                                      Slip Op. 13-137

                UNITED STATES COURT OF INTERNATIONAL TRADE


  HUBSCHER RIBBON CORP., LTD.,

                       Plaintiff,
                                                        Before: Leo M. Gordon, Judge
         v.
                                                        Court No. 13-00004
  UNITED STATES,

                      Defendant.


                                         OPINION

                                                                  Dated: November 8, 2013

[Plaintiff’s motion for judgment on the agency record denied; final results of administrative
review sustained.]

      John J. Kenkel, Gregory S. Menegaz, and J. Kevin Horgan, DeKieffer & Horgan,
of Washington, DC, for Plaintiff Hubscher Ribbon Corp., Ltd.

        Ryan M. Majerus, Trial Attorney, Commercial Litigation Branch, Civil Division,
U.S. Department of Justice, of Washington, DC, for Defendant United States. With him on the
briefs were Stuart F. Delery, Acting Assistant Attorney General, Jeanne E. Davidson, Director,
Patricia M. McCarthy, Assistant Director. Of counsel on the briefs was George Kivork,
U.S. Department of Commerce, Office of the Chief Counsel for Import Administration, of
Washington, DC.

       Gregory C. Dorris, Pepper Hamilton, LLP, of Washington, DC, for Defendant-
Intervenor Berwick Offray, LLC.

       Gordon, Judge: This action involves an administrative review conducted by the

United States Department of Commerce (“Commerce”) of the antidumping duty order

covering narrow woven ribbons with woven selvedge from Taiwan. See Narrow Woven

Ribbons with Woven Selvedge from Taiwan, 77 Fed. Reg. 72,825 (Dep’t of Commerce

Dec. 6, 2012) (final results admin. review) (“Final Results”); see also Issues and Decision
Court No. 13-00004                                                                 Page 2

Memorandum for the Final Results of the Antidumping Duty Administrative Review on

Narrow Woven Ribbons with Woven Selvedge from Taiwan, A-583-844 (Dep’t of

Commerce       Dec.     6,    2012)     (“Decision     Memorandum”),       available     at

http://enforcement.trade.gov/frn/summary/taiwan/2012-29542-1.pdf (last visited Nov. 4,

2013). Before the court is Plaintiff Hubscher Ribbon Corp., Ltd.’s (“Hubscher”) motion for

judgment on the agency record challenging Commerce’s assignment of a total adverse

facts available (“AFA”) rate of 137.20%. See Pl.’s Rule 56.2 Mot. for J. upon the Agency

R. at 1-2, ECF No. 29 (“Pl.’s Br.”).     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)

(2006),1 and 28 U.S.C. § 1581(c) (2006). For the reasons set forth below, the court denies

the motion and sustains Commerce’s determination.

                                 I. Standard of Review

       The court sustains Commerce’s determinations, findings, or conclusions in

administrative reviews of antidumping duty orders 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




1
 Further citations to the Tariff Act of 1930, as amended, are to the relevant provisions of
Title 19 of the U.S. Code, 2006 edition, and all applicable supplements.
Court No. 13-00004                                                                  Page 3

conclusion.”   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. 2013).

Therefore, when addressing a substantial evidence issue, the court analyzes whether the

challenged agency action “was reasonable given the circumstances presented by the

whole record.” Edward D. Re, Bernard J. Babb, and Susan M. Koplin, 8 West's Fed.

Forms, National Courts § 13342 (2d ed. 2013).

                                         II. Background

       During the less than fair value (“LTFV”) investigation, Commerce assigned

dumping margins of 0.00%, 0.00%, and 4.37% to three individually investigated

respondents. Narrow Woven Ribbons with Woven Selvedge from Taiwan, 75 Fed. Reg.

41,804, 41,804-07 (Dep’t of Commerce July 19, 2010) (final determ.). Hubscher was not

individually investigated and was assigned the 4.37% “all others” rate. See id. In the first

administrative review Hubscher was the only mandatory respondent. Final Results,

77 Fed. Reg. at 72,825. Hubscher cooperated initially. In response to Commerce’s

quantity and value questionnaire, Hubscher disclosed that it imported approximately

12,700 100-yard spools of in-scope Taiwanese ribbon having a total value of $135,000.

Letter from Hubschercorp to Dep’t of Commerce: Quantity and Value Data (Jan. 17,
Court No. 13-00004                                                                    Page 4

2012), PD 26/CD 1 Att. 1 at 1-2 (“Hubscher Q&V Data”).2 Hubscher did not specify the

model of these ribbons or provide any other information as to what materials, shapes, or

characteristics they featured. Id. Soon thereafter Hubscher notified Commerce that it no

longer intended to cooperate in the administrative review because it lacked “the

person[n]el [and] financial resources.” Correspondence with Hubschercorp regarding the

2010-2011 Antidumping Duty Administrative Review of Narrow Woven Ribbons with

Woven Selvedge from Taiwan (Dep’t of Commerce Feb. 27, 2012), PD 39 at 4-5.

