Petition for Writ of Certiorari — NEC Corp. v. United States

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' Supreme Court, Us

) raga

No. 98-

DB y 5 - i098

IN THE

Supreme Court of the United Stabs Me “er

OCTOBER TERM, 1998

NEC CORPORATION and

HNSX SUPERCOMPUTERS, INC..,

Petitioners,

Vv.

UNITED STATES AND DEPARTMENT OF COMMERCE,

Respondents,

and

CRAY RESEARCH, INC.,

Respondent.

On Petition for a Writ of Certiorari to the

United States Court of Appeals for the Federal Circuit

PETITION FOR A WRIT OF CERTIORARI

ROBERT E. MONTGOMERY, JR.

Counsel of Record

TERENCE J. FORTUNE

ROBERT P. PARKER

DAVID J. WEILER

SWATI AGRAWAL

Paul, Weiss, Rifkind,

Wharton & Garrison

16i5 L Street N.W.

Suite 1300

Washington, D.C. 20036

(202) 223-7300

Counsel for Petitioners

PRESS OF BYRON S. ADAMS # WASHINGTON, D.C. # 1-800-347-8208

QUESTION PRESENTED

Whether, under the Due Process Clause of the Fifth

Amendment, the standard for disqualifying an administrative

decisionmaker alleged to have prejudged questions of

adjudicative fact requires the challenging party to prove that

the decisionmaker’s mind is “irrevocably closed,” as the

Federal Circuit held in the present case, or whether

disqualification is required whenever “a disinterested observer

may conclude that [the decisionmaker] has in some measure

adjudged the facts as welf as the law of a particular case in

advance of hearing it,” as the District of Columbia, Sixth,

Eighth, and Tenth Circuits have held.

PARTIES

The parties in the courts below are as follows:

Plaintiffs-Appellants: NEC Corporation and HNSX

Supercomputers, Inc.

Defendants-Appellees: | United States; Department of

Commerce; and Cray

Research, Inc.

The plaintiffs-appellants in the court below are petitioners in

this Court. The defendants-appellees in the Court below are

respondents in this Court.

RULE 29.6 LISTING

Pursuant to Rule 29.6 of the Rules of this Court:

1. NEC Corporation states that its publicly-held

affiliates are: NEC Systems Integration & Construction, Ltd.;

Ando Electric Company, Limited.; Japan Aviation Electronics

Industry, Limited.; Tokin Cerporation; Toyo Communication

Equipment Co., Ltd.; Nippon Avionics Co., Ltd.; Nippon

Electric Glass Co., Ltd.; Nippon Electric Industry Co., Ltd.;

Nitsuko Corporation; Anritsu Corporation; Tama Electric

Co., Ltd.; Nippon Computer System Co., Ltd.

2. HNSX Supercomputers, Inc. states that if is an

indirect, wholly-owned subsidiary of NEC Corporation, and

does not have any nonwhoily-owned subsidiaries.

ili

TABLE OF CONTENTS

Page

I i

PRR 664. teins RS area bP eee. ca. ii

ee ns an pa DS A a ele cc ii

Mee TREO os ks one c ccs o's avs ce. v

Bs Re ee |

UIE Sot ort ay fc geek ck se ek 1

CONSTITUTIONAL PROVISION INVOLVED ........ 1

pEAReeeeee OF TORGAGE,......... oss. ce cae 2

A. Commerce’s Unprecedented Dissemination of

Dumping Findings Outside the Context of an

Antidumping Investigation .............. 3

B. DOC’s Initiation of the Supercomputer

Antidumping Investigation .............. 6

C. The Trial Court’s Opinion .............. 7

D. The Federal Circuit’s Opinion ........... 9

REASONS FOR GRANTING THE WRIT ........... 1]

I. The Federal Circuit’s “Irrevocably Closed Mind”

Standard Is In Direct Conflict with the Due Process

Standard Adopted by Four Other Circuits ...... . 11

A. The District of Columbia, Sixth, Eighth, and

Tenth Circuits Each Requires That Adjudicative

Hearings Be Completely Fair — in Both Fact

and Appearance — When Viewed Through the

Eyes of a Disinterested Observer.......... 11

Page

B. The Federal Circuit’s Decision in NEC v.

United States Conflicts with the Foregoing

Decisions, Notwithstanding Substantially

Indistinguishable Facts ..........+6626:

C. The Federal Circuit Erroneously Adopted a

Disqualification Standard That Was Crafted by

this Court to Address Prejudgment of

Legislative, Not Adjudicative, Facts .......

II. In Applying the “Irrevocably Closed Mind” Standard

to NEC’s Prejudgment Claim, the Federal Circuit

Decided an Important Question of Constitutional

Law Which Has Not Been Settled by this Court . .

A. The Decisions of This Court on Which the

Federal Circuit Relied Do Not Resolve the Issue

Presented by NEC’s Prejudgment Claim .....

B. The Supreme Court Should Take This

Opportunity to Address the Degree to Which an

Administrative Agency Charged with a

Combination of Investigative and Adjudicative

Functions May Take a Position on Disputed

Factual Issues Outside the Established Statutory

PR Sai ks eee eee ee eee

. The Federal Circuit’s Decision Should Be Reviewed

By This Court Because It Effectively Creates a Due

Process “Double Standard” Which Could Be Viewed

As Discriminatory by our Trading Partmers......

CE os a es ow ee eee

«ie

TABLE OF AUTHORITIES

Page(s)

CASES:

American Cyanamid Co. v. FTC, 363 F.2d 757 (6th

Gir AOE se 6 ie wk ee eo ek eee 13-14

Amos Treat & Co. v. SEC, 306 F.2d 260 (D.C. Cir.

RE 405 Be ea wae eS: 12

Antoniu v. SEC, 877 F.2d 721 (8th Cir. 1989) cert.

denied, 494 U.S. 10041990) ...... 14-15, 17

Association of Nat’l. Advertisers, Inc. v. FTC, 627

F.2d 1151 (D.C. Cir. 1979), cert. denied,

GET Aigh, SER CI 6k os ae ee SS 8, 20-21

Board of Regents v. Roth, 408 U.S. 564 (1972) ...... 9

Cinderella Career & Finishing Sch., Inc. v. FTC,

425 F240 363 (D.C. Cir. 1970)... ss. passim

Concrete Pipe & Prods., Inc. v. Construction

Laborers Pension Trust, 508 U.S. 602

RIOD oie 0 ee ee ROE ee 26

Crawford-El v. Britton, 118 S. Ct. 1584 (1998) ...... 11

FTC v. Cement Inst., 333 U.S. 683 (1948) .. 19-20, 22, 24

Gilligan, Will, & Co. v. SEC, 267 F.2d 461 (2d

Cir.), cert. denied, 361 U.S. 896 (1959). . 12, 15

Hannah v. Larche, 363 U.S. 420 (1960) ....... i |

Hortonville Joint Sch. Dist. No. 1 v. Hortonville

Educ. Ass’n, 426 U.S. 482 (1976) ...... 20, 24

Marshall v. Jerrico, Inc., 446 U.S. 238 (1980) ...... 26

Table of Authorities continued

Page(s)

Memphis Light, Gas, & Water Div. v. Craft, 436

ue Sea. Bose aha ee we oe a 10

Morgan v. United States, 304 U.S. 1 (1938) ..... 15, 16

Richardson v. Perales, 402 U.S. 389 (1971) ........ 24

Staton v. Mayes, 552 F.2d 908 (10th Cir.), cert.

denied, 434 U.S. 907 (1977) ......... 14, 20

Texaco, Inc. v. FTC, 336 F.2d 754 (D.C. Cir.

1964), vacated on other grounds, 381

od - FRE < A Capes dae ae passim

United States v. Florida E. Coast Ry. Co., 410 U.S.

SPER EE i ok 0 Veen ee es 21

United States v. Morgan, 313 U.S. 409 (1941) . 16, 20, 24

Withrow v. Larkin, 421 U.S. 35 (1975) ...... 22-23, 25

STATUTES, REGULATIONS, AND RULES:

RD Wi ls Se TET gb because nce 6, 9-10

ae U Ba eC ERS EEE 5 S SS mvs

y BIE See oe. en Be ts ie ae 27

19 UP ee ia a es on Meee Nae bs Coe 6

89 CPR: SG WOR os Sa was te e ee e eee 6

Pi ER Oe Ciao ra eee ee il

Pe te NO Dg 8: eset

Vii

Table of Authorities continued

Page(s)

MISCELLANEOUS:

es RO Se ck is oh Pee ee ee: eee

KENNETH C. DAVIS & RICHARD C. PIERCE, JR..,

ADMINISTRATIVE LAW TREATISE (3d ed.

1994)

PETITION FOR A WRIT OF CERTIORARI

Petitioners NEC Corp. and HNSX Supercomputers, Inc.

(collectively “NEC”) respectfully request that this Court grant

a writ of certiorari to review the decision of the United States

Court of Appeals for the Federal Circuit rejecting NEC’s

request to enjoin the Department of Commerce (“Commerce”

or “DOC”) from enforcing an antidumping order based upon

adjudicative facts regarding NEC’s supercomputer imports

which Commerce was alleged to have prejudged. NEC had

sought such relief under the Due Process Clause, because the

Secretary of Commerce and certain of his key subordinates,

acting in response to political pressures and outside their

statutory mandate to administer the antidumping laws — and

before an antidumping petition had been filed — had informed

senior White House officials, other Executive Branch

agencies, DOC’s Congressional oversight committees, and the

general public that NEC was guilty of “dumping”

supercomputers.

OPINIONS BELOW

The opinion of the Court of Appeals for the Federal

Circuit is reported at 151 F.3d 1361 and is reproduced in the

Appendix (“App.”) to this Petition, at App. la-32a. The

opinion of the United States Court of International Trade is

reported at 978 F. Supp. 314, and appears at App. 33a-76a.

JURISDICTION

The jurisdiction of this Court is invoked under 28 U.S.C.

§ 1254(1). This petition is being filed within 90 days of

August 7, 1998, the date on which the Court of Appeals

entered judgment.

CONSTITUTIONAL PROVISION INVOLVED

This case involves the application of the Fifth

amendment (Due Process Clause) of the United States

Constitution, reproduced at App. 77a.

STATEMENT OF THE CASE

Summary

In the Spring and Summer of 1996, the Department of

Commerce succeeded in preventing a federally-funded

research consortium, the University Corporation for

Atmospheric Research (“UCAR”), from purchasing

supercomputers manufactured by NEC Corporation of Japan

(“NEC”). Avs part of that effort, high-ranking DOC officials,

acting with the express approval of the Secretary of

Commerce, informed the White House, other Executive

Branch agencies, DOC’s Congressional oversight committees,

UCAR, and the general public that Commerce had analyzed

NEC’s offer to UCAR, and had determined that it involved

very substantial “dumping,” i.e., sale of an imported product

at a price below fair market value. These pronouncements of

NEC’s guilt were made wholly outside the context of any

proceeding authorized by the antidumping laws.

Subsequent to DOC’s intervention in the UCAR

procurement, a private party, Cray Research Inc. (“Cray”),

filed a petition under the antidumping laws alleging substantial

dumping in connection with the offer of NEC supercomputers

to UCAR. Commerce initiated a dumping proceeding and

ultimately entered an antidumping order finding NEC guilty

of dumping at the rate of 454 percent.

In view of DOC’s actions prior to the initiation of the

investigation, NEC raised a due process objection, and sought

the appointment of an unbiased decisionmaker to conduct the

antidumping proceeding, initially through a request to

Commerce and subsequently through an action filed with the

Court of International Trade. These requests were denied.

The Federal Circuit acknowledged that NEC had run into a

“high-level political buzz-saw apparently motivated by a

desire to protect a domestic industry,” but nonetheless

affirmed on the ground that NEC had not established by clear

and convincing evidence that the minds of the responsible

DOC officials were “irrevocably closed.”

A. Commerce’s Unprecedented Dissemination of

Dumping Findings Outside the Context of an

Antidumping Investigation

On May 20, 1996, the day that UCAR announced its

intention to procure NEC supercomputers, Paul Joffe, the

Acting Assistant Secretary for Import Administration and the

senior Commerce official responsible for the administration

of the antidumping laws, sent a letter to the National Science

Foundation (“NSF”) — the agency of the United States

Government which was providing funding to UCAR (and

whose approval was necessary for finalization of the

transaction with NEC) — charging that NEC’s offer involved

dumping. According to Joffe:

Using standard dumping methodology prescribed by

the antidumping laws, we estimate that the cost of

production of one of the foreign bidders is

substantially greater than the funding levels projected

by [UCAR’s] request for proposals. In antidumping

law terms, this means that the “dumping margin,” .

. . ls likely to be very high.

(App. at 6a). On the same day, Commerce faxed Mr. Joffe’s

letter to Cray, NEC’s domestic competitor in the UCAR

procurement, and released it to the media. (Jd.). These

unprecedented actions were taken with the express approval

of Commerce Secretary Mickey Kantor. (App. 49a).

Also on May 20, 1996, Commerce sent NSF a second

letter transmitting a copy of a document entitled

“Predecisional Memorandum,” which set forth DOC’s detailed

“Dumping Analysis” of NEC’s UCAR offer. This analysis

described the methodology employed by Commerce, set forth

its conclusion that NEC’s offer to UCAR involved substantial

dumping, and estimated the dumping margin at between

163.8% and 280%. (App. 6a). Commerce authorized release

of the Predecisional Memorandum to UCAR and NEC, and

it was soon disseminated beyond the initial recipients and

eventually published in an international trade publication.

(Id.).

DOC’s May 20, 1996 intervention in the UCAR

procurement was the culmination of a course of conduct

designed to prevent the award of the UCAR supercomputer

contract to NEC. Prior to its May 20 communications to

NSF, Commerce had conducted interagency meetings on

April 24, 1996 and May 13, 1996, with senior NSF officials

present, to press its view that NEC’s offer to UCAR involved

dumping. (App. 4a). At the meeting on May 13, 1996,

DOC’s General Counsel, Susan Esserman, stated that a

dumping finding by Commerce in the range of 100-300%

could be made and successfully upheld on appeal. (App. 72a-

73a). At a subsequent meeting at the White House on

May 17, 1996, DOC’s Under Secretary for International

Trade and its General Counsel informed high-level officials

from the White House and other executive agencies of DOC’s

conclusion that NEC was guilty of dumping.’

' The CIT chose to downplay this meeting, omitting mention of

several attendees and ncting only that it involved “a short factual briefing

of [sic] the UCAR Procurement and Import Administration’s inquiry into

this matter.” (App. 47a). The substance of that briefing is evident,

however, from the court’s findings regarding DOC’s characterization of

the results of the Import Administration’s inquiry, as presented to a group

of lower-level officials four days earlier. (App. 72a-73a).

On three occasions during June 1996, Commerce

defended the premature dissemination of its “Dumping

Analysis” of the NEC-UCAR bid before skeptical audiences

on Capitol Hill, including a meeting with staff members of the

House Ways and Means Committee and the Senate Finance

Committee, which oversee the administration of the

antidumping laws. Robert LaRussa, who succeeded Mr. Joffe

as Acting Assistant Secretary of Commerce for Import

Administration on June 5, 1996, attended two of these

meetings, including the meeting with the Ways and Means

and Finance staff at which DOC described its Dumping

Analysis in detail. (App. 5la-53a).

The campaign by Commerce to block the UCAR-NEC

contract was successful; NSF refused to approve UCAR’s

request to negotiate a contract with NEC. DOC’s use of the

dumping laws to achieve this result was wholly

unprecedented. As the Court of Appeals for the Federal

Circuit acknowledged:

NEC is not without grounds for feeling aggrieved.

Presumably it entered into the competition for the

UCAR contract on the supposition that the vendor

with the best product for the lowest cost would win.

Then it ran into a high-level political buzz-saw

apparently motivated by a desire to protect a

domestic industry. (App. 30a-31a).

DOC’s assertions in May and June of 1996 to the White

House, Congress, NSF, UCAR and the general public that

NEC was guilty of substantial dumping occurred prior to the

filing of the petitions which led to the initiation of the

supercomputer antidumping investigation, and were entirely

extraneous to any proceeding, formal or informal,

contemplated by the antidumping laws.”

B. DOC’s Initiation of the Supercomputer

Antidumping Investigation

Cray filed an antidumping petition with DOC and the

International Trade Commission (“ITC”) on July 29, 1996, in

which it alleged that the offer of NEC supercomputers to

UCAR involved dumping at very high levels — precisely the

allegation that senior DOC officials had already endorsed as

accurate. By letter of August 2, 1996, NEC asked the

Commerce Under Secretary for International Trade to suspend

any action on Cray’s petition, pending a review by the

Commerce Inspector General of the Department’s conduct in

, Initiation of a formal antidumping investigation is generally

preceded by the filing of a petition by a U.S. industry seeking relief from

dumping; on very rare occasions, Commerce itself will initiate an

investigation. 19 U.S.C. § 1673a. When Commerce decides to initiate an

investigation, it publishes a notice in the Federal Register. 19 C.F.R. §

351.203(c). Following initiation, Commerce conducts a formal proceeding

to determine whether the imported merchandise is “dumped,” i.e., sold at

less than normal value. 19 U.S.C. §§ 1673b, 1673d. Concurrently with the

Commerce dumping investigation, the International Trade Commission

determines whether the imports at issue are injuring, threatening to injure

or retarding the establishment of a U.S. industry. 19 C.F.R. Part 210. If

Commerce finds dumping and the ITC makes an affirmative determination,

an antidumping order is published by Commerce, and antidumping duties

are imposed on the imports. 19 U.S.C. § 1673e. While the trial court

declined to consider NEC’s contention that DOC’s transmittal of the

Predecisional Memorandum to NSF was ultra vires, because it would have

required the court to inquire into DOC’s motivation, the court did not find

that such dissemination was authorized, much less required, by the

antidumping statute. Rather, the court acknowledged that “the disclosure

of the Predecisional Memorandum to NSF, NEC, UCAR and NCAR was

for purposes of the procurement,” (App. 51a), but nonetheless held

Commerce’s actions to be lawful on the basis of a 1985 opinion of the

Justice Department’s Office of Legal Counsel. (App. 68a-69a, n. 97).

connection with the UCAR procurement, including DOC’s

apparent prejudgment of the dumping issue. This request was

summarily rejected, and an antidumping proceeding (“the

Supercomputer Investigation”) was initiated. (App. 8a-9a).

