Papierfabrik August Koehler AG v. United States

SLIP OP 12- 5

UNITED STATES COURT OF INTERNATIONAL TRADE

PAPIERFABRIK AUGUST KOEHLER AG and
KOEHLER AMERICA, INC.,

Plaintiffs,

- and -

MITSUBISHI INT’L CORP., MITSUBISHI
HI-TEC PAPER FLENSBURG GmbH, and
MITSUBISHI HI-TEC PAPER BIELEFELD
GmbH,
Before: Donald C.Pogue,
Plaintiff-Intervenors, Chief Judge
Court No. 08-00430
v.

THE UNITED STATES and the UNITED
STATES INTERNATIONAL TRADE
COMMISSION,

Defendants,

- and -

APPLETON PAPERS INC.,

Defendant-Intervenor.

OPINION

[Commission’s remand determination affirmed.]

Dated: January 10, 2012

William Silverman and Richard P. Ferrin, Drinker Biddle &
Reath LLP, of Washington, DC, for the Plaintiffs,

Eric C. Emerson and Jamie B. Beaber, Steptoe & Johnson LLP,
of Washington, DC, for the Plaintiff-Intervenors,

David F. D’Alessandris, Trial Attorney, Commercial
Court No. 08-00430 Page 2

Litigation Branch, Civil Division, U.S. Department of Justice, of
Washington, DC, for Defendants. With him on the briefs were Tony
West, Assistant Attorney General; Jeanne E. Davidson, Director;
and Patricia M. McCarthy, Assistant Director.

Marc A. Bernstein, Office of General Counsel, United States
International Trade Commission, of Washington, DC, for Defendant
United States International Trade Commission. With him on the
briefs were James M. Lyons, General Counsel, and Neal J.
Reynolds, Assistant General Counsel for Litigation.

Joseph W. Dorn, Gilbert B. Kaplan, Brian E. McGill, and
Daniel L. Schneiderman, King & Spalding LLP, of Washington, DC,
for the Defendant-Intervenors.

Pogue, Chief Judge: This case returns to court following

remand ordered by the Court of Appeals for the Federal Circuit in

Papierfabrik August Koehler AG v. United States, 413 F. App’x.

227 (Fed. Cir. 2011) (“Koehler II”).1 On remand, the

International Trade Commission (the “ITC” or “Commission”) found

– after obtaining and taking into consideration intermediate

calculation worksheets from the Department of Commerce showing

that a specific subset of lightweight thermal paper (“LWTP”) was

not dumped on the United States market – that the domestic LWTP

industry is still threatened with material injury by way of

subject imports from Germany.

Plaintiffs (“Koehler”) challenge the Commission’s remand

determination. The court has jurisdiction pursuant to 28 U.S.C.

1
Koehler II vacated and remanded this court’s previous
judgment. See Papierfabrik August Koehler AG v. United States,
__ CIT __, 675 F. Supp. 2d 1172 (2009) (“Koehler I”).
Court No. 08-00430 Page 3

§ 1581(c).

After a brief discussion of the background and applicable

standard of review, the court will explain why it concludes that

the Commission’s remand determination is free of legal error and

based on a reasonable reading of the record.

BACKGROUND

In October, 2008, the Department of Commerce (“the

Department” or “Commerce”) issued a finding that imports of LWTP

from Germany were being or were likely to be sold in the United

States at less than fair value. Lightweight Thermal Paper from

Germany, 73 Fed. Reg. 57,326 (Dep’t Commerce Oct. 2, 2008)

(notice of final determination of sales at less than fair value)

(“Commerce Final Determination”).2 Shortly thereafter, pursuant

to 19 U.S.C. § 1673d(b), the Commission conducted a separate

injury investigation and determined that the domestic LWTP

industry was threatened with material injury by way of imports

from Germany, including imports from Plaintiffs. Certain

Lightweight Thermal Paper from China and Germany, 73 Fed. Reg.

2
Commerce defined the LWTP subject merchandise as “thermal
paper with a basis weight of 70 grams per square meter . . . or
less.” Commerce Final Determination, 73 Fed. Reg. at 57,327.
Koehler was a mandatory respondent in Commerce’s
investigation, Id. at 57,327 n.4. In its investigation, Commerce
found that imports of the subject merchandise from Koehler were
being dumped at a margin of 6.50 percent. Id. at 57,328.
Court No. 08-00430 Page 4

70,367 (ITC Nov. 20, 2008) (final determinations).3

LWTP is sold in a variety of weights, including 48 grams per

square meter (“48g LWTP”) and 55 grams per square meter (“55g

LWTP”), which, together, comprise the bulk of LWTP sold in the

United States. ITC Original Determination, USITC Pub. 4043 at

16. During the Commission’s period of investigation, domestic

production of LWTP was “overwhelmingly concentrated” in 55g LWTP.

