The Mead Corp. v. U.S.

• Citation: 185 F.3d 1304
• Parties: (Fed. Cir. 1999) THE MEAD CORPORATION, Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee. 98-1569 CORRECTED:
• Decision Date: 29 July 1999
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

Page 1304

185 F.3d 1304 (Fed. Cir. 1999)

THE MEAD CORPORATION, Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee.

98-1569

United States Court of Appeals for the Federal Circuit

CORRECTED: 7/29/99

DECIDED: July 28, 1999

Appealed from: United States Court of International Trade

Senior Judge James L. Watson

Sidney H. Kuflik, Lamb & Lerch, of New York, New York, argued for plaintiff-appellant.

Amy M. Rubin, Attorney, Appellate Staff, Civil Division, International Trade Field Office, Department of Justice, of New York, New York, argued for defendant-appellee. With her on the brief were David W. Ogden, Acting Assistant Attorney General, and David M. Cohen, Director, Civil Division, Commercial Litigation Branch Department of Justice, of Washington, DC; Joseph I. Liebman, Attorney in Charge, International Trade Field Office; and William Kanter, Attorney, Appellate Staff, Civil Division, Department of Justice, of Washington, DC. Of counsel on the brief were Allan L. Martin, Associate Chief Counsel, and Lou Brenner, Attorney, U.S. Customs Service, of Washington, DC; and Karen P. Binder, Assistant Chief Counsel, and Edward N. Maurer, Attorney, U.S. Customs Service, of New York, New York.

Terence P. Stewart, Stewart and Stewart, of Washington, DC; David Serko, Serko & Simon, LLP, of New York, New York; Richard M. Belanger, Powell, Goldstein, Frazer & Murphy, LLP, of Washington, DC; and Peter Jay Baskin, Sharretts, Paley, Carter & Blauvelt, P.C., of New York, New York, for amicus curiae Customs and International Trade Bar Association.

Before NEWMAN, RADER, and SCHALL, Circuit Judges.

RADER, Circuit Judge.

On summary judgment, the Court of International Trade affirmed the United States Customs Service's classification of day planners imported by The Mead Corporation as bound diaries. Because the terms within subheading 4820.10.20 of the Harmonized Tariff Schedules of the United States (HTSUS), namely "diaries" and "bound," do not encompass the imported articles, this court reverses.

I.

At issue are five models of Mead's day planners (model nos. 47192, 47062, 47124, 47104, and 47102). Stylistically, the day planners differ from each other based on their size (ranging from 7 1/2" x 4 3/8" to 12" x 10 5/8"), outer jacket cover material, and type of closure. The basic model contains a calendar, a section for daily notes, a section for telephone numbers and addresses, and a notepad. The larger models contain the features of the basic model and additional items such as a daily planner section, plastic ruler, plastic pouch, credit card holder, and computer diskette holder. A loose-leaf ringed binder holds the contents of the day planner, except for the notepad, which fits into the rear flap of the day planner's outer cover.

In a January 11, 1993 ruling, Customs classified the subject planners as bound diaries under subheading 4820.10.20 (emphasis added):

4820 Registers, account books, notebooks, order books, receipt books, letter pads, memorandum pads, diaries and similar articles, exercise books, blotting pads, binders (looseleaf or other), folders, file covers, manifold business forms, interleaved carbon sets and other articles of stationery, of paper or paperboard; albums for sample or for collections and book covers (including cover boards and book jackets) of paper or paperboard:

4820.10 Registers, account books, notebooks, order books, receipt books, letter pads, memorandum pads, diaries and similar articles:

4820.10.20 Diaries, notebooks and address books, bound; memorandum pads, letter pads and similar articles

Moving for summary judgment in the trial court, Mead attacked Customs' ruling on two grounds. Mead argued that (1) the articles were not diaries, and (2) the articles were not bound. Either contention, if accepted, compels classification under the "other" provision of subheading 4820.10.40. Under that subheading, Mead would owe no tariff on the imported articles, in contrast with the 4.0% tariff assessed in Customs' 1993 ruling. In support of its motion, Mead submitted dictionary definitions of the terms at issue, affidavits from seven individuals from the U.S. stationery goods industry, and affidavits from two bookbinding experts. The government cross-moved for summary judgment in support of Customs' classification, offering its own definitions of "diary" and "bound," and submitting supporting affidavits.

