Tyco Fire Prods. L.P. v. United States

• Decision Date: 10 July 2015
• Docket Number: Court No. 08–00190.,Slip Op. 15–74.
• Citation: 82 F.Supp.3d 1340
• Parties: TYCO FIRE PRODUCTS L.P., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

82 F.Supp.3d 1340

TYCO FIRE PRODUCTS L.P., Plaintiff,

v.UNITED STATES, Defendant.

Slip Op. 15–74.

Court No. 08–00190.

United States Court of International Trade.

July 10, 2015.

Michael E. Roll, Pisani & Roll, of Los Angeles, CA, argued for plaintiff.

Amy M. Rubin, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of New York, NY, argued for defendant. With her on the brief were Benjamin C. Mizer, Acting Assistant Attorney General, and Jeanne E. Davidson, Director. Of counsel on the brief was Chi S. Choy, Office of Assistant Chief Counsel, International Trade Litigation, U.S. Customs and Border Protection.

OPINION

RESTANI, Judge:

In its second motion for summary judgment, Tyco Fire Products L.P. ("Tyco") once again contends that its products, filled glass bulbs, should be classified under Chapter 84 of the Harmonized Tariff Schedule of the United States ("HTSUS"), as parts of either fire sprinklers or water heaters. U.S. Customs and Border Protection ("Customs") originally determined, and Defendant the United States ("the government") continues to argue in its second cross-motion for summary judgment, that the products are properly classified under Chapter 70, as articles of glass. After denying the parties' original cross-motions for summary judgment due to insufficient evidence as to material facts, the court now denies Tyco's motion, grants the government's cross-motion, and holds that the filled bulbs are properly classified under subheading 7020.00.60, as other articles of glass.¹

BACKGROUND

The court assumes familiarity with the facts of the case as set out in the previous opinion, Tyco Fire Products L.P. v. United States, 918 F.Supp.2d 1334, 1337–39 (CIT 2013) ("Tyco I "), but they are summarized below for ease of reference. From July 2004 to July 2006, Tyco imported forty-two models of filled glass bulbs from two German producers, Geissler Glasinstrumente GmbH ("Geissler") and Job GmbH ("Job") through the port of Dallas–Fort Worth, Texas, for use in fire sprinklers and water heaters. Id. at 1337–38.

Each of these filled bulbs is made of glass and has an inner tube which contains an air bubble and colored liquid. Id. at 1337. According to the Customs' Laboratory Report, the colored liquid is triethylene glycol.² Laboratory Report No. NY20131574, DE 75–6 ("Customs' Lab Report"). The filled bulbs function as thermal activation devices because when the bulbs are exposed to heat, the glass exterior transfers the heat to the liquid contained in the inner tube of the bulb, causing the liquid to expand. Tyco I, 918 F.Supp.2d at 1337. As the liquid expands, the pressure in the bulb builds. Id. Once the bulb reaches its activation temperature, which is determined partially by the size of its air bubble, the pressure inside the bulb becomes too strong and the bulb shatters. Id. at 1337–38 & n. 5. For bulbs used in water-based fire sprinklers, when the bulb shatters, the valve which previously had been held closed by the bulb is released and water is dispersed. Id. at 1337–38. For the filled bulbs used in water-heaters, when the bulb shatters, a door that was previously held open by the bulb closes, cutting off the air supply to the combustion chamber, thereby preventing an explosion. Id. at 1338.

Customs classified the filled bulbs under subheading 7020.00.60 of the HTSUS as "other articles of glass," and Tyco protested. Id. at 1338–39. The protest was denied. Tyco filed suit and eventually moved for summary judgment. Id. at 1337, 1338 n. 6. Tyco argued that either all forty-two models of filled bulbs should be classified under HTSUS 8424.90.90 as "other parts" of goods covered by Heading 8424 or three of Tyco's forty-two bulb models should be classified under HTSUS 8419.90.10 as parts of water-heaters, with the remainder being classified under HTSUS 8424.90.90, as parts of fire-sprinklers. See id. at 1338 n. 6. Tyco argued that thirty-nine models of its filled bulbs derive their essential character from the liquid that they contain and that the sole or principal use of the bulbs was as parts of fire sprinkler systems. Id. at 1337, 1344. As to the remaining three models, Tyco argued that the sole or principal use of the bulbs was as parts of water-heaters. Id. at 1344. The government filed a cross-motion for summary judgment, claiming that the bulbs could be classified only under HTSUS 7020.00.60 and rejecting plaintiff's classification, because statutory Note 1(c) of Chapter 84 excludes parts made of glass. Id. at 1339, 1341. The government argued that the bulbs derive their essential character from their glass component and alternatively that Tyco had not established the sole or principal use of the bulbs. Id. at 1342–43.