NEC subsequently filed an action in the Court of

International Trade, invoking its Constitutional right to due

process and seeking, inter alia, the appointment of a neutral,

unbiased decisionmaker to preside over the Supercomputer

Investigation. Pending a judicial ruling on this request, NEC

advised Commerce that it would not participate in the DOC

phase of the proceeding. (App. 56a-57a).

C. The Trial Court’s Opinion

The Court of International Trade (“CIT”) rejected NEC’s

claim that the Department of Commerce had impermissibly

prejudged the outcome of the Supercomputer Investigation.

In reaching this conclusion, the CIT held that NEC had no

Constitutional right to due process in an antidumping

proceeding. Noting that there is no substantive Constitutional

right to engage in international trade, the court held that:

NEC did not identify a specific Constitutionally

protected interest at stake in the antidumping

investigation. . . . [C]ases from the Supreme Court

and the Federal Circuit seem to preclude recognition

of a Constitutionally based prejudgment claim.

(App. 59a-60a).

The court also stated that NEC was not entitled to a full

measure of Constitutional due process protection because

“[ajntidumping proceedings are not adjudicatory but

investigatory . . ..” (App. 66a) The court acknowledged that

other courts have “require[d] recusal of a decisionmaker in an

adjudicatory administrative proceedings [sic],” but held that

“(t]he constitutionally driven concerns of formal adjudicatory

proceedings are not at issue in antidumping cases.” (App 66a,

n. 95).

In lieu of Constitutional due process, the CIT recognized

“a Statutorily based prejudgment claim... preclud{ing] only

conduct by the decisionmaker that will render the statutory

procedures a ‘hollow formality.’” (App. 60a, 67a). (quoting

Association of Nat’l Advertisers v. United States, 627 F.2d

1151, 1187 (D.C. Cir. 1979), cert. denied, 447 U.S. 921

(1980)). The CIT emphasized how demanding this standard is:

Under this statutory scheme, a plaintiff must

demonstrate more than the appearance of

prejudgment to disqualify a decisionmaker. A

plaintiff must show from the conduct and statements

of the decisionmaker that the outcome of the

investigation had already been determined and that

plaintiff's participation in the administrative process

would be futile.

(App. 67a). The CIT rejected NEC’s contention that:

The test for disqualification . . . [is] whether a

disinterested observer may conclude that [the

agency] has in some measure adjudged the facts as

well as the law of a particular case in advance of

hearing it.

Cinderella Career and Finishing Sch. v. FTC, 425 F.2d 583,

591 (D.C. Cir. 1970) (internal quotation omitted). (App.

66a-67a). Thus, although it acknowledged the risk that the

statements by senior DOC officials that NEC was guilty of

dumping would “become[ ] a self-fulfilling prophecy” (App.

73a-74a), the CIT denied NEC’s prejudgment claim because

it had not been established by “clear and convincing proof”

that the outcome of the proceeding had necessarily been

predetermined. (App. 67a, 44a-45a).?

D. The Federal Circuit’s Opinion

The Court of Appeals for the Federal Circuit (“CAFC”)

declined to decide whether NEC was entitled to Constitutional

due process, but held it sufficient to conclude that “NEC is

due a fair and honest process” under the antidumping laws

(App. 19a-20a).*

> The trial court’s application of this legal standard to the facts

was highly convoluted. After arbitrarily restricting its analysis to only two

of the numerous Commerce pronouncements that suggested prejudgment,

the CIT focused solely on the decisional independence o1 Assistant

Secretary LaRussa, ruling irrelevant any prejudgment by the members of

his staff, upon whom the court had found Mr. LaRussa would necessarily

rely (App. 63a-64a). The court also limited its analysis of the factors

which might have affected Mr. LaRussa’s objectivity to the impact of

DOC General Counsel Esserman’s May 13, 1996 statement to NSF that

a dumping finding by DOC in the range of 100-300% could be made and

successfully upheld on appeal. Because the court was unable to conclude

“that Ms. Esserman’s statement so constrained Mr. LaRussa as to lead to

a pre-determined result,” it dismissed NEC’s claim. (App. at 74a).

* To the extent that the Federal Circuit’s holding turns to any

degree on the conclusion that NEC did not have a Constitutional right to

due process, it is erroneous. This Court has held that the perquisite of a

Constitutionally protected property interest is a

legitimate claim of entitlement to it. . . . Property interests . . .

are not created by the Constitution. Rather, they are created and

their dimensions are defined by existing rules or understandings

that stem from an independent source such as state law.

Board of Regents v. Roth, 408 U.S. 564, 577 (1972). The antidumping

Statute meets the Court’s description precisely: it comprises an

“independent source” of “state law” that encompasses “rules” and

“understandings” which, in turn, create a “legitimate claim of entitlement.”

Through the statute, Congress effectively permits NEC to import free of

antidumping duties, unless and until the Department of Commerce follows

Statutorily mandated procedures to determine that it is dumping. See 19

Observing that the case was one of first impression in the

circuit (App. 20a-21a),° the CAFC held that a party can

prevail on a prejudgment claim involving an antidumping

investigation only if it can establish that the decisionmaker is

incapable of “judging a particular controversy fairly on the

basis of its own circumstances.” (App. 24a). The CAFC

applied this standard in the strictest possible manner,

requiring that a challenging party show that the

decisionmaker’s mind is “irrevocably closed.” (Jd.).° While

noting that “NEC is not without grounds for feeling

aggrieved,” and that Commerce’s conduct should not be

“emulated,” the CAFC held that DOC’s pronouncement of

NEC’s guilt in at least five different settings did not meet this

U.S.C. §§ 1673-1677. The statute thus creates a “legitimate claim of

entitlement” that triggers rights of procedural due process. See Memphis

Light, Gas, & Water Div. v. Craft, 436 U.S. 1, 11 (1987).

* In rejecting the “disinterested observer” standard advocated by

NEC, the CAFC inexplicably chose to ignore the fact that other circuits

had embraced that standard, and treated it as though it were NEC’s

invention of the moment:

As an abstract proposition, NEC’s proposed standard is a goal

to which all government decision makers might aspire.

However, as a practical matter, we are not persuaded that

NEC’s standard is the correct one when imposed on

administrative agencies charged with the duty both to

investigate and then judge.

(App. 20a-26a).

® Although the CAFC apparently believed that its “irrevocably

closed mind” standard was less draconian than the Government’s proposed

standard, “that would require the plaintiff to show that plaintiff's

participation in the administrative process would be futile,” petitioners

submit that the two standards (as well as the trial court’s “hollow

formality” standard) are virtually identical. (See App. 23a-24a).

exceptionally high standard, and thus that NEC was entitled

to no relief (App. 30a-31a).’

The CAFC justified its adoption of the “irrevocably

closed mind” standard by invoking the need to maintain

flexibility in an administrative process that involves both

investigatory and adjudicatory phases, incorporates procedural

safeguards, and is subject to judicial review. (App. 21a-28a).

The CAFC’s discussion of the proper prejudgment standard,

however, contained a significant omission. It failed to

acknowledge the critical fact that the public pronouncements

of NEC’s dumping violation, which NEC alleged constituted

improper prejudgment, were not made in the course of

discharging DOC’s duty under the antidumping statute, but as

part of an extraneous effort to influence a federal procurement

SO as “to protect a domestic industry.” (App. 31a).

REASONS FOR GRANTING THE WRIT

I. The Federal Circuit’s “Irrevocably Closed Mind”

Standard Is In Direct Conflict with the Due Process

Standard Adopted by Four Other Circuits

A. The District of Columbia, Sixth, Eighth, and

Tenth Circuits Each Requires That Adjudicative

Hearings Be Completely Fair — in Both Fact and

Appearance — When Viewed Through the Eyes of

a Disinterested Observer.

In a long line of cases, four United States courts of appeal

have applied a single due process standard to allegations that

an administrative decisionmaker had prejudged adjudicative

’ The CAFC opinion is silent on the propriety of the CIT’s

adoption of a “clear and convincing proof” standard, notwithstanding this

Court’s recent decision in Crawford-El v. Britton, 118 S. Ct. 1584 (1998),

which was brought to the CAFC’s attention pursuant to FED. R. APP. P.

28(j).

facts. The D.C. Circuit was the first court to articulate this

standard with Clarity. In Texaco, Inc. v. FTC, 336 F.2d 754

(D.C. Cir. 1964), vacated on other grounds, 381 U.S. 739

(1965), the Chairman of the Federal Trade Commission had

delivered a public address, accompanied by a press release, in

which he opined that a specific corporation had engaged in

illegal anti-competitive behavior. The address and release

coincided with the Chairman’s participation in adjudicatory

proceedings whose purpose was to determine whether the

corporation was in fact complicitous in such behavior. The

D.C. Circuit formulated the test for assessing the existence of

prejudgment in terms of whether “‘a disinterested observer

may conclude that [the decisionmaker] has in some measure

adjudged the facts as well as the law of a particular case in

advance of hearing it,” Jd. at 760 (quoting Gilligan, Will, &

Co. v. SEC, 267 F.2d 461, 469 (2d Cir.), cert. denied, 361

U.S. 896 (1959)), and whether, as a result, the administrative

proceedings were “‘attended, not only with every element of

fairness but with the very appearance of complete fairness,””

Id. (quoting Amos Treat & Co. v. SEC, 306 F.2d 260, 267

(D.C. Cir. 1962)). Reaching an affirmative answer to the

first query and a negative answer to the second, the court held

that the Chairman’s participation in the adjudicative

proceeding constituted an unconstitutional denial of due

process.

The D.C. Circuit relied on the same prejudgment test in

Cinderella Career & Finishing Sch. Inc. v. FTC, 425 F.2d

583 (D.C. Cir. 1970). The issue before the court was whether

an FTC Chairman who had publicly questioned the ethical

propriety of an advertisement promising applicants that they

could “become[ ] airline[ ] hostess[es] by attending a charm

school” should have been disqualified from a subsequent

adjudicatory proceeding to determine whether a corporation

that had made precisely this promise was guilty of false

advertising. Jd. at 590. Although the Chairman had neither

named the corporation itself in his speech, nor suggested that

such advertisement was necessarily illegal (only potentially

unethical), the court of appeals nonetheless found that the

Chairman’s statements regarding disputed issues of fact in a

pending proceeding required his disqualification. The court

reasoned that:

Conduct such as this may have the effect of

entrenching a Commissioner in a position which he

has publicly stated, making it difficult, if not

impossible, for him to reach a different conclusion in

the event he deems it necessary to do so after

consideration of the record.

Id. at 590. Concluding that a disinterested observer might

believe the Chairman had prejudged the facts before him, the

court held that his participation in the adjudicatory process

would entail a denial of due process. Jd. at 591.

The Sixth Circuit, in another case involving the FTC,

was confronted with prejudgment allegations against an FTC

Commissioner who, during his tenure as counsel to a Senate

subcommittee investigating the drug industry, had made

statements indicating his belief that a particular company had

violated the antitrust laws, and had helped draft a report

critical of the company. Applying the disinterested observer

Standard articulated in Texaco, the court held that the

Commissioner must be disqualified from participating in

subsequent FTC hearings involving the same company and

issues. American Cyanamid Co. v. FTC, 363 F.2d 757 (6th

Cir. 1966). The court reasoned with respect to the

Commissioner’s statements in his former capacity that:

Any opinions so formed were conclusions as to facts,

and not merely an ‘underlying philosophy’ or a

‘crystallized point of view on questions of law or

policy.” The[se] facts . . . are inseparably a part of

the ultimate findings of fact of the Commission. . .

in the present proceeding.

Id. at 765.

The Tenth Circuit adopted the D.C. Circuit’s

prejudgment standard in Staton v. Mayes, 552 F.2d 908, cert.

denied, 434 U.S. 907 (1977). Staton involved a due process

challenge to the participation of three school board members

in the board’s decision to dismiss a district superintendent for

incompetence. One of the challenged members had previously

campaigned for office on a promise to remove the

superintendent, and the other two board members had publicly

discussed the need for a new superintendent. Citing

Cinderella and Texaco, the Tenth Circuit rejectec the claims

of these members that they had maintained their impartiality

at the formal hearing, and held that the superintendent had

been denied due process because “the circumstances left no

room for a determination that there was a decision by a fair

tribunal, with the appearance of fairness.” Jd. at 914-15.

In Antoniu v. SEC, 877 F.2d 721 (8th Cir. 1989), cert.

denied, 494 U.S. 1004 (1990), the Eighth Circuit became the

latest federal court of appeals to embrace the prejudgment test

originally formulated by the D.C. Circuit in Texaco. Antoniu

concerned alleged prejudgment by an SEC Commissioner who

stated in a speech that a named individual had been

permanently banned from the securities industry,

notwithstanding the fact that a proceeding on that very issue

was then pending before the agency. The Eighth Circuit,

citing Texaco, Cinderella, and Staton, held that the

Commissioner’s conduct created a credible impression that he

had “‘in some measure adjudged the facts as well as the law

of a particular case in advance of hearing it’” and that his

participation in the SEC’s administrative proceeding therefore

constituted an unconstitutional deprivation of due process. Jd.

at 725 (quoting Gilligan, Will & Co. v. SEC, 267 F.2d 461,

469 (2d Cir.), cert. denied, 361 U.S. 896 (1959)). In so

doing, the court affirmed that, consistent with the overarching

due process requirements of “a fair trial in a fair tribunal,” an

adjudicative proceeding must be conducted by a truly neutral

decisionmaker. /d. at 724 (citation omitted).

B. The Federal Circuit’s Decision in NEC v. United

States Conflicts with the Foregoing Decisions,

Notwithstanding Substantially {ndistinguishable

Facts.

The test for assessing the existence of prejudgment in an

antidumping proceeding conducted by the Department of

Commerce has not previously been explicitly articulated by a

federal court. (See App. 20a-21a). Yet the absence of

applicable precedent in the antidumping context does not

render the question presented a novel one. The defining

elements of NEC’s claim are identical to those addressed by

the Sixth, Eighth, Tenth and District of Columbia circuits:

(1) an adjudicative proceeding; (2) a Constitutional right to

procedural due process; and (3) an act of apparent

prejudgment by a decisionmaker acting outside the scope of

his statutorily mandated duties.

First, antidumping proceedings, like the proceedings at

issue in Texaco, Cinderella, Staton, and Antoniu, are

adjudicative: that is, they make “binding determinations which

affect the legal rights of individuals.” Hannah v. Larche, 363

U.S. 420, 442 (1960); see also Morgan v. United States, 304

U.S. 1, 20 (1938) (holding that an inquiry conducted by the

Secretary of Agriculture was adjudicative because it featured

“the elements of contested litigation”).* Although the trial

court justified its rejection of the “disinterested observer”

standard in part because it viewed antidumping proceedings

as “investigatory” rather than “adjudicatory,” (App. 66a), its

own analysis belied that characterization,’ and the Federal

Circuit tacitly rejected the trial court’s pesition.”®

The purportedly “distinct” nature of antidumping

adjudications cannot explain the Federal Circuit’s rejection

sub silentio of the due process standard adopted by all prior

§ This case should not be confused with a successor that involved

a challenge to a rulemaking decision taken by the Secretary. See United

States v. Morgan (“Morgan II"), 313 U.S. 409 (1941). That later Morgan

II case is discussed infra.

° The trial court observed that, by statutory prescription,

antidumping actions must include

a final determination in which the Department must articulate

and substantiate its decisionmaking; an opportunity to submit

factual information and legal argument; an opportunity to argue

important issues at a hearing; and an opportunity for judicial

review of the final determination.

(App. 66a-67a) (internal citations omitted). It would be difficult to

imagine “elements of contested litigation,” Morgan, 304 U.S. at 20, that

more clearly mark proceedings as adjudicative.

‘0 The Federal Circuit’s opinion makes no reference whatsoever

te the trial court’s categorization of antidumping proceedings as

investigative, nor does it explicitly address how such proceedings should

properly be categorized. Instead, it describes antidumping actions as

consisting of both investigative and adjudicative components. (App. 20a)

(suggesting that administrative tasks such as anti-dumping proceedings

involve a “blend of investigative and adjudicative functions”); (App. 21a)

(noting that the Department of Commerce is “charged with the duty both

to investigate and then judge”). Petitioners will refer to proceedings with

both investigative and adjudicative components as “adjudicative” to

distinguish them from rulemaking proceedings, which involve a much

more stringent test of prejudgment. See infra.

;

circuits that have confronted the question of whether a

decisionmaker should be disqualified for having prejudged the

outcome of an administrative adjudication. Like the Texaco

line of prejudgment cases which center on two-stage

proceedings with investigative and adjudicative components,”

antidumping proceedings also involve both investigatory and

adjudicatory functions. As with the administrative proceedings

at issue in those cases, antidumping proceedings are subject

to the due process requirements that generally attach to

adjudicative proceedings. Hannah, 363 U.S. at 442 (“when

governmental agencies adjudicate or make binding

determinations which directly affect the legal rights of

individuals, it is imperative that those agencies use the

procedures which have traditionally uees associated with

judicial process”).

Second, NEC has maintained from the outset that its

interest in the fair and neutral administration of the

antidumping laws derives from its Constitutional right to due

process. The Federal Circuit accurately construed NEC’s

claim to be “of the kind generally cognizable under the Fifth

Amendment.” (App. 18a). Although the court declined to hold

that NEC’s due process claim was Constitutionally grounded,

(App. 19a-20a), in determining “what process is due” the

Federal Circuit relied exclusively on Constitutional

precedents, and stated that even if the right is statutory, the

'' See Texaco, 336 F.2d at 756 (noting that the Federal Trade

Commission conducted a four year “investigation” prior to initiating the

action contested in the suit); see also Antoniu, 877 F.2d at 722-723

(detailing the SEC’s investigative role prior to its adjudication of the

appropriate punishment for the offender who ultimately sued); Cinderella,

425 F.2d at 590 (noting that the FTC has the “power to act in an

accusatory Capacity” and to gather facts for that purpose, as well the

“responsibility of ultimately determining the merits of the charges so

presented”) (internal quotations omitted).

“applicable procedural standard [is] not unlike that of

constitutional due process.” (App. 19a).

