Opposition Brief — NEC Corp. v. United States

Supreme Court, U.S.

ett ED

JAN 6 1999

No. 98-740

ATE ea ee a | CLERK

In the Supreme Court of the United States

OCTOBER TERM, 1998

NEC CORPORATION and HNSX SUPERCOMPUTERS, INC.,

Petitioners,

V.

UNITED STATES and DEPARTMENT OF COMMERCE

and

CRAY RESEARCH, INC.,

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals for the Federal Circuit

BRIEF OF RESPONDENT CRAY RESEARCH, INC.

IN OPPOSITION

Michael L. Burack

Counsel of Record

John D. Greenwald

- Amber L. Cottle

WILMER, CUTLER & PICKERING

2445 M Street, N.W.

Washington, D.C. 20037

(202) 663-6000

Counsel for Respondent Cray

Research, Inc.

January 6, 1999

nena ce nance te

COUNTERSTATEMENT OF THE

QUESTION PRESENTED

Whether the Federal Circuit acted correctly when it

followed existing Supreme Court precedent and held that a

plaintif* alleging prejudgment by an administrative decision-

maker, based on actions taken by the decisionmaker’s agency

in the performance of its statutory duties, must prove that the

decisionmaker is “not capable of judging a particular contro-

versy fairly on the basis of its own circumstances.”

RULE 29.6 LISTING

Pursuant to Rule 29.6 of the Rules of this Court, Cray

Research, Inc. provides as follows:

l. Cray Research, Inc. is a wholly owned subsid-

iary of Silicon Graphics, Inc.

y A Cray Research, Inc. does not have any non-

wholly owned subsidiaries.

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TABLE OF CONTENTS

Page

COUNTERSTATEMENT OF THE QUESTION

SBOE EAL ADLER ET EET LY ES) elena i

WY Tt POG LISTING «cs cess wesc es ese sete rere ii

TABLE OF AUTHORITIES .....----------sc0 000 '? Vv

COUNTERSTATEMENT OF THE CASE ....----- >>: 2

A. General Background .....---.----s--500tt'? 2

B. The Statutory Basis for the Department's

SITELOGO COE oe gtd eat alas 4

C. The Decisionmaker's Involvement in the Actions

of Which NEC Complains ......--------:°7*? 8

D. The Decision of the Court of Appeals.......--- 11

REASONS FOR DENYING THE WRIT ....------ >> 13

1. THIS COURT HAS PREVIOUSLY

ADDRESSED THE CONSTITUTIONAL ISSUE

AS TO WHICH NEC SEEKS CERTIORARI,

AND THE COURT BELOW FOLLOWED THIS

COURT'S GUIDANCE ....---------+°7°? 14

Il. THERE IS NO CONFLICT AMONG THE

EN ee a gyee ex ence es eR oes 20

TABLE OF CONTENTS -- continued

Ii. THIS IS NOT AN APPROPRIATE CASE IN

WHICH TO GRANT CERTIORARI .......... 23

CRIES 6s oes ocak Newe bebo Ree Pea 25

PEI De 8:50 ha 6 e'> Fan ANS ERT la

Pg i ge yr eee ye ee 3a

iV

TABLE OF AUTHORITIES

Page

Cases:

American Cyanamid Co. v. Federal Ti rade

Comm'’n, 363 F.2d 757 (6th Cir. 1966) ....-. ai, oe

Antoniu v. Securities and Exch. Comm'n,

877 F.2d 721 (8th Cir. 1989) .......------ 21, 22

Cinderella Career & Finishing Sch., Inc. v.

Federal Trade Comm'n, 425 F.2d 583

IG. Cie. 1970). ni css eee nes tte Zi; 20

Federal Trade Comm'n v. Cement Institute,

333 U.S. 683 (1948) .....-. eee ee ee ees passim

Hortonville Joint Sch. Dist. No. I v. Hortonville

Educ. Ass'n, 426 U.S. 482 (1976) ......--- passim

Staton v. Mayes, 552 F.2d 908 (10th Cir. 1977) .. 21, 22

Texaco, Inc. v. Federal Trade Comm'n,

336 F.2d 754 (D.C. Cir. 1964), vacated on

other grounds, 381 U.S. 739 ‘ob =) eae 21, 22

United States v. Morgan, 313 U.S. 409 (1941) . 12, 18, 21

Withrow v. Larkin, 421 U.S. 35 (1975) ...------ passim

Statutes:

WUE C. SUGAR. bo oes i passim

Cee foak & 1g peipepunarrnt as (rr eer Rear ta, 2

STEREO AGE oxen ccc tet eee ree 2

UGE BURTO og as ees eet her 2

19-45-S CB 16776 een teen en ane 2

SOTE SC 6 GTI oak ns ee ee eee: 2

TABLE OF AUTHORITIES — continued

Miscellaneous:

Inter-Deparimental Disclosure of Information

Submitted Under the Shipping Act of 1984,

9 Op. Off. Legal Counsel 48 (Feb. 8, 1985) ...... 8

2 Kenneth Culp Davis & Richard J. Pierce, Jr.,

Administrative Law Treatise § 9.8 (3d ed. 1994) . 20

No. 98-740

——— eee

In the Supreme Court of the United States

OCTOBER TERM, 1998

NEC CORPORATION and HNSX SUPERCOMPUTERS, INC.,

Petitioners,

Vv.

UNITED STATES and DEPARTMENT OF COMMERCE

and

CRAY RESEARCH, INC.,

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals for the Federal Circuit

BRIEF OF RESPONDENT CRAY RESEARCH, INC.

IN OPPOSITION

Respondent Cray Research, Inc. (“Cray”) respectfully

requests that this Court deny the petition for a writ of certio-

rari to review the decision and judgment of the United States

Court of Appeals for the Federal Circuit entered on August 7,

1998.

2

COUNTERSTATEMENT OF THE CASE

A. General Background

On July 29, 1996, respondent Cray Research, Inc.

(“Cray”) filed a petition with the Department of Commerce

(“the Department”) under Title VII of the Trade Act of 1930,

as amended, 19 U.S.C. §§ 1673 et seq. (“the Act”), asking the

Department to initiate a formal on-the-record antidumping

proceeding (often referred to as an “investigation”) and to

impose antidumping duties on the sales of vector supercom-

puters by the petitioners here, NEC Corporation and HNSX

Supercomputers, Inc. (collectively, “NEC”).' The Depart-

ment commenced a formal antidumping proceeding.

