Bausch & Lomb, Inc. v. U.S.

• Decision Date: 05 February 1997
• Docket Number: Slip Op. 97-16.,Court No. 93-01-00028.
• Citation: 957 F.Supp. 281
• Parties: BAUSCH & LOMB, INC., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

957 F.Supp. 281

BAUSCH & LOMB, INC., Plaintiff, v. UNITED STATES, Defendant.

Slip Op. 97-16.

Court No. 93-01-00028.

United States Court of International Trade.

February 5, 1997.

McKenna & Cuneo (Michael K. Tomenga), Washington, DC, for Plaintiff.

Frank W. Hunger, Assistant Attorney General, Washington, DC; Joseph I. Liebman, Attorney in Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, United States Department of Justice (Barbara Silver Williams), New York City, for Defendant.

OPINION

MUSGRAVE, Judge.

Plaintiff Bausch & Lomb, Inc. ("B & L") brings this action to contest the tariff classification by the United States Customs Service ("Customs") of electric toothbrushes and toothbrush heads imported by B & L. Defendant Customs liquidated the entries as "Other appliances" under Subheading 8509.80.00 of the Harmonized Tariff Schedule of the United States ("HTSUS") and B & L filed a timely protest which Customs denied. B & L claims that its entries of electric toothbrushes are properly classified as "Toothbrushes" under Subheading 9603.21.00 of the HTSUS. Both parties have stipulated to the material facts and have filed motions for summary judgment pursuant to CIT R. 56. The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1581(a) and holds that Customs correctly classified the electric toothbrushes under Subheading 8509.80.00 of the HTSUS.

Background and Standard of Review

The merchandise is a battery-operated electric toothbrush sold under the trademark "Interplak." B & L imported eight different models of the Interplak under the entries in this case. The Interplak usually consists of three basic elements: (1) one to four interchangeable plastic toothbrush heads; (2) a detachable plastic handle containing a battery-operated motor and a compartment for two rechargeable batteries; and (3) a stand that incorporates a battery recharger. B & L imported the toothbrushes from Hong Kong through the port of Atlanta between January 8, 1991, and August 12, 1992. B & L currently imports the Interplak under the newly created Subheading 8509.80.0045 for electric toothbrushes. The current imports are identical in all material respects to the merchandise at issue. Both parties have moved for summary judgment. Summary judgment is proper when "there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law." CIT R. 56. Since the parties have stipulated to all of the material facts, the Court has the power to render summary judgment.

Before launching into a discussion of the issues at hand, the Court finds it appropriate to review the historical characterization of classification decisions and suggest an avenue for conceptual reform. A long line of decisions from the United States Court of Appeals for the Federal Circuit ("CAFC") has characterized classification determinations as a "two-step" process with a legal and a factual component.¹ This characterization raises a logical and practical dilemma for deciding classification cases on summary judgment: the determination of whether the merchandise fits within the tariff provision is characterized as a factual issue; however, whether the merchandise fits within the tariff provision is equivalent to the ultimate issue in a classification case. Put another way, what party seeking summary judgment would stipulate to its adversary's "factual" determination that the merchandise fits within a particular tariff provision? To do so would be to stipulate oneself out of court. Strictly embracing the characterization would entail that the parties would never stipulate to a crucial material fact and the Court would be logically prevented from rendering summary judgment.

The "two-step" process originated from a classification case involving "prosthetic socks", where the court ruled that:

The first question we must address is whether the merchandise is a prosthesis, and our immediate task is to determine the meaning of prosthesis. This is a question of law.

Daw Industries, Inc. v. United States, 1 Fed. Cir. (T) 146, 147, 714 F.2d 1140, 1141 (1983). Once the court determined the correct meaning of "prosthesis", the second step involved examining whether the prosthetic sock fit into the proper definition. As the court ruled:

Whether particular items fit the definition of prosthesis adopted above is a question of fact. Therefore, the trial court's finding that the sheaths and socks are not prostheses will be reversed on appeal only if that finding is clearly erroneous.

