CIT Should Have Remanded After Holding ITC Report Had Errors, Exporter Says

Although the Court of International Trade rejected the International Trade Commission’s analysis in its affirmative injury determination regarding boxed mattresses from various Asian countries as “mathematical obfuscation and statistical chicanery,” it didn’t remand like it should have, an exporter told the U.S. Court of Appeals for the Federal Circuit on June 21 (CVB, Inc. v. U.S., Fed. Cir. # 24-1504).

In its finding, the ITC, as CIT itself noted in its opinion, erred by failing to differentiate between the flat-packed mattress and boxed mattress industries, exporter CBV said.

Though consumers use both models in the same way once the mattresses are delivered and set up, the business models needed to get the mattresses to that point vary, it said. It said boxed mattresses must be made to be rolled, so their foam must be “a certain quality and cured for longer,” then pre-compressed in “large compression machines to remove air and make certain the rebound is sufficient.”

Due to this, “there is significant specialization” in the U.S. mattress market; “almost all” domestic producers specialize in one or the other, the exporter said. But the ITC ignored this evidence, instead holding that the two products were almost the same, it said.

But the court wrongly decided to uphold the commission's overall finding despite these flaws because the ITC also said that the domestic boxed mattress industry alone was harmed by the increase in imports, CBV said. But “that finding -- comprising four pages at the end of the 73-page Views -- was an afterthought by the Commission,” it said.

It was also unsupported by substantial evidence, the exporter said. Because of that, it said, the finding was not a “harmless error,” as CIT had ruled.

Boxed mattress imports haven’t hurt U.S. producers even if they do only manufacture the same product, CBV said. Those producers “showed strong and significant improvements by increasing production, shipments, market share, and profitability” during the period of review, it said. This growth, it claimed, has been hidden by the more negative trends in the flat-packed mattress market. But it shows that U..S producers have been “gaining share in the burgeoning [boxed mattress] market” despite a rise in subject imports during the same period, it said.

ITC also claimed that the domestic boxed mattress industry “would have performed even better but for subject imports” by pointing to domestic producers’ low capacity utilization rates -- which wavered between 50% and 64% from 2017 to 2020 -- but only added “in passing” in a footnote that those rates were partly caused by shortages in raw materials, it said.

And capacity utilization was the only metric of many that the ITC is supposed to consider that indicated negative results for domestic boxed mattress producers during the period, CBV said.

At one point, the ITC’s report appeared actively misleading, the exporter said, as the commission claimed in its four-page analysis of the boxed mattress industry that “subject imports of [boxed mattresses] increased their share of overall apparent U.S. consumption by more than domestically produced [boxed mattresses] during the period” -- an “abrupt shift” from a discussion of the boxed mattress market alone to the overall market. CBV called the move “inappropriate and misleading in a section of the analysis that purports to address the MiB segment alone, not the domestic industry as a whole.”

“Otherwise, the Commission supports its finding with conclusory statements such as, ‘domestic producers of MiBs could have had greater sales revenues and operating and net income than they did during the period of investigation but for subject import competition,’” it said.