Under the Act, a foreign producer such as NEC has

the right to submit its actual cost and pricing data on the re-

cord of the proceeding, and the Department must then base its

analysis in the proceeding on those data unless they are in-

complete, unverifiable, or unrepresentative. 19 U.S.C.

§§ 1677a, 1677b(a){1)(B), (f), 1677m(d), (e), (i). Where a

party withholds information that the Department has re-

quested, the Department “shall . . . use the facts otherwise

available in reaching” its dumping determination in the pro-

ceeding. Jd. § 1677e(a). In such a situation, the Department

“may use an inference that is adverse to the interests of [the

non-cooperating] party in selecting from among the facts oth-

erwise available.” Jd § 1677e(b).

Notwithstanding these provisions, NEC chose not to

participate in or cooperate with the Department’s antidumping

proceeding. NEC refused to respond to the questionnaire that

the Department, following its standard procedures, sent to

' “Dumping” occurs when foreign merchandise is being sold, or is

likely to be sold, in the United States at less than its “fair value.” 19 U.S.C.

§ 1677(34).

" wad mc nC OPER aR Se PN

3

NEC; nor did NEC submit any other data or information. Pet.

31a, 56a-57a.”

Instead, NEC filed an action in the Court of Interna-

tional Trade (“the CIT”) seeking to enjoin the antidumping

proceeding on the ground that the Department had prejudged

the matter as a result of an analysis the Department had per-

formed, at its own initiative and before Cray had filed the

antidumping petition, into the possibility that NEC was en-

gaged in dumping. After allowing NEC to take discovery and

holding an evidentiary hearing, the CIT denied NEC’s motion

for a preliminary injunction. After allowing additional discov-

ery and holding a further evidentiary hearing, the CIT con-

cluded that NEC had failed to prove prejudgment and denied

NEC’s application for a permanent injunction. Pet. 33a-76a.

A unanimous panel of the U.S. Court of Appeals for the Fed-

eral Circuit affirmed. Pet. la-32a.

NEC now petitions this Court for a writ of certiorari

to review the decision of the Federal Circuit, claiming that the

Federal Circuit applied the wrong legal standard. The Petition

rests on three basic premises each of which is unsupported by,

and mischaracterizes, the record. First, the Petition incor-

rectly asserts that the actions of the Department that NEC

claims show prejudgment occurred “wholly outside the con-

text of any proceeding authorized by the antidumping laws.”

Pet. 22 Second, the Petition incorrectly conflates actions by

! “Pet.” followed by a number refers to the page number of NEC’s

Petition for a Writ of Certiorari. “Pet.” followed by a number and the letter

“a” refers to the page number of the Appendix to the Petition. “Opp.” fol-

lowed by a number and the letter “a” refers to the page number of the Ap-

pendix to this Opposition.

3

See also, e.g., Pet. 5-6 (actions complained of were “entirely extra-

neous to any proceeding, formal or informal, contemplated by the

(continued...)

4

other officials of the Department with actions by the decision-

maker in this case. Third, the Petition incorrectly character-

izes the holding of the court of appeals in this case. This

counterstatement of the case discusses these three points.

B. The Statutory Basis for the Department’s Actions

This case involves the Department’s exercise of its

broad powers and duties, pursuant to the Act, to administer

the antidumping laws of the United States. The Act autho-

rizes the Department to institute a formal antidumping pro-

ceeding based on information submitted to ii in an anti-

dumping petition filed by a United States manufacturer. 19

U.S.C. § 1673a(b)(1). That was the authority under which

the Department entertained Cray’s petition.

In addition, the Act authorizes -- indeed, requires --

the Department to examine potential dumping situations that

come to its attention independently of any antidumping peti-

tion in order to determine whether to “self-initiate” a formal

antidumping proceeding (i.e., to hold an antidumping pro-

ceeding on its own initiative). In this regard, the Act states:

An antidumping duty investigation

shall be initiated whenever the [Department]

determines, from information available to it,

that a formal investigation is warranted into

the question of whether the elements necessary

for the imposition of a duty under sect'on 1673

of this title exist.

19 U.S.C. § 1673a(a)(1) (emphasis added).

’ (...continued) -

antidumping laws”), 1] (actions “were not made in the course of discharging

DOC’s duty under the antidumping statute”).

Se Se eee

5

This case arose from the Department’s consideration,

pursuant to 19 U.S.C. § 1673a(a)(1), of a potential dumping

situation involving NEC that came to the Department's atten-

tion in the absence of an antidumping petition by a domestic

manufacturer, and that the Department examined for the pur-

pose of determining whether to self-initiate an antidumping

proceeding against NEC.

In March 1995, the University Corporation for Atmo-

spheric Research (“UCAR”) issued a Request for Proposals

for a new supercomputer system for the National Center for

Atmospheric Research (“NCAR”). Three companies submit-

ted “best and final offers”: Federal Computing Corporation

(“FCC”), Fujitsu Limited, and Cray. FCC and Fujitsu pro-

posed to supply Japanese supercomputers: Fujitsu offered its

own products, and FCC offered supercomputers made by

NEC. Pet. 3a, 44a. On May 20, 1996, UCAR announced

that it would negotiate a contract for the NEC supercomput-

ers. Pet. Sa, 49a.

The National Science Foundation (“NSF”) was to fi-

nance the UCAR purchase and had to approve it. Pet. 3a,

44a. Both NSF and UCAR were concerned about the possi-

bility that NEC’s bid might involve dumping. Accordingly,

UCAR engaged a consultant to examine NEC’s costs relative

to NEC’s bid price. Pet. 4a, 44a. The consultant delivered

his analysis to UCAR on March 12, 1996.

In April 1996, the Department of Commerce became

aware of the concerns of NSF and UCAR that NEC’s bid

might involve dumping. Pursuant to its statutory power and

The consultant, Dr. Lloyd Thorndyke, did not find dumping, but --

as he himself noted -- his analysis omitted key cost elements (e. g., hardware

and software development costs). Pet. 4a. Cray reviewed his study and con-

cluded that, corrected for the omissions, it showed NEC’s price to be sub-

stantially below cost. Cray’s analysis was part of the record below.

6

duty to consider “information available to it” under 19 U.S.C.

§ 1673a(a)(1), the Department, on its own initiative, under-

took a preliminary consideration of NEC’s bid. Pet. 45a.

