[00:00:13] Speaker 03: The document this morning is 161730 Meridian Products versus United States. [00:00:37] Speaker 02: Now we get to something with a legal framework. [00:00:41] Speaker 00: Thank you, Your Honor. [00:00:42] Speaker 00: Good morning, Your Honors. [00:00:42] Speaker 00: May I please the Court? [00:00:44] Speaker 00: The judgment of the Court of International Trade should be reversed. [00:00:47] Speaker 00: The trial court erred in two ways. [00:00:49] Speaker 00: First, it erred by failing to defer to commerce's reasonable interpretation of scope language. [00:00:56] Speaker 00: In doing so, the trial court committed a second error by adopting an unreasonable interpretation of the finished goods kit exclusion that fails to give effect to all of the scope language. [00:01:07] Speaker 02: At issue here is how to interpret the finished goods... Why do you cite geodesic domes rolling if the statute's unambiguous? [00:01:20] Speaker 02: I'm sorry, the language of the order is unambiguous? [00:01:23] Speaker 00: Yes. [00:01:23] Speaker 00: Well, one, because, I mean, yes, if the court were to agree with the trial court that the plain language of the order unambiguously requires... Well, you argued that it's unambiguous. [00:01:37] Speaker 00: Right, we believe that it is unambiguous, but to the extent that interpretation was required, the past interpretations of commerce were consistent with what it did here. [00:01:50] Speaker 00: And so in considering the K-1 factors, it was appropriate for commerce to refer to the geodesic domes scope rolling because the product there essentially has the same problem that the product [00:02:06] Speaker 00: that the trim kits have here, which is that the product contains aluminum extrusions, which meet the physical description of subject merchandise and fasteners. [00:02:17] Speaker 00: And under Commerce's reasonable interpretation of the scope language, that product remains subject merchandise and does not fall within the finished goods kit exclusion. [00:02:29] Speaker 03: The exclusion? [00:02:29] Speaker 03: I mean, it is a little confusing, is it not? [00:02:32] Speaker 03: Because the suggestion is these are all the finished goods kits are excluded. [00:02:39] Speaker 03: And then it's like an exception is the exception. [00:02:41] Speaker 03: That even though, I mean, the order says that if it's just the [00:02:48] Speaker 03: what you said, the aluminum exclusion plus fasteners, that does constitute a finished goods kit under the order, right? [00:02:57] Speaker 00: Right. [00:02:57] Speaker 00: Facially means that description, yes. [00:03:00] Speaker 03: So it says finished goods kits are excluded, and then it says [00:03:10] Speaker 03: except finished goods kits. [00:03:12] Speaker 03: Is that the way you're reading it? [00:03:14] Speaker 03: Except these kinds of finished goods kits. [00:03:15] Speaker 00: We're reading that third sentence as a commerce reads that third sentence as a qualifier to the exclusion. [00:03:23] Speaker 00: And we would argue that that's the best reading of the entire exclusion, which starts with an explanation that the scope also excludes finished goods containing aluminum extrusions that are entered unassembled. [00:03:41] Speaker 03: The easiest way to, it seems to me, the common sense way to have written something is to say, finished good kits are excluded, but to then state, but we do not consider these finished goods, but we exclude this from the finished good kits exception. [00:03:58] Speaker 03: What they seem to say in the order is an imported product will not be considered a finished good kit. [00:04:05] Speaker 03: But it is a finished good kit. [00:04:07] Speaker 03: So they're saying, even though it's a finished good kit, we're going to call it something else. [00:04:10] Speaker 03: Is that the way you're construing the order? [00:04:11] Speaker 00: Yes. [00:04:13] Speaker 00: No doubt this could have been written better. [00:04:15] Speaker 00: We certainly acknowledge that we wouldn't be here today if the language wasn't, in some part, a little bit confusing. [00:04:22] Speaker 00: But we think that the best way to read that language is all three sentences together. [00:04:29] Speaker 00: First, it's a kit that contains aluminum extrusions, which suggests that there is some [00:04:35] Speaker 00: