Pam, S.P.A. v. United States

United States Court of Appeals for the Federal Circuit
2009-1066

PAM, S.P.A.,

Plaintiff-Appellant,
and

JCM, LTD.,

Plaintiff,

v.

UNITED STATES,

Defendant-Appellee,
and

A. ZEREGA’S AND SONS,

Defendant,
and

AMERICAN ITALIAN PASTA COMPANY,
NEW WORLD PASTA COMPANY,
and DAKOTA GROWERS PASTA COMPANY,

Defendants-Appellees.

David L. Simon, Law Office of David L. Simon, of Washington, DC, argued for
plaintiff-appellant.

Jane C. Dempsey, Attorney, Commercial Litigation Branch, Civil Division,
United States Department of Justice, of Washington, DC, argued for defendant-appellee
United States. With her on the brief were Michael F. Hertz, Assistant Attorney General,
Jeanne E. Davidson, Director, and Reginald T. Blades, Jr., Assistant Director.

Mary T. Staley, Kelley Drye & Warren LLP, of Washington, DC, argued for
defendants-appellees American Italian Pasta Company, et al. With her on the brief
were David C. Smith, Jr. and Paul C. Rosenthal.

Appealed from: United States Court of International Trade

Judge Gregory W. Carman
United States Court of Appeals for the Federal Circuit

2009-1066

PAM, S.P.A.,

Plaintiff-Appellant,
and

JCM, LTD.,

Plaintiff,
v.

UNITED STATES,

Defendant-Appellee,

and

A. ZEREGA’S AND SONS,

Defendant,

and

AMERICAN ITALIAN PASTA COMPANY,
NEW WORLD PASTA COMPANY,
and DAKOTA GROWERS PASTA COMPANY,

Defendants-Appellees.

Appeal from the United States Court of International Trade
in Case No. 04-00082, Judge Gregory W. Carman.
___________________________

DECIDED: September 24, 2009
___________________________
Before MICHEL, Chief Judge, LOURIE, Circuit Judge, and CLARK, District Judge. *

CLARK, District Judge.

Appellant PAM, S.p.A. (“PAM”) appeals from a final judgment of the United

States Court of International Trade (“CIT”) concerning pasta imported into the United

States by PAM. The CIT affirmed a remand determination issued by the Department of

Commerce (“Commerce”) in compliance with the CIT’s earlier order directing

Commerce to explain and recalculate an adverse-facts-available (“AFA”) antidumping

margin, which had been corroborated in accordance with 19 U.S.C. § 1677e(c).

Because the 45.49% AFA margin assessed against PAM is supported by substantial

evidence, we affirm.

I. BACKGROUND

PAM is an Italian producer and exporter of pasta. PAM’s pasta is the subject of a

1996 Commerce antidumping order. Notice of Antidumping Duty Order and Amended

Final Determination of Sales at Less than Fair Value: Certain Pasta from Italy, 61 Fed.

Reg. 38,547-01 (Dep’t of Commerce July 24,1996). PAM participated in the sixth

administrative review of this antidumping order between July 1, 2001 and June 30,

2002, during which it filed questionnaire responses and participated in verification of its

sales databases.

PAM failed to report its sales to one customer, AGEA, a governmental entity that

buys pasta for distribution to charitable causes rather than for commercial resale. PAM

also neglected to include a set of invoices with the prefix “FP,” which denote invoices for

*
Honorable Ron Clark, District Judge, United States District Court for the
Eastern District of Texas, sitting by designation.

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goods shipped from an external warehouse to the customer. The AGEA and FP sales

combined amounted to about two-thirds of PAM’s total domestic sales.

Commerce found that PAM had not fully cooperated in the sixth administrative

review, and applied an AFA margin. Notice of Preliminary Results: For the Sixth

Administrative Review of the Antidumping Duty Order on Certain Pasta from Italy, 68

Fed. Reg. 47,020-02 (Dep’t of Commerce Aug. 7, 2003). Commerce assessed an AFA

margin of 45.49%, the highest margin applied to any party that had been previously

upheld in the proceeding. 1

PAM appealed to the CIT, arguing that the 45.49% AFA margin was unlawful for

a number of reasons. The CIT found that Commerce had not adequately corroborated

the AFA margin applied to PAM and remanded. In doing so, it stated that Commerce

must select a margin that is a reasonably accurate estimate of PAM’s actual rate, not

merely one that is related to the overall level of dumping during the period of review.