NEC’s claim that the Department prejudged the merits

of the formal antidumping proceeding subsequently initiated

pursuant to Cray’s petition rests on the Department’s actions

in connection with its consideration of whether to “self-initi-

ate” a formal antidumping investigation pursuant to 19 U.S.C.

§ 1673a(a)(1). The actions of the Department upon which

NEC’s claim of prejudgment rests are identified at pages 3-5

of the Petition. They are as follows:

- April 24, 1996 interagency meeting convened by Su-

san Esserman, Assistant Secretary of Commerce for

Import Administration. The court of appeals and the

CIT both concluded that this meeting was held in or-

der “to obtain technical information on supercomput-

ers and hear a presentation by NSF on the UCAR pro-

curement.” Pet. 4a, 45a.

* May 13, 1996 interagency meeting convened by Ms.

Esserman. The meeting was held “with senior offi-

cials of NSF and other agencies to discuss the results

of Commerce’s preliminary analysis.” Pet. 4a. The

CIT heard the testimony of attendees at this meeting,

including Ms. Esserman and the General Counsel of

NSF, Lawrence Rudolph, and made detailed findings

about the meeting. Pet. 72a-74a. Crediting the testi-

mony, the CIT found that Ms. Esserman “was provid-

ing advice in the nature of a forecast rather than pre-

judging the outcome of the investigation.” Pet. 74a.

The court of appeals upheld the CIT’s finding. Pet.

28a.

7

* May 17, 1996 interagency meeting at the White

House. Stuart Eizenstat, Under Secretary of Com-

merce for International Trade, and Ms. Esserman met

with officials of the National Economic Council and

“provided a short, factual briefing on the UCAR pro-

curement and the [Department’s] inquiry.” Pet. 4a-Sa,

47a?

* May 20, 1996 letters frcm Commerce Department to

iJSF. Paul Joffe, then Acting Assistant Secretary of

Commerce for Import Administration,® sent two let-

ters to Dr. Neal Lane, the Director of NSF. Pet. 5a-

6a, 49a-S5la. One letter informed NSF of Commerce’s

preliminary view that NEC’s bid appeared to involve a

very high “dumping margin” and noted that “[ajnti-

dumping investigations can be initiated either at the

request of the domestic industry or on the initiative of

the Department of Commerce.” Opp. 1a-2a; see also

Pet. 5a-6a, 49a. The other letter transmitted Com-

merce’s “Predecisional Memorandum,” which con-

tained a “Dumping Analysis,” to NSF and authorized

NSF to give copies to NEC, UCAR, and NCAR.

Opp. 3a-8a; see also Pet. 6a, 50a-Sla. (The two let-

. In discussing this meeting, NEC asserts that Mr. Eizenstat and Ms.

Esserman informed the attendees “of DOC’s conclusion that NEC was guilty

of dumping.” Pet. 4. This characterization is contrary to both the findings of

the CIT, Pet. 47a, and the recitation of the court of appeals, Pet. 4a. The

assertion that the Department said, at any time, that NEC was “guilty” of

anything is utterly unsupported by the record.

. Mr. Joffe succeeded Ms. Esserman, who had become Acting Gen-

eral Counsel of the Department, on May 2, 1996.

y The “dumping margin” is the amount by which the U.S. selling

price would have to be increased to be at “fair value,” expressed as a per-

centage of the U.S. price.

8

ters are set out in fuil in the Appendix to this Opposi-

tion.)

¢ Three meetings with Committees or Members of Con-

gress in June 1996. On June 6, 10, and 11, 1996,

Commerce Department officials met with, respec-

tively, (1) the staff of the House Science Committee,

(2) the staffs of the House Ways and Means Commit-

tee and the Senate Finance Committee, and (3) Rep-

resentative David Skaggs, in whose district UCAR is

located. In these meetings, the Department represen-

tatives explained their predecisional analysis and esti-

mates and the antidumping process. et. 7a-8a, 52a-

53a.

All of these events occurred in connection with the Depart-

ment’s preliminary assessment cS possible dumping pursuant

to its self-initiation authority under 19 U.S.C. § 1673a(a)(1).

See Pet. 45a.

Cc. The Decisionmaker’s Involvement in the Actions of

Which NEC Complains

In discussing the various Commerce Department ac-

tions just identified, NEC’s Petition does not distinguish be-

tween those actions in which the decisionmaker in the formal

antidumping investigation participated and those in which he

did not. In this manner, NEC seeks to attribute to “the

decisionmaker” participation in all of the actions of which

While the Act does not expressly authorize the Department to dis-

cuss its preliminary analyses of potential dumping situations with other arms

of the Government, that authority is implied as part of the “general presump-

tion that information obtained by one federal government agency is to be

freely shared araong federal government agencies.” IJnter-Departmental

Disclosure of Information Submitted Under the Shipping Act of 1984, 9

Op. Off. Legal Counsel 48, 52-53 (Feb. 8, 1985). See Pet. 68a-69a n.97.

9

NEC complains. Tliat is unsupported by, and a distortion of,

the record.

The decisionmaker in the formal antidumping proceed-

ing initiated pursuant to Cray’s petition was Robert LaRussa,

the Acting Assistant Secretary of Commerce for Import Ad-

ministration. Mr. LaRussa was appointed to that position on

June 5, 1996.° Pet. 7a, 5la.

Prior to his appointment, Mr. LaRussa had no involve-

ment with the UCAR procurement. Pet. 7a, 51a. He did not

attend any of the interagency meetings about which NEC

complains; he did not work on the Department’s predecisional

analysis and estimates; he did not participate in the prepara-

tion of the May 20, 1996 letters to NSF; and he did not attend

the June 6, 1996 meeting with members of the staff of the

House Science Committee. Pet. 51a-S2a. Mr. LaRussa’s

only involvement in the events about which NEC complains

was his presence during the June 10, 1996 meeting with staff

members of the House Ways and Means Committee, Pet. 52a-

53a, and the June 11, 1996 meeting with Representative

Skaggs, Pet. 53a. At those meetings, Mr. LaRussa was a

largely passive observer: he did not say anything at the June

10, 1996 meeting, and he participated in the June 11, 1996

meeting only in helping to explain the antidumping process to

Congressman Skaggs. Pet. 53a.

On the basis of these facts, the CIT found that Mr.

LaRussa -- the decisionmaker in the antidumping proceeding

initiated by Cray’s July 29, 1996 petition -- “had only a cur-

sory involvement with the matters in dispute here” and that

Mr. LaRussa’s “decisional independence” had not been “con-

, Mr. LaRussa had been preceded in that position by Mr. Joffe, who

had in turn been preceded by Ms. Esserman. See note 6 supra.