part that is not aluminum extrusions. [00:04:38] Speaker 00: Then we have the package combination of parts and we can see that with the aluminum extrusions and the fasteners that meets that definition. [00:04:46] Speaker 00: And then the third sentence which is that it won't be considered a finished good kit and therefore excluded merely by including fasteners such as screws or bolts. [00:04:55] Speaker 00: The problem with the interpretation that the trial court adopted is essentially lets the exclusion rule the scope because then... Talk about brackets. [00:05:05] Speaker 00: So the brackets in the first remand redetermination, commerce addressed Meridian's argument that the brackets were not fasteners and commerce concluded that they were fasteners because based upon Meridian's argument. [00:05:23] Speaker 00: Essentially they're part of a fastener. [00:05:28] Speaker 00: Right. [00:05:28] Speaker 00: The short answer is that when the court remanded a second time, it directed commerce to proceed from a clean slate and to reconsider any arguments that Meridian wanted to make. [00:05:38] Speaker 00: Meridian did not revive the argument about brackets. [00:05:42] Speaker 00: And so our argument was, and the trial court agreed in the first instance, that that argument had been waived. [00:05:49] Speaker 00: When the court reconsidered its judgment, [00:05:52] Speaker 00: It did so not based on that issue, but because it believed that the fasteners, because it believed that it could, based on the scope language alone. [00:06:02] Speaker 00: that the fasteners and the aluminum extrusions were sufficient to become excluded merchandise. [00:06:09] Speaker 00: So our argument here is, we do believe that argument's been waived and Meridian can't revive it before this court, but in any event, we believe that commerce's determination is supported by substantial evidence if the court would like to, does find that reconsidering the bracket issue is before this court. [00:06:31] Speaker 00: As we explained, [00:06:32] Speaker 00: The trial court, essentially reading this language would create an uneven result. [00:06:40] Speaker 00: So for example, trim, carpet trim, which is identified as subject merchandise. [00:06:46] Speaker 00: If that were imported by itself and the consumer was directed to go to their hardware store and pick up some screws, that's subject merchandise. [00:06:57] Speaker 00: But if the screws are included in the packaging with the carpet trim, that now becomes [00:07:02] Speaker 00: out of scope, excluded merchandise. [00:07:05] Speaker 00: And that can't be the result. [00:07:09] Speaker 00: It leads to uneven results and in one circumstance, essentially the same subject merchandise would become out of scope. [00:07:17] Speaker 00: It's the same issue we have here. [00:07:18] Speaker 00: The product here is subject merchandise plus fasteners [00:07:22] Speaker 00: the extraneous materials, which I can discuss briefly, but we don't even understand the trial court to be making the argument that the wrench or the instruction booklet would be sufficient to render a product to be excluded merchandise under this particular exception. [00:07:42] Speaker 00: At best, what the trial court offered was an alternative interpretation. [00:07:47] Speaker 00: And in that circumstance, the trial court was required, as this court is, to defer to commerce's interpretation, which is reasonable, which is not contrary to the plain terms of the scope language, and which gives full effect to the language of the entire order. [00:08:08] Speaker 03: How long has this order been in effect since 2011? [00:08:11] Speaker 00: These orders have been in effect since 2011. [00:08:20] Speaker 00: We appealed this decision because we believe that the trial court committed a reversible error of law. [00:08:25] Speaker 00: But as a practical matter, certainly this particular language of the finished goods kit exclusion has been the language that has invited the most scope ruling requests before commerce and as well as litigation before the Court of International Trade. [00:08:41] Speaker 00: So we do believe it's an important question for the court to address. [00:08:48] Speaker 00: And I will sit down here. [00:08:52] Speaker 03: We'll reserve your rebuttal if you need it. [00:08:58] Speaker 03: Mr. Schaefer. [00:09:00] Speaker 