author: KATZ, District Judge.

text:
    SUN SHIP, INC. v. MATSON NAVIGATION COMPANY.
    Civ. A. No. 85-0141.
    United States District Court, E.D. Pennsylvania.
    March 29, 1985.

      Jeffery C. Hayes, Michael T. Scott, Richard W. Foltz, Jr., Philadelphia, Pa., for plaintiff.
    David P. Bruton, Alfred W. Putnam, Philadelphia, Pa., for defendant.
   MEMORANDUM AND ORDER

KATZ, District Judge.

Sun Ship, Inc. petitions this Court to vacate or to correct an award in a commercial arbitration between it and Matson Navigation Company. I will deny the Petition and affirm the arbitration award in all respects.

On May 8, 1980, the parties entered into a “Contract for the Reconstruction of one Roll-on/Roll-off Trailervessel named “LUR-LINE.” The contract called for Sun Ship to modify the vessel for Matson in order to make the ship suitable for carrying containerized cargo. The contract price was $30,-624,500 and required redelivery of the vessel by December 31, 1981. Sun Ship agreed to pay $10,000 in liquidated damages for each day of unexcused delay.

The contract contained a broad arbitration clause which provided for arbitration “[i]n the event of any dispute or difference as to any matter or thing between Matson and Shipbuilder in the contract which cannot be settled____” Although the contract provided for the application of Pennsylvania law in all other respects, the arbitration clause provided that arbitration was to be conducted in accordance with the Federal Arbitration Act, 9 U.S.C. § 1 et seq.

Article 2 of the contract allowed Matson to direct a change in the Plans and Specification of the work to be performed. If Matson and Sun Ship were unable to reach agreement as to the effect of the change on the contract price and the contract redelivery date, Matson was to make progress payments to Sun Ship according to Sun Ship’s own estimate, with the issue ultimately “resolved by arbitration under Article 23.” Article 12(i)(ii) stated:

If an increase or decrease in the contract price due to a change is not finally agreed upon or determined by arbitration prior to redelivery of the vessel, appropriate adjustment of any overpayments or underpayments shall be made after redelivery of the vessel promptly upon ... determination by arbitration of the increase or decrease.

The arbitration here concerned three contract change orders issued by Matson. As to the first, Contract Change Number (CCN) 4, there is no dispute that Matson overpaid Sun Ship $14,892.

The next change order at issue, CCN 13, directed Sun Ship to blast and coat four ballast tanks on the Lurline. Matson, however, claimed that this was work Sun Ship should have done pursuant to the original contract. Matson, therefore, took the position from the outset that CCN 13 should have had no effect on the contract price or contract redelivery date. To avoid delaying progress on the work, Matson issued a contract change order and made progress payments based on Sun Ship’s estimates. The arbitration panel determined that Sun Ship did not have a pre-existing contractual duty to perform the work required in CCN 13. Although the arbitrators decided that Matson did have to pay for CCN 13, they held that Matson, by its advance payments, overpaid Sun Ship $71,475 for that contract change.

Because of its position that Sun Ship’s work pursuant to CCN 13 was incompetent, Matson issued a third change order, CCN 14, to require Sun Ship to recoat and re-blast the tanks. As with CCN 13, Matson made progress payments based on Sun Ship’s estimate and deferred determination of who should bear the cost of recoating and reblasting until arbitration. The arbitrators decided that CCN 14 should have effected no change in the contract price or contract redelivery date, thus apparently accepting Matson’s argument that Sun Ship did not perform the work properly the first time. The arbitrators ordered Sun Ship to repay Matson the entire $1,707,790 Matson had paid pursuant to Sun Ship’s estimate. The panel also ordered Sun Ship to pay Matson $1,450,000 in liquidated damages due to 145 days of inexcusable delay in the redelivery of the vessel. With respect to CCN 14, Sun Ship argues that Matson, by executing a contract change order, waived any argument about Sun Ship’s preexisting contractual duty to perform the work, and that in an arbitration proceeding pursuant to Article 2 of the contract the arbitrators did not have authority to decide whether Matson was liable for the contract change. With respect to CCN 4, CCN 13 and CCN 14, and to liquidated damages, Sun Ship claims that the arbitrators erred in awarding interest to Matson at the prime rate rather than at the statutory rate prescribed by 41 P.S. § 202. Sun Ship also complains that the arbitrators erred in awarding interest from the time of Matson’s overpayment of progress payments rather than from the time of the arbitrators’ decision.

I. Arbitrability of Liability For CCN lJj.

To determine whether an issue is arbitrable, the Court may look both to the original contract between the parties and to the parties’ submission to the arbitration panel. Piggly Wiggly Operators’ Warehouse, Inc. v. Piggly Wiggly Operators’ Warehouse Independent Truck Drivers Union, Local No. 1, 611 F.2d 580, 584 (5th Cir.1980). In this case, both of those sources show that liability for the work ordered in CCN 14 was an arbitrable issue. Article 23 of the contract made arbitrable “any dispute or difference as to any matter or thing ... arising out of or relating to the Contract____” This provision would have certainly allowed arbitration of liability for recoating and reblasting in the absence of a contract change order. The arbitration clause was also worded broadly enough to give the arbitration panel the authority to decide whether the contract allowed Matson to execute a contract change order while reserving the question of liability for the work ordered. Although because of the parties’ request the arbitrators did not issue a written decision, this was an issue the arbitrators resolved against Sun Ship by their award.

Sun Ship argues that because this was an arbitration about change orders pursuant to Article 2 of the contract, the arbitrators could only consider the effect of the change on the cost and redelivery date in the agreement. This argument, however, is without merit. Article 2 of the contract does not provide that execution of a change order waives any question of liability, nor does Article 2 establish an arbitration proceeding different from the proceeding described in the broad arbitration clause of Article 23. In fact, Article 2 provides that if the parties cannot agree on the effect of a change, then the issue “shall be resolved by arbitration under Article 23.”

Although the contract itself makes clear that the arbitrators had the power to resolve the question of liability for CCN 14, examination of the submission to the arbitrators of the issues to be resolved requires the same conclusion. The parties jointly submitted a series of questions to the arbitrators. Question 3(a) asked the panel to determine:

Without reference to any payment that has already been made by Matson for CCN 14, what adjustment, if any, should be made to the contract price on account of CCN-14? (emphasis added).

Had Sun Ship not intended the arbitrators to decide the question of liability, there would have been no reason for the addition of the phrase “if any.” In fact, counsel for both parties wrote the arbitration panel a joint cover letter at the time the questions were submitted which stated that the parties “were unable to reach agreement on either the form or appropriateness” of other questions. Each party reserved the right to identify other questions it thought the panel should consider.

Even more persuasive is the transcript of a preliminary session before the arbitration panel on March 17, 1983. At that hearing, counsel for Sun Ship told the panel:

On behalf of Sun Ship we expressly withdraw any objection to the power or jurisdiction of the panel to consider all of the issues set forth in the four issue letters.

The first of the four issue letters, written by Matson to Sun Ship on June 2, 1982 posed the following issues:

3(a) Does the reblasting and recoating of double bottom tank No. 1 OB and the pre-existing forward portion of double bottom tank No. 3 OB, which work was directed by contract change No. 14, constitute work to be performed by the Shipbuilder, at Shipbuilder’s risk and expense, under the Reconstruction Contract?
(b) If not, is the Shipbuilder otherwise responsible for the cost of reblasting and recoating double bottom tank no. 1 OB and the pre-existing forward portion of double bottom tank no. 3 OB, as directed by Contract Change No. 14?

At another point in the March 17 proceeding, counsel for Sun Ship stated, “it is agreed between the parties that the panel is empowered to enter an award for damages against either party in these proceedings, in accordance with the panel’s resolution of the liability and damage issues as they develop in the case.” Sun Ship has waived any complaint that liability for work performed pursuant to CCN 14 was not an arbitrable dispute.

II. The Interest Award.

Sun Ship has several challenges to the arbitrators’ award of interest to Matson.

First, Sun Ship complains about the rate of interest applied to the overpayments and the liquidated damages. The arbitration panel stated that the applicable rate should be:

The fluctuating base rate charged by the Chase Manhattan Bank, N.A. for 90-day loans to substantial and responsible commercial borrowers as such base rate shall change from time to time, each change in such rate to become effective on the effective date of each change in such base rate as announced by such bank. Simple interest, (i.e., the prime rate without any additions).

Sun Ship argues that the panel should have applied the statutory rate for prejudgment interest. 41 P.S. § 202 provides:

Reference in any law or document enacted or executed heretofore or hereafter to “legal rate of interest” and reference in any document to an obligation to pay a sum of money “with interest” without specification of the applicable rate shall be construed to refer to the rate of interest of six per cent per annum.

