Toy Biz, Inc. v. U.S.

• Decision Date: 30 July 2002
• Docket Number: Court No. 96-10-02291.,SLIP OP. 02-76.
• Citation: 219 F.Supp.2d 1289
• Parties: TOY BIZ, INC., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

219 F.Supp.2d 1289

TOY BIZ, INC., Plaintiff, v. UNITED STATES, Defendant.

SLIP OP. 02-76.

Court No. 96-10-02291.

United States Court of International Trade.

July 30, 2002.

Singer & Singh, New York City (Sherry L. Singer and Indie K. Singh), for Plaintiff.

Robert D. McCallum, Jr., Assistant Attorney General; John J. Mahon, Acting Attorney in Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, United States Department of Justice (Mikki Graves Walser); Beth C. Brotman, Office of Assistant Chief Counsel, International Trade Litigation, United States Customs Service, for Defendant, of counsel.

OPINION

RIDGWAY, Judge.

This action involves the tariff classification of dozens of action figures from various Marvel Comics series (including the X-Men, Spider-Man, and the Fantastic Four), as well as a doll sold as "Jumpsie." Plaintiff Toy Biz, Inc. ("Toy Biz") imported the merchandise from China, through the ports of Seattle and Los Angeles, in 1993 and 1994. The United States Customs Service ("Customs") classified the merchandise as "[d]olls representing only human beings and parts and accessories thereof," under subheading 9502.10.40 of the Harmonized Tariff Schedule of the United States ("HTSUS") (1993 and 1994),¹ and assessed duties at the rate of 12% ad valorem.² Toy Biz contests that classification.

The goods at issue in this opinion are the "X-Men Projectors" (Assortment No 49110).³ Toy Biz here contends that — even if the specific X-Men figures which house the projector mechanisms represent humans, and thus would alone be classifiable as "dolls" — the existence of the projector feature and the film disks packaged with the Projectors justify their classification as "other toys" under subheading 9503.90.60, HTSUS, or as "toy sets" under subheading 9503.70.80, HTSUS (both dutiable at 6.8% ad valorem).⁴ See Complaint ¶ 30; Memorandum In Support of Plaintiff's Motion For Summary Judgment ("Plaintiff's Brief") at 8-12; Memorandum of Plaintiff Toy Biz, Inc. In Reply to Defendant's Memorandum In Opposition to Plaintiff's Motion For Summary Judgment and In Opposition to Defendant's Cross-Motion For Summary Judgment ("Plaintiff's Reply Brief") at 14-17.

This action has been designated a test case pursuant to USCIT Rule 84, and is before the Court on cross-motions for summary judgment. Jurisdiction is predicated on 28 U.S.C. § 1581(a) (1994). Customs' classification decisions are subject to de novo review pursuant to 28 U.S.C. § 2640 (1994).

For the reasons set forth herein, the Court denies the parties' cross-motions for partial summary judgment on the classification of the Projectors as "other toys" vs. "dolls" based on the existence of the projector mechanism or feature. As explained below, Customs properly ruled that the Projectors are composite goods to be classified pursuant to General Rule of Interpretation ("GRI") 3(b). However, the record before the Court is not sufficient at this time to permit a determination as to the "essential character" of the Projectors, as required by GRI 3(b).

The Court further finds, as discussed below, that the film disks packaged with the Projectors do not justify their classification as "toy sets." Accordingly, Toy Biz's motion for partial summary judgment on that issue is denied, and the Government's cross-motion is granted.

I. Background

The "X-Men Projectors" at issue are colorful, poseable plastic action figures — specifically, "Cyclops," "Magneto," and "Wolverine" — each of which stands approximately seven-and-one-half inches tall, and has a built-in miniature slide projector mechanism housed in a cavity in its upper torso.⁵ The projector mechanism consists of a small light bulb (powered by two AAA batteries, which are not included) behind a small lens through which images are projected. The lens of the projector protrudes markedly from the figure's chest. Packaged with each Projector are three different, interchangeable film "action disks," each of which consists of multiple "still" frames (slides) of various action scenes (resembling frames of a comic strip). See Sample "Bishop" and "Dr. Octopus" Projectors; Plaintiff's Brief, App. A at 10; Toy Biz 1994 Catalog at 14-15; Toy Biz 1995 Catalog at 13.

A button on the back of the Projector figure permits the user to turn on the projector's light bulb and to project one of the various images on the film disk onto any surface in front of the figure. Turning a knob on the back of the figure advances the film disk to another "frame," changing the projected image. Twisting the lens on the front of the figure focuses the image.