Because Commerce did not explain how the other respondents’ transaction-specific

margins were related to PAM’s dumping activity during the period of review, the CIT

concluded that the 45.49% margin appeared punitive and aberrational. The CIT

remanded for Commerce “to explain and recalculate an adverse facts available rate that

is corroborated in accordance with 19 U.S.C. § 1677e(c).”

On remand, Commerce used PAM’s databases from the fourth administrative

review — in which PAM was also a respondent — and found the 45.49% AFA margin it

1
The rate was applied to Barilla, five years earlier in the first administrative
review in 1995-97, and was affirmed on appeal by the CIT. World Finer Foods, Inc. v.
United States, 120 F. Supp. 2d 1131, 1134 (Ct. Int’l Trade 2000). The same rate was
also applied to Barilla in the fourth administrative review, in which Barilla declined to
participate.

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had assessed in the sixth administrative review was corroborated by United States

sales in the fourth review with margins in excess of 45.49%. On appeal to the CIT,

PAM argued that these sales were unrepresentative outliers (i.e., statistical anomalies).

The CIT disagreed, and affirmed Commerce’s findings.

PAM moved for reconsideration in the CIT, which was denied. This appeal

followed. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(5).

II. DISCUSSION

A. Standard of Review

When reviewing Commerce’s determinations, this Court will “apply anew the

same standard of review used by the Court of International Trade.” Tung Mung Dev.

Co. v. United States, 354 F.3d 1371, 1378 (Fed. Cir. 2004). We will uphold

Commerce’s determinations unless it is “‘unsupported by substantial evidence on the

record, or otherwise not in accordance with law.’” Alloy Piping Prods., Inc. v. Kanzen

Tetsu Sdn. Bhd., 334 F.3d 1284, 1289 (Fed. Cir. 2003) (quoting 19 U.S.C. §

1516a(b)(1)(B)(i)).

“Substantial evidence” is defined as “more than a mere scintilla,” or “such

relevant evidence as a reasonable mind might accept as adequate to support a

conclusion.” Micron Tech., Inc. v. United States, 117 F.3d 1386, 1393 (Fed. Cir. 1997)

(quoting Consol. Edison Co. v. N.L.R.B., 305 U.S. 197, 229, 59 S. Ct. 206, 216 (1938)).

The court will review the record as a whole — including any evidence that “fairly

detracts from the substantiality of the evidence” — in determining whether substantial

evidence exists. Micron Tech., 117 F.3d at 1393 (internal quotation omitted).

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B. Analysis

1. Duty to provide complete and accurate information

PAM attempts to describe its failure to provide information as merely two “errors,”

one of which was supposedly a computer error, and the other allegedly due to mistaken

advice from an attorney. However, PAM had refused to answer an initial questionnaire

requesting the information and failed to include the sales data in responses to two

supplemental questionnaires that clearly requested the information.

Parties and attorneys filing documents with the Department of Commerce have

an obligation to provide complete and correct information. The duty is not unlike that of

an attorney appearing before the Court of International Trade or any federal district

court See U.S. Ct. Int’l Trade R. 11(b); Fed. R. Civ. P. 11(b) (An attorney presenting to

the court “a pleading, written motion, or other paper . . . certifies that to the best of the

person’s knowledge, information, and belief, formed after an inquiry reasonable under

the circumstances” that, among other things, “factual contentions have evidentiary

support[.]”) (emphasis added).

Congress has made very clear the importance of accurate and complete

reporting of home market sales to the Department of Commerce. If an interested party

“withholds information that has been requested by the administering authority” or

provides information that cannot be verified, the administering authority “shall . . . use

the facts otherwise available in reaching” its decision on an antidumping issue.

19 U.S.C. § 1677e(a)(2)(A), (D). If the interested party fails to cooperate by not acting,

to the best of its ability, to comply with a request for information from Commerce,

Section 1677e(b) permits Commerce to “use an inference that is adverse to the

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2009-1066
interests of that party in selecting from among the facts otherwise available.” Such

adverse inferences may include reliance on information derived from previous

administrative review or any other information placed on the record.

Id. § 1677e(b)(3), (4).

