Plaintiffs
assert that Commerce’s position was not substantially justified
at either the administrative level or in the litigation before this
court. Plaintiffs argue that Commerce misapplied the statutory provisions
regarding the application of total adverse facts available, and that
the government ignored this court’s reasoning in Borden, Inc.
v. United States, 4 F. Supp.2d 1221 (Ct. Int’l Trade 1998)
in defending Commerce’s application of total adverse facts available.
The government counters that its position was based on law and fact,
and that Ferro Union involved the interpretation of new and complex
terms pursuant to the 1994 Uruguay Round Agreements Act.
The
government bears the burden of showing that its position was substantially
justified. Inner Secrets/Secretly Yours, Inc. v. United States,
20 CIT 210, 213, 916 F. Supp. 1258, 1261-62 (1996) (quotation omitted).
The Supreme Court has clarified that “substantially” in this
context does not mean “‘justified to a high degree,’
but rather ‘justified in substance or in the main’ –
that is, justified to a degree that could satisfy a reasonable person.” Pierce v. Underwood, 487 U.S. 552, 565 (1988).
The
fact that the party prevailed is not sufficient to show that the government’s
position was not substantially justified. See Luciano Pisoni
Fabbrica Accessori Instrumenti Musicali v. United States, 837 F.2d
465, 467 (Fed. Cir. 1988) (“The mere fact that the United States
lost the case does not show that its position in defending the case
was not substantially justified.”) (quotation omitted). As further
stated by the Federal Circuit:
The
EAJA was not intended to be an automatic fee-shifting device . . .
. The decision on an award of attorney fees is a judgment independent
of the result on the merits, and is reached by examination of the
government’s position and conduct through the EAJA ‘prism,’
. . . not by redundantly applying whatever substantive rules governed
the underlying case.
Id. at 467 (quotations omitted). Indeed, attorney’s fees and other
expenses “are generally awarded only where the government offers
‘no plausible defense, explanation, or substantiation for its action.’” Consolidated, 16 CIT at 696, 797 F. Supp. at 1011 (quotation
omitted). Viewed in this light, Commerce’s position at both the
administrative level and in the litigation before this court was substantially
justified.
In
concluding that Saha Thai was affiliated with a variety of companies
through familial ties, Commerce grounded its analysis in the statute
and concluded that the companies were affiliates. See Final
Results, 62 Fed. Reg. at 53,809-10 (analyzing definition of “affiliated
persons,” “family” and “control” pursuant to
19 U.S.C. § 1677(33)). Although the court found some of Commerce’s
descriptions of the family relations vague, Commerce further described
these relationships on remand and properly found that the families controlled
Saha Thai. Ferro Union, 1999 WL 825584, at *6 & n.14.
Commerce
was applying new statutory terms at the time of the Final Results.
When the agency is dealing with a new issue, the courts have recognized
that the agency may be substantially justified in its position, even
if that position is erroneous. See Consolidated, 16 CIT
at 697, 797 F. Supp. at 1012 (Commerce substantially justified in addressing
matters pertaining to economy of People’s Republic of China which
“were not settled or fixed” and “Commerce [made] good
faith attempts to address them.”); see also Luciano,
837 F.2d at 467 (underlying case revoked antidumping duty order, but
Commerce’s position substantially justified in part because of
“complexity, uniqueness, and newness” of issues). Here the
court recognized that the full scope of the term “affiliated persons”
pursuant to 19 U.S.C. § 1677(33) was “an admittedly complex,
and as yet unexplained, concept.” Ferro Union, 44 F. Supp.2d
at 1327. The court upheld Commerce’s interpretation of the term,
but found that Commerce had unfairly required Saha Thai to apply this
interpretation at the outset because Saha Thai did not have reason to
foresee the full meaning of the term as interpreted by Commerce. Id. Nonetheless, it is not clear that Commerce should have recognized Saha
Thai’s lack of notice. Because of the new statute, neither party
was certain of its duties. The court finds Commerce’s proper interpretation
of “affiliation” in this case was sufficient to render its
actions substantially justified or otherwise to make the award of fees
unjust.
Commerce
also attempted to follow the framework of 19 U.S.C. § 1677e in
applying total adverse facts available in concluding that Saha Thai
had significantly impeded the review. Final Results, 62 Fed.
Reg. at 53,809. This conclusion is sufficient for an application of
facts otherwise available. See 19 U.S.C. § 1677e(a)(2)(C).
The flaw in Commerce’s analysis was in failing to make the additional
finding that Saha Thai had “failed to cooperate by not acting to
the best of its ability” as required under 19 U.S.C. § 1677e(b)
in order to draw an adverse inference. Ferro Union, 44 F. Supp.2d
at 1329-31 & n.44.
Commerce’s
method for selecting total adverse facts available pursuant to 19 U.S.C.
§ 1677e(b), however, also involved interpreting a new provision
of the statute. This court clarified in Borden that the analysis
under the 1994 statute differs from prior law, and that Commerce must
make a series of determinations before making an adverse inference. Borden, 4 F. Supp.2d at 1246-47. Borden, however, was
issued in 1998, after Commerce had issued the Final Results in
its administrative review of Saha Thai. Commerce therefore did not have
the benefit of the Borden analysis when it applied total adverse
facts available to Saha Thai. The government’s judicial defense
of Commerce’s determination likewise should not be the basis for
a fee award. An agreed remand to resolve the more procedural issue would
have wasted time and likely would not have led to plaintiffs’ victory
at that point. That is, had Commerce given adequate notice of its interpretation
of the statute, it likely would have been justified in applying adverse
facts after following the proper procedure. Thus, because Commerce’s
action as to notice of its interpretation of “family” was
substantially justified within the meaning of the EAJA, it would be
unjust to award fees based on this procedural error which would not
have been the cause of plaintiffs’ success.4
Because
it is denying any fee award, the court need not decide whether Asoma’s
request for attorney’s fees and expenses was properly documented,
pursuant to USCIT R. 68(b).
Conclusion
Although
plaintiffs were prevailing parties, Commerce’s position was substantially
justified. The court therefore denies the application for attorney’s
fees and expenses of the Asoma Corporation pursuant to the EAJA.
It
is so ordered.
_______________________
Jane A. Restani
JUDGE |
Dated: New York,
New York
This
30th day of December 1999.
4.
Plaintiffs also assert that the application of the 29.89 percent margin
from the Final Results was not substantially justified. Because
Commerce was not required to reach the issue, the court never resolved
whether this margin would have been acceptable if total adverse facts
were warranted. That is, because plaintiffs were successful on their
other theories the issue of corroboration of the higher margin was mooted.
To resolve this issue the court would have to direct Commerce to perform
an analysis merely for the purpose of resolving the attorney’s
fee issue. But a “request for attorney’s fees should not result
in a second major litigation.” Naekel v. Department of Transp.,
FAA, 884 F.2d 1378, 1379 (Fed. Cir. 1989) (quoting Hensley v.
Eckerhart, 461 U.S. 424, 437 (1983)). Further, it is unlikely that
plaintiffs would prevail in establishing lack of justification. The
corroboration issue also stems from the new statute which had not been
interpreted as to the relevant point prior to the time of the court’s
first decision on the merits here.
