Container Store v. United States
| Decision Date | 21 January 2016 |
| Docket Number | Court No. 09–00327,Slip Op. 16–6 |
| Parties | The Container Store, Plaintiff, v. United States, Defendant. |
| Court | U.S. Court of International Trade |
Robert B. Silverman and Robert F. Seely, Grunfeld Desiderio Lebowitz Silverman & Klestadt, LLP of New York, NY, argued for plaintiff. With them on the brief was Alan R. Klestadt.
Marcella Powell, Trial Attorney, International Trade Field Office, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of New York, NY, argued for defendant. With her on the brief was Benjamin C. Mizer, Principal Deputy Assistant Attorney General, and Amy M. Rubin, Assistant Director. Of counsel on the brief was Paula Smith, Office of Assistant Chief Counsel, International Trade Litigation, U.S. Customs and Border Protection, of New York, NY.
Before the Court are cross-motions for summary judgment. Plaintiff the Container Store (“Plaintiff” or “Container Store”) contests the denial of protests challenging U.S. Customs and Border Protection's (“Customs”) liquidation of the subject imports, elfa® top tracks and hanging standards made of epoxy-bonded steel, under subheading 8302.41.60 of the Harmonized Tariff Schedule of the United States (“HTSUS”), as base metal mountings suitable for buildings. (See generally Pl.'s Mot. for Summ. J. (“Pl.'s MSJ”), ECF No. 36.) The Container Store contends that Customs should have classified the subject imports in subheading 9403.90.80, HTSUS, as parts of furniture. Defendant United States (“Defendant” or “United States”) abandons Customs' original classification of the goods and contends that the proper classification of subject imports falls within subheading 8302.42.30, HTSUS. (Def.'s Mem. of Law in Opp'n to Pl.'s Mot. for Summ. J. and in Supp. of Def.'s Cross–Mot. for Summ. J. (“Def.'s Cross–MSJ”) at 2, ECF No. 41; Def.'s Reply Mem. in Further Supp. of Cross Mot. for Summ. J. (“Def.'s Reply”) at 7, ECF No. 58.)
No genuine issue of material fact exists regarding the physical properties of the subject imports or their function.1 Thus, the sole issue before the Court is the correct classification of the subject merchandise, elfa® top tracks and hanging standards made of steel. For the reasons discussed below, the Court holds that the subject imports are properly classified under subheading 8302.42.30, HTSUS, as base metal mountings, fittings, and similar articles suitable for furniture. Accordingly, the Court denies Plaintiff's motion for summary judgment and grants Defendant's cross-motion for summary judgment.
The subject merchandise is the Container Store's top tracks and hanging standards, two components of its patented elfa® system.2 (Am. Compl. ¶¶ 5, 26, ECF No. 27; Answer to Am. Compl. (“Answer”) ¶¶ 5, 26, ECF No. 28.) Consumers typically purchase and assemble elfa® systems to provide storage for their homes and offices. (Am. Compl. ¶¶ 28, 32; Answer ¶¶ 28, 32.) They can assemble the elfa® system's components in a variety of configurations to create a customized, modular storage unit. (Am. Compl. ¶ 32; Answer ¶ 32.)
There are two articles at issue: top tracks and hanging standards, both of which are elongated rectangular strips of hardware made of epoxy-bonded steel.3 (Def.'s Cross–MSJ, Ex. C, ECF No. 41–2 (“Ex. C Physical Sample”); Am. Compl. ¶ 26; Answer ¶ 26.) A top track has top and bottom edges that are angled at about 45 degrees and a flat back which consumers affix horizontally with anchors or screws to a vertical surface, such as a door or wall. (Am. Compl. ¶ 33; Answer ¶ 33.) The top and bottom edges of the top track protrude and respectively bend downward and upward to form the track's upper and lower lips. (Am. Compl. ¶ 34; Answer ¶ 34.) A hanging standard consists of three sides with an open back and flat front that has rows of evenly spaced slots which allow the consumer to attach accessories or brackets for the accessories. (Ex. C Physical Sample.) A hanging standard is suspended from a top track by means of notches on the top end of the standard that slide into the top track's lower lip. (Am. Compl. ¶ 35; Answer ¶ 35.) Once inserted into the lower lip of the top track, the hanging standard suspends from the top track without additional hardware and remains in place due to the “overhanging design of the upper lip” of the top track. (Am. Compl. ¶¶ 35, 37; Answer ¶¶ 35, 37.) A consumer may then attach additional elfa®> components, such as drawers, baskets, and shelves, to the hanging standards in customized configurations. (Am. Compl. ¶¶ 39–40; Answer ¶¶ 39–40.) By design, consumers may only use top tracks and hanging standards with other elfa® system components. (Am. Compl. ¶¶ 28, 31; Answer ¶¶ 28, 31.) On their own, top tracks and hanging standards do not organize or store anything. (Am. Compl. ¶ 41; Answer ¶ 41.)
