Brother Intern. Corp. v. U.S.

• Decision Date: 10 June 2004
• Docket Number: Slip Op. 04-67.,Court No. 00-01-00006.
• Citation: 342 F.Supp.2d 1295
• Parties: BROTHER INTERNATIONAL CORP., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

Page 1295

342 F.Supp.2d 1295

BROTHER INTERNATIONAL CORP., Plaintiff, v. UNITED STATES, Defendant.

Slip Op. 04-67.

Court No. 00-01-00006.

United States Court of International Trade.

June 10, 2004.

Barnes, Richardson & Colburn (Sandra Liss Friedman, Jennifer L. Morgan, Helena D. Sullivan), New York City, for Plaintiff.

Peter D. Keisler, Assistant Attorney General; Barbara S. Williams, Attorney-in-Charge, International Trade Field Office; Bruce N. Stratvert, Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice; Yelena Slepak, Office of Assistant Chief Counsel, International Trade Litigation, United States Customs and Border Protection, for Defendant, of counsel.

OPINION

CARMAN, Judge.

Plaintiff Brother International Corporation ("Plaintiff") moves for summary judgment. Plaintiff challenges the United States Customs Service's, now organized as the Bureau of Customs and Border Protection ("Customs"), denial of its protest asking Customs to reliquidate thirty-eight entries of merchandise consisting of Multi-Function Centers ("MFCs") which were misclassified due to a mistake of fact, as provided by 19 U.S.C. § 1520(c)(1) (2000). Defendant cross-moves for summary judgment, asserting that Plaintiff's misclassification of the merchandise was not a mistake of fact; rather, it was a mistake of law, which cannot be remedied under § 1520(c)(1). This Court has jurisdiction to review this matter under 28 U.S.C. § 1581(a) (2000). The Court denies Plaintiff's motion for summary judgment and denies Defendant's cross-motion for summary judgment for the reasons articulated below.

BACKGROUND

The merchandise at issue is MFCs with model numbers: MFC-4550, MFC-4550DS, MFC-6550MC, and MFC-7550MC. (Pl.'s Statement of Material Facts Not in Dispute Pursuant to R. 56(h) ("Pl.'s Statement") ¶ 4; Def.'s Resp. to Pl.'s Statement of Undisputed Facts ("Def.'s Resp.") ¶ 4.) Models MFC-4550 and MFC-4550DS are known as "five-in-one" MFCs, and consist of a laser printer, copier, facsimile machine, PC fax, and a scanner. (Pl.'s Statement ¶ 5; Def.'s Resp. ¶ 5.) Models MFC-6550MC and MFC-7550MC, referred to as "six-in-one" MFCs, consist of a laser printer, copier, facsimile machine, PC fax, a scanner, and an answering machine. (Pl.'s Statement ¶ 6; Def.'s Resp. ¶ 6.) All models at issue "employ a printing mechanism that uses laser technology." (Pl.'s Statement ¶ 8; Def.'s Resp. ¶ 8.) For convenience, the Court will refer to all models of the subject merchandise as MFCs. The MFCs were entered between June 24, 1996, and February 5, 1997, and liquidated between October 11, 1996, and May 23, 1997. Customs Ruling Letter HQ 228629 (Sept. 17, 2002) (Def.'s Ex. 6); (Def.'s Mem. in Supp. of Its Mot. for Summ. J. and in Opp'n to Pl.'s Mot. for Summ. J. ("Def.'s Mem.") at 3.)

Prior to importation, Mitchell von Poederoyen, a national account manager for Plaintiff's customs broker, FedEx Trade Networks,¹ classified the MFCs under subheading 9009.12.0000 of the Harmonized Tariff Schedule of the United States ("HTSUS"). (Pl.'s Statement ¶¶ 19, 35-37; Def.'s Resp. ¶¶ 19, 35-37.) Accordingly, Customs liquidated the entries at 3.7% ad valorem.² Customs Ruling Letter HQ 228696 (Def.'s Ex. 6).

In July 1997, Plaintiff requested a tariff classification ruling for the MFC-4550, one of the MFC models at issue in this case. Customs Ruling Letter N.Y. B87982 (Aug. 4, 1997) (Def.'s Ex. 4). In August 1997, Customs issued a ruling letter responding to Plaintiff's request. Id. In that letter, Customs described the MFC-4550 as "a multi-function machine in one common housing that can perform[] printing, copying, scanning, fax and PC fax functions," and found that "the printing function ... dictates the principal function of [the] machine." Id. Based upon this finding, Customs concluded that the MFC-4550 should be classified under subheading 8471.60.6200,³ HTSUS, "which provides for other laser printer units," and is a duty free provision. Id.

In April 1999, Brother filed protests requesting reliquidation of the entries at issue in this case. See Summons at 1, Brother Int'l v. United States, No. 00-01-00006 (CIT 2000) (challenging Protest No. 2701-99-100963 (Apr. 13, 1999)); Summons at 1, Brother Int'l v. United States, No. 03-00026 (Ct. Int'l Trade filed Jan. 21, 2003) (challenging Protest No. 2704-99-100964 (Apr. 13, 1999)).⁴ Customs denied both protest. See Customs Ruling Letter HQ 228696 at 5 (Def.'s Ex. 6); Summons at 1, Brother Int'l, No. 00-01-00006. Plaintiff requested further review of Protest Number 2704-99-100964 and again requested reliquidation of the entries alleging a mistake of fact pursuant to 19 U.S.C. § 1520(c)(1). Customs Ruling Letter HQ 228696 at 1 (Def.'s Ex. 6). Customs denied the protest, finding that any misclassification was due to a mistake of law. Id. at 8, 10-11. Plaintiff timely filed its summons in this Court to challenge both Customs' decisions. (Pl.'s Statement ¶ 3; Def.'s Resp. ¶ 3.)

