Deckers Corp. v. U.S.

• Citation: 532 F.3d 1312
• Decision Date: 02 July 2008
• Docket Number: No. 2008-1011.,2008-1011.
• Parties: DECKERS CORPORATION, Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

532 F.3d 1312

DECKERS CORPORATION, Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee.

No. 2008-1011.

United States Court of Appeals, Federal Circuit.

July 2, 2008.

Patrick D. Gill, Rode & Qualey, of New York, NY, argued for plaintiff-appellant. With him on the brief were Michael S. O'Rourke and William J. Maloney.

Marcella Powell, Trial Attorney, International Trade Field Office, Commercial Litigation Branch, Civil Division, United States Department of Justice, of New York, NY, argued for defendant-appellee. With her on the brief were Jeffrey S. Bucholtz, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Barbara S. Williams, Attorney in Charge. Of counsel on the brief was Michael W. Heydrich, Office of the Assistant Chief Counsel, United States Customs and Border Protection, of New York, NY.

Before SCHALL, Circuit Judge, CLEVENGER, Senior Circuit Judge, and GAJARSA, Circuit Judge.

CLEVENGER, Senior Circuit Judge.

This customs case concerns the proper classification of three styles of Teva® Sport Sandals: "Pretty Rugged Sports Sandal," "Terradactyl Sports Sandal," and the "Aquadactyl Sports Sandals" (collectively, "Teva® Sandals"). Deckers Corporation ("Deckers") appeals the final judgment and decision by the United States Court of International Trade, after a trial on the merits, holding that the merchandise at issue was properly classified under subheading 6404.19.35 of the Harmonized Tariff Schedule of the United States ("HTSUS"). Deckers Corp., Inc. v. United States, No. 02-674, 2007 WL 2489657 (Ct. Int'l Trade Sept. 5, 2007). We affirm.

I

Teva® Sandals are imported footwear used for athletic purposes. The sandals were designed and developed for human outdoor activity often near or in bodies of water, including "adventure racing," beach and trail running, "canyoneering," hiking, jogging, mountain biking, power and sail-boating, sport fishing, swimming, triathlon, and "white water" kayaking and rafting. The sandals have uppers composed of textile materials and soles composed of rubber or plastic. The toe and heel sections of the sandal are open, and the uppers do not enclose the foot and ankle. One style of the Teva® Sandals is depicted in Figure 2 of U.S. Patent No. 4,793,075, as shown below.

NOTE: OPINION CONTAINING TABLE OR OTHER DATA THAT IS NOT VIEWABLE

U.S. Customs and Border Protection ("Customs") classified the merchandise at issue in subheading 6404.19.35, HTSUS, as "Footwear with outer soles of rubber, plastics . . . and uppers of textile materials . . . Other . . . with open toes or open heels . . . Other" at a rate of duty of 37.5% ad valorem. Even though subheading 6404.19.35 describes the Teva® Sandals, Deckers challenged the classification. Deckers asserted that under General Rule of Interpretation 3(a), the Teva® Sandals are more specifically described in subheading 6404.11.80, HTSUS, as "Footwear with outer soles of rubber, plastics, leather or composition leather and uppers of textile materials . . . Footwear with outer soles of rubber or plastics: . . . Sports footwear; tennis shoes, basketball shoes, gym shoes, training shoes and the like . . . Valued over $6.50 but not over $12/pair" at a rate of duty of ninety cent per pair plus twenty percent ad valorem. Deckers argued that Additional Note 2 to Chapter 64 requires all athletic footwear (other than items specifically exempted not affecting the Teva® Sandals) to be classified under subheading 6404.11.80, and that in any event, the Teva® Sandals are like the exemplars "tennis shoes, basketball shoes, gym shoes, training shoes. . . ." Deckers filed a protest on the same basis, which Customs denied. Customs rejected Deckers's Note 2 argument and reasoned that the sandals were not "like" the exemplars named in subheading 6404.11.80 because the exemplars named therein have a "secure and supportive enclosure for the foot," and none of the named exemplars are "open at the toes or the heel."

II

Deckers filed suit in the Court of International Trade, asserting that Customs erred in failing to classify the Teva® Sandals under subheading 6404.11.80. The court first entertained the government's motion for summary judgment, which argued that the Teva® Sandals had been properly classified under subheading 6404.19.35. Deckers reframed the issue on summary judgment as whether "all athletic footwear" is properly classified under subheading 6404.11.80, and whether there are genuine issues of material fact as to whether the Teva® Sandals are "athletic footwear."

