2014 in review: scope and procedural matters before the Court of International Trade.

Author:Grimson, Jeffrey S.
Position:P. 132-159
  1. Meridian Products, LLC v. United States

    In 2014, the court issued two opinions in the continuing saga of Meridian Products, LLC v. United States, an appeal of Commerce's 2012 scope ruling finding that plaintiff's imported refrigerator/freezer "trim kits" were within the scope of the antidumping and countervailing duty orders on imports of certain aluminum extrusions from China. (171) In the orders, Commerce broadly describes the subject merchandise in relevant part as "[a]luminum extrusions which are shapes and forms, produced by an extrusion process, made from aluminum alloys." (172) The orders, however, contain an exclusion for products that would otherwise be considered "finished goods" or "finished goods kits." Specifically, the exclusion is as follows:

    The scope also excludes certain finished merchandise containing aluminum extrusions as parts that are fully and permanently assembled and completed at the time of entry, such as finished windows with glass, doors with glass or vinyl, picture frames with glass pane and backing material, and solar panels. The scope also excludes finished goods containing aluminum extrusions that are entered unassembled in a "finished goods kit." A finished goods kit is understood to mean a packaged combination of parts that contains, at the time of importation, all of the necessary parts to fully assemble a final finished good and requires no further processing or fabrication, such as cutting or punching and is assembled 'as is' into a finished product. (173) Plaintiff describes its trim kits as "aluminum trim kit packages which are utilized as an aesthetic frame around the perimeter of (though not attached to) a major home appliance" that are imported into the United States unassembled but containing all of the components necessary to fully assemble them. (174) Plaintiff requested a scope ruling from Commerce, arguing that its trim kits as described above qualified for the "finished goods kit" exception contained in the scope. (175) Commerce disagreed, finding that "the Trim Kits were unambiguously included in the scope of the Orders as subject aluminum extrusions identified by reference to their end use." (176) Specifically, "Commerce concluded that the Trim Kits are like the geodesic dome frame kits in a previous ruling and met the initial requirements for the finished good kits exclusion, but it also found that the Trim Kits consisted entirely of aluminum extrusions, fasteners, and extraneous materials and accordingly did not qualify for the exclusion." (177)

    Plaintiff filed suit contesting Commerce's scope ruling in early 2013, alleging initially that remand was necessary because Commerce failed to take into account certain scope rulings that modified the test through which Commerce determined whether merchandise qualified for the finished good kit exception, despite the fact that the rulings announcing those tests were issued prior to Meridian's scope ruling request. (178) In Meridian I, the court agreed, and remanded to the agency with instructions to "reconsider the Trim Kits under the finished goods scope exclusion" of the order, as modified by Commerce's new stated analytical framework announced in recent scope rulings interpreting the finished goods and finished goods kit exceptions. (179)

    On remand, Commerce synthesized the analytical framework used in prior scope rulings on the issue and determined that its finished goods kit exception applies to merchandise that is "designed to display or incorporate customizable materials or work with removable/replaceable components," if such merchandise "contains, at the time of importation, all of the parts necessary to assemble a final finished good for such purposes." (180) In light of this new test, Commerce continued to find that the finished goods kits exception did not apply here because the trim kits were not analogous to other merchandise previously excluded pursuant to this exception. (181) This was so, Commerce found, because plaintiff's trim kits did not "display or incorporate customizable materials" nor "work with removable/replaceable components." (182)

    In Meridian II, the court found that while Commerce's articulation of the synthesis of its new analytical framework was acceptable in principle, the agency failed to support certain parts of its application to plaintiff's trim kits with substantial evidence. (183) Specifically, the court found that Commerce provided "substantial evidence to support its determination that Trim Kits do not 'incorporate' customizable material." (184) The court also found, however, that Commerce failed "to point to substantial evidence to support the finding that Trim Kits are not intended to 'display' an appliance or 'work with removable or replaceable components.'" (185) This was so, the court explained, because "Commerce provid[ed] no analysis, outside of conclusory statements, to support its conclusion that an 'aesthetic frame' designed to 'enhance the appearance of the cabinetry surrounding the appliance in the consumer's home and lend[] a customized, "built-in" look' is not intended to 'display' a 'customizable' freezer or refrigerator unit." (186) Additionally, the court found that "Commerce also [failed] to expressly conclude or analyze in its remand if, like the products [in a prior ruling] the Trim Kits are designed to 'work with removable/replaceable components' that can change with user needs." (187) Thus, the court found, "Commerce's analysis falls short of that minimally cleared path that would enable the reader to understand the logic of the remand." (188) Accordingly, the court ordered a second remand with instructions to Commerce to "support its remand decision with findings of fact grounded in substantial evidence of record." (189)