STANDARD OF REVIEW

Summary judgment will be granted when "the pleadings, depositions, answers to interrogatories, and the admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." USCIT R. 56(c); see also, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "[T]he inferences to be drawn from the underlying facts contained in such materials must be viewed in the light most favorable to the party opposing the motion." United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962) (per curiam); see also Avia Group Int'l v. L.A. Gear Cal., Inc., 853 F.2d 1557, 1560 (Fed.Cir.1988). The party moving for summary judgment "bears the burden of demonstrating the absence of all genuine issues of material fact." Avia Group Int'l, 853 F.2d at 1561; Black and White Vegetable Co. v. United States, 125 F.Supp.2d 531, 536 (CIT 2000) (citations omitted).

PARTIES' CONTENTIONS

I. Plaintiff's Contentions

Plaintiff alleges that Customs' refusal to reliquidate the entries of MFCs to correct the result of a mistake of fact as permitted pursuant to 19 U.S.C. § 1520(c)(1) is "in error and without legal justification." (Pl.'s Mem. of Law in Support of Mot. for Summ. J. ("Pl.'s Mem.") at 7.) Plaintiff identifies four requirements that an importer must satisfy in order to be entitled to reliquidation of an entry made in error due to a mistake of fact: (1) "there must be a mistake of fact;" (2) the mistake "must not amount to an error in the construction of the law;" (3) the mistake is adverse to the importer; and (4) the mistake is established by documentary evidence. (Id. at 9 (citing 19 U.S.C. § 1520(c)(1); 19 C.F.R. § 173.4 (Customs regulation implementing § 1520(c)(1))).) Plaintiff advances the following arguments to demonstrate its compliance with the statutory requirements.

First, Plaintiff contends that the circumstances surrounding the classification of the MFCs amount to "the kind of misapprehension" that courts have identified as a mistake of fact. Id. at 11 (citing Degussa Canada Ltd. v. United States, 87 F.3d 1301, 1304 (Fed.Cir.1996); C.J. Tower & Sons v. United States, 68 Cust.Ct. 17, 336 F.Supp. 1395, 1399 (Cust.Ct.1972), aff'd, 61 C.C.P.A. 90, 499 F.2d 1277 (Cust. & Pat.App.1974).) Plaintiff argues that a mistake of fact occurred because of its customs broker's employee's "lack of knowledge regarding the exact physical properties of MFCs" and his "unaware[ness] of the history of the development of the MFCs," specifically that the MFC evolved from a printer and that additional functions were added to the existing printing function. (Id. at 7-8, 11-12) (citing von Poederoyen Aff. of June 20, 2003, ¶¶ 6-8, 11 (Pl.'s Ex. 1); Hatano Aff. of Aug. 1, 2003, ¶ 4 (Pl.'s Ex. 2); Cummins Aff. of July 7, 2003, ¶¶ 7-9, 12 (Pl.'s Ex. 3).) Plaintiff adds that Mr. von Poederoyen's belief that all of the functions of the MFCs were of equal importance is "a fact that [he] thought existed ... [but] in reality did not exist." (Id. at 12) (citing von Poederoyen Aff. of June 20, 2003, ¶¶ 6, 8 (Pl.'s Ex. 1); Hatano Aff. of Aug. 1, 2003, ¶ 4 (Pl.'s Ex. 2).) Plaintiff explains that this lack of knowledge formed Mr. von Poederoyen's belief that all of the functions of the MFCs — printing, copying, and faxing — were of equal importance and that the MFCs had no primary function or essential character. (Pl.'s Mem. at 4, 7; von Poederoyen Aff. of June 20, 2003, ¶ 8 (Pl.'s Ex. 1).) Plaintiff asserts that Mr. von Poederoyen did not personally examine the MFCs prior to classification. (Id. at 4.) Plaintiff attributes Mr. von Poederoyen's erroneous belief on his reliance on conversations with Tomohisa Hatano, Plaintiff's import manager at the time, and on the "line art consisting of a draft of product literature supplied by Brother." (Id. at 4 (citing von Poederoyen Aff. of June 20, 2003, ¶¶ 5-7 (Pl.'s Ex. 1); Hanato Aff. ¶ 3 (Pl.'s Ex. 2)).) It was Mr. von Poederoyen's erroneous belief, Plaintiff argues, that led him to use General Rule of Interpretation ("GRI") 3(c), which resulted in the misclassification of the MFCs under subheading 9009.12.0000, HTSUS, "the heading that occurs last in numerical order among the potential suitable provisions." (Pl.'s Mem. at 4-5, 7; von Poederoyen Aff. of June 20, 2003, ¶¶ 8-9 (Pl.'s Ex. 1).)

Second, Plaintiff contends that there is no error in the construction of law. (Id. at 17 (citing Hambro Auto. Corp. v. United States, 66 C.C.P.A. 113, 603 F.2d 850, 855 (1979) (in turn quoting 58 C.J.S. Mistake § 832)).) Plaintiff asserts that the error made by its customs broker was an "ignorant mistake" and not a "decisional mistake." (Id. at 15-16.) Plaintiff contends that a decisional mistake occurs when "a party make[s] the wrong choice between two known, alternative set of facts," and acknowledges that such a mistake cannot be...