Finally, not only do the case at bar and the Texaco line of

cases address the same basic type of adjudicative proceeding,

but the facts surrounding Commerce’s alleged prejudgment

are squarely analogous to the prejudicial conduct of

comparable administrative decisionmakers in those cases.

These are not cases in which a party was challenging the mere

combination of investigatory and adjudicatory functions

within a single administrative body. Rather, the relevant

challenge in the NEC case and the Texaco line of cases

concerned the fact that the administrative decisionmakers

announced the substance of their “guilty verdict” outside the

course of ordinary procedures specified by either statute or

regulation, and prior to reaching a formal decision in

adjudicative proceedings involving the same factual questions.

Moreover, none of these cases involved a challenge to a

decisionmaker who merely took a position on a legal issue or

a matter of policy; each decisionmaker was found to have

prejudged disputed adjudicative facts, i.e., particular facts

regarding particular parties.

Despite these virtually indistinguishable facts, the Federal

Circuit refused, without explanation, to address the Texaco

line of cases, and instead adopted the “irrevocably closed

mind” standard for disqualification. By so doing, it was able

to sanction the conduct of the Supercomputer Investigation by

Commerce officials whose prior pronouncements regarding

the level of dumping inherent in NEC’s UCAR bid would

unquestionably have led a disinterested observer to conclude

that they had, at least in some measure, already adjudged the

facts put at issue by Cray’s dumping allegations.

C. The Federal Circuit Erroneously Adopted a

Disqualification Standard That Was Crafted by

this Court to Address Prejudgment of Legislative,

Not Adjudicative, Facts

The adjudicative nature of antidumping proceedings

notwithstanding, the Federal Circuit has adopted a test of

prejudgment that has previously been applied solely in the

very different context of legislative facts. Specifically, it

requires petitioners to

establish that the decision maker is not capable of

judging a particuiar controversy fairly on the basis of

its Own Circumstances. This standard is met when

the challenger demonstrates . . . that the decision

maker’s mind is irrevocably closed on a disputed

issue. ;

(App. 24a) (internal quotations omitted). The Federal Circuit

inexplicably drew its standard from the rulemaking paradigm,

despite having correctly recognized the adjudicative nature of

both the Supercomputer Investigation and the facts alleged to

have been prejudged.

The Federal Circuit derived the “irrevocably closed mind”

standard from FTC v. Cement Inst., 333 U.S. 683 (1948),

which it cites for the proposition that an administrative

decisionmaker’s prior public statement of “views contrary to

the plaintiff's position” is not a violation of due process.

(App. 22a). This reading of Cement Institute, however, is

overbroad. Cement Institute stands only for the proposition

that prior announcements of views on questions of law and

policy, as distinguished from views on disputed adjudicative

facts, do not disqualify an agency from later adjudicating such

factual issues. In that case, this Court held that the FTC did

not violate due process when it testified and reported to

Congress and the President on policy issues involving a

pricing mechanism, and later issued a cease-and-desist order

against a particular party’s use of the same pricing system.

The Court applied the “irrevocably closed mind” standard

based on its reasoning that the Commissioners’ testimony

regarding general issues of policy involving the pricing

mechanisms — and not the specific facts of the respondents’

pricing practices — did not suggest that the Commissioners

had impermissibly prejudged the adjudicative facts in the case

before them. Jd. at 701-702.

Like Cement Institute, the other decisions of this Court on

which the Federal Circuit relied to support its formulation of

the disqualification standard pertain to challenges based on

alleged prejudgment of legislative, rather than adjudicative,

facts. See Hortonville Joint Sch. Dist. No. 1 v. Hortonville

Educ. Ass’n, 426 U.S. 482, 495 (1976) (school board alleged

to have prejudged a decision that “was not an adjudicative

decision,” but one that turned ultimately on the answer to a

policy question);'* United States v. Morgan (“Morgan II”),

313 U.S. 409, 417 (1941) (Secretary of Agriculture alleged to

have prejudged facts that fell into “the legislative realm of

fixing rates”).

The Federal Circuit’s reliance on the Cement Institute

standard ignored well-settled distinctions between the test that

must be met to disqualify an administrative decisionmaker

who is alleged to have prejudged broad issues of law, policy,

or legislative fact, as opposed to the test applicable to alleged

prejudgment of specific factual questions pertaining to

particular persons or entities. The D.C. Circuit explained this

distinction in Association of Nat’l Advertisers v. FTC, 627

In Staton, the Tenth Circuit distinguished Hortonville on this

ground, noting that, in contrast to Hortonville, Staton involved adjudicative

facts concerning alleged incompetence and neglect of duty. 552 F.2d at

913-14.

F.2d 1151 (D.C. Cir. 1979). There it held that the due

process standard established for adjudicatory proceedings in

Cinderella was not applicable to the disqualification of a

decisionmaker in a rulemaking proceeding, because of

the ‘recognized distinction in administrative law

between proceedings for the purpose of promulgating

policy-type rules [i.e., rulemaking proceedings]. . .

on the one hand, and proceedings designed to

adjudicate disputed facts in particular cases on the

other.’

id. at 1165 (quoting United States v. Florida E. Coast Ry.

Co., 410 U.S. 224, 245 (1973)). The court emphasized that

“[iJn determining the due process ayplicable . . . [it was]

guided by [the proceeding’s] nature as rulemaking,” and not

by other specific facts regarding the rulemaking itself. Jd. at

1165.

The leading authorities on administrative procedure have

also recognized that the “irrevocably closed mind” standard is

applied in rulemakings or other administrative proceedings

where only questions of policy are alleged to have been

prejudged, and have emphasized that,

if the decisionmaker expressed strong prior views on

a disputed issue, the reviewing court must analyze

the statements and issues carefully to determine

whether the statements evidence impermissible

prejudgment of an issue of adjudicative fact or

permissible expression of strong views on issues of

law, policy, or legislative fact.

KENNETH C. DAvIS & RICHARD J. PIERCE, Jr.,

ADMINISTRATIVE LAW TREATISE, § 9.8, at 82-84, 87 (3d ed.

1994) (noting that the “irrevocably closed mind” standard

represents the proposition that “[a] previously announced

position on a disputed issue of law, policy or legislative fact

does not disqualify a decisionmaker”) (citing FTC v. Cement

Institute, 333 U.S. 683 (1948)). The Federal Circuit

exhibited no appreciation of this critical distinction, despite

the fact that NEC had discussed it in its briefs.

II. In Applying the “Irrevocably Closed Mind” Standard

to NEC’s Prejudgment Claim, the Federal Circuit

Decided an Important Question of Constitutional Law

Which Has Not Been Settled by this Court

A. The Decisions of This Court on Which the Federal

Circuit Relied Do Not Resolve the Issue Presented

by NEC’s Prejudgment Claim

The Federal Circuit erroneously construed certain prior

decisions of this Court as having rejected the application of

the “disinterested observer” test to the type of prejudgment

claim brought by NEC. (See App. 21a-24a). The Supreme

Court has not in fact settled this important question of law.

The Supreme Court precedents on which the CAFC relied

establish only the limited proposition that a decisionmaker

may permissibly announce a preliminary conclusion regarding

adjudicative facts — in the context of an investigative or other

proceeding conducted pursuant to procedures established by

statute or regulation — and then revisit those same factual

issues in the context of a subsequent adjudication. The

Federal Circuit relied heavily on Withrow v. Larkin, 421 U.S.

35 (1975), a case in which a physician challenged a statute

that empowered members of a medical board to make findings

of fact and conclusions of law in the course of investigating

whether a physician had engaged in conduct proscribed by

statute, and then to revisit those same questions at a formal

adversary hearing convened to resolve the issue. /d. at 41.

This Court declined to find a due process violation solely by

virtue of the combination of investigative and adjudicative

functions, both of which had been entrusted by law to the

same adjudicative body. There were no allegations of

prejudgment based on conduct that fell outside the

decisionmaker’s legal duties. Jd. at 54 (“there was no more

evidence of bias or the risk of bias or prejudgment than

inhered in the very fact that the Board had investigated and

would now adjudicate”).

The Withrow Court was careful to note that its holding

did not reach the type of circumstances posed by cases such

as Texaco, Cinderella, and American Cyanamid. Id. at 50.

Citing those cases by name, this Court specifically observed

that they presented “factors not present in the record before

us,” — namely, anomalies in the decisionmakers’ conduct

providing grounds to “suspect[ ] that [they] . . . would be

disabled from hearing and deciding on the basis of the

evidence to be presented.” Jd. at 50 n.16, 54. Yet it is

precisely such anomaious factors that exist in the case at bar.

NEC does not contend that Commerce’s exposure to the

facts surrounding NEC’s UCAR bid in the course of DOC’s

internal deliberations regarding the possible self-initiation of

an antidumping proceeding would have warranted

disqualification. Nor would NEC’s right to due process have

been violated solely by virtue of a DOC decision to self-

initiate such a proceeding. Rather, NEC has alleged

prejudgment only because of highly irregular actions and

pronouncements by Commerce that took place entire!y outside

the established statutory and regulatory procedures governing

antidumping proceedings — aptly characterized by the Federal

Circuit as “a high-level political buzz saw.” (App. 31a) There

was no suggestion of any such irregularity in Withrow.

The other decisions of this Court cited hy the : ederal

Circuit are equally devoid of the anomalous “factors” that the

Withrow Court noted in Texaco, Cinderella, and American

Cyanamid. Like Withrow, they all involved a claim of bias

inherent in the ordinary structure of an administrative

proceeding with successive stages. Hortonville Joint Sch.

Dist. No. I v. Hortonville Educ. Assoc. , 426 U.S. 482, 494-

495 (1976) (a school board which had been unsuccessful in

negotiating a contract with a teachers’ union, and later

terminated the employment of those teachers who went on

strike, had not denied teachers their right to an impartial

Gecisionmaker solely by virtue of the board’s familiarity with

the facts as a result of the board’s performance of its

Statutorily mandated activities); FTC v. Cement Inst., 333

U.S. at 701 (FTC studies which would later serve as the

target for allegations of prejudgment by the Commission were

“filled] . . . in obedience to congressional command”);

Richardson v. Perales, 402 U.S. 389 (1971) (a social security

hearing examiner may, pursuant to prescribed procedures,

gather evidence and resolve disputes while maintaining

impartiality); United States v. Morgan (“Morgan II”), 313

U.S. 409, 421 (1941) (Secretary of Agriculture could re-

adjudicate a rate-making proceeding on remand, despite his

public protest concerning the reversal of his initial decision).”°

By construing these decisions as encompassing the type

of claim presented by NEC, the Federal Circuit erroneously

attributed to this Court a position which it has never adopted.

'S As discussed supra, Hortonville, Cement Institute, and Morgan

II arz also distinguished from NEC by the fact that the alleged prejudgment

pertained to issues of law and policy, rather than adjudicative facts.

B. The Supreme Court Should Take This

Opportunity to Address the Degree to Which an

Administrative Agency Charged with a

Combination of Investigative and Adjudicative

Functions May Take a Position on Disputed

Factual Issues Outside the Established Statutory

Framework

NEC joins Texaco, Cinderella, American Cyanamid,

Antoniu, and Staton in the line of United States court of

appeals decisions that have, without the benefit of this Court’s

direct guidance, considered the due process standard for

disqualifying an administrative decisionmaker alleged to have

engaged in prejudgment where (1) the prejudgment pertains

to adjudicative facts in dispute in an administrative

proceeding, and (2) the decisionmaker’s prior

pronouncements regarding such facts took place outside

statutorily prescribed forums and procedures. Granting NEC’s

petition for a writ will afford this Court an opportunity to

address this important question of Constitutional law which it

has not heretofore directly addressed.

The Supreme Court recognized in Withrow that it had

not specifically considered the issue that is presented by this

petition, /.e.,

{whether an administrative decision:maker’s] initial

view of the facts based on the evidence derived from

nonadversarial processes as a practical or legal

matter foreclosed fair and effective consideration at

a subsequent adversary hearing leading to ultimate

decision . . . [or whether] other special facts and

circumstances [counsel that] the risk of unfairness is

intolerably high.

421 U.S. at 58. Commentators have recognized that the

standard for disqualification in such circumstances is not

always clear. KENNETH C. DAVIS & RICHARD J. PIERCE, JR.,

ADMINISTRATIVE LAW TREATISE, § 9.8, at 68 (1994)

(remarking that with respect to the legal principles governing

different types of bias that may arise in an administrative

proceeding, “[T]he problems about the law . . . relate to their

application and to the clear demarcation of each from the

others”).

Both the parties who appear before administrative

decisionmakers in proceedings where adjudicative facts are in

dispute, as well as those decisionmakers themselves, are

entitled to a clear statement by this Court regarding the due

process standard that governs the actions of “those ‘whose

impartiality serves as the ultimate guaranty of a fair and

meaningful proceeding in our constitutional regime.’”

Concrete Pipe & Prods., Inc. v. Construction Laborers

Pension Trust, 508 U.S. 602, 619 (1993) (quoting Marshall

v. Jerrico, Inc. , 446 U.S. 238, 250 (1980)). The importance

of this issue as matter of United States Constitutional law

independently justifies review by this Court.

III. The Federal Circuit’s Decision Should Be Reviewed By

This Court Because It Effectively Creates a Due

Process “Double Standard” Which Could Be Viewed

As Discriminatory by our Trading Partners.

The Supreme Court should review the split created by the

Federal Circuit’s departure from decisions in ‘he Sixth,

Eighth, Tenth, and District of Columbia circuits, not only

because it has created a conflict on an important issue of

Constitutional law, but also because it has effectively resulted

in two due process standards for disqualification of an

administrative adjudicator on grounds of prejudgment — a

virtually insurmountable standard that will apply to the

complaints of non-citizens who are drawn into international

trade proceedings overseen exclusively by the Federal

APSE A PETA Bhane ©

Tr ee Ge

Circuit'*, and another, more reasonable standard that applies

to prejudgment challenges brought in every other circuit that

has addressed the issue.

Parties aggrieved by prejudgment in an administrative

adjudication who bring their claims before the other courts of

appeal that have spoken on this issue have recourse to the

protection of Texaco, Cinderella, and their progeny. To

obtain a judicial remedy, they need only show that a

disinterested observer might conclude that the decisionmaker

prejudged the facts and law of the case in advance of the

hearing, and, in turn, that the hearing was not attended by the

appearance of fairness. See, e.g., Texaco, 336 F.2d at 760.

But foreign companies aggrieved by prejudgment in an

antidumping, countervailing duty or unfair trade proceeding

— surely among the most significant ways in which foreign

companies interact with the American legal system — face a

much more daunting task. To win judicial relief after the

Federal Circuit’s NEC decision, they must show that the

decisionmaker was not capable of judging the controversy

fairly because his mind was “irrevocably closed.” (App. 24a).

If the circuit split is not resolved by this Court, foreign

parties will disproportionately be required to satisfy a higher

standard to disqualify an administrative decisionmaker on

grounds of prejudgment. The fact that an American petitioner

in an antidumping case might also theoretically suffer from

the CAFC’s more stringent prejudgment standard is true as a

matter of logic, but naive in the context of the actual

administration of the antidumping laws. As the CAFC

‘# See 28 U.S.C. § 1295(a)(5) (Federal Circuit has exclusive

jurisdiction over appeals from final decisions of the Court of International

Trade), and § 1295(a)(6) (exclusive jurisdiction over final determination

of the U.S. International Trade Commission relating to unfair practices in

import trade).

forthrightly observed, “[t]he entire system that Congress has

established under the Tariff Acts is designed to protect

domestic industries from ‘unfair foreign competition.’” (App.

31a). Nor does the fact that foreigners encounter our legal

system in areas outside the CAFC’s jurisdiction mitigate the

disparate impact that the circuit split will have on non-

citizens. The perception of unequal treatment in the one

circuit expressly established by Congress to adjudicate trade

disputes between U.S. and foreign companies will! not be

dispelled by the fact of equal treatment in other fora.

The Federal Circuit’s decision will not go unnoticed by

the United States’ international trading partners, who will

perceive a baseless double standard in our Constitutional due

process jurisprudence. This undesirable perception will only

be exacerbated by the CAFC’s failure to correct explicitly the

CIT’s patently erroneous holding that “[t]he constitutionally

driven concerns of formal adjudicatory proceedings are not at

issue in antidumping cases.” (App. 66a n.95). Review by

this Court to reconcile the circuit split would go far to ensure

that our system of administrative law and judicial review does

not lose credibility in the eyes of the world community.

CONCLUSION

For the foregoing reasons, and on the basis of the

authorities cited, the petition for a writ of certiorari should be

granted.

Respectfully submitted,

ROBERT E. MONTGOMERY, JR.

Counsel of Record

TERENCE J. FORTUNE

ROBERT P. PARKER

DAVID J. WEILER

SWATI AGRAWAL

Paul, Weiss, Rifkind,

Wharton & Garrison

1615 L Street N.W.

Suite 1300

Washington, D.C. 20036

(202) 223-7300

Counsel for Petitioners

Dated: November 5, 1998

APPENDIX

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

98-1020

NEC CORPORATION and

HNSX SUPERCOMPUTERS, INC.,

Plaintiffs-Appellants,

UNITED STATES and DEPARTMENT OF COMMERCE,

Defendants-Appellees,

and

CRAY RESEARCH, INC.,

Defendant-Appellee.

Robert E. Montgomery, Jr., Paul, Weiss, Rifkind,

Wharton & Garrison, of Washington, DC, argued for

plaintiffs-appellants. With him on the brief were Terence J.

Fortune, Robert P. Parker, David J. Weiler, and Swati

Agrawal.

Lucius B. Lau, Attorney, Commercial Litigation Branch,

Civil Division, U.S. Department of Justice, of Washington,

DC, argued for defendants-appellees, United States and

Department of Commerce. With him on the brief were Frank

W. Hunger, Assistant Attorney General, David M. Cohen,

Director, and A. David Lafer, Senior Trial Counsel. Of

counsel were Berniece A. Browne, Patrick V. Gallagher,

David W. Richardson, and Stephen J. Powell, Attorneys,

U.S. Department of Commerce, of Washington, DC.

Michael L. Burack, Wilmer, Cutler & Pickering, of

Washington, DC, argued for defendant-appellee, Cray

Research, Inc. With him on the brief were John D.

Greenwald, Stuart M. Weiser, and Amber L. Cottle.

Appealed from: United States Court of International Trade

Judge Donald C. Pogue.

