Streetsurfing LLC v. United States
| Decision Date | 22 September 2014 |
| Docket Number | Slip Op. 14–110.,Court No. 09–00136. |
| Parties | STREETSURFING LLC, Plaintiff, v. UNITED STATES, Defendant. |
| Court | U.S. Court of International Trade |
Russell A. Semmel and Elyssa Emsellem, Neville Peterson LLP, of New York, NY, argued for plaintiff. With them on the brief were John M. Peterson and Maria E. Celis.
Marcella Powell, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of New York, NY, argued for defendant. With her on the brief were Stuart F. Delery, Assistant Attorney General, Barbara S. Williams, Attorney in Charge, International Trade Field Office, and Amy M. Rubin, Acting Assistant Director, International Trade Field Office. Of counsel on the brief was Paula S. Smith, Office of Assistant Chief Counsel, International Trade Litigation, United States Customs and Border Protection, of New York, NY.
This matter is before the court on the cross-motions for summary judgment of plaintiff Streetsurfing LLC (“plaintiff” or “Streetsurfing”) and defendant United States (“defendant”). Def.'s Mot. for Summ. J. (ECF Dkt. No. 52); Pl.'s Cross Mot. for Summ. J. (ECF Dkt. No. 71) (“Pl.'s Cross Mot.”). Jurisdiction lies pursuant to 28 U.S.C. § 1581(a) (2006). At issue is the proper classification of Streetsurfing's waveboards, the “Ripple Board” and “The Wave” (collectively, “merchandise” or “waveboards”).
For the reasons set forth below, defendant's motion for summary judgment is granted, plaintiff's cross-motion for summary judgment is denied, and the court finds that plaintiff's waveboards are properly classified under the Harmonized Tariff Schedule of the United States (“HTSUS”)1 subheading 9506.99.60.
The facts described below have been taken from the parties' USCIT Rule 56(h) statements. Citation to the record is provided where a fact, although not admitted in the parties' papers, is uncontroverted by record evidence.
The merchandise at issue is the “Ripple Board” and “The Wave,” which are waveboards2 manufactured by Streetsurfing.3 Def.'s Statement of Undisputed Material Facts ¶¶ 2, 3 (ECF Dkt. No. 52) (“Def.'s Statement”). Streetsurfing's patent for the waveboards describes the merchandise as a “skateboard having a front board, [a] rear board, a connecting element which interconnects the front board and the rear board in a spaced relationship, [and] at least one direction-caster4 mounted on the underside of each of the front board and the rear board.” Def.'s Statement ¶ 17 (emphasis added) (internal quotation marks omitted). Unlike a traditional skateboard, however, the waveboards possess two wheels and two flexible platforms that can partially rotate, rather than four wheels and a single inflexible platform. See Appendix infra; Def.'s Statement ¶ 6. The waveboards are propelled Def.'s Statement ¶ 7. Moreover, “[o]nce on the board, and riding, ... the rider [can] turn or even propel the board forward without removing his or her feet from the board.” Ex. A, at 2, Mem. of Streetsurfing LLC in Supp. of Pl.'s Cross-mot. for Summ. J. and Resp. in Opp'n to Def.'s Mot. for Summ. J. (ECF Dkt. No. 71) (“Pl.'s Br.”). Thus, to ride the waveboard, users must coordinate their balance, steering, and propulsion all at once. Def.'s Statement ¶ 24.
After importation, Streetsurfing, which “describes itself as a sporting goods product and lifestyle company,” sells its waveboards to large retail stores (e.g., Walmart), toy stores (e.g., Toys “R” Us), sporting goods stores (e.g., Dick's Sporting Goods and Modell's Sporting Goods), and online retailers (e.g., Amazon.com, Shopping.com, Sportchalet.com, and Getboards.com). Def.'s Statement ¶ 8 (internal quotation marks omitted); Ex. G, at 8, Pl.'s Resp. to Def.'s First Interrogatories and Request for Production of Documents and Things (ECF Dkt. No. 52–4). In toy stores, such as Toys “R” Us, the waveboards are sold in the “wheeled sporting goods aisles” next to skateboards. Ex. B, at 8, Report of Findings Related to the Case by Robert F. Valerio (ECF Dkt. No. 52–1). Plaintiff markets its waveboards as “a new sport that combines the natural fluidity of surfing with the smooth maneuverability of snowboarding and skating into one new action sport known as Street Surfing.” Def.'s Statement ¶ 10 (internal quotation marks omitted).
