinner, Dir., Office of AD/CVD Enforcement VI, Whether to
Collapse Garofalo S.p.A. (Garofalo) and Pastificio Antonio Amato
& C. S.p.A. (Amato) in the Preliminary Results, C.R. Doc. No.
45, Pl.’s Conf. Ex. 7 at 4-5 (July 31, 2002) (“Preliminary
Collapsing Memo”)).
Court No. 03-00105 Page 3
Garofalo with an affiliate,2 and its decision not to use adverse
facts available in making its determination. With regards to
the second company, Pastificio Guido Ferrara, S.r.L.
(“Ferrara”), Plaintiff challenges Commerce’s decision to add a
product-matching criterion for die-type in defining the “foreign
like product”3 for Ferrara, but not for other companies in the
same review. This matter is before the Court on Plaintiff’s
motion for judgment upon the agency record. The Court has
jurisdiction under 28 U.S.C. § 1581(c) (2000). For the reasons
discussed below, the Court denies Plaintiff’s motion and grants
judgment for Defendant.
BACKGROUND
To provide a context for the Court’s review of Commerce’s
decisions, the Court first summarizes aspects of the agency’s
administrative proceedings. Insofar as they are at issue here,
these proceedings began in August 2001, when the Department of
Commerce published a notice of initiation of the fifth
antidumping duty review for certain pasta from Italy, covering
2
Commerce may, pursuant to 19 C.F.R. § 351.401(f) (2003),
treat two affiliated companies as a single entity, i.e.,
“collapse” the two companies. For the full text of the
regulation, see infra note 7.
3
For the statutory definition of “foreign like product,” see
infra note 18.
Court No. 03-00105 Page 4
the period from July 1, 2000 to June 30, 2001. Initiation of
Antidumping and Countervailing Duty Administrative Reviews and
Requests for Revocation in Part, 66 Fed. Reg. 43,570, 43,571
(Dep’t Commerce Aug. 20, 2001); see also Final Determination, 68
Fed. Reg. at 6,882. Eight days after publishing the notice of
initiation of the antidumping review, Commerce sent out initial
questionnaires to the companies under review. Def.’s Opp’n to
Mot. J. Agency R. at 3 (“Def.’s Br.”) (citations omitted). Both
Garofalo and Ferrara replied. The Court summarizes relevant
parts of each response in turn.
In Garofalo’s response, the company disclosed a family
relationship between its majority shareholder and the majority
shareholders of another pasta company, Antonio Amato & C. S.p.A.
(“Amato”),4 as well as certain intercompany transactions between
the two. Response of Pastificio Lucio Garofalo S.P.A. to
Section A of the Department’s Antidumping Questionnaire, C.R.
Doc. No. 1, Pl.’s Conf. Ex. 10 at A7-A8 (Oct. 25, 2001)
4
The Court notes that there is great inconsistency in the
record as to Amato’s proper or legal name. However, on its own
financial report, the company refers to itself as Antonio Amato
& C. Molini e Pastifici. See Amato’s 2000 Financial Statement,
Garofalo Verification Ex. 6(e), C.R. Doc. No. 38, Fiche 124 at
Frame 45 (July 22, 2002).
Court No. 03-00105 Page 5
(“Garofalo’s First Response”).5 However, Garofalo claimed that
the two companies were not affiliates as defined by 19 U.S.C. §
1677(33),6 and did not provide detailed information on Amato.
5
Documents existing only in the confidential administrative
record are referred to as “C.R. Doc. No.” followed by their
document number, and the fiche and frame at which they appear.
Documents existing only in the public administrative record are
referred to as “P.R. Doc. No.” followed by their document
number, and the fiche and frame at which they appear. Documents
in the parties’ confidential exhibits to their briefs are
referred to by “C.R. Doc. No.” followed by the document number,
“[Party Name]’s Conf. Ex.” and the number of the exhibit.
Documents in the parties’ public exhibits to their briefs are
referred to by “P.R. Doc. No.” followed by the document number,
“[Party Name]’s Pub. Ex.” and the number of the exhibit.
6
The text of 19 U.S.C. § 1677(33) is as follows:
(33) Affiliated persons
The following persons shall be considered to be "affiliated" or
“affiliated persons":
(A) Members of a family, including brothers and sisters
(whether by the whole or half blood), spouse, ancestors, and
lineal descendants.
(B) Any officer or director of an organization and such
organization.
(C) Partners.
(D) Employer and employee.
(E) Any person directly or indirectly owning, controlling,
or holding with power to vote, 5 percent or more of the
outstanding voting stock or shares of any organization and such
organization.
(F) Two or more persons directly or indirectly controlling,
controlled by, or under common control with, any person.
(G) Any person who controls any other person and such other
person.
For purposes of this paragraph, a person shall be considered to
control another person if the person is legally or operationally
in a position to exercise restraint or direction over the other
person.
Court No. 03-00105 Page 6
Garofalo’s First Response, C.R. Doc. No. 1, Pl.’s Conf. Ex. 10
at A7-A9. Commerce issued a supplemental questionnaire to
Garofalo, inquiring further about its relationship with Amato,
and later conducted an on-site verification. Letter from James
Terpstra, Program Manager, Office of AD/CVD Enforcement VI,
Int’l Trade Admin., to William Silverman, Hunton & Williams,
Section A, B & C Supplemental Questionnaire, C.R. Doc. No. 18,
Garofalo’s Conf. Ex. 8 at 2-3 (Apr. 19, 2002) (“Second Garofalo
Questionnaire”); Dep’t of Commerce Mem. from Geoffrey Craig et
al., Trade Analysts, Office of AD/CVD Enforcement VI, to James
Terpstra, Program Manager, Office of AD/CVD Enforcement VI,
Verification of the Sales Response of Pastificio Lucio Garofalo
S.p.A. (Garofalo), C.R. Doc. No. 40, Garofalo’s Conf. Ex. 10 at
2 (July 22, 2002) (“Verification Report”).
Information gathered from the supplemental questionnaire
and the verification allowed Commerce to preliminarily decide
that Garofalo and Amato were affiliated, but that they should
not be collapsed. Certain Pasta from Italy, 67 Fed. Reg.
51,827, 51,828 (Dep’t Commerce Aug. 9, 2002) (notice of
preliminary results and partial rescission of antidumping duty
administrative review and intent not to revoke in part)
19 U.S.C. § 1677(33)(2000) (emphasis supplied).
Court No. 03-00105 Page 7
(“Preliminary Results”); Preliminary Collapsing Memo, C.R. Doc.
No. 45, Pl.’s Conf. Ex. 7 at 4-5. After Commerce issued the
Preliminary Results, Plaintiff challenged Commerce’s decision
not to collapse Garofalo with its affiliate as well as
Commerce’s failure to use adverse facts available against
Garofalo. Petitioner’s Case Brief Concerning Garofalo before
the Int’l Trade Admin. of the U.S. Dep’t of Commerce, C.R. Doc.
No. 54, Pl.’s Conf. Ex. 12 at 1-12 (Sept. 19, 2002). In its
final results, however, Commerce maintained that although
Garofalo was affiliated with Amato, Garofalo and Amato should
not be collapsed. Decision Memorandum, P.R. Doc. No. 134, Pl.’s
Pub. Ex. 2 at 9-11.
Ferrara, in its response to Commerce’s initial
questionnaire, requested that Commerce add a new product-
matching criterion, reflecting the type of die used to extrude
the pasta, in defining “foreign like product” for purposes of
the antidumping review. Letter from David L. Simon and Ayla
Önder, Law Offices of David L. Simon, to Sec’y of Commerce,
Pasta from Italy: Pastificio Guido Ferrara s.r.l. Response to
Sections A-C of the Questionnaire, C.R. Doc. No. 3, Fiche 58 at
Frames 26-27 (Oct. 25, 2001) (“Ferrara’s First Response”).