10

strained in a way that precludes a fair investigation.” Pet. 68a.

See also Pet. 74a.

The court of appeals agreed. It stated that, prior to

his appointment, “Mr. LaRussa had no involvement with the

UCAR procurement,” and that, aside from being briefed on

the situation generally, he thereafter “had no communication

with either Mr. Eizenstat or Ms. Esserman relating to the

preparation, dissemination, purpose or content of the Pre-

decisional Memorandum or regarding Cray’s petition... .”

Pet. 7a. The court of appeals stated that “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.” Pet. 28a.

Although both decisions below thus make clear that

the question before them was whether Mr. LaRussa could

fairly decide the antidumping proceeding, the Petition barely

mentions Mr. LaRussa."° Instead, the Petition focuses on

events in which Mr. LaRussa did not participate, but without

acknowledging that he was not a participant. In so doing, the

Petition creates the erroneous impression that Mr. LaRussa --

the decisionmaker in the formal antidumping proceeding --

Was involved in the actions on which NEC’s claim of prejudg-

ment is predicated.

The Petition also fails to point out that the issues that

were before Mr. LaRussa in the formal antidumping proceed-

ing differed from the issues the Department had earlier consid-

ered in connection with its predecisional inquiry. There were

two reasons for the difference. First, the purpose of the De-

” The only places where the Petition refers specifically to Mr.

LaRussa are at page 5 (noting that he was present at two of the three meet-

ings with Congressional staff) and in footnote 3 on page 9 (noting that the

CIT specifically focused on Mr. LaRussa’s decisional independence).

11

partment’s predecisional inquiry was to determine whether the

Department should exercise its statutory power and discretion

to self-initiate an antidumping proceeding of its own, whereas

Mr. LaRussa’s task was simply to decide the formal on-the-

record proceeding before him. Second, the formal anti-

dumping proceeding that the Department subsequently initi-

ated pursuant to Cray’s petition was on the record, and -- be-

cause NEC refused to participate -- the only evidence in the

record was the information Cray submitted. That evidence

had not been available to the Department when it performed

its earlier predecisional analysis, which was based on informa-

tion that the Department gleaned from NSF and other sources.

There is no reason to believe that the Department’s analysis of

those data would be the same as, or would constrain, Mr. La-

Russa’s later analysis of different data.

D. The Decision of the Court of Appeals

The part of the decision below that NEC asks this

Court to review is the standard that the Federal Circuit ap-

plied in determining whether the outcome of the antidumping

proceeding had been prejudged. According to NEC, the Fed-

eral Circuit applied an “‘irrevocably closed mind’ standard.”

Pet. i, 10-11, 18-22. That is, according to NEC the Federal

Circuit held that, in order to prevail, “a challenging party

[must] show that the decisionmaker’s mind is ‘irrevocably

closed.”” Pet. 10. NEC’s argument for a writ of certiorari

rests on the premise that the Federal Circuit’s decision was

based on the application of this standard. In fact, it was not.

NEC and the Governmert had proposed different

standards in the court of appeals. NEC argued that the appro-

priate standard was

whether objective facts reveal that the decision

maker has in some measure prejudged the is-

12

sues presented in a subsequent administrative

hearing. Under this standard, a prejudgment

claim must be sustained if there is even the

appearance of unfairness.

Pet. 21a (emphasis in original) (citation and internal quota-

tions omitted). Under the Government’s proposed standard,

the plaintiff would have to show that its “participation in the

administrative process would be futile.” Pet. 23a-24a (internal

quotations omitted).

The Federal Circuit stated that it need not decide be-

tween the standards proposed by NEC and the Government,

because the Supreme Court had already addressed the issue.

Pet. 24a. Following this Court’s decision in Hortonville Joint

School District No. 1 v. Hortonville Education Ass'n, 426

U.S. 482 (1976), the Federal Circuit held that NEC could pre-

vail only if it could establish that the decisionmaker was ““not

“capable of judging a particular controversy fairly on the basis

of its own circumstances.””” Pet. 24a (quoting Hortonville,

426 U.S. at 493, which in turn quoted United States v. Mor-

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

The Federal Circuit then applied the Hortonville stan-

dard to the facts of the case. Pet. 28a-30a. Based on its re-

view of the record evidence, the court concluded that “NEC

has failed to demonstrate that the decision maker, here Mr.

LaRussa, was not capable of judging this particular contro-

versy fairly on the basis of its own circumstances.” Pet. 28a.

See also Pet. 30a (“NEC has failed to satisfy its burden to

prove that Mr. LaRussa was incapable of judging this particu-

lar controversy fairly on the basis of its own circumstances.”).

Just as had the CIT, see Pet. 68a, the Federal Circuit empha-

sized the fact that the decisionmaker, Mr. LaRussa, had virtu-

ally no participation in the events that NEC claims evidence

prejudgment, Pet. 27a, 30a.

13

Though it decided the case by applying this Court’s

Hortonville standard, the Federal Circuit did, to be sure, men-

tion the “irrevocably closed mind” concept. Pet. 24a, 29a. It

did so, however, by way of giving an illustration of a situation

in which the Hortonville standard was satisfied. Referring to

the Hortonville test, the Federal Circuit stated: “This stan-

dard is met when the challenger demonstrates, for example,

that the decision maker’s mind is ‘irrevocably closed’ on a

disputed issue.”"’ Pet. 24a (emphasis added) (quoting Fed-

eral Trade Comm’n v. Cement Institute, 333 U.S. 683, 701

(1948)). The Federal Circuit then went on to say that “[t]his

standard” -- referring to the Hortonville standard -- is the ap-

propriate standard to apply in this case. Pet. 24a. And, as

noted above, the Federal Circuit’s statement of its conclusion,

based on applying the legal standard to the facts of record,

incorporated the Hortonville standard -- that NEC did not

show that Mr. LaRussa was not “capable of judging this par-

ticular controversy fairly on the basis of its own circum-

stances.” Pet. 28a, 30a.

REASONS FOR DENYING THE WRIT

Each of the four judges who has heard this case -- the

single judge of the CIT and the three judges of the Federal

Circuit -- concluded, based on the evidence of record, that

Mr. LaRussa, the decisionmaker in the antidumping proceed-

ing that the Department initiated pursuant to Cray’s petition,

did not prejudge the outcome. Not satisfied, NEC now asks

this Court to review the legal standard the Federal Circuit ap-

plied in ruling on the prejudgment issue.

