[00:00:00] Speaker 05:
Four arguments today, and the first one is number 151489, paper fabric, August Koehler versus US.

[00:00:12] Speaker 05:
Mr. Wood.

[00:00:19] Speaker 02:
May it please the court, I'm John Wood on behalf of the appellant for SE.

[00:00:23] Speaker 02:
I'd like to save three minutes of my time for rebuttal.

[00:00:27] Speaker 02:
In this case, Commerce imposed a 75.36% total AFA rate.

[00:00:33] Speaker 02:
That's more than 11 times the highest rate ever calculated for coal.

[00:00:39] Speaker 02:
This equates to over $100 million in duties for this period of review alone.

[00:00:45] Speaker 02:
And that's on top of a comparable amount for period of review two as well.

[00:00:51] Speaker 02:
Now, Commerce purported to corroborate this AFA rate

[00:00:55] Speaker 02:
based on a single stray transaction, one transaction from period of review two that had a reported margin of 144%.

[00:01:05] Speaker 02:
So to put this one transaction in perspective, we look at this.

[00:01:11] Speaker 05:
Am I remembering right?

[00:01:12] Speaker 05:
That wasn't sort of the only basis of corroboration.

[00:01:16] Speaker 05:
Commerce also looked at other numbers that, while smaller than the number it chose,

[00:01:23] Speaker 05:
was, you might say, somewhere in that range.

[00:01:27] Speaker 02:
I actually don't believe so.

[00:01:28] Speaker 05:
I don't even remember what's still confidential here.

[00:01:32] Speaker 02:
So none of that is confidential.

[00:01:34] Speaker 05:
So there were numbers in the 50% range?

[00:01:37] Speaker 02:
Actually, I direct your attention to page 34 of our opening brief.

[00:01:41] Speaker 02:
And there's a graph here, which is also at JA 1862.

[00:01:45] Speaker 02:
There was also one transaction between 40% and 50%.

[00:01:51] Speaker 02:
So you can see the 144 is barely discernible there, all the way over in the bottom right-hand corner.

[00:01:56] Speaker 02:
There's one other transaction of 40% to 50%.

[00:01:59] Speaker 02:
Now that, of course, is well below the 75.36%.

[00:02:03] Speaker 02:
After that, you have to go to 20% to 30% to find 28%.

[00:02:07] Speaker 04:
So are you saying that as a matter of law, Commerce was barred from relying on that sales data, about 144%?

[00:02:16] Speaker 02:
I'm saying that the corroboration or purported corroboration was not supported by substantial evidence because it relied, going back to Judge Sorrento's question, my reading of what Commerce did is that it relied entirely on the 144%.

[00:02:31] Speaker 04:
What about cases like Todd Chen and Pam that also pointed to very tiny volume of sales data as evidence to justify the rate

[00:02:46] Speaker 02:
Right, Your Honor.

[00:02:47] Speaker 02:
And so both Ta Chen and Pam, I believe, were distinguished in, and I will find the case here.

[00:03:14] Speaker 02:
Yeah, actually, it's this court's decision in Gallin Ocean, pointed out that Ta Chen had made a sale of 30.95% dumping margin during the relevant period of review.

[00:03:25] Speaker 02:
But that case relied on primary information, thus it didn't, Ta Chen didn't involve corroboration at all, and that's something this court pointed out in Gallin Ocean.

[00:03:33] Speaker 02:
Now, Pam,

[00:03:36] Speaker 02:
In PAM, there were actually 29 transactions that had margins at or above the 45.49% AFA rate.

[00:03:42] Speaker 02:
So neither of those cases seemed to fall.

[00:03:44] Speaker 00:
What about Nannya?

[00:03:46] Speaker 00:
Pardon me?

[00:03:46] Speaker 00:
Nannya, which relied on one single margin rate that was the highest margin rate.

[00:03:52] Speaker 02:
Yeah, Nannya was not a corroboration case at all.

[00:03:54] Speaker 02:
In fact, I think there was a lengthy section there in this court's decision explaining that because it was primary information, corroboration was not needed at all.

[00:04:04] Speaker 02:
So there was nothing about Nanyah that could affect this court's prior decisions in cases such as- Is the 144% sales data primary information or secondary in this case?

[00:04:17] Speaker 02:
Well, the 144 in this case would count as secondary information.

[00:04:21] Speaker 02:
But in any event, it's the 75.36% that has to be corroborated.

[00:04:26] Speaker 02:
And it's 75.36% AFR rate.