Commerce subsequently sent a supplemental questionnaire to
Ferrara asking for a demonstration that the added criterion
Court No. 03-00105 Page 8
would be valid. See Letter from David L. Simon and Ayla Önder,
Law Offices of David L. Simon, to Sec’y of Commerce, Pasta from
Italy; Pastificio Guido Ferrara s.r.l. Response to 2nd
Supplemental Questionnaire, C.R. Doc. No. 35, Fiche 94 at Frame
7 (July 16, 2002) (“Ferrara’s Second Response”). Ferrara
submitted a response, providing the verification report and the
production cost verification documents from the previous
antidumping review of Certain Pasta from Italy, wherein Commerce
had added such a criterion for Ferrara, as well as certain new
exhibits. Id. at Frames 7-11; see also Dep’t of Commerce Mem.
from Frank Thomson and Mark Young, Case Analysts, Office of
AD/CVD Enforcement VI, to James Terpstra, Program Manager,
Office of AD/CVD Enforcement VI, Verification of the Sales
Response of Pastificio Guido Ferrara s.r.l. (“Ferrara”) in the
99/00 Antidumping Review of the Antidumping Duty Order of
Certain Pasta from Italy, C.R. Doc. No. 35, Ferrara’s Conf. Ex.
2 (July 16, 2002) (“Ferrara Verification Report”); Verification
Ex. 20: Production Costs, C.R. Doc. No. 35, Ferrara’s Conf. Ex.
3 (July 16, 2002); Production Control System Recipe Screenshots,
C.R. Doc. No. 35, Ferrara’s Conf. Ex. 4 (July 16, 2002);
Extracts from HM Database & Package Labelling, C.R. Doc. No. 35,
Ferrara’s Conf. Ex. 5 (July 16, 2002).
Court No. 03-00105 Page 9
Plaintiff challenged the addition of a fifth criterion in a
case brief, but in the final results, Commerce maintained that
the die-type product criterion was valid in relation to Ferrara,
but that it should not be applied to the other respondents.
Plaintiff’s Case Brief Concerning Pastificio Guido Ferrara,
s.r.l before the Int’l Trade Admin. of the U.S. Dep’t of
Commerce, C.R. Doc. No. 52, Fiche 107 at Frames 39-43 (Sept.
19, 2002); see Decision Memorandum, P.R. Doc. No. 134, Pl.’s
Pub. Ex. 2 at 23.
Plaintiff consequently filed for relief in this Court.
STANDARD OF REVIEW
This Court reviews the actions of the government in
antidumping duty proceedings to determine whether they are
“unsupported by substantial evidence on the record, or otherwise
not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i)
(2000).
DISCUSSION
Four issues are before the Court, two relating to
Commerce’s treatment of Garofalo, and two relating to Commerce’s
treatment of Ferrara.
Court No. 03-00105 Page 10
With respect to Garofalo, Plaintiff argues that Commerce
acted without support of law or substantial evidence in refusing
to collapse Garofalo with its affiliate, Amato, and in refusing
to apply adverse facts available to Garofalo in making its
collapsing determination.
With respect to Ferrara, Plaintiff argues that Commerce
acted without support of law or substantial evidence in adding a
product-matching criterion for die-type to the definition of
“foreign like product” for Ferrara, and in not adding the
product-matching criterion for die-type to the definition of
“foreign like product” for other companies in the same review.
The Court will discuss the challenges to Garofalo and
Ferrara in turn.
A. Challenges to the Determination Regarding Garofalo
Plaintiff first argues that Commerce’s decision not to
collapse Garofalo with its affiliate, Amato, was unsupported by
law or substantial evidence. Principal Br. of Pl. New World
Pasta Company at 7 (“Pl.’s Br.”). Second, Plaintiff argues that
Commerce’s decision not to apply adverse facts available against
Garofalo in making the collapsing decision was unsupported by
law or substantial evidence. See Pl.’s Br. at 10-11. The Court
discusses each argument in turn.
Court No. 03-00105 Page 11
Commerce’s decision not to collapse Garofalo and Amato was
based on Commerce’s application of its own regulations regarding
“collapsing factors” and its interpretation of the evidence
presented.
Pursuant to 19 C.F.R. § 351.401(f)(1),7 Commerce will
collapse two producers where they are affiliated, and “where
those producers have production facilities for similar or
identical products that would not require substantial retooling
of either facility in order to restructure manufacturing
priorities and [Commerce] concludes that there is a significant
7
The text of 19 C.F.R. § 351.401(f) is as follows:
(f) Treatment of affiliated producers in antidumping
proceedings—(1) In general. In an antidumping proceeding under
this part, [Commerce] will treat two or more affiliated
producers as a single entity where those producers have
production facilities for similar or identical products that
would not require substantial retooling of either facility in
order to restructure manufacturing priorities and [Commerce]
concludes that there is a significant potential for the
manipulation of price or production.
(2) Significant potential for manipulation. In identifying
a significant potential for the manipulation of price or
production, the factors [Commerce] may consider include:
(i) The level of common ownership;
(ii) The extent to which managerial employees or board
members of one firm sit on the board of directors of an
affiliated firm; and
(iii) Whether operations are intertwined, such as through
the sharing of sales information, involvement in production and
pricing decisions, the sharing of facilities or employees, or
significant transactions between the affiliated producers.
19 C.F.R. § 351.401(f) (emphasis supplied).
Court No. 03-00105 Page 12
potential for the manipulation of price or production.” 19
C.F.R. § 351.401(f)(1). Commerce found the first two of the
three collapsing factors satisfied here: affiliation and similar
production facilities not requiring substantial retooling in
order to change manufacturing priorities.
With regards to the first factor, affiliation, under 19
U.S.C. § 1677(33)(A), Commerce will consider persons (including
corporations under 19 C.F.R. § 351.102(b)) affiliated where
there is a family relationship between them. Under 19 U.S.C. §
1677(33)(F), Commerce will consider persons affiliated when they
are under common control. Because Amato’s major shareholders
include a sister and a sister-in-law of Garofalo’s majority
shareholder, Commerce found that the two companies were
affiliated under 19 U.S.C. § 1677(33)(A). Preliminary
Collapsing Memo, C.R. Doc. No. 45, Pl.’s Conf. Ex. 7 at 4.
Commerce also found that a group of related individuals
exercised common control over both Garofalo and Amato. Id.
Hence, Commerce found the two companies affiliated under both 19
U.S.C. § 1677(33)(A) and 19 U.S.C. § 1677(33)(F). Id.
Plaintiff does not contest this finding.
As to the second factor, similar production lines, Commerce
also found that Garofalo and Amato, as pasta companies, had
similar production facilities that might not require substantial
Court No. 03-00105 Page 13
retooling in order to restructure manufacturing priorities.
Preliminary Collapsing Memo, C.R. Doc. No. 45, Pl.’s Conf. Ex. 7
at 4. Plaintiff does not contest this finding.
Plaintiff does, however, challenge Commerce’s failure to
find that the third collapsing factor, “significant potential
for the manipulation of pricing or production,” was satisfied.
See Pl.’s Br. at 12; 19 C.F.R. § 351.401(f)(1). This third
factor itself has three sub-factors. See 19 C.F.R. §
351.401(f)(2). These are (1) the level of common ownership, (2)
the extent to which managerial employees or directors of one
firm also sit on the board of the other firm, and (3) whether
operations are intertwined. Id.
Commerce found that none of the sub-factors were met.
Decision Memorandum, P.R. Doc. No. 134, Pl.’s Pub. Ex. 2 at 10-
11. Plaintiff challenges the determinations as to all three
sub-factors.
In regards to the first sub-factor, common ownership,
Plaintiff contends that Commerce originally found that this
factor was met, and then arbitrarily retreated from the finding.
Pl.’s Br. at 13-14. In the Preliminary Collapsing Memo,
Commerce does state that the first sub-factor of 19 C.F.R. §
351.401(f)(2), common ownership, is met because of the common
control exerted over both Garofalo and Amato by the group of
Court No. 03-00105 Page 14
related individuals. See Preliminary Collapsing Memo, C.R. Doc.
No. 45, Pl.’s Conf. Ex. 7 at 4. However, in the Final Collapsing
Memo and the Decision Memorandum, Commerce, while discussing the
effect of a sale of stock in Amato by Garofalo’s major
shareholder, which occurred before the period of review (“POR”),
states that the factor of common ownership is not, in fact,
satisfied. Final Collapsing Memo, C.R. Doc. No. 59, Pl.’s Conf.