The scope of review of commercial arbitration decisions is limited. In Ludwig Honold Manufacturing Co. v. Fletcher, 405 F.2d 1123 (3d Cir.1969), the Court noted that “a mere error in the law or failure on the part of the arbitrators will not justify judicial intervention.” 405 F.2d at 1127. In Swift Industries, Inc. v. Botany Industries, Inc., 466 F.2d 1125 (3d Cir.1972), the Court stated that it would overrule a commercial arbitration decision only if the decision (1) does not draw its essence from the contract; (2) is in manifest disregard of the law; or (3) does not meet the test of fundamental rationality.

The Supreme Court of Pennsylvania has approved the Restatement, Contracts, § 337, which provides:

If the parties have not by contract determined otherwise, simple interest at the statutory legal rate is recoverable as damages for breach of contract as follows: (a) Where the defendant commits a breach of a contract to pay a definite sum of money, or to render a performance the value of which in money is stated in the contract or is ascertainable by mathematical calculation from a standard fixed in the contract or from established market prices of the subject matter, interest is allowed on the amount of the debt or money value from the time performance was due, after making all the deductions to which the defendant may be entitled.

Penneys v. Pennsylvania Railroad Co., 408 Pa. 276, 279, 183 A.2d 544, (1962).

Sun Ship argues that it should pay interest to Matson at the statutory rate for Matson’s overpayments on CCN 4, CCN 13 and CCN 14. The arbitration panel’s interest award on the overpayments, however, was not in the nature of damages for a breach of contract by Sun Ship. The contract provided for arbitration in the event the parties could not agree on the effect of a contract change. It gave the arbitration panel broad discretion to formulate whatever adjustments the panel deemed equitable.

Article 12(i)(ii) of the contract provides: [i]f an increase or decrease in the Contract Price due to a change is not finally agreed upon or determined by arbitration prior to redelivery of the vessel, appropriate adjustment of any overpayments or underpayments shall be made after redelivery of the vessel promptly upon ... determination by arbitration, (emphasis added)

Thus, it was within the discretion of the panel to award interest at the prime rate as part of an “appropriate adjustment” of Matson’s overpayments.

Sun Ship’s argument that interest on liquidated damages should have been limited to the statutory rate is a stronger one. Sun Ship does not contest the imposition of interest on liquidated damages, just the rate of that interest. The arbitrators held that the completion of work on the Lurline was inexcusably delayed by 145 days. The contract set a specific rate of damages for each day of delay. Thus, Sun Ship contends this is “a breach of a contract ... to render a performance the value of which in money is stated in the contract or is ascertainable by mathematical calculation from a standard fixed in the contract____” Restatement, Contracts, § 337.

I cannot say, however, that the arbitrators’ decision to award interest on liquidated damages at the prime rate does not draw its essence from the contract, is in manifest disregard of the law, or does not meet the test of fundamental rationality. First, the statute (41 P.S. § 202) adopts a six percent interest rate only where the document contains the terms “with interest” or “legal rate of interest.” The contract between Matson and Sun Ship never uses the specific words mentioned in the statute. Second, the trend in Pennsylvania has been to adopt a more flexible approach to the award of interest. In Murray Hill Estates, Inc. v. Bastin, 442 Pa. 405, 276 A.2d 542 (1971), the Supreme Court of Pennsylvania approved as appropriate for equity cases the Superior Court’s comment that

“[t]he decided trend of courts of law and courts of equity has been to break away from hard and fast rules and charge and allow interest in accordance with principles of equity, in order to accomplish justice in each particular ease ... Unless a case be found, which is a conclusive precedent, the safest and at the same time the fairest way for a court is to decide questions pertaining to interest according to a plan and simple consideration of justice and fair dealing.”

442 Pa. at 410, 276 A.2d at 545 quoting from McDermott v. McDermott, 130 Pa.Super. 127, 130, 196 A. 889, 890 (1938).

In Peterson v. Crown Financial Corp., 661 F.2d 287 (3d Cir.1981), the Court, applying Pennsylvania law, stated that a flexible approach to interest rates should be adopted whenever the plaintiff’s complaint sounds in restitution, whether the case be brought in law or in equity.

Finally, the arbitrators’ could have rationally interpreted Article 12(i)(ii) of the contract to allow them discretion to set the interest rate on liquidated damages as part of an “appropriate adjustment.”

Given my narrow discretion to review the decision of the arbitration panel, I will not overturn their decision as to the proper interest rate.

Sun Ship’s final complaint is that the panel erred in finding that interest on the overpayments ran from the dates of the overpayments of progress payments rather than from the date of the arbitrators’ award. Sun Ship focuses on Article 12(i)(ii) of the contract, which provides that appropriate adjustment of overpayments should be made “after redelivery of the vessel promptly upon ... determination by arbitration.” (emphasis added). Sun Ship complains that the panel could-not award interest until the principal amount became due and owing and that the principal amount did not become due and owing until the arbitrators’ award.

Article 12(i)(ii) of the contract gives the arbitrators power to make any appropriate adjustment of Matson’s overpayments. One such adjustment would be to restore to Matson the amount its overpayments could have earned had Matson retained use of the funds. Further, the arbitrators could have reasonably determined that sums were due and owing from the date they were overpaid. Such readings draw their essence from the contract, are not in manifest disregard of the law, and meet the test of fundamental rationality. Indeed, awarding Matson interest at the prime rate from the time the company lost use of its funds puts Matson in the position in which it would have been, except for its overpayments. Such an outcome is fundamentally fair as well as fundamentally rational. It encourages the settlement of cases on their merits and it discourages the holding of money to which one is not entitled in cases where the only sanction would be the payment of below market rates of interest.

      . Matson has cross-petitioned to confirm the arbitrators’ award.

      . Sun Ship’s counsel argues that defendant has taken his comment at the June 2, 1982 conference out of context. He has submitted an affidavit to show that his statement referred to an off the record discussion concerning the power of the arbitrators to hear disputes relating to a second set of issue letters. Counsel’s record statement, however, is very clear and, in the absence of ambiguity, I find that Sun Ship’s intentions are accurately reflected in the record of the March 17, 1983 hearing. Sun Ship cites Local 719, American Bakery and Confectionery Workers of America, AFL-CIO v. The National Biscuit Company, 378 F.2d 918 (3d Cir.1977), for the proposition that "any claim that the parties intended to exclude the courts from consideration of arbitrability must be borne by a clear demonstration of that purpose.” 378 F.2d at 921. Such a demonstration has been made in this case. In Bakery Workers the union made it clear from the outset that, although it was proceeding with the arbitration, it was reserving its position that the dispute was not arbitrable.

      . The award of interest for overpayments at the prime rate seems appropriate in light of the fact that Article 12(k) of the contract provided that interest for late payments of the contract price would be assessed at a rate two percent above the prime.


source: Caselaw Access Project

author: NANGLE, Chief Judge.

license: Public Domain

text:
    Lenora LAWRENCE, individually and as mother of Kirk C. Lawrence, deceased, Plaintiff, v. BOARD OF POLICE COMMISSIONERS, as a body and in their official capacities and as individuals, Homer Sayad, Charles Valier, Robert Wintersmith, Thomas Purcell, and Mayor Vincent C. Schoemehl, Jr.; John F. Berner, as an individual and as Chief of Police for the City of St. Louis, Mo.; and Captain Charles McCiche, as an individual and in his official capacity as Commander for the City of St. Louis, Mo., Police Dept., Central Holding Facility, Defendants.
    No. 84-2915C(1).
    United States District Court, E.D. Missouri, E.D.
    April 3, 1985.

      MacArthur Moten, St. Louis, Mo., for plaintiff.
    Sheryl Johnson-Elcock, St. Louis, Mo., for defendants.
   MEMORANDUM

NANGLE, Chief Judge.

This is an action for damages under 42 U.S.C. §§ 1981, 1983, 1985 and 1988,- and Chapter 537 R.S.Mo. (1979), which is the Missouri Wrongful Death Statute. Plaintiff also appears to be seeking damages for negligence. There are ten counts in the complaint. Count I appears to be a general claim against all defendants under 42 U.S.C. §§ 1981 and 1983, the Missouri Wrongful Death Statute and for negligence. Plaintiff alleges that her son hung himself in a holding cell, while in police custody. There are additional allegations that plaintiff’s decedent displayed bizarre conduct immediately prior to his death, which should have placed those around him on notice of his unstable mental condition. Plaintiff further maintains that her decedent received disparate treatment by defendants because of his race, and that all defendants conspired to withhold the news of her son’s death from her. Named as defendants are the Board of St. Louis Police Commissioners; the- individual members of the Board; John F. Berner, who is the Chief of Police; and Captain Charles McCiche, a Commander in the Department.

Defendants first argue that the St. Louis Board of Police Commissioners should be dismissed from the action because it is not a suable entity. This Court agrees. Jurisdiction over the St. Louis Board of Police Commissioners can only be obtained by suing its individual members. Sparks v. St. Louis Board of Police Commissioners, No. 84-384C(3) (E.D.Mo., Apr. 25, 1984); Best v. Schoemehl, 652 S.W.2d 740, 742 (Mo.App.1983). Accordingly, the St. Louis Board of Police Commissioners is dismissed from the action.

