Ferro Union, Inc. v. United States

Slip Op. 99-143

UNITED STATES COURT OF INTERNATIONAL TRADE
_________________________________
:
FERRO UNION, INC. AND :
ASOMA CORPORATION, :
:
Plaintiffs, :
:
v. :
:
THE UNITED STATES, : Court No. 97-11-01973
:
Defendant, :
:
and :
:
WHEATLAND TUBE COMPANY, :
:
Defendant-Intervenor. :
________________________________ :

[Application for attorney’s fees and expenses denied.]

Dated: December 30, 1999

Mayer, Brown & Platt (Simeon M. Kriesberg, Carol J.
Bilzi, Peter C. Choharis, and Andrew A. Nicely) for
plaintiffs.

David W. Ogden, Acting Assistant Attorney General, David
M. Cohen, Director, Commercial Litigation Branch, Civil
Division, United States Department of Justice (Michele D.
Lynch), Brian Peck, Office of Chief Counsel for Import
Administration, United States Department of Commerce, of
counsel, for defendant.

OPINION

RESTANI, Judge: This matter concerns plaintiffs’ application

for attorney’s fees and expenses pursuant to USCIT R. 68 and

the Equal Access to Justice Act (“EAJA”), 28 U.S.C.A. § 2412
Court No. 97-11-01973 Page 2

(West Supp. 1999).1 Plaintiffs, Ferro Union and Asoma

Corporation, Inc. (“Asoma”), allege that the position of

defendant, the Department of Commerce (“Commerce”) in Ferro

Union, Inc. v. United States, 44 F. Supp.2d 1310 (Ct. Int’l

Trade 1999), and in Certain Welded Carbon Steel Pipes and

Tubes from Thailand, 62 Fed. Reg. 53,808 (Dep’t Commerce 1997)

(final results of antidumping duty admin. rev.) [hereinafter

“Final Results”], was not “substantially justified” within the

meaning of the EAJA. Asoma seeks an award of $250,633.78,

which is one half of the attorney’s fees and expenses incurred

by plaintiffs. Plaintiffs admit that Ferro Union is not

entitled to an EAJA fee award because it had a total net worth

of more than $7,000,000. Pls.’ Br. at 2 n.1; see also 28

U.S.C.A. § 2412(d)(2)(B)(ii) (defining “party” for purposes of

EAJA as a business whose net worth does not exceed $7,000,000

at the time of the civil action). Thus, fees are requested

for Asoma only. For purposes of this opinion, the court will

briefly review the facts of this case, but the court assumes

familiarity with its earlier opinions, both Ferro Union, 44 F.

Supp.2d 1310 and the opinion pursuant to remand, Ferro Union,

1 The EAJA applies to actions in this court.
Consolidated Int’l Automotive, Inc. v. United States, 16 CIT
692, 692 n.1, 797 F. Supp. 1007, 1008 n.1 (1992) (citation
omitted).
Court No. 97-11-01973 Page 3

Inc. v. United States, No. 97-11-01973, 1999 WL 825584 (Ct.

Int’l Trade Oct. 6, 1999).

Background

On April 1, 1996, Ferro Union and Asoma, along with Saha

Thai Steep Pipe Co., Ltd. (“Saha Thai”),2 requested a review

of the 1986 antidumping duty order on welded carbon steel

pipes and tubes from Thailand. Ferro Union, 44 F. Supp.2d at

1313. Commerce initiated the review on April 25, 1996, for

the period March 1, 1995 through February 29, 1996.

Initiation of Antidumping and Countervailing Duty

Administrative Reviews, 61 Fed. Reg. 18,378, 18,378-79 (Dep’t

Commerce 1996). In both its preliminary results and final

results, Commerce determined that an application of total

adverse facts available, pursuant to 19 U.S.C. § 1677e (1994),

was warranted because of Saha Thai’s failure to provide

complete information on affiliates. See Certain Welded Carbon

Steel Pipes and Tubes from Thailand, 62 Fed. Reg. 17,590,

17,592 (Dep’t Commerce 1997) (preliminary results of

antidumping duty admin. rev.); Final Results, 62 Fed. Reg. at

53,809-10. Ferro Union and Asoma challenged the Final Results

in this court. In Ferro Union the court upheld Commerce’s

2 Ferro Union and Asoma are U.S. importers of Saha Thai
pipe.
Court No. 97-11-01973 Page 4

determination to continue with the review, despite Saha Thai’s

request for termination. Ferro Union, 44 F. Supp.2d at 1317.

The court also upheld Commerce’s interpretation of the terms

“family” and “control” listed in the definition of “affiliated

persons” in 19 U.S.C. § 1677(33) (1994). Id. at 1324-26. The

court remanded several other issues. Specifically, the court

found that although Commerce’s interpretation of “family” was

permissible, it was improperly applied because Commerce failed

to provide the respondent with complete notice of the agency’s

interpretation of the term. Id. at 1325-26. The court

therefore instructed Commerce to ignore any possible

affiliation Saha Thai may have had with two particular Thai

companies, and to substantiate its conclusion that Saha Thai

should have disclosed affiliations with five other companies.

