346 F.Supp.2d 1295 (CIT. 2004), 98-12-03231, Mattel, Inc. v. United States

Docket Nº:Court No. 98-12-03231.
Citation:346 F.Supp.2d 1295
Party Name:MATTEL, INC. and Fisher Price, Inc. Plaintiffs, v. UNITED STATES, Defendant. SLIP OP. 04-104.
Case Date:August 19, 2004
Court:Court of International Trade

Page 1295

346 F.Supp.2d 1295 (CIT. 2004)

MATTEL, INC. and Fisher Price, Inc. Plaintiffs,

v.

UNITED STATES, Defendant.

SLIP OP. 04-104.

Court No. 98-12-03231.

United States Court of International Trade.

Aug. 19, 2004

Page 1296

Stein Shostak Shostak & O'Hara, P.C., Los Angeles, CA (Marjorie M. Shostak and Heather C. Litman), for Plaintiffs.

Peter D. Keisler, Assistant Attorney General; John J. Mahon, Acting Attorney in Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Mikki Graves Walser); Sheryl A. French, Office of the Assistant Chief Counsel, International Trade Litigation, U.S. Customs Service, for Defendant United States, of counsel.

OPINION

RIDGWAY, Judge.

In this action, plaintiffs Mattel, Inc. and its wholly-owned division, Fisher-Price, Inc., (collectively "Mattel") challenge the decision of the U.S. Customs Service

Page 1297

("Customs")1 denying Mattel's protests concerning the tariff classification of certain children's merchandise imported by Mattel and marketed in this country as "Pop-Up Wackaroos."2

The Government maintains that Customs properly classified the "Pop-Up Wackaroos" as toys--specifically, "[o]ther toys ... [i]ncorporating an electric motor," under subheading 9503.80.20 of the Harmonized Tariff Schedule of the United States ("HTSUS") (1994),3 assessing duties at the rate of 6.8 % ad valorem. See generally Memorandum in Support of Defendant's Opposition to Plaintiffs' Motion for Summary Judgment and in Support of Defendant's Cross-Motion for Summary Judgment ("Def.'s Brief"); Defendant's Reply to 'Plaintiff's Combined Opposition to Defendant's Cross-Motion for Summary Judgment and Reply to Defendant's Opposition to Plaintiffs' Motion for Summary Judgment ("Def.'s Reply Brief").

Mattel contends that Pop-Up Wackaroos are instead properly classifiable as "[g]ame machine[s]," under subheading 9504.90.40, and thus are dutiable at the significantly lower rate of 3.9%. See generally Memorandum of Points and Authorities in Support of Plaintiffs' Motion for Summary Judgment ("Pls.' Brief"); Plaintiffs' Combined Opposition to Defendant's Cross-Motion for Summary Judgment and Reply to Defendant's Opposition to Plaintiffs' Motion for Summary Judgment ("Pls.' Reply Brief").4

Cross-motions for summary judgment are pending. Jurisdiction lies under 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 discussed below, "Pop-Up Wackaroos" are properly classified as "[g]ame machines" under subheading 9504.90.40 of the HTSUS.

Mattel's motion for summary judgment is therefore granted, and the Government's cross-motion is denied.

I. Background

The box in which it is sold describes the merchandise here at issue--"Pop-Up Wackaroos"--as "[a] fast-paced preschool game" designed for children "[a]ges 3-7." See Def.'s. Exh. C (sample of merchandise at issue).5 In essence, it is a scaled-down,

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children's version of "Whac-A-Mole," a venerable and beloved game common in arcades and casinos throughout the country.

Pop-Up Wackaroos consists of two pieces--a small, somewhat irregularly-shaped base unit made of hard plastic, and a two-headed, accordion-style mallet made of soft plastic. When the base unit is turned on, a timing device is activated, whooping, "wacky arcade sounds" begin to play, and six small comical "critter heads" randomly pop up--one at a time--out of six holes (or cavities) in the base unit, before quickly disappearing back into their respective holes.6

For young children playing Pop-Up Wackaroos, the object is to "beat the clock" by using the mallet to quickly strike each critter as it pokes its head up (before it disappears back into its hole)--and to successfully hit all six critters before time runs out and the unit automatically shuts off (after roughly one minute or so).7

If a child succeeds in hitting a critter head while it is poking out of its hole, that critter makes a warbling, chirpy sound, then does not pop up again. Any remaining critter heads (i.e., critter heads that have not been successfully struck while out of their holes) continue to randomly pop up--one at a time--and then disappear again, until "time is up" (or until all six heads have been successfully struck, whichever happens first).8 According to the back of the product box:

Kids love keeping these cute critters from popping up. Turn it on, watch as they come out of their holes, then try to bop them back into place. Players win when all the critters stay down.

