Otter Prods., LLC v. United States

• Decision Date: 26 May 2015
• Docket Number: Court No. 13–00269.,Slip Op. 15–49.
• Parties: OTTER PRODUCTS, LLC, Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

70 F.Supp.3d 1281

OTTER PRODUCTS, LLC, Plaintiff

v.UNITED STATES, Defendant.

Slip Op. 15–49.

Court No. 13–00269.

United States Court of International Trade.

May 26, 2015.

Louis S. Mastriani, Munford Page Hall, II, Beau A. Jackson, Dana L. Watts, Adduci, Mastriani & Schaumberg, LLP, of Washington, DC, for plaintiff.

Beverly A. Farrell, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of New York, NY, for defendant. With her on the brief were Joyce R. Branda, Acting Assistant Attorney General, and Amy M. Rubin, Assistant Director. Of counsel on the brief was Beth C. Brotman, Office of the Assistant Chief Counsel, International Trade Litigation, United States Customs and Border Protection of New York, NY.

OPINION

KELLY, Judge:

Before the court are Plaintiff's, Otter Products, LLC, (“OtterBox”), and Defendant's, United States, cross-motions for summary judgment in this classification dispute. OtterBox moves for summary judgment on the two counts in its complaint arguing that as to count one, Defendant improperly classified OtterBox's Commuter and Defender Series cases under subheading 4202.99.9000 of the Harmonized Tariff Schedule of the United States (2012) ( “HTSUS”), which carries an ad valorem rate of 20%, and should properly classify the cases under subheading 3926.90.9980, HTSUS, which carries an ad valorem rate of 5.3%. With respect to count two OtterBox claims that because the goods are properly classified under subheading 3926.90.9980, HTSUS, Defendant “[i]n addition to the refund of the duties paid by OtterBox upon the entry and liquidation of the subject merchandise, ... should also refund to OtterBox all additional overpayments of duties paid on assists....” Compl. ¶ 26, Aug. 2, 2013, ECF No. 4 (“Pl.'s Compl.”).

Defendant argues that the court should deny Plaintiff's motion and grant summary judgment in its favor because the Defender and Commuter series cases were properly classified under subheading 4202.99.9000, HTSUS. Defendant further argues that the court does not have jurisdiction over Plaintiff's second count, requesting repayment of post-importation overpaid duties, because they were voluntarily made (i.e. not a “charge or exaction”) and, in any event, OtterBox did not protest these payments. For the reasons set forth below, the court has jurisdiction over OtterBox's claims and finds that the subject merchandise is properly classified under subheading 3926.90.9980, HTSUS, and that the ad valorem rate of 5.3% applies to the entire transaction value of OtterBox's entries, including the value of assists paid subsequent to importation. The court will address the Plaintiff's counts separately.

Background

OtterBox is the owner and importer of record of the Commuter and Defender Series cases. OtterBox's goods were entered between April 23, 2012 and July 11, 2012 through the Port of Memphis, Tennessee, under Entry Numbers 112–7334796–8, 112–7391483–3, 112–7967525–5, 112–8546857–0 (“Subject Entries”). Pl.'s Ex. List Ex. C Att. 1 (“Pl.'s Protest”), Oct. 9, 2014, ECF No. 25–2; Def.'s Mem. Law Opp'n Pl.'s Mot. Summ. J. Supp. Def.'s Cross–Mot. Summ. J. 2, Dec. 17, 2014, ECF No. 37 (“Def.'s Opp'n & Cross–Mot.”). OtterBox paid duties at the 20% ad valorem rate provided under subheading 4202.99.9000, HTSUS, and the goods were liquidated between March 8, 2013, and May 24, 2013, at that rate. See Def.'s Opp'n & Cross–Mot. 2; see also Pl.'s Protest. On July 2, 2013, Plaintiff timely filed Protest Number 2006–13–101283 covering all four entries and requested accelerated disposition pursuant to 19 U.S.C. § 1515(b). See Pl.'s Protest. The protest was deemed denied on August 1, 2013. Def.'s Opp'n & Cross–Mot. 3. On August 2, 2013, Plaintiff timely filed its summons contesting the denial of its protest. See Summons, Aug. 2, 2013, ECF No. 1.

Before importing the entries involved in this case, OtterBox learned that it had failed to disclose and pay duties on the value of assists it provided in connection with the manufacture of certain merchandise. As a result of that discovery OtterBox filed a prior disclosure on November 17, 2010 and eventually submitted the duties owed for the period preceding its prior disclosure. Pl.'s Compl. ¶ 8. Subsequently, OtterBox undertook to enter the Reconciliation Prototype so that going forward it could pay the value of assists on reconciliation entries.¹ Pl.'s Mem. Supp. Mot. Summ. J. 26, Oct. 9, 2014, ECF No. 25–1 (“Pl.'s Mot. Summ. J.”); 19 U.S.C. § 1484(b). Some of the assists for the Subject Entries were included in the reconciliation entries. Answers Questions Presented Teleconference April 2, 2015 6–8, April 17, 2015, ECF No. 50 (“Def.'s Answers Re Payment Assists”). Additionally, OtterBox made three “interim payments” for the assists supplied in connection with the Subject Entries between the time it submitted a prior disclosure and the time it was certified for the reconciliation program.² The payments were made on September 29, 2011, May 7, 2012, and July 30, 2012. Pl.'s Compl. ¶¶ 10–12. Plaintiff's summons filed in this case does not list these reconciliation entries.³

