La Crosse Tech., Ltd. v. United States

• Decision Date: 25 July 2013
• Docket Number: No. 2012–1370.,2012–1370.
• Citation: 723 F.3d 1353
• Parties: LA CROSSE TECHNOLOGY, LTD., Plaintiff–Appellant, v. UNITED STATES, Defendant–Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

723 F.3d 1353

LA CROSSE TECHNOLOGY, LTD., Plaintiff–Appellant,

v.UNITED STATES, Defendant–Appellee.

No. 2012–1370.

United States Court of Appeals,Federal Circuit.

July 25, 2013.

William Randolph Rucker, Drinker Biddle & Reath LLP, of Chicago, Illinois, argued for plaintiff-appellant.

Amy M. Rubin, Trial Attorney, Civil Division, Commercial Litigation Branch, Department of Justice, of New York, New York, argued for defendant-appellee. With her on the brief were Stuart F. Delery, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Barbara S. Williams, Attorney in Charge, International Trade Field Office, of New York. Of counsel on the brief was Chi S. Choy, Office of Assistant Chief Counsel, United States Customs and Border Protection, of New York, New York.

Before NEWMAN, BRYSON, and O'MALLEY, Circuit Judges.

O'MALLEY, Circuit Judge.

Plaintiff–Appellant La Crosse Technology, Ltd. (“La Crosse”) disputes the Harmonized Tariff Schedule of the United States (“HTSUS”) classification of several models of imported electronic devices that measure and display atmospheric and weather conditions. The devices also display the time and date. Upon liquidation, U.S. Customs and Border Protection (“Customs”) classified all the subject devices as “other clocks” under HTSUS subheading 9105.91.40. La Crosse challenged Customs' classification, and the United States Court of International Trade reclassified many of the imported devices. The trade court divided the subject devices into three general categories: Weather Station models, Professional models, and Clock models. The trade court classified the Weather Station models under HTSUS subheading 9025.80.10 (which includes thermometers, barometers, hygrometers, and combinations of these instruments), the Professional models under subheading 9015.80.80 (which includes certain “meteorological ... instruments and appliances”), and the Clock models under subheading 9105.91.40 (which includes certain clocks). On appeal, La Crosse challenges the trade court's classification of a number of devices the court categorized as Weather Station and Clock models. For the reasons below, we find that the models at issue on appeal are properly classified under HTSUS subheading 9015.80.80. Thus, we reverse the judgment of the Court of International Trade with respect to the models at issue on appeal and order Customs to reliquidate these models in accordance with their classification under subheading 9015.80.80.

I. Background

La Crosse imports electronic devices that measure atmospheric conditions (e.g., outdoor temperature, indoor temperature, and/or humidity) and display the measured information alongside temporal information (e.g., the time and date). All the devices at issue on appeal include wireless instruments that measure outdoor conditions and a base unit containing instruments that measure indoor conditions. The devices also contain an LCD display, a barometer to measure air pressure, and a microprocessor. The microprocessor uses an algorithm to analyze historical barometric measurements to provide a weather forecast. The forecast indicates “whether the weather will improve or deteriorate” and is displayed as a “ ‘tendency’ arrow, a series of icons, or an image of a boy (‘Oscar outlook’) whose clothes indicate which type of weather is predicted.” ¹La Crosse Tech., Ltd. v. United States, 826 F.Supp.2d 1349, 1351–52 (Ct. Int'l Trade 2012).

Customs initially classified all the devices at issue as “other clocks” under 9105.91.40. See La Crosse, 826 F.Supp.2d at 1353. La Crosse challenged Customs' classification in the United States Court of International Trade, arguing that the articles were “more than clocks.” Id. at 1355 (internal quotation marks omitted). According to La Crosse, the devices at issue on appeal were constructed to do far more than indicate the time of day and should have been classified as meteorological appliances under HTSUS Heading 9015 because of their ability to forecast the weather. Id. La Crosse contended that the subject merchandise was prima facie classifiable under Heading 9015 using General Rule of Interpretation (“GRI”) 1, which applies “when an imported article is described in whole by a single classification heading or subheading” of HTSUS. CamelBak Prods., LLC v. United States, 649 F.3d 1361, 1364 (Fed.Cir.2011). The government, on the other hand, argued that classification pursuant to GRI 1 was inappropriate because the devices at issue were composite goods that were not described by a single HTSUS heading or subheading. La Crosse, 826 F.Supp.2d at 1356. According to the government, classification pursuant to GRI 3(b) was appropriate, and the devices were not properly classified under Heading 9015 using such an analysis. Id. The parties filed cross-motions for summary judgment, and the trade court granted-in-part and denied-in-part each of the parties' motions.