“5 In quoting this sentence, the Petition omitted the words “for exam-

ple,” thereby changing the meaning of the sentence. Compare Pet. 19 with

Pet. 24a.

14

The Court should not grant certiorari in this case. The

Court has several times addressed the precise issue of pre-

judgment raised by this case, most recently in Hortonville

Joint School District No. 1 v. Hortonville Education Ass'n,

426 U.S. 482 (1976), which the Federal Circuit followed.

There is no need for this Court to revisit the issue again in this

case.

Nor is there a conflict between the Federal Circuit and

other circuits with respect to the standard of review. NEC’s

argument that a conflict exists rests principally on its mis-

characterization of this case as one in which an administrative

decisionmaker exceeded its authority and acted “outside” the

bounds of its statutory power. Pet. 15. But the Department

in fact undertook the actions of which NEC complains pursu-

ant to and in connection with its express statutory authority to

consider whether to self-initiate a formal antidumping investi-

gation. See 19 U.S.C. § 1673a(a)(1); Pet. 45a.

Finally, this case is for other reasons not an appropri-

ate one in which to address the issue as to which NEC seeks

certiorari. Most notably, because the decisionmaker, Mr. La-

Russa, did not participate in the actions that NEC cites as evi-

dence of prejudgment, the record in this case does not lend

itself to an effective analysis of the standard that should apply

to potential prejudgment situations.

I. THIS COURT HAS PREVIOUSLY ADDRESSED

THE CONSTITUTIONAL ISSUE AS TO WHICH

NEC SEEKS CERTIORARI, AND THE COURT

BELOW FOLLOWED THIS COURT’S GUID-

ANCE,

This Court has on several occasions considered claims

of unconstitutional prejudgment arising from an administrative

decisionmaker’s dual statutory roles of initial investigator and

15

subsequent adjudicator. On each occasion, the Court has em-

phasized that the standard for finding prejudgment must be

high in order to preserve the administrative scheme established

by Congress.

In Federal Trade Commission v. Cement Institute,

333 U.S. 683 (1948), the FTC instituted formal enforcement

proceedings against several firms on charges that their pricing

systems constituted unfair competition. The firms demanded

that the FTC disqualify itself from the proceedings because,

before the proceedings were instituted, the FTC had investi-

gated the pricing systems at issue and had reported to Con-

gress and the President on them. Jd at 700. The reports indi-

cated that at least some of the FTC members believed that the

pricing system was illegal, and this Court assumed, for pur-

poses of discussion, “that such an opinion had been formed by

the entire membership of the Commission as a result of its

prior official investigations.” Jd (emphasis added). Never-

theless, this Court refused to disqualify the FTC from the sub-

sequent enforcement proceedings. The Court stated that

the fact that the Commission had entertained

such views as the result of its prior ex parte

investigations did not necessarily mean that the

minds of its members were irrevocably closed

on the subject of the respondents’ [pricing]

practices[, }

particularly in light of the firms’ right to participate in the for-

mal proceeding in support of their positions. Jd. at 701. Con-

cluding its discussion, the Court stated that it is not

a violation of due process for a judge to sit in a

case after he had expressed an opinion as to

whether certain types of conduct were prohib-

ited by law. In fact, judges frequently try the

16

same case more than once and decide identical

issues each time, although these issues in-

volved questions both of law and fact. Cer-

tainly, the Federal Trade Commission cannot

possibly be under stronger constitutional com-

pulsions in this respect than a court.

Id. at 702-03 (footnote omitted).'”

This Court addressed the issue again in Withrow v.

Larkin, 421 U.S. 35 (1975). Emphasizing again that judges

commonly preside over the same issues twice -- for example,

in deciding preliminary and permanent injunction proceedings

-- the Court went on to state:

It is also very typical for the members of ad-

ministrative agencies to receive the results of

investigations, to approve the filing of charges

or formal complaints instituting enforcement

proceedings, and then to participate in the en-

suing hearings. This mode of procedure does

not violate the Administrative Procedure Act,

and it does not violate due process of law.

Id. at 56 (footnote omitted). Applying this principle, the

Court held that it was not a denial of due process for an ad-

ministrative agency -- the Wisconsin Medical Examining

Board -- first to investigate whether the plaintiff physician had

engaged in certain proscribed acts, id. at 39, and thereafter to

hold a “contested hearing” to decide whether he had engaged

in those acts and whether his license should be suspended as a

result, id. at 40-41. The Court stated that “there was no more

12

Here, by contrast, the issues in the Commerce Department’s

predecisional inquiry and the issues in the antidumping proceeding were not

identical. See pp. 10-11 supra. Consequently, the argument for disqualifi-

cation is even weaker.

17

evidence of bias or the risk of bias or prejudgment than in-

hered in the very fact that the Board had investigated and

would now adjudicate.” Jd. at 54 (footnote omitted). To es-

tablish bias or prejudgment, a complainant must “overcome a

presumption of honesty and integrity in those serving as adjudi-

cators.” Jd. at 47; see also id. at 55. That could be done, the

Court said, in situations “in which the adjudicator has a pecu-

niary interest in the outcome” or “in which he has been the

target of personal abuse or criticism from the party before

him.” Jd. at 47.

This Court addressed the issue most recently in

Hortonville Joint School District No. 1 v. Hortonville Educa-

tion Ass'n, 426 U.S. 482 (1976). In that case, the School

Board had negotiated unsuccessfully with teachers for renewal

of a collective bargaining contract. When the teachers then

went on strike, the School Board held disciplinary hearings

and fired them. The teachers sued for violation of due pro-

cess, claiming the School Board was not an impartial

decisionmaker in the disciplinary hearings by virtue of its in-

volvement in the negotiations. This Court rejected the claim,

stating that the Board’s prior involvement was “not enough to

overcome the presumption of honesty and integrity in

policymakers with decisionmaking power.” Jd. at 497. The

Court said that a decisionmaker is not disqualified by “[m]ere

familiarity with the facts of a case gained by an agency in the

performance of its statutory role,” id. at 493 (citing Withrow,

421 US. at 47, and Cement Institute, 333 U.S. at 700-03), or

because he has taken a position, even in public,

on a policy issue related to the dispute, in the

absence of a showing that he is not “capable

of judging a particular controversy fairly on

the basis of its own circumstances.”