Though the court found that three models of the filled bulbs were principally used in water heaters, the court denied both parties' motions for summary judgment.

Id. at 1344–45. Neither Tyco nor the government presented evidence on the relative weight or value of the glass and liquid components used in the filled bulbs. Id. at 1343. In the absence of this information, the court denied both parties' motions for summary judgment, concluding that it had insufficient evidence to determine the essential character of the filled bulbs. Id. Additionally, because of the conflicting evidence that Tyco and the government presented on the uses of thirty-nine models of filled bulbs that Tyco argued were used in fire sprinklers, the court could not determine the principal use of those bulbs as a matter of law. Id. at 1344. The principal use determination for the water-heater bulbs also did not resolve the inquiry in Tyco's favor because principal use is relevant only upon a finding that the bulbs are not excluded from Chapter 84.

In response to the court's opinion, Tyco submitted twenty-three samples to the Customs Laboratory for testing. Pl.'s Mem. of Law in Opp'n to Def.'s Second Cross–Mot. for Summ. J. and in Reply to Def.'s Opp'n to Pl.'s Second Mot. for Summ. J. 5 n. 1, ECF No. 79 ("Pl.'s Reply"). The results indicate that by weight the glass is the predominant component of the filled bulbs. Customs' Lab Report at 1. The average percent by weight of glass in the bulbs ranges from a low of 68.85% to a high of 83.54%. Id. Inversely, the average percent by weight of liquid in the bulbs ranges from a low of 16.46% to a high of 31.15%. Id. The parties also calculated the relative importance of the glass and liquid by value. The glass is predominantly the more expensive component. In the Geissler bulbs, the glass accounts for the majority of the material cost. Pl.'s Mem. of Law in Supp. of Pl.'s Second Mot. for Summ. J. 13, ECF No. 68–5 ("Pl.'s Mot."); Def.'s Reply at 21; Decl. of Peter Rahm 2, ECF No. 68–2 ("Rahm Decl."). For the Job bulbs, the glass is predominantly more expensive, but the relation of glass value to liquid value varies based the size of the bulb. For the 5mm diameter bulbs, the glass accounts for 80% of the material cost. Decl. of Bodo Muller 4, ECF No. 68–1 ("Muller Decl."). For the 3mm bulbs, the glass accounts for 64% of the material cost. Id. For the 2.5mm bulbs and water-heater bulbs, however, the glass accounts for 30% of the material cost. Id.

Tyco has filed another motion for summary judgment, arguing once again that the filled bulbs are properly classified in Chapter 84. Pl.'s Mot. at 2. Tyco provides two reasons as to why Note 1(c) does not exclude the bulbs from classification under Chapter 84. Id. at 11–12. First, Tyco argues that the proportion of liquid in the bulbs is too high for the bulbs to be considered articles of glass. Id. Second, Tyco argues that the glass in the bulbs is static because "it [the glass] just sits there" and the liquid is dynamic such that its function means that the bulbs have lost their character as glass. Id. at 12–13. Tyco also argues that the court should hold that the bulbs do not have the essential character of glass because the liquid, if not more important, is at least as important to the function of the bulbs as the glass is. Id. at 17. Tyco finally argues that the court already determined that the three bulb models used in water-heaters are solely and principally used in water-heaters and that the court should now determine that the remaining thirty-nine models are solely and principally used in fire sprinkler systems. Id. at 4–9.

In response to Tyco's motion, the government argues that Customs' classification of Tyco's bulbs under Heading 7020 was correct and that Note 1(c) prevents the bulbs from being classified under Chapter 84. Def.'s Mem. in Supp. of Its Cross–Mot. for Summ. J. and in Opp'n to Pl.'s Mot. for Summ. J. 11, 13, ECF No. 75 ("Def.'s Mot."). Specifically, the government argues that the presence of liquid in the bulb does not stop the bulb from being "of glass" and that the bulbs derive their essential character from their glass component. Def.'s Mot. at 14–15, 18; Def.'s Reply at 13–22. Alternatively, and despite the law of the case which has decided the principal use of the water-heater bulbs, the government argues that Tyco has not adequately established the principal use of the bulbs as parts of either water-heaters or fire sprinkler systems. Def.'s Mot. at 26–30; Def.'s Reply at 26–27.

Because the filled bulbs are excluded from Chapter 84 by Note 1(c), have the essential character of glass, and are not more specifically described elsewhere in the HTSUS, the court will grant the government's cross-motion for summary judgment, deny Tyco's motion, and holds that the bulbs are properly classified in Heading 7020.

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction pursuant to 28 U.S.C. § 1581(a) (2012). Summary judgment is appropriate when the parties' submissions "show[ ] that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." USCIT R. 56(a). Where tariff classification is at issue, "summary judgment is appropriate...