The trade court agreed with the government that “GRI 3 applies because the subject merchandise is prima facie classifiable under more than one heading.” Id. The court determined that the devices at issue were composite goods that were properly classified pursuant to GRI 3(b), which bases classification of goods on the “ ‘material or component which gives them their essential character.’ ” Id. at 1356–58 (quoting GRI 3(b)). For the purpose of classifying the goods, the court divided the devices into three general categories: Professional models (which are not at issue on appeal), Weather Station models, and Clock models. Id. at 1352. The court then examined the “primary functionality and marketing” of the devices in each category to determine their essential character. Id. at 1359.

With respect to the Weather Stations, the court noted that La Crosse marketed the devices as “Wireless Temperature Stations” or “Wireless Weather Stations” and determined that the devices “ha[d] a concentration of weather related features which predominate in number over clock functions.” Id. at 1360. Concluding that the devices' forecasting ability was “imprecise and lack[ed] the character of meteorological equipment” under Heading 9015, the court classified the Weather Stations as combination instruments under subheading 9025.80.10. Id. at 1361.

Regarding the Professional models, the court determined “[t]he essential character ... is also given by their weather-related functions because they overwhelmingly predominate over the clock functions.” Id. The Professional models included the features of the Weather Station models, but also contained “wind and rain sensors, as well as the ability to download weather data to a computer for further analysis.” Id. These additional capabilities, in the court's view, made it appropriate to classify the Professional models as meteorological equipment under subheading 9015.80.80, HTSUS. Id.

In classifying the Clock models, the trade court focused on the “numerous and predominant clock-related functions and clock-related marketing.” Id. The court noted that La Crosse described these models as atomic or projection clocks in marketing materials. Id. The trade court also observed that, although the Clock models display weather information (including a forecast), the Clock models “display[ed] time information in larger type size than weather information.” Id. Consequently, the court determined that the Clock models were properly classified under subheading 9105.91.40. Id. at 1362.

La Crosse timely appealed. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(5).

II. Arguments on Appeal

On appeal, La Crosse challenges the Court of International Trade's classification of a number of the Clock and Weather Station models, which the trade court placed under subheadings 9105.91.40 and 9025.80.10, respectively. ² According to La Crosse, the models at issue on appeal should have been classified pursuant to GRI 1 as “meteorological ... instruments and appliances” under 9015.80.80, HTSUS. The government, however, contends that the trade court properly classified the models pursuant to GRI 3(b).

III. Legal Standards

“We review the grant of summary judgment by the Court of InternationalTrade without deference.” CamelBak, 649 F.3d at 1364. “The ultimate issue as to whether particular imported merchandise has been classified under an appropriate tariff provision is a question of law subject to de novo review.” Marcel Watch Co. v. United States, 11 F.3d 1054, 1056 (Fed.Cir.1993). Tariff classification under HTSUS generally involves two steps: “(1) ascertaining the proper meaning of specific terms within the tariff provision and (2) determining whether the merchandise at issue comes within the description of such terms as properly construed.” Id. The first step presents a question of law, which we review de novo. Id. The second step presents a question of fact, which we review for clear error. Id. “A finding is clearly erroneous when, although there is evidence to support it, the reviewing court is left with a ‘definite and firm conviction that a mistake has been committed.’ ” Timber Prods. Co. v. United States, 515 F.3d 1213, 1220 (Fed.Cir.2008) (quoting United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 92 L.Ed. 746 (1948)). “Absent contrary legislative intent, HTSUS terms are to be construed according to their common and commercial meanings....” Carl Zeiss, Inc. v. United States, 195 F.3d 1375, 1379 (Fed.Cir.1999).

HTSUS GRIs and Additional U.S. Rules of Interpretation govern the classification of imported merchandise and are applied in numerical order. Id.; see also Mita Copystar Am. v. United States, 160 F.3d 710, 712 (Fed.Cir.1998) (“The first step in analyzing the classification issue is to determine the applicable subheadings, if possible, under GRI 1.”). In addition, “a court may refer to the Explanatory Notes of a tariff subheading, which do not constitute controlling legislative history but nonetheless are intended to clarify the scope...