Ex. 8 at 3-4; Decision Memorandum, P.R. Doc. No. 134, Pl.’s Pub.
Ex. 2 at 10-11 (“[A]lthough petitioners’ new argument implicates
the first two criteria of 19 CFR 341.401(f)(2) [sic], based on
the record facts and our interpretation of those facts, we have
determined that neither criterion has been satisfied.”).
While Commerce’s two statements could appear inconsistent,
a review of the record leads the Court to conclude that any
inconsistency does not render Commerce’s decision legally
flawed. Under the collapsing regulation, 19 C.F.R. §
351.401(f)(1), “the evidence required to justify a collapsing
determination ‘goes beyond that which is necessary to find
common control.’” Allied Tube and Conduit Corp. v. United
States, 24 CIT __, __, 127 F. Supp. 2d 207, 222 (2000) (quoting
Certain Welded Carbon Steel Pipes and Tubes from Thailand, 63
Fed. Reg. 55,578, 55,583 (Dep’t Commerce Oct. 16, 1998) (final
results of antidumping duty administrative review)). While
Court No. 03-00105 Page 15
Commerce did not explain why it chose to regard the factor as
unsatisfied in the final results, it did explain in the
Preliminary Collapsing Memo that even were the factor of common
ownership satisfied, the two parties should not be collapsed
because common ownership would be based entirely on the finding
of affiliation by common control under 19 U.S.C. § 1677(33)(F).
See Preliminary Collapsing Memo, C.R. Doc. No. 45, Pl.’s Conf.
Ex. 7 at 4. Therefore, even were the sub-factor of common
ownership satisfied, it alone could not justify collapse;
Commerce would still need to review the other two sub-factors.
Commerce did so, and found them unsatisfied.
In regards to the second sub-factor, the extent to which
managerial employees or directors of one firm also sit on the
board of the other firm, Commerce explained that during the POR,
no members of Garofalo’s board sat on Amato’s board, and there
were no shareholders in common. Preliminary Collapsing Memo,
C.R. Doc. No. 45, Pl.’s Conf. Ex. 7 at 5; see also Verification
Report, C.R. Doc. No. 40, Garofalo’s Conf. Ex. 10 at 5-6, 10.
At verification, Commerce examined the financial records of both
Garofalo and Amato, Garofalo’s Libro Soci (which by Italian Law,
must list shareholders), and the tax returns of Garofalo’s
shareholders. Verification Report, C.R. Doc. No. 40, Garofalo’s
Conf. Ex. 10 at 6-7; Garofalo’s Financial Statements, Garofalo
Court No. 03-00105 Page 16
Verification Ex. 3, C.R. Doc. No. 38, Fiche 123 at Frames 9-12
(July 22, 2002); Amato’s 2000 Financial Statement, Garofalo
Verification Ex. 6(e), C.R. Doc. No. 38, Fiche 124 at Frames 45-
50 (July 22, 2002); Pages from Garofalo’s Shareholder’s Book,
Garofalo Verification Ex. 4(c), C.R. Doc. No. 38, Fiche 123 at
Frame 90-92 (July 22, 2002); Tax Returns, Garofalo Verification
Ex. 16, C.R. Doc. No. 38, Fiche 126 at Frame 14-56 (July 22,
2002). Moreover, Commerce examined a contract of sale whereby
Garofalo’s majority shareholder had sold a minority interest in
Amato previous to the POR, and found that all legal interest in
Amato had passed from the majority shareholder prior to the POR.
See Verification Report, Garofalo’s Conf. Ex. 10 at 7; Final
Collapsing Memo, C.R. Doc. No. 59, Pl.’s Conf. Ex. 8 at 3-4.
In regards to the third sub-factor, whether operations are
intertwined, Commerce verified the small level of intercompany
transactions to which Garofalo had admitted in its questionnaire
responses. Verification Report, C.R. Doc. No. 40, Garofalo’s
Conf. Ex. 10 at 14-15; Completeness Test of Purchased Semolina
Using Bolla Book, Garofalo Verification Ex. 13, C.R. Doc. No.
38, Fiche 125 at Frames 65-66 (July 22, 2002); Completeness Test
of Purchased Pasta Using Bolla Book, Garofalo Verification Ex.
19, C.R. Doc. No. 38, Fiche 128 at Frame 1 (July 22, 2002).
These involved the purchase by Garofalo of a very small amount
Court No. 03-00105 Page 17
of finished pasta from Amato for resale during the POR, and the
purchase of some semolina from Amato during the same period.
Garofalo’s First Response, C.R. Doc. Nos. 1-2, Pl.’s Conf. Ex.
10 at A8-A9; Letter from William A. Silverman et al., Hunton &
Williams LLP, to Sec’y of Commerce, Certain Pasta From Italy,
C.R. Doc. No. 11, Garofalo’s Conf. Ex. 7 at 8 (Mar. 26, 2002)
(“Mar. 26 Letter”). Garofalo had described these transactions
as being conducted at arm’s length. Garofalo’s First Response,
C.R. Doc. Nos. 1-2, Pl.’s Conf. Ex. 10 at A7-A9; Letter from
William A. Silverman et al., Hunton & Williams LLP, to Sec’y of
Commerce, Certain Pasta From Italy, C.R. Doc. No. 22, Fiche 82
at Frames 17-18 (May 17, 2002) (“Garofalo’s Second Response”).
Garofalo provided to Commerce, previous to verification, a list
of all semolina purchases made during fiscal year 2000. Mar. 26
Letter, C.R. Doc. No. 11, Garofalo’s Conf. Ex. 7 at App. 1. At
verification, Commerce examined Garofalo’s selected records of
purchases of semolina and pasta during 2001, up until the end of
the POR, compared amounts and prices, and concluded that the
semolina transactions were made on the same basis as those being
conducted with other, non-affiliated semolina producers, and
that the pasta-transactions were both small and within standard
business practices. See Preliminary Collapsing Memo, C.R. Doc
No. 45, Pl.’s Conf. Ex. 7 at 5; Verification Report, C.R. Doc.
Court No. 03-00105 Page 18
No. 40, Garofalo’s Conf. Ex. 10 at 14-15. Finally, Commerce did
not find that either company was sharing sales data, customer
information, or had any links other than the intercompany
purchases of pasta and semolina. Preliminary Collapsing Memo,
C.R. Doc. No. 45, Pl.’s Conf. Ex. 7 at 5.
Plaintiff argues nonetheless that Commerce’s decisions as
to the three sub-factors were unsupported by law or substantial
evidence. As to the first sub-factor, Plaintiff argues that
Commerce’s unexplained decision to reverse its finding that
common ownership was satisfied is arbitrary and unsupported by
substantial evidence. See Pl.’s Br. at 13-14.8 While the
8
The Court notes that Plaintiff’s arguments on this point
are opaque, as Plaintiff mischaracterizes the language of the
Preliminary Collapsing Memo. On page thirteen of its principal
brief, Plaintiff states that: “[i]n the Preliminary Results,
Commerce determined that the first criterion, the level of
common ownership, was sufficient to find that the two companies
should be collapsed because the agency found Garofalo and Amato
to be under ‘common ownership.’” Pl.’s Br. at 13 (referring to
the Preliminary Collapsing Memo when it mentions “the
Preliminary Results”). Contrary to Plaintiff’s claim, while, in
the Preliminary Collapsing Memo, Commerce found that the two
companies were affiliated because of the operation of both 19
U.S.C. § 1677(33)(A) and 19 U.S.C. § 1677(33)(F) (affiliation by
common control), and that the sub-factor of common ownership was
therefore satisfied, it did not decide that this sub-factor was
sufficient for a finding of collapse. Preliminary Collapsing
Memo, C.R. Doc. No. 45, Pl.’s Conf. Ex. 7 at 4-5. This
mischaracterization made it difficult to discern the true nature
of Plaintiff’s argument: that there had been an unexplained
change in Commerce’s position on the issue of whether the common
ownership sub-factor was satisfied, not in whether collapse was
justified.