    Notably, in ordering a second remand, the court clearly stated that it agreed with Commerce's assessment that the first remand instructions "did not 'direct or require Commerce [to] find that Meridian's trim kits are excluded.'" (190) Instead, the court explained, Commerce's first remand ruling "evinces inconsistency" with the prior rulings from which its finished goods kit analytical framework was derived. (191) Accordingly, instead of explicitly directing a result, the court provided Commerce with the opportunity to "sufficiently explain why the Trim Kits do not meet the 'additional criteria identified'" in those prior scope rulings. (192)

    In its second remand redetermination, Commerce continued to find that Meridian's trim kits were covered by the scope of the orders. (193) Commerce determined as a threshold matter that the finished goods kit exception did not apply to the trim kits because "they consisted entirely of aluminum extrusions, fasteners, and extraneous materials." (194) Essentially, according to Commerce's second remand determination, whether or not the trim kits consisted entirely of aluminum extrusions was a preliminary step in the analysis and it was, therefore, unnecessary in the first instance to determine whether or not the trim kits "displayed" or "worked" with an appliance. (195) Commerce further determined, however, that the trim kits did not "display" or "work with" an appliance because the trim kits "'merely frame the space into which the refrigerator is placed' and were therefore unlike the goods in [prior rulings], because in those rulings the subject goods were designed to 'display' or 'work with' a missing non-essential interchangeable component by the functional means of holding the component." (196)

    In Meridian III, the court upheld Commerce's second remand redetermination. (197) The court first found that plaintiff had failed to exhaust administrative remedies with respect to Commerce's "aluminum content" threshold analysis because it had failed to adequately dispute this issue before the agency during the second remand proceedings, or incorporate the arguments that it had made before the agency in the prior remand proceedings. (198) Accordingly, the court found that it was "left unable to further address the plaintiff's critique of' Commerce's interpretation of the word "display" because "'display' is only applicable in the final step of Commerce's analysis and the plaintiff did not exhaust its administrative remedies on the finding of whether the trim kits consisted of 'more than' aluminum extrusions, fasteners, and extraneous materials." (199) Thus, the court sustained Commerce's second remand redetermination without reaching the merits of the reasons for remand in Meridian II.

    The saga of the Meridian Products case does not, however, end with Meridian III. Plaintiff subsequently filed a motion for reconsideration with respect to the court's exhaustion ruling in Meridian III shortly after the opinion was handed down. (200) In Meridian TV, the court granted plaintiffs motion because "the need to prevent manifest injustice" favored ruling for Meridian. (201) Reaching the merits, the court found that a third remand was appropriate because Commerce's threshold "aluminum content" analysis was contrary to the orders' terms and thus unreasonable. (202) Commerce has yet to issue its third remand redetermination in response to Meridian TV, and the case thus continues to "ricochet" between the court and Commerce as a result of Commerce's recalcitrance and the Nippon quagmire.

  2. Rubbermaid Commercial Products LLC v. United States

    In the underlying administrative proceedings giving rise to Rubbermaid Commercial Products LLC v. United States, plaintiffs contested Commerce's determination that thirteen of its products, including "a variety of mop frames and handles, a squeegee blade replacement" and mopping kits were within the scope of the orders in the aluminum extrusions case because they did not fall under either the "finished merchandise" or "finished goods kit" exceptions. (203) Rubbermaid contended that its mopping kits fell under the "finished goods kit" exclusion, while all of the other...

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