Defendants next argue that Police Chief Berner and Captain McCiche are inappropriately named in the civil rights claims because the complaint contains insufficient allegations of personal involvement on their behalf. Monell v. New York City Department of Social Services, 436 U.S. 658, 694, 98 S.Ct. 2018, 2037, 56 L.Ed.2d 611 (1978); Rogers v. Rulo, 712 F.2d 363 (8th Cir.1983); Harris v. Pirch, 677 F.2d 681 (8th Cir.1982). There are two separate § 1983 claims against each of these defendants. The first appears to be contained in Count I, while the second is in Counts VIII and IX. This Court shall first consider the charges against defendant McCiche. Plaintiff alleges in the first § 1983 claim that McCiche was the Commander of the holdover facility where the decedent, Lawrence took his own life, and that said defendant allowed Lawrence to be placed alone in a cell. The complaint further alleges that McCiche knew or should have known of Lawrence’s abnormal behavior, but failed to remove certain harmful articles of clothing from him. This Court deems these to be sufficient allegations of direct involvement on behalf of McCiche to state a claim against him under 42 U.S.C. § 1983. Count IX is a second § 1983 claim against McCiche, for discrimination against Lawrence. The complaint states that defendant McCiche actively engaged in disparate treatment of the decedent. This Court concludes that the allegations of McCiche’s active involvement in the alleged wrong are sufficient to state a § 1983 claim against him. Count IX, therefore, will not be dismissed.

Count VI, which is a claim under 42 U.S.C. § 1981, represents a different situation, however. Plaintiff does not allege any direct involvement on behalf of defendant McCiche. The only allegations against this defendant under that count are that he supervised the individuals who engaged in the discrimination. Such allegations constitute a classic example of an attempt to pin liability upon a defendant by the respondeat superior theory. Case law establishes, however, that unlike § 1983 actions, the doctrine of respondeat superior may be invoked to hold a municipality liable under 42 U.S.C. § 1981. Haugabrook v. City of Chicago, 545 F.Supp. 276, 279-81 (N.D.Ill.1982); Jones v. Local 520, International Union of Operating Engineers, 524 F.Supp. 487, 492 (S.D.Ill.1981); Commonwealth of Pennsylvania v. Local Union 542, International Union of Operating Engineers, 469 F.Supp. 329, 409 (E.D.Pa.1978); Croswell v. O’Hara, 443 F.Supp. 895, 898 (E.D.Pa.1978). Such doctrine cannot be used to impose liability upon individ ual supervisors, however. Respondeat superior does not apply to the instant situation where Captain McCiche and his subordinate officers are fellow employees of the same employer, the City of St. Louis. Norton v. McKeon, 444 F.Supp. 384, 386 (E.D.Pa.1977), aff'd, 601 F.2d 575 (3rd Cir.1979); Krier v. Amodio, 441 F.Supp. 181, 183 (E.D.Pa.1977); Palermo v. Rockefeller, 323 F.Supp. 478, 483 (S.D.N.Y.1971). Thus, Count VI, the § 1981 claim against Captain McCiche is dismissed for plaintiff’s failure to allege active participation by this defendant in plaintiff’s disparate treatment.

Count I is also brought under § 1981, but plaintiff makes no allegations concerning Lawrence’s race or disparate treatment in this count. Therefore, the § 1981 claim contained in Count I shall be dismissed entirely.

Plaintiff attacks the claims against Police Chief Berner on the same grounds. The § 1981 claim against this defendant shall be dismissed for the same reasons as apply to Captain McCiche.

The Count I § 1983 claim against defendant Berner is different, however. Plaintiff makes no allegations whatsoever in the general count concerning this defendant’s participation in the circumstances surrounding Lawrence’s death. In addition, plaintiff alleges in other counts that defendant Berner was the commanding officer of McCiche and other police officers, and that he breached his duty of providing adequate training, supervision and guidance to his subordinates. These allegations will not subject Berner to liability, however. In the absence of more specific allegations establishing an affirmative link between Berner’s failings and the harm, this Court cannot impose liability. Plaintiff must allege, for example that defendant Berner was aware of previous negligent conduct on behalf of his subordinates, but nonetheless failed to actively correct the situation. See Hays v. Jefferson County, 668 F.2d 869 (6th Cir.1982), cert. denied, 459 U.S. 833, 103 S.Ct. 75, 74 L.Ed.2d 73 (1982); Watson v. Interstate Fire & Casualty Co., 611 F.2d 120, 123 (5th Cir.1980); LaPlant v. Frazier, 564 F.Supp. 1095, 1098 (E.D.Pa.1983); Eiland v. Hardesty, 564 F.Supp. 930, 935-36 (N.D.Ill.1982).

Count VIII, which is the second § 1983 claim against defendant Berner for disparate treatment shall remain, however. Plaintiff alleges that this defendant actively discriminated against Lawrence.

Plaintiff has also asserted § 1981 and § 1983 claims against the members of the St. Louis Board of Police Commissioners. In Count I, plaintiff alleges that the Board failed to adequately train, supervise and guide those persons who were directly responsible for Lawrence’s death. As with Chief Berner, such allegations are insufficient to state a claim under § 1983. Yet, in Count VII, an additional § 1983 claim against the Board, plaintiff sufficiently alleges active participation by the Board members in discrimination against the decedent to withstand the instant motion to dismiss. Likewise, in Count IV, plaintiff alleges that the Board members intended to and did subject Lawrence to disparate treatment because of his race. This Court deems these statements to sufficiently link these defendants to the wrong, as to state a claim under § 1981. Accordingly, Count IV will not be dismissed.

Count X represents a claim under 42 U.S.C. § 1985, against all defendants for conspiring to withhold information from plaintiff concerning the death of her son. Defendants have not attacked the sufficiency of this claim, and consequently this Court will allow it to remain.

The only remaining claims are the state wrongful death and negligence claims against all defendants in Count I and against defendant Berner in Count II. The defendants assert that these claims represent tort actions to which sovereign immunity attaches. Sovereign immunity is inapplicable, however, because only individual defendants in their official and individual capacities remain. The doctrine of sovereign immunity “protect[s] the impersonal body politic or government itself from tort liability.” Jackson v. Wilson, 581 S.W.2d 39, 42 (Mo.App.1979). See also Owen v. City of Independence, 445 U.S. 622, 647, 100 S.Ct. 1398, 1413, 63 L.Ed.2d 673 (1980). Thus, defendants shall not be dismissed on this ground.

Defendants next maintain that the individual members of the Board of Police Commissioners are entitled to official immunity for the performance of discretionary duties in the state counts. This Court agrees that under the allegations stated herein, these defendants are entitled to such immunity. Plaintiff attempts to hold the Board members liable for their failure to properly train and supervise other officers. The members of the Board are vested with power by statute. Section 84.020 et seq. R.S.Mo. (1978). In addition, this Court deems the alleged actions on behalf of the Board members to involve discretion, to the same extent as the officials in State ex rel. Eli Lilly & Co. v. Gaertner, 619 S.W.2d 761 (Mo.App.1981) and Jackson v. Wilson, 581 S.W.2d 39 (Mo.App.1979). Therefore, the state law claim shall be dismissed against the Board members in Count I.

Defendants also argue for the dismissal of the Board members from the state law claim in Count I on the theory that respondeat superior is inapplicable. Reenie v. Belleview School District, 521 S.W.2d 423, 425 (Mo. banc 1975); Jackson v. Wilson, 581 S.W.2d at 46. Defendants’ argument lacks merit, however, because plaintiff does not attempt to hold the Board members liable under the doctrine of respondeat superior. Plaintiff alleges that the members are personally guilty of negligently training and supervising the police department employees.

In summary, the following claims are dismissed: all claims against the Board of Police Commissioners as a body; the § 1981 claim contained within Count I; Count VI; Count V; the § 1983 claim against defendant Berner in Count I; the § 1983 claim against the members of the St. Louis Board of Police Commissioners contained in Count I; and the state tort actions and wrongful death action contained in Count I against the St. Louis Board of Police Commissioners. All other counts and claims shall remain.


author: RAO, Judge:

text:
    ALSTHOM ATLANTIQUE and Cogenel, Inc., Plaintiffs, v. UNITED STATES, Defendant, and Westinghouse Electric Corp., Intervenor.
    Court No. 82-4-00474.
    United States Court of International Trade.
    Jan. 24, 1985.

      Donohue and Donohue, New York City (Joseph Donohue and John M. Peterson, New York City, on the brief), for plaintiffs.
    Richard K. Willard, Acting Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civ. Div., Washington, D.C. (J. Kevin Horgan, New York City, on the brief and at the argument), for defendant.
    Steptoe & Johnson, Washington, D.C. (Richard O. Cunningham, Valerie A. Slater and Kevin Brosch, Washington, D.C., on the brief), for intervenor.
   OPINION AND ORDER

RAO, Judge:

This civil action involves shunt reactors manufactured in France by plaintiff, Alsthom Atlantique. The facts underlying the issues involved date back to March 11, 1970 when intervenor, Westinghouse Electric Corp. (Westinghouse), an American manufacturer of electrical equipment, petitioned the Treasury Department (Treasury) (which then had jurisdiction over antidumping determinations) to investigate whether large power transformers from France were being sold in this country at less than fair value (LTFV).