DECIDED: August 7, 1998

JUDGES: Before NEWMAN, Circuit Judge, SKEL’“ON,

Senior Circuit Judge, and PLAGER, Circuit Judge.

PLAGER, Circuit Judge.

This challenge to the Department of Commerce’s

(“Commerce’s”) administration of the antidumping laws arises

in a somewhat unusual way: plaintiffs-appellants NEC

Corporation and HNSX Supercomputers, Inc. (collectively

“NEC”) seek to enjoin Commerce from conducting an

antidumping investigation involving certain supercomputers

from Japan. NEC alleges that the deciding officials in

Commerce had prejudged the outcome, and therefore were

Constitutionally disqualified from proceeding with the

investigation. The Court of International Trade denied NEC’s

petition for an injunction and declaration of rights, and

Commerce proceeded to complete its investigation, following

which, as NEC feared, Commerce determined that the

proposed sales of the Japanese supercomputers were being

made at less-than-fair value. NEC appeals the decision of the

ee NE a

Court of International Trade denying the petition for

injunction and declaratory judgment.'

BACKGROUND

In order to appreciate the gravamen of NEC’s complaint,

it is necessary to examine in some detail the history of the

challenged procurement, and the involvement of various

political officials and actors. Though the parties dispute

exactly what happened, and the meaning to be attributed to

some of the events, the following facts seem to have been

established.

The story begins with the decision by the University

Corporation for Atmospheric Research (“UCAR”) to procure

advanced supercomputers for its National Center for

Atmospheric Research (“NCAR”). In March 1995, UCAR

solicited bids for advanced supercomputers from three

supercomputer manufacturers—Federal Computing

Corporation (“FCC”); Cray Research, Inc. (“Cray”); and

Fujitsu Limited. FCC offered to provide NEC

supercomputers, while the other two manufacturers offered to

supply their own.

UCAR is a research consortium funded in part by the

National Science Foundation (“NSF”), an agency of the

United States Government. Under the terms of its Cooperative

Agreement with NSF, UCAR was required to obtain NSF

approval for the supercomputer acquisition. As part of this

approval process, N°F requested that UCAR obtain evidence

Subsequent to Commerce’s determination, the International

Trade Commission determined that an industry in the United States is

threatened with material injury by reason of these imports. That

determination has been challenged by NEC, see CIT No. 97-11-01967.

that NEC’s* offer did not involve dumping, as that term is

understood under United States antidumping laws.’ In

response to that directive, UCAR commissioned a study by

Dr. Lloyd Thorndyke to analyze NEC’s offer. Dr. Thorndyke

ultimately concluded that there was no dumping, although he

did not consider the effect of research and development costs

in his analysis.

Meanwhile, the Department of Commerce decided to look

into the matter. Even though NSF did not request that

Commerce undertake an antidumping analysis of the UCAR

procurement, Commerce undertook a preliminary analysis of

NEC’s bid. As part of that process, Susan Esserman,

Assistant Secretary of Commerce for Import Administration,

assembled a team of Import Administration (“IA”) officials on

April 3, 1996 to collect and analyze NEC’s bid data. Three

weeks later, on April 24, 1996, Ms. Esserman convened an

interagency meeting to obtain technical information on

supercomputers and hear a presentation by NSF on the UCAR

procurement.

On May 13, 1996, Ms. Esserman, by now Commerce’s

Acting General Counsel, convened another interagency

meeting with senior officials of NSF and other agencies to

discuss the results of Commerce’s preliminary analysis. The

fact of this meeting and what transpired there is one of the

sources of contention among the parties.

A few days later, on May 17, 1996, Stuart Eizenstat,

Under Secretary for International Trade, and Ms. Esserman

met with officials of the National Economic Council to

2 Even though FCC was the actual bidder, we will refer to FCC

as NEC because NEC was and is the real party in interest throughout.

See generally 19 U.S.C. § 1673 (1994) et seq.

ean ae woe et we nwt

discuss the matter. At that meeting, Mr. Eizenstat and Ms.

Esserman provided a short, factual briefing on the UCAR

procurement and the IA inquiry.

At about the same time, Brian Mannion, Grants and

Agreements Officer at NSF, decided to reiterate to UCAR

NSF's concern about the possibility of dumping, based on the

meetings with Commerce. In a letter dated May 17, 1996,

Mr. Mannion informed UCAR of the results of those

meetings:

UCAR has provided NSF with several documents that

addressed the “antidumping” issue. Subsequently,

officials at the Department of Commerce, which has

Statutory responsibility for administering relevant

provisions of the antidumping laws, have advised NSF

that they have performed a “constructive analysis” of

the proposal with the best performance characteristics.

They have reached the preliminary conclusion that the

proposal does not constitute an offer at “fair value.”

NSF accordingly encouraged UCAR to give the antidumping

issue “due consideration” before concluding final negotiations.

Undeterred by NSF’s letter, on May 20, 1996, UCAR

announced that it had selected NEC’s bid to supply a system

of four FCC 32 processor SX-4 vector supercomputers. (Each

computer would cost about $ 13.25 million for the first year

of the procurement.). According to UCAR, the NEC systems

“provide a distinct technical advantage compared to the

systems offered by the other vendors.”

On the same day, Commerce transmitted to NSF a letter

from Acting Assistant Secretary Paul Joffe to Dr. Neal Lane,

Director of NSF (this became known as “the Joffe letter”). In

that letter, Mr. Joffe stated:

Using standard methodology prescribed by the

antidumping law, we estimate that the cost of

production of one of the foreign bidders is

substantially greater than the funding levels projected

by NCAR’s request for proposals. In antidumping

law terms, this means that the “dumping margin,”

that is, the amount by which the fair value of the

merchandise to be supplied exceeds the export price,

is likely to be very high.

The letter also stated that Commerce had “significant concern

that importation of the NCAR supercomputer system would

threaten the U.S. supercomputer industry with material injury

within the meaning of the antidumping law.” Thus, Commerce

apparently concluded based on its analysis that all the

conditions for assessing an antidumping duty were present.

This was confirmed in another letter sent by Mr. Joffe to

Dr. Lane, which included a “Predecisional Memorandum”

outlining Commerce’s methodology. The Predecisional

Memorandum estimated NEC’s dumping margin to be in the

range of 163.38% to 280%. Commerce’s analysis was not

based on actual NEC pricing data. Instead, it was based on

information gleaned from various governmental sources,

including the Thorndyke study and NEC financial statements.

At NSF’s suggestion, Commerce gave NSF authorization to

forward a copy of the Predecisional Memorandum to NEC,

UCAR and NCAR.

Commerce then made a copy of the Joffe letter available

to the press and public, including NEC’s competitor Cray.

The letter was reproduced in Jnside U.S. Trade, an industry

periodical, on May 24, 1996. The Predecisional

Memorandum, which had been given only limited distribution

within the Government, was published in Jnside U.S Trade

several months later. No one admitted to having leaked it.

On June 5, 1996, Robert LaRussa succeeded Mr. Joffe as

Acting Assistant Secretary of Commerce for Import

Administration. Prior to that time, Mr. LaRussa had no

involvement with the UCAR procurement. Two days later,

Gary Taverman, an Office Director of Enforcement Group I

within the IA, briefed Mr. LaRussa on IA’s involvement in

the UCAR procurement. At that time, Mr. LaRussa also read

the Joffe letter, but seemingly he did not read the

Predecisional Memorandum itself. From then until submission

of this case, Mr. LaRussa had no communication with either

Mr. Eizenstat or Ms. Esserman relating to the preparation,

dissemination, purpose or content of the Predecisional

Memorandum or regarding Cray’s petition, discussed infra.

What advice Mr. Eizenstat did give Mr. LaRussa related to

general procedures in pending investigations.

At this point congressional involvement became part of

the mix. On June 5, 1996, three officials of Commerce — Mr.

Joffe, now a Senior Advisor to the Assistant Secretary for IA,

Stephen J. Powell, Chief Counsel for IA, and Mr. Taverman

— met with staff members from the House of Representatives

Ways and Means Committee to discuss the UCAR

procurement. At that meeting, Mr. Taverman explained

Commerce’s antidumping analysis. He prefaced his remarks

by indicating that the results were just an “estimate” taken

from public information and other governmental sources. Mr.

Taverman stressed that Commerce had not made a dumping

determination. The three had a similar meeting with the

House Science Committee the next day

On June 11, 1996, Ms. Esserman, Mr. Powell, Mr.

Joffe, Mr. Taverman, and Mr. LaRussa met with

Representative David E. Skaggs, at his request, to discuss the

UCAR procurement. Representative Skaggs represents the

congressional district in which UCAR and NCAR are located.

At that meeting, Mr. Taverman again explained Commerce’s

analysis, but this time in very general terms.

Not long after, on June 20, 1996, Mr. William F.

Rawson, Vice President for Finance and Administration of

UCAR, responded to Mr. Mannion’s letter of May 17. In his

letter, Mr. Rawson indicated that UCAR had asked NEC to

comment upon Commerce’s May 20, 1996, Predecisional

Memorandum. UCAR had also, according to Mr. Rawson,

previously retained its own experts to independently verify

Commerce’s analysis. Based on UCAR’s own analysis, it

concluded that NEC’s offer was not at less-than-fair value and

that an award to NEC would fully comply with its

Cooperative Agreement with NSF.

The move in NEC’s favor was short lived. Faced with the

conflicting reports from UCAR and Commerce, Dr. Lane

wrote Secretary of Commerce Michael Kantor requesting his

comments on UCAR’s report. Dr. Lane asked Secretary

Kantor to inform NSF whether or not Commerce intended to

self-initiate an official investigation.

On July 29, 1996, Cray filed an antidumping petition

with Commerce and the International Trade Commission

(“Commission” or “ITC”) against vector supercomputers from

Japan. Cray executives and its attorneys had previously met

with IA staff for pre-petition counseling. Commerce

responded on August 19, 1996, by initiating the

supercomputer investigation. See Vector Supercomputers from

Japan, 61 Fed. Reg. 43,527 (Dep’t Commerce 1996) (initial

antidumping investigation). The investigation was assigned to

IA’s Office of Antidumping and Countervailing Duty

Enforcement Group II.

In light of Commerce’s initiation of an antidumping duty

investigation, NSF decided to hold off approval of a contract

award to NEC. Dr. Lane, ina press release, stated that he felt

it would be “inappropriate for NSF to approve this

procurement until the dumping issue has been resolved,” and

“inconsistent with the responsible stewardship of taxpayer

monies.” His sentiments reflected those expressed by some in

Congress. See H.R. Rep. No. 104-628, at 124-29: 142 Cong.

Rec. H6905-02, H6906-07 (1996).

NEC responded by writing to Mr. Eizenstat informing

him that NEC had requested that Commerce’s Inspector

General (“IG”) investigate the circumstances surrounding

Commerce’s involvement in the UCAR procurement,

including the release of confidential NEC data to Cray. NEC

also requested that Commerce stay its investigation of NEC

pending the outcome of the IG’s investigation. To allow the

investigation to go forward in light of these accusations,

according to NEC, “would constitute an egregious and

irreparable denial of due process.” Mr. Eizenstat referred the

letter to Ms. Esserman with instructions that she “draft a

response to this outrageous letter.” That response denied

NEC’s request to stay the investigation.

The Chairman of the ITC on September 12, 1996 notified

the Secretary of Commerce that the Commission had made an

affirmative determination in the preliminary injury phase of

the antidumping investigation. See Vector Supercomputers

from Japan, 61 Fed. Reg. 50,331 (Int'l Trade Comm’n 1996)

(preliminary injury determination). Accordingly, on

September 30, 1996, Commerce sent NEC and Fujitsu an

antidumping questionnaire.

NEC filed the present suit in the Court of International

Trade on October 15, 1996. In its suit, NEC sought to enjoin

Commerce’s investigation of vector supercomputers from

Japan on the grounds that its due process rights were violated.

In particular, NEC alleged that “Commerce has revealed itself

10a

as a partisan ally of NEC’s competitor [Cray] for the UCAR

contract, and has rendered itself constitutionally incapable of

adjudicating the merits of Cray’s dumping allegation.” NEC

asserted that, by Commerce’s actions, it “has deprived NEC

and HNSX of their right to a determination by a fair and

neutral decision-maker.”

On the same day it filed suit, NEC wrote to Secretary

Kantor informing him that NEC intended to “respectfully

withhold their response to the Department questionnaire until

such time as a qualified independent party, who is impartial

and has not prejudged the matter, is appointed as a ‘special

master’ to conduct the investigation.” NEC has remained true

to its word.

Subsequently , Commerce assigned a dumping duty of 454

percent against NEC on importation of supercomputers from

Japan. See Vector Supercomputers from Japan, 62 Fed. Reg.

45,623, 45,625 (Dep’t Commerce 1997). That assessment has

since become final. See Vector Supercomputers from Japan,

62 Fed. Reg. 55,392 (Dep’t Commerce 1997). NEC

thereafter filed a complaint in the Court of International Trade

under 28 U.S.C. § 1581(c), challenging the ITC’s final

determination that vector supercomputers from Japan threaten

to cause a material injury to a domestic industry.

Before the trial court, defendants — the United States, the

Department of Commerce, and Cray Research, Inc. — moved

to dismiss the complaint in this case for lack of jurisdiction

and failure to state a claim. Specifically, the defendants

argued that jurisdiction was not proper under 28 U.S.C. §

1581(i) because NEC had an adequate remedy under 28

U.S.C.§ 1581(c), and therefore the statutorily-available

procedure required that NEC await the conclusion of the

lla

investigation, and bring any court action at that time. The trial

court denied defendants’ motion.

The trial court on March 21, 1997 held a hearing on

NEC’s motion for a preliminary injunction; the court denied

that motion. The court thereafter considered NEC’s petition

for permanent injunction at a three day trial, conducted on

April 14, 15, and 21, 1997. In its ensuing Judgment and

Opinion, dated August 20, 1997, the trial court rejected

NEC’s claim that Commerce’s conduct constituted

prejudgment having the effect of denying NEC due process

under the Fifth Amendment. The court concluded that NEC

had no legally cognizable property or liberty interest that

could have been deprived by Commerce’s actions.

However, the trial court did recognize a statutory

prejudgment claim. To prevail on this claim, the court

required NEC to prove that Commerce’s prior actions

rendered the antidumping investigation a “hollow formality”

such that “plaintiff's participation in the administrative process

would be futile.” The court imposed this heavy burden in light

of the presumption of honesty and integrity that governmental

decision makers enjoy under the law and the investigatory

(versus adjudicatory) nature of the antidumping investigation.

NEC’s burden in this case was even heavier, according to the

trial court, because a new decision maker assumed the helm

of the investigation. The court found that NEC failed to

satisfy this heavy burden, and entered judgment for the

defendants. NEC now appeals.

DISCUSSION

On the merits, the parties disagree about what is the

proper legal standard for judging the “prejudgment” behavior

of the Commerce Department. NEC claims it is entitled to full

protection under Constitutional Due Process, specifically to

12a

the right to an unbiased decision maker in fact and in

appearance. The Government supports the trial judge’s view

that a lower standard is appropriate when Commerce is

engaged in an antidumping matter. The lower standard,

inferred from the statutes which govern import policy,

requires only that the procedures and hearing which lead to

the decision be fair, and not a “hollow formality.”

NEC further complains that the trial court, though it

recited the litany of facts summarized above, narrowed its

focus when assessing Commerce’s conduct to just two events,

Ms. Esserman’s presentation at the May 13 interagency

meeting, and the May 20 Joffe letter and Predecisional

Memorandum. Had the trial court kept the entire history in

focus, argues NEC, the conclusion of improper prejudgment

would be unavoidable under any standard. The Government

responds that the trial court’s focus was entirely correct

because no other evidence in the case would arguably support

NEC’s prejudgment claim.

And finally, the parties quarrel over the constraints the

trial court placed on the obtaining of testimony from certain

high-ranking government officials. NEC complains that it was

improperly hindered in efforts to make its case, while the

Government defends the trial court’s handling of the matter as

well within the discretion granted to courts in such matters.

If that is not enough, the Government devotes much of its

effort on appeal to the proposition that the trial court was

without jurisdiction to hear NEC’s petition in the first

instance, since a suit against the United States requires

consent, and the statutes governing the Court of International

Trade, when properly read, do not contain that consent. The

Government contends here, as they did in their motion to

dismiss at the trial level, that the trial court improperly

exercised jurisdiction over this case under 28 U.S.C. §

13a

1581(i). As an adjunct to the jurisdictional argument,

defendant Cray argues that this appeal is moot because the

investigation which NEC sought to enjoin in this case has now

been completed.

We first address the jurisdiction question. Chapter 95 of

Title 28 of the United States Code, entitled “Court of

International Trade,” contains Congress’ jurisdictional grant

to the court. The first section of the chapter is § 1581, “Civil

actions against the United States and agencies and officers

thereof,” and consists of subsections (a) through (j).

Subsections (a) through (h) assign exclusive jurisdiction to the

Court of International Trade regarding civil actions against the

United States in a variety of matters affecting foreign

commerce, including the antidumping laws. Subsection (i)

contains what has been called a residual provision that grants

to the Court of International Trade exclusive jurisdiction over

“any civil action commenced against the United States, its

agencies, or its officers, that arises out of any law of the

United States providing for — (4) administration and

enforcement with respect to the matters referred to in. . .

subsections (a)-(h) of this section.” 28 U.S.C. § 1581(i)(4)

(1994).

The subsection contains a caveat: subsection (i) “shall not

confer jurisdiction over an antidumping or countervailing duty

determination which is reviewable... . by the Court of

International Trade under section 516Afa) of the Tariff Act of

1930.” Jd. In light of this caveat, this court has interpreted the

jurisdiction provided by subsection (i) to be available only

when jurisdiction under another subsection of 1581 is either

unavailable or, if available, “manifestly inadequate.” See

Shakeproof Indus. Prod. Div. v. United States, 104 F.3d

1309, 1312 (Fed. Cir. 1997); Miller & Co. v. United States,

l4a

824 F.2d 961, 963 (Fed. Cir. 1987). At the time that NEC

filed its complaint, it could not invoke the trial court’s §

1581(c) jurisdiction because the antidumping investigation had

not yet been completed. Nevertheless, because subsection (c)

specifically provides for review of any civil action

commenced under section 516A of the Tariff Act of 1930,

argues the Government, NEC should have waited until

Commerce completed its review, and then raised its due

process concerns. The trial court rejected the Government's

view, and characterized the suggested approach as a “fools

errand.”