This case involves two entries of merchandise,4 consisting of top tracks and hanging standards, which the Container Store imported through the Port of Houston, Texas, in October 2007 and January 2008. Customs originally liquidated the entries at issue under subheading 8302.41.60, HTSUS, a provision for “[b]ase metal mountings, fittings and similar articles, and parts thereof: [s]uitable for buildings: [o]f iron or steel.” (Summons at 2.) In December 2008, the Container Store, the importer of record, timely filed protests challenging the classification of its merchandise and seeking reclassification under subheading 9403.90.80, HTSUS, as parts of furniture. (Summons Schedule; Am. Compl. ¶¶ 2–3; Answer ¶¶ 2–3.) In February 2009, Customs denied the protests and reaffirmed that the top tracks and hanging standards fall under heading 8302, HTSUS.5 (See Summons; see also Def.'s Cross–MSJ at 2.) In response, in August 2009, the Container Store commenced this action.
This case was then placed on the Reserve Calendar, pending the outcome of another case filed in this court by the Container Store involving identical merchandise, Container Store v. United States, 35 C.I.T. ––––, 800 F.Supp.2d 1329 (2011) (hereafter “Container Store I ”). (Def.'s Cross–MSJ at 2 n.4; Pl.'s MSJ at 7.) In Container Store I, the court followed a decision of the Court of Appeals for the Federal Circuit (“Federal Circuit”) regarding the classification of functionally similar merchandise–storeWALL wall panels and locator tabs—however, those products were notably made of plastic. 35 C.I.T. at ––––, 800 F.Supp.2d at 1332–33 (citing storeWALL, LLC v. United States, 644 F.3d 1358 (Fed.Cir.2011). Applying the storeWALL analysis, the Container Store I court held that the Container Store's elfa® top tracks and hanging standards were properly classified under subheading 9403.90.80, HTSUS. (Id. at 1331.) Customs appealed the decision but then abandoned the appeal. (Pl.'s MSJ at 1 (citing Answer ¶ 10).)
On December 10, 2013, the Container Store filed the Complaint in this action (ECF No. 20), and on March 24, 2014, filed an Amended Complaint (ECF No. 27). On March 28, 2014, Defendant filed its answer. (ECF No. 28.) The Container Store moved for summary judgment on October 29, 2014 (ECF No. 36), and the United States responded with a cross-motion for summary judgment on February 9, 2015 (ECF No. 41). Oral argument was held on September 10, 2015. (ECF No. 61.) Subsequent to oral argument, the Container Store moved to supplement, in writing, its answer to Question 1 contained in the Court's letter dated September 4, 2015 (ECF No. 60), and both parties were given the opportunity to file supplemental briefs ( ) ( ). The parties have fully briefed the issues and the Court now rules on the parties' respective motions.
The Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1581(a). It may grant summary judgment when “there is no genuine issue as to any material fact,” and “the moving party is entitled to judgment as a matter of law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ; USCIT R. 56(a).
The court's review of a classification decision involves two steps. First, it must determine the meaning of the relevant tariff provisions, which is a question of law. See Bausch & Lomb, Inc. v. United States, 148 F.3d 1363, 1365 (Fed.Cir.1998) (citation omitted). Second, it must determine whether the merchandise at issue falls within a particular tariff provision as construed, which is a question of fact. Id. (citation omitted). When no factual dispute exists regarding the merchandise, resolution of the classification turns solely on the first step. See id. at 1365–66 ; see also Carl Zeiss, Inc. v. United States, 195 F.3d 1375, 1378 (Fed.Cir.1999).
The court reviews classification cases de novo . See 28 U.S.C. §§ 2640(a), 2643(b). While the court accords deference to Customs classification rulings relative to their “ ‘power to persuade,’ ” United States v. Mead Corp., 533 U.S. 218, 235, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001) (quoting Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 89 L.Ed. 124 (1944) ), it has “an independent responsibility to decide the legal issue of the proper meaning and scope of HTSUS terms,” Warner–Lambert Co. v. United States, 407 F.3d 1207, 1209 (Fed.Cir.2005) (citing Rocknel Fastener, Inc. v. United States, 267 F.3d 1354, 1358 (Fed.Cir.2001) ). It is “the court's duty to find the correct result, by whatever procedure is best suited to the case at hand.” Jarvis Clark Co. v. United States, 733 F.2d 873, 878 (Fed.Cir.1984) (emphasis in original).
Customs liquidated the subject imports under subheading 8302.41.60, HTSUS, as base metal mountings suitable for buildings.6 (See Summons ...
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Container Store v. United States
...as "[b]ase metal mountings, fittings and similar articles suitable for furniture." See Container Store v. United States , 145 F.Supp.3d 1331, 1348–49 (Ct. Int'l Trade 2016) (" Container Store II "). Because we conclude that the subject imports should instead be classified under HTSUS subhea......