18

Id. (emphasis added) (quoting Morgan, 313 U.S. at 421, and

also citing Cement Institute, 333 U.S. at 701). There was no

such showing in Hortonville; as the Court stated, the Board

members did not have “the kind of personal or financial stake

in the decision that might create a conflict of interest, and

there [was] nothing in the record to support charges of per-

sonal animosity.” Jd. at 491-92.

In the instant case, the Federal Circuit followed and

applied this Court’s guidance, citing and discussing Cement

Institute, Withrow, Hortonville, and others. Pet. 20a-28a. As

noted in the Counterstatement of the Case, pp. 11-13 supra,

the Federal Circuit decided the case on the basis of the stan-

dard this Court enunciated in Hortonville, finding that “NEC

has failed to demonstrate that the decision maker, here Mr.

LaRussa, was not capable of judging this particular contro-

versy fairly on the basis of its own circumstances.” Pet. 28a.

See Hortonville, 426 U.S. at 493.¥

In an effort to argue that this case warrants certiorari,

NEC asserts that this case differs in two respects from the

cases in which this Court has previously addressed the issue.

First, NEC states that the prior cases did not involve

“allegations of prejudgment based on conduct that fell outside

the decisionmaker’s legal duties.” Pet. 23. NEC claims that,

by contrast, its allegation of prejudgment here rests on “highly

irregular actions and pronouncements by Commerce that took

piace entirely outside the established statutory and regulatory

procedures governing antidumping proceedings... .” Pet. 23

(emphasis in original). :

“ NEC asserts that the Federal Circuit rejected NEC’s proposed stan-

dard sub silentio. Pet. 16. That is not so. The Federal Circuit discussed at

length the reasons why it held that NEC’s proposed standard was inappro-

priate, emphasizing in particular that it is inconsistent with the decisions of

this Court on the subject. Pet. 21a-28a.

19

There is no merit to NEC’s attempt to distinguish this

case from the Court’s prior prejudgment cases. Contrary to

NEC’s characterization, the actions of the Department of

Commerce of which NEC compiains were within the scope of

its duties and responsibilities for administering the anti-

dumping laws. As discussed in the Counterstatement of the

Case, pp. 4-8 supra, the Department is expressly authorized

by statute to examine and assess information available to it

from all sources in order to determine whether the Depart-

ment should self-initiate an antidumping proceeding. 19

U.S.C. § 1673a(a)(1). That was precisely why the Depart-

ment performed its predecisional analysis and estimate, and

why it consulted with other arms of the Federal Government

that had an interest in the matter by virtue of their own re-

spective responsibilities. *

Second, NEC attempts to distinguish this case from

the Court’s prior prejudgment cases on the ground that the

initial agency inquiry in each of the prior cases had involved

“legislative facts” whereas the initial inquiry in this case (i.e.,

the predecisional analysis and estimate) involved “adjudicative

facts.” Pet. 19-22. This argument mischaracterizes the

Court’s prior cases.

This Court’s Cement Institute-Withrow-Hortonville

line of cases embraced situations where the alleged prejudg-

ment arose from initial agency inquiries into adjudicative facts

(what NEC calls “particular facts regarding particular parties,”

Pet. 18) as well as from inquiries into legislative facts (what

NEC calls “questions of law and policy,” Pet. 19 (emphasis

omitted)). While the initial inquiry in Cement Institute was

That the Department’s Predecisional Memorandum became pub-

licly available does not, of course, detract from the fact that it was prepared

pursuant to the Department’s statutory duty tv examine potential dumping

situations.

20

indeed legislative in nature, the initial inquiry in Withrow was

as adjudicative and non-legislative as an inquiry can be: it was

an investigation into particular facts regarding particular ac-

tions by a particular physician. 421 U.S. at 38-43. And

Hortonville cited both prior cases -- Withrow and Cement In-

stitute -- for the proposition that “[m]Jere familiarity with the

facts of a case gained by an agency in the performance of its

statutory role does not, however, disqualify a decisionmaker.”

426 U.S. at 493."

For these reasons, NEC is incorrect in asserting that

this case “will afford this Court an opportunity to address [an]

important question of Constitutional law which it has not

heretofore directly addressed.” Pet. 25. The issue as to

which NEC seeks certiorari is the same issue that this Court

has addressed several times already, and there is no reason to

revisit the issue again in this case.

IL. THERE IS NO CONFLICT AMONG THE CIR-

CUITS.

NEC argues that the standard the Federal Circuit ap-

plied is in conflict with the standard adopted by the District of

Columbia, Sixth, Eighth, and Tenth Circuits for prejudgment

cases. NEC’s assertion of a conflict rests, however, on two

mischaracterizations.

To begin with, NEC has, as discussed earlier, mis-

characterized the standard that the Federal Circuit applied in

a NEC’s reliance on the “leading authorities on administrative proce-

dure” in support of its adjudicative fact/legislative fact distinction is mis-

placed. Pet. 21-22. Although the administrative law treatise NEC cites does

indeed suggest that cases involving adjudicative facts more frequently war-

rant a finding of prejudgment on the merits than do cases involving legisla-

tive facts, the treatise nowhere suggests that different standards should ap-

ply to the respective situations. See generally 2 Kenneth Culp Davis &

Richard J. Pierce, Jr., Administrative Law Treatise § 9.8 (3d ed. 1994).

21

this case. See pp. 11-13 supra. NEC’s argument is premised

on the assertion that the Federal Circuit applied a standard

under which disqualification requires the challenger to estab-

lish that the decisionmaker had an “irrevocably closed mind.”

Pet. 10-11, 18-19. In fact, the Federal Circuit applied the

Hortonville standard, which inquires whether the

decisionmaker is “‘capable of judging a particular controversy

fairly on the basis of its own circumstances.”” 426 U.S. at

493 (quoting Morgan, 313 U.S. at 421). The Petition con-

flates the two standards by omitting the words “for example”

from the excerpt quoted on page 19. Compare Pet. 24a.