The trial court is correct. Requiring NEC to appeal from

the conclusion of an investigation that, allegedly, was

preordained because of impermissible prejudgment is a classic

example of a remedy that was “manifestly inadequate.” See

Pac Fung Feather Co. v. United States, 111 F.3d 114, 116

(Fed. Cir. 1997) (“[T]he preordained ruling available to

importers under section 1581(n) would be manifestly

inadequate.”); Hylsa v. United States, No. 97-12-02168, 1998

WL 51731, at *3 (Ct. Int'l Trade, Feb. 3, 1998) (when a

plaintiff alleges that the outcome is preordained, the case “is

the very type of situation which is intended to be addressed

under 28 U.S.C. § 1581(i)”); Luggage & Leather Goods Mfrs.

of Am. v. United States, 588 F. Supp. 1413, 1420-21 (Ct.

Int’l Trade 1984); United States Cane Sugar Refiners’ Ass'n

v. Block, 544 F. Supp. 883, 887 (Ct. Int’! Trade 1982), aff'd

on other grounds, 683 F.2d 399 (CCPA 1982). This is not a

case in which NEC is attempting to “sail past carefully

constructed limitations simply by invoking other and more

general legislation.” National Corn Growers Ass'n v. Baker,

840 F.2d 1547, 1558 (Fed. Cir. 1988); see St. Paul Fire &

Marine Ins. Co. v. United States, 959 F.2d 960, 963-64 (Fed.

Cir. 1992) (finding jurisdiction proper under 1581(i)).

Instead, NEC is attempting to adjudicate an issue that goes to

15a

the very heart of the administrative system—neutrality—using

the only adequate avenue available. See McCarthy y.

Madigan, 503 U.S. 140, 148 (1992) (“[A]n administrative

remedy may be inadequate where the administrative body is

shown to be biased or has otherwise predetermined the issue

before it.”).

With regard to Cray’s argument that the case is moot and

the appeal should be dismissed because the proceeding NEC

sought to enjoin has been concluded, we think otherwise.

Article III limits federal judicial power to cases or

controversies. See U.S. Const. art. II, § 2. If a case becomes

moot it no longer presents a justiciatie controversy over

which a federal court may exercise jurisdiction. See

Kimberly-Clark Corp. v. Proctor & Gamble Distrib. Co. , 973

F.2d 911, 913 (Fed. Cir. 1992). “A case is moot when the

issues presented are no longer ‘live’ or the parties lack a

legally cognizable interest in the outcome.” Powell vy.

McCormack, 395 U.S. 486, 496 (1969).

However, even if an intervening event satisfies some of

the plaintiff's concerns, the case is not moot if other

consequences of defendants’ actions remain. See Church of

Scientology v. United States, 506 U.S. 9, 13 (1992): Gandera

Ind., S.A. v. Block, 727 F.2d 1156, 1158 (D.C. Cir. 1984).

In their complaint, NEC sought the following relief:

Plaintiffs pray . . . that this Court issue a permanent

injunction enjoining the defendants . . . from making

any determination on the merits in the proceeding

styled Vector Supercomputers from Japan, Inv. No.

A-588-841, and from such other acts and practices

as would deprive plaintiffs of their due process

rights[.]

16a

(Emphasis added). Thus, even though the investigation sought

to-be enjoined is now complete and the final dumping order

has been issued, the question remains whether there are other

consequences remaining from Commerce’s actions for which

the trial court could fashion a remedy.

The final dumping order requires NEC to post a cash

deposit of 454 percent of the sales price at the time the entries

are made. See 62 Fed. Reg. 55,392. If this deposit rate was

arrived at in violation of NEC’s due process rights this would

qualify as “such other acts” that the trial court could enjoin if

the court were to rule in its favor. Because the trial court

could still fashion a useful remedy in this case by granting

prospective relief from the effects of the antidumping order,

the case is not moot. See Church of Scientology, 506 U.S. at

13. The cases cited by Cray in its brief all stand for the

unremarkable proposition that a case is rendered moot by the

conclusion of an administrative proceeding when the only

remedy sought by the plaintiff is to enjoin the proceeding.

That is not the case here. See Gandera, 727 F.2d at 1158.

We turn now to the merits. The first question we must

answer is: Does NEC have a right to some form or level of

due process? The trial court, in light of Congress’ plenary

power over foreign commerce, rejected NEC’s constitutional

due process claim. Specifically, the court held that NEC

lacked a legally cognizable liberty or property interest in its

pending antidumping investigation that could be

unconstitutionally depr: 7ed. NEC asserts that the trial court

misconstrued the nature of NEC’s claim. The trial court,

according to NEC, mischaracterized NEC’s claim as a

substantive due process challenge rather than a procedural

one.

17a

Indisputably, engaging in foreign commerce is not a

fundamental right protected by notions of substantive due

process. See Buttfield v. Stranahan, 192 U.S. 470, 492-93

(1904); Arjay Assocs., Inc. v. Bush, 891 F.2d 894, 896 (Fed.

Cir. 1989) (“It is beyond cavil that no one has a constitutional

right to conduct foreign commerce in products excluded by

Congress.”). As a result, courts have repeatedly rebuffed

substantive due process challenges by importers to statutes

which restrict or even prohibit importation:

As a result of the complete power of Congress

over foreign commerce, it necessarily follows that no

individual has a vested right to trade with foreign

nations which is so broad in character as to limit and

restrict the power of Congress to determine what

articles of merchandise may be imported into this

country and the terms upon which a right to import

may be exercised. This being true, it results that a

Statute which restrains the introduction of particular

goods into the United States from consideration of

public policy does not violate the due process clause

of the Constitution.

Buttfield, 192 U.S. at 493: see also The Abby Dodge, 223

U.S. 166, 176-77 (1912); Arjay Assocs., 891 F.2d at 897

(“Appellants cite not one decision, and we are aware of none

in the 200 years of our judicial history, which has upheld any

right of persons in appellants’ position to overturn a

Congressional exclusion of any product from importation.”).

Nonetheless, an importer may be entitled to procedural

due process regarding the resolution of disputed facts involved

in a case of foreign commerce when the importer faces a

deprivation of “life, liberty, or property” by the Federal

i ee aa

18a

Government. “The Due Process Clause requires a hearing of

some kind . . . when government deprives an individual of

‘life, liberty, or property’ based on resolution of contested

factual issues concerning that individual .. . .” 2 Kenneth C.

Davis & Richard J. Pierce, Jr., Administrative Law Treatise

§ 9.2, at 3 (3d ed. 1994); see also United States v. Florida

East Coast Ry. Co., 410 U.S. 224 (1973).

The trial court held that NEC’s Constitutional due

process claim failed because NEC had no legally cognizable

right, property or otherwise, to engage in foreign commerce.

NEC’s claim, however, was not a challenge to the

Government’s legislative power to regulate NEC’s conduct in

foreign commerce, as in The Abby Dodge, Arjay, and the

other cases relied on by the trial court. Instead, NEC claims

that the determination of certain contested facts regarding the

pending antidumping investigation against it was tainted by

prejudgment. This is a procedural due process claim of the

kind generally cognizable unde, the Fifth Amendment of the

Constitution.

"n recent years the Supreme Court has abandoned the

ea.iler narrow reading of “rights” subject to constitutional

protection, and extended constitutional coverage to some

statutory entitlements previously thought of as “privileges.”

See, e.g., Goldberg v. Kelly, 397 U.S. 254 (1970) (welfare

benefits); Goss v. Lopez, 419 U.S. 565 (1975) (suspension

from school); see also Board of Regents v. Roth, 408 U.S.

564, 571 (1972) (“[T]he Court has fully and finally rejected

the wooden distinction between ‘rights’ and ‘privileges’ that

once seemed to govern the applicability of procedural due

process rights.”). Although the Court has not gone so far,

commentators have argued that the Framers intended “life,

liberty, and property” to be read as a single term that refers to

“all interests valued by sensible men.” Henry Monaghan, Of

19%,

‘Liberty” and “Property,” 62 Cornell L. Rev. 405, 409

(1977). (See 2 Davis & Pierce, supra, § 9.4, for a discussion

of the interests which have been held protected, and those that

have not, and the view that the Court’s line-drawing

jurisprudence in this area is not entirely satisfactory. )

The trial court avoided immersing itself in that debate by

concluding that, though no constitutionally-protected right

might exist, there inheres in the Statutory scheme created by

Congress an implicit expectation that governmental decision

makers will act honestly and fairly in the performance of their

duties. The court noted the presumption, rebuttable, that their

actions are so motivated. From this, the trial court discerned

an applicable procedural standard not unlike that of

constitutional due process.

We share the trial court’s commitment to the proposition

that there inheres in a statutory scheme such as this an

expectation that those charged with its administration will act

fairly and honestly. That proposition is not based on blind

hope or naivete, but on a shared expectation of how the

Government will conduct itself. See, e.g., Parsons v. United

States, 670 F.2d 164, 166 (Ct. Cl. 1982) (“It is well

established that there is a presumption that public officers

perform their duties correctly, fairly, in good faith, and in

accordance with law and governing regulations, and the

burden is on the plaintiff to prove otherwise.”); Haley v.

Department of the Treasury, 977 F.2d 553, 558 (Fed. Cir.

1992).

In the context of this case, however, we need not decide

whether the obligation imposed on the Government to deal

honestly and fairly with those who come before it arises from

the existence of the law itself and the implicit assumptions

about how Congress intends Government decision makers to

conduct themselves, see Parsons, 670 F.2d at 166, or resides

20a

in a constitutionally-protected liberty or property interest of

an importer who accepts the Government’s invitation to

engage in commerce within the United States pursuant to the

laws thereof, see Cleveland Bd. of Educ. v. Loudermill, 470

U.S. 532, 541 (1985) (“‘While the legislature may elect not to

confer a property interest in [public] employment, it may not

constitutionally authorize the deprivation of such an interest,

once conferred, without appropriate safeguards.’”) (quoting

Arnett v. Kennedy, 416 U.S. 134, 167 (1974) (Powell, J.,

concurring in part and concurring in result in part)); cf. Steel

Co. v. Citizens for a Better Env't, 118 S. Ct. 1003, 1021

(1998) (Stevens, J., concurring) (“Because it is always

prudent to avoid passing unnecessarily on an undecided

constitutional question, the Court should answer the statutory

question first.” (citation omitted)). There can be no doubt that

arbitrary administration of the law is subject to judicial

intervention; it is enough for us to here conclude that NEC is

due a fair and honest process; the question that remains, then,

is what process is due.

r a

The right to an impartial decision maker is

unquestionably an aspect of procedural due process. See

Withrow v. Larkin, 421 U.S. 35, 47 (1975); In re Murchison,

349 U.S. 133, (1955) (“A fair trial in a fair tribunal is a basic

requirement of due process.”). This applies to administrative

proceedings as well as judicial trials. See Gibson v. Berryhill,

411 U.S. 564, 579 (1973).

But the blend of investigative and adjudicative functions

sometimes found in modern administrative agencies requires

that a pragmatic approach be taken to what qualifies as an

“impartial” decision maker. As the Government notes, neither

the Court of International Trade nor this court previously has

addressed the proper legal standard to be applied in a

2la

prejudgment claim involving Commerce’s antidumping duty

proceedings. NEC offers the following articulation of the

prejudgment standard: “the test to be applied is whether

objective facts reveal that the decision maker has ‘in some

measure’ prejudged the issues presented in a subsequent

administrative hearing.” Brief for Plaintiffs-Appellants 28.

Under this standard, “a prejudgment claim must be sustained

if there is even the appearance of unfairness.” Jd. at 29.

As an abstract proposition, NEC’s proposed standard is

a goal to which all government decision makers might aspire.

However, as a practical matter, we are not persuaded that

NEC’s standard is the correct one when imposed on

administrative agencies charged with the duty both to

investigate and then judge. First of all, this strict standard is

inconsistent with prior prejudgment cases. A leading case on

the question of agency prejudgment is Withrow v. Larkin,

upon which both parties rely and to which we now turn.

Wisconsin statutes established a State Examining Board,

composed of practicing physicians, to license and discipline

physicians. When charges against a physician were filed with

the Board, the Board first held an investigative proceeding to

consider the charges, and then, if it determined the evidence

warranted, held a ‘contested hearing’ to determine whether

the charges should be sustained, and, if so, the appropriate

penalty, which could include revocation of license. See

Withrow, 421 U.S. at 37-38. The district court held that such

a proceeding was a denial of an accused doctor’s procedural

due process riguts because the Board did not qualify as an

independent decision maker. See id. at 46. The Supreme

Court reversed.

Drawing the distinction between previous knowledge of

the facts and an advance commitment about them, the Court

concluded that this combination of investigating and judging

22a

was noi a denial of due process under the circumstances. The

Court acknowledged that permitting those who investigate to

then sit in judgment raises a substantial issue. However, the

Court pointed out that that is not a new issue, and legislators

and others concerned with the operations of administrative

agencies have given much attention to whether and to what

extent distinctive administrative functions should be

performed by the same persons. Concluding that “[t}he

incredible variety of administrative mechanisms in this

country will not yield to any single organizing principle,” id.

at 52, the Court looked instead at the various situations which

have been identified “in which experience teaches that the

probability of actual bias on the part of the judge or decision

maker is too high to be constitutionally tolerable,” id. at 47.

The Court cited cases in which the adjudicator has a

pecuniary interest in the outcome, and those in which the

adjudicator has been the target of personal abuse or criticism

from the party before him, as examples of unacceptable risk

of bias. On the other hand, the Court did not find the risk of

prejudgment resulting from having the investigator also as the

adjudicator a risk that was, per se, too high. The Court cited

to FTC v. Cement Inst., 333-U.S. 683 (1948), i which the

Court had held that even though members of the Commission

had publicly stated views contrary to the plaintiff's position,

“the fact that the Commission had entertained such views as

a result of its prior ex parte investigations did not necessarily

mean that the minds of its members were irrevocably closed

on the subject.” /d. at 701.

The Court also cited favorably to Richardson v. Perales,

402 U.S. 389, 410 (1971), a case rejecting a due process

objection to the multiple roles— investigator and adjudicator

— of the Examiner under the Social Security System. The

Court noted that “the challenge to this combination of

23a

functions ‘assumes too much and would bring down too many

procedures designed, and working well, for a governmental!

structure of great and growing complexity.’” Withrow, 421

U.S. at 49-50.

Nor is a decision maker disqualified simply by making a

public statement concerning the case, see Hortonville Joint

Sch. Dist. No. 1 v. Hortonville Educ. Ass 'n, 426 U.S. 482,

493 (1976); FTC v. Cinderella Career & Finishing Sch., Inc.,

404 F.2d 1308, 1315 (1968), even when that Statement is

made before Congress, see Cement Inst., 333 U.S. at

702-703. Other administrative cases have also rejected

prejudgment claims despite what could be characterized as

prejudgment “in some measure” giving rise to the “appearance

of unfairness.” See, e.g., Hortonville, 426 U.S. at 493;

Cement Inst., 333 U.S. at 702-703; United States v. Morgan,

313 U.S. 409, 421 (1941).

We recognize that many of these cases deal with

decision-making by multiple-member boards, whereas our

case involves a single administrative decision maker. We do

not see that this difference should call for a different

assessment of the behavior involved. Thus, it is difficult to

resolve these outcomes with the standard that NEC advocates.

We would be blinding ourselves to the reality of the

administrative process that Congress has created were we to

hold that the mere fact that a decision maker has-been

involved in the development of the case, either through a field

investigation or a public hearing, or indeed has taken,

preliminarily, a public position on the case, is enough to place

the entire process under a constitutional cloud from which it

cannot be shielded.

On the other hand, the shield the Government proposes

for its agents is one that would require the plaintiff to show

“that plaintiff's participation in the administrative process

24a

would be futile.” The Government rightly characterizes its

standard as “a difficult one to sustain.” Fortunately we need

not choose between these polar versions of what is to be

expected from a Government decision maker; Supreme Court |

case law suggests a useful standard by which we may judge |

NEC’s claim of prejudgment without necessarily establishing |

a standard for all time and for all cases.

NEC can prevail on its claim of prejudgment only if it

can establish that the decision maker is “not ‘capable of

judging a particular controversy fairly on the basis of its own

circumstances.’” Hortonville, 426 U.S. at 493 (quoting

Morgan, 313 U.S. at 421). This standard is met when the

challenger demonstrates, for example, that the decision

maker’s mind is “irrevocably closed” on a disputed issue.

Cement Inst., 333 U.S. at 701. This standard is appropriate in

this case for two reasons.

The first is that “administrators ‘are assumed to be men

of conscious and intellectual discipline, capable of judging a

particular controversy fairly on the basis of its own

circumstances.’” Withrow, 421 U.S. at 55 (quoting Morgan,

313 U.S. at 421). Were we routinely to accept challenges to

the administrative decision-making process based on claims of

prejudgment, we would undermine the presumption that

administrators fulfill their obligations with the highest level of

integrity and honesty.

The second, more practical reason, is that the

administrative process must have the flexibility necessary to

accomplish its mission. Although “we should be alert to the

possibility of bias that may lurk in the way particular

procedures actually work in practice,” Withrow, 421 U.S. at

54, we are reluctant to circumvent the normal administrative

procedure absent a showing that the decision maker’s mind is

“irrevocably closed.”

)

25a

The antidumping system is a good example of the need

for such flexibility. First of all, an antidumping investigation

is bifurcated: Commerce makes less-than-fair value

determinations for a class or kind of foreign merchandise, and

the ITC makes injury determinations. Only if Commerce

determines that the merchandise is being sold at less-than-fair

value (“LTFV”), see 19 U.S.C. § 1673(1) (1994), and the

ITC determines that a domestic industry is materially injured

or is threatened with material injury, see 19 U.S.C. §

1673(2), does Commerce issue an antidumping order. See 19

U.S.C. § 1673. This bifurcation reduces the risk that an

improper bias will deprive importers of their due process

rights.

Second, the investigation within Commerce proceeds in

two stages — a preliminary determination and a final

determination. See 19 U.S.C.8§ 1673b(b), 1673d(a) (1994).

