Trade Court Upholds Commerce's Decision Not to Collapse Exporters in AD Case

Judge Timothy Stanceu agreed with the agency's finding that there was insufficient evidence to show a significant potential for manipulation between Prosperity and Yieh Phui. The decision was made despite the fact that members of the same family owned both companies. The result was an 11.04% margin for Prosperity and a de minimis 1.20% margin for the Yieh Phui/Synn entity.

The case was previously before the U.S. Court of Appeals for the Federal Circuit, during which time the appellate court said that when collapsing three or more entities, the relevant criteria must be applied between all entities, even when a previous decision to collapse two entities was not contested. In the investigation, while Commerce assessed Yieh Phui and Synn and Prosperity and Synn, it did not assess the Prosperity and Yieh Phui relationship. The case was remanded.

Commerce returned and said that there was not enough evidence to collapse the two. The agency went through the non-exhaustive list of criteria set out in the regulations, including the level of common ownership, extent to which board members of one firm sit on the board of the other and whether operations are intertwined, to make the determination. Yieh Phui and Prosperity do not share any significant ownership, have no overlap in their largest shareholders and none of either company's board members sit on the other company's board, Commerce said, adding that the business operations are not intertwined in any way.

The petitioners, led by California Steel Industries, took issue with this position, claiming that Prosperity and Yieh Phui had the potential to manipulate price or production, given the roles of various members of the Lin family in charge of both firms. The judge said that no "rule of law required Commerce to consider an extended family such as the Lin family to be a single, unified entity." Commerce also noted that the family is effectively split into two branches and the two halves are competitors.

Stanceu added that the petitioners mischaracterize Commerce's reasoning in its decisions since the agency did not say it could not find a significant potential for manipulation, but rather said that the mere fact that there are family ties between the firms does not itself support the conclusion that they are a single person.

Stanceu also upheld the significant weight Commerce placed on an event that happened outside of the period of investigation. After the period Commerce investigated, but before the investigation's preliminary determination was released, Prosperity divested itself of an ownership interest in Synn. The judge said that while the consideration of an event like this outside the POI was "atypical," Commerce didn't fail to explain its reasons for doing so. The agency said the collapsing criterion look to price or production manipulation that could happen in the future and that the fact that Prosperity divested its Synn interest before the imposition of duties shows that concerns about the potential for future manipulation are "unfounded."

The petitioners claimed that Commerce should have gone back on its decision to collapse Yieh Phui and Synn and instead have collapsed Synn and Prosperity. Stanceu said this stance conflates two separate issues: the claim that Commerce was required to uncollapse the Yieh Phui and Synn entity and collapse Prosperity and Synn. By arguing this, "defendant-intervenors sidestep the issue of whether Synn, following the additional remand order that they seek, could or should be investigated as a separate exporter/producer," the judge said. "Nor do they confront the complications such an uncollapsing, absent a subsequent collapsing of Prosperity and Synn, would entail."

In ruling against this position, Stanceu again said that he found no fault in the significant weight the agency placed on Prosperity's divesting of its interest in Synn. "Even though it was completed after the close of the POI, the divestment had significant implications for any determination on whether Prosperity and Synn should be treated as one entity," the opinion said.

Given this finding, which grants a de minimis rate to the Yieh Phui/Synn entity, the companies were excluded from the AD order. However, Stanceu specifically said that while the court sustains the exclusion of Yieh Phui/Synn from the order, it does not sustain Commerce's statement that the agency has the authority to investigate the companies' relationship and can find that merchandise made by the collapsed entity to be subject to the order where evidence shows that the "circumstances have changed and that the three companies are acting as a collapsed entity."

Stanceu said that by including this statement, "Commerce is attempting, speculatively, to decide an issue or issues that are not before the court in this litigation and, therefore, are not among the issues Commerce was authorized to decide in the remand proceeding that it conducted under the court’s supervision. The court, therefore, does not sustain the sentence in question."

(Prosperity Tieh Enterprise Co. v. United States, Slip Op. 23-95, CIT Consol. # 16-00138, dated 06/23/23; Judge: Timothy Stanceu; Attorneys: Donald Cameron of Morris Manning for plaintiff Prosperity Tieh Enterprise; Kelly Slater of Appleton Luff for plaintiff Yieh Phui; Elizabeth Speck for defendant U.S. government; Daniel Schneiderman of King & Spalding for defendant-intervenor Cleveland-Cliffs; Alan Price of Wiley Rein for defendant-intervenor Nucor Corp.; Roger Schagrin of Schagrin Associates for defendant-intervenors Steel Dynamics and California Steel Industries; Thomas Beline of Cassidy Levy for defendant-intervenor U.S. Steel Corp.)