Court No. 03-00105 Page 19
turnaround could appear troubling, as noted above, even were the
factor found to be satisfied, it would not be possible to
collapse Garofalo and Amato based on that sub-factor alone. See
Allied Tube & Conduit Corp., 24 CIT at __, 127 F. Supp. 2d at
222. If Commerce was justified in finding that the other two
sub-factors were unsatisfied, then any argument on this sub-
factor becomes moot, as its resolution one way or the other
could not affect the collapsing decision.
It is a “substantial evidence” argument that predominates
in Plaintiff’s arguments as to the second and third sub-factors.
On the issue of the second sub-factor, the extent to which
managerial employees or directors of one firm also sit on the
board of the other firm, Plaintiff advances the argument that
Commerce is required by law to look to the future in evaluating
the potential for manipulation. See Reply Br. of Pl. New World
Pasta Company at 7 (“Pl.’s Reply Br.”). Therefore, Plaintiff
argues, Commerce’s determination was unsupported by substantial
evidence where Commerce relied on the state of affairs during
the POR in finding a lack of significant potential for
manipulation. Id. Plaintiff also claims that Commerce did not
properly take into account Garofalo’s majority shareholder’s
ability to “require” the purchase of the majority shareholder’s
stock in Amato prior to the period of review. Pl.’s Br. at 17.
Court No. 03-00105 Page 20
Plaintiff argues that this should weigh in favor of a finding of
significant potential to manipulate. See id. Moreover,
Plaintiff claims that the small, family-owned structure of
Garofalo and Amato, supports a finding of significant potential
for manipulation. See Pl.’s Br. at 16.
It is true that Commerce “will consider future
manipulation” in evaluating the potential for manipulation.
Antidumping Duties; Countervailing Duties, 62 Fed. Reg. 27,296,
27,346 (Dep’t Commerce May 19, 1997) (final rule). However,
during the POR there were in fact no board members or managerial
employees in common at the two companies, nor was there any
interlocking of managerial shareholders.9 Preliminary Collapsing
Memo, C.R. Doc. No. 45, Pl.’s Conf. Ex. 7 at 5; Garofalo’s
Second Response, C.R. Doc. No. 22, Fiche 82 at Frame 16;
Verification Report, C.R. Doc. No. 40, Garofalo’s Conf. Ex. 10
at 5-8; cf. Organizational Chart, Garofalo Verification Ex. 2,
9
Plaintiff argues that Commerce’s decision does not rest on
substantial evidence because Commerce never learned the names of
Amato’s directors nor the names of upper management. See Pl.’s
Reply Br. at 8. However, Commerce obtained the names of Amato’s
directors and management in the course of its verification, when
it procured a copy of Amato’s publicly available financial
report, which lists shareholders, directors, and identifies
upper management. Amato’s 2000 Financial Statement, Garofalo
Verification Ex. 6(e), C.R. Doc. No. 38, Fiche 124 at Frame 67
(July 22, 2002). Cross-checking of this list against Garofalo’s
organizational chart reveals no overlap. Organizational Chart,
Garofalo Verification Ex. 2, C.R. Doc. No. 38, Fiche 123 at
Frame 8 (July 22, 2002).
Court No. 03-00105 Page 21
C.R. Doc. No. 38, Fiche 123 at Frame 8 (July 22, 2002), with
Amato’s 2000 Financial Statement, Garofalo Verification Ex.
6(e), C.R. Doc. No. 38, Fiche 124 at Frame 67 (July 22, 2002).
While it is reasonable for Plaintiff to argue that common
control shows a possibility of manipulation, it is just as
reasonable for Commerce to conclude that the lack of board
entwinement during the POR provides a reasonable basis for a
finding of no likelihood of future manipulation, and Commerce’s
reasonable interpretation of the evidence will be upheld under
the standard of review applicable here. As for Garofalo’s
majority shareholder’s contract to sell the shareholder’s
interest in Amato, Commerce examined the contract and found
that, despite certain monies still being owed during the POR,
the material terms of sale were set before the POR. See
Verification Report, C.R. Doc. No. 40, Garofalo’s Conf. Ex. 10
at 7; Sales Contract, Garofalo Verification Ex. 6(d), C.R. Doc.
No. 38, Fiche 124 at Frames 35-44 (July 22, 2002). Commerce has
explained that in antidumping reviews, its regulations specify
that sales of “foreign like product” or subject merchandise are
regarded as completed as of the date the material terms are set.
See 19 C.F.R. § 351.401(i); Final Collapsing Memo, C.R. Doc. No.
59, Pl.’s Conf. Ex. 8 at 3. While neither “foreign like
product” nor subject merchandise was the subject of this sale,
Court No. 03-00105 Page 22
Commerce indicated that the date material terms are set should
control. Final Collapsing Memo, C.R. Doc. No. 59, Pl.’s Conf.
Ex. 8 at 3. While Commerce might have chosen to deal otherwise
with such contracts, its choice is reasonable, and will be
upheld.
The family-owned nature of the two businesses is yet
another fact that could be weighed differently by reasonable
people. The family connections and relative simplicity of the
businesses could facilitate manipulation, as Plaintiff contends,
or could be completely irrelevant to manipulation, as Commerce
appears to have found. The mere fact that two inconsistent
conclusions can be drawn from a piece of evidence does not
render an agency’s decision unsupported by substantial evidence.
Consolo v. Fed. Mar. Comm’n, 383 U.S. 607, 620 (1966) (citation
omitted). Therefore, despite the small, family-owned nature of
the two companies, record evidence indicating that there was no
overlap of directors, major shareholders, or managerial
employees during the POR supports Commerce’s finding that the
second factor of the significant potential for manipulation
analysis is not met.
In regards to the third sub-factor, whether operations are
intertwined, Plaintiff asserts that Commerce’s decision is
unsupported by substantial evidence because the operations of
Court No. 03-00105 Page 23
the two companies are entwined in a way that makes for a
significant potential for manipulation. See Pl.’s Br. at 18-20.
The regulation describing entwinement of operations highlights
such practices as sharing of sales information, sharing of
facilities, and involvement in production and pricing
transactions, none of which are present on this record. 19
C.F.R. § 351.401(f)(2)(iii).10 The regulation also describes
“significant transactions” between affiliated producers as cause
to find the third sub-factor satisfied. Id. However, Commerce
found the transactions here not to be significant, as the
transactions did not amount to a majority of Garofalo’s
purchases of either semolina or pasta, and moreover, appeared
customary for the Italian Pasta industry.11 See Preliminary
10
For the text of the regulation, see supra note 7.
11
Commerce states in its Preliminary Collapsing Memo that
the types of transactions that were conducted between Garofalo
and Amato are common in the Italian pasta industry. Preliminary
Collapsing Memo, C.R. Doc. No. 45, Pl.’s Conf. Ex. 7 at 4-5.
Commerce repeats this statement in its Decision Memorandum and
in its brief. Decision Memorandum, P.R. Doc. No. 134, Pl.’s
Pub. Ex. 2 at 10; Def.’s Br. at 17. Commerce does not cite to
the evidence that supports this contention. However, during
Verification, Garofalo personnel explained that buying pasta for
resale from other pastificios allowed Garofalo to round out its
product line without reconfiguring its machinery, and that the
practice was common. See Verification Report, C.R. Doc. No. 40,
Pl.’s Conf. Ex. 11 at 14. This explains the practice as regards
purchases of pasta, but not purchases of semolina. However,
with regard to semolina, Commerce found that the purchases of
semolina were conducted at market rates, and that during the
Court No. 03-00105 Page 24
Collapsing Memo, C.R. Doc. No. 45, Pl.’s Conf. Ex. 7 at 5;
Verification Report, C.R. Doc. No. 40, Garofalo’s Conf. Ex. 10
at 14-15; Completeness Test of Purchased Semolina Using Bolla
Book, Garofalo Verification Ex. 13, C.R. Doc. No. 38, Fiche 125
at Frame 65 (July 22, 2002); Garofalo Verification Ex. 19,
Completeness Test of Purchased Pasta Using Bolla Book, C.R. Doc.
No. 38, Fiche 128 at Frame 1 (July 22, 2002).12
POR, the majority of Garofalo’s semolina purchases were from
providers other than Amato. Id.; see Completeness Test of
Purchased Semolina Using Bolla Book, Garofalo Verification Ex.