Jurisdiction and Standard of Review

The court has “exclusive jurisdiction of any civil action commenced to contest the denial of a protest, in whole or in part, under [19 U.S.C. § 1515 ],” 28 U.S.C. § 1581(a) (2012)⁴ , and reviews such actions de novo. 28 U.S.C. § 2640(a)(1). As will be more fully discussed below, the court exercises jurisdiction over OtterBox's count I and II because the subject matter of this case is the properly protested classification decision made by CBP which applies to the entire transaction value of the Subject Entries. Moreover, OtterBox has paid all liquidated duties on the Subject Entries in accordance with 28 U.S.C. § 2637(a).

The court will grant summary judgment when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” USCIT Rule 56(a). A classification decision involves two steps. First, the court determines the proper meaning of the tariff provisions, a question of law. See Link Snacks, Inc. v. United States, 742 F.3d 962, 965 (Fed.Cir.2014). Second, the court determines whether the subject merchandise properly falls within the scope of the tariff provisions, a question of fact. Id. Where no genuine “dispute as to the nature of the merchandise [exists], then the two-step classification analysis collapses entirely into a question of law.” Id. at 965–66 (citation omitted). The court must determine “whether the government's classification is correct, both independently and in comparison with the importer's alternative.” Jarvis Clark Co. v. United States, 733 F.2d 873, 878 (Fed.Cir.1984).

DISCUSSION

Count I

While the Plaintiff and Defendant describe the merchandise differently, the material facts as to the nature of the subject merchandise are not disputed. Plaintiff describes the Commuter Series cases as “durable protective products comprised of two basic pieces: a silicone mid-layer and, most importantly, a rigid outer plastic shell.” Pl.'s Mot. Summ. J. 1, (citing Pl.'s Ex. A ¶ 5, Oct. 9, 2014, ECF No. 26 (“Pl.'s Ex. A”); Pl.'s Att. 1 ¶ 5). The Commuter Series cases “have a smooth exterior, designed to allow them to slide easily in and out of pockets.” Id. (citing Pl.'s Physical Exs. 1, 3, 6, and 8, Oct. 14, 2014, ECF No. 27 (“Pl.'s Physical Ex.”)). Moreover, the plastic components of these cases “do not cover or enclose the screen” of the device but do allow the consumer “the option of affixing to the screen of the electronic device a thin, plastic, self-adhesive film to protect the screen.” Id. at 1–2.

Plaintiff characterizes the Defender Series cases as consisting “of the following four pieces: a clear protective plastic membrane, a high-impact polycarbonate shell, a plastic belt clip holster, and a durable outer silicone cover.” Id. at 2 (citing Pl.'s Ex. A ¶ 6; Pl.'s Physical Exs. 2, 4, 5, and 9). Plaintiff further explains that the “hard plastic pieces” in both series of cases “are made of polycarbonate” and the “ ‘silicone’ component” in the cases “may consist of silicone, thermoplastic elastomer, or thermoset elastomer.” Id. (citing Pl.'s Ex. A ¶¶ 7–8). Finally, Plaintiff identifies the products with which the subject merchandise is used, including Defender Series cases for the Apple iPhone 4, 4S, and iPod Touch, the Nokia Lumia 900, and Commuter Series cases for the Blackberry Curve 9220, 9310, and 9320, the Samsung i500, and the HTC my Touch.Id.

Defendant emphasizes different facts when describing the merchandise. It describes the Commuter Series cases as “com[ing] with a screen assembly” which includes “an instructional packet that includes a self-adhesive, plastic screen protector, wiping cloth, instructions and a plastic squeegee to push the plastic screen protector to avoid bubbling.” Def.'s Opp'n & Cross–Mot. 4 (citing Def.'s Ex. 1 at 12:9–13:23). Defendant also states that OtterBox markets the Commuter Series as “ ‘[s]lim, multilayer protective cases delivers tough protection;’ ‘2–layer protection withstands drops, bumps and shock;’ ‘[s]elf-adhesive screen protector guards against scratches;’ and ‘[s]lides easily in and out of pockets.’ ” Id. at 4 (citing Def.'s Ex. 2).

It describes the Defender Series cases as “hav[ing] a screen built into the top or front of the case,” and for Defender cases used in connection with products other than the iPod touch, the cases “come with a belt clip.” Def.'s Opp'n & Cross–Mot. 3 (citing Def.'s Ex. 1 at 13:23–24, 21:18–21). Moreover, Defendant states that “Otter markets the Defender® cases for active people,” Def.'s Opp'n & Cross–Mot. 3 (citing Def.'s Exs. 2–3), and describes Defender cases in connection with the iPhone 4 & 4S, “as ‘[a] unique multi-layer combination fit[ ] precisely to undoubtedly protect’ with an ‘inner polycarbonate layer [that] fully encloses the iPhone.’ ” Id. (citing Def.'s Ex. 4).

Defendant also...