The purpose of the preliminary determination is to ascertain

whether there is a reasonable basis to believe or suspect that

the subject merchandise is being sold, or is likely to be sold,

at LTFV. See 19 U.S.C.§ 1673b(b); 19 C.F.R.§ 353.15

(1997). This triggers an opportunity for the affected parties to

Participate actively in the process, after which Commerce

proceeds to make its final determination. See 19 U.S.C. §

1673d(a); 19 C.F.R.§ 353.20 (1997). Both the preliminary

and final determinations are based on information presented

to or obtained by Commerce during the course of the

proceeding. See 19 U.S.C.§ 1516a(b)(2) (1994). Commerce

may not base its decision on information outside the record.

See id. Thus, even if Commerce is exposed to improper

influences outside the record, it is prohibited from acting upon

them.

There are also statutory and regulatory protections for

importers. Commerce is required by statute to hold a hearing

26a

at the request of any interested party prior to its final

determination. See 19 U.S.C. § 1677c (1994); 19 C.F.R. §

353.38(b) (1997). Commerce is required by statute to address

the arguments made at the hearing regarding the proper

methodology for the dumping calculation. See 19 U.S.C. §

1677f(i)(3)(A) (1994). An interested party is also not limited

to giving oral testimony. The antidumping statute permits a

party to an investigation to submit written materials, it

requires Commerce to consider such materials and, if

Commerce finds them to be deficient, to afford the importer

the opportunity to supplement its submission. See 19 U.S.C.

§§ 1677m(d)-(e) (1994). Interested parties also have the

opportunity to submit factual information to rebut, clarify, or

correct the submissions of another interested party. See 19

C.F.R. § 353.31 (1997). Additionally, Commerce is required

to “verify all information relied upon in making a final

determination of an investigation.” 19 U.S.C. § 1677m(i)(1)

(1994); 19 C.F.R. § 353.36(a)(i) (1997). Though there is no

way to prevent a government official bent on doing mischief

from secretly prejudging a matter, these elaborate procedural

protections substantially reduce the likelihood that such

prejudgment will survive. See Withrow, 421 U.S. at 54.

We are particularly reluctant to hold Commerce to the

stringent prejudgment standard advocated by NEC in light of

the two stages of an investigation. Because Commerce must

publish its preliminary results, it must take an initial public

position on the disputed issues in the investigation. However,

because interested parties are given the opportunity to

comment on those results, and because Commerce is required

to respond to them, it is not uncommon for Commerce to

modify its position between the preliminary determination and

a en ea

27a

the final determination.* Therefore, in an antidumping

investigation, “[t]he risk of bias or prejudgment in this

sequence of functions has not been considered to be

intolerably high or to raise a sufficientiy grave possibility that

the adjudicators would be so psychologically wedded to their

complaints that they would consciously or unconsciously

avoid the appearance of having erred or changed position.”

Withrow, 421 U.S. at 57. Were we to impose a strict

prejudgment standard, we risk upsetting this intricate system

that Congress developed in exercising its broad power over

foreign commerce. The fact that the final decision maker in

this case - Mr. LaRussa - was to a large extent insulated from

the earlier machinations within the Depactment weighs

importantly against the fixed mindset thesis.

The judiciary also provides an independent check on

Commerce. An importer may appeal from Commerce’s final

determination to the United States Court of International

Trade. See 28 U.S.C. § 1581(c) (1994); 19 U.S.C.§

1516a(a)(2)(B)(i) (1994). That court reviews Commerce's

determination for substantial evidence. See 19 U.S.C.§

1516a(b)(1)(B)(i) (1994). If the importer is dissatisfied with

that result, it can appeal the court’s final decisien to this

court, see 28 U.S.C. § 1295(a)(5) (1994), where we again

apply the substantial evidence test to Commerce’s decision,

see Atlantic Sugar, Ltd. v. United States, 744 F.2d 1556,

: Compare Certain Parts From Italy, 61 Fed. Reg. 1,344, 1,351

(Dep’t Commerce 1996) (preliminary determination of 22%) with 61 Fed.

Reg. 42,231, 42,232 (final determination of 0%); compare Polyvinyl

Alcohol From the People’s Republic of China, 60 Fed. Reg. 52,547,

52,649 (Dep’t Commerce 1995) (preliminary determination of 187.56%)

with 61 Fed. Reg. 14,057, 14,063 (final determination of 0%); compare

Manganese Metal From the People’s Republic of China, 60 Fed. Reg.

37,875 (amended preliminary determination of 82.44%) with 61 Fed. Reg.

4,415, 4,418 (amended final determination of 0%).

aa SA STE i

28a

1559 n.10 (Fed. Cir. 1984); Micron Tech., Inc. v. United

States, 117 F.3d 1386, 1392-93 (Fed. Cir. 1997). The

availability of this level of review significantly lessens the risk

that an impermissible bias will infect Commerce's

decision-making process, or if it does, that such a decision

will withstand scrutiny.

NEC has failed to demonstrate that the decision maker,

here Mr. LaRussa, was not capable of judging this particular

controversy fairly on the basis of its own circumstances. Each

of the statements that NEC points to as evidence of

prejudgment were qualified. Ms. Esserm2n’s oral advice

given to NSF at the May 13 meeting, according to the

testimony of Mr. Rudolph, NSF’s general counsel, who was

in attendance, “was based on the preliminary analysis as

understood to date.” Mr. Mannion’s contemporaneous letter

to UCAR, in which he referred to Commerce’s analysis as

“constructive” and its conclusion “preliminary,” supports this.

Although someone on her staff prepared an outline for her

presentation that purported to summarize Commerce’s

“find[ing] that dumping is occurring at significant levels,

ranging from approximately 100-300 percent,” Ms. Esserman

testified that she did not use these “talking points” at the May

13th meeting because she thought they were “inappropriate.”

The trial court credited her testimony; and we cannot say this

was error.

Neither the Predecisional Memorandum nor the Joffe

letter will support the weight NEC places upon them. The

° But see Zenith Elecs. Corp. v. United States, 99 F.3d 1576,

1583 (Fed. Cir., 1996) (Rader, J., concurring) (suggesting that the

standard articulated in Universal Camera Corp. v. NLRB, 340 U.S. 474,

491 (1951) is the more appropriate standard of review).

29a

Joffe letter on its face is equivocal, using woids of

qualification such as “estimated,” “could,” and “likely.” The

Predecisional Memorandum is not definitive. The title itself

suggests that the results contained therein were made prior to

any formal analysis, and that any conclusions stated were

intended to precede the decisional process. The memorandum

was not based on NEC’s actual cost data, but on data

contained in public and other governmental sources. The

marketing costs, for example, were based on “Industry

standards,” not on actual NEC cost data. The cost figures,

which would likely be the most critical disputed factual issues

in an actual antidumping investigation, were listed as

“estimates.” There is nothing in the memorandum or the

accompanying letter that indicates that Commerce would not

reconsider these figures once they were presented with actual

data. Accordingly, they do not vcither separately or

cumulatively establish that Mr. LaRussa’s mind was

“irrevocably closed.”

NEC argues that once Commerce had to justify its

analysis to Congress, that “backed the Department further into

a corner, and dragged Mr. LaRussa there with it.” Brief of

Plaintiffs-Appellants 34. We are not persuaded. The

statements made by Commerce officials in their briefings to

Congress were not of a nature or made in such context as “to

raise a sufficiently grave possibility that the adjudicators

would be so psychologically wedded to their complaints that

they would consciously or unconsciously avoid the appearance

of having erred or changed position.” Withrow, 421 U:S. at

57. Congress, and presumably its staff, know how the

antidumping laws work. At the time the briefings took place,

it no doubt knew that no preliminary, let alone final,

determination had been made. Whatever doubt there was

about this was assuaged by Mr. Taverman’s testimony, who

testified that he spoke in broad, qualified generalities, not

30a |

precise terms. Neither Mr. Taverman, Ms. Esserman, nor any

other Commerce official made the type of unequivocal

statement that would establish that Commerce had made up its

mind. Accordingly, NEC has failed to satisfy its burden to

prove that Mr. LaRussa was incapable of judging this

particular controversy fairly on the basis of its own

circumstances.

Finally, NEC asserts that she trial court erred in limiting

the testimony of Mr. LaRussa and ifr. Eizenstat. We review

such evidentiary rulings for abuse of discretion. See Heat &

Control Inc. v. Hester Indus., Inc., 785 F.2d 1017, 1022

(Fed. Cir. 1986). No such abuse of discretion has been

shown. The trial court permitted discovery of Mr. LaRussa

and Mr. Eizenstat in the form of written interrogatories. In

light of Mr. LaRussa’s ongoing involvement in the

supercomputer investigation and Mr. Eizenstat’s high-ranking

position, we agree with the trial court that such limitations

were appropriate in order to protect the deliberative process

from undue interference. See Morgan, 313 U.S. at 422; In re

Office of Inspector General, 93 F.2d 276, 278 (Sth Cir.

1991); Simplex Time Recorder Co. v. Secretary of Labor, 766

F.2d 575, $86 (D.C. Cir. 1985) (absent “extraordinary

circumstances,” high agency officials should not “be called to

testify regarding their reasons for taking official action”).

Our conclusion that NEC has failed to establish an

invalidating prejudgment on the part of the government

officials involved is not a statement that the conduct of these

officials is to be emulated. But for the fortuitous intervention

at the final stages of the process of a different decision maker

the outcome could well have been different. Thus NEC is not

3la

without grounds for feeling aggrieved. Presumably it entered

into the competition for the UCAR contract on the supposition

that the vendor with the best product for the lowest cost would

win. Then it ran into a high-level political buzz-saw

apparently motivated by a desire to protect a domestic

industry. But the entire system that C-ngress has established

under the Tariff Acts is designec to protect domestic

industries from “unfair” foreign com tition, and that is a

policy decision that the Constitution places in Congress’

hands. The law requires that, in implementing that policy, the

administrative decision maker play the game within the rules

Congress has established, and that means making final

decisions by applying the law to the facts before the agency,

not on the basis of xenophobic arguments or distorted facts.

In this case, NEC chose to withhold whatever facts it

might have favorable to its cause, and to allow Commerce to

proceed to its final decision on the basis of the available

information. That decision, which found dumping to be

present with regard to certain supercomputers, including

NEC’s, is now up for review on the merits. NEC will have

whatever opportunity is open to it to challenge Commerce’s

determination on the merits.

It is hard to argue with the proposition that it would have

been preferable for Commerce to await a request in the usual

course before inserting itself into the UCAR procurement, if

for no other reason than that this lawsuit would have been

avoided. That Commerce yielded to pressure to get involved

at a preliminary stage in the matter does not alone establish

that the final outcome was pre-ordained. After a thorough

review of all the events, and weighing their implications in

light of the policies represented in the Tariff Acts, we are not

persuaded that the process here fell so short.

32a

CONCLUSION

The judgment of the United States Court of International

Trade is

AFFIRMED.

COSTS

Each party to bear its own costs.

33a

APPENDIX B

UNITED STATES COURT

OF INTERNATIONAL TRADE

NEC CORPORATION and

HNSX SUPERCOMPUTERS, INC..,

Plaintiffs,

Vv.

UNITED STATES DEPARTMENT

OF COMMERCE, et al.,

Defendants,

and

CRAY RESEARCH, INC.,

Defendant-Intervenor.

BEFORE: Pogue, Judge

Court No. 96-10-02360

Slip Op. 97-117

[Judgment entered for Defendants. }

August 20, 1997

Paul, Weiss, Rifkind, Wharton, & Garrison (Robert E.

Montgomery, Jr.,Terence J. Fortune, Robert P. Parker,

David J. Weiler, Swati Agrawal) for Plaintiffs.

Frank W. Hunger, Assistant Attorney General; David M.

Cohen, Director; Sharon Y. Eubanks, Deputy Director, A.

David Lafer, Attorney, Jeffrey M. Telep, Attorney, U.S.

34a

Department of Justice, Civil Division, Commercial Litigation

Branch; Patrick V. Gallagher, Attorney-Advisor, Lucius B.

Lau, Attorney-Advisor, Office of the Chief Counsel for

Import Administration, U.S. Department of Commerce, of

counsel, for Defendant.

Wilmer, Cutler & Pickering (John D. Greenwald, Michael L.

Burack, Charles S. Levy, Brigida Benitez, Stuart M. Weiser)

for Defendant-Intervenor.

OPINION

POGUE, Judge: Plaintiffs NEC Corp. and HNSX

Supercomputers, Inc.(collectively, “NEC”) commenced this

action to enjoin the United States Department of Commerce

(“Commerce”) from conducting an antidumping investigation

of Vector Supercomputers from Japan. NEC claims that

Commerce prejudged the investigation.

Defendant moved to dismiss NEC’s complaint for lack of

jurisdiction and for failure to state a claim. See USCIT Rs.

12b (1) and (5). The Court denied Defendant’s motion and

entered an expedited trial schedule, with the intent to

consolidate the preliminary injunction hearing with the trial on

the merits. NEC Corp. v. United States, Court No. 96-10-

02360 (Mem. Op. and Order, Dec. 18, 1996).

Subsequently, the Court defined the scope of discovery

and scheduled document production and depositions. See NEC

Corp. v. United States, 21 C.1.T. ___, 958 F. Supp. 624

(CIT 1997).' On March 4, 1997, the Court issued a protective

order for documents produced by Defendant that were

' Prior to issuance of the Court’s February 12, 1997, Discovery

Order, Defendant petitioned the Court of Appeals for the Federal Circuit

for a writ of mandamus to quash the Court’s discovery order rendered at the

conclusion of several telephone conferences. See Tr. of Jan. 8, 1997, Tel.

Conf. (# 040); Tr. of Jan. 15, 1997, Tel. Conf. (# 053); Tr. of Jan. 24,

1997, Tel. Conf. (# 062). The Federal Circuit denied the writ application.

35a

covered by certain statutory privileges, the attorney-client

privilege, the “state secrets privilege,” and the “official

information” (or “deliberative process”) privilege. See NEC

Corp. v. United States, Court No. 96-10-02360 (Order, Mar.

4, 1997). The impending issuance of a preliminary

determination in the underlying antidumping investigation

prevented consolidation of the preliminary injunction hearing

with the trial on the merits. The preliminary injunction

hearing was held on March 14, 1997. On March 21, 1997, the

Court denied NEC’s application for a preliminary injunction.

See NEC Corp. v. United States, Court No. 96-10-02360,

(Mem. Op. and Order on Pls.’ Mot. for Prelim. Inj., Mar.

21, 1997).

On April 7, 1997, Commerce issued its preliminary

determination. See Vector Supercomputers from Japan, 62

Fed. Reg. 16,544, 16,547 (Dep’t Commerce 1997) (prelim.

determ.). NEC did not respond to the investigation

questionnaire, citing the instant action as the reason for

nonparticipation. Jd. at 16,545. Without NEC’s price

information and cost data, Commerce used the “facts

otherwise available”* to calculate a 454 percent dumping

margin for NEC. Jd.

* See Section 776 of the Tariff Act of 1930, as amended 19

U.S.C.§ 1677e(a)(2)(B) (“If an interested party . . . fails to proved such

information by the deadlines for submission of the information . . . the

administering authority . . . shall, . . ., use the facts otherwise available

in reaching the applicable determination under «is subtitle.”). Al! further

Citations to the antidumping statute are to the section in Title 19 of the

U.S. Code.

36a

The Court conducted a three-day trial on April 14, 15,

and 21, 1997, to determine whether Commerce had prejudged

the supercomputer investigation.’

STRUCTURE AND ADMINISTRATION

OF THE ANTIDUMPING STATUTE

The United States antidumping statute bifurcates

investigations between two different federal agencies: the

Department of Commerce, which makes less than fair value

determinations for a class or kind of foreign merchandise; and

the International Trade Commission (“ITC”),* which makes

injury determinations.’ If Commerce determines that a class

or kind of foreign merchandise is being, or is likely to be sold

in the United States at less than its fair value (“LTFV,” i.e.,

at a price which is lower than the price at which the

merchandise is sold in the country of exportation or to a third

country), and the ITC determines that an industry in the

United States is materially injured or is threatened with

material injury, or the establishment of an industry in the

United States is materially retarded, by reason of imports of

the subject merchandise, Commerce issues an antidumping

order directing the United States Customs Service to collect

antidumping duties equal to the amount by which the normal

> The Court wishes to acknowledge the consi\erable efforts

throughout this litigation of counsel for all parties; their cooperation in

assembling the record was especially appreciated.

* The International Trade Commission is an independent federal

agency with investigative powers on trade matters. See 19 U.S.C. § 1332

(1994).

* NEC’s suit does not encompass the ITC investigation. NEC

participated in the ITC’s injury investigation. See Vector Supercomputers

from Japan, 61 Fed. Reg. 50,331 (ITC 1996) (prelim. injury determ.).

What NEC challenges here is Commerce’s ability to make the less than

fair value determination.

ena wer ye ee

37a

value (i.e., the price in the foreign market) exceeds the export

price (i.e., the U.S. price) for the merchandise. 19 U.3.C.

§ 1673 (1994). That amount is the dumping margin. 19

U.S.C. § 1677(35) (A) (1994).

The antidumping law requires the Secretary of

Commerce, or any other officer to whom the responsibility

for carrying out the duties of the statute are transferred, to

administer antidumping investigations. See 19 U.S.C.§

1677(1) (1994). Antidumping investigations may be

commenced in two ways. An interested party may file a

petition alleging the elements necessary for an antidumping

duty, 19 U.S.C. § 1673a(b), or Commerce may self-initiate

an investigation. 19 U.S.C. § 1673a(a); 19 C.F.R.§ 353.11

(1996). Prior to self-initiation, Commerce prepares a

“predecisional” analysis of the imports in question based on

information available.®

Once commenced, the antidumping investigation proceeds

through a preliminary and final determination, see 19 U.S.C.

§$§1673b(b), 1673d(a) (1994), unless the ITC issues a negative

injury determination. See 19 U.S.C.§ 1673d(c) (2), (3). The

purpose of the preiiminary determination is to determine

whether there is a reasonable basis to believe or suspect that

the merchandise which is the subject of the investigation is

being sold, or is likely to be sold at LTFV. See 19 U.S.C.§

1673b(b) (1994); 19 C.F.R.§ 353.15 (1996). The purpose of

the final determination is to determine whether the

merchandise which is the subject of the investigation is being

or is likely to be sold at LTFV. See 19 U.S.C.§ 1673d(a)

(1994); 19 C.F.R.§ 353.20. The preliminary and final

determinations are based on information presented to or

* See Tr. Powell Trial Test. at 188, Ct. Doc. # 177 (Ct. Doc.

refers to the document number recorded on the official docket sheet,

which is maintained by the Court’s Clerk).