Id. at 148, 714 F.2d at 1142. The court in Daw Industries portrayed the factual issue arising in every classification case as whether the merchandise "fits" within the proper meaning of the tariff provision. Subsequent CAFC decisions have followed the "two-step" process outlined in Daw Industries and have embraced its characterization of the factual analysis in a classification case as a determination that involves the fitting of an item into the tariff schedule.²

However, the process of "fitting" subject merchandise within a tariff term entails more than simply a factual determination: it is equivalent to resolving the ultimate issue in a classification case. The purely factual component of a classification case consists of determining what the item is and how it functions. If the "factual" analysis described in Daw Industries and its progeny is strictly applied, the parties will never stipulate to a crucial material fact because fitting the merchandise into the proper definition of the tariff term is at the heart of every classification case. If what functions as the ultimate issue in a classification case is characterized as a question of fact, then summary judgment could not be rendered because an issue of material fact remains in dispute.

Strictly applying the depiction of the "factual analysis" from Daw Industries would produce another unwanted result: classification determinations would be reviewable only under a "clearly erroneous" standard. Moreover, Customs' determinations of "whether particular items fit the definition of the tariff provision in question" would be presumed to be correct under 28 U.S.C. § 2639(a)(1)³ because the determinations are putatively factual inquiries. Goodman Mfg. v. United States, 13 Fed. Cir. (T) ___, ___, 69 F.3d 505, 508 (1995) (the statutory presumption of correctness attaches only to an agency's factual determinations) The Court would thereby be prevented from finding the correct result in a classification case. Such a result would be at odds both with the Court's established duty to find the correct result⁴ and with the Court's nondeferential review of classification cases.⁵

Of course, in Daw Industries the CAFC did not rule that Customs' ultimate classification determinations were presumed to be correct and subject to the "clearly erroneous" standard. The court implicitly fashioned a third step in asserting that its "final task is to determine whether the original classification of the merchandise as wearing apparel was correct." Id. at 149, 714 F.2d at 1143. Subsequent cases have ruled that 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."⁶ The Court can discern no logical or functional difference between determining whether merchandise fits within a tariff provision and determining the "ultimate" issue of whether the merchandise was classified under the appropriate subheading. One circumstance is eminently clear: if the question of whether the fit between merchandise and a tariff provision is a question of fact, it is surely a material fact to which the parties will not stipulate. It is due to this problematic situation that the Court now embarks on a proposal for conceptual reform.

The conceptual dilemma created by Daw Industries may be cured by revising the characterization of the issues. The purely factual inquiry in every classification case involves determining what the subject merchandise is and what it does. The purely legal question involves determining the meaning and scope of the tariff provisions. The ultimate mixed question becomes whether the merchandise has been classified under an appropriate tariff provision, or equivalently, whether the merchandise fits within the tariff provision. This ultimate issue involves both a legal and factual component: indeed the ultimate issue is an inseparable hybrid of the discrete factual and legal inquiries and is therefore a mixed question of law and fact reviewable de novo.

Although this Circuit has not previously characterized the ultimate classification issue as a mixed question of law and fact, the parallels between the ultimate classification issue and mixed questions decided by the CAFC, the Supreme Court, and federal appellate courts are compelling. In Campbell v. Merit Systems Protection Bd., 14 Fed. Cir. (T) ___, 27 F.3d 1560 (1994), the CAFC reviewed an agency determination that an individual was not an "independent candidate" for purposes of a regulatory exception to the Hatch Political Activities Act. The CAFC explained that "this case reveals the falseness of the fact-law dichotomy, since the determination at issue, involving as it does the application of a general legal standard to particular facts, is probably most realistically described as neither of fact nor law, but mixed." Id. at ___, 27 F.3d at 1565. Whether particular merchandise fits within the ordinary meaning of a tariff subheading is likewise a mixed question.

In analyzing the issue of discriminatory intent, the Supreme Court labeled it a mixed question of law and fact and defined mixed questions of law and fact as

questions in which the historical facts are admitted or established, the rule of law is [resolved], and the issue is whether the facts satisfy the statutory standard, or to put it another way, whether the...