Quaker Pet Grp., LLC v. United States

• Decision Date: 29 March 2019
• Docket Number: Court No. 13-00393,Slip Op. 19-40
• Citation: 374 F.Supp.3d 1375
• Parties: QUAKER PET GROUP, LLC, Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

374 F.Supp.3d 1375

QUAKER PET GROUP, LLC, Plaintiff,

v.UNITED STATES, Defendant.

Slip Op. 19-40

Court No. 13-00393

United States Court of International Trade.

March 29, 2019

Alan Goggins, Barnes, Richardson & Colburn, LLP, of New York, NY, for plaintiff.

Monica P. Triana, Trial Attorney, International Trade Field Office, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of New York, NY, for defendant. With her on the brief were Joseph H. Hunt, Assistant Attorney General, and Amy M. Rubin, Assistant Director. Of counsel on the brief were Beth C. Brotman and Sheryl A. French, Office of Assistant Chief Counsel for International Trade Litigation, U.S. Customs and Border Protection, of New York, NY.

OPINION

Katzmann, Judge:

The court returns to the question of the tariff classification under the Harmonized Tariff Schedule of the United States (2012) ("HTSUS") of Plaintiff Quaker Pet Group, LLC's ("Quaker Pet") pet carrier products. Previously, the court held that, as a matter of law, Quaker Pet's carriers could not be classified under HTSUS heading 4202, which comprises containers that organize, store, protect, and carry various items, because pets are living beings and not items. Quaker Pet Group, LLC v. United States, 42 CIT ––––, 287 F.Supp.3d 1348 (2018). However, the undisputed facts available to the court at that time were insufficient to determine whether the pet carriers could be covered by HTSUS 6307 -- a provision containing made up articles of textile that are not included under another tariff category -- or some other HTSUS heading. Id. at 1359–60. The parties have undertaken discovery and provided the court with additional, undisputed facts, which now permit the court to conclude that Quaker Pet's carriers should be classified under HTSUS 6307.

BACKGROUND

I. Tariff Classification Generally

In a classification case, "the court construes the relevant (competing) classification headings, a question of law; determines what the merchandise at issue is, a question of fact; and then ... adjudges ... the proper classification under which it falls, the ultimate question in every classification case and one that has always been treated as a question of law." Bausch & Lomb, Inc. v. U.S., 148 F.3d 1363, 1366 (1998) ; see Wilton Indus., Inc. v. United States, 741 F.3d 1263, 1266 (Fed. Cir. 2013). When there is no factual dispute regarding the merchandise, the resolution of the classification issue turns on the first step, determining the proper meaning and scope of the relevant tariff provisions. See Wilton Indus., 741 F.3d at 1266–67 ; Carl Zeiss, Inc. v. U.S., 195 F.3d 1375, 1378 (Fed. Cir. 1999) ; Bausch & Lomb, 148 F.3d at 1365–66.

"The HTSUS scheme is organized by headings, each of which has one or more subheadings; the headings set forth general categories of merchandise, and the subheadings provide a more particularized segregation of the goods within each category." Alcan Food Packaging (Shelbyville) v. United States, 771 F.3d 1364, 1366 (Fed. Cir. 2014) (quoting Wilton Indus., 741 F.3d at 1266 ). Chapter and section notes of the HTSUS are statutory law, not interpretative guidelines, and are binding on the court. Quaker Pet, 287 F.Supp.3d at 1355 (citing Arko Foods Intern., Inc. v. United States, 654 F.3d 1361, 1364 (Fed. Cir. 2011) ; Park B. Smith, Ltd. v. United States, 347 F.3d 922, 929 (Fed. Cir. 2003) ).

Tariff classification is determined according to the General Rules of Interpretation ("GRIs"), and, if applicable, the Additional U.S. Rules of Interpretation. The "General Rules of Interpretation govern classification of merchandise under the HTSUS, and are applied in numerical order." Honda of Am. Mfg. v. United States, 607 F.3d 771, 773 (Fed. Cir. 2010) (internal quotations and citations omitted).

Under GRI 1, "classification shall be determined according to the terms of the headings and any relative section or chapter notes."¹ See also Faus Grp., Inc. v. United States, 581 F.3d 1369, 1372 (Fed. Cir. 2009) (citing Orlando Food Corp. v. United States, 140 F.3d 1437, 1440 (Fed. Cir. 1998) ). Unless there is evidence of "contrary legislative intent, HTSUS terms are to be construed according to their common and commercial meanings." La Crosse Tech., Ltd. v. United States, 723 F.3d 1353, 1358 (Fed. Cir. 2013) ; Russell Stadelman & Co. v. United States, 242 F.3d 1044, 1048 (Fed. Cir. 2001). In ascertaining a term's common meaning, the court may "consult lexicographic and scientific authorities, dictionaries, and other reliable information" or may rely on its "own understanding of the terms used."