38a

obtained by Commerce during the course of the proceeding.

19 U.S.C.§ 1516a(b) (2) (1994) Information not placed on the

record may not influence the outcome of the investigation, see

id., or be considered for purposes of judicial review. See

Beker Indus. Corp. v. United States, 7 C.1.T. 313, 315-18

(1984).

The statute requires Commerce to hold a hearing upon the

request of any interested party to the investigation prior to its

final determination, see 19 U.S.C. § 1677c (1994); 19 C.F.R.

§ 353.38(b) (1996), and requires Commerce to address, in the

final determination, arguments made at the hearing regarding

the proper methodology for the dumping calculations at issue.

See 19 U.S.C. § 1677f(i) (3) (A) (1994).

The statute also requires Commerce to consider

information submitted by parties to an investigation, to inform

a party if its submission in response to Commerce’s request

for information is deficient, and to provide the submitting

party with an opportunity to remedy or explain its submission.

See 19 U.S.C. § 1677m(d) (1994).

The statute further requires Commerce to consider

information that is submitted by an interested party and is

necessary to the preliminary or final determination if (1) the

information is submitted within the deadline for its

submission, (2) the information can be verified, (3) the

information is not so incomplete that it cannot serve as a

reliable basis for reaching the applicable determination, (4)

the interested party has demonstrated that it acted to the best

of its ability in providing the information and meeting

Commerce’s requirements, and (5) the information can be

used without undue difficulties. See 19 U.S.C. § 1677m{(e)

(1994).

Additionally, the statute requires Commerce to “verify all

information relied upon in making a final determination of an

39a

investigation.” 19 U.S.C § 1677m(i)(1) (1994); 19 C_F.R. §

353.36(a) (i) (1996).

Congress intended antidumping investigations to be

, “transparent.” See S. Rep. No 96-246, at 38, 41 (1979),

reprinted in 1979 U.S.C.C.A.N. 424, 427.” Included in the

record of the proceedings is a record of any ex parte meeting

between interested parties, (or other persons providing factual

information in connection with a proceeding), and the person

charged with making the determination, (or any person

charged with making a final recommendation to that person),

in connection with that proceeding. See 19 U.S.C. § 1677f(3)

(1994); 19 C.F.R. § 353.35 (1996). Interested parties have

the opportunity to submit factual information to rebut, clarify,

or correct the factual submissions of another interested party.

See 19 C.F.R. § 353.31(2) (1996). Interested parties also may

i submit case briefs that present their arguments on issues

relevant to the final determination. See 19 C.F.R. § 353.38(2)

(1996).

Commerce addresses issues prior to and again following

the preliminary determination.* Commerce re-examines its

Padre H Se

“Other significant changes in existing law adopted in this title

included . . . greater transparency of investigations,” S. Rep. No 96-246,

at 38 (1979), reprinted in 1979 U.S.C.C.A.N. 424; “The major common

elements of the [Subsidies Agreement and the Antidumping Code] are:

. . . 3. Provisions for ‘transparency’ in all phases of a. . . dumping case,

.. +." Id. at 41, reprinted in 1979 U.S.C.C.A.N. 427. See also H. Rep.

No. 96-317, at 45 (1979) (“With the rise in the number of foreign

antidumping proceedings by Code parties, . . ., the United States has

become increasingly concerned that other countries utilize open public

proceedings, similar to those in the United States, to ensure importers and

exporters are treated fairly.”).

RR 9 LAT RCE aD REA ie Si TE as ME oy 9B i tS

See Esserman Prelim. Inj. Test., Hr’g Exs. and Docs., Vol. 2,

Tab 38 at 222-23.

40a

analysis between the preliminary and the final determination.’

The investigation may produce a dumping margin in a

preliminary determination that is different from the margin

forecast in a self-initiated predecisional analysis (or alleged in

a petition pursuant to which an investigation was initiated),

and the dumping margin in the final determination may differ

significantly from the dumping margin in the preliminary

determination. °

Judicial review of Commerce’s final determination is

available in the U.S. Court of International Trade. See 28

U.S.C. § 1581(c);"' 19 U.S.C. § 1516a(a) (2) (B) (i). The

9 Id. at 223, 236.

1,351 (Dep’t Commerce 1996) (prelim. determ.) (22.15%), with 61 Fed.

Reg. 42,231, 42,232 (final determ.) (0.00%); compare Polyvinyl Alcohol

From the People’s Republic of China, 60 Fed. Reg. 52,547, 52,649 (Dep’t

Commerce 1995) (prelim. determ.) (187.56%), with 61 Fed. Reg. 14,057,

14063 (final determ.) (0.00%); compare Manganese Metal From the

People’s Republic of China, 60 Fed. Reg. 37,875 (Dep’t Commerce 1995)

(amend. prelim. determ.) (82.44%), with 61 Fed. Reg. 4,415, 4,418

(amend. final determ.) (0.97%).

'! The Court exercised jurisdiction over this action pursuant to 28

U.S.C. § 1581(i), the Court’s residual jurisdiction provision. See

Asociacion Colombiana de Exportadores de Flores (Asocoflores) v. United

States, 13 C.1.T. 584, 585, 717 F. Supp. 847, 849 (1989). For § 1581(i)

jurisdiction to attach, relief under another section (in this case § 1581(c))

must be “manifestly inadequate.” Miller & Co. v. United States, 5 Fed.

Cir. (T) 122, 124, 824 F.2d 961, 963 (1987). In an earlier order, the

Court held that requiring exhaustion of administrative remedies, see 28

U.S.C. § 2637(d); B-West Imports, Inc. v. United States, 880 F. Supp.

853, 858-59 (CIT 1995), would be inappropriate for NEC’s claim of

prejudgment given that the remedy of disqualification of a biased

decisionmaker could be granted at the outset of the investigation, avoiding

the need to undo a complicated administrative proceeding if the actionable

allegations in NEC’s complaint proved to be true. See NEC Corp. v.

United States, Court No. 96-10-02360 at 3 (Mem. Op. and Order, Dec.

DE SPAREN ie Bt la Oe!

4la

court reviews the determination to insure Commerce’s action

is in accordance with law and supported by substantial

evidence. See 19 U.S.C. § 1516a(b) (1) (B) (i).

Subject to any policies and directives the Secretary may

prescribe, the authority to conduct investigations and make all

determinations in antidumping proceedings has been delegated

to the Under Secretary for International Trade, the head of the

International Trade Administration, pursuant to Department

of Commerce Organization Order 10-3 at § 4.01b.? Subject

to any policies and directives the Under Secretary may

prescribe, the Under Secretary, in turn, has delegated the

authority to conduct investigations and make ll

determinations in antidumping proceedings to the Assistant

Secretary for Import Administration. See Department of

Commerce Organization and Function Order 41-1

Amendment 3 at § 1.01d.”

18, 1996) If the matter was in fact prejudged, requiring NEC to submit

to an administrative process rendered a hollow formality by the

prejudgment, see infra p. 29, would not provide an adequate remedy. See

Barry v. Barchi, 443 U.S. 55, 63 n.10, 99 S. Ct. 2642, 2648 n.10 (1979)

(“Uader existing authority, exhaustion of administrative remedies is not

required when ‘the question of the adequacy of the administrative remedy

- . « [is] for all practical purposes identical with the merits of [the

plaintiff's} lawsuit.’”) (quoting Gibson v. Berryhill, 411 U.S. 564, 575, 93

S. Ct. 1689, 1696 (1973)); McCarthy v. Madigan, 503 U.S. 140 148, 112

S. Ct. 1081, 1088 (1992) (stating that exhaustion of administrative

remedies may not be required “where the administrative body is shown to

be biased or has otherwise predetermined the issue before it.”).

'? The Department of Commerce Organization Order is publicly

available through the Commerce Department, but not separately published

in any secondary source,

‘> The Department of Commerce Organization and Function Order

is publicly available through the Commerce Department, but not separately

published in any secondary source.

42a

The Assistant Secretary for Import Administration is the

head of Import Administration. The Assistant Secretary

exercises the functions of the Under Secretary and the

administering authority under the U.S. antidumping law,

including responsibility for the initiation of investigations, and

for ensuring the proper administration of the antidumping

laws. See Department of Commerce Organization and

Function Order 41-1 at § 2. By virtue of this delegation, the

Assistant Secretary for Import Administration is the

decisionmaker in antidumping investigations. The Assistant

Secretary for Import Administration reports to the Under

Secretary of Commerce for International Trade. The Under

Secretary may give general policy guidance to the Assistant

Secretary regarding administration of the antidumping statute,

but is not involved in the conduct of, or the determinations

issued in connection with, specific investigations. See

Department of Commerce Organization and Function Order

41-1, Amendment 3 at § 1.01d.

As head of Import Administration, the Assistant Secretary

for Import Administration supervises Import Administration

staff. Since June 4, 1996, Import Administration staff have

been organized into three Antidumping and Countervailing

Duty Groups, each of which is headed by a Deputy Assistant

Secretary. See Department Organization and Function Order

41-1 at § 2.04b. Antidumping investigations are managed on

a day-to-day basis by an Import Administration investigation

team that works under a Deputy Assistant Secretary.'* Each

'* Each Deputy Assistant Secretary is responsible for managing the

antidumping proceedings assigned to their respective groups and each

reports directly to the Assistant Secretary for Import Administration. See

Department of Commerce Organization and Function Order 41-1 at §

2.04. The antidumping investigation of Vector Supercomputers from Japan

is being conducted by members of Antidumping and Countervailing Duty

Enforcement Group I. Uncontested Fact ¢ 61, NEC Corp. v. United

‘ bee skates td

eee Ee ee eed ae

43a

investigation team normally is comprised of one or more

import compliance specialists, one or more accountants, an

attorney, and a policy analyst.’° The team is supervised by the

Office Director and may have a team leader.’ The

accountant, attorney and policy analyst are assigned by their

respective offices.'’ For accounting, legal, and policy issues,

the attorney, the accountant, and the policy analyst report

directly to their respective supervisors.'* The team solicits,

collects and analyzes information submitted for the record of

the investigation and presents issues to the Assistant Secretary

for decision, along with the team’s recommendations on those

issues. ?

States, Court No. 96-10-02360 (Pretrial Order at 22, Apr. 11, 1997)

(hereinafter UF {___, Pretrial Order at__). To begin an antidumping

investigation, the Deputy Assistant Secretary assigns the petition (or the

task of doing a self-initiation predecisional analysis) to an Office Director

who, in turn, selects Import Compliance Specialists to work on the

investigation. UF 468, Pretrial Order at 26. Within each Antidumping and

Countervailing Duty Enforcement Group are three AD/CVD Enforcement

Offices. Mr. Gary Taverman is the Office Director responsible for the

investigation team assigned the antidumping investigation of Vector

Supercomputers from Japan. This team includes Mr. Edward Easton, Ms.

Sunkyu Kim, and ether Import Compliance Specialists, as necessary, in

Mr. Taverman’s Office of Antidumping and Countervailing Duty

Enforcement II. UF { 62, Pretrial Order at 22-23.

'S UF 4 68, Pretrial Order at 26.

* Investigation teams “analyze petitions submitted by

manufacturers, producers, trade associations, and unions under the

AD/CVD laws; conduct investigations and, for the findings, orders, or

agreements under their jurisdiction, the administrative revicws required

under the AD/CVD laws, including the determination of product

44a

FACTUAL BACKGROUND

The University Corporation for Atmospheric Research

(“UCAR”) is a research consortium funded in part by the

National Science Foundation (“NSF”), an independent

Executive Branch agency of the U.S. Government. Ir. March

1995, UCAR initiated a bidding process to procure aavanced

supercomputers.” As a result of this process, three

companies—Federal Computing Corporation (“FCC”),

supplying vector supercomputers produced by NEC

Corporation (“NEC”), Cray Research, Inc. (“Cray”) and

Fujitsu Limited (“Fujitsu”)}—were invited to submit a “best and

final offer.””'

Guided by its obligation to assure that the procurement

process was free of “noncompetitive practices,” on or about

March 3, 1996, NSF instructed UCAR to obtain evidence that

no dumping was involved in NEC’s offer to supply UCAR. ~

In response to NSF’s directive, UCAR commissioned Dr.

Lloyd Thorndyke to prepare an analysis of NEC’s offer.”

definitions and the drafting and presentation of questionnaires, analysis of

responses to questionnaires and the conduct of on site verification of the

accuracy and completeness of responses; . . . [and] prepare

recommendations regarding the disposition of individual AD/CVD

investigations and reviews.” Department of Commerce Organization and

Function Order 41-1 at § 2.04b.

20 UF 41, Pretrial Order at 7.

21 UF 4 2, Pretrial Order at 7.

22 UF 419, dd. at 12.

eee) Rudolph Trial Test. at 380, Ct. Doc. # 179; see also UF 4 6,

Pretrial Order at 8.

4 UF 47, Pretrial Order at 8.

ii bao cn bit esha

teksto,

45a

Dr. Thorndyke’s analysis concluded that NEC’s offer did not

involve dumping.”

NSF did not request Commerce to undertake a dumping

analysis of the UCAR procurement.”* Nevertheless, in

contemplating a self-initiated dumping investigation, see 19

U.S.C. § 1673a(a)(1) (1994), Commerce undertook a

preliminary analysis of NEC’s bid.”’

Specifically, on April 3, 1996, Ms. Susan Esserman,

Assistant Secretary of Commerce for Import Administration,

assembled a team of Import Administration officials to collect

information and analyze the possibility that NEC’s offer of

supercomputers to UCAR might involve dumping.”8

On April 24, 1996, Ms. Esserman convened an

interagency meeting to obtain technical information on

supercomputers and hear a presentation by NSF on the UCAR

procurement.”°

> UF 48, Id.

Powell Trial Test. at 168, Ct. Doc. # 177.

*7 Esserman Prelim. Inj. Test., Hr’g Exs. and Docs., Vol. 2, Tab

38 at 135, 162, 179, 185; Powell Dep., Hr’g Exs. and Docs., Vol. 4, Tab

72 at 45; see also Tr. Powell Trial Test. at 168, 188-192, Ct. Doc. # 177.

** UF 4 13, Pretrial Order at 13; see also Esserman Prelim. Inj.

Test., Hr’g Exs. and Docs., Vol. 2, Tab 38 at 177.

*° First Esserman Decl. ¢ 9, Hr’g Exs. and Docs., Vol. 1, Tab 16

at 2-3; Commerce Admissions { 16, Hr’g Exs. and Docs., Vol. 2, Tab 34

at 6-7; McPhee Prelim. Inj. Test., Hr’g Exs. and Docs., Vol. 2, Tab 38

at 65; Tr. Eleanor Lewis Trial Test. at 72-77, Ct. Doc. # 177.

46a

On May 2, 1996, Ms. Esserman became Commerce’s

Acting General Counsel.*® In ear’y May, Mr. Paul Joffe

became the Acting Assistant Secretary for Import

Administration.*' On May 13, 1996, Ms. Esserman convened

an interagency meeting with senior officials of NSF and other

agencies to discuss the results of Commerce’s preliminary

analysis of NEC’s UCAR bid. Attendees at the meeting

included, inter alia: Ms. Esserman, Paul L. Joffe, Eleanor R.

Lewis,” Gary Taverman,” John N. McPhee,** Mary Good,”

Stephen J. Powell, Jr.,*° Dr. George Cotter,” Dr. Neal Lane,

the director of NSF, and Lawrence Rudolph, NSF’s General

Counsel.** The specifics of the May 13th meeting are

discussed infra pp. 42-45.

% UF 4 16, Pretrial Order at 10.

3! UF 4 17, Id.

2 Chief Counsel for International Commerce, Office of the General

Counsel (“OGC”)/DOC. Id.

* Office Director, Enforcement Group I, IA/ITA/DOC. Jd. at 3.

* Director of Department’s Office of Computers and Business

Equipment, Trade Development (“TD”)/ITA/DOC. The office is

responsible for monitoring developments in the computer industry,

including software and software aspects, and working with the industry

and trade associations and other parts of the government to stimulate

export sales. UF { 12, Pretrial Order at 9. Mr. McPhee has been

employed at the Commerce Department for over twenty years, and is in

frequent contact with Cray on a variety of matters as part of his official

duties. Id.

* Under Secretary for Technology, DOC. Def.’s Resp. to Ct.

Ordered Disc., Hr’g Exs. and Docs., Vol. 2, Tab 32 at 4.

*” Chief Scientist, National Security Agency. Id.

% UF 4 18, Jd. at 11.

47a

On May 17, 1996, Ambassador Stuart Eizenstat, Under

Secretary for International Trade, and Ms. Esserman met with

Daniel K. Tarullo of the National Economic Council to

discuss the UCAR procurement.” The meeting was limited to

a short factual briefing of the UCAR procurement and Import

Administration’s inquiry into the matter.

Also on May 17, 1996, Mr. Brian Mannion, Grants and

Agreements Officer of NSF, wrote to Mr. William Rawson,

Vice President of UCAR,*' and stated, inter alia:

Under the Cooperative Agreement between UCAR

and NSF, UCAR is required to obtain NSF’s

approval before UCAR enters into the agreement to

acquire the supercomputing capacity that is the

subject of this procurement. In purchasing this

supercomputer capacity, UCAR must observe the

procurement standards set forth in Office of

Management and Budget Circular A-110, Uniform

Administrative Requirements for Grants and

Agreements with Institutions of Higher Education,

Hospitals, and Other Non-Profit Organizations,

which was incorporated by reference in section 2b of

°° Esserman Prelim. Inj. Test., Hr’g Exs. And Docs., Vol. 2, Tab

38 at 160; Decl. of Mary Good at 2, Under Secretary of Technology,

DOC, Ct. Doc. | 164.

“Id. at 161-163; id. at 2-3. Having received the testimony of Ms.

Esserman, as well as the Declaration of Mary Good, two attendees of the

May 17, 1996, meeting, the Court did not require testimony at trial by

Mr. Eizenstat to establish the substance of the meeting. See Warzon v.

