                                        Slip Op. 16-90

               UNITED STATES COURT OF INTERNATIONAL TRADE

PAKFOOD     PUBLIC   COMPANY
LIMITED,    OKEANOS     FOOD
COMPANY LIMITED, THAI UNION
FROZEN PRODUCTS PUBLIC CO.,
LTD., THAI UNION SEAFOOD CO.,
LTD.,
                                                    Before: Leo M. Gordon, Judge
                       Plaintiffs,
                                                    Court No. 14-00230
                  v.

UNITED STATES,

                       Defendant.

                                     OPINION and ORDER

[Final administrative review results remanded.]

                                                                 Dated: October 4, 2016

       Robert G. Gosselink, Trade Pacific PLLC of Washington, DC for Plaintiffs
Pakfood Public Co., Ltd., Okeanos Food Company Ltd., Thai Union Frozen Products
Public Co., Ltd., and Thai Union Seafood Co., Ltd.

       Kara M. Westercamp, Trial Attorney, Commercial Litigation Branch, Civil Division,
U.S. Department of Justice of Washington, DC for Defendant United States. On the brief
with her were Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Jeanne E.
Davidson, Director, and Patricia M. McCarthy, Assistant Director. Of counsel on the brief
was Michael T. Gagain, Attorney, Office of Associate Chief Counsel, U.S. Department of
Commerce of Washington, DC.

     Jordan C. Kahn and Nathaniel M. Rickard, Picard Kentz & Rowe, LLP of
Washington, DC for Defendant-Intervenor Ad Hoc Shrimp Trade Action Committee.

      Gordon, Judge: This action involves the final results of an administrative review

conducted by the U.S. Department of Commerce (“Commerce”) for the antidumping duty

order covering Certain Frozen Warmwater Shrimp from Thailand, 79 Fed. Reg. 51,306
Court No. 14-00230                                                                  Page 2

(Dep’t Commerce Aug. 28, 2014) (“Final Results”); see also Issues and Decision Mem.

for Certain Frozen Warmwater Shrimp from Thailand, A-549-822 (Aug. 21, 2014,

ECF No. 22 (“Decision Mem.”). The court has jurisdiction pursuant to Section

516A(a)(2)(B)(iii)   of   the   Tariff     Act   of   1930,   as   amended,   19    U.S.C.

§ 1516a(a)(2)(B)(iii)(2012),1 and 28 U.S.C. § 1581 (c) (2012). Plaintiffs Pakfood Public

Co. Ltd, and Okeanos Food Company Limited (collectively, “Pakfood”) and Thai Union

Frozen Products Public Co., Ltd. and Thai Union Seafood Co., Ltd. (collectively, “Thai

Union”) challenge Commerce’s deviation from its standard 90/60-day window sales

comparison periods provided in 19 C.F.R. § 351.414(f) (2013). For the reasons that follow,

the court remands this matter to Commerce for further consideration.

                                         I. Background

       During the administrative review Commerce selected Pakfood and Thai Union for

individual review. Commerce collapsed them into a single entity (“Collapsed Entity”) two

and a half months into the review period, effective April 23, 2012 (“Collapsing Date”).

Commerce calculated separate dumping margins for Pakfood and Thai Union before (and

excluding) the Collapsing Date, as well as a separate margin for the Collapsed Entity after

(and including) the Collapsing Date. In those calculations Commerce truncated—on the

Collapsing    Date—its     normal        90/60-day    sales   comparison   window    under

19 C.F.R. § 351.414(f) in which it tries to match contemporaneous sales. Commerce

compared Pakfood’s U.S. sales to its home market sales made before the Collapsing




1
 Further citations to the Tariff Act of 1930, as amended, are to the relevant provisions of
Title 19 of the U.S. Code, 2012 edition.
Court No. 14-00230                                                               Page 3

Date. Commerce also compared Thai Union’s U.S. sales to its home market sales made

before the Collapsing Date. Lastly, Commerce compared the Collapsed Entity’s (Pakfood

and Thai Union’s) U.S. sales to home market sales made on or after the Collapsing Date.

                                II. Standard of Review

      For administrative reviews of antidumping duty orders, the court sustains

Commerce’s “determinations, findings, or conclusions” unless 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). More specifically, when reviewing agency determinations, findings,

or conclusions for substantial evidence, the court assesses whether the agency action is

reasonable given the record as a whole. Nippon Steel Corp. v. United States, 458 F.3d

1345, 1350-51 (Fed. Cir. 2006). Substantial evidence has been described as “such

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

conclusion.” DuPont Teijin Films USA v. United States, 407 F.3d 1211, 1215 (Fed. Cir.

2005) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)). Substantial

evidence has also been described as “something less than the weight of the evidence,

and the possibility of drawing two inconsistent conclusions from the evidence does not

prevent an administrative agency’s finding from being supported by substantial evidence.”

Consolo v. Fed. Mar. Comm’n, 383 U.S. 607, 620 (1966). Fundamentally, though,

“substantial evidence” is best understood as a word formula connoting reasonableness

review. 3 Charles H. Koch, Jr., Administrative Law and Practice § 9.24[1] (3d ed. 2016).

