Energizer Battery, Inc. v. United States, Slip Op. 16–116

• Decision Date: 07 December 2016
• Docket Number: Slip Op. 16–116,Court No. 13–00215
• Citation: 190 F.Supp.3d 1308
• Parties: Energizer Battery, Inc., Plaintiff, v. United States, Defendant.
• Court: U.S. Court of International Trade

190 F.Supp.3d 1308

Energizer Battery, Inc., Plaintiff,

v.United States, Defendant.

Slip Op. 16–116

Court No. 13–00215

United States Court of International Trade.

December 7, 2016

M. Jason Cunningham , Sonnenberg & Cunningham, Ltd., of Naples, FL for Plaintiff. Of counsel on the brief was Steven P. Sonnenberg, Sonnenberg & Cunningham, Ltd., of Chicago, IL.

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

OPINION

Barnett, Judge:

Plaintiff, Energizer Battery, Inc. ("Energizer"), challenges the final determination issued by U.S. Customs and Border Protection ("CBP" or "Customs") on April 29, 2013 ("Final Determination") concerning the country of origin of a second generation military flashlight produced by Energizer ("Generation II flashlight") for purposes of government procurement under the Trade Agreements Act of 1979 ("1979 Act"). HQ H215657 (April 29, 2013), available at2013 WL 2297571 ; see also Notice of Issuance of Final Determination Concerning Generation II Military Flashlights , 78 Fed. Reg. 26,058 (Customs and Border Protection, May 3, 2013) ("Final Det."). Plaintiff and Defendant, United States, both filed motions for summary judgment and the motions are fully briefed. Pl.'s Mot. for Summ. J., ECF No. 40 ("Pl.'s MSJ"); Def.'s Mot. for Summ. J. and Def.'s Mem. in Supp. of its Mot. for Summ. J., ECF No. 38 ("Def.'s MSJ"). The court has jurisdiction pursuant to 28 U.S.C. § 1581(e).¹ For the reasons set forth below, the court grants Defendant's motion for summary judgment and denies Plaintiff's motion for summary judgment.

Background

Energizer submitted a request for a final determination of country of origin of its Generation II flashlight and replacement lens head subassembly to CBP on March 28, 2012. Pl. Energizer Battery, Inc.'s Rule 56.3 Statement of Undisputed Material Facts with Pl.'s Mot for Summ. J., Ex. 1 ("Energizer Ruling Req."), ECF No. 41–1. CBP issued its Final Determination, HQ H215657, on April 29, 2013. See Final Det. at 78 Fed. Reg. 26,058. The notice of Final Determination was published in the Federal Register on May 3, 2013. 78 Fed. Reg. 26,058.

In its Final Determination, CBP found:

virtually all of the components of the military Generation II flashlight, including the most important component, the LED, are of Chinese origin. All of the components arrive in the United States ready for assembly into the Generation II flashlight. Only the assembly process is done in the United States ... [M]ost of this work consists of rather simple insertions, relatively simple attaching and fastening of the components and parts together.

Final Det., 78 Fed. Reg. at 26,060. As a result, CBP determined:

the imported components of the flashlight and replacement lens head subassembly are not substantially transformed as a result of the described assembly operations and programming operations performed in the United States. The country of origin for government procurement purposes of the Generation II military flashlight is China.

Id. at 26061. Energizer timely filed this action on May 31, 2013. Compl., ECF No. 2.

Material Facts Not in Dispute

The Generation II flashlight is comprised of approximately fifty² different components. Pl.'s SOF ¶ 17; Def's Resp. to Pl.'s SOF ¶ 7.³ It contains five light-emitting diodes ("LEDs") in white, red, green, blue, and infrared. Pl.'s SOF ¶ 10; Def.'s Resp. to Pl.'s SOF ¶ 10. Other than the white LED and the hydrogen getter, all components of the Generation II flashlight are of Chinese origin.⁴ Def.'s SOF ¶ 12; Pl.'s Resp. to Def.'s SOF ¶ 12.