13, C.R. Doc. No. 38, Fiche 125 at Frame 65 (July 22, 2002);
Mar. 26 Letter, C.R. Doc. No. 11, Garofalo’s Conf. Ex. 7 at App.
1.
12
Plaintiff also argues that Commerce’s decision regarding
the third sub-factor is unsupported by substantial evidence in
that Commerce, in reviewing Garofalo’s purchases of semolina and
pasta, only had information on purchases from the first half of
the POR. Pl.’s Reply Br. at 11. This claim is unsupported by
the record. Garofalo provided to Commerce a list of fiscal year
2000 semolina purchases. See Mar. 26 Letter, C.R. Doc. No. 11,
Garofalo’s Conf. Ex. 7 at App. 1. Commerce, during
verification, looked at selected purchases from fiscal year 2001
to verify that purchases were at arms length and that the
percentage of purchases from Amato remained more or less
constant. Completeness Test of Purchased Semolina Using Bolla
Book, Garofalo Verification Ex. 13, C.R. Doc. No. 38, Fiche 125
at Frame 65 (July 22, 2002). Garofalo informed Commerce that
purchases of pasta from Amato in fiscal year 2000 for resale
accounted for only a small percentage of total pasta sales.
Mar. 26 Letter, C.R. Doc. No. 11, Garofalo’s Conf. Ex. 7 at 8.
In its verification report, Commerce noted the amount that
Garofalo claimed, and appeared to find no discrepancies.
Verification Report, C.R. Doc. No. 40, Garofalo’s Conf. Ex. 10
at 14-15.
Court No. 03-00105 Page 25
Therefore, Commerce’s decision not to collapse Garofalo and
Amato was supported by substantial evidence and in accordance
with law. Commerce acted reasonably in deciding only to
consider events occurring during the POR in evaluating the
collapsing factors, and while it could have reasonably made
different inferences from the facts, the ones it did make were
reasonable and supported by the record.
Having found that Commerce’s decision not to collapse
Garofalo and Amato as a single entity was in accordance with law
and supported by substantial evidence, the Court now turns to
the second issue involving Garofalo: whether, in making its
collapsing determination, Commerce’s decision not to apply facts
available or adverse facts available13 to Garofalo was
unsupported by law and substantial evidence.
13
Plaintiff’s brief argues that Commerce acted improperly in
not using adverse facts available against Garofalo, on the basis
of what Plaintiff perceives of as significant omissions in
Garofalo’s responses and cooperation. See Pl.’s Br. at 10.
Plaintiff does not, however, argue for the use of facts
available, a prerequisite to adverse facts available under 19
U.S.C. § 1677e. Presumably, this is because the use of facts
available, without adverse inferences, would have produced the
same result as obtained in the administrative review: a finding
of affiliation, but not of collapse. The Court’s discussion of
the issue, however, deals with both the question of whether
Commerce properly declined to use adverse facts available and
whether it properly declined to use facts available. The text of
19 U.S.C. § 1677e, which describes the use of both facts
available and adverse facts available, is reproduced here:
Court No. 03-00105 Page 26
§ 1677e. Determinations on the basis of the facts available
(a) In general
If--
(1) necessary information is not available on the record, or
(2) an interested party or any other person--
(A) withholds information that has been requested by the
administering authority or the Commission under this
subtitle,
(B) fails to provide such information by the deadlines for
submission of the information or in the form and manner
requested, subject to subsections (c)(1) and (e) of section
1677m of this title,
(C) significantly impedes a proceeding under this
subtitle, or
(D) provides such information but the information cannot
be verified as provided in section 1677m(i) of this title,
the administering authority and the Commission shall, subject
to section 1677m(d) of this title, use the facts otherwise
available in reaching the applicable determination under this
subtitle.
(b) Adverse inferences
If the administering authority or the Commission (as the case
may be) finds that an interested party has failed to cooperate
by not acting to the best of its ability to comply with a
request for information from the administering authority or the
Commission, the administering authority or the Commission (as
the case may be), in reaching the applicable determination under
this subtitle, may use an inference that is adverse to the
interests of that party in selecting from among the facts
otherwise available. Such adverse inference may include
reliance on information derived from--
(1) the petition,
(2) a final determination in the investigation under this
subtitle,
(3) any previous review under section 1675 of this title or
determination under section 1675b of this title, or
(4) any other information placed on the record.
19 U.S.C. § 1677e(a)-(b) (2000) (emphasis supplied).
Court No. 03-00105 Page 27
Application of adverse facts available is governed by 19
U.S.C. § 1677e(b), which states that if Commerce finds that an
interested party has not acted to the best of its ability to
comply with a request for information, Commerce “may use an
inference that is adverse to the interests of that party in
selecting from among the facts otherwise available.” 19 U.S.C.
§ 1677e(b). While 19 U.S.C. § 1677e(b) allows Commerce to apply
adverse inferences where it feels that a party “has failed to
cooperate by acting to the best of its ability to comply with a
request for information,” use of adverse inferences is
discretionary. Moreover, such inferences cannot be applied
until and unless 19 U.S.C. § 1677e(a) is operative. 19 U.S.C. §
1677e(a). 19 U.S.C. § 1677e(a) states, among other things, that
Commerce “shall use the facts otherwise available” where a party
withholds information or fails to submit it in the proper
manner. Id.
Thus, while Plaintiff’s arguments focus on the application
of adverse inferences, Plaintiff’s argument might be better
understood as an argument that “facts otherwise available”
should have been applied against Garofalo.14 In addition, 19
14
The mandatory language of the facts available provision –-
“shall”-- appears to remove from Commerce any discretion about
whether to use facts available when there is a withholding of
information or failure to submit in the proper form, and if read
Court No. 03-00105 Page 28
U.S.C. § 1677e(a) is subject to the dictates of 19 U.S.C. §
1677m(d). That provision requires Commerce, if it finds a
submission from a party to be deficient, to inform the party of
the deficiencies and to allow for remedy or explanation. 19
U.S.C. § 1677m(d).15
strictly, could mandate the use of facts available wherever
there is a slight discrepancy between question and answer.
However, this Court has held that Commerce may not use facts
available at least until Commerce issues a supplemental
questionnaire. See Nippon Steel v. United States, 25 CIT __,
__, 146 F. Supp. 2d 835, 837 (2001)(citing NTN Bearing Corp. v.
United States, 25 CIT __, 132 F. Supp. 2d 1102 (2001); SKF USA
Inc. v. United States, 24 CIT __, __ 116 F. Supp. 2d 1257, 1268
(2000)) (rev’d on other grounds). This result obtains because
of the dictates of 19 U.S.C. § 1677m(d) (reproduced below, note
15), which require that Commerce give notice of a deficiency and
opportunity to remedy the deficiency before applying facts
available.
15
Title 19 U.S.C. § 1677m(d) is as follows:
(d) Deficient submissions
If the administering authority or the Commission determines
that a response to a request for information under this subtitle
does not comply with the request, the administering authority or
the Commission (as the case may be) 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 established for the completion of investigations
or reviews under this subtitle. If that person submits further
information in response to such deficiency and either--
(1) the administering authority or the Commission (as the
case may be) finds that such response is not satisfactory, or
(2) such response is not submitted within the applicable
time limits,
Court No. 03-00105 Page 29
Assuming that Commerce’s issuance of a supplemental
questionnaire to Garofalo was inherently a finding that
Garofalo’s first questionnaire response failed to comply with
Commerce’s request for information,16 under 19 U.S.C. § 1677m(d),
Garofalo’s supplemental questionnaire response would merit use
of facts otherwise available only if Commerce found that it,
too, was deficient. 19 U.S.C. § 1677m(d). Commerce does not
appear to have found Garofalo’s second questionnaire response
unsatisfactory, as it did not attempt to apply facts available
or adverse facts available in its review. Commerce’s decision
not to apply facts otherwise available is therefore in
accordance with law.
