Appeals from the United States Court of International Trade in consolidated case Nos. 08-CV-0324, 08-CV-0329, and 08-CV-0370, Judge Timothy C. Stanceu.
The opinion of the court was delivered by: Moore, Circuit Judge.
Before DYK, MOORE, and O'MALLEY, Circuit Judges.
Appellants JTEKT Corporation and Koyo Corporation of U.S.A. (JTEKT, collectively), and NTN Corporation, NTN Bearing Corporation of America, American NTN Bearing Manufacturing Corporation, NTN-Driveshaft, Inc., NTN Bower Corporation, and NTN-BCA Corporation (NTN, collectively) appeal the final judgment in JTEKT Corp. v. United States, 717 F. Supp. 2d 1322 (Ct. Int'l Trade 2010) sustaining the final results of the United States Department of Commerce's (Commerce) eighteenth administrative review of ball bearings from Japan. See Ball Bearings and Parts Thereof From France, Germany, Italy, Japan, and the United Kingdom, 73 Fed. Reg. 52,823 (Dep't of Commerce Sept. 11, 2008). Because Commerce failed to adequately explain why it continues to use zeroing in Administrative Reviews while discontinuing the practice in investigations, we vacate and remand. In this remand, Commerce need not reconsider its model match methodology because we explicitly affirmed its use of the sum of the deviations approach in SKF USA, Inc. v. United States, 537 F.3d 1373, 1380 (Fed. Cir. 2008). Further, we find no error in the method that Commerce used to break ties as a part of its model match method.
In order to determine an antidumping margin, Commerce must compare sales in the exporter's home market (foreign like product sales) with sales in the United States. 19 U.S.C. § 1677(16). Ideally, Commerce would match sales of identical merchandise. Because this is not always possible, the statute allows Commerce to consider sales of similar merchandise. Id. § 1677(16)(B), (C).
The merchandise in this case is ball bearings. The dispute centers on the method Commerce used to determine what constitutes similar merchandise. In its first fourteen reviews of ball bearings, Commerce used the family model match methodology. Under this methodology, Commerce considered sales of products in the exporter's home market that had the same physical characteristics as the United States sale. Commerce considered eight characteristics: load direction, bearing design, number of rows of rolling elements, precision rating, inner diameter, outer diameter, width, and load rating. Any bearing that shared these eight characteristics with the merchandise sold in the United States was considered part of the family of merchandise. Commerce then averaged the prices of the family of bearings for its dumping calculations.
In the fifteenth administrative review, Commerce changed to a new method for determining similar merchandise called the sum of the deviations method. This method allows Commerce to compare the United States sale to the sales of a single product in the exporter's home market rather than an average of sales of a family of merchandise. The method uses the same eight characteristics, but weighs them differently. The matching sale must be identical on four of the eight characteristics: load direction, bearing design type, number of rows of rolling elements, and precision rating. For the remaining characteristics, Commerce will consider products that differ from the subject merchandise. For each characteristic, Commerce determines a percentage difference between the product sold in the United States and the product sold in the comparison market. The sum total of these percentage differences must be less than 40%. Additionally, the cost of manufacturing the good sold in the United States must be within 20% of the cost of manufacturing the home market good. This difference in manufacturing cost is called a DIFMER. If all of these criteria are met, the United States sale is a match with the foreign sale- and DIFMER is accounted for by adjusting the price of the foreign sold good.
Under this method, it is possible for there to be more than one matching product, thus, Commerce breaks ties between matching products to determine the single most similar sale. To break these ties, Commerce compares the level of trade and contemporaneity of the sales. If the tie remains, then Commerce selects the sale with the lowest DIFMER.
Appellants argued to the Court of International Trade that Commerce's use of the sum of the deviations approach is not supported by substantial evidence, that Commerce should have included an additional characteristic in its analysis, and that Commerce's tie breaking method is improper. The Court of International Trade agreed with Commerce on all issues. It held that our opinions in Koyo Seiko Co. v. United States, 551 F.3d 1286, 1290 (Fed. Cir. 2009) (Koyo III) and SKF USA, Inc. v. United States, 537 F.3d 1373, 1379 (Fed. Cir. 2008) (SKF II) expressly decided that Commerce is free to use the sum of the deviations methodology. JTEKT, 717 F. Supp. 2d at 1329-30. Further, the Court of International Trade determined that it was reasonable for Commerce to refuse to add a ninth characteristic to its analysis because that characteristic, the presence of lubricant, was adequately accounted for in the DIFMER. Id. at 1332-33. Finally, the Court of International Trade determined that Commerce has considerable discretion in breaking ties between similar merchandise and the use of level of trade and contemporaneity over DIFMER is reasonable. Id. at 1339-40.
We review the Court of International Trade's determinations de novo, stepping into its shoes and applying the same standard of review. SKF II, 537 F.3d at 1377. We uphold Commerce's determination unless it is "unsupported by substantial evidence on the record, or otherwise not in accordance with law." NSK Ltd v. United States, 510 F.3d 1375, 1377 (Fed. Cir. 2007).
I. Model Match Methodology
NTN broadly argues that the sum of the deviations methodology is not supported by substantial evidence. It argues that the family methodology, used in the first fourteen reviews, provides a more accurate result because it relies on exact matches between United States and foreign sales. NTN contends that Commerce has failed to show evidence that the sum of the deviations approach is more accurate than the family methodology. It argues that there is no support for Commerce's statement that the sum of the deviations approach is "more accurate in that it selects a single most-similar model and results in more price-to-price comparisons." J.A. 1066. NTN notes that the only reason there are more price-to-price comparisons is because the sum of the deviations approach loosens the standard for a "match" by allowing certain characteristics to differ between the merchandise. In sum, NTN argues that because the sum of the deviations approach allows for differences between the matched products, it is necessarily less accurate than the family matching approach and that we should therefore preclude its application. NTN argues that this argument is distinct from the arguments made in SKF II and Koyo III because, in those cases, no party argued that Commerce failed to support its use of the sum of the deviations approach with substantial evidence.
We agree with the government that SKF II forecloses this argument. In SKF II we stated that "we have specifically affirmed changes to model-match methodologies by Commerce where reasonable." 537 F.3d at 1380. In SKF II we considered the exact issue in this case, whether Commerce erred by switching from a family model match to a sum of the deviations approach. We credited Commerce's reasoning for making the change-that superior technology allowed it to perform the more complicated sum of the deviations approach and that by using the sum of the deviations approach, it was able to ...