Trade Court Denies Injunction Bid on Cash Deposits, Says Exporter Unlikely to Suffer Irreparable Harm

In the review, the Commerce Department hit Tainai with a 538.79% dumping margin based on adverse facts available. In the review's preliminary results, Commerce identified various "deficiencies and inconsistencies" from the respondent's data over its factors of production. The missing information included direct input bills of materials that Tainai needed to gather from its suppliers. The preliminary rate in the review was 36.75%.

The agency then issued a supplemental questionnaire to which Tainai and its suppliers failed to respond. As a result, Commerce hit Tainai with the 538.79% rate, given the "magnitude of the missing data." This rate was derived in part from the respondent's position in the tapered roller bearing production line. Since the exporter doesn't develop or add value to the finishing stages in the supply chain and merely buys the components after those stages, the data from the third party suppliers was crucial for determining the dumping rate, Commerce said. The agency further said that since Tainai could have induced the unaffiliated suppliers to fork over the data, AFA was warranted.

Filing its case at CIT, the plaintiffs eventually moved for an injunction against cash deposits being collected at the 538.79% rate. To review this motion, Vaden looked at the four factors that a movant must clear to be granted an injunction: likelihood to suffer irreparable harm without the injunction, likelihood to succeed on the merits of the case, balance of equities and public interest. On all four factors, the court ruled that the plaintiffs' motion fell short.

First looking at the irreparable harm claims, Vaden first commented on the "tenuous link" set up between harm done to Tainai and the importer, C&U Americas. The judge ruled that evidence of harm to one does not necessarily hold up as harm done to the other. Vaden said that the relationship between the two companies "remains a recurring mystery in the evidence," with the court being unaware of the exact nature of how their business models are intertwined.

The judge held that aside from questions over how the cash deposits will harm each of the plaintiffs, the motion fails to establish the immediacy of any harm. Vaden ruled that C&U Americas' argument -- that it continues to negotiate with some buyers to get them to accept a pass-through of the duties -- fails to clear the standard for immediacy since it does not establish exactly when and how any lost sales would force the plaintiff out of business.

Turning to the question of the plaintiffs' likelihood of success, Vaden said the plaintiffs failed again. The judge said that the high rates alone are not evidence enough of an error in Commerce's findings. "As the Government rightly contends, despite ample opportunity, Plaintiffs 'do not challenge the substance of Commerce’s Final Results,'" the opinion said. "Instead, Plaintiffs rest their claim of likely success on the merits on a presumption that Commerce’s determined rate must be 'punitive.' Although Plaintiffs could have expanded their analysis to include relevant evidence demonstrating likelihood of success on the merits, they chose not to do so."

Vaden also ruled that the balance of equities favors the government, and that the "plaintiffs give short shrift to the harm potentially caused to Defendant." The judge said that "a court should be reticent to unwind the entire remedy the Government has ordered, especially when it accords with a clear statutory scheme," given that an injunction on the underlying tariff could allow underpriced goods to "flood the market." Vaden also ruled that the plaintiffs "misapprehend" the risk that stems from the exporter not paying the tariffs, and that the government is not fully protected by continuous customs bond.

The U.S. is also favored in the consideration of what move best serves the public interest, Vaden held. Tying in this ruling to the irreparable harm claim, the judge ruled that nowhere is it claimed that the plaintiff's manufacturing sites are on the brink of closure. "Against these speculative and unsupported claims, the public’s greater interest lies in following Congress’s legislative enactments in the normal course and ensuring that Customs collects cash deposits sufficient to protect the public fisc," the opinion said.

(Shanghai Tainai Bearing Co. v. United States, Slip Op. 22-74, CIT Consol. #22-00038, dated 06/17/22, Judge Stephen Vaden. Attorneys: David Craven of Craven Trade Law LLC for plaintiff Shanghai Tainai Bearing; Kelly Krystyniak for defendant U.S. government)