2. Deferential review of adverse antidumping inference

Because of Commerce’s special expertise in antidumping cases, the court

applies the deferential “substantial evidence” standard when reviewing agency action in

this field. F.lli De Cecco Di Filippo Fara S. Martino S.p.A. v. United States, 216 F.3d

1027, 1032 (Fed. Cir. 2000). PAM argues that the 45.49% AFA margin applied to it is

not supported by substantial evidence, because the sales with margins over 45.49%

from the fourth administrative review that Commerce relied upon are aberrant outlier

values.

Commerce’s discretion in applying an AFA margin is particularly great when a

respondent is uncooperative by failing to provide or withholding information.

See Id. § 1677e. While the possibility of a high AFA margin creates a powerful

incentive to avoid dumping and to cooperate in investigations, there is a limit to

Commerce’s discretion. “Congress tempered deterrent value with the corroboration

requirement. It could only have done so to prevent the petition rate (or other adverse

inference rate), when unreasonable, from prevailing and to block any temptation by

Commerce to overreach reality in seeking to maximize deterrence.” De Cecco, 216

F.3d at 1032.

Congressional foresight in this regard was highlighted at oral argument when

both attorneys for the Appellees maintained that the price of a single box of pasta out of

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2009-1066
sales of thousands of cases would, in and of itself, corroborate an AFA margin based on

that price. The burden imposed by substantial evidence review may not be heavy, but it

is not ephemeral. There must be at least enough evidence to allow reasonable minds

to differ. See Consol. Edison, 305 U.S. at 229, 59 S. Ct. at 217; Heisig v. United States,

719 F.2d 1153, 1156 (Fed. Cir. 1983). A single sale supported a 30.95% margin under

the specific facts of Ta Chen Stainless Steel Pipe, Inc. v. United States, 298 F.3d 1330

(Fed. Cir. 2002). This does not mean that one sale by itself will always rise to the level

of substantial evidence.

In the present case, Commerce’s assessment of the 45.49% AFA margin is

supported by substantial evidence. There were 29 sales with margins over 45.49%.

PAM asserts that since these amounted to only 0.5% of PAM’s total United States sales

during the period of the fourth administrative review, they constitute outlier data that

cannot be relied upon. This position was rejected by the Ta Chen court:

Here, the 30.95% dumping margin is corroborated by actual sales data, and Ta
Chen admits that it is reflective of some, albeit a small portion, of Ta Chen’s
actual sales. So long as the data is corroborated, Commerce acts within its
discretion when choosing which sources and facts it will rely on to support an
adverse inference.

Id., 298 F.3d at 1339. 2

2
PAM also argues that the data from the fourth administrative review is not
actually representative of its sales during that period, because costs and home market
sales are not included, and the sales consist mostly of specialty pasta (which make up a
small portion of total United States sales). However, PAM never previously challenged
the data from the fourth administrative review. Commerce is permitted to use the
information available to it in choosing and supporting an AFA value. See Ta Chen, 298
F.3d at 1338-39 (“In the case of uncooperative respondents, the discretion granted by
the statute appears to be particularly great, allowing Commerce to select among an
enumeration of secondary sources as a basis for its adverse factual inferences. In
cases in which the respondent fails to provide Commerce with the most recent pricing
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 We reject PAM’s suggestion that Ta Chen is called into question by Exxon

Shipping Co. v. Baker, – U.S. –, 128 S. Ct. 2605 (2008). In Exxon Shipping, the Court

reviewed a punitive damages award under maritime common law rendered against

Exxon in connection with the 1989 oil spill of the Exxon Valdez off the Alaskan coast.

The opinion noted the “stark unpredictability” of punitive damages awards when

compared to compensatory awards, including the presence of “outlier” cases where the

punitive damages dwarf the compensatory damages awarded. Id. at 2625. The Court

ultimately settled on a rule where the appropriate upper limit ratio for punitive to

compensatory damages in maritime cases was 1:1. Id. at 2633.

According to PAM, Exxon Shipping — a case involving punitive damages in the

area of maritime common law — should be read “expansively” for the proposition that

unpredictable outlier results are generally to be avoided. Nothing in Exxon Shipping, a

case with a very different fact pattern and legal issues, requires us to impose new limits

on the discretion Congress granted to the Department of Commerce.

III. CONCLUSION

The judgment of the Court of International Trade is affirmed.

AFFIRMED

data, it is within Commerce’s discretion to presume that the highest prior margin reflects
the current margins.” (internal citation omitted)).
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