Treasury sent out questionnaires to the manufacturers of large power transformers in France, including Alsthom Atlantique. On June 9, 1971 the Notice of Anti-dumping Proceeding was amended “to make it clear that the notice applies to all types of transformers rated 10,000 KVA or above ... including but not limited to shunt reactors ...” (A.R. 375).

Treasury had already received some responses to its questionnaires on large power transformers and it is not clear whether it resubmitted questionnaires with specific reference to shunt reactors. As a matter of fact, no shunt reactors were imported into the United States from France during the period of investigation and no specific finding was made as to whether shunt reactors, other than as included within the class or kind of large power transformers, were being sold at LTFV. The matter was referred to the United States Tariff Commission (now the International Trade Commission) (Commission) for a determination of whether an American industry was being injured or was likely to be injured by the articles of merchandise enumerated in the petition and a positive response was given by the Commission. The final anti-dumping duty order issued by Treasury as to “the class or kind of large power transformers” did not refer to shunt reactors specifically and established a dumping margin of 24 per cent. T.D. 72-160.

On January 2, 1980 responsibility for the administration of the antidumping provisions of the Tariff Act of 1930, as amended, was transferred from Treasury to the Department of Commerce (Commerce). The International Trade Administration (ITA) of Commerce undertook an annual administrative review of T.D. 72-160, pursuant to 19 U.S.C. § 1675 (hereinafter “section 751”). This review covered the period of October 1, 1972 to June 30, 1980 and the administrative record reflects that a hearing was held at which all the parties presented their views.

As a result of its review the ITA concluded that shunt reactors were within the “class or kind” of merchandise covered by Treasury’s dumping determination and that the scope of Treasury’s dumping finding could not be changed during a section 751 administrative review. Because the ITA lacked specific information regarding Alsthom Atlantique’s home market prices, it decided to postpone appraisement of shipments imported during the review period and directed that the 24 per cent cash deposit be continued on all shipments of large power transformers and shunt reactors until the publication of the final results of the next annual review.

It is plaintiff’s position that the ITA erred in both its determinations as a matter of law, and that its conclusions are not supported by substantial evidence in the administrative record.

There is no question as to the timeliness of this civil action. However, defendant does challenge the method employed by plaintiffs in bringing the 24 per cent dumping margin into issue. It is defendant’s position that this margin, imposed by Treasury on large power transformers, including shunt reactors, can only be raised after a protest filed against the assessment of dumping duties when merchandise subject to the order is imported, under the statutory provisions in effect before the Trade Agreements Act of 1979 changed the procedure to obtain review of dumping determinations. Since no shunt reactors have been entered, no protests filed and denied as to this margin, defendant posits that the Court is without jurisdiction in this case.

It is plaintiff’s position that it is contesting Commerce’s section 751 review of T.D. 72-160, particularly as it purports to apply to shunt reactors, and not the underlying Treasury determinations, and this Court agrees with this position. See Diversified Products Corp. v. United States (Stewart-Warner Corp., Intervenor), — CIT —, 572 F.Supp. 883 (1983).

The question for this Court, then, is whether the ITA did in fact reach a conclusion that shunt reactors are to continue to be covered under T.D. 72-106, whether this decision was within the scope of its authority under the statute and whether this decision was supported by substantial evidence.

The administrative record of the hearing conducted by the ITA reflects that the ITA considered whether it could amend the scope of the underlying Treasury decision. The transcript of the administrative hearing shows that Mr. Leonard M. Shambon, who conducted the hearing for the ITA, considered the scope of the Treasury decision:

Well, I don’t think we were focusing necessarily on what the ITC decided, but instead on what Treasury decided in placing the order on the books. And Treasury clearly said large power transformers; they, in the not too distant past before that order, had amended the investigation and explicitly listed what it perceived to be a large power transformer.
And we have no hint that Treasury, in placing the order, after investigating and finding no shipments of French shunt reactors, decided to carve out that merchandise. So, we are left with the supposition that Treasury, despite the fact that there were no shipments of French shunt reactors, fully intended to include French shunt reactors when it placed the thing on the books.
And so they may have made a wrong decision, but they made a decision. Now, my power under 751 is to investigate shipments of merchandise subject to an order, and the only authority I have is under 751(b), I think, to measure situations of changed circumstances dealing with the merchandise subject to the order.
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So, it is, first, a question of jurisdiction. If, in fact, I do have the jurisdiction to re-examine the wisdom of the Treasury decision, then I have to face the issue of whether or not I see anything wrong in what Treasury did. (A.R. 305-307).

Mr. Shambon even inquired as to whether the issue of no shipments of French shunt reactors was discussed in the briefs or at the hearing prior to the issuance of Treasury’s order (A.R. 310).

Thus, it is clear from the transcript of the hearing held with reference to the § 751 review that the question was raised as to the authority of the Commerce Department to modify an order of the Treasury Department, and that this question was answered in the negative by the ITA. The ITA did not reach the issue of whether the original Treasury decision was erroneous in that it included shunt reactors in the same dumping duty order with large power transformers.

The Court finds that the ITA’s conclusion in this matter was in error. Although the scope of the annual review permissable under § 751 was not defined by Congress, the legislative history of the Act indicates that the Commerce Department can review whether sales at less than fair value exist:

In addition the authority could review, upon request, a determination that ... less-than-fair value sales exists (sic). U.S. Senate Report No. 96-249, p. 80, U.S.Code Cong. & Admin.News 1979, pp. 381, 466.

Additionally, it is noted that the responsibility for administering the antidumping laws was transferred from Treasury to Commerce on January 2, 1980, more than five years ago. To require plaintiff to seek review of an antidumping duty order from an agency which has not been involved in this activity for more than five years, which no longer employs the personnel with expertise in this area and no longer has the facilities to conduct reviews or investigations, would not be in the interest of justice. The ITA, on the other hand, does employ such experts in this field and has a Congressional mandate to make annual reviews of antidumping duty orders. To hold that the ITA would be forced to follow an erroneous Treasury order until it was changed by Treasury would frustrate rather than further Congressional intent in transferring authority in antidumping matters to Commerce.

It is also to be noted that it is the underlying less-than fair value determination which creates the difficulty in this case. The ITC, in the original dumping investigation, found less than fair value sales of shunt reactors from France even though there had been no exports from France to the United States of shunt reactors during the period of investigation. Even if defendant and intervenor were correct in their position that the Treasury decision could not be reviewed by Commerce, the legislative history relied upon, supra, indicates that Congress intended that the less than fair value determination underlying the Treasury order could be reviewed by Commerce.

In Diversified Products Corp. v. United States (Stewart-Warner Corp., Intervenor), — CIT —, 572 F.Supp. 883 (1983), Judge Maletz concluded that the ITA has the authority to review a pre-Trade Agreements Act dumping finding for the purpose of ascertaining its scope:

[T]he ITA, not the Customs Service, is responsible for clarifying, where necessary, the scope of dumping findings and antidumping duty orders.

The Court further stated:

[I]t is equally clear that the ITA is in no way obligated to follow nor is it bound by the classification determination of Customs when it does clarify the scope of a dumping finding.

It is thus clear that this case must be remanded to the ITA for a determination by it as to whether shunt reactors are within the class or kind of merchandise encompassed by large power transformers.

Plaintiff has adduced much evidence, both before the ITA in its presentation in conjunction with the section 751 review and in its briefs in this action, that shunt reactors are not, commercially, of the same class or kind of merchandise as large power transformers and Westinghouse has adduced a similarly impressive argument that they are of the same class or kind.

While the classification of merchandise under the Tariff Schedules of the United States (TSUS) is not binding on the ITA in its class or kind determination (see Royal Business Machines v. United States, 1 CIT 80, 507 F.Supp. 1007 (1980), the Court directs the attention of the ITA to the holding of our appeals court, the United States Court of Appeals for the Federal Circuit, in Asea, Inc. v. United States, 748 F.2d 676, (Fed.Cir.1984) in which classification of shunt reactors under item 682.60, TSUS, as “inductors” was upheld.

This case is remanded to the ITA for a redetermination of its annual review of T.D. 72-160 in a manner consistent with the decision herein.


text:
    AGREXCO, AGRICULTURAL EXPORT CO., LTD., et al., Plaintiffs, v. UNITED STATES, Defendant.
    Consol. No. 80-10-01578.
    United States Court of International Trade.
    Feb. 1, 1985.