01: Thank you, Your Honors. [00:09:00] Speaker 01: May it please the Court. [00:09:02] Speaker 01: Alex Schaefer from Meridian. [00:09:06] Speaker 01: I'd like to begin by addressing the waiver issue a bit, with the Court's permission. [00:09:11] Speaker 01: Meridian's initial scope ruling request argued that these were finished products. [00:09:16] Speaker 01: finished goods, finished goods kits. [00:09:18] Speaker 01: And the Commerce Department came back and said, no, all you have are extrusions and fasteners and extraneous things. [00:09:26] Speaker 01: I'll talk about extraneous things in a moment. [00:09:29] Speaker 01: After the court initially remanded that determination to Commerce, we laid out our arguments for why that was wrong. [00:09:34] Speaker 01: We said, that's not so, because brackets aren't fasteners, hinge covers are emphatically not fasteners, and instructions and the tool for assembling the very good that we're talking about are not extraneous. [00:09:46] Speaker 01: And Commerce again said, no, we're not buying this line of argument. [00:09:50] Speaker 01: At that point, as to those issues about the brackets and the other tools, there was nothing left for us to say. [00:09:57] Speaker 01: Now, in the second remand, Commerce issued a draft redetermination to the parties in the administrative proceeding below. [00:10:04] Speaker 01: And what it said was, it was very explicit, it said, [00:10:08] Speaker 01: We're making our decision consistent with the court's instruction to evaluate what working with something is like. [00:10:14] Speaker 01: This was in reference to the banner stand rulings and the drapery rail kit rulings and these sorts of things. [00:10:19] Speaker 01: And they said, we're making that decision notwithstanding the fact that you are just a collection of extrusions and fasteners and extraneous things. [00:10:28] Speaker 01: In other words, they said, that's off the table. [00:10:30] Speaker 01: We think you already lose on that ground and we've already told you why. [00:10:33] Speaker 01: So this is the thing we're talking about now. [00:10:36] Speaker 01: And by the way, they gave us four and a half days to respond to that. [00:10:38] Speaker 01: They issued that at midday on a Thursday and said, your comments are due Tuesday. [00:10:43] Speaker 01: In the first paragraph of our response, of our comments below, we said, given the timeframe, we're providing abbreviated comments. [00:10:51] Speaker 01: And what we addressed was the analysis that they laid out in their re-determination. [00:10:54] Speaker 01: We said, the way you're construing what it means to work with something or what it means to be customizable doesn't make sense to us. [00:11:01] Speaker 01: They then take that into account, expand their re-determination filing before the court, [00:11:06] Speaker 01: and then come along and say that we've waived the issues about finished product kits and what the significance of a bracket and a wrench and all these other things are. [00:11:15] Speaker 01: We never waived any of those issues. [00:11:17] Speaker 01: And in fact, after those comments were filed in court, we filed a notice of supplemental authority because of an intervening case that had been decided, the Newell-Robermaid decision, and again pointed out why it should be the case that these were finished product kits. [00:11:31] Speaker 01: So at no point did we abandon that. [00:11:32] Speaker 02: So if you haven't abandoned brackets, [00:11:35] Speaker 02: performances of argument. [00:11:38] Speaker 02: Why are they not simply part of fasteners? [00:11:42] Speaker 01: I'm not aware of any reasonable definition of a fastener that encompasses brackets. [00:11:47] Speaker 01: It's a different product. [00:11:49] Speaker 01: They lend torsional stability. [00:11:51] Speaker 01: They lend structural stability. [00:11:53] Speaker 01: They perform different functions in fasteners. [00:11:54] Speaker 01: They're not attaching anything to anything. [00:11:56] Speaker 01: Of course they are. [00:11:59] Speaker 01: I don't see it, Your Honor. [00:12:00] Speaker 02: They're attaching one [00:12:02] Speaker 01: extruded piece to another extruded piece. [00:12:04] Speaker 01: I think that's the screw that's doing that. [00:12:08] Speaker 01: The bracket may facilitate that, but a bracket in and