Baxter Healthcare Corp. v. United States, 182 F.3d 1333, 1337–38 (Fed. Cir. 1999) ; see Millenium Lumber Distrib., Ltd. v. United States, 558 F.3d 1326, 1328–29 (Fed. Cir. 2009) ; Carl Zeiss, 195 F.3d at 1379. "Where a tariff term has various definitions or meanings and has broad and narrow interpretations, the court must determine which definition best expresses the congressional intent." Richards Med. Co. v. United States, 910 F.2d 828, 830 (Fed. Cir. 1990). Although not binding law, courts also look to the Explanatory Notes ("ENs") to the Harmonized Commodity Description and Coding System, maintained by the World Customs Organization, as persuasive authority on how to interpret and apply HTSUS provisions. See Home Depot U.S.A., Inc. v. United States, 491 F.3d 1334, 1336 n.1 (Fed. Cir. 2007) ("Although the Explanatory Notes ‘do not constitute controlling legislative history,’ they are nonetheless intended to offer guidance in clarifying the scope of HTSUS subheadings." (citing Mita Copystar Am. v. United States, 21 F.3d 1079, 1082 (Fed. Cir. 1994) ) ); Deckers Outdoor Corp. v. United States, 714 F.3d 1363, 1367 n.1 (Fed. Cir. 2013) ; see generally Alcan Food Packaging (Shelbyville) v. United States, 37 CIT ––––, 929 F.Supp.2d 1338 (2013) (relying extensively on the guidance provided by the ENs to resolve the case under GRI 1), aff'd, 771 F.3d 1364 (Fed. Cir. 2014).

"The HTSUS is designed so that most classification questions can be answered by GRI 1." Telebrands Corp. v. United States, 36 CIT ––––, ––––, 865 F.Supp.2d 1277, 1280 (2012), aff'd, 522 Fed. App'x 915 (Fed. Cir. 2013). "What is clear from the legislative history of the World Customs Organization and case law is that GRI 1 is paramount ... The HTSUS is designed so that most classification questions can be answered by GRI 1, so that there would be no need to delve into the less precise inquiries presented by GRI 3." Id. A product is classifiable under GRI 1 if it "is described in whole by a single classification heading or subheading" of the HTSUS; however, "[w]hen goods are in character or function something other than as described by a specific statutory provision -- either more limited or more diversified -- and the difference is significant, then the goods cannot be classified" pursuant to GRI 1.² La Crosse Tech., 723 F.3d at 1358 (quoting CamelBak Prods., LLC v. United States, 649 F.3d 1361, 1364 (Fed. Cir. 2011) ).

II. Procedural History

In this case, the Government classified the subject pet carriers under subheading 4202.92.305³ of the HTSUS, the provision covering traveling bags and similar containers of textile material. Amended Compl. ¶ 10; Def.'s Answer ¶ 10. This classification carries a 17.6 percent duty rate. HTSUS 4202.92.30. Quaker Pet contested the liquidations by filing a protest on April 25, 2013, because it believed that pet carriers are classifiable under HTSUS subheading 6307.90.98, "Other made up articles, including dress patterns:...Other:...Other," which carries a duty rate of seven percent. Summ., Dec. 9, 2013, ECF No. 1. Customs denied the protest on June 21, 2013, and this action followed. Id. Initial disclosures were served on January 21, 2015 and supplemented on July 17, 2015. Resp. to Mot. for J. on the Pleadings as to Count I of the Amended Compl. ("Def.'s Br."), Oct. 30, 2015, ECF No. 28, at Exhibits 1–2. Quaker Pet moved for judgment on the pleadings as to Count I of its Amended Complaint on September 18, 2015, and the Government filed its response on October 30, 2015. Mot. for J. on the Pleadings as to Count I of the Amended Compl. ("Pl.'s Br."), ECF No. 21 ; Def.'s Br. Quaker Pet filed its reply on November 12, 2015, and the first oral argument was held on February 11, 2016. Pl.'s Reply Br., ECF No. 29 ; Oral Argument, ECF No. 35.

On November 29, 2017, the case was reassigned to a new judge. Reassignment Order, ECF No. 52. Quaker Pet filed a motion to withdraw Count II⁴ of the amended complaint on December 14, 2017, and the Government filed its response opposing withdrawal of Count II on January 2, 2018. ECF. No. 57 ; ECF No. 59. Oral argument was held anew on January 17, 2018. ECF No. 60.

In its ensuing opinion, issued in February 2018, the court held that, as a matter of law, Quaker Pet's products could not be classified under heading 4202. Quaker Pet, 287 F.Supp.3d at 1358–59. Under the Federal Circuit's Avenues In Leather test, "the common characteristic or unifying purpose of the goods in heading 4202 consist[s] of organizing, storing, protecting, and carrying various items." Avenues In Leather, Inc. v. United States, 423 F.3d 1326, 1332 (Fed. Cir. 2005) (emphasis added) (citations omitted). The court reasoned that because the primary purpose of Quaker Pet's products was to carry living beings -- namely, pets -- and not items, these pet carriers did not meet the Avenues In Leather test. Quaker Pet, 287 F.Supp.3d at 1358–59. However, "the undisputed facts contained in the pleadings d[id] not provide sufficient information -- for example, the materials comprising each style of pet carrier or any procedure through which the products were assembled or otherwise made up -- for the court to determine whether the pet carriers are properly classifiable under HTSUS heading 6307 or another heading." Id. at 1359. The court also granted Quaker Pet's Motion to Withdraw Count II of the Amended Complaint,...