However, Plaintiff argues that Commerce’s refusal to use
adverse facts available against Garofalo was unsupported by
substantial evidence. See Pl.’s Br. at 10. Plaintiff argues
that because Commerce eventually found that Garofalo and Amato
were affiliated, Garofalo’s failure to provide “a single
then the administering authority or the Commission as the case
may be) may, subject to subsection (e), disregard all or part of
the original and subsequent responses.
19 U.S.C. § 1677m(d) (emphasis supplied).
16
See, e.g., China Steel Corp. v. United States, 27 CIT __,
__, 264 F. Supp. 2d 1339, 1356 (2003); Reiner Brach GmbH & Co.
KG v. United States, 26 CIT __, __, 206 F. Supp. 2d 1323, 1332
(2002); Bergerac, N.C. v. United States, 24 CIT __, __, 102 F.
Supp. 2d 497, 504 (2000).
Court No. 03-00105 Page 30
response that includes information, including financial
statements, for all affiliates” in its questionnaire responses
means that Garofalo failed to respond to the questionnaires
adequately and that its submissions are therefore deficient.
See id.17 Given the Court’s discussion of 19 U.S.C. § 1677m(d)
above, this argument becomes a question of whether Commerce had
substantial support for its finding that Garofalo’s first and
second responses, taken together, constituted an adequate
response to Commerce’s questionnaires, such that Commerce could
reasonably decide not to apply facts available or adverse facts
available.
In its initial questionnaire, Commerce required that
Garofalo provide an organization chart and description of its
legal structure, including any affiliated persons or companies.
U.S. Dep’t of Commerce, Imp. Admin. Office of Antidumping and
Countervailing Duty Enforcement, Request for Information, Italy,
Certain Pasta, P.R. Doc. No. 19, Pl.’s Pub. Ex. 9 at A4 (Aug.
28, 2001) (“Initial Questionnaire”). Garofalo’s response
17
In its case brief before the agency, Plaintiff also argued
that Garofalo’s failure to report the sale of Amato stock by
Garofalo’s major shareholder before the POR rendered Garofalo’s
responses deficient. See Petitioner’s Case Brief Concerning
Garofalo before the Int’l Trade Admin. of the U.S. Dep’t of
Commerce, C.R. Doc. No. 54, Pl.’s Conf. Ex. 12 at 3-7 (Sept. 19,
2002). However, Plaintiff does not appear to pursue this
argument in its briefs before the Court. See Pl.’s Br; Pl.’s
Reply Br.
Court No. 03-00105 Page 31
admitted that relatives of its majority shareholder owned
another pasta company, Amato. Garofalo’s First Response, C.R.
Doc. No. 1, Pl.’s Conf. Ex. 10 at A7. The response also
disclosed that the two companies engaged in intercompany
transactions; specifically, Garofalo had purchased from Amato
during the POR a quantity of semolina and a small amount of
finished pasta. Id. at A8-A9. Garofalo contended in its
response, however, that Garofalo and Amato were not affiliates.
Id. at A7-A9.
In its supplemental questionnaire, Commerce asked three
questions relating to Garofalo’s relationship with Amato. See
Garofalo’s Second Response, C.R. Doc. No. 22, Fiche 82 at Frames
16-17. Commerce first asked Garofalo to state whether Garofalo
owned stock in Amato, provided loan or credit guarantees to
Amato, or shared customer lists with Amato. Garofalo replied in
the negative. See Garofalo’s Second Response, C.R. Doc. No. 22,
Fiche 82 at Frame 16. Next, Commerce requested the names of
Amato’s shareholders, and asked Garofalo to specify if there
were any other companies that might be affiliated with both
Garofalo and Amato, and with whom Garofalo dealt. Id. Garofalo
revealed the names of Amato’s shareholders, as garnered from
publicly available sources, and stated that it was not
affiliated with any affiliates of Amato, and did not have any
Court No. 03-00105 Page 32
dealings with affiliates of Amato. See Garofalo’s Second
Response, C.R. Doc. No. 22, Fiche 82 at Frames 16-17. Third,
Commerce asked Garofalo to describe the terms and conditions of
intercompany transactions between Garofalo and Amato, and to
alert Commerce to any such transactions not described in
Garofalo’s first questionnaire response. See Garofalo’s Second
Response, C.R. Doc. No. 22, Fiche 82 at Frame 17. Garofalo
described the transactions it had already revealed in its first
response, and affirmed that there were no others. See
Garofalo’s Second Response, C.R. Doc. No. 22, Fiche 82 at Frames
17-18.
At verification Commerce discovered that Garofalo’s major
shareholder had previously owned a minority interest in Amato,
but found that the interest had been divested prior to the POR,
and that it was therefore unnecessary for Garofalo to have
reported on it. See Preliminary Collapsing Memo, C.R. Doc. No.
45, Pl.’s Conf. Ex. 7 at 3-4; see also Verification Report, C.R.
Doc. No. 40, Garofalo’s Conf. Ex. 10 at 6-7. No other
discrepancies with Garofalo’s responses were noted. See
Verification Report, C.R. Doc. No. 40, Garofalo’s Conf. Ex. 10.
Based on the three follow-up questions of the supplemental
questionnaire, Commerce appears to have found the original
response deficient in only a few respects. Garofalo was
Court No. 03-00105 Page 33
responsive to the questions in the supplemental questionnaire,
and its responses were later successfully verified.
Accordingly, the Court concludes that Commerce’s decision not to
apply adverse facts available or facts available in making its
affiliation and collapsing decisions was supported by
substantial evidence.
B. Challenges to the Determination Regarding Ferrara
The remaining two issues in the case deal with Plaintiff’s
challenges to Commerce’s treatment of Ferrara. Plaintiff first
argues that Commerce acted in violation of law, and its decision
was unsupported by substantial evidence, when it added a
product-matching criterion for die-type in identifying Ferrara’s
“foreign like product.” See Pl.’s Br. at 21. Plaintiff
furthermore argues that Commerce acted in a manner contrary to
law when it did not include this criterion in its analysis of
the other firms under review. Id. The Court discusses the two
issues in turn below.
First, Commerce’s decision to add a fifth product-matching
criterion for die-type with regards to Ferrara was in accordance
with law and supported by substantial evidence. Congress has
delegated to Commerce the ability to choose product-matching
criteria to identify the “foreign like product” to which
Court No. 03-00105 Page 34
domestic sales are compared in order to calculate the dumping
margin. See Pesquera Mares Australes, Ltda. v. United States,
266 F.3d 1372, 1384 (Fed. Cir. 2001); Koyo Seiko Co. v. United
States, 66 F.3d 1204, 1209 (Fed. Cir. 1995). However, in
defining “foreign like product,” Commerce is constrained both by
statute and by its own past practice. Under 19 U.S.C. §
1677(16)(A), Commerce must base product-matching criteria on
“physical characteristics.” 19 U.S.C. § 1677(16)(A).18 In
18
The text of 19 U.S.C. § 1677(16) is as follows:
(16) Foreign like product
The term "foreign like product" means merchandise in the
first of the following categories in respect of which a
determination for the purposes of part II of this subtitle can
be satisfactorily made:
(A) The subject merchandise and other merchandise
which is identical in physical characteristics with, and
was produced in the same country by the same person as,
that merchandise.
(B) Merchandise—
(i) produced in the same country and by the same
person as the subject merchandise,
(ii) like that merchandise in component material
or materials and in the purposes for which used, and
(iii) approximately equal in commercial value to
that merchandise.
(C) Merchandise--
(i) produced in the same country and by the same
person and of the same general class or kind as the
subject merchandise,
(ii) like that merchandise in the purposes for
which used, and
Court No. 03-00105 Page 35
addition, it is apparently Commerce’s past practice, to consider
only “meaningful” or “significant” physical characteristics.
Emulsion Styrene-Butadiene Rubber from Mexico, 64 Fed. Reg.
14,872, 14,875 (Dep’t Commerce Mar. 29, 1999) (notice of final
determination of sales at less than fair value) (applying a
“meaningful” standard); Certain Hot-Rolled Lead and Bismuth
Carbon Steel Products From the United Kingdom, 63 Fed. Reg.
