Brother Intern. Corp. v. U.S.

• Decision Date: 29 April 2005
• Docket Number: Slip Op. 05-53.,Court No. 00-00006.
• Citation: 368 F.Supp.2d 1345
• Parties: BROTHER INTERNATIONAL CORP., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

Page 1345

368 F.Supp.2d 1345

BROTHER INTERNATIONAL CORP., Plaintiff, v. UNITED STATES, Defendant.

Slip Op. 05-53.

Court No. 00-00006.

United States Court of International Trade.

April 29, 2005.

Barnes, Richardson & Colburn (Sandra Liss Friedman, Jennifer L. Morgan, Helena D. Sullivan), New York City, for Plaintiff.

Peter D. Keisler, Assistant Attorney General; Barbara S. Williams, Attorney-in-Charge, International Trade Field Office; Bruce N. Stratvert, Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice; Yelena Slepak, Office of Assistant Chief Counsel, International Trade Litigation, United States Customs and Border Protection, for Defendant, of counsel.

OPINION

CARMAN, District Judge.

The matter before this Court follows a bench trial held on February 9, 2005. At issue is whether Plaintiff's misclassification of certain multifunction centers ("MFCs"¹ or "subject merchandise") was due to mistake of fact or mistake of law. Plaintiff Brother International Corporation ("Plaintiff" or "Brother") challenges the United States Customs Service's, now organized as the United States Bureau of Customs and Border Protection ("Customs" or "Defendant"), denial of two protests to reliquidate thirty-eight entries of MFCs, claiming misclassification due to a mistake of fact, which is remedial under section 520 of the Tariff Act of 1930, 19 U.S.C. § 1520(c)(1) (2000). Defendant contends that Plaintiff's misclassification of the merchandise was a mistake of law, which is afforded no relief under section 1520(c)(1). Based on the findings of fact and conclusions of law set forth below, this Court enters final judgment in favor of Defendant.

BACKGROUND

The merchandise at issue is MFCs with model numbers: MFC-4550, MFC-4550DS, MFC-6550MC, and MFC-7550MC. (Pl.'s Statement of Material Facts Not in Dispute Pursuant to R. 56(h) ("Pl.'s Statement") ¶ 4; Def.'s Resp. to Pl.'s Statement of Undisputed Facts ("Def.'s Resp.") ¶ 4.) All models at issue "employ a printing mechanism that uses laser technology." (Pl.'s Statement ¶ 8; Def.'s Resp. ¶ 8.) The MFCs were entered between June 24, 1996, and February 5, 1997, and liquidated between October 11, 1996, and May 23, 1997.² Customs Ruling HQ 228696 (Sept. 17, 2002); (Def.'s Mem. in Supp. of Its Mot. for Summ. J. and in Opp'n to Pl.'s Mot. for Summ. J. ("Def.'s Mem.") at 3.)

Prior to importation, Mitchell von Poederoyen ("Mr. von Poederoyen" or "broker"), a national account manager for Plaintiff's customs broker, FedEx Trade Networks,³ classified the MFCs under subheading 9009.12.0000 of the Harmonized Tariff Schedule of the United States (1997) ("HTSUS"). (Pl.'s Statement ¶¶ 19, 35-37; Def.'s Resp. ¶¶ 19, 35-37.) Accordingly, Customs liquidated the entries at 3.7% ad valorem.⁴

In July 1997, Plaintiff requested a tariff classification ruling for the MFC-4550, one of the MFC models at issue in this case. Customs issued a ruling responding to Plaintiff's request. Customs Ruling N.Y. B87982 (Aug. 4, 1997). In that ruling, Customs described the MFC-4550 as "a multi-function machine in one common housing that can perform, printing, copying, scanning, fax and PC fax functions" and found that "the printing function ... dictates the principal function of [the] machine." Id. Based upon this finding, Customs concluded that the MFC-4550 should be classified under subheading 8471.60.6200, HTSUS,⁵ "which provides for other laser printer units," and is a duty free provision. Id.

Subsequent to the 1997 ruling, Plaintiff submitted timely requests to reliquidate the subject entries pursuant to 19 U.S.C. § 1520(c)(1). Customs denied Plaintiff's requests for reliquidation. Plaintiff then filed timely protests of the denials. Protest No. 2701-99-100963 (Apr. 13, 1999); Protest No. 2704-99-100964 (Apr. 13, 1999). Plaintiff requested further review of the denied Protest Number 2704-99-100964. In a ruling, Customs affirmed the denial of the protest, finding that any misclassification was due to a mistake of law. HQ 228696. Thereafter, Plaintiff timely filed its summons in this Court to challenge the Customs decisions.

Plaintiff moved for summary judgment, and Defendant cross-moved for summary judgment. This Court denied both motions in Slip Op 04-67 issued on June 10, 2004, because this Court found a genuine issue of material fact. Brother Int'l Corp. v. United States, 342 F.Supp.2d 1295, 1301 (CIT 2004). This Court held that further findings of fact were necessary to determine the extent of knowledge that Mr. von Poederoyen possessed about the physical characteristics of the MFCs at the time of classification. This Court held a bench trial on February 9, 2005, to resolve this matter.