      Kaplan Russin & Vecchi, Washington, D.C. (Julius Kaplan, Dennis James, Jr. and Kathleen F. Patterson, Washington, D.C., on the briefs) for plaintiff, Agrexco, Agr. Export Co., Ltd.
    Eugene L. Stewart, Washington, D.C. (Paul W. Jameson, Washington, D.C., with him on the brief) for plaintiff, Roses, Inc.
    Richard K. Willard, Acting Asst. Atty. Gen., Washington, D.C., David M. Cohen, Director, Commercial Litigation Branch (Sheila N. Ziff, Washington, D.C., on the briefs) for defendant.
   RAO, Judge:

This case involves fresh cut roses, imported from Israel, which were the subject of a countervailing duty petition filed by the plaintiff, Roses, Inc. (Roses), a trade association of the domestic rose growing industry representing the majority of commercial rose growers in the United States. The petition, filed with the Commissioner of Customs on November 15, 1979, alleged that the Government of Israel was paying or bestowing, directly or indirectly, bounties or grants with respect to the production and exportation of cut roses to the United States. The Department of the Treasury did not initiate an investigation before December 31, 1979 and on January 2, 1980 the authority for administering the countervailing duty laws was transferred from the Department of the Treasury to the Department of Commerce (Commerce). Commerce initiated an investigation and published a Notice of Initiation of Investigation in the Federal Register on February 1, 1980. 45 Fed.Reg. 7273 (1980).

Since Israel is not a “country under the Agreement”, section 303 of the Tariff Act of 1930, as amended by section 103(b) of the Trade Agreements Act of 1979 [19 U.S.C. § 1303] applied and no finding of injury to an American industry was required. Commerce decided that the case was “extremely complicated” because there were twenty separate programs for which subsidy information was requested and published a Notice of Postponement of Preliminary Determination in the Federal Register on March 14, 1980 (45 Fed.Reg. 16522-23). The Preliminary Countervailing Determination was published in the Federal Register on June 10, 1980. Commerce found some of the programs, discussed infra, to be countervailable and some were found not to be in effect or not utilized. The estimated aggregate net amount of the subsidies was determined to be 3.8% of the f.o.b. value of the exported cut roses.

The International Trade Administration (ITA) verified this determination and a Final Determination was published in the Federal Register, 45 Fed.Reg. 58516-19 (1980), which was essentially the same as the preliminary determination, except that the final net subsidy rate was found to be 2.02% of the f.o.b. value of the exported merchandise.

Roses filed a summons and complaint in this Court contesting the validity of the final determination and subsequently, Agrexco, Agricultural Export Company, Ltd. (Agrexco) also filed a summons in this Court contesting the validity of the final determination. These cases were consolidated by order of this Court because they involved common issues of fact and of law. Subsequently, Roses filed a motion for summary judgment, Agrexco filed a cross-motion for summary judgment, and the United States opposed both these motions for summary judgment and cross-moved for summary judgment affirming its Final Countervailing Duty Determination.

Thereafter, Commerce admitted that as to three of the programs for which review was requested it had erred in its consideration as to whether a bounty or a grant had been bestowed. It moved for a partial remand to permit the ITA to reinvestigate and verify these programs:

(a) the Israeli government supported minimum price program,
(b) the Israeli government sponsored loans to Agrexco for the financing of working capital and accounts receivable, and
(c) the Israeli government assistance in the expansion, during 1978-79 of Agrexco’s facilities at Ben Gurion Airport from which the roses are air-freighted to the United States,

and this Court granted defendant’s motion.

As a result of its reconsideration, the ITA found that the government supported minimum price program conferred a benefit of 2.5%, that the government sponsored loans to Agrexco for the financing of working capital and accounts receivable conferred a benefit of 8.54%, and that the 1978-79 expansion of Agrexco’s facilities at the airport was found to confer a benefit of 0.12 per cent. Agrexco contests each of these determinations as being unlawful or contrary to the evidence.

In addition to reviewing the above programs, this Court will now consider the other programs that plaintiffs protest with respect to this countervailing duty determination. These programs include:

(d) exemption to approved packing houses from payment of two-thirds of the property tax on buildings used by each enterprise,
(e) exemption to Agrexco and the ap- ■ proved packing houses from payment of one-sixth of the property tax on equipment used by each enterprise,
(f) cash payments related to the property, machinery, equipment and buildings used by Agrexco,
(g) accelerated depreciation for machinery, equipment and buildings used by Agrexco,
(h) cash payments to growers for greenhouses,
(i) cash payments to packing houses for buildings and equipment,
(j) payments by the government equal to a percentage of the export value added, refunds for government participation in marketing, and cash rebates for every dollar of export sales,
(k) government support of regional relocation programs,
(l) refund of a portion of export insurance premiums,
(m) government participation in research and development related to roses and flowers,
(n) government funded extension services provided to rose growers,
(o) government support of the Ornamental Plant Production and Marketing Board.

There is no doubt that this case is “extraordinarily complicated” as Commerce had originally determined. There are at least 26 varieties of roses grown and exported from Israel, world-wide. Some are air-freighted directly to the United States and some are sent to European auctions from which shipments are also made to the United States.

The rose industry in Israel consists of growers, individuals who operate greenhouses and actually grow the roses; the eight packing houses which collect, sort, grade and pack the cut roses and deliver them to the airport; and Agrexco, which has an air-freight facility at Ben Gurion Airport and which assumes the responsibility for exporting all flowers and for marketing flowers abroad. It exports 90 per cent of the roses exported from Israel and is owned in part by the Government of Israel.

It is Roses’ position that the benefits bestowed at each level of production amount to countervailable bounties or grants.

As to the growers, the benefits would include cash payments for greenhouses, support of regional relocation programs, government participation in research and development related to roses and flowers, government funded extension services provided to rose growers and government support of the Ornamental Plant Production and Marketing Board. The ITA determined that cash payments to growers for greenhouses amounted to a subsidy of 0.364 per cent of the f.o.b. value of the merchandise. The value of the benefit was calculated by taking 33.5 per cent of the total payments and allocating the result on a straight line basis over 10 years (half the useful life of the greenhouses) and by then allocating the benefit attributable to the 1978/79 growing season over the 1978/79 rose exports.

This Court has considered the use of a period of half the accounting life of a capital asset to determine the value of a grant and has found it improper, not based on fact and not embodying generally accepted principles or methods of financial accounting or analysis. In Michelin Tire Corp. v. United States, 4 C.I.T. 252, 254, 255, (1982), the Court held that:

[T]he use of a period of half the accounting life of the capital assets amounts to a Procrustean method, unrelated to the facts, and unsupported by law or rule ...
The arbitrary compression of useful life is wrong.

The Court went on to discuss an alternative method, the sum of the digits, which it also rejected, and it remanded the case to the ITA for redetermination. We do the same.

Those other programs involved herein for which the allocation of benefit was also arrived at by the use of a period of half the accounting life are also due to be remanded to the ITA for redetermination. These included cash payments to packing houses related to the property, machinery and equipment [ (i) supra ] and the government development grant to Agrexco for an export facility at Ben Gurion Airport [(c) supra ].

As to the benefits conferred by government research and development, it is generally held that these programs do not confer subsidies when the research and development are provided for a wide range of disciplines and projects. Commerce found no subsidy because the results are disseminated to all growers and to the general public. It made a point of informing the Court that the results of this program were equally available to rose growers worldwide, including members of Roses, Inc. This Court is of the opinion that it is immaterial whether the information is disseminated to all groups, but whether the research and development is targeted to assist a particular, rather than a general industry. The brief for the United States contains statements which indicate that the publications disseminating the results of the research and development were “... the best examples of practical rose production.” If the research and development is targeted to the production of roses, it is a subsidy. We remand this program to Commerce for a determination of its value. Cf. Bethlehem Steel Corp. v. United States, 7 C.I.T. -, 590 F.Supp. 1237 (1984), in which the Court discussed generally available benefits and rejected their general exclusion under the countervailing duty law.

We reach the same conclusion as to the extension services provided to the rose growers. If the net result of these services provided the rose growers with specific assists that would not benefit other sectors of the agricultural segment of the Israeli economy, then it is the' opinion of this Court that they would be countervailable if not de minimus. We remand this to the ITA for a determination of the value of the subsidy.

With respect to Commerce’s finding that government support of the Ornamental Plant Production and Marketing Board is not a subsidy, the following considerations apply. It is Roses’ position that any government support of this board, which provides services to the rose industry gratis should be, to that extent, considered a bounty or a grant. Commerce takes the position that this Board receives no government funding, and, therefore, no subsidy can be found. Funding is not the only form of assist that can be given. The record shows that the Government of Israel provides some of the Board membership, and it has not been determined whether these members are compensated for their activities as Board members. If, however, their salaries are paid by the Government of Israel and if it is part of their official or government function to serve on the Board, it is the opinion of this Court that some subsidization has occurred. Also, if the government has provided other assistance to the Board, such as free facilities, these should also be considered. This matter is remanded to Commerce for further investigation.