of itself is not a fastener. [00:12:11] Speaker 01: Certainly not in the way that we commonly understand with a screw or a nut and bolt or a rivet. [00:12:20] Speaker 01: And that still, by the way, doesn't take us away from the hinge covers and from the tools and the instructions. [00:12:25] Speaker 01: If you've ever bought an Ikea bookcase, [00:12:27] Speaker 01: And it came with all of the fasteners that you require, but without the slightly Swedish-accented instruction manual and the hex wrench. [00:12:35] Speaker 01: I think you can be forgiven for concluding that kit was incomplete. [00:12:38] Speaker 01: It required those things. [00:12:39] Speaker 02: Now, they're not incorporated into the final product. [00:12:41] Speaker 02: Excuse me, but I've bought any number of IKEA bookcases, and the instructions are useless. [00:12:47] Speaker 01: That's a fair point, Your Honor, but I guess the way I would say it is this. [00:12:52] Speaker 01: You're better off with them than without them. [00:12:55] Speaker 01: And so to here. [00:12:57] Speaker 01: And what Commerce seems to say on this issue of extraneous materials is, look, if it's not incorporated into the final item, then it's extraneous. [00:13:07] Speaker 01: That completely undercuts the notion of what a kit is. [00:13:09] Speaker 01: If you buy a modeling kit and it has an X-Acto knife in it that you use to do it, it's not going to be incorporated into the final item. [00:13:15] Speaker 01: The example we used in our papers was a painting kit that included the brushes or a crocheting kit that includes the crocheting needles. [00:13:22] Speaker 01: None of these things are going to be incorporated into whatever your ultimate resultant product is. [00:13:27] Speaker 01: But of course they're part of the kit. [00:13:29] Speaker 01: They're a critical part of the kit. [00:13:30] Speaker 01: You can't do what it is that you need to do without them. [00:13:33] Speaker 01: So this idea of these items being extraneous, that's a convenient way to scoop out anything that's not fasteners and extrusions. [00:13:41] Speaker 01: But it's analytically completely indefensible in our view. [00:13:52] Speaker 01: Even if you accept their argument, and we find that it's wrong-headed, that you would just have extrusions and fasteners, [00:14:01] Speaker 01: I still think their interpretation of what they're calling the fastener exception leads to strange results. [00:14:07] Speaker 01: And here's the way I would illustrate that for the court. [00:14:09] Speaker 01: Suppose, what we have ultimately is three or four extruded pieces that frame out the appliance, right? [00:14:16] Speaker 01: Now suppose that instead of the bottom piece, the, I think, kick plate is what they call it in the industry. [00:14:23] Speaker 01: Suppose instead of being an aluminum extrusion that was made from stainless steel to make it more dent resistant. [00:14:30] Speaker 01: The government's logic requires you to conclude in that situation that now we have a finished product kit. [00:14:36] Speaker 01: Because now we no longer just have a collection of extrusions and fasteners. [00:14:39] Speaker 01: Now we have extrusions and fasteners and a chunk of steel and everything is fine. [00:14:43] Speaker 01: And so this item's status as a finished product kit turns on the composition of one of these panels. [00:14:49] Speaker 01: There's no basis to think that the petitioners or commerce ever intended that sort of a result. [00:14:53] Speaker 01: And it's a very strange result because we haven't changed anything about the way the kit is assembled. [00:14:57] Speaker 01: We haven't changed anything about the way that it's sold, the way that it's used. [00:15:00] Speaker 01: We've just switched from one piece being aluminum to one piece being steel, and poof, it's a finished product kit. [00:15:07] Speaker 01: Any interpretation that compels a result like that is unreasonable. [00:15:10] Speaker 01: It makes much more sense to conclude, as Judge Musgrave did, that what this was, was an anti-circumvention provision to say, listen, you can't just take a collection of extrusions and throw a packet of screws in and call it a kid. [00:15:22] Speaker 01: Which, of course, is not what we have. [00:15:25] Speaker 01: And if the court doesn't have any more questions for me, I'll yield the rest