STANDARD OF REVIEW

Jurisdiction of this Court is found under 28 U.S.C. § 1581(a) (2000). Although Custom's decisions are entitled to a presumption of correctness pursuant to 28 U.S.C. § 2639(a)(1) (2000), this Court makes its determinations upon the basis of the record before it, not upon the record developed by Customs. See United States v. Mead Corp., 533 U.S. 218, 233 n. 16, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001). Accordingly, this Court makes the following findings of fact and conclusions of law de novo. See 28 U.S.C. § 2640(a) (2000).

ANALYSIS

At issue is whether a mistake of fact or mistake of law caused the misclassification of the MFCs. The distinction between a mistake of fact and a mistake of law is that a mistake of fact occurs in instances where either (1) the facts exist, but are unknown, or (2) the facts do not exist as believed. G & R Produce Co. v. United States, 381 F.3d 1328, 1333 (Fed.Cir.2004) ("G & R Produce II"), aff'g G & R Produce Co. v. United States, 281 F.Supp.2d 1323 (CIT 2003) ("G & R Produce I"). A mistake of law occurs when the facts are known but the legal significance of those facts is not appreciated. G & R Produce II, 381 F.3d at 1332.

When a mistake of fact occurs, courts have recognized that 19 U.S.C. § 1520(c)(1) provides a liberal scope of correction for the aggrieved party. See G & R Produce II, 381 F.3d at 1332-33 (citing Aviall of Tex., Inc. v. United States, 70 F.3d 1248, 1250 (Fed.Cir.1995)); cf. Fujitsu Compound Semiconductor v. United States, 363 F.3d 1230, 1235 (Fed.Cir.2004) (referring to section 1520(c)(1) as a limited exception). This Court has found that "section 1520(c)(1) does not provide a remedy for all mistakes" but rather "only offers limited relief to the importer in the situations described in the statute." G & R Produce I, 281 F.Supp.2d at 1330. Further, if a mistake is a mix of fact and law, then statutory relief is precluded. Ford Motor Co. v. United States, 157 F.3d 849, 857 (Fed.Cir.1998) ("The statute contemplates that some errors that are prima facie correctable will also be `errors in the construction of a law.' The statute precludes that subset of errors from correction.") Therefore, Plaintiff must meet the statutory burden in order to be granted relief.

Pursuant to this Court's Rule 52(a), "[i]n all actions tried upon the facts without a jury ..., the court shall find the facts specially and state separately its conclusions of law thereon...." USCIT R. 52(a) (2002). Accordingly, findings of fact and conclusions of law are set forth below.

A. Findings of Fact

(1) Uncontested Facts in Pretrial Order (Schedule C)

The following uncontested facts were stipulated by parties in the pretrial order submitted to this Court on December 27, 2005.

1. Plaintiff is the importer of record of the subject merchandise and the party in interest in this litigation.

2. The court has jurisdiction of this action under 28 U.S.C. § 1581(a).

3. The action was timely commenced and all liquidated duties have been paid.

4. The merchandise in issue consists of MFCs whose model numbers are MFC-4550, MFC-4550DS, MFC-6550MC and MFC7550MC.

5. The MFC-4550 and MFC-4550DS are "five-in-one" MFCs consisting of a laser printer, copier, facsimile, scanner and PC fax.

6. The MFC-6550MC and MFC-7550MC are "six-in-one" MFCs consisting of a laser printer, copier, facsimile, scanner, PC fax and answering machine.

7. The invoice description for the entries in issue reads "multifunctional copier/printer/fax."

8. Customs issued binding ruling N.Y. B87982 covering the MFC-4550 on August 4, 1997.

9. In N.Y. B87982, Customs classified the MFC-4550 under subheading 8471.60. 6200, HTSUS.

10. In N.Y. B87982, Customs stated: "The MFC-4550 is a multi-function machine in one common housing that can perform printing, copying, scanning, fax and PC fax functions. This machine appears to have evolved from prior laser printer technology developed by Brother Industries Ltd."

11. NY B876982 also noted: "In order to print, the MFC-4550 uses a print engine, which consists of a drum unit and fixing unit which acts to permanently adhere the chemicals which are contained in a toner cartridge to the paper. In order to fax, the machine uses the print engine together with a network control unit and the main board or control unit. When used as a copy machine, the device uses a print engine, CCD unit, and the main board."

(2) Uncontested Facts Established at Trial

This Court finds, based upon the testimony and evidence presented, the following facts were uncontested and established at trial.

1. Engineers of the MFCs were located in Nagoya, Japan. (Trial Tr. at 29:5-6.)

2. Brother first developed its laser print engine in the early 1990s, primarily for the laser printer but also used it in other products. (Trial Tr. at 33:3-9.)

3. Without the laser print engine, Brother would not have had MFCs because the laser print engine is the core for the development of each of those machines. (Trial Tr. at 34:17-25, 35:2-4.)

4. Brother's literature reflects equal importance of each function of the MFCs. (Trial Tr. at 93:8-14, 94:15-23.)

5. Brother's purpose of line art was for the reseller to create advertisements. (Trial Tr. at 26:17-20, 27:6-7.)

(3) Court Found Facts

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