       Commerce determined that Hubscher’s refusal to cooperate justified application of

total AFA. Narrow Woven Ribbons with Woven Selvedge from Taiwan, 77 Fed. Reg.

32,938, 32,940 (Dep’t of Commerce Dec. 6, 2012) (prelim. results admin. review).

Consistent with its “practice . . . to select the highest rate on the record of the proceeding

and to ensure that the margin is sufficiently adverse,” Commerce preliminarily assigned

Hubscher the highest rate alleged in the petition, 137.20%. Id. Commerce then sought

to corroborate its selection using “information from independent sources reasonably at its

disposal.” Id.; see 19 U.S.C. § 1677e(c). Commerce placed on the record certain pages

from the investigation margin programs showing that two of the individually investigated,

cooperative respondents “had multiple model-specific margins higher than 137.20

percent.” Placement of Proprietary Model-Specific Margins from the Investigation on the

Record and Corroboration of AFA Rate (Dep’t of Commerce May 29, 2010), PD 41/CD 2

(“Model Specific Margin Data”).




2
  “PD” refers to a document contained in the public administrative record. “CD” refers to
a document contained in the confidential record.
Court No. 13-00004                                                                  Page 5

       Commerce upheld its selection of the petition rate in the Final Results over

Hubscher’s objections. Final Results, 77 Fed. Reg. at 72,825. Commerce reiterated its

confidence in the calculations underlying the petition rate because “the export price was

based on a confidential price quote from a ribbon manufacturer and the normal value was

built based mostly on publicly-available rates and the petitioner’s own experience.”

Decision Memorandum at 5. Commerce also explained that “there is a link between the

petition rate and [Hubscher’s] own commercial activity because [Hubscher] imported

subject merchandise into the United States in similar quantities” to the quantity of model-

specific entries near or above the petition rate, “and at equivalent spool sizes” to one

particular model-specific entry above the petition rate. Id. at 5-6.

       Hubscher challenges the Final Results, arguing that the highest petition rate,

137.20%, has been discredited by Commerce’s calculated rates assigned in the

investigation, 0.00%, 0.00%, and 4.37%. Hubscher further argues that Commerce did

not reasonably corroborate the petition rate.

                                      III. Discussion

       In a total AFA scenario like the one presented here, Commerce typically cannot

calculate an antidumping rate for an uncooperative respondent because the information

required for such a calculation (the respondent's sales and cost information for the subject

merchandise during the period of review) has not been provided.           As a substitute,

Commerce relies on various “secondary” sources of information (the petition, the final

determination from the investigation, prior administrative reviews, or any other information

placed on the record), 19 U.S.C. §§ 1677e(b), (c), to select a proxy to serve as a
Court No. 13-00004                                                                 Page 6

“reasonably accurate estimate of the respondent's actual rate, albeit with some built-in

increase intended as a deterrent to noncompliance.” F.LLI de Cecco Di Filippo Fara S.

Martino S.p.A. v. United States, 216 F.3d 1027, 1032 (Fed. Cir. 2000) (“de Cecco”). When

selecting an appropriate total AFA proxy, “Commerce must balance the statutory

objectives of finding an accurate dumping margin and inducing compliance.” Timken Co.

v. United States, 354 F.3d 1334, 1345 (Fed. Cir. 2004). The proxy’s purpose “is to provide

respondents with an incentive to cooperate, not to impose punitive, aberrational, or

uncorroborated margins.” de Cecco, 216 F.3d at 1032. Although a higher AFA rate

creates a stronger incentive to cooperate, “Commerce may not select unreasonably high

rates having no relationship to the respondent's actual dumping margin.” Gallant Ocean

(Thailand) Co., v. United States, 602 F.3d 1319, 1323 (Fed. Cir. 2010) (citing de Cecco,

216 F.3d at 1032).     “Commerce must select secondary information that has some

grounding in commercial reality.” Id. at 1323-24.

      As de Cecco explained, these requirements are logical outgrowths of the statute’s

corroboration requirement, 19 U.S.C. § 1677e(c), which mandates that Commerce, to the

extent practicable, corroborate secondary information. See de Cecco, 216 F.3d at 1032.