Streetsurfing LLC, the importer of record of the merchandise in question, entered twenty-six shipments of waveboards between June 2007 and September 2007 at the Port of Los Angeles, California. Def.'s Statement ¶ 1; Summons at 3–4 (ECF Dkt. No. 1). Upon liquidation5 of the entries, the U.S. Customs and Border Protection Agency (“Customs”) classified the waveboards under HTSUS 9506.99.60,6 which covers “Articles and equipment for general physical exercise, gymnastics, athletics, other sports (including table-tennis) or outdoor games, not specified or included elsewhere in this chapter; swimming pools and wading pools; parts and accessories thereof: Other: Other: Other,” at 4% ad valorem. Pl.'s Statement of Material Facts as to Which No Genuine Issue Exists ¶ 3 (ECF Dkt. No. 71) (“Pl.'s Statement”). The Explanatory Notes to the Harmonized Commodity Description and Coding System, 4th ed., 95.06 (2007) (“Explanatory Notes”), which “are generally indicative of the proper interpretation of the various HTSUS provisions,” expressly list skateboards as covered by HTSUS Heading 9506. N. Am. Processing Co. v. United States, 236 F.3d 695, 698 (Fed.Cir.2001) (citation omitted); Explanatory Notes 95.06.
Plaintiff submitted a timely protest of Customs' tariff classification on October 29, 2008 (Protest No. 2704–08–103793), which was subsequently denied by Customs. See Summons 1. After paying all required duties, plaintiff commenced this action, claiming that Customs erred in its classification of the merchandise as “sports equipment” under HTSUS 9506.99.60. See Pl.'s Br. 17. Rather, plaintiff urges that the merchandise should have been classified as “other wheeled toys,” and thus, should be reliquidated under HTSUS 9503 which covers “Tricycles, scooters, pedal cars and similar wheeled toys; dolls' carriages; dolls, other toys; reduced-scale (‘scale’) models and similar recreational models, working or not; puzzles of all kinds; parts and accessories thereof.” See Pl.'s Br. 7–8. Heading 9503 is duty-free.
Summary judgment shall be granted “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” USCIT R. 56(a) ; see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). “When both parties move for summary judgment, the court must evaluate each motion on its own merits, resolving all reasonable inferences against the party whose motion is under consideration.” JVC Co. of Am., Div. of U.S. JVC Corp. v. United States, 234 F.3d 1348, 1351 (Fed.Cir.2000) (citing McKay v. United States, 199 F.3d 1376, 1380 (Fed.Cir.1999) ). In the context of a classification action, “summary judgment is appropriate when there is no genuine dispute as to the underlying factual issue of exactly what the merchandise is.” Bausch & Lomb, Inc. v. United States, 148 F.3d 1363, 1365 (Fed.Cir.1998) (citations omitted).
The objective in a classification case is to determine the correct tariff provision for the subject merchandise. See Jarvis Clark Co. v. United States, 733 F.2d 873, 878 (Fed.Cir.1984). This Court reviews Customs' classification decisions de novo. Sony Elecs., Inc. v. United States, 37 CIT ––––, ––––, Slip Op. 13–153, at 4, 2013 WL 6728681 (2013) (citing CamelBak Prods., LLC v. United States, 649 F.3d 1361, 1364 (Fed.Cir.2011) ). In reaching its conclusions, the Court engages in a two-step inquiry: first, it “must construe the meaning of terms in a given tariff provision.” Deckers Corp. v. United States, 752 F.3d 949, 954 (Fed.Cir.2014) (citing Orlando Food Corp. v. United States, 140 F.3d 1437, 1439 (Fed.Cir.1998) ). “Second, the trial court must determine if the merchandise at issue falls within the tariff provision that the court just construed.” Id. (citing Orlando Food, 140 F.3d at 1439 ). “The first step is a question of law; the second is a question of fact.” Dependable Packaging Solutions, Inc. v. United States, 37 CIT ––––, ––––, Slip Op. 13–23, at 7, 2013 WL 646328 (2013) (citing Pomeroy Collection, Ltd. v. United States, 35 CIT ––––, ––––, 783 F.Supp.2d 1257, 1259 (2011) ).
The General Rules of Interpretation (“GRI”) “govern classifications of imported goods under [the] HTSUS and [are] appl[ied] in numerical order.” CamelBak, 649 F.3d at 1364 (citing BASF Corp. v. United States, 482 F.3d 1324, 1325–26 (Fed.Cir.2007) ). “Under GRI 1, the court must determine the appropriate classification ‘according to the terms of the headings and any relative section or chapter notes.’ ” Millenium Lumber Distribution Ltd. v. United States, 558 F.3d 1326, 1328–29 (Fed.Cir.2009) (quoting GRI 1, HTSUS). Only after a court has “determin[ed] that a product is classifiable under the heading[, may it] look to [a] subheading[ ].” Orlando Food, 140 F.3d at 1440 (citation omitted). Dependable Packaging, 37 CIT at ––––, Slip Op. 13–23, at 7 (citing Orlando Food, 140 F.3d at 1440 ).
This Court is further directed to interpret “[t]he terms of the HTSUS ... according to their common commercial meanings.” Millenium Lumber, 558 F.3d at 1329 (citing Len–Ron Mfg. Co. v. United States, 334 F.3d 1304, 1309 (Fed.Cir.2003) ). In doing so, “the court may rely on its own understanding of the...
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