See Def.'s Exh. C (sample merchandise).

If a child hits all six critter heads within the allotted time (i.e., before the unit automatically shuts off), the child "wins," and a distinctive, melodic "cavalry-charge"-type fanfare plays, heralding the child's success. On the other hand, if time expires before the child succeeds in striking all six "critter heads" while they are poking out of their holes, the unit silently shuts off. See Def.'s Exh. C (sample merchandise).

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).

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Customs classification decisions are reviewed through a two-step analysis--first, construing the relevant tariff headings, a question of law; and second, determining under which of those headings the merchandise at issue is properly classified, a question of fact. 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)).

Summary judgment is thus appropriate where, as here "there is no genuine dispute as to the underlying factual issue of what exactly the merchandise is." Id. at 1365. A factual dispute is genuine only "if the evidence is such that the [the trier of fact] could return a verdict for the non-moving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "[T]here is no issue for trial unless there is sufficient evidence favoring the nonmoving party.... If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Id. at 249-50, 106 S.Ct. 2505 (emphasis added) (citations omitted). Thus, at the summary judgment stage, the question to be answered is "whether there is the need for a trial--whether, in other words, there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Id. at 250, 106 S.Ct. 2505.

On review, Customs' classification rulings are accorded 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, 65 S.Ct. 161, 89 L.Ed. 124 (1944). See United States v. Mead Corp., 533 U.S. 218, 234-35, 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 classification of all merchandise is governed by the General Rules of Interpretation ("GRIs"), which provide a framework for classification under the HTSUS, and are to be applied in sequential order. See, e.g., North Am. Processing Co. v. United States, 236 F.3d 695, 698 (Fed.Cir. 2001); Orlando Food Corp. v. United States, 140 F.3d 1437, 1439 (Fed.Cir. 1998).

The GRIs relevant to this action are GRIs 1 and 3. Most goods are classified pursuant to GRI 1, which provides that "classification shall be determined according to the terms of the headings and any relevant section or chapter notes and, provided such section or notes do not otherwise require, according to [GRIs 2 through 6]." GRI 2(a) and 2(b)--which have no bearing here--generally deal, respectively, with the classification of articles that are "incomplete," "unfinished," "unassembled," or "disassembled," and with the classification of "mixtures or combinations" of materials or substances. GRI 3, in turn, governs the tariff treatment of goods that "are, prima facie, classifiable under two or more headings."

Both Mattel and the Government contend that Pop-Up Wackaroos is classifiable pursuant to GRI 1--albeit with very different results. Mattel asserts that GRI 1 leads to classification as a "game machine" under heading 9504, while the Government maintains that it leads to classification as a "toy" under heading 9503. See, e.g., Pls.' Brief at 6; Def.'s Brief at 22. Mattel argues, in the alternative, that--even if Pop-Up Wackaroos is prima facie classifiable under both headings 9503 and 9504--GRI 3 compels classification as a "game machine." See, e.g., Pls.' Brief at 4, 11-13; Pls.' Reply Brief at 10-11.

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The parties' arguments are considered in turn below.

A. GRI 1: The Terms of The Headings

Classification under GRI 1 begins with "the terms of the headings and any relevant section or chapter notes." GRI 1.

1. Heading 9504: The Definition of "Game"

The Government explains that, because the term as used in heading 9504 is not defined in the HTSUS, Customs has established criteria for determining whether an article is classifiable as a "game," "[b]ased upon the dictionary definition of the term ... and the prior judicial construction of that term." Def.'s Brief at 13. According to the Government, to secure tariff treatment as a "game," an article must involve:

(1) a competition or contest with the objective of winning;

(2) play activity between two or more people or between one person and the game itself;

(3) skill, chance, or endurance, or a combination of these elements; and

(4) a method or system of scoring.

Def.'s Brief at 13; Def.'s Reply Brief at 5, 10. See also Customs Headquarters Decision Memo at 2.

The Government maintains that Customs...

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