In practice “corroboration” involves confirming that secondary information has “probative

value,” 19 C.F.R. § 351.308(d) (2013), by examining its “reliability and relevance.” Mittal

Steel Galati S.A. v. United States, 31 CIT 730, 734, 491 F. Supp. 2d 1273, 1278 (2007)

(citing Ball Bearings and Parts Thereof from France, Germany, Italy, Japan, Singapore,

and the United Kingdom, 70 Fed. Reg. 54,711, 54,712-13 (Sept. 16, 2005) (final results

admin. reviews)).    More simply, to corroborate the selection of a total AFA rate,
Court No. 13-00004                                                                 Page 7

Commerce must (to the extent practicable) “demonstrate that the rate is reliable and

relevant to the particular respondent” in light of the whole record before it. Yantai Xinke

Steel Structure Co. v. United States, 36 CIT ___, ___, Slip Op. 12-95 at 27 (July 18,

2012); PSC VSMPO-AVISMA Corp. v. United States, 35 CIT ___, ___, 755 F. Supp. 2d

1330, 1336-37 (2011) (citing Gallant Ocean, 602 F.3d at 1323-24); de Cecco, 216 F.3d

at 1032 (“Obviously a higher adverse margin creates a stronger deterrent, but 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.”).

       At first glance, Commerce’s selection of a 137.20% petition rate as total AFA does

seem unreasonable when measured against the actual margins Commerce calculated

for the individually investigated, cooperative respondents: 0.00%, 0.00%, and 4.37%.

After all, in Gallant Ocean the Federal Circuit held that Commerce’s assignment of a

57.64% AFA petition rate was unreasonable when measured against actual calculated

margins between 5.91% and 6.82% in the investigation, and 2.58% and 10.75% during

the first administrative review.   Gallant Ocean, 602 F.3d at 1323-24.        On remand

Commerce ultimately settled on a total AFA rate of 14.34%. Gallant Ocean (Thailand)

Co. v. United States, Court No. 1:07-cv-00360, Final Results of Redetermination Pursuant

to Court Remand at 1, 17, ECF No. 56 (Oct. 20, 2010).

       Hubscher seeks a similar outcome here, focusing on the four mentioned data

points: 0.00%, 0.00%, 4.37%, and 137.20%. If the court’s analysis were limited to these
Court No. 13-00004                                                                      Page 8

four data points, one could question whether the AFA rate represents a reasonable proxy

for Hubscher’s actual rate plus some built-in increase intended to deter non-compliance.

The court’s analysis, however, is not so limited because Commerce’s corroboration went

beyond those four data points. Commerce examined model specific margin data from

the cooperative respondents in the investigation and compared it to Hubscher’s quantity

and value data (submitted before Hubscher ceased cooperating).

      More specifically, as Commerce explained in its corroboration memo:

      As an initial matter, we disagree with Hubschercorp that we have relied on
      only “a few sales” to corroborate the petition rate. At the time of the
      preliminary results, as we stated in the course of our corroboration analysis,
      we identified “multiple model-specific margins higher than 137.20 percent”
      calculated for [ . . . ] in the LTFV investigation. Specifically, the output pages
      placed on the record at that time reflect the automatic SAS output from the
      LTFV programs, and consist of the [ . . . ] highest antidumping duty margins
      calculated for individual models . . . . Using these output pages on the
      record of the review, we identified [ . . . ] model-specific margins,
      corresponding to [ . . . ] spools of merchandise, with margins above the
      petition rate, and [ . . . ] additional models corresponding to [ . . . ] spools of
      merchandise in the range of the petition rate. . . . Given that a substantial
      number of actual U.S. sales transactions were dumped at the same rate as,
      or at an even higher level than, the petition margin, we find that the petition
      rate is neither aberrational nor divorced from commercial reality, but rather
      is corroborated with the limited evidence available on the record.

      ....

      [Furthermore], we find that there is a plausible link between the
      merchandise used in our corroboration analysis and Hubschercorp’s own
      commercial reality. Specifically, Hubschercorp reported in its Q&V
      response that it exported to the United States spools of subject
      merchandise with a spool capacity of [ . . . ] yards during the POR. . . .
      Among the model-specific margins used to corroborate the highest petition
      rate in the Preliminary Results, the Department calculated a dumping
      margin of [ . . . ] percent for a model of subject merchandise sold in [ . . . ]-
      yard spools. . . . It is reasonable to assume that size of the spool is a
      material factor in determining the price of narrow woven ribbon. Thus,
      because a model of similarly-sized merchandise was dumped at a rate
Court No. 13-00004                                                                    Page 9

          exceeding the petition rate, it is plausible that Hubschercorp also sold
          ribbons during the POR at a level in the range of the petition rate of 137.20
          percent.

Confidential Corroboration Memorandum (Dep’t of Commerce Nov. 29, 2012), CD 3 at 2-

3 (citing Model Specific Margin Data at Att. I; Hubscher Q&V Data at Att. 1)

(“Corroboration Memorandum”) (confidential information omitted); see also Decision

Memorandum at 5-6.