Remand Results 23, Sept. 30, 2011, ECF No. 123 (citing ITC

Original Determination, USITC Pub. 4043 at 16). Similarly, the

majority of imported LWTP during the same time period was 55g.4

ITC Original Determination, USITC Pub. 4043 at 16. However, the

Commission also found that domestic production of 48g LWTP was

highly likely to increase in the future. Id. at 38, 42.

Likewise, German producers, including Plaintiffs, reported

increased imports of 48g LWTP as a “significant change in product

range” during the pertinent time period. Id. at 17.

During the original ITC proceedings, Plaintiffs argued that

a series of worksheets from Commerce’s investigation showed that

3
The views of the Commission are contained in Certain
Lightweight Thermal Paper from China and Germany, USITC Pub.
4043, Inv. Nos. 701-TA-451 & 731-TA-1126-1127 (Final) (Nov.
2008), Admin. R. Pub. Doc. 285 (“ITC Original Determination”).
4
The Commerce period of investigation was from July 1, 2006
through June 30, 2007. The ITC’s threat analysis, however,
focused on the imminent future after October 2008. See Remand
Results 22.
Court No. 08-00430 Page 5

48g LWTP was not dumped in the United States market during

Commerce’s period of investigation and therefore the Commission

should completely disregard the increase in imports of 48g LWTP

in its separate injury investigation and final determination.

The Commission declined to do so based in part on the Federal

Circuit’s decision in Algoma Steel Corp. v. United States, 865

F.2d 240 (Fed. Cir. 1989), which, under the Commission’s

interpretation, did not “compel or even authorize the Commission

to examine individual sales or model transactions considered by

Commerce.” ITC Original Determination, USITC Pub. 4043 at 31

n.201.5 Because Commerce also had not issued a separate dumping

margin for 48g LWTP, the Commission concluded it was not

permitted to consider individual sales of 48g and 55g LWTP in its

injury determination.

Plaintiffs appealed to this court which affirmed the

Commission’s determination. Koehler I, __ CIT at __, 675 F.

Supp. 2d at 1191–92. The Court of Appeals, however, vacated

Koehler I, holding that the Commission’s refusal to consider

intermediate 48g dumping margins “was premised on a divergent

5
The Commission also declined to disregard the increased
48g LWTP shipments based on 19 U.S.C. § 1677(35)(C)(ii), which
states that the dumping margin used by the Commission “shall
be . . . the dumping margin or margins most recently published by
[Commerce] prior to the closing of the Commission’s
administrative record.” ITC Original Determination, USITC Pub.
4043 at 31 n.201; 19 U.S.C. § 1677(35)(C)(ii).
Court No. 08-00430 Page 6

reading of Algoma, and a misunderstanding of Koehler’s request.”

Koehler II, 413 F. App’x. at 231. The Court stated that “Algoma

specifically allows for consideration of raw data in computer

print outs ‘by reasons specific to the particular case . . . .’”

Id. (quoting Algoma, 865 F.2d at 242). It reasoned that the

statute requires that Commerce make available to the Commission

all of the information upon which its determination was based,

see 19 U.S.C. § 1673d(c)(1)(A), including the sales prices of a

“subset of dumped goods,” here the 48g LWTP. Koehler II, 413 F.

App’x. at 231–32. With regard to the Plaintiffs’ request, the

Court of Appeals interpreted it as a request for the Commission

to make decisions “based on the price, measured as a dumping

margin, of a subset of dumped goods” and to analyze data that is

available to the Commission. Id.6

The Court of Appeals further held that while the ITC may not

change Commerce’s determination that all of Plaintiffs’ products

were being dumped at a rate of 6.50 percent, it was permitted to

examine and consider Commerce’s intermediate calculations and

6
“Commerce analyzed seven of Koehler's LWTP products,
distinguished by weight . . . [and] found that six of the seven
Koehler products had positive dumping margins—meaning they are
being sold at [less than fair value]. As calculated by Commerce,
and reflected in Commerce's intermediate calculations, the only
Koehler product without a positive dumping margin was Koehler's
48 gsm LWTP product. The 48 gsm product constituted 38.15 percent
of Kohler's quantity of sales in the United States and made up
40.28 percent of the value of sales in the United States.”
Koehler II, 413 F. App’x. at 229-30
Court No. 08-00430 Page 7

subsets of the subject merchandise when making an injury

determination. Id. at 231 (citing Cleo Inc. v. United States,

501 F.3d 1291, 1295 (Fed. Cir. 2007)).7

Following the Appeals Court order and mandate, this court

remanded the matter to the Commission with instructions to

reconsider and revise its decision in accordance with the

decision of the Court of Appeals, indicating how any decision is

in accordance with Algoma Steel.