Therefore, when addressing a substantial evidence issue raised by a party, the court

analyzes whether the challenged agency action “was reasonable given the circumstances
Court No. 14-00230                                                                     Page 4

presented by the whole record.” 8A West’s Fed. Forms, National Courts § 3.6 (5th ed.

2016).

                                        III. Discussion

         When Commerce calculates a respondent’s dumping margin, Commerce

compares “the export price or constructed export price and normal value.” 19 U.S.C.

§ 1677b(a). The respondent’s “normal value” is generally based on home market sales,

made in the ordinary course of trade “at a time reasonably corresponding to the time of

the sale used to determine the export price or constructed export price.” 19 U.S.C.

§ 1677b(a)(1)(A). Commerce normally determines the contemporaneous month for price-

to-price    comparisons     using    the   90/60-day      window    method     set   forth   in

19 C.F.R. § 351.414(f):

         Normally, the Secretary will select as the contemporaneous month the first
         of the following months which applies:

            (1) The month during which the particular U.S. sales under
            consideration were made;

            (2) If there are no sales of the foreign like product during this month, the
            most recent of the three months prior to the month of the U.S. sales in
            which there was a sale of the foreign like product.

            (3) If there are no sales of the foreign like product during any of these
            months, the earlier of the two months following the month of the U.S.
            sales in which there was a sale of the foreign like product.

19 C.F.R. § 351.414(f).

         All parties take this regulation at face value and do not discuss its genesis or

purpose. The parties do, however, discuss the purpose of the collapsing regulation, with

all agreeing that Commerce collapses entities to counteract or inhibit a potential for sales
Court No. 14-00230                                                                 Page 5

and production manipulation among the collapsed entities. In the proceeding below

Plaintiffs challenged Commerce’s decision to use the Collapsing Date as a demarcation

line across which no sales comparisons would be made. Plaintiffs argued that pre-

collapsed sales (of Pakfood and, separately, Thai Union) should be compared with post-

collapsed sales (of Pakfood and Thai Union, collectively) so that a pre-collapsed Pakfood

sale might match with a post-collapsed Thai Union sale, or a pre-collapsed Thai Union

sale might potentially match with a post-collapsed Pakfood sale. Commerce responded

to Plaintiffs’ challenge by explaining that failing to treat the pre- and post- collapsed

entities separately for sales comparison purposes would “undermine the rationale behind

the collapsing regulation at 19 C.F.R. 351.401(f), and potentially allow parties to engage

in precisely the type of sales and production shifting and manipulation that the regulation

is designed to prevent.” Decision Mem. at 22.

       Plaintiffs make a straightforward argument that this explanation is unreasonable:

if one accepts that the purpose of the collapsing regulation is to inhibit manipulation of

sales and production among parties, then once parties are collapsed, that should, in

theory, eliminate any potential for sales and production manipulation among those parties.

Plaintiffs, in essence, characterize Commerce’s additional truncation of the windows

comparison period—to tackle an imagined, lingering potential for sales and production

manipulation that has already been cured by the collapsing determination—as mere

surplusage that arbitrarily inflates margins. Defendant and Defendant-Intervenor both

respond that a mid-review collapse of mandatory respondents is an unusual situation,

and that Commerce’s fine tuning of the sales comparison methodology to deal separately
Court No. 14-00230                                                                   Page 6

with the pre- and post-collapsed entities was reasonable.

       There is some logic and persuasiveness to Plaintiffs’ argument. Collapsing is not

a new concept or methodology, so the court has some skepticism that an otherwise

normal affiliation relationship and uncontested collapsing determination is unique or

abnormal. And given the purpose of the collapsing regulation to eliminate the potential for

price and production manipulation, the court does wonder why collapsing Pakfood and

Thai Union does not, in fact, eliminate that potential. Why does it linger after the entities

have been collapsed? If the potential for manipulation does in fact remain, has Commerce

not chosen the correct collapsing date? And what can the parties manipulate after they

have been collapsed? Is it the affiliation relationship itself that Commerce is trying to

influence or discourage? Is Commerce concerned that parties will potentially manipulate

the date of affiliation, engineer their collapsing, to minimize dumping margins? If that is

the concern, wouldn’t the parties have to be collapsed for the entire review period to

eliminate that potential?

       Also, what is Commerce’s practice for the windows comparison period when

Commerce collapses entities for the first time for an entire period of review? Does

Commerce make the same calculation adjustment that it made here—truncating the

normal windows comparison period when the entities are first collapsed (at the start of

the review period)? In other words, does Commerce always isolate the sales comparisons

of the collapsed entity? If not, how does Commerce reconcile the differing approaches?
Court No. 14-00230                                                              Page 7

                                      IV. Conclusion

       In accordance with the foregoing, it is hereby

       ORDERED that this action is remanded to Commerce to reconsider its decision to

truncate the windows comparison period for Plaintiffs; it is further

       ORDERED that Commerce shall file its remand results on or before

December 1, 2016; and it is further

       ORDERED that, if applicable, the parties shall file a proposed scheduling order

with word limits for comments on the remand results no later than seven days after

Commerce files its remand results with the court.



                                                            /s/ Leo M. Gordon
                                                          Judge Leo M. Gordon


Dated: October 4, 2016
       New York, New York