[00:04:29] Speaker 02:
That, in my understanding, is undisputed in this case, that that counts as secondary information because it was taken from the petition.

[00:04:37] Speaker 02:
And so going back to Judge Sol's question about NANYA, there's nothing about NANYA that in any way calls into question this court's decisions in cases such as DiCecco and Gallant Ocean, where it's well established in the corroboration context that an AFA rate has to be a reasonably accurate estimate of the respondent's actual rate, albeit with some built-in increase for deterrent.

[00:05:02] Speaker 02:
Now, again, if I draw your attention to page 34 of our opening brief where we have this graph, there's nothing about this graph that can even remotely suggest that a 75.36% AFA rate is in any way relevant or reliable, which is the test for corroboration.

[00:05:22] Speaker 02:
So there's a 144% stray transaction that on its face is obviously aberrational for several reasons.

[00:05:29] Speaker 02:
One is it's a single sale.

[00:05:32] Speaker 02:
Minuscule volume, I understand, is the equivalent of one roll of lightweight thermal paper.

[00:05:37] Speaker 02:
Now, we're not saying that either of those by themselves is determinative.

[00:05:40] Speaker 02:
It's not just that it's one sale.

[00:05:41] Speaker 02:
It's not just that it's a tiny volume.

[00:05:43] Speaker 02:
But it's those facts.

[00:05:44] Speaker 02:
Plus, it's so egregiously out of line with all of the other margins.

[00:05:49] Speaker 02:
As I said earlier, the next closest you can find is 40% to 50%.

[00:05:53] Speaker 02:
And that also is only one transaction.

[00:05:55] Speaker 02:
And that was well below the 75.36% petition rate that was relied on for adverse facts available here.

[00:06:05] Speaker 02:
And so I point out that if you look at this graph on page 34, this reflects a guess.

[00:06:09] Speaker 05:
Can you remind me what, if any, was the asserted basis in the petition for the 75% rate?

[00:06:15] Speaker 02:
So it used a combination of data from another company, Mitsubishi, and used some of Kohler's data, but very little.

[00:06:29] Speaker 02:
So Kohler's actual data played a very small role in calculating the petition rate.

[00:06:34] Speaker 02:
And as you know, the petition rate is something supplied by the petitioner.

[00:06:39] Speaker 02:
So it is, in some ways, the least trustworthy of any of the data here, and therefore subject to the highest corroboration.

[00:06:51] Speaker 02:
It is something that the statute allows commerce to look at, but is unquestionably secondary information, and therefore has to be corroborated.

[00:06:58] Speaker 02:
And the reason is obvious, because this is not

[00:07:00] Speaker 02:
something that was calculated by Commerce for a previous period of review.

[00:07:04] Speaker 02:
In the previous periods of review, the highest ever calculated for Kohler was the 6.5% from the original investigation.

[00:07:12] Speaker 02:
But even that rate was never actually used, because the rates were always lower for all the other periods of review.

[00:07:18] Speaker 02:
In period review one, there was a single digit number, which was then overturned by the CIT.

[00:07:25] Speaker 02:
And on remand, Commerce determined that the amount, after properly taking into account

[00:07:31] Speaker 02:
The rebates was de minimis, so it's effectively 0.

[00:07:35] Speaker 02:
So there's nothing remotely close to corroborating the 75.36%.

[00:07:41] Speaker 02:
As I said earlier, there's over 11 times the 6.5% that was calculated in the original investigation.

[00:07:49] Speaker 02:
So there's no evidence from any period of review that can even remotely corroborate the 75.36%.

[00:07:56] Speaker 02:
And to the contrary, all the evidence from the previous reviews

[00:08:00] Speaker 02:
undermines the relevance of reliability of the 75.36%.

[00:08:05] Speaker 02:
And even the data from Period of Review 2, which is what Commerce relied on, that data strongly suggests that the 75.36% can't be corroborated with substantial evidence.

[00:08:18] Speaker 05:
And so what do you think specifically Commerce should have done in corroborating

[00:08:28] Speaker 05:
We're finding a corroborated rate to apply.

[00:08:32] Speaker 02:
It should have considered all of the data.

[00:08:34] Speaker 02:
And so I think that's one of the lessons from Gallant Ocean.

[00:08:36] Speaker 02:
So in Gallant Ocean, there were viewers.

[00:08:41] Speaker 05:
If I remember right, the government's fundamental response on that is, we are entitled to ignore all of the rest of your data because you lied to us about some of it.

[00:08:51] Speaker 05:
So we can't trust any of it.