Following the remand order, the Commission re-opened its

record to obtain additional material from the record of

Commerce’s investigation. Noting that neither the Appeals Court

opinion nor this court’s remand order called into question the

Commission’s findings or conclusions regarding domestic like

product, industry, or conditions of competition, the Commission

focused on “whether the information from the Commerce dumping

investigation warrants modification of the prior analysis that

there is a threat of material injury by reason of the subject

imports.” Remand Results 5.

In affirming its finding of threat of material injury, the

Commission concluded that different weights of LWTP are or will

be dumped on the United States market in direct response to

7
The court emphasized that the Commission, not Commerce,
“determines whether all articles in the subject merchandise are
‘like products,’ which in turn make up an ‘industry’ for the
purposes of a dumping determination.” Id. at 231.
Court No. 08-00430 Page 8

market competition. See Id. at 23. Specifically, importers

respond to increased domestic production of and/or demand for a

particular weight of LWTP by dumping the same weight of LWTP on

the United States market.

STANDARD OF REVIEW

The Department, in its remand redetermination, must comply

with the terms of the court’s remand order. Jinan Yipin Corp. v.

United States, __ CIT __, 637 F. Supp. 2d 1183, 1185 (2009). In

addition, the court “shall hold unlawful any determination,

finding, or conclusion found ... to be unsupported by substantial

evidence on the record, or otherwise not in accordance with law.”

19 U.S.C. § 1516a(b)(1)(B)(i); Koyo Seiko Co. v. United States,

20 F.3d 1160, 1164 (Fed. Cir. 1994).

The substantial evidence standard of review “can be

translated roughly to mean ‘is [the determination]

unreasonable?’” Nippon Steel Corp. v. United States, 458 F.3d

1345, 1351 (Fed. Cir. 2006) (alteration in original) (quoting

SSIH Equip. S.A. v. U.S. Int’l Trade Comm’n, 718 F.2d 365, 381

(Fed. Cir. 1983)); Daewoo Elecs. Co. v. Int’l Union, 6 F.3d 1511,

1520 (Fed. Cir. 1993) (“The specific determination we make is

‘whether the evidence and reasonable inferences from the record

support’ [the agency’s] findings.” ). Moreover, the possibility

of drawing two inconsistent conclusions from the evidence does
Court No. 08-00430 Page 9

not render the agency’s determination unreasonable, Consolo v.

Fed. Maritime Comm’n, 383 U.S. 607, 620 (1966), and where

“[s]ubstantial evidence exists on both sides of the issue[,]

. . . the statutory substantial evidence standard compels

deference to the [agency].” Nippon Steel, 458 F.3d at 1354.

DISCUSSION

While Commerce is charged with investigating whether

merchandise is being dumped on the domestic market and if so,

determining the dumping margin for such imports, the ITC is

responsible for determining whether an industry in the United

States is or will be threatened with material injury by reason of

these imports. See 19 U.S.C. § 1673d(b). The Commission’s

analysis is, by its nature, of a different character and also

covers a different time period than the Commerce investigation.