          This appears to be a reasonable effort to corroborate the petition rate against

(1) the model-specific margin information from the investigation and (2) the only available

record information about Hubscher—its quantity and value data. Commerce basically

infers from Hubscher’s spool size that Hubscher deals in relatively higher margin

merchandise, and hence, the petition rate is a reasonable choice for Hubscher’s total AFA

rate. Hubscher argues that Commerce’s corroboration is unreasonable. Specifically,

Hubscher contends there are a “plethora of factors” that determine ribbon prices other

than “spool size” and “spool quantity.” Pl.’s Br. at 18 (noting that the scope of the

antidumping duty order lists numerous attributes of covered ribbons). According to

Hubscher the U.S. sales price of a ribbon “is based, in large part, on the sophistication of

the ribbon and, hence, its cost to produce,” meaning “these factors, taken together, far

outweigh the importance of the number of spools or the length of ribbon on an individual

spool.”     Id.   Of course, had Hubscher cooperated and provided all the requested

information, its final calculated margin would have been based on a “plethora of factors.”

Hubscher, however, did not cooperate, and the only information Commerce had to tie the

petition rate to Hubscher was Hubscher’s quantity and value data, which included spool
Court No. 13-00004                                                               Page 10

size and quantity (and not much else). Hubscher Q&V Data Att. 1 at 1-2. Hubscher’s

argument that Commerce’s corroboration impermissibly focuses on those metrics rather

than on the full “plethora of factors” for ribbon pricing is unpersuasive when measured

against Hubscher’s own lack of cooperation and failure to provide that very data. Instead,

Commerce analyzed the data reasonably at its disposal, which included Hubscher’s spool

size and quantity.   Although Hubscher contends that these metrics are “essentially

meaningless,” Pl.’s Br. at 18-20, they are not. See Issues and Decision Memorandum for

the Antidumping Duty Investigation of Narrow Woven Ribbon with Woven Selvedge from

Taiwan,    A-583-844    (Dep’t   of   Commerce       July   19,   2010),   available    at

http://enforcement.trade.gov/frn/summary/taiwan/2010-17538-1.pdf (last visited Nov. 4,

2013). (“[W]e solicited data from the respondents in this case on a per-spool basis

because this is the unit of measure used to set their prices.”); Narrow Woven Ribbons

with Woven Selvedge from Taiwan, 75 Fed. Reg. 7236, 7240 (Dep’t of Commerce

Feb. 18, 2010) (prelim. determ.) (listing “spool capacity” as the fifth most important

physical characteristic among sixteen).

      Commerce identified “dozens” of model-specific margins from the investigation

that were at or above the petition rate, “covering . . . thousands of spools of ribbons.”

Decision Memorandum at 5.        Commerce then used available record information to

present a “plausible” link between Hubscher’s merchandise and this high-margin model-

specific data.   Corroboration Memorandum at 3.       Although Hubscher contends that

Commerce “cherry picked” the data, Pl.’s Br. at 21, Hubscher fails to demonstrate the

unreasonableness of Commerce’s inference that Hubscher dealt in high margin
Court No. 13-00004                                                              Page 11

merchandise. Hubscher does not explain why the only permissible inference to be drawn

from the administrative record is that it never dealt in the higher-margin model-specific

ribbon, or that Hubscher overwhelmingly dealt in lower-margin model-specific ribbon.

See id. at 18-23. When Hubscher advanced its “cherry picking” argument, the court

anticipated a showing from Hubscher that the high margin, model-specific transaction

quantities or physical characteristics might somehow distinguish them as one-off

aberrations when compared to the lower-margin model-specific data, see, e.g., Dongguan

Sunrise Furniture Co. v. United States, 37 CIT ___, ___, 931 F. Supp. 2d 1346, 1356

(2013) (holding unreasonable “Commerce's reliance on minuscule percentages of sales

to determine the partial AFA rates”), but Hubscher chose not to provide that comparison.

All Hubscher offers is the general argument that the higher-margin model-specific data

must not have been significant given the low resulting margins in the investigation. This

is not enough. In short, Hubscher has not enabled the court to declare unreasonable

Commerce’s inference that Hubscher dealt in higher margin merchandise. At best,

Hubscher has only established that there may be other possible inferences from the

administrative record about Hubscher’s actual dumping margin. Commerce, by contrast,

has offered a reasonable path for the court to conclude that the 137.20% total AFA rate

may be a reasonably accurate estimate of Hubscher’s actual rate, albeit with some built-

in increase intended as a deterrent to noncompliance.
Court No. 13-00004                                                         Page 12

                                    IV. Conclusion

      For the foregoing reasons, Hubscher’s motion for judgment on the agency record

is denied. Judgment will be entered accordingly.




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

Dated: November 8, 2013
       New York, New York