[00:08:55] Speaker 05:
Am I getting their position right?

[00:08:58] Speaker 02:
I think you're getting their position right.

[00:09:00] Speaker 02:
It's hard to actually take that with a straight face, because it doesn't mean that they can just make it up.

[00:09:05] Speaker 02:
And that's all that they did here.

[00:09:06] Speaker 02:
So the Commerce Department decided, because Kohler submitted information that had omitted home market sales, that we don't have to trust anything that they're saying, and we can just speculate on what it might be.

[00:09:18] Speaker 02:
So Commerce even goes so far, I believe, to say that in this graph here,

[00:09:22] Speaker 02:
on page 34 reflecting the period of review data that this seems, their reliance on this is somehow conservative because they speculate there could be higher market transactions.

[00:09:36] Speaker 05:
Isn't a version of their theory that this graph is meaningless?

[00:09:40] Speaker 05:
Because we have no idea.

[00:09:41] Speaker 05:
We basically will not accept the figures all on the left side of the graph.

[00:09:47] Speaker 05:
As far as we are concerned,

[00:09:49] Speaker 05:
we're going to assume you made those up too.

[00:09:52] Speaker 02:
I think that's an accurate description of what Commerce said.

[00:09:55] Speaker 02:
And I think that that cannot be supported.

[00:09:57] Speaker 02:
There's no substantial evidence then.

[00:09:59] Speaker 02:
If they're just at that point saying, we're not going to believe anything you say, we're going to just make it up, then there's no substantial evidence.

[00:10:04] Speaker 02:
Now I'd also point out that just as a factual matter, there's no basis for saying that they can speculate that there would be higher margin transactions if nothing had been omitted.

[00:10:15] Speaker 02:
Because all that was omitted

[00:10:17] Speaker 02:
was the only evidence on the record is that there were home market sales transactions that were omitted.

[00:10:24] Speaker 02:
The home market sales are used to calculate a monthly average, which is then compared to individual US sales.

[00:10:32] Speaker 02:
So this chart reflects margins for US sales as compared to an average home market sale by month.

[00:10:41] Speaker 02:
So there are no sales that are actually missing from this chart.

[00:10:47] Speaker 02:
Now, these numbers, if you were to include the omitted home market sales might vary slightly because... I'm sorry, this chart is of home market sales or of U.S.

[00:10:57] Speaker 05:
sales?

[00:10:58] Speaker 02:
This is margins of, and so it's U.S.

[00:11:02] Speaker 02:
sales, individual U.S.

[00:11:03] Speaker 02:
sales compared to a monthly average for the relevant month.

[00:11:08] Speaker 02:
And so the only thing that was missing here were home market sales.

[00:11:12] Speaker 02:
And so if the U.S.

[00:11:13] Speaker 02:
sales,

[00:11:14] Speaker 02:
The individual US sales here are compared to average monthly home market sales.

[00:11:19] Speaker 02:
And so there's no evidence whatsoever that any US sales are missing.

[00:11:24] Speaker 02:
And so all of the sales transactions are reflected in here, but the numbers vary slightly.

[00:11:29] Speaker 05:
I guess Commerce's theory is that since this chart is in part based on home market sales, and to compare them to the US sales,

[00:11:44] Speaker 05:
We simply will not trust anything you have told us about your home market sales.

[00:11:51] Speaker 05:
We just erase that.

[00:11:52] Speaker 05:
And so the chart is meaningless because you only get to these bars by subtracting one from the other.

[00:11:59] Speaker 02:
But if it's meaningless, then this data can't be relied upon at all.

[00:12:03] Speaker 02:
to corroborate.

[00:12:04] Speaker 02:
They can't have it both ways.

[00:12:05] Speaker 02:
They can't say, we're going to throw all the data out, and yet we're going to pick a number and say it's corroborated.

[00:12:09] Speaker 02:
They still need substantial evidence to corroborate that.

[00:12:11] Speaker 05:
Except that the adverse inference provision allows them to hold things against you.

[00:12:15] Speaker 02:
That's correct.

[00:12:16] Speaker 02:
So as cases such as Gallant Ocean and Jacheco have said, commerce is permitted to come up with a reasonable estimate of what the actual margin would be, albeit with some built-in increase as a measure of deterrence.

[00:12:31] Speaker 02:
That doesn't mean that they can simply throw everything out the window.

[00:12:34] Speaker 02:
And that's exactly what they did here.

[00:12:36] Speaker 02:
If you throw out all this data, there's nothing that commerce can rely on to corroborate the rate that they used.