See 19 U.S.C. § 1677(7)(F) (charging the ITC with the forward-

looking task of determining actual and potential effects of

imports of subject merchandise on the domestic industry). The

governing statute requires that the Commission consider all

“relevant economic factors which have a bearing on the state of

the industry in the United States, including, but not limited to

actual and potential decline in output, sales, [and] market share

. . . . ” when making its threat analysis. 19 U.S.C.
Court No. 08-00430 Page 10

§ 1677(7)(C)(iii).8

In order to find a causal nexus between the subject imports

and the domestic industry’s condition, the Commission must find

that the subject imports will have more than a tangential,

trivial, or incidental effect on the industry,9 and that further

dumped imports are imminent. 19 U.S.C. § 1677(7)(F)(ii). It is

the Commission’s charge to make findings of fact and, if it finds

that there is injury to the domestic market, “explain, in a

8
In relevant part, the statute states that “the Commission
shall consider, among other relevant economic factors . . .
any . . . substantial increase in production capacity in the
exporting country indicating the likelihood of substantially
increased imports of the subject merchandise into the United
States . . . and any other demonstrable adverse trends that
indicate the probability that there is likely to be material
injury by reason of imports . . . .” 19 U.S.C.
§ 1677(7)(F)(i)(II) & (IX).
9
Under the “by reason of” standard of causation, subject
imports must have more than an “incidental, tangential or
trivial” effect on the industry. See Nippon Steel Corp. v. Int’l
Trade Comm’n, 345 F.3d 1379, 1381 (Fed. Cir. 2003); see also
Gerald Metals, Inc. v. United States, 132 F.3d 716, 721-22 (Fed.
Cir. 1997); Mittal Steel Point Lisas Ltd. v. United States, 542
F.3d 867, 873 (Fed. Cir. 2008).
Nonetheless, in making its determination, the Commission
“need not isolate the injury caused by other factors from injury
cased by unfair imports . . . [r]ather, the Commission must
examine other factors to ensure that it is not attributing injury
from other sources to the subject imports.” Uruguay Round
Agreements Act, Statement of Administrative Action, H.R. Rep. No.
103–316, 156 (1994) reprinted in 1994 U.S.C.C.A.N. 4040, 4185
(“SAA”). The SAA accompanied the Uruguay Round Agreements Act
(“URAA”) and was approved by Congress as an “authoritative
expression by the United States concerning the interpretation and
application of the Uruguay Round Agreements and [the URAA] in any
judicial proceeding . . . concerning” the interpretation or
application of the URAA. 19 U.S.C. § 3511(a)(2) and § 3512(d).
Court No. 08-00430 Page 11

meaningful way,” the causation of such injury. Bratsk Aluminum

Smelter v. United States, 444 F.3d 1369, 1376 (Fed. Cir. 2006);

Mittal Steel, 542 F.3d at 874–75. The Commission “must examine

the relevant data and articulate a satisfactory explanation for

its action.” Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto.

Ins. Co., 463 U.S. 29, 43 (1983).

Here, pursuant to the directive from the Court of Appeals,

and the remand order of this court, the Commission considered

Commerce’s intermediate dumping margin calculations and provided

a reasonable explanation for continuing to find a positive threat

of injury to the domestic industry. First, the Commission

reopened the record to request further information from Commerce

regarding the interpretation of the Commerce data. Remand

Results 9–10 (citing “Final Analysis Memorandum for Sales –

Koehler” Sept. 25, 2008, and “Cost of Production and Constructed

Value Calculation Adjustments for the Final Determination” Sept.

25, 2008, EDIS Doc. 454291). The Commission noted that it was

required to weigh this information while conducting its overall

statutory directives. Id. at 18. In this context, and

responding to the court’s remand order that it articulate how its

decision is consistent with Algoma Steel, the Commission found

that Commerce’s intermediate calculations were “of limited

utility in an analysis of threat of material injury by reason of

subject imports” because they were not probative with respect to
Court No. 08-00430 Page 12

the focal point of the Commission’s threat analysis. Id. at

19.10

The Commission recognized “undisputed changes in conditions

of competition between the time covered by Commerce’s dumping

investigation and the time period we have considered in analyzing

threat of material injury.” Id. at 22. It further noted that

market participants anticipated growing demand for 48g LWTP,

indicated in part by Defendant-Intervenor’s construction of a

facility in August 2008 with the intent to increase production of

48g LWTP. Plaintiffs, the predominant German exporters of LWTP,

ceased bringing 55g LWTP into the United States in March 2008 and

indications are that future imports will be “heavily

concentrated” in 48g LWTP. ITC Original Determination, USITC

Pub. 4043 at 37.

In addition, the Commission recognized that “where

competition was most concentrated during the periods both

Commerce and the Commission investigated, Commerce calculated

much higher rates of dumping than the 6.50 percent weighted

average dumping margin it published in its final determination.”