As to the redetermination of the value of the minimum price program, on remand the ITA requested information concerning this program both from the Government of Israel and from Agrexco, noting in both requests the need for the information before the expiration of the time within which it was required to report the results of its redetermination to this Court. When the information that was forwarded to it by the Government of Israel and Agrexco concerning this program was found to be contradictory and incomplete, incapable of verification, the ITA turned to the data provided to it by Roses in support of its petition and assessed a countervailing duty rate of 2.5 per cent of value, citing the mandate of the statute, section 776 of the Tariff Act of 1930 (19 U.S.C. 1677e), which expressly authorizes Commerce, if it is unable to verify the accuracy of the information submitted, to use the best information available to it, including that provided by the petitioner. However, the Government admits that there is no information in the record with respect to the sales prices of roses resold to the United States through the European auctions (see defendant’s response in opposition to the supplemental brief of plaintiff, Agrexco and in support of its cross-motion for' summary judgment, page 15). The measurement of a grant must be made in the most reasonable commercial terms. Michelin Tire Corp. v. United States, 6 C.I.T. -, Slip Op. 83-136 (December 22, 1983). And, this measurement must be specific for each recipient in order for it to be reasonable within the intendment of the countervailing duty law. Id. It is concluded by this Court that the specificity requirement enunciated in Michelin, supra, has not been met for this program. If the data as to the number of roses and the prices at which they were exported to the United States through the European auction houses is not part of the record of this case, it can be concluded that accurate information was not available to Roses at the time it filed its petition. That being the case, its statement that roses from Israel benefit from a 2.5 per cent grant because of the minimum price support program was speculative and not supported by substantial evidence. It is remanded for further proceedings in accordance with this opinion.

We turn now to those programs for which Agrexco obtained loans at preferential rates, i.e., preferential export financing. Commerce had originally computed the value of this benefit by comparing the interest rate which Agrexco paid with the overdraft rate then applicable in Israel. On remand, Commerce found three different funds or sources of financing with different rates and conditions, and determined the value of the benefit by comparing the rates utilized with those for comparable sources of financing. Agrexco argues that the rate at which it could have borrowed money from New York banks (1 and lk per cent above prime) is the proper rate to use for comparison, and that it would have been exempt from the 12 per cent surcharge applicable to foreign loans. Commerce found that the information supplied by Agrexco in support of this position was unsupported by properly corroborative documentation. It takes the position that had Agrexco been exempted from paying the surcharge, that in itself might have constituted a subsidy. Since we concur that Commerce used the proper method in computing the benefit bestowed by preferential financing, we need not address this additional consideration.

We turn to the program by reason of which Agrexco and three of the packing houses were exempted from paying a portion (two-thirds) of any property tax on buildings for which they were liable, under the Israeli Encouragement of Capital Law (ECIL). Commerce determined that this provision of the ECIL was repealed in 1978, but that Agrexco and the packing houses remained eligible to receive benefits under the program during 1978-79. Commerce was informed through Agrexco’s Israeli attorney of an agreement between Agrexco and the Airport Authority, which owned the facilities used by Agrexco, that it had “no obligation under law to pay property tax.” Commerce took the position that this agreement, rather than the provisions of the ECIL relieved Agrexco from the legal liability to pay property tax and that until Agrexco is legally obligated to pay the tax, exemption from the liability is not to be considered a countervailable benefit. Commerce accordingly determined that the subsidy rate for this program was zero.

Generally, exemption from the payment of real property taxes is held to be a subsidy. See Sturm, Customs Law and Administration, § 58.2. Without dwelling on the legal question of whether buildings constitute real property or whether the general principle enunciated supra can be expanded to include buildings, we turn to whether the exemption constituted a benefit. This Court is of the opinion that it is not germaine whether Agrexco and the packing houses are exempted from paying the tax by reason of an agreement with the Airport Authority, which we assume is an agency of the Israeli government, rather than under the ECIL. The issue is whether it is exempted, by government action, from paying taxes that are paid by other firms. For each year that it has received an exemption from the government from the payment of taxes, it has received a benefit. The same is true of the packing houses. See Bethlehem Steel Corp. v. United States, 7 C.I.T. -, 590 F.Supp. 1237 (1984), for a cogent discussion on this topic by Judge Watson.

It is Roses’ position that the value of this benefit is 100 per cent of the reduction in the property tax on buildings, whereas Commerce has already indicated that it would value the benefit by taking into account the savings only to the rose sector for the exemption from payment of the property tax resulting from the ECIL provisions allowing preferential tax rates for buildings. We leave to the agency the task of finding the proper value of this benefit, taking into consideration the benefit derived from the agreement with the Airport Authority.

Similar is the issue of whether exemption from paying of one-sixth of the property tax on equipment used by Agrexco and the approved packing houses. Commerce calculated the net subsidy to be equal to 0.06 per cent based on equipment values provided in tax returns or based on equipment values provided by the Board. What the Court cannot determine from the information provided is the basis for the valuation of the equipment for tax purposes; that is, whether an independent valuation of the equipment is made by the taxing authority, whether valuation is ever required or whether the values provided by the Board are accepted without question. Another question is whether the valuation process for the rose industry is more favorable than that for other industries.

Again, Roses argues that the benefit received was 100 per cent of the property tax that was not paid, but again, the agency will be permitted to arrive at the value of the benefit.

Roses also contests Commerce’s determination that there was no countervailable benefit derived by Agrexco from the provisions for accelerated depreciation under the provisions of the ECIL. These amounts to a rate of 200 per cent for machinery and equipment and 400 per cent for buildings. Although the benefits to be derived from these provisions were not used by Agrexco, because it paid no income taxes in 1978-79, Roses takes the position that a benefit is bestowed because the loss due to depreciation can be carried over to future years when it would otherwise show a profit. The government, correctly, cites legislative history to buttress its position that only current benefits can be considered countervailable subsidies. The House Ways and Means Committee Report on the Trade Agreements Act of 1979 states (H.Rep. No. 96-317, 96th Cong., 1st Sess. 74 (1979):

With respect to a ‘net subsidy’ under subsection (b), the Committee intends that the authority will determine the amount of a gross subsidy by determining the value of the subsidy bestowed or otherwise made available to the -extent such a subsidy is actually used. For example, if a firm were given a tax deduction for moving to a disadvantaged area, the value of the subsidy is the tax deduction available. However, amounts of the tax deduction not actually used would not be included in the gross subsidy amount ... [Emphasis supplied.]

Additionally, Commerce has stated that it is well aware of the existence of the provisions of the ECIL and will scrutinize the results of the provisions for accelerated depreciation in future annual reviews under Section 751(a). If accelerated depreciation is being used under the ECIL, Commerce would include this fact in future annual reviews. The Court finds that this approach is in accordance with the law.

This principle is also applicable to the provision for refunding a portion of export insurance premiums. Commerce determined, and the verification Report stated, that no insurance premiums were paid for rose shipments. This statement was made by one Mr. Sofer of Agrexco and one Mr. Goren during the verification. Roses insists that this evidence is insufficient and that the ITA should have asked to examine books of account, ledgers, etc. to determine whether these statements were correct. This court will not substitute its standards of proof (nor those of Roses) for the verification carried on by the ITA. It apparently found no discrepancy, nor can Roses show any, that would lead to the conclusion that these statements were erroneous. We accept the finding of the ITA that the benefits under the program for the refund of a portion of export insurance premiums was not used by Agrexco and that no subsidy resulted therefrom.

Roses also challenges Commerce’s determination that rose growers did not benefit from the regional relocation program. The ITA ascertained that only enterprises that qualified under the ECIL were eligible to receive these grants. Rose growers were not approved under the ECIL and therefore could not qualify. This fact was verified by Y. Shehory, Deputy, Director General of the ECIL. Roses takes the position that this verification is insufficient, and that therefore Commerce should have used the best information available, viz, that supplied by Roses in support of its petition. This court will not remand this issue for further verification. Absent some showing that Mr. Shehory acted in bad faith, misstated the facts or was disqualified from certifying that rose growers were ineligible under the regional relocation program, we cannot conclude that Commerce’s determination was based on insufficient evidence or contrary to law.

Under the Export Promotion Financing Fund, the government of Israel compensated exporters for expenses such as advertising, merchandising and public relations (IL 0.10 for every dollar of exports for the expenses of marketing and up to $0.30 for every dollar of exports as a cash refund). These programs were abolished in 1977. Although Commerce was unable to verify amounts paid on total exports of flowers, it did verify the sales promotion budget for flower exports to the United States for the year 1978-79 and calculated the ad valorem value of this program by multiplying the budget amount by 33.5 per cent (the proportion of flower exports represented by roses) and dividing the result by the dollar value of rose exports to the United States. On this basis it found a subsidy of 0.67 of the f.o.b. value of the merchandise.