[00:12:45] Speaker 02:
And they have to have substantial evidence to justify the corroboration.

[00:12:50] Speaker 02:
Otherwise, this court can't uphold it.

[00:12:52] Speaker 05:
You want to save your time?

[00:12:54] Speaker 05:
Yes, Your Honor.

[00:12:55] Speaker 05:
OK, thank you.

[00:13:16] Speaker 05:
You, Mr. Perlund?

[00:13:17] Speaker 01:
Yes, Your Honor.

[00:13:18] Speaker 05:
Please.

[00:13:20] Speaker 01:
Good morning, Your Honor, and may it please the Court.

[00:13:22] Speaker 01:
To address the corroboration issue first.

[00:13:26] Speaker 01:
Fundamentally, it's worth starting at the point that the anti-dumping statute itself at section 1677E explicitly authorizes Commerce to use the petition rate that it used in this case.

[00:13:39] Speaker 01:
If corroborated.

[00:13:41] Speaker 01:
If it's corroborated, but it also makes a provision to the extent practicable.

[00:13:45] Speaker 01:
And it's also important to note, and Commerce was very clear about this in its issue and decision memo, that it did not rely on a single sale.

[00:13:54] Speaker 01:
But among limited sources for corroboration, which matches up with the statutes clause about doing things to the extent practical, Commerce looked at what Kohler reported as its own commercial practices in the previous review and looked to a range of transactions.

[00:14:13] Speaker 01:
The petition rate that Commerce ultimately used was not at the 144% that was at the top of that range, but was significantly closer to the other high margin transactions that were at the bottom of that range.

[00:14:29] Speaker 01:
The precise number, because I think it's been disclosed publicly now, there was a 49% transaction

[00:14:33] Speaker 01:
There was a 29% transaction, and I think a total of 18 in that 20 to 30 range, as well as hundreds in at least double digits, the 10 to 20% range.

[00:14:44] Speaker 01:
So Congress, at the end of the day, looked to permissible sources of information and looked to what Kohler was saying

[00:14:56] Speaker 01:
I think the point is slightly more subtle than the way in which your honor articulated it.

[00:15:03] Speaker 01:
I think Congress does fundamentally distrust the information that Kohler, it's tainted by the transshipment scheme, but at the same time,

[00:15:12] Speaker 01:
This is, applying the adverse inference provision, the information that Kohler at least represented were its commercial practices in the second review.

[00:15:22] Speaker 01:
And that's what makes it permissible for commerce to use that information for the limited purpose.

[00:15:28] Speaker 05:
Let me, I guess, test that a little bit.

[00:15:35] Speaker 05:
I'm not sure that if you give no more than some taint view

[00:15:43] Speaker 05:
to this chart, which is, I gather, subject to simply disbelieving it.

[00:15:51] Speaker 05:
Let's consider you think it's only tainted maybe a little bit.

[00:15:57] Speaker 05:
Then if you take it substantially seriously, how could this rate, which is I don't know what the numbers would be, but is aberrational by

[00:16:11] Speaker 05:
any reasonable view of this chart be considered relevant and reliable?

[00:16:17] Speaker 05:
How could the numbers be?

[00:16:18] Speaker 05:
So I understand your honor's question and I understand how you get there if you say we just got to ignore it basically or treat it with because we don't trust anything we will merely use it against them but if you think you know like DiCicco we're going to adjust it a little bit we're going to question it

[00:16:38] Speaker 05:
But if you take it at all seriously, isn't this just way off?

[00:16:42] Speaker 01:
So that's the question I was getting at.

[00:16:44] Speaker 01:
And my point is that one doesn't have to throw out this chart entirely to determine that the AFA rate here of 75% was adequately corroborated.

[00:16:53] Speaker 01:
And that goes to this court's decision in KYD, which made very clear that in applying an AFA rate, commerce does not have to apply what would be a typical dumping margin for the industry in question or a typical dumping margin

[00:17:07] Speaker 01:
or a cooperating respondent, or, and this bleeds into this court's decision in NANYA, something that reflects what the rate would have been if the respondent had otherwise cooperated.

[00:17:20] Speaker 05:
But why doesn't it need to be kind of close to what the rate would have been?

[00:17:28] Speaker 05:
I realize kind of close is not much of a standard, but whatever that is, this is probably not that.

[00:17:36] Speaker 01:
Well, respectfully, Your Honor,

[00:17:38] Speaker 01:
This is within the range of what Kohler reported as the highest margin sales that it completed in the second review.