10
The Commission acknowledges that there is data from
Commerce’s first administrative review showing that 48g LWTP from
Germany was sold at less than fair value after Commerce’s initial
period of review. However, because the data pertaining to
Commerce’s review was not available during the Commission’s
original investigation, the Commission has not considered it.
Remand Results 26 n.85.
Court No. 08-00430 Page 13

Remand Results 23 (citing EDIS Doc. 454291). In this context, the

Commission gave weight to data indicating that “Koehler was

inclined to sell types of LWTP that competed directly with the

domestic like product in dumped transactions, while non-dumped

transactions tended to focus on a product type that was not at

the time produced domestically in significant quantities.” Id.

at 24.11

The Commission emphasized that “the focus of competition

between LWTP from Germany and the domestic like product [is] not

static, but in fact changed after Commerce’s period of

investigation,” and concluded that the imminent future would be

“characterized by more intense competition between domestically

produced and German 48 gram LWTP . . . .” Id. Therefore, in

light of the evidence that dumping transactions occurred for

products in direct competition, the Commission continued to find

that there is a threat of material injury to the domestic market

by way of imports of 48g LWTP. Id. at 23 (“In the circumstances

of this investigation, viewing Commerce’s calculations for 48

gram LWTP as conclusive of likely conduct during the imminent

future is particularly inappropriate.”). This conclusion is one

that has reasonably taken into consideration and explained the

“relevant economic factors” which have a bearing on the LWTP

11
Plaintiffs do not challenge this aspect of Commerce’s
reading of the record. See Plaintiff’s Comments, ECF No. 127.
Court No. 08-00430 Page 14

industry in the United States. See 19 U.S.C. § 1677(7)(C)(iii).

Plaintiffs concede that “the Commission is not required to

tie each bit of injury to a dumped sale.” Plaintiff Comments 27.

Nonetheless, the Commission’s analysis does not ignore the role

of dumping in causing injury to the domestic industry. As noted

above, the Commission concluded that imports entering in the

imminent future would be heavily concentrated in 48g LWTP. Faced

with evidence that Koehler’s pricing practices indicated much

higher rates of dumping “where competition was most concentrated

during the periods both Commerce and the Commission

investigated,” Remand Results at 23, the Commission concluded

that it was unlikely that sales of the 48g LWTP will be at normal

value. Id. at 26.

The Plaintiffs raise two challenges to the remand

determination. First, Plaintiffs contend that the remand

determination violates the mandate of the Federal Circuit. The

Plaintiffs correctly argue that “the Federal Circuit has already

decided, either expressly or by necessary implication, that the

computer printout showing a negative dumping margin for Koehler’s

sales of 48-gram [LWTP] is factually relevant and legally germane

. . . .” Plaintiff Comments 3. Relevance, however, does not

determine weight, and the Appeals Court did not supplant the

Commission’s role to weigh the evidence and, on remand, determine

its effect. Had the Appeals Court intended otherwise, no remand
Court No. 08-00430 Page 15

would have been necessary.

Plaintiffs also argue that the following language in Koehler

II precludes the Commission from making an affirmative finding of

material injury:

Instead, [the worksheet data] allows the Commission to
take those calculations and apply its expertise to make
a fair and equitable injury determination. When the
threat determination is based almost exclusively on one
product within the subject merchandise, and that one
product is not being sold at [less than fair value],
the Commission should be able to use all materials at
its disposal to make an equitable determination. The
Commission incorrectly denied Koehler’s request, and
incorrectly interpreted this court’s holding in Algoma,
when refusing to consider potentially dispositive
intermediate data.

Id. at 7 (quoting Koehler II, 413 F. App’x. at 231–32). However,

Plaintiffs’ reliance is misplaced. The Court of Appeals ordered

that the Commission examine the data that is required by statute

to be available to it and conduct a “thoughtful consideration” of

this data. Koehler II, 413 F. App’x. at 231. While recognizing

that the data was “potentially dispositive,” the Court of Appeals

does not, either expressly or impliedly, hold that such data is

dispositive. This is in keeping with the Court’s prior holdings

that the Commission, not the courts, is the finder of facts in

injury proceedings. Mittal Steel, 542 F.3d at 875; Nippon Steel,

458 F.3d at 1352. Thus it was for the Commission to evaluate all

“relevant economic factors.” Its affirmative threat finding is

based on a reasonable reading of the record.
Court No. 08-00430 Page 16

CONCLUSION

Because the Commission took into consideration the data

submitted by Commerce and adequately explained its rationale for

not giving them weight in its positive threat assessment and

because the Commission’s finding that the domestic market for 48g

LWTP is threatened by way of imports from Germany is not

unreasonable, its determination is affirmed.

Judgment will be entered accordingly.

/s/ Donald C. Pogue
Donald C. Pogue, Chief Judge

Dated: January 10, 2012
New York, New York