Beyond that, NEC’s 1ssertion of a conflict among the

circuits rests on a mischaracterization of the circumstances of

this case. NEC begins by noting -- correctly -- that the cases

it cites from other circuits all involve “an act of apparent pre-

judgment by a decisionmaker acting outside the scope of his

statutorily mandated duties.” Pet. 15 (emphasis added)."°

- See, e.g., Texaco, Inc. v. Federal Trade Comm'n, 336 F.2d 754

(D.C. Cir. 1964) (prejudgment challenge to FTC Commissioner’s participa-

tion in adjudicatory proceedings against corporation on ground that Com-

missioner had made a speech and issued a press release opining that the cor-

poration had engaged in illegal behavior), vacated on other grounds, 381

U.S. 739 (1965), Cinderella Career & Finishing Sch., Inc. v. Federal

Trade Comm'n, 425 F.2d 583 (D.C. Cir. 1970) (prejudgment challenge to

FTC Chairman’s participation in an adjudicatory proceeding against corpo-

ration or ground that Chairman had made public statements questioning the

ethical propriety of the corporation’s advertisements); American Cyanamid

Co. v. Federal Trade Comm'n, 363 F.2d 757 (6th Cir. 1966) (prejudgment

challenge to FTC Commissioner’s participation in FTC hearings against

company on ground that Commissioner, during previous job as counsel to

Senate subcommittee, had drafted report critical of the company); Staton v.

Mayes, 552 F.2d 908 (10th Cir. 1977) (prejudgment challenge to school

board member’s participation in board’s decision to dismiss superintendent

on ground that board member had campaigned for office on promise to re-

move superintendent); Antoniu v. Securities and Exch. Comm’n, 877 F.2d

(continued...)

22

NEC then asserts that the “defining elements” of its claim here

“are identical to those addressed by the” other circuits, includ-

ing that the decisionmaker acted “outside the scope of his

statutorily mandated duties.” Pet. 15.

As discussed above, however, the actions of the De-

partment here were within the scope of the Department’s du-

ties and responsibilities for administering the antidumping

laws. Everything to which NEC points as evidence of pre-

judgment was done in connection with the Department’s as-

sessment of possible dumping pursuant to its self-initiation

authority under 19 U.S.C. § 1673a(a)(1) -- an assessment in-

dependent of, and based on different information than, the

formal antidumping proceeding subsequently initiated pursu-

ant to Cray’s petition.

Thus, there is no conflict between the decision of the

Federal Circuit in this case and the cases in the other circuits

upon which NEC relies. This case involves a situation where

an agency acts in two statutorily authorized capacities -- an

initial investigative or assessment capacity, and a subsequent

adjudicatory capacity. This case therefore falls within the

same fact pattern as the Cement Institute, Withrow, and

Hortonville line of cases, and the Federal Circuit properly ap-

plied the standard that this Court enunciated in Hortonville.

In the court of appeals cases NEC invokes -- Texaco, Cinder-

ella, Cyanamid, Staton, and Antoniu -- the conduct on which

the claim of prejudgment was predicated was not part of the

agency’s statutorily mandated role, see note 16 supra, and

ss (...continued)

721 (8th Cir. 1989) (prejudgment challenge to SEC Commissioner’s partici-

pation in administrative proceeding against individual on ground that Com-

missioner had stated in a speech that the individual had been banned from

the securities industry, which was the very issue pending before the SEC in

the administrative proceeding).

23

those courts consequently applied a different standard.” If

there is any question as to whether those cases applied the

correct prejudgment standard, that question should be re-

solved in the context of a case that shares that fact pattern. It

should not be resolved in this case, which falls squarely within

the Withrow-Hortonville line of cases and which therefore

applied this Court’s Hortonville standard.

Ii, THIS IS NOT AN APPROPRIATE CASE IN

WHICH TO GRANT CERTIORARL

Even if the issue presented in this case could be

deemed worthy of certiorari in the abstract, the Court none-

theless should deny NEC’s petition, because this case does not

present an appropriate record on which to decide the issue.

The issue that NEC asks this Court to address in-

volves the standard for disqualifying a decisionmaker for pre-

judgment based on prior actions and pronouncements by the

decisionmaker that are outside the decisionmaker’s statutory

duties and responsibilities. E.g., Pet. 25. This is plainly not

an appropriate case in which to explore that issue, for two

reasons: first, because -- as the trial court found and the court

of appeals affirmed -- the decisionmaker here, Mr. LaRussa,

was not a participant in the actions of which NEC complains,

see pp. 8-11 supra; and second, because the actions com-

plained of here were not outside the Department’s statutory

duties and responsibilities for administering the antidumping

laws, see pp. 4-8, 18-19 supra. Thus, the record here is not

suitable to elucidate the kind of fact pattern that underlies the

17

Just as there is no conflict among the circuits, no “due process dou-

ble standard” exists which could be viewed as discriminatory by the United

States’s trading partners. See Pet. 26-28. As noted above, the Supreme

Court has consistently applied one standard to all prejudgment challenges

based on an administrative decisionmaker’s actions pursuant to its statutory

authority.

24

issue NEC seeks to have this Court review. To the contrary,

the record here shows that this case falls precisely within this

Court’s holding in Hortonville that “[mJere familiarity with

the facts of a case gained by an agency in the performance of

its statutory role does not, however, disqualify a

decisionmaker.” 426 U.S. at 493.

Finally, in determining whether to exercise its discre-

tionary power of certiorari in this case, this Court should keep

in mind that NEC chose not to give the Department a chance

to demonstrate its fairness and objectivity. NEC refused to

participate in or cooperate with the Department’s antidumping

proceeding; it offered no evidence and presented no argu-

ments. NEC deprived the Department of the evidence NEC

possessed, thereby forcing the Department to rely on the un-

contradicted evidence presented by Cray in the record of the

proceeding. See pp. 2-3, 11 supra. The resulting scenario

was the most unfavorable possible to NEC, and it was the re-

sult of NEC’s own calculated decision not to cooperate.

sii catiaite:

25

CONCLUSION

For the foregoing reasons, the petition for a writ of

certiorari should be denied.

Respectfully submitted,

Michael L. Burack

Counsel of Record

John D. Greenwald

Amber L. Cottle

WILMER, CUTLER & PICKERING

2445 M Street, N.W.

Washington, D.C. 20037

(202) 663-6000

Counsel for Respondent Cray

Research, Inc.

January 6, 1999

APPENDIX

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pine.

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APPENDIX A

[SEAL] UNITED STATES DEPARTMENT OF

COMMERCE

International Trade Administration

Washington DC 20230

ASSISTANT SECRETARY FOR IMPORT

ADMINISTRATION

May 20, 1996

Dr. Neal Lane

Director

National Science Foundation

4201 Wilson Boulevard

Arlington, VA 22230

Dear Dr. Lane:

The Department of Commerce is responsible for ad-

ministering the U.S. antidumping law, which guards against

unfair international pricing practices that harm U.S. industries.