[00:17:48] Speaker 01:
So this is consistent with Kohler's commercial practices.

[00:17:52] Speaker 01:
And although there are some sales that are somewhat lower than the AFA rate, which again is much closer to that number, the AFA rate is not 144%, even though Appian had specifically urged commerce to potentially rely on that number.

[00:18:04] Speaker 01:
Commerce went with a 75% number, which is much closer to the other transactions that COLA reported at 50%.

[00:18:11] Speaker 05:
It's still 50% higher than kind of the relatively small group at the north end of

[00:18:18] Speaker 05:
all of the rest of the sentence.

[00:18:20] Speaker 01:
Well, but that's precisely what this court addressed in KYD and in, for example, in Ad Hoc Shrimp.

[00:18:26] Speaker 01:
I mean, it's ironic that these cases were both at court at the same time, but Ad Hoc Shrimp was arguing that the rate was, you know, with emphasis, 12 times higher than

[00:18:35] Speaker 01:
the rate that had been applied to ad hoc shrink, I'm sorry, Hiltop, the respondent in that case, in previous reviews.

[00:18:45] Speaker 01:
And the court obviously upheld that AFA rate.

[00:18:48] Speaker 01:
And in KYD, the court has upheld rates that were significantly higher.

[00:18:53] Speaker 01:
In KYD, it's an astronomical number, dozens of times.

[00:18:56] Speaker 01:
And I think when you take the average of those, it's like over 100 times higher than the rate.

[00:19:03] Speaker 01:
So the court has upheld rates.

[00:19:05] Speaker 01:
that are based on relatively small amounts of information and are significantly higher than the typical rate under the adverse facts available.

[00:19:15] Speaker 01:
After all, DeCecho says it's supposed to be close plus some deterrent.

[00:19:21] Speaker 01:
Plus some deterrent.

[00:19:22] Speaker 01:
So here you have transactions that are high but somewhat lower than the AFA rate.

[00:19:28] Speaker 01:
And that also brings us to another point, which is this court's decision making, for example,

[00:19:35] Speaker 01:
from Gallant Ocean.

[00:19:37] Speaker 01:
The way in which Gallant Ocean distinguished Ta Chen and Pam is precisely why this case is more like Ta Chen and Pam than it is like Gallant Ocean.

[00:19:49] Speaker 01:
I mean, first of all, Gallant Ocean didn't involve the type of intentional misconduct.

[00:19:53] Speaker 01:
The party there was kind of an unsophisticated party that had never participated in the review.

[00:20:00] Speaker 05:
Do you think that what constitutes corroboration depends on

[00:20:05] Speaker 05:
the reason you get to the adverse inference standard in the first place, whether it's intentional or merely negligent failure to cooperate?

[00:20:16] Speaker 01:
I think it provides a framework, and particularly when you're talking about a rate that is intended to deter non-cooperation,

[00:20:24] Speaker 01:
I'm not sure that's the central issue, but I think it's an important framework for what was going on in Gallant Ocean.

[00:20:29] Speaker 01:
But the important distinction is that this court in Gallant Ocean said, look, this rate has nothing to do with Gallant Ocean.

[00:20:35] Speaker 01:
They've never participated.

[00:20:36] Speaker 01:
There's nothing tying this rate to Gallant Ocean.

[00:20:40] Speaker 01:
Unlike Todd Chen and Pam,

[00:20:43] Speaker 01:
where we allowed commerce to rely on a small amount of information precisely because that information had been tied to the commercial practices of the companies in question.

[00:20:52] Speaker 01:
Todd Chen was a single sale, but it was a single sale by that company.

[00:20:58] Speaker 01:
And in the same way here, again, commerce was very clear that there are limited information sources.

[00:21:03] Speaker 01:
The statute said, to the extent practicable, and Kohler is the only respondent in the history of this proceeding.

[00:21:10] Speaker 01:
And obviously its data had also been affected by the actual scheme itself.

[00:21:16] Speaker 01:
And so among those limited sources, Commerce used a petition rate that it statutorily authorized to use and then went to Culler's own data that Appian had put on the record

[00:21:27] Speaker 01:
and said, this matches what Kohler has reported as its own commercial practices.

[00:21:32] Speaker 01:
One more issue that I want to make sure I address is the way that Kohler attempted to distinguish the Nannya case.

[00:21:40] Speaker 01:
The Nannya case may have been a case that involved so-called primary information, but it speaks for itself.

[00:21:46] Speaker 01:
Nannya pursued a broad discussion of commerce's responsibilities

[00:21:52] Speaker 01:
in the realm of applying adverse tax availability.