The court covered several points in its opinion denying the government's summary judgment motion. First, the court rejected as "tenuous" Deckers's interpretation of Additional Note 2 to the effect that all athletic footwear (with exceptions not relevant to this case) must be classified under subheading 6404.11.80. Second, the court entertained the rule of ejusdem generis, an interpretative tool in customs law that helps in deciding whether merchandise is "like" named exemplar merchandise. In this case, the rule would ask whether the Teva® Sandals are like tennis shoes, basketball shoes, gym shoes, and training shoes. The court noted that in appearance alone, each of the exemplars differs significantly from the Teva® Sandals. The Court of International Trade, however, denied the government's motion for summary judgment, in favor of a trial on the issue of whether the openness of the Teva® Sandals leaves them unsuitable for activities implied by the exemplars of subheading 6404.11.80, namely tennis shoes, basketball shoes, gym shoes or training shoes.

After trial, the court issued its second opinion. The court noted that the evidence at trial regarding the Teva® Sandals "attenuates" Customs's view that the Teva® Sandals are not suitable for uses associated with the exemplars, even though the Teva® Sandals might not be the preferred footwear for those uses. Because the evidence at trial showed that the Teva® Sandals are, for many sports, athletic footwear, Teva renewed its statutory argument, which the court again rejected. Instead, the court reasoned that "sandals" as they have been understood for millennia, are different from "shoes," which subheading 6404.11.80 covers. Citing portions of the record that depict the differences between sandals and the listed exemplars, the court held that the Teva® Sandals, as such, could not be like the exemplars, and therefore were not entitled to classification under subheading 6404.11.80.

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

III

The interpretation of the headings and subheadings of the HTSUS is a question of law, which we review without deference. MetChem, Inc. v. United States, 513 F.3d 1342, 1345 (Fed.Cir.2008). A classification decision involves two underlying steps: (1) determining the proper meaning of the tariff provisions, which is a question of law; and (2) determining which heading the particular merchandise falls within, which is a question of fact. Cummins Inc. v. United States, 454 F.3d 1361, 1363 (Fed.Cir.2006). We review questions of law de novo, including the interpretation of the terms of the HTSUS, whereas factual findings of the Court of International Trade are reviewed for clear error. Home Depot U.S.A., Inc. v. United States, 491 F.3d 1334, 1335 (Fed.Cir.2007). See also Agfa Corp. v. United States, 520 F.3d 1326, 1328 (Fed.Cir.2008) ("The ultimate issue as to whether particular imported merchandise has been classified under an appropriate tariff provision is a question of law which we review de novo."); Marcel Watch Co. v. United States, 11 F.3d 1054, 1056 (Fed.Cir.1993) (same); Lynteq, Inc. v. United States, 976 F.2d 693, 696 (Fed.Cir. 1992) (same).

IV

On appeal, Deckers renews its statutory interpretation argument based on Additional Note 2. It also asserts that the Court of International Trade erred in its application of the rule of ejusdem generis. Finally, Deckers argues that the court's analysis of the Teva® Sandals as not being "shoes" is incorrect. We treat each argument in turn.

A

Deckers argues that Additional U.S. Note 2 has clear language that "defines the term in issue as athletic footwear." Additional Note 2 to Chapter 64, HTSUS, provides that:

For the purposes of this chapter, the term "tennis shoes, basketball shoes, gym shoes, training shoes and the like" covers athletic footwear other than sports footwear (as defined in subheading note 1 above), whether or not principally used for such athletic games or purposes. (Emphasis in original.)

Deckers argues that the trial court erred by disregarding the defining language of the statutory chapter note. The government responds that Note 2 states that the phrase "tennis shoes, basketball shoes, gym shoes, training shoes and the like" in subheading 6404.11.80, HTSUS, was to cover athletic footwear regardless of whether that specific footwear was principally used for "such athletic games or purposes." In the government's view, the Note is designed to explain that "use" is not a factor to be considered in the ejusdem generis analysis.

Deckers's proffered interpretation of Additional Note 2 lacks support. It assumes that the inclusion of the phrase "athletic footwear" in Note 2 is for the purpose of subsuming all athletic footwear within 6404.11.80, HTSUS, regardless of whether such athletic footwear bears any similarity to the exemplars specifically enumerated in the subheading. Such an interpretation reads out any purpose for the enumerated list and the limited explanation of scope that Note 2 provides in stating that "tennis shoes, basketball shoes, gym shoes, training shoes and the like covers athletic footwear" whether or not principally used for "such athletic games or purposes." The more reasonable interpretation of Note 2 is that the placement of the phrase "athletic footwear" was to conveniently group the enumerated list for purposes of explaining that "use" would not itself...