18,879, 18,881 (Dep’t Commerce Apr. 16, 1998) (final results of
antidumping duty administrative review) (applying a
“significant” standard). Commerce has defined what makes a
physical characteristic “meaningful” or “significant” only by
saying, in a notice applying the “meaningful” standard, that it
looks to “both price differences in the marketplace and cost
differences which may reflect different production processes.”
Emulsion Styrene-Butadiene Rubber from Mexico, 64 Fed. Reg. at
14,875; see also Certain Pasta from Italy, 67 Fed. Reg. 300, 302
(Dep’t Commerce Jan. 3, 2002) (notice of final results of
antidumping duty administrative review, partial rescission of
antidumping duty administrative review and revocation of
(iii) which the administering authority
determines may reasonably be compared with that
merchandise.
19 U.S.C. § 1677(16) (emphasis supplied).
Court No. 03-00105 Page 36
antidumping duty order in part);19 Certain Pasta from Italy, 64
Fed. Reg. 6,615, 6,623-24 (Dep’t Commerce Feb. 10, 1999) (notice
of final results and partial rescission of antidumping duty
administrative review).
In the antidumping review at issue here, Commerce
originally chose four criteria to use in identifying the foreign
like product: pasta shape, wheat type, presence of additives,
and presence of enrichment. Initial Questionnaire, P.R. Doc.
No. 19, Pl.’s Pub. Ex. 9 at III-2. Ferrara, in answering its
first questionnaire, requested that a fifth criterion be added,
representing the type of die used to extrude the pasta.
Ferrara’s First Response, C.R. Doc. No. 3, Fiche 58 at Frames
26-27. In response to a supplemental questionnaire requesting
explanation of why a fifth criterion should be added, Ferrara
provided Commerce’s verification, from the review conducted a
year previously, that the surface texture of bronze-die and
Teflon-die pastas were noticeably different. Ferrara’s Second
19
This final determination, Certain Pasta from Italy, 67
Fed. Reg. at 300, incorporates by reference an Issues and
Decision Memorandum discussing cost differences and production
differences in terms of physical difference. Certain Pasta from
Italy, 67 Fed. Reg. at 302; Dep’t of Commerce Mem. from Bernard
T. Carreau, Deputy Assistant Sec’y for Imp. Admin. to Richard W.
Moreland, Acting Assistant Sec’y for Imp. Admin., Issues and
Decision Memorandum for the Fourth Antidumping Duty
Administrative Review, Def.’s Conf. Ex. 7, at cmt. 2 (Jan. 3,
2002) (“Fourth Review Decision Memorandum”).
Court No. 03-00105 Page 37
Response, C.R. Doc. No. 35, Fiche 94 at Frames 7-9; Ferrara
Verification Report, C.R. Doc. No. 35, Ferrara’s Conf. Ex. 2 at
1 (July 16, 2002) (stating that Ferrara’s bronze-die pasta is
“rougher on the surface” than Teflon-die pasta). This appears
to satisfy the statutory requirement that some physical
difference exist.
Other evidence that Ferrara provided related to the high
cost differential between production of bronze-die and Teflon-
die pasta, the slight differences in recipe, and evidence that
Amway, Ferrara’s customer for bronze-die pasta, paid a premium
for pasta produced in that manner and prominently labeled the
product as bronze-die pasta. Ferrara’s Second Response, C.R.
Doc. No. 35, Fiche 94 at Frames 7-11; Verification Ex. 20:
Production Costs, C.R. Doc. No. 35, Ferrara’s Conf. Ex. 3 (July
16, 2002); Production Control System Recipe Screenshots, C.R.
Doc. No. 35, Ferrara’s Conf. Ex. 4 (July 16, 2002); Extracts
from HM Database & Package Labelling, C.R. Doc. No. 35,
Ferrara’s Conf. Ex. 5 (July 16, 2002). Production cost and
market price differences between pastas produced with the two
die-types appear to satisfy Commerce’s own rule that the
physical difference be “significant” or “meaningful.”
Plaintiff nevertheless argues that the fifth criterion
impermissibly reflects a non-physical characteristic. Pl.’s Br.
Court No. 03-00105 Page 38
at 22-26. Plaintiff’s argument is that Commerce’s definition of
“significant” or “meaningful” physical characteristics hinges on
production cost and marketing price, in violation of 19 U.S.C. §
1677(16)(A). Pl.’s Br at 24-25.20 The Court agrees that by
20
The Court notes that neither Plaintiff nor Commerce use
the term “physically significant” in their briefs, preferring
the term “commercially significant,” although the Court cannot
divine from the Federal Register that Commerce has stated a
practice of looking for “commercially significant” physical
characteristics, rather than merely “significant” or
“meaningful” physical characteristics. While the term appears
in some Federal Register notices, and is occasionally used by
Commerce to describe characteristics worthy of their own product
matching criteria, the Court has not found any document wherein
Commerce has explained that “commercial significance” is its
standard, nor what “commercially significant” physical
characteristics would be. Plaintiff, however, argues that past
practice requires Commerce to only consider “commercially
significant” physical characteristics in creating product
matching-criteria. Pl.’s Br. at 22-23. Plaintiff cites as
proof of this practice the Federal Circuit’s decision in
Pesquera Mares Australes. Pl.’s Br. at 23 n.70.
In that case, Commerce asked the Federal Circuit to uphold
as reasonable Commerce’s interpretation of the statutory phrase
“identical in physical characteristics” in accord with
commercial practice. Pesquera Mares Australes, Ltda. v. United
States, 266 F.3d at 1372. The Court notes that the phrase
“commercially significant” appears nowhere in that decision.
See id. Rather, the Federal Circuit opined that the words
“identical in physical characteristics” as used in 19 U.S.C. §
1677(16)(A) could reasonably be held to mean “the same with
minor differences,” rather than absolutely physically identical.
Id. at 1383. This was in part due to the fact that there may be
hundreds of small variations between any two given products, and
Commerce would never be able to match an imported product with a
“foreign like product” if it were required to evaluate every
possible difference. Id. (citation omitted). Therefore, the
Federal Circuit held that Commerce could ignore differences that
were not “commercially recognized” in making product-matching
criteria. Id. at 1384. This, however, is different from
Court No. 03-00105 Page 39
statute, Commerce is required to match only “physical”
characteristics. 19 U.S.C. § 1677(16)(A). The statute,
however, does not require that physical characteristics be
significant and, generally, Commerce has wide latitude in
choosing what physical characteristics to consider. Pesquera
Mares Australes, Ltda. v. United States, 266 F.3d 1372 at 1384.
Additionally, Commerce has established a practice of considering
only “significant” or “meaningful” physical characteristics,
defined in terms of cost and price differences, which appear to
be non-physical attributes of a good. Consequently, Commerce’s
practice could appear inconsistent with the statute; were
Plaintiff able to demonstrate that the verified physical
difference between bronze-die and Teflon-die pasta, i.e.,
surface texture, is actually inconsequential to the purchaser,
it could claim that the cost difference is propelled by a
consumer preference for the production method alone. In that
case, Commerce’s findings here could be contrary to law, as the
decision to create a fifth product-matching criterion would
requiring Commerce to ignore commercially unrecognized
differences, or, to put it another way, from requiring that
Commerce prove that a difference is “commercially recognized”
when choosing product-matching criteria. Pesquera Mares
Australes does not so hold. Moreover, the case does not, in of
itself, create a past practice of only relying on “commercially
significant” characteristics, but rather states that it is
reasonable for Commerce to ignore minor characteristics if it so
chooses.
Court No. 03-00105 Page 40
appear to be based entirely on non-physical attributes.
However, Plaintiff has adduced no such evidence; the record
contains no evidence whatsoever on whether the surface texture,
standing alone, and unaided by cost or production method, is
significant to consumers or not.21 However, the record does
disclose a verified physical difference between bronze-die and
Teflon-die pasta, and that the two are markedly different in
terms of price and cost to produce. That being so, it appears
that Commerce has satisfied both the requirements of 19 U.S.C. §
1677(16)(A) and the requirement of its own practice of relying
only on “meaningful” or “significant” physical characteristics.