[00:21:54] Speaker 00:
How does commercial reality, I mean, Nanya talks about commercial reality in the context of the actual margin.

[00:22:00] Speaker 00:
How does that compare to corroboration?

[00:22:02] Speaker 00:
Maybe that's where you were going.

[00:22:04] Speaker 01:
It is where I was going, Your Honor.

[00:22:05] Speaker 01:
What Nanya said is that commercial reality doesn't appear anywhere in the statute.

[00:22:09] Speaker 01:
And so Nanya, I'll look back to the statements about commercial reality and accuracy that are in

[00:22:16] Speaker 01:
that are in Dicecco and said, look, don't take these too far.

[00:22:20] Speaker 01:
This is not a statutory term.

[00:22:22] Speaker 01:
This is a guidepost.

[00:22:23] Speaker 01:
Commerce, if it complies with the statutory requirement of corroborating to the extent practicable, is within its permissible actions on the statute.

[00:22:35] Speaker 01:
And that's all that commercial reality means.

[00:22:36] Speaker 01:
And here, these transactions were all what Commerce calculated based on Kohler's reporting.

[00:22:46] Speaker 05:
Do you disagree with the interpretation of corroboration as requiring that the information with the result be relevant and reliable?

[00:22:58] Speaker 05:
No, that's the standard commerce applies, but here... So relevant to what and reliable for what purpose?

[00:23:06] Speaker 01:
Well, relevant to Kohler because these are Kohler's own reported transactions.

[00:23:10] Speaker 05:
And reliable for what?

[00:23:12] Speaker 05:
Reliability has to do with

[00:23:14] Speaker 05:
It's a reliable basis for drawing a particular kind of inference.

[00:23:17] Speaker 05:
What's the inference if it's not something like commercial reality?

[00:23:22] Speaker 01:
I think the idea is that it's reliable information.

[00:23:28] Speaker 01:
The statute gives commerce very broad discretion when it's looking for cooperation sources, and presumably there could be more exotic sources than looking at a company's own data.

[00:23:39] Speaker 01:
For example,

[00:23:42] Speaker 01:
The ad hoc shrimp data was from a WTO implementation proceeding, so on and so forth.

[00:23:48] Speaker 01:
And I think it's a level you want to make sure is reliable.

[00:23:51] Speaker 01:
Here it's reliable because what's Kohler saying is these are our transactions.

[00:23:56] Speaker 01:
This is what we're reporting.

[00:23:58] Speaker 01:
Despite the fact that there were obviously sales that were omitted that were not reported, this is what Kohler wanted to put forth as its face to commerce.

[00:24:08] Speaker 01:
This is the dumping we were doing.

[00:24:09] Speaker 01:
And so Commerce looked at that and said, the petition rate that we're authorized to use is consistent with the high end of what you're reporting as your dumped transactions in the second review.

[00:24:23] Speaker 01:
And that, in this limited information world we're in, that's an adequate basis for us to determine that this petition rate is probative and has some bearing and some relationship to Kohler.

[00:24:37] Speaker 01:
I see that I'm running low on time.

[00:24:39] Speaker 01:
I just want to leave something for my colleagues.

[00:24:41] Speaker 05:
OK.

[00:24:41] Speaker 05:
Thank you, Mr. Kurlo.

[00:24:43] Speaker 01:
Thank you, Your Honor.

[00:24:48] Speaker 05:
Mr. Schneiderman.

[00:24:49] Speaker 03:
May it please the court.

[00:24:51] Speaker 03:
I'd like to address your questions.

[00:24:53] Speaker 03:
First, I'd like to point out that margin is not necessarily considered aberrational just because it's a statistical outlier.

[00:25:02] Speaker 03:
Putting aside the fact that Kurlo didn't report the transactions that would have resulted in the highest margins,

[00:25:07] Speaker 03:
the fact that there is a sale of 144%, even if it's much higher than the next highest.

[00:25:12] Speaker 05:
I mean, are we arguing about the word aberrational?

[00:25:14] Speaker 05:
I'm not sure what aberrational means, if it doesn't mean this is unique.

[00:25:19] Speaker 03:
The Avisma case and the Nanya case says that sometimes you have a sale that's just dumped at a much higher rate.

[00:25:25] Speaker 03:
When we talk about aberrational, we mean that there's something unusual about that particular transaction.

[00:25:31] Speaker 05:
I think we're just talking about words, but it doesn't, anyway.

[00:25:34] Speaker 03:
Well, the sale itself.