In classifying the "X-Men Projectors," Customs determined that each was "a composite article (consisting of a figure and a projector) with accessories (consisting of three film disks)." See HQ 957636 (Oct. 11, 1995); HQ 957688 (Oct. 11, 1995). Applying GRI 3(b), Customs further determined that "[e]ach article's essential character is imparted by the doll or toy animal/creature component." Id. Customs therefore classified the Projectors here at issue as "[d]olls representing only human beings" under subheading 9502.10.40, HTSUS. Id.

II. Standard of Review

Under USCIT Rule 56, summary judgment is appropriate where "there is no genuine issue as to any material fact and ... the moving party is entitled to [] judgment as a matter of law." USCIT R. 56(c). Customs' classification decisions are reviewed through a two-step analysis — first construing the relevant tariff headings, then determining under which of those headings the merchandise at issue is properly classified. Bausch & Lomb, Inc. v. United States, 148 F.3d 1363, 1365 (Fed. Cir.1998) (citing Universal Elecs., Inc. v. United States, 112 F.3d 488, 491 (Fed.Cir. 1997)).

Interpretation of the relevant tariff headings is a question of law, while application of the terms to the merchandise is a question of fact. See id. Summary judgment is thus appropriate where the nature of the merchandise is not in question, and the sole issue is its proper classification. See id. (it is "clear that summary judgment is appropriate when there is no genuine dispute as to the underlying factual issue of exactly what the merchandise is)" (citation omitted).

On the other hand, "summary proceedings are not intended to substitute for trial when it is indeed necessary to find material facts." Scripps Clinic & Research Found. v. Genentech, Inc., 927 F.2d 1565, 1570 (Fed.Cir.1991) (citing Meyers v. Brooks Shoe, Inc., 912 F.2d 1459, 1461 (Fed.Cir.1990)). Thus, it remains a function of the court to "determine whether there are any factual disputes that are material to the resolution of the action. The court may not resolve or try factual issues on a motion for summary judgment." Sea-Land Service, Inc. v. United States, 23 CIT 679, 684, 69 F.Supp.2d 1371, 1375 (1999) (quoting Phone-Mate, Inc. v. United States, 12 CIT 575, 577, 690 F.Supp. 1048, 1050 (1988)). See also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (on summary judgment, "the judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial"). Accordingly, summary judgment must be denied where there is a "dispute about a fact such that a reasonable trier of fact could return a verdict against the movant." Ugg Int'l, Inc. v. United States, 17 CIT 79, 83, 813 F.Supp. 848, 852 (1993) (quoting Pfaff Am. Sales Corp. v. United States, 16 CIT 1073, 1075 (1992)).

On review, Customs' classification decisions are afforded a measure of deference proportional to their power to persuade, in accordance with the principles set forth in Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 89 L.Ed. 124 (1944). See United States v. Mead Corp., 533 U.S. 218, 235, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001); Mead Corp. v. United States, 283 F.3d 1342, 1346 (Fed.Cir.2002).

III. Analysis

The General Rules of Interpretation ("GRIs") provide a framework for the classification of merchandise under the HTSUS, and are considered statutory provisions of law for all purposes. See Orlando Food Corp. v. United States, 140 F.3d 1437, 1439 (Fed.Cir.1998). The Harmonized Commodity Description and Coding System: Explanatory Notes (1st ed. 1986) ("Explanatory Notes") function as an interpretative supplement to the HTSUS. While the Explanatory Notes "do not constitute controlling legislative history," they "are intended to clarify the scope of HTSUS subheadings and offer guidance in interpreting its subheadings." Mita Copystar Am. v. United States, 21 F.3d 1079, 1082 (Fed.Cir.1994) (citing Lynteq, Inc. v. United States, 976 F.2d 693, 699 (Fed.Cir.1992)).

Most goods are classified pursuant to GRI 1, which provides that "classification shall be determined according to the terms of the headings and any relative section or chapter notes and, provided such headings or notes do not otherwise require, according to the following provisions [Rules 2 through 6]." GRI 1. According to the Explanatory Notes, GRI 1 is "intended to make it quite clear that the terms of a heading and any relative Section or Chapter Notes are paramount, i.e., they are the first consideration in determining classification." Explanatory Notes at GRI 1(V). See also Orlando Food Corp., 140 F.3d at 1440 ("Only after determining that a product is classifiable under the heading should the court look to the subheadings to find the correct classification for the merchandise.") (citation omitted).

The relevant GRIs here are GRI 1 and GRI 3. The parties disagree as to their application to the Projectors in the cross-motions at bar.

A. Projectors as Dolls with "Parts and Accessories" vs. "Other Toys"

1. GRI 1

Although Customs classified the Projectors pursuant to GRI 3(b), the Government argues for the first time here that the Projectors actually can be classified as "dolls" under heading 9502 pursuant to GRI 1 instead.⁶...