The next question is whether Commerce’s decision was
supported by substantial evidence. Responding to the second
supplemental questionnaire, Ferrara produced the verification
report and exhibits from the review conducted a year earlier
regarding treatment of Ferrara on the same issue, and in which
Commerce added a fifth matching criterion for die-type. See
Ferrara’s Second Response, C.R. Doc. No. 35, Fiche 94 at Frames
7-9. In the verification conducted during the fourth review,
21
Ferrara has introduced evidence that its customer for
bronze-die pasta, Amway, prominently advertises the product as
such, but this does not inform us as to whether it is the bronze
die process, or the resulting physical differences that Amway
finds attractive. See Extracts from HM Database & Package
Labelling, Ferrara’s Second Response Ex. 4, C.R. Doc. No. 35,
Ferrara’s Conf. Ex. 5 (July 16, 2002).
Court No. 03-00105 Page 41
Commerce found and verified an actual physical difference
between bronze-die and Teflon-die pasta; i.e., surface texture.22
22
Commerce also argues that record evidence shows throughput
rates and line speeds differ for bronze-die and Teflon-die
pasta, and that this makes for a physical difference. See Def.’s
Br. at 23; see also Decision Memorandum, P.R. Doc. No. 134,
Pl.’s Pub. Ex. 2 at 23 (implicating throughput rate and line
speeds in either a physical or cost difference, or both); Fourth
Review Decision Memorandum, Def.’s Conf. Ex. 7 at cmt. 2.
Record evidence shows that throughput rates and line speeds for
bronze-die pasta are slower than those for Teflon pasta. See,
e.g., Ferrara Verification Report, C.R. Doc. No. 3, Ferrara’s
Conf. Ex. 2 at 15.
While Commerce does not explain how line speed or
throughput rates implicate a physical difference in either the
Decision Memorandum or the Fourth Review Decision Memorandum, it
does cite to past pasta reviews in which a fifth matching
criterion was added. Decision Memorandum, P.R. Doc. No. 134,
Pl.’s Pub. Ex. 2 at 23 (citations omitted); Fourth Review
Decision Memorandum, Def.’s Conf. Ex. 7, at cmt. 2 (citing
Certain Pasta from Italy, 64 Fed. Reg. 6,615 (Dep’t Commerce
Feb. 10, 1999) (notice of final results and partial rescission
of antidumping duty administrative review); Certain Pasta from
Turkey, 65 Fed. Reg. 77,857 (Dep’t Commerce Dec. 13, 2000)
(final results of antidumping duty administrative review)). One
of these cases appears to indicate that in past reviews,
Commerce used line speed as a descriptor for pasta shape, as it
is the different speeds at which pastas are run through the die
that give them their different lengths and thicknesses. Certain
Pasta from Italy, 64 Fed. Reg. at 6,623-24. There is also
other evidence on the record that appears to show that line
speed is a shorthand for shape. See, for example, Initial
Questionnaire, P.R. Doc. No. 19, Pl.’s Pub. Ex. 9 at III-3,
which asks respondents to support shape classifications with
line speed, and Letter from Paul C. Rosenthal et al., to Sec’y
Commerce, Re: Certain Pasta From Italy, C.R. Doc. No. 32, Fiche
92 at Frames 36-37, 52, 61-63, and 65-67 (Jun. 7, 2002),
explaining that line speeds reflect the shape and size of pasta.
Therefore, it may be that in addition to the surface texture,
bronze-die pasta differs from Teflon-die pasta in its length and
thickness, and that it is this fact Commerce is trying to
describe in its discussions of line speed and throughput rates.
Court No. 03-00105 Page 42
Ferrara Verification Report, C.R. Doc. No. 3, Ferrara’s Conf.
Ex. 2 at 1. It also verified the different costs of production
and different market prices. Id. While Plaintiff claims that
Commerce should not rely on evidence that was not produced in
response to the particular review at hand, the Court cannot say
that Commerce’s decision was unsupported by substantial
evidence, or that it is unreasonable for Commerce to rely on
There is language from Commerce in a review previous to the one
at issue in this case, however, that seems to indicate that
throughput rates and line speeds do not reflect a physical
difference so much as a cost difference:
The fact that a long or short artiginal pasta [bronze
die pasta made with coarse semolina] cut takes up to
20 times longer to produce than the comparable
industrial long or short pasta cut is sufficiently
significant to warrant the creation of a special shape
category for artiginal pasta long or short cuts for
the same reason that led [Commerce] to create
speciality [sic] long and short shapes for industrial
pasta long or short cuts; in other words, the
production cost for artiginal pasta is significantly
influenced by the slower line speeds required to
produce the same long or short industrial pasta cut.
Certain Pasta from Italy, 64 Fed. Reg. at 6,624.
The record before the Court here is unclear on whether line
speed in this case primarily affects shape and, in turn, cost,
or whether it is primarily a matter of cost that does not
reflect a different pasta shape.
Be that as it may, there is at least one verified physical
difference between Ferrara’s bronze-die and Teflon-die pasta --
texture. Ferrara Verification Report, C.R. Doc. No. 3, Ferrara’s
Conf. Ex. 2 at 1. This difference was verified and, on this
record, provides a reasonable basis for fulfilling the statutory
requirement that product-matching be based on physical
characteristics. See 19 U.S.C. § 1677(16)(A).
Court No. 03-00105 Page 43
evidence prepared by its own personnel only a year before.
Moreover, Ferrara provided certain new evidence relating to
production recipes and Amway’s promotion of the bronze-die
product to support its bid for a fifth product-matching
criterion. Production Control System Recipe Screenshots, C.R.
Doc. No. 35, Ferrara’s Conf. Ex. 4 (July 16, 2002); Extracts
from HM Database & Package Labelling, C.R. Doc. No. 35,
Ferrara’s Conf. Ex. 5 (July 16, 2002)
The final issue in the case is whether Commerce acted with
support of law and substantial evidence when, having added the
die-type criterion to the “foreign like product” with regards to
Ferrara, it did not add it for the other companies under review.
In support of the argument that this decision was not in
accordance with law, Plaintiff appears to cite inapposite cases.
Pl.’s Br. at 21 n.63. The cases deal not with variations in
product-matching criteria between reviewed companies in an
investigation, but with Commerce’s having given the phrase
“foreign like product,” as it appears in various places in the
dumping statutes, different meanings without explanation. See
RHP Bearings Ltd. v. United States, 288 F.3d 1334, 1346-47 (Fed.
Cir. 2002); SKF USA Inc. v. United States, 263 F.3d 1369, 1382-
83 (Fed. Cir. 2001). These cases do no more than defend a basic
canon of statutory construction, and factually, do not appear to
Court No. 03-00105 Page 44
have application to the issues here, which involve the use of
criteria to define a certain category of pasta, rather than a
shifting meaning of the phrase “foreign like product” across
statutory sections. Moreover, with regard to substantial
evidence, Plaintiff appears to render its own argument moot when
it admits that none of the other companies ever reported the use
of bronze dies. Pl.’s Br. at 26. Requiring companies to report
on a characteristic that their pasta does not have would be
superfluous indeed.23 The Court’s review of the applicable
statutes and regulations does not reveal any reason why Commerce
should be barred from using a product-matching criterion solely
in relation to the one company under review to which it has
application.
23
Any argument that the other reviewed companies may also
have been making bronze-die pasta, but were unaware of their
ability to request a product-matching criterion is undermined by
the fact that Commerce has added a fifth product-matching
criterion for die-type for certain companies in past pasta
reviews. For example, in the Fourth Antidumping Review of
Certain Pasta from Italy, Commerce added a die-type criterion
solely for Ferrara, the same company at issue here. See Fourth
Review Decision Memorandum at cmt. 2. Similar results were
obtained in an earlier pasta review, where a fifth criterion was
added for just one respondent. See Certain Pasta from Italy, 64
Fed. Reg. at 6,623-24.
Court No. 03-00105 Page 45
CONCLUSION
Because Commerce’s review of both Garofalo and Ferrara was
in accordance with law and supported by substantial evidence,
the Court will deny Plaintiff’s motion for judgment upon the
agency record, and enter judgment for Defendant.
/s/ Donald C. Pogue
Donald C. Pogue
Judge
Dated: New York, New York
March 1, 2004