It is not clear to this Court whether the sales promotion budget, which was supplied by the Israeli Ministry of Agriculture) takes into account both these benefits. It does not take into account compensation paid for roses which were shipped to the European auctions and then transshipped to the United States. Therefore we remand this issue for reconsideration by Commerce to determine whether the promotion budget covers both rebates and whether it can be determined what percentage of the rebates paid for roses shipped to the European auctions accrued to the benefit of those roses which were then transshipped to the United States.

For the reasons expressed herein, and due to the fact that the Court’s decision may result in a reduction of the countervailing duty rate, this action is remanded to Commerce for further proceedings in accordance with this opinion. The parties are directed to confer with one another and attempt to agree on a schedule for proceeding on remand and for reporting the results of their consultation to the Court. If the parties cannot reach agreement within thirty days from the date of this order, the Court will order a schedule for further proceedings.


author: WATSON, Judge:

text:
    AMERICAN GRAPE GROWERS, et al., Plaintiffs, v. UNITED STATES, et al., Defendants, and Joseph E. Seagram & Sons, Inc., et al., Defendants-Intervenors.
    Court No. 84-4-00575.
    United States Court of International Trade.
    March 11, 1985.

      Plaia & Schaumberg, Chartered, Washington, D.C. (Herbert C. Shelley, Tom M. Schaumberg, Joel D. Kaufman, George W. Thompson, Washington, D.C., of counsel), for defendant-intervenor Joseph E. Seagram & Sons, Inc.
    Schreiber & MacKnight, New York City (William B. Schreiber, New York City, of counsel), for defendant-intervenor Wellington Importers, Ltd.
    Office of General Counsel, U.S. International Trade Commission (Michael P. Ma-bile, Acting Gen. Counsel, Wayne W. Herrington, Washington, D.C., Attorney), for defendant United States.
    Heron, Burchette, Ruckert & Rothwell, Washington, D.C. (Thomas A. Rothwell, Jr., Washington, D.C., of counsel), for plaintiffs American Grape Growers Alliance for Fair Trade, et al.
   Memorandum Opinion and Order

WATSON, Judge:

In this opinion the Court rules on a motion to dismiss made by defendant-intervenor Joseph E. Seagram & Sons, Inc. (Sea-grams), joined in by defendant intervenor Wellington Importers, Ltd. (Wellington) and supported by the defendant International Trade Commission (ITC).

The motion to dismiss attacks the standing of the plaintiffs to bring this action under the Trade Agreements Act of 1979, as well as their “standing” to be petitioners in the administrative proceeding of which this action is a judicial review.

This action was brought to obtain judicial review of the ITC determinations that there was no reasonable indication of material injury or threat of material injury by reason of importations of table wine from France and Italy, which were alleged to be subsidized and sold at less than fair value.

The motion has five prongs: In the first, the standing of those plaintiffs who are grape growers is attacked on the ground that they are not “interested parties” within the meaning of 19 U.S.C. § 1516(a). This point is well taken and they must be dismissed from the action.

The term “interested parties,” insofar as it is germane here, is limited to producers of a product like that subject to investigation. 19 U.S.C. § 1677(9). Obviously, table wine and grapes are different products. The only possible justification of standing for the grape growers is a reading of the law which would make an exception for agricultural raw products.

Plaintiffs argue that Congress intended to include producers of raw agricultural products within the industry producing the more advanced product. The Court does not agree that this momentous enlargement of the normal understanding of the term industry and of the concept of “like product” is found in the law.

An interested party, in the terms relevant here, is simply defined in 19 U.S.C. § 1677(9)(C), as a producer of a “like product,” which is further defined in 19 U.S.C. § 1677(10) as a product like the article subject to an investigation.

It is true that in discussing the question of determining whether an industry is being materially injured the legislators did focus on the “special nature of agriculture,” and used the example of the “livestock sector” in which apparently favorable economic signs in the beef producing industry could, in reality, indicate the hardship of the cattle raisers. S.Rep. No. 96-249, 96th Cong., 1st Sess. 88 (1979), U.S.Code Cong. & Admin.News 1979, p. 381. But this recognition of the subtleties of injury determination in the agricultural area is a far cry from the promulgation of a general rule that in all cases the producers of agricultural raw products be joined with the industry producing the final product.

The logic of the legislative concern summarized above extends only to agricultural products which are completely devoted to the production of the more advanced product under investigation. Grapes, of which 55 percent are apparently used in wine production, are utilized to a significant extent for other purposes, notably, as fruit and for the production of raisins. The other uses are too extensive to allow the production of grapes to be considered part and parcel of the production of table wine.

The grape growers argue that the ITC has accepted other agricultural raw products as part of an industry producing a more advanced product. They point to investigations in which orange growers were included in the frozen concentrated orange juice industry; sheep growers and feed lot operators were included in the lamb meat industry; sugar beet and sugar cane growers were included in the sugar producing industry; tomato growers were included in the tomato end-product industry; and red raspberry growers were included in the end-product industry.

In those instances however, substantially all of the raw product was dedicated to the production of the product under investigation. Assuming this to be a proper understanding of the concept of industry and a correct interpretation of the legislative intent, it still does not benefit the grape growers in this action. Their raw agricultural product is not dedicated to the same extent to the production of table wine. It cannot be accepted that they fall within the original description of interested parties, even when it is given an expansive application to special agricultural situations.

As a final point on the question of the standing of the grape growers, the Court considers this a situation in which it is possible to reason backwards from the amendment made to include them in the definition of “industry” in the Trade and Tariff Act of 1984. In some circumstances reasoning from an amendment may be a double-edged sword. It might be a specific expression of something that was already in the law. Here however, it is clear that what has been done is the addition of grape growers to a category in which they would normally not belong.

The plain language of the amendment and the limitation of the inclusion to a period of two years strongly suggests that the purpose was the temporary addition of grape growers and not the expression of a permanent pre-existing meaning of the term “industry.”

All these considerations lead the Court to conclude that, under the Trade Agreements Act of 1979, grape growers were not part of the industry for the purpose of an investigation of injury to the table wine industry and were not interested parties within the meaning of the law.

The remaining grounds of the motion to dismiss are rejected.

The movants assert that those plaintiffs who make table wine were too small a percentage of the table wine industry to be proper petitioners on behalf of that industry. For this proposition, they rely on Gilmore Steel Corp. v. United States, 8 CIT -, 585 F.Supp. 670 (1984). This point, however, is not properly raised in a motion to dismiss on jurisdictional grounds. It does not relate to a party’s standing to bring an action in this Court or to any other aspect of the jurisdiction of the Court. It attacks one of the implicit determinations of the ITC, namely, the determination that the petitioners were entitled to file a petition in the administrative proceeding. Accordingly, it is a subject which is properly part of the judicial review of the substance of the administrative determination. It must await the resolution of the merits of the case.

The movants also single out the Gibson Wine Co. (Gibson) as lacking standing because it was not a “party to the proceeding” before the ITC, even though as a maker of table wine it was an “interested party.” On the question of participation in the proceeding, the law is satisfied by any form of notification or participation which reasonably conveys the separate status of a party. The participation requirement is obviously intended only to bar action by someone who did not take the opportunity to further its interests on the administrative level. The Court has also taken the requirement of participation to mean something more than passive membership in an umbrella organization. The listing of Gibson as a co-petitioner in a post-conference brief is sufficient to satisfy these standards. Zenith Radio Corporation v. United States, 5 C.I.T. 155 (1983).

The Court’s opinion that grape growers are not interested parties leaves the plaintiff association known as American Grape Growers Alliance (the Alliance) with a membership of five interested parties and five others.

Movants argue that this does not give the Alliance a “majority” of members who produce a like product and therefore the Alliance does not meet the standard for a trade association expressed in 19 U.S.C. § 1677(9)(E). The Court agrees that five out of ten does not make a majority in the literal sense. The Court also notes that it has previously denied intervention (the legal equivalent of standing to bring the action) to an organization in which only four of 14 members produced the product under investigation. Matsushita Electric Industrial Co., Ltd. v. United States, 2 C.I.T. 254; 529 F.Supp. 664 (1981).

Nevertheless, it must be understood that the standing requirement for associations was primarily designed to keep out broad-spectrum, general organizations who would always have a few members with direct interest in the product under investigation. The “majority” requirement in the Trade Agreements Act of 1979 was explained as follows in the report of the Senate Committee on Finance:

This limitation is believed to fairly delimit those groups with sufficient interest to always be considered interested parties. An association representative of importers generally, or business generally, would not be considered an interested party under this limitation, although a sub-group of such an association may qualify.
S.Rep. 96-249, 96th Cong., 1st Sess., 90 (1979), U.S.Code Cong. & Admin.News 1979, p. 476.

In the opinion of the Court the remedial purpose of this provision, intended as it was to set a fair standard for access to judicial review, justifies the conclusion that an organization should have standing in the peculiar situation where interested parties are half of the membership. At the midpoint the proportion of membership with undeniable interest is sufficient to fall within the intention of the law.