In a July 14, 1998 opinion (No. 98-101), the trial court granted the government's motion. The Court of International Trade broadly defined "diaries" as "articles whose principle purpose is to allow a person to make daily notations concerning events of importance." Using that definition, the trial court decided that Mead's day planners qualify as diaries even though they admittedly contain "supplementary material," that is, non-diary elements such as a section for addresses and telephone numbers. With respect to the term "bound," the trial court opined: "The common meaning of 'bound' is fastened. The irrevocability of the fastening is not important so long as it goes beyond the transitory role of packaging." Using that broad meaning for "bound," the trial court found that Mead's day planners, whose contents fit in a loose-leaf ringed binder, fall within that definition.

On appeal, Mead contests the trial court's definitions of "diaries" and "bound." Mead contends that "diaries" means: "A book for recording a person's observations, thoughts and/or events." Mead further contends that an item is "bound" only when "permanently secured along one edge between covers in a manner traditionally performed by a bookbinder."

II.

This court reviews the Court of International Trade's grant of summary judgment without deference. See Sharp Microelecs. Tech., Inc. v. United States, 122 F.3d 1446, 1449 (Fed. Cir. 1997). Where, as here, the parties do not dispute material facts regarding the imported goods, the analysis of whether the trial court properly classified the goods collapses into a determination of the proper meaning and scope of the HTSUS terms. See SGI, Inc. v. United States, 122 F.3d 1468, 1471 (Fed. Cir. 1997).

The Supreme Court's recent pronouncement in United States v. Haggar Apparel Co., __ U.S. __, 119 S. Ct. 1392 (1999) has raised questions concerning the standard of review applicable to determinations of the meaning and scope of tariff terms. See Avenues in Leather, Inc. v. United States, 178 F.3d 1241, 1243 (Fed. Cir. May 20, 1999). The meaning of a tariff term, a matter of statutory interpretation, is a question of law. See Bauerhin Tech. v. United States, 110 F.3d 774, 776 (Fed. Cir. 1997). Accordingly, this court has previously accorded Customs' classification rulings no deference. See Rollerblade, Inc. v. United States, 112 F.3d 481, 483-84 (Fed. Cir. 1997). In Haggar, however, the Supreme Court held that if an HTSUS provision is ambiguous and Customs promulgates a regulation that "fills a gap or defines a term in a way that is reasonable in light of the legislature's revealed design," courts should give that judgment "controlling weight" as articulated in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 844 (1984). Haggar, 119 S. Ct. at 1399. Thus this court must decide whether that decision applies in this case where Customs has not issued a regulation, but has merely issued a classification ruling implicitly interpreting an HTSUS provision. For the reasons articulated below, this court determines that Haggar, and thus Chevron deference, does not extend to ordinary classification rulings.

The United States Code has specifically given Customs the power to promulgate regulations. See 19 U.S.C. 1502(a) (1994). Where, as in Haggar, Customs issues a regulation under the procedural rigors dictated by the Administrative Procedure Act, see 5 U.S.C. 553 (1994), that regulation has the enforceability of law. See Chrysler Corp. v. Brown, 441 U.S. 281, 295 (1979); Bernard Schwartz, Administrative Law 182-83 (3d ed. 1991). A regulation, however, must first undergo a notice and comment period during which the interested public can "participate in the rule making through submission of written data, views, or arguments." 5 U.S.C. 553(c). Moreover, even after promulgation, a regulation is subject to petitions in which interested persons may seek to amend or repeal the new policy. See 5 U.S.C. 553(e). A regulation that endures this process carries the full weight of Customs' rulemaking authority. See Parker v. Office of Personnel Management, 974 F.2d 164, 166 (Fed. Cir. 1992) (recognizing that by enacting regulations, agencies put a "gloss" on their statutory interpretations). A regulation thus represents a reasoned and informed articulation of Customs' statutory interpretation, which serves to "clarify the rights and obligations of importers." Haggar, 119 S. Ct. at 1398.

In contrast, such procedural safeguards do not accompany typical Customs rulings.¹ The process of such rulings, for example, does not involve public debate or discussion, but is confined to the specific facts of and parties to the particular transaction at issue. See 19 C.F.R. 177.0, 177.1(a) (1998). Moreover, Customs rulings do not carry the force of law and are not, like regulations, intended to clarify the rights and obligations of importers beyond the specific case under review. Instead, a ruling merely interprets and applies Customs laws to "a specific set of facts." 19 C.F.R. 177.1(d)(1) (defining "ruling"). These significant differences between Customs regulations and Customs rulings convince this court that Haggar's reach does not extend to standard Customs rulings. Accordingly, this court continues to adhere to its precedent giving no deference to such rulings. See Rollerblade, 112 F.3d at 484.

In reaching this conclusion, this court also finds apt the Supreme Court's analogy in Haggar between trade and tax matters. See Haggar, 119 S. Ct. at 1400. The Supreme Court has decided...