Id. at 1331. The court also required Commerce to revisit its

procedure for applying total adverse facts available. Id. at

1330-32. After remand, Commerce chose a smaller margin based

on partial adverse facts, and the court upheld the remand

results. Ferro Union, 1999 WL 825584, at *6-7.

Discussion

The EAJA is a statute which authorizes the recovery of

attorney’s fees and expenses from an agency of the United

States. It constitutes a waiver of sovereign immunity which
Court No. 97-11-01973 Page 5

must be strictly construed. United States v. Modes, Inc., 18

CIT 153, 154 (1994) (citation omitted). The EAJA provides in

relevant part:

[A] court shall award to a prevailing party other than
the United States fees and other expenses . . . incurred
by that party in any civil action . . . including
proceedings for judicial review of agency action, brought
by or against the United States in any court having
jurisdiction of that action, unless the court finds that
the position of the United States was substantially
justified or that special circumstances make an award
unjust.

28 U.S.C.A. § 2412(d)(1)(A). The court must therefore

determine whether the party seeking the award is a “prevailing

party” and whether the government’s position was

“substantially justified” at both the administrative level and

litigation stage. See Urbano v. United States, 15 CIT 639,

641, 779 F. Supp. 1398, 1401 (1991) (“government’s position

must be substantially justified at both the agency level and

litigation stage.”) (citation omitted).

A prevailing party is one who “‘succeed[s] on any

significant issue in litigation which achieves some of the

benefit the part[y] sought in bringing suit.’” Modes, 18 CIT

at 155 (quotation omitted). The government does not challenge

Asoma’s assertion that it was the prevailing party in this

action. Although not all of plaintiffs’ challenges were
Court No. 97-11-01973 Page 6

successful,3 in the light of the fact that plaintiffs

ultimately were successful as to at least one major issue and

in having the 29.89 percent dumping margin from the Final

Results reduced substantially to 9.52 percent, the court

agrees that Asoma is a prevailing party for purposes of the

EAJA.

Plaintiffs assert that Commerce’s position was not

substantially justified at either the administrative level or

in the litigation before this court. Plaintiffs argue that

Commerce misapplied the statutory provisions regarding the

application of total adverse facts available, and that the

government ignored this court’s reasoning in Borden, Inc. v.

United States, 4 F. Supp.2d 1221 (Ct. Int’l Trade 1998) in

defending Commerce’s application of total adverse facts

available. The government counters that its position was

based on law and fact, and that Ferro Union involved the

interpretation of new and complex terms pursuant to the 1994

Uruguay Round Agreements Act.

3 For example, plaintiffs had asserted that Commerce
improperly continued its review of Saha Thai after Saha Thai’s
request for termination. The court held that Commerce had
discretion to continue the review, and that no violation of
Commerce’s regulations had occurred. Ferro Union, 44 F.
Supp.2d at 1317.
Court No. 97-11-01973 Page 7

The government bears the burden of showing that its

position was substantially justified. Inner Secrets/Secretly

Yours, Inc. v. United States, 20 CIT 210, 213, 916 F. Supp.

1258, 1261-62 (1996) (quotation omitted). The Supreme Court

has clarified that “substantially” in this context does not

mean “‘justified to a high degree,’ but rather ‘justified in

substance or in the main’ – that is, justified to a degree

that could satisfy a reasonable person.” Pierce v. Underwood,

487 U.S. 552, 565 (1988).

The fact that the party prevailed is not sufficient to

show that the government’s position was not substantially

justified. See Luciano Pisoni Fabbrica Accessori Instrumenti

Musicali v. United States, 837 F.2d 465, 467 (Fed. Cir. 1988)

(“The mere fact that the United States lost the case does not

show that its position in defending the case was not

substantially justified.”) (quotation omitted). As further

stated by the Federal Circuit:

The EAJA was not intended to be an automatic fee-shifting
device . . . . The decision on an award of attorney fees
is a judgment independent of the result on the merits,
and is reached by examination of the government’s
position and conduct through the EAJA ‘prism,’ . . . not
by redundantly applying whatever substantive rules
governed the underlying case.

Id. at 467 (quotations omitted). Indeed, attorney’s fees and

other expenses “are generally awarded only where the
Court No. 97-11-01973 Page 8

government offers ‘no plausible defense, explanation, or

substantiation for its action.’” Consolidated, 16 CIT at 696,

797 F. Supp. at 1011 (quotation omitted). Viewed in this

light, Commerce’s position at both the administrative level

and in the litigation before this court was substantially

justified.

In concluding that Saha Thai was affiliated with a

variety of companies through familial ties, Commerce grounded

its analysis in the statute and concluded that the companies

were affiliates. See Final Results, 62 Fed. Reg. at 53,809-10

(analyzing definition of “affiliated persons,” “family” and

“control” pursuant to 19 U.S.C. § 1677(33)). Although the

court found some of Commerce’s descriptions of the family

relations vague, Commerce further described these

relationships on remand and properly found that the families

controlled Saha Thai. Ferro Union, 1999 WL 825584, at *6 &

n.14.

