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A. Hirsh Inc. v. United States

Decided: November 6, 1991; As Amended November 25, 1991.

A. HIRSH, INC., PLAINTIFF-APPELLANT,
v.
THE UNITED STATES, DEFENDANT-APPELLEE, AND PAINT APPLICATORS TRADE ACTION COALITION, DEFENDANT



Appealed from: U.S. Court of International Trade; Judge Restani.

Michel, Circuit Judge, Bennett, Senior Circuit Judge, and Clevenger, Circuit Judge.

Michel

MICHEL, Circuit Judge

A. Hirsh, Inc. ("Hirsh") appeals the order of the Court of International Trade ("trade court") denying its request for attorney fees and costs under the Equal Access to Justice Act ("EAJA" or the "Act"), 28 U.S.C. § 2412(d)(1)(A) (1988), and sanctions under Fed. R. Civ. P. 11 against defendant Paint Applicators Trade Action Coalition ("PATAC"), some of its members, and its counsel. A. Hirsh, Inc. v. United States, 747 F. Supp. 723 (Ct. Int'l Trade 1990). Because the trade court correctly applied the Act's "prevailing party" standard for awarding attorney fees and costs, and because the trade court did not abuse its discretion by not finding sanctionable conduct under Rule 11, we affirm.

BACKGROUND

Hirsh is a major importer of natural bristle paint brushes from the People's Republic of China. In February 1988, Hirsh petitioned the International Trade Commission ("ITC" or "Commission") to review its affirmative antidumping determination in Natural Bristle Paint Brushes from the People's Republic of China, USITC Pub. 1805, Inv. No. 731-TA-244 (Final) (Jan. 1986).

In its final determination, the Commission found that the domestic industry producing natural bristle paint brushes was threatened with material injury due to the "less than fair value" imports of such paint brushes from China, basing its conclusion on a series of factors. Id. at 11-14. Following the Commission's final affirmative determination, the Commerce Department issued an antidumping order placing a duty on Chinese natural bristle paint brushes. 51 Fed. Reg. 5580 (Feb. 14, 1986).

Hirsh, in its petition for review of the final determination, alleged that circumstances had changed, most notably that the threat to domestic industry never materialized and that imports of the subject paint brushes "were brought to a virtual halt, and were replaced by imports from other sources."*fn1 Therefore, Hirsh contended, the Commission should reconsider its determination.

The Commission, in response to Hirsh's petition, published a request for comments on whether to initiate a review based on the grounds stated by Hirsh. 53 Fed. Reg. 9496 (Mar. 23, 1988). After considering the petition and the comments submitted by interested parties, the Commission determined that "the request does not show changed circumstances sufficient to warrant institution" of a review investigation. Dismissal of Request for Institution of a Section 751(b) Review Investigation; Natural Bristle Paint Brushes from the People's Republic of China, 53 Fed. Reg. 18,912 (May 25, 1988).

On February 28, 1989, Hirsh filed another request for review, again on the grounds of changed circumstances.*fn2 The second review petition noted that the first request had been "rejected" by the Commission, but did not specify any deficiency in the reasons given by the Commission for its rejection. The Commission published a request for comments concerning Hirsh's second request for a review investigation. 54 Fed. Reg. 11,822 (Mar. 22, 1989). According to the Commission, four comments were received in support of the request, but none presented any facts or arguments that "had not already been set forth in the request." Gov't. Br. at 7.

After consideration, the Commission determined that "the request does not show changed circumstances sufficient to warrant institution" of a review investigation regarding natural bristle paint brushes from the People's Republic of China, and dismissed Hirsh's petition. Dismissal of Request for Institution of a Section 751(b) Review Investigation; Natural Bristle Paint Brushes from the People's Republic of China, 54 Fed. Reg. 21,491 (May 18, 1989).

Following the Commission's dismissal, Hirsh filed a summons and complaint against the Commission in the trade court. In its complaint, Hirsh alleged that the Commission had failed to adequately explain its rationale for the dismissal, and further contended that the Commission "abused its discretion in dismissing [Hirsh's] petition which established sufficient facts to show a reasonable appearance of changed circumstances that warrant review." Complaint at 2, para. 12. Before the trade court, Hirsh sought a remand to the Commission "for re-consideration and for statement of facts and reasons bearing a rational nexus to its conclusions." Hirsh Brief for Review of Administrative Determination Upon Agency Record at 34. The Commission opposed reconsideration or remand, arguing that "the review request failed as a matter of law to allege changed circumstances, and that a legal conclusion was all that was required in dismissing" Hirsh's petition. Gov't. Br. at 9.

The trade court, however, held that the Commission was required to provide a more detailed explanation for its conclusion that Hirsh's allegations of changed circumstances were insufficient to warrant a review investigation. A. Hirsh, Inc. v. United States, 729 F. Supp. 1360 (Ct. Int'l Trade 1990) (" Hirsh I "). According to the trade court:

in the instant case ITC failed to articulate the reasons for its particular application of law; it merely recited uninformative statutory language. Without an articulation of reasons the court cannot ascertain whether or not ITC's decision was arbitrary, capricious, or otherwise not in accordance with law.

Id. at 1362 (footnote omitted). Therefore, the trade court concluded, the Commission's dismissal was contrary to law and remand was necessary. Id. at 1365. The Commission was ordered by the trade court to "make a reasoned decision and state its reasons, so they may be reviewed if [Hirsh] remains dissatisfied with the resolution or explanation" and to present its views to the court within 25 days. Id. The trade court did not, however, grant Hirsh's alternative request for relief -- that the Commission be required to reconsider its original rejection of the petition for a review investigation.

On February 22, 1990, the Commission submitted to the trade court a more detailed explanation of its conclusion that Hirsh's allegations were insufficient to "warrant" a review investigation. Hirsh disputed the Commission's conclusions and filed a memorandum, requesting that the Commission be directed to institute a review investigation.

The trade court subsequently affirmed the Commission's decision not to institute a review investigation, and dismissed the action. A. Hirsh, Inc. v. United States, 737 F. Supp. 1186 (Ct. Int'l Trade 1990) (" Hirsh II "). The court noted that:

contrary to [Hirsh's] assertion, the court believes ITC did consider [its] allegations as a whole and did not ignore relevant background data, much of which are not supportive of [its] position.

Id. at 1190.

During the pendency of the trade court litigation, a group of American manufacturers of natural bristle paint brushes filed a motion to intervene and an answer to the complaint,*fn3 alleging that they were "interested parties" within the definition of 19 U.S.C. § 1677(9)(A) (1988) and 28 U.S.C. § 2631(k) (1988). According to the motion, the proposed defendant-intervenors were "interested parties (i.e., members of the petitioner [before ITC]) to the proceedings before the International Trade Commission and the Department of Commerce." In addition, the manufacturers argued that they were "entitled to intervene as a matter of right" under the relevant statutes because they "may be adversely affected by the outcome of th[e] action." As a result, they sought to intervene both individually and collectively.

In response to the manufacturers' motion, Hirsh filed a 25-page memorandum, opposing intervention on the grounds, inter alia, that not all the individual companies were members of the original petitioner and that not all are "U.S. manufacturers" of natural bristle paint brushes. Therefore, according to Hirsh, the manufacturers are not "interested parties" as contemplated by the statute and do not have standing.

The manufacturers voluntarily withdrew their motion,*fn4 and on September 8, 1989, filed a second motion for leave to intervene as the Paint Applicators Trade Action Coalition ("PATAC"), an "interested" trade organization. On ...


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