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Michaels Stores, Inc. v. United States

United States Court of Appeals, Federal Circuit

September 10, 2014

MICHAELS STORES, INC., Plaintiff-Appellant,
v.
UNITED STATES, Defendant-Appellee

Appeal from the United States Court of International. Trade in No. 12-CV-00146, Judge Jane A. Restani.

MATTHEW R. NICELY, Hughes Hubbard & Reed LLP, of Washington, DC, argued for plaintiff-appellant. With him on the brief were LYNN G. KAMARCK and ALEXANDRA B. HESS.

STEPHEN C. TOSINI, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee. With him on the brief were STUART F. DELERY, Assistant Attorney General, JEANNE E. DAVIDSON, Director, and PATRICIA M. MCCARTHY, Assistant Director. Of counsel on the brief was DANIEL J. CALHOUN, Senior Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, United States Department of Commerce, of Washington, DC.

Before PROST, Chief Judge, CLEVENGER and CHEN, Circuit Judges.

OPINION

Page 1389

Prost, Chief Judge.

American arts and crafts supply retailer Michaels Stores, Inc. (" Michaels" ) appeals from the decision of the United States Court of International Trade affirming the Department of Commerce's (" Commerce" ) antidumping rates assigned to certain cased pencils manufactured and exported by businesses in the People's Republic of China (" PRC" ). Commerce assigned Michaels' exporters a country-wide antidumping cash deposit rate, as opposed to lower rates obtained by the pencils' producers. Michaels argues it is entitled to the producer rate based on its reading of 19 C.F.R. § 351.107(b)(2), which states that " if the Secretary has not established previously a combination cash deposit rate . . . for the exporter and producer in question or a noncombination rate for the exporter in question, the Secretary will apply the cash deposit rate established for the producer." Because § 351.107(b)(2) is informed by § 351.107(d), which establishes an initial noncombination rate for all producers and exporters in nonmarket economy countries, we affirm.

Background

Commerce has the general authority within certain parameters to set the cash deposit rates associated with imported goods in an effort to curb " dumping," i.e., exporting goods far below typical market prices in order to lower the profits of domestic competitors. 19 U.S.C. § 1673e(a)(3). Upon a finding of material injury to a U.S. industry, Commerce sets antidumping rates for the producers and exporters of foreign goods, and it may also assign special rates for specific American importers. Rates that apply to specific combinations of producers, exporters, and/or importers are referred to as " combination" rates. See 19 C.F.R. § 351.107(b)(1)(i). A noncombination rate, in contrast, is a rate that applies to a producer or exporter and is not combined with the rate of another entity. See id.

Page 1390

Commerce distinguishes between traditional market economies, where money is exchanged for goods and services, and " nonmarket economies" (NMEs), such as barter systems or state-controlled economies. See Final Determination of Sales at Less Than Fair Value: Sparklers From the People's Republic of China, 56 Fed. Reg. 20,588 (May 6, 1991) (" Sparklers " ). The PRC has been classified as an NME country since as early as 1987. Tapered Roller Bearings From the People's Republic of China: Final Determination of Sales at Less Than Fair Value, 52 Fed. Reg. 19,7481 (May 27, 1987); see also Certain Cased Pencils from China: Preliminary Results, 76 Fed. Reg. 2337, 2338-39 (Jan. 13, 2011).

In NME proceedings, Commerce begins with a rebuttable presumption that a company operating within a NME is subject to state control. See id ; accord Initiation of Antidumping and Countervailing Duty Administrative Reviews, 75 Fed. Reg. 4770, 4771 (Jan. 29, 2010). Commerce therefore applies a single country-wide antidumping deposit rate to all NME producers and exporters, unless the producer, exporter, or another interested party can prove through an administrative review process (established by 19 C.F.R. § 351.213(b)) that the exporter or producer at issue is not subject to government control and thus eligible for a lower rate. See Initiation of Antidumping and Countervailing Duty Administrative Reviews, 75 Fed. Reg. at 4771; Policy Bulletin 05.1 at 4 (Dep't of Commerce Apr. 5 2005), available at http://enforcement.trade.gov/policy/bull05-1.pdf.

In 1994, the International Trade Commission conducted an investigation in which it found that a U.S. industry was threatened with material injury by reason of imports of certain cased pencils from the PRC. See Anti-dumping Duty Order: Certain Cased Pencils from the People's Republic of China, 59 Fed. Reg. 66,909 (Dec. 28, 1994). Commerce accordingly imposed antidumping duties and later initiated administrative reviews for the 2008-2009 and 2009-2010 time periods, which are at issue here.

During the 2008-2009 period of administrative review, Michaels imported cased pencils that were manufactured by three producers in the PRC: China First Pencil Co., Ltd. (" China First" ), Shanghai Three Star Stationery Industry Co., Ltd. (" Three Star" ), and Shandong Rongxin Import and Export Co., Ltd. (" Rongxin" ). Michaels Stores, Inc. v. United States, 931 F.Supp.2d 1308, 1309 (Ct. Int'l Trade 2013). These producers did not sell to Michaels directly; rather, Michaels obtained the pencils through three different ...


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