Commerce was applying new statutory terms at the time of

the Final Results. When the agency is dealing with a new

issue, the courts have recognized that the agency may be

substantially justified in its position, even if that position

is erroneous. See Consolidated, 16 CIT at 697, 797 F. Supp.

at 1012 (Commerce substantially justified in addressing
Court No. 97-11-01973 Page 9

matters pertaining to economy of People’s Republic of China

which “were not settled or fixed” and “Commerce [made] good

faith attempts to address them.”); see also Luciano, 837 F.2d

at 467 (underlying case revoked antidumping duty order, but

Commerce’s position substantially justified in part because of

“complexity, uniqueness, and newness” of issues). Here the

court recognized that the full scope of the term “affiliated

persons” pursuant to 19 U.S.C. § 1677(33) was “an admittedly

complex, and as yet unexplained, concept.” Ferro Union, 44 F.

Supp.2d at 1327. The court upheld Commerce’s interpretation

of the term, but found that Commerce had unfairly required

Saha Thai to apply this interpretation at the outset because

Saha Thai did not have reason to foresee the full meaning of

the term as interpreted by Commerce. Id. Nonetheless, it is

not clear that Commerce should have recognized Saha Thai’s

lack of notice. Because of the new statute, neither party was

certain of its duties. The court finds Commerce’s proper

interpretation of “affiliation” in this case was sufficient to

render its actions substantially justified or otherwise to

make the award of fees unjust.

Commerce also attempted to follow the framework of 19

U.S.C. § 1677e in applying total adverse facts available in

concluding that Saha Thai had significantly impeded the
Court No. 97-11-01973 Page 10

review. Final Results, 62 Fed. Reg. at 53,809. This

conclusion is sufficient for an application of facts otherwise

available. See 19 U.S.C. § 1677e(a)(2)(C). The flaw in

Commerce’s analysis was in failing to make the additional

finding that Saha Thai had “failed to cooperate by not acting

to the best of its ability” as required under 19 U.S.C. §

1677e(b) in order to draw an adverse inference. Ferro Union,

44 F. Supp.2d at 1329-31 & n.44.

Commerce’s method for selecting total adverse facts

available pursuant to 19 U.S.C. § 1677e(b), however, also

involved interpreting a new provision of the statute. This

court clarified in Borden that the analysis under the 1994

statute differs from prior law, and that Commerce must make a

series of determinations before making an adverse inference.

Borden, 4 F. Supp.2d at 1246-47. Borden, however, was issued

in 1998, after Commerce had issued the Final Results in its

administrative review of Saha Thai. Commerce therefore did

not have the benefit of the Borden analysis when it applied

total adverse facts available to Saha Thai. The government’s

judicial defense of Commerce’s determination likewise should

not be the basis for a fee award. An agreed remand to resolve

the more procedural issue would have wasted time and likely

would not have led to plaintiffs’ victory at that point. That
Court No. 97-11-01973 Page 11

is, had Commerce given adequate notice of its interpretation

of the statute, it likely would have been justified in

applying adverse facts after following the proper procedure.

Thus, because Commerce’s action as to notice of its

interpretation of “family” was substantially justified within

the meaning of the EAJA, it would be unjust to award fees

based on this procedural error which would not have been the

cause of plaintiffs’ success.4

Because it is denying any fee award, the court need not

decide whether Asoma’s request for attorney’s fees and

expenses was properly documented, pursuant to USCIT R. 68(b).

4 Plaintiffs also assert that the application of the
29.89 percent margin from the Final Results was not
substantially justified. Because Commerce was not required to
reach the issue, the court never resolved whether this margin
would have been acceptable if total adverse facts were
warranted. That is, because plaintiffs were successful on
their other theories the issue of corroboration of the higher
margin was mooted. To resolve this issue the court would have
to direct Commerce to perform an analysis merely for the
purpose of resolving the attorney’s fee issue. But a “request
for attorney’s fees should not result in a second major
litigation.” Naekel v. Department of Transp., FAA, 884 F.2d
1378, 1379 (Fed. Cir. 1989) (quoting Hensley v. Eckerhart, 461
U.S. 424, 437 (1983)). Further, it is unlikely that
plaintiffs would prevail in establishing lack of
justification. The corroboration issue also stems from the
new statute which had not been interpreted as to the relevant
point prior to the time of the court’s first decision on the
merits here.
Court No. 97-11-01973 Page 12

Conclusion

Although plaintiffs were prevailing parties, Commerce’s

position was substantially justified. The court therefore

denies the application for attorney’s fees and expenses of the

Asoma Corporation pursuant to the EAJA.

It is so ordered.

________________________

Jane A. Restani
Judge

Dated: New York, New York

This 30th day of December 1999.