[00:25:35] Speaker 05:
It seems to me it's aberrational if there's nothing else like it, even if it's a real transaction.

[00:25:39] Speaker 03:
The margin is certainly much higher than the next highest.

[00:25:41] Speaker 03:
But that in itself, according to the precedent, shouldn't render it unusable for purposes of the corroboration analysis.

[00:25:47] Speaker 01:
That's a different story.

[00:25:48] Speaker 03:
In the Abismah case and the Narnia case.

[00:25:50] Speaker 03:
And also, going to your question about, should we look at the nature of the misconduct here as part of the corroboration analysis?

[00:25:57] Speaker 03:
And I'd like to speak to that, because we have to remember here that this is a fraud case.

[00:26:02] Speaker 03:
This is a case where

[00:26:03] Speaker 03:
Curler intentionally set out to conceal its sales, and as Commerce found, submitted a fraudulent questionnaire response.

[00:26:10] Speaker 03:
And that is relevant to the corroboration analysis, because as you mentioned, in the DiCecco case, the court said, you look to Curler's actual rate plus an additional amount for deterrence.

[00:26:20] Speaker 03:
Well, how do you set that additional amount?

[00:26:23] Speaker 03:
I think it has to be reasonably calibrated to the nature of the misconduct that occurred.

[00:26:27] Speaker 03:
In most of these AFA cases, you have respondents that either make a mistake

[00:26:30] Speaker 03:
or perhaps they don't understand the reporting obligations.

[00:26:33] Speaker 03:
And that conduct can only be deterred so much.

[00:26:35] Speaker 03:
But when you have a respondent like Crow that sets out from the very beginning to conceal sales and commit fraud, I think that even if they believe that the chances of getting caught or being detected are fairly low.

[00:26:46] Speaker 05:
Did commerce rely on that rationale?

[00:26:48] Speaker 05:
I don't remember.

[00:26:49] Speaker 05:
Did commerce say that one reason that we are choosing this rate

[00:26:56] Speaker 05:
which is pretty darn far from anything else except the one, what's the word, unusual, unusual sale, is because that's what we think is necessary to deter this particularly bad kind of conduct?

[00:27:11] Speaker 03:
Absolutely, Your Honor.

[00:27:12] Speaker 03:
Where is that?

[00:27:12] Speaker 03:
At pages 1950 to 1951 in the Joint Appendix, which is towards the end of the final determination, Commerce precisely found that the petition rate of 75% is the rate that's required to deter

[00:27:26] Speaker 03:
the particular misconduct that occurred in this case.

[00:27:28] Speaker 03:
And it also found that the alternative rates that had been proposed by Kerler, all of which, by the way, were in the single digits, would be insufficient.

[00:27:36] Speaker 03:
In fact, it would have no deterrent effect.

[00:27:38] Speaker 03:
And Judge Soukalis made a finding towards the end of page 17 of his slip opinion, where he said that this is the rate that's required to deter the misconduct, given the extreme nature of the fraud that occurred here, and is perfectly consistent with the DeCheca case.

[00:27:53] Speaker 03:
And actually, if you read the decision by Judge Stansu in the second review, he affirmed precisely on that basis.

[00:28:00] Speaker 05:
Am I allowed to read that one?

[00:28:02] Speaker 03:
Allowed to read that case?

[00:28:03] Speaker 03:
Yeah.

[00:28:04] Speaker 03:
The slip opinion has been placed on the record in a 28-J decision, a letter.

[00:28:09] Speaker 03:
And Judge Stansu actually found that the rate is corroborated solely on that basis, even though he did not consider the one sale with 144% rate.

[00:28:18] Speaker 03:
Although I should point out that the records of the two cases are different in that respect.

[00:28:22] Speaker 03:
And so Judge Stanton's reasoning for disregarding that really don't apply here.

[00:28:31] Speaker 03:
I see that my time is up.

[00:28:33] Speaker 03:
Thank you.

[00:28:33] Speaker 03:
Thank you, Your Honor.

[00:28:38] Speaker 02:
Three minutes.

[00:28:41] Speaker 02:
There are several things I'd just like to point out.

[00:28:43] Speaker 02:
I guess I'd like to start out by saying that Appian describes Collor's conduct here as having set out to conceal sales and commit fraud.

[00:28:52] Speaker 02:
And I would just point out that there's no substantial evidence to support that.

[00:28:55] Speaker 02:
The only evidence on the record here is that certain employees, in an attempt to contravene Collor's own.