As a result of the considerations expressed above, the Court dismisses from this action the Raisin Bargaining Association, the New York State Wine Grape Growers, the National Grape Cooperative Association, the California North Coast Grape Growers, and the Washington Association of Wine Grape Growers. While these organizations may have some members who are table wine producers they have not been shown to individually meet the statutory standing requirements. As to the remaining plaintiffs, the motion is DENIED.

      . Certain Table Wines From France and Italy. Inv. No. 701-TA-210 and 211 (preliminary), USITC Pub. 1502 (March, 1984).

      . Frozen Concentrated Orange Juice Front Brazil, Inv. No. 701-TA-184.

      .. Lamb Meat From New Zealand, Inv. No. 701-TA-80.

      . Sugar From the European Community, Inv. No. 104-TAA-7.

      . Certain Tomato Products From Greece, Inv. No. 104-TAA-124.

      . Certain Red Raspberries From Canada, Inv. No. 731-TA-135.

      . The amendment changed the provision which defined industry as producers of a like product to add "except that in the case of wine and grape products subject to investigation under this title, the term also means the domestic producers of the principal raw agricultural product (determined on either a volume or value basis) which is included in the like domestic product, if those producers allege material injury, or threat of material injury, as a result of imports of such wine and grape products.”

      . Section 626(c)(2) of the Trade and Tariff Act of 1984 provides that the amendment "shall not apply with respect to petitions filed ... after September 30, 1986.”


author: CARMAN, Judge.

text:
    HUFFY CORPORATION, et al., Plaintiffs, v. UNITED STATES, Defendant, and Taiwan Transportation Vehicle Manufacturers Association, Defendant-Intervenor.
    Court No. 83-8-01180.
    United States Court of International Trade.
    March 13, 1985.
    Collier, Shannon, Rill & Scott, Washington, D.C. (Michael R. Kershow and Lauren R. Howard, Washington, D.C., on the motion), for plaintiffs.
    Richard K. Willard, Acting Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Washington, D.C. (Velta A. Melnbrencis, New York City, on the motion), for defendant.
    Plaia & Schaumberg, Chartered, Washington, D.C. (Herbert C. Shelley, Joel D. Kaufman and George W. Thompson, Washington, D.C., on the motion), for defendantintervenor.
   MEMORANDUM AND OPINION

CARMAN, Judge.

BACKGROUND

This case arises out of an antidumping petition filed with the United States Department of Commerce (Commerce) by plaintiffs on September 24, 1982. Following investigation by Commerce’s International Trade Administration (ITA), Commerce published a notice on July 11, 1983, of Final Determination of Sales at Less Than Fair Value: Bicycles from Taiwan. 48 Fed.Reg. 31,688 (1983). Plaintiffs challenged this nominally affirmative determination in its action filed with this Court on August 9, 1983 (Court No. 83-8-01180). In the determination Commerce had concluded that only five of sixteen Taiwanese bicycle producers investigated had weighted average dumping margins in excess of 0.5 percent ad valorem, and liquidations of entries from these firms were suspended until further notice. Regarding the eleven remaining firms, Commerce found either no sales or de minimis sales of bicycles at less than fair value (LTFV). These eleven firms were therefore excluded from the final affirmative determination.

The International Trade Commission (ITC), in its injury investigation pursuant to 19 U.S.C. § 1673d(b) (1982), determined that the record did not “establish a causal nexus between the imports under investigation [per Commerce’s final affirmative determination] and the injury experienced by the U.S. industry.” Bicycles from Taiwan, Inv.No. 731-TA-lll (Final), USITC Pub. No. 1417, at 8 (1983). As a result of the ITC’s final negative injury notification on August 29, 1983, Commerce did not publish an antidumping duty order and the investigation was terminated. See 19 U.S.C. §§ 1673d(c)(2), 1673e(a) (1982). Plaintiffs challenged the ITC injury determination in a second action filed with this Court on October 7, 1983 (Court No. 83-10-01499), following publication of this final negative determination on September 8, 1983. 48 Fed.Reg. 40,574 (1983). This latter challenge was primarily to the ITC’s noninclusion of data regarding the eleven producers which had been excluded from the LTFV determination.

As the ITC’s injury determination depended in part upon the results in Commerce’s LTFV determination, the defendant moved to consolidate the two actions under Consolidated Court No. 83-8-01180 and suspend those proceedings dealing with the ITC determination until after ruling on the challenge to Commerce’s LTFV determination. Plaintiffs agreed to defendant’s proposed mode of proceeding and the Court therefore allowed defendant’s motion for consolidation and suspension on December 6, 1983. Intervenor now moves to dismiss plaintiff’s original challenge to Commerce’s final LTFV determination, contending that the Court lacks subject-matter jurisdiction.

OPINION

Intervenor argues that no provision provides for judicial review of an affirmative antidumping duty determination by Commerce until such determination results in an antidumping duty order. See 19 U.S.C. § 1516a(a)(2)(B)(i), (ii) (1982). Intervenor’s view is essentially that the petitioner’s right of appeal is cut off when the ITC has not been able to link the injury experienced by the domestic industry to those foreign producers that Commerce determined were dumping. The Court rejects this position. Its adoption could result in negative findings as to dumping by certain companies completely escaping judicial review.

Intervenor does show that an appeal of the ITC negative determination, pursuant to 19 U.S.C. § 1516a(a)(2)(A)(i), could lead to the overturning of the ITC determination and the issuance of an order. Thereupon the plaintiffs would gain the right to review of the Commerce determination under § 1516a(a)(2)(A)(ii). But intervenor fails to point out any avenue of review if the ITC determination were to be upheld.

The appealability of negative findings contained in nominally affirmative dumping and subsidy determinations by Commerce has been the subject of a number of disputes before this Court and the Court of Appeals for the Federal Circuit. E.g., United States Steel Corp. v. United States, 5 CIT 287, (1983), vacated as moot, 7 CIT —, Slip Op. 84-12 (Feb. 24, 1984); United States Steel Corp. v. United States, 5 CIT 272 (1983), vacated as moot, 7 CIT —, Slip Op. 84-12 (Feb. 24, 1984); Bethlehem Steel Corp. v. United States, 742 F.2d 1405 (Fed.Cir.1984). It is now apparent that the negative and affirmative findings of an affirmative determination should generally be heard together in a single action following the ITC injury investigation and the publication of an anti-dumping or countervailing duty order, as long as the ITA has found some subsidy or dumping regarding the subject merchandise and companies. See Bethlehem, 742 F.2d at 1410-11. But where particular products or companies have not been a part of the affirmative Commerce determination, the question of proper duty assessment will not become moot upon a negative ITC injury determination. The controversy regarding the negative findings of the ITA remains.

A negative finding by the ITA which results in the exclusion of a product or company is in substance the same as a final negative determination. The ITC does not consider such a product or company in its evaluation of injury to the domestic industry. Further, the suspension of liquidations of entries and the posting of security is not required under 19 U.S.C. § 1671b(d)(l), (2) (1982). From the point of view of Commerce, the matter regarding the excluded product or company is essentially closed. The controversy is therefore ripe for appeal.

Congress apparently recognized this proposition when enacting section 623(a)(3) of the Trade and Tariff Act of 1984, Pub.L. No. 98-573, 98 Stat. 2948, 3040. This section, amending 19 U.S.C. § 1516a(a)(2)(B)(ii), now provides for review within 30 days after publication in the Federal Register notice of

[a] final negative determination by the administrating authority or the Commission under section 703 or 735 of this Act, including, at the option of the appellant, any part of a final affirmative determination which specifically excludes any company or product.

Id. (emphasis added).

There is no question of the applicability of this statute to the current controversy, as Commerce specifically excluded eleven companies from its affirmative determination. See 48 Fed.Reg. 31,688 (1983). Plaintiffs have properly alleged the Court’s jurisdiction in their complaint by citing the appropriate jurisdictional statutes, 28 U.S.C. § 1581(c) and 19 U.S.C. § 1516a(a)(2), and by alleging the requisite jurisdictional facts which have subsequently been borne out by the record. The Court’s jurisdiction is not affected by the plaintiffs not specifically discussing Commerce’s exclusion of eleven companies from the affirmative determination in Counts I-IV of the complaint. The counts merely outline the challenges to the legal and factual conclusions by Commerce which led to the exclusion of the eleven companies.

For the foregoing reasons, intervenor’s motion to dismiss Court No. 83-8-01180 should be, and hereby is, denied. Pursuant to the Court’s order of December 6, 1983, matters relating to the ITC injury determination (as originally raised in Court No. 83-10-01499) continue to be stayed pending the Court’s review of those matters which resulted in the exclusion of eleven companies from Commerce’s July 11, 1983 final affirmative antidumping duty determination.

      . The Court granted the motion to intervene by the Taiwan Transportation Vehicle Manufacturers Association on February 29, 1984.

      . Section 626(b)(2) of the Trade and Tariff Act of 1984, Pub.L. No. 98-573, 98 Stat. 2948, 3042, assures that the section 623 amendments apply to civil actions pending on the date of enactment of the Act.