Drew, 155 F.R.D. 183, 185 (E.D. Wis. 1994) (obtaining involuntary

testimony of high ranking government officials requires that the “evidence

must not be available through an alternative source or via less burdensome

means.”) The Esserman testimony and the Good declaration were

sufficient alternative sources of the evidence.

*! UF 19, Pretrial Order at 12.

48a

clause I of the general provisions of the Cooperative

Agreement. Among other things, those standards

require that:

All procurement transactions shall be

conducted in a manner to provide, to the

maximum extent practical, open and free

competition. The recipient shall be alert to

organizational conflicts of interest as well

as noncompetitive practices among

contractors that may restrict or eliminate

competition or otherwise restrain trade.

As you know, NSF has been concerned about the

possibility that one or more of the proposals could

give rise to the imposition of an “antidumping duty”

UCAR has provided NSF with several documents

that addressec the “antidumping” issue.

Subsequently, officials at the Department of

Commerce, which has statutory responsibility for

administering relevant provisions of the antidumping

laws, have advised NSF that they have performed a

“constructive analysis” of the proposal with the best

performance characteristics. They have reached the

preliminary conclusion that the proposal does not

constitute an offer at “fair value.”

As you enter into final negotiations with the firm that

in UCAR’s judgment has submitted the best

proposal, we remain concerned about the dumping

issue. Prior to approving this award, therefore, NSF

will require that UCAR has given this issue due

consideration and that UCAR has obtained sufficient

documentation to demonstrate that the proposal does

not reflect any “noncompetitive practices among

49a

contractors that may restrict or eliminate competition

or otherwise restrain trade” in violation of the

antidumping laws.*”

On May 20, 1996, UCAR announced that it had selected

for final contract negotiations FCC’s bid to supply a system

of four NEC 32 processor SX-4 vector supercomputers for

$35.25 million. UCAR found that the NEC systems offered

by FCC “provide a distinct technical advantage compared to

the systems offered by the other vendors.””?

On May 20, 1996, Commerce transmitted to NSF a letter

from Acting Assistant Secretary Joffe to Dr. Lane, Director

of NSF, (the “Joffe Letter”) stating that “using standard

methodology prescribed by the dumping law” Commerce had

“estimated” that NEC’s bid to supply UCAR was below cost,

and that the dumping margin on NEC’s UCAR bid “is likely

to be very high,” and further, that UCAR’s acquisition of

NEC supercomputers “could have a serious adverse impact on

the domestic industry’s efforts to develop a more advanced

version of the supercomputer system to be supplied.“* The

Joffe Letter also stated that a formal antidumping investigation

could be self-initiated by Commerce or initiated pursuant to

an antidumping petition.“ The Secretary of Commerce

approved the delivery of the “Joffe Letter” to NSF.“

* Hr’g Exs. and Docs., Vol. 1, Tab 23.

Press Release).

“ Hr’g Exs. and Docs., Vol. 1, Tab 14.

“ UF 423, Pretrial Order at 12-13; see also Hr’g Exs. and Docs.,

Vol. 1, Tab 14.

38 at 175-76.

50a

On the same date, Mr. Joffe sent a second letter to Dr.

Lane transmitting a document entitled “Predecisional

Memorandum.”*” The Predecisional Memorandum contained

a “Dumping Analysis” that included a specific, estimated

“Margin Calculation” ranging from 163.38 to 280 percent.“

The Predecisional Memorandum was not based on NEC’s

actual cost and pricing data that would be used to make a

formal dumping finding under the statute.” Instead, Import

administration staff reviewed various sources of information,

including estimates of NEC’s costs available to the U.S.

Government, the Thorndyke Study, and information from

NEC financial statements.”

For reasons relating to NSF’s procurement procedures,

NSF requested authorization from Commerce to release the

analysis to NEC, UCAR and NCAR.*' Commerce transmitted

the May 20 Predecisional Memorandum to NSF with

authorization for NSF to distribute the Memorandum to NEC,

UCAR and NCAR as within Commerce’s “intended official

*’ UF 4 24, Pretrial Order at 13; see also Hr’g Exs. And Docs.,

Vol. 1, Tab 15.

“* Hi’g Exs. and Docs., Vol. 1, Tab 15 at 3.

*° Esserman Prelim. Ini. Test., Hr’g Exs. and Docs., Vol. 2, Tab

38 at 150-51. (“we were involved with a preliminary analysis. . . when

you make a preliminary, [19 U.S.C. § 1673b(b)], or a final determination,

[19 U.S.C. § 1673d(a)], [there is] a full review of a foreign producer’s

data, . . .”). Among other things, that review includes verification of the

foreign producers’ data. See 19 U.S.C. § 1677m(i)(1) (1994); 19 C.F.R.

§ 353.36(a)(i) (1996).

*! Tr. Powell Trial Test. at 178-82, Ct. Doc. # 177; Tr. Rudolph

Trial Test at 384, 417-18, Ct. Doc. # 179.

ewe ee ae ON Oe

We gl ge Bale OL: a loi hintast Dilatal

SL tere ae a oes ag ee a On fee ee ee eee et

S5la

use.” Commerce and NSF agreed that the disclosure of the

Predecisional Memorandum to NSF, NEC, UCAR and NCAR

was for purposes of the procurement.”

Commerce made the Joffe Letter available to the press

and public and faxed it directly to Cray on May 20, 1996 It

was published in Inside U.S. Trade on May 24, 1996.° The

Predecisional Memorandum was published in Inside U.S.

Trade on September 13, 1996. There is no evidence of

Inside U.S. Trade’s source for publication.

On June 4, 1996, Cray executives, accompanied by

outside counsel, met with Import Administration staff for

pre-petition counseling.*”

On June 5, 1996, Robert LaRussa, who had no prior

involvement in the issues relating to the UCAR procurement,

succeeded Mr. Joffe as Acting Assistant Secretary of

Commerce for Import Administration. On June 7, 1996, Mr.

LaRussa was briefed by Mr. Taverman on the predecisional

analysis and the dissemination and general content of the

Predecisional Memorandum.” He also read the Joffe Letter at

* Joffe Transmittal Letter, Hr’g Exs. and Docs., Vol. 1, Tab 15:

see also Tr. Powell Trial Test. at 185, Ct. Doc. # 177: Tr. Rudolph Trial

Test. at 400, Ct. Doc. # 179.

* UF 4 29, Pretrial Order at 14.

*” UF 441, Pretrial Order at 17.

** UF 4 32, Pretrial Order at 15.

*° Suppl. LaRussa Interrog. Resp. 2, Hr’g Exs. and Docs., Vol. 2,

Tab 37 at 3-4; Taverman Dep., Hr’g Exs. and Docs., Vol. 4, Tab 73 at

42-47.

52a

that time.” Mr. LaRussa did not read the predecisionai

dumping analysis.”

Mr. LaRussa has had no communication with Mr.

Eizenstat or Ms. Esserman relating to the preparation,

dissemination, purpose, or content of the Predecisional

Memorandum; neither Ms. Esserman nor Mr. Eizenstat had

communicated to Mr. LaRussa their views on Cray’s

antidumping petition; and Mr. Eizenstat gave Mr. LaRussa

only general guidance to observe all standard applicable

procedures in the pending investigation of vector

supercomputers from Japan.”

On June 6, 1996, Mr. Joffe, then a Senior Advisor to the

Assistant Secretary for Import Administration, Mr. Powell,

and Mr. Taverman, met with Democratic staff members from

the House of Representatives Science Committee to discuss

the UCAR procurement. Mr. Taverman explained the

predecisional analysis and the resulting estimated dumping

margins.©

On June 10, 1996, Ms. Esserman, Mr. Joffe, Mr.

LaRussa, Mr. Powell, and Mr. Taverman met with staff

members of the House Ways and Means Committee and

Senate Finance Committee, at the request of one of the staff

members, to discuss the UCAR procurement. Mr. Taverman

again explained the predecisional analysis and the estimated -

Tab 37 at 3.

Soe

® Suppl. LaRussa Interrog. Resp. 2, 3, 6, Hr’g Exs. and Docs.,

Vol. 2, Tab 37 at 3, 6, 11- 12.

® UF 4 33, Pretrial Order at 15. The Predecisional Memorandum

was not given to the Congressional staff members.

;

53a

dumping margins.” Acting Assistant Secretary LaRussa did

pot make any presentation or ask or answer any questions at

On June 11, 1996, Ms. Esserman, Mr. Powell, Mr.

Joffe, Mr. Taverman, and Mr. LaRussa met with

Representative David E. Skaggs,® at his request, to discuss

the UCAR procurement. They explained the antidumping

process to Congressman Skaggs, and Mr. Taverman explained

in general terms the predecisional dumping analysis.°”

On June 20, 1996, Mr. Rawson of UCAR wrote to Mr.

Mannion at the NSF to state that, in response to NSF’s May

17 letter, UCAR had asked FCC/HNSX/NEC to comment

upon Commerce’s May 20, 1996, Predecisional Memorandum

and also had retained its own legal and economic experts to

evaluate the FCC/HNSX/NEC response as well as

Commerce’s Predecisional Memorandum.”

UCAR concluded, based on its information, that the

FCC/HNSX/NEC offer to supply four of NEC’s SX-4 32

processor supercomputers was not at less than fair value.

* UF { 34. Id. The Predecisional Memorandum was not given to

the Congressional staff members.

Representative David E. Skaggs represents the 2nd Congressional

District of Colorado which includes Boulder Colorado, where UCAR and

NCAR are located. UF 4 36, Id.

* UF { 37, Id. Subsequently, the UCAR procurement and

Commerce’s preliminary analysis were the subject of Congressional debate

on an amendment to a House Appropriations Bill. See H.R. Rep. 104-628

at 124-129; 142 Cong. Rec. H6905-02 (1996).

% UF 4 38, Pretrial Order at 16.

° UF 4 39, Id. at 17.

54a

On June 24, 1996, NSF Director Lane forwarded to the

Secretary of Commerce, Michael Kantor, Mr. Rawson’s letter

of June 20, 1996, together with the enclosed cost analyses,

asking Secretary Kantor to inform him “in the near future”

about Commerce’s intentions regarding the self-initiation of

an antidumping investigation of supercomputers from Japan.”

Also on June 24, 1996, NSF General Counsel Rudolph wrote

to Ms. Esserman conveying the same cost analyses.”

On July 29, 1996, Cray filed an antidumping petition

with Commerce and the U.S. International Trade Commission

(“ITC”) against vector supercomputers from Japan.”

On August 2, 1996, NEC wrote to Under Secretary

Eizenstat advising him of a request to Commerce’s Inspector

General for an investigation of the circumstances surrounding

the issuance of Commerce’s Predecisional Memorandum as

well as NEC’s claim that Commerce had improperly released

NEC’s business confidential information to Cray. NEC sought

suspension of the antidumping investigation initiated pursuant

to Cray’s petition, pending the conclusion of the Inspector

General’s investgation.”

On August 14, 1996, Mr. LaRussa received a note from

Under Secretary Eizenstat transmitting a letter from NEC’s

counsel dated August 2, 1996, and instructing Mr. LaRussa

to draft a response to a letter from NEC’s counsel containing

allegations that Commerce Department actions related to its

antidumping investigation “may include violations of a Federal

7 UF 4 40, Id.

7 UF ¢ 42, Id.

2 UF 4 42, Id.; see also Vector Supercomputers from Japan, 61

Fed. Reg. 43,527 (Dep’t Commerce 1996) (init. antidumping invest.).

™ UF 4 44, Pretrial Order at 17-18.

MSR eS ats a8 a eet id A Sava 4

55a

criminal statute, applicable Department regulations, and the

Due Process Clause of the Constitution.””

On August 19, 1996, Commerce initiated the

supercomputer investigation.” The investigation was assigned

to Import Administration’s Office of Antidumping and

Countervailing Duty Enforcement II.”°

On August 20, 1996, NSF issued a press release in

which Dr. Neal Lane, NSF’s Director, stated, inter alia:

In my view, it would be inappropriate for NSF to

approve this procurement until the dumping issue has

been resolved.

In light of the numerous questions raised about and

interest expressed in this procurement, i am pleased

that the issue of dumping is being properly addressed

by the appropriate federal agencies. The Department

of Commerce and the International Trade

Commission have the statutory authority, the

expertise, and the established procedures to

determine whether this offer is being made at less

than fair value, and whether it would be injurious to

American industry.

I am acutely aware that the National Center for

Atmospheric Research (NCAR), which is operated

by UCAR, needs state-of-the-art computational

equipment to maintain U.S. world leadership in

climate modeling research. I feel, however, that

acting now on this procurement would be

> Vector Supercomputers from Japan, 61 Fed. Reg. 43,527 (Dep’t

Commerce 1996) (init. antidumping invest.)

%® UF 4 46, Pretrial Order at 18.

56a

inconsistent with the responsible stewardship of

taxpayer monies.”

On September 12, 1996, the Chairman of the ITC

notified the Secretary of Commerce that the Commission had

made an affirmative determination in the preliminary injury

phase of the antidumping investigation regarding vector

supercomputers from Japan,” which was published on

Septémber 25, 1996, in the Federal Register.”

On September 30, 1996, Commerce sent Section A of its

antidumping questionnaire to counsel for NEC.” The same

questionnaire was sent to Fujitsu Limited (“Fujitsu”).®'

On October 15, 1996, NEC sent a letter to Secretary

Kantor stating “we have today asked the Court of International

Trade to enjoin the Department’s continued prosecution of its

antidumping investigation of supercomputers from Japan.”™

NEC explained that the reason for this action was that

Commerce publicly endorsed “the merits of our competitor’s

dumping claim before the antidumping investigation was even

initiated” and therefore “Commerce has deprived NEC and

HNSX of the right to a fair and impartial decision-maker to

which they are entitled under the Fifth Amendment of the

United States Constitution. Accordingly, [NEC] will

respectfully withhold their response to the Department

7 UF 4 48, Id.; see also Ex. Q attached to Pls.” Mem. of P.& A.

in Supp. of Mot. for Prelim. Inj., Court Doc. # 004.

78 UF 4 49, Pretrial Order at 19.

” UF 451, Id.; see also Vector Supercomputers from Japan, 61

Fed. Reg. 50,331 (ITC 1996) (prelim. injury determ.).

80 UF 4 52, Pretrial Order at 19.

8 UF 453, Jd. at 19-20.

57a

questionnaire until such time as a qualified independent party,

who is impartial and has not already prejudged the matter, is

appointed as a ‘special master’ to conduct the investigation.”™

As noted above, NEC filed this lawsuit on October 15,

1996 seeking to enjoin Commerce’s investigation of vector

supercomputers from Japan.

DISCUSSION

NEC’s constitutionally based prejudgment claim (seeking

disqualification of an administrative decisionmaker) invokes

the protections of the Due Process Clause of the Fifth

— Amendment. See, e.g., Withrow v. Larkin, 421 U.S. 35.

46, 95 S. Ct. 1456, 1464 (1975) (reviewing whether

combination of investigative and adjudicative functions creates

an unconstitutional risk of bias in administrative adjudication).

Before an administrative action implicates constitutional due

process concerns, however, that action must deprive a party

of “life, liberty, or property."° Therefore, a prejudgment

claim based on the Due Process Clause requires that the court

“first determine whether a protected property or liberty

interest exists,” before determining “what procedures are

necessary to_protect that interest.” Techsnabexport, Ltd. v.

United States, 16 C.1.T. 420, 426, 795 F. Supp. 428, 435

* U.S. Const. Amend. V.

** The Due Process Clause provides, “No person shall . . . be

deprived of life, liberty, or property, without due process of law.” U.S.

Const. Amend. V. “The [Supreme] Court analyzes each of these three

concepts separately; unless an agency action threatens to deprive an

individual of something that fits within one of these three categories, the

procedures used by the agency are not subject to review under the Due

Process Clause.” Kenneth Culp Davis & Richard J. Pierce, Administrative

Law Treatise § 9.4 at 21 (3d ed. 1994).

58a

(1992) (citing American Ass’n of Exporters & Importers v.

United States, 751 F.2d 1239, 1250 (Fed. Cir. 1985).

The Supreme Court has interpreted Congress’ power “to

regulate Commerce with foreign nations” to be “so complete

. . . that no one can be said to have a vested right to carry on

foreign commerce with the United States.” The Abby Dodge,

223 U.S. 166, 176-77, 32 S. Ct. 310, 313 (1912); see also

authorities cited in Arjay Assocs., Inc. v. United States, 8

Fed. Cir. (T) 16, 18-20, 891 F.2d 894, 896-98 (1989):*’ and

8 U.S. Const. Art I, § 8, cl. 3.

*” Arjay cites the following authorities:

Buttfield v. Stranahan, 192 U.S. 470, 493, 24 S. Ct. 349, 354,

48 L. Ed. 525 (1904) (“As a result of the compl<te power of

Congress over foreign commerce, it necessarily follows that no

individual has a vested right to trad< with foreign nations,

which is so broad in character as to limit and restrict the power

of Congress to determine what articles of merchandise may be

imported into this country and the terms upon which a right to

import may be exercised. This being true, it results that a

statute which restrains the introduction of particular goods into

the United States from considerations of public policy does not

violate the due process clause of the Constitution.”); . . .

American Assoc. of Exporters and Importers v. United States,

751 F.2d 1239, 1250 (Fed. Cir. 1985) (“No one has a

protectable interest to engage in international trade.”);

Ganadera Indus., §.A. v. Block, 727 F.2d 1156, 1160 (D.C.

Cir. 1984) (“[Ganadera’s] due process argument must fail

because [Ganadera] has no constitutionally-protected right to

import into the United States.”); .. . .

The absence of a constitutional right has been recognized in

relation to aspects of international trade other than exclusion

from importation. See Japan Line, Lid. v. County of Los

Angeles, 441 U.S. 434, 448-49, 99 S. Ct. 1813, 1821-22, 60

L. Ed. 2d 336 (1979); Board of Trustees of Univ. of Ill. v.

United States, 289 U.S. 48, 57, 53 S. Ct. 509, 509-10, 77 L.

Ed. 1025 (1933) (no violation of federalism in imposition of

duty on state importation) (“The Congress may determine what

59a

B-West Imports, Inc. v. United States, 880 F. Supp. 853,

863-64 (CIT 1995). NEC did not identify a specific

constitutionally protected interest at stake in the pending

antidumping investigation. Indeed, the authoriti

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