of my time. [00:15:28] Speaker 03: Thank you. [00:15:36] Speaker 00: Let me just briefly make a couple of points [00:15:38] Speaker 00: On page 159 of the appendix, this is the first re-determination. [00:15:49] Speaker 00: When commerce specifically addresses the issue of brackets, [00:15:53] Speaker 00: It refers to the installation booklet wherein the brackets, the booklet explains that the brackets, quote, attached to the angled ends of each side trim and are secured by screws. [00:16:04] Speaker 00: And then Commerce uses the definition that Meridian provided for what a fastener is as any device for holding together two objects or parts. [00:16:13] Speaker 00: So Commerce used both the description of the merchandise that Meridian provided as well as the definition [00:16:20] Speaker 00: of a fastener that Meridian provided. [00:16:24] Speaker 00: With respect to the extraneous materials, we're really looking at what the scope language is. [00:16:31] Speaker 00: whatever one might colloquially call a kit is not really what we're talking about. [00:16:36] Speaker 00: We're talking about does the product contain a package combination of parts and whatever the wrench or the instruction booklet or the hinge covers are, they're not part of the final finished goods. [00:16:49] Speaker 00: So they're not really relevant. [00:16:51] Speaker 02: Nor are the hinge covers necessary to the finished goods. [00:16:54] Speaker 00: They're not necessary. [00:16:55] Speaker 00: they're an option that the end consumer can use and they're not attached in any way. [00:16:59] Speaker 03: Well, what about your friend's example about the crochet needles or the knitting needles included in the kit with yarn to make the product? [00:17:07] Speaker 03: I mean, they don't appear in the final product, but they're certainly necessary and useful. [00:17:12] Speaker 03: Wouldn't those kinds of elements be included in the finished goods kit? [00:17:17] Speaker 00: They could be included in a kit, but they wouldn't be the reason that it would be considered a finished goods kit, because the definition of what we're looking for is what it is is the finished goods that contain all the containing aluminum extrusions, that they contain all the necessary parts to fully assemble the final finished good. [00:17:38] Speaker 00: So whatever the knitting needles or the wrench, it may be useful, but it does not become part of the final finished good. [00:17:45] Speaker 00: And I think this is supported by reference to... Wait, I'm sorry. [00:17:49] Speaker 03: You're talking about the definition. [00:17:51] Speaker 03: It says all of the necessary parts to fully assemble a final finished good, right? [00:17:57] Speaker 03: Correct. [00:18:00] Speaker 03: And so that wouldn't be something like the knitting needle to put together just to knit the yarn? [00:18:08] Speaker 00: No. [00:18:10] Speaker 00: And that we think is supported by [00:18:13] Speaker 00: We think that this language is really talking about what is necessary to assemble the good. [00:18:19] Speaker 00: What are the parts? [00:18:20] Speaker 00: We're looking at what the parts are. [00:18:23] Speaker 02: And if the court... What you're saying is some people have these knitting needles at home already. [00:18:27] Speaker 00: Sure, right, exactly. [00:18:31] Speaker 00: Although it's a different exclusion, the finished merchandise exclusion that precedes this can sort of be read as a parallel. [00:18:39] Speaker 00: And the examples that are given there [00:18:43] Speaker 00: you know, windows with glass, doors with glass or vinyl, picture frames with glass pane and backing. [00:18:51] Speaker 00: All of those examples include a significant non-aluminum extrusion component. [00:18:55] Speaker 00: So it's reasonable for commerce to interpret this parallel exclusion as also having that particular requirement as well. [00:19:05] Speaker 00: This court must, as the trial court, must uphold Congress's determination unless the scope ruling is unsupported by substantial evidence or otherwise not in accordance with law. [00:19:15] Speaker 00: We submit that Congress's original scope ruling was supported by substantial evidence, is consistent with the scope language, and this court should reverse the trial court's judgment and sustain the scope ruling. [00:19:28] Speaker 03: Thank you.