CAFC Judges Say High Bar to Overcome CIT Decision That Argument Inadequately Raised

Judge Todd Hughes at a June 4 oral argument said this decision has "got to be at the height of discretion for the trial court to determine whether you submitted a sufficient argument to entertain or not." He added that the coalition has a "mountain to overcome on abuse of discretion." Judge Raymond Clevenger echoed this sentiment.

In response, Zachary Walker of Picard Kentz, counsel for the petitioner, said that he thinks he can overcome this burden. The Federal Circuit's prior cases on waiver of arguments are "readily distinguishable," since they concern when arguments are made in footnotes or raised for the first time in reply briefs. Here, Walker said he presented a claim "based on the plain text in the statute and applied the record evidence to that requirement of the statute" -- a claim both the DOJ and exporters, led by Z.A. Sea Foods (ZASF), responded to.

That argument was that, by the terms of the statute, an exporter's sales must actually be for consumption in a third country market if Commerce is to use those sales for determining normal value. Court of International Trade Judge Gary Katzmann said the coalition failed to flesh out this claim in a case on an AD review on frozen warmwater shrimp from India since it merely recited the statute and didn't cite case or Commerce practice interpreting the words "for consumption" (see 2212070036).

Hughes then turned to the question of whether there was sufficient evidence to show that ZASF's third-country sales made to Vietnam were actually for consumption in that country. The judge asked whether it's the "big problem in this case" that there's no showing that those sales weren't made for consumption in Vietnam, "even though there are maybe inferences that can be drawn," since "there's no actual evidence that these people only sent stuff to the United States or didn't do any processing before they sent it to the United States."

In the review, Commerce initially said that ZASF's goods weren't for consumption in Vietnam since one of its Vietnamese customers, the Minh Phu Group, was transshipping the Indian goods and sending them to the U.S. The agency cited an Enforce and Protect Act investigation against the Minh Phu Group in defense of this finding, though both Commerce's conclusion, and the underlying EAPA decision, were reversed following lawsuits at CIT (see 2207190032).

Walker said during oral argument that there's a presumption that third-market sales are representative of a respondent's sales, though Commerce is allowed to find differently if there's a "reasonable basis to do so." He claimed that there's "two baskets" of evidence providing Commerce with that basis: the EAPA case establishing the commingling of Vietnamese and Indian shrimp for sale to the U.S. and actual evidence of commingling.

Hughes then asked MacKensie Sugama of Trade Pacific, counsel for ZASF, why that evidence is insufficient under Commerce's deferential standard for the agency to reject the third country sales. Sugama replied that ZASF isn't even mentioned in the EAPA determination and that the evasion finding is "speculation," since it just relies on the likelihood that transshipping is occurring. What's more is that the EAPA decision itself was reversed, she said.

Walker said during rebuttal that the EAPA decision wasn't the only evidence Commerce relied on, noting that the initial decision not to use ZASF's Vietnamese sales was made six months before the EAPA determination was released.

Huges additionally questioned Walker about why the government didn't appear in the case, to which the coalition's attorney said he didn't know, despite the U.S.'s "rigorous" defense of its initial decision at CIT. The judge said he understands why the U.S. doesn't appear when DOJ is alongside an appellant, since it has to get permission from the Solicitor General to appear, but "when they're the appellee, it seems to me odd that they're not here."