Injurious dumping, which is condemned by the General

Agreement on Tariffs and Trade, can have serious adverse

consequences for domestic producers and future consumers.

As you requested, we have examined the proposed

procurement of a supercomputer system by the National Cen-

ter for Atmospheric Research (NCAR), which is funded in

part by the National Science Foundation and other federal

agencies through the University Corporation for Atmospheric

Research, to determine if it involves dumping. We have eval-

uated the NCAR procurement, and have information that we

believe is relevant.

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

2a

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.

We have significant concerns that importation of the

NCAR supercomputer system would threaten the U.S. super-

computer industry with material injury within the meaning of

the antidumping law, because the imports are likely to have a

significant suppressing or depressing effect on domestic prices

and because these imports could have a serious adverse im-

pact on the domestic industry's efforts to develop a more ad-

vanced version of the supercomputer system to be supplied.

Antidumping investigations can be initiated either at

the request of the domestic industry or on the initiative of the

Department of Commerce. If the Department finds dumping

margins and the U.S. International Trade Commission finds

injury, the Department will issue an antidumping order and

will instruct the U.S. Customs Service to collect from the im-

porter of the dumped merchandise an antidumping duty in the

amount of the dumping margin.

Please let us know if we may answer any questions

you may have. I may be reached at (202) 482-1780.

Sincerely,

ts/_PaulL, Joffe _

Acting Assistant Secretary

for Import Administration

— i fa ta oa Fi sah

3a

APPENDIX B

[SEAL] UNITED STATES DEPARTMENT OF

COMMERCE

International Trade Administration

Washington DC 20230

ASSISTANT SECRETARY FOR IMPORT

ADMINISTRATION

May 20, 1996

Dr. Neal Lane

Director

National Science Foundation

4201 Wilson Blvd.

Arlington, VA 22230

Dear Dr. Lane:

Attached is a memorandum analyzing dumping mar-

gins for a bid of three NEC SX-4 processors leased for five

years. The analysis also includes dumping estimates for alter-

native numbers of units and lease terms. This memorandum

was prepared for the official use of the Department of Com-

merce and the National Science Foundation. We agree that

selected distribution to UCAR, NCAR and NEC employees is

within our intended official use. These arrangements are in

accordance with the conversation this morning between Ste-

phen Powell, our Chief Counsel for Import Administration

and Larry Rudolph, your General Counsel.

Sincerely,

ie. | 8 ee

Acting Assistant Secretary

for Import Administration

Attachment

4a

PREDECISIONAL MEMORANDUM

For Official Use Only

Dumping Analysis

Three SX-4 Processors - Five-Year Lease

(all values are in millions)

This cost model is based on the requirement that the minimum

sustained performance of this procurement must increase over

time to 50 gigaFLO?S. This would require that NEC provide

three SX-4 processors.

Determination of U.S. Price

The U.S. sales price of $ 35.25 million is discounted to a five-

year net present value using an interest rate of 4.0%, and as-

suming that the payment stream will consist of equal monthly

payments based on NCAR's projected annual funding.

$ 31.393

Determination of Fair Value

This cost estimate is based on NEC initially providing only an

SX-4/16 processor, which later would be upgraded to an SX-

4/24, and then a final upgrade to achieve SX-4/32. Each of

the other two processors would be installed as an SX-4/32

system. In this way, the minimum performance standards

could be met with only three processors.

a wee as ob waar § -

Pre Bake

TRE DIR ES bs

————~E

Sa

PREDECISIONAL MEMORANDUM

For Official Use Only

System Materials and | October 1996 $ 3.868

Components

October 1997 6.446

October 1998 4.029

Subtotal 14.343

The cost of materials and componerts includes processors,

main and extended memory, mechanical and cooling struc-

tures, and interconnection devices. The cost estimate also

includes assembly, integration and testing. The cost of

follow-on deliveries is reduced to estimate the effects of

"Moore's Law," which states that computer performance

should double every 18 months or, the same performance

could be obtained for half the price.

Storage Systems October 19°5 $ 0.800

October 1997 1.140

October 1998 0.808

Subtotal 2.748

Storage systems are required for each SX-4. This estimate is

based on magnetic disk technology. The cost of recording

media (disks) is estimated to decline by 50% every 9 months;

the cost of the remaining components (approximately 40% of

the total) is estimated to decline by 20% per year.

6a

PREDECISIONAL MEMORANDUM

For Official Use Only

Other Services and Software | October 1996 $ 0.840

October 1997 | 1.365

October 1998 0.871

Subtotal 3.076

Other services and software includes integration, maintenance,

and consulting services. These services are often bundled as a

single surcharge at 18% of total hardware costs.

Marketing Costs

The cost of marketing high performance computing products

is substantial. Industry standards for this class of machine

reveals that marketing costs average 15% of revenues.

$ 5.288

Research and Development

The development cycle for a high-end supercomputer system

is four to five years. These costs, also referred to as Nonre-

curring Engineering (NRE) expense, include research, design,

engineering, simulation, prototyping, development of unique

test and integration equipment, and final product testing. Fac-

toring in the cost of money on the estimated $ 200 million in

development costs adds $ 17.435 million. This cost is amor-

tized over the 250 processors NEC estimated that it would

ship. The per unit NRE expense assumes a scaling factor of

Ta

PREDECISIONAL MEMORANDUM

For Official Use Only

0.666 that reduces the NRE as systems increase to larger sizes

like the 32-processor NCAR computer.

$ 55.608

Total Costs $ 81.063

Profit

Profit is based on the 2% earnings before taxes | $ 1.€21

reported on NEC's financial statements.

Total Fair Value $ 82.684

Margin Calculation

(Fair Value - US. Price)((U.S. Price) =| 163.38%

Dumping Margin

Additional Comments

The estimated dumping margins will vary based on the number

of processors included in the lease, the length of the lease, the

possible buy-out of NCAR's existing lease, and the estimated

number of SX-4 units produced by NEC.

° Under the three-unit, five-year lease scenario, we esti-

mated dumping margins as high as 190%

8a

PREDECISIONAL MEMORANDUM

For Official Use Only

° Under the four-unit, five-year lease scenario, we esti-

mated dumping margins as high as 280%

° Under the one-unit, three-year lease scenario, we esti-

mated dumping margins as high as 240%