[00:29:02] Speaker 05:
We certainly have to accept that there were agents of the company that did this in part for the purpose of changing

[00:29:11] Speaker 05:
the home market sale.

[00:29:14] Speaker 02:
That piece, actually, there is no record evidence to support.

[00:29:17] Speaker 02:
There's no record evidence to support that.

[00:29:19] Speaker 02:
The admission by Kohler is only that there were employees who made sales through a third country in contravention of Kohler's anti-dumping protocol.

[00:29:27] Speaker 04:
Senior personnel were involved.

[00:29:29] Speaker 02:
No, no.

[00:29:30] Speaker 02:
Again, that's one quote that's been taken way out of context, which is that was in the context of Kohler explaining that it took personnel action

[00:29:38] Speaker 02:
against the senior people involved.

[00:29:40] Speaker 02:
And I would submit that means the senior most of the people involved, as opposed to the people in the shipping department who prepared labels and things like that.

[00:29:48] Speaker 02:
But if there's a dispute as to that, that's an issue where that points out exactly why commerce should have allowed Kohler an opportunity to present inside of the case, but it never gave it a chance to do so.

[00:29:59] Speaker 02:
But I'd also like to point out an important legal issue here, which is that the government said that non-Yah speaks broadly.

[00:30:05] Speaker 02:
And I really want to emphasize

[00:30:07] Speaker 02:
that Nanyah did not purport to, nor could it, overturn discourse decisions in cases such as DiCicco and Gallin Ocean.

[00:30:14] Speaker 02:
So the standard in the corroboration context is unchanged by Nanyah.

[00:30:20] Speaker 02:
Now, I'd also like to point out when I was asked earlier by the court whether or not commerce looked to anything other than that 144% transaction.

[00:30:27] Speaker 02:
And commerce's language, actually, was that it was relying on a range of margins.

[00:30:34] Speaker 02:
in which the 75.36% fell.

[00:30:37] Speaker 02:
But as you can see from that chart, absent the 144%, there's no range in which the 75.36% even remotely fell.

[00:30:46] Speaker 02:
So to answer your question, I do think that commerce was really relying on that 144% transactions.

[00:30:53] Speaker 00:
Otherwise, you don't have a complete.

[00:30:54] Speaker 02:
48 point something percent right correct, but that doesn't create a range in which the seventy five point three six percent false So the range consists of 144 and then something which was below the not extraordinarily below significantly below I would say And we're talking about pardon me not multiples below I mean not multiples low, but I don't think we have to show that that that the AFA rate was multiples of

[00:31:23] Speaker 02:
of something that wasn't even the one that Congress was relying on.

[00:31:27] Speaker 02:
So, I mean, I think that the 144 is clearly aberrational.

[00:31:32] Speaker 02:
As I said earlier, you get into, I think it was the one transaction from 40-50, and to get anything more substantial, there are 18 between 20 and 30.

[00:31:46] Speaker 02:
So, again, 75.36 is nowhere near that.

[00:31:50] Speaker 02:
But I also point out that when it comes to the question about what commerce had to do to corroborate, commerce, if it did not want to rely on any of this data in the chart, it still had an obligation to corroborate, and it could have done so under the statute under independent sources that are reasonably at its disposal.

[00:32:08] Speaker 02:
So it could have looked at

[00:32:10] Speaker 02:
data from the original investigation.

[00:32:12] Speaker 02:
It could have looked at period of review one, which was not in any way affected by this transshipment because that started later.

[00:32:19] Speaker 02:
So it had plenty of data it could have looked at, even if it said, incorrectly in our view, it was going to disregard all of the data from period of review two other than that 144% transaction that it relied on.

[00:32:31] Speaker 05:
You need to finish up.

[00:32:34] Speaker 05:
OK.

[00:32:35] Speaker 05:
That doesn't mean the whole minute.

[00:32:36] Speaker 05:
I mean like two sentences.

[00:32:40] Speaker ?:
OK.

[00:32:41] Speaker 02:
So in conclusion, I would point out that the 144% transaction is what you call it unusual or aberrational.

[00:32:50] Speaker 02:
I would call it unusually aberrational.

[00:32:52] Speaker 02:
It is an extreme outlier that can't reasonably constitute any kind of substantial evidence to support the 75.36% margin here, which had an incredibly punitive effect of $100 million in duties against my client.

[00:33:07] Speaker 02:
Thank you, Your Honors.

[00:33:09] Speaker 05:
Thank you.

[00:33:09] Speaker 05:
Cases submitted.

[00:33:15] Speaker ?:
Thank you.