The white LED wafer in the Generation II flashlight is grown and sliced into dies, and then tested and sorted in the United States, in Durham, North Carolina. Pl.'s SOF ¶¶ 32, 38–39; Def.'s Resp. to Pl.'s SOF ¶¶ 32, 38–39. The sorted dies are then sent to China for packaging. Pl.'s SOF ¶ 42; Def.'s Resp. to Pl.'s SOF ¶ 42. During packaging in China, each die is glued to an aluminum pad, a thermally conductive pad with an electrically nonconductive coating. Pl.'s SOF ¶ 44; Def.'s Resp. to Pl.'s SOF ¶ 44. Two small wires are attached to each side of the LED and phosphor is sprayed on the LED die to convert the light it emits from blue to white. Id. At this stage, the LED has "terrible irregular light radiation patterns." Id. The irregular light radiation pattern is corrected by the addition of a TIR (total internal reflection) lens at Energizer's Vermont facility ("Vermont facility"). Pl.'s SOF ¶ 45; Def.'s Resp. to Pl.'s SOF ¶ 45.

All of the components that comprise the Generation II flashlight, other than the electrical wire and red LED, are specifically designed for use in the Generation II flashlight. Def.'s SOF ¶ 13; Pl.'s Resp. to Def.'s SOF ¶ 13. The electrical wires are cut to lengths specific to the Generation II flashlight and the red LED is soldered to the Generation II flashlight printed circuit board prior to importation. Def.'s SOF¶¶ 14, 15; Pl.'s Resp. to Def.'s SOF ¶¶ 14, 15. The lens head subassembly of the Generation II flashlight is also partially assembled in China, prior to importation into the United States. This partial assembly consists of attaching the red, green, blue, and infrared LEDs to the head printed circuit board ("head PCB"), soldering six of the multi-cord wires to the head PCB, and running all eight of the multi-cord wires through one hole of the yoke and one hole of the head with overmold. Def.'s SOF ¶ 16; Pl.'s Resp. to Def.'s SOF ¶ 16.

The final assembly and packaging of the Generation II flashlight occurs at two work stations ("Work Station I" and "Work Station II") at Energizer's facility in Vermont. Def.'s SOF ¶¶ 18, 19; Pl.'s Resp. to Def.'s SOF ¶¶ 18, 19. At Work Station I, a worker completes assembly of the lens head subassembly (imported from China partially assembled). Def.'s SOF ¶ 20; Pl.'s Resp. to Def.'s SOF ¶ 20. At Work Station II, a worker assembles the lens head subassembly with the remaining Generation II flashlight components, tests the final product, and places the finished Generation II flashlight in a box. Def.'s SOF ¶ 21; Pl.'s Resp. to Def.'s SOF ¶ 21.

The assembly, testing and boxing of a Generation II flashlight at the Vermont facility takes approximately seven minutes and ten seconds. Def.'s SOF ¶¶ 22, 23; Pl.'s Resp. to Def.'s SOF ¶¶ 22, 23; see also Pl.'s SOF, Ex. 5 ("Energizer Communications to CBP") at 8, ECF No. 41–5. Energizer submitted a digital video recording (DVD) of its process at both work stations. See Pl.'s Manually Filed Exhibits to its Statement of Undisputed Material Facts ("Pl.'s DVD"), ECF No. 43; Def.'s Manually Filed Exhibits to its Mot. for Summ. J. ("Def.'s DVD"), ECF No. 42. The assembly in the video is at a slower pace than regular operations because it is not performed by fully trained operators under production conditions; rather, it is performed to demonstrate more clearly the steps involved. Pl.'s SOF ¶ 25; Def.'s Resp. to Pl.'s SOF ¶ 25. The assembly process, as shown on the DVD, takes approximately thirteen and a half minutes, including testing, which takes approximately three and a half minutes. See Pl.'s DVD; Def.'s DVD.

The assembly operations performed at the Vermont facility do not require a change in the shape or material composition of any imported component. Def.'s SOF ¶¶ 24–25; Pl.'s Resp. to Def.'s SOF ¶¶ 24–25. At the time of importation, each component used in producing the Generation II flashlight is intended for use in a finished Generation II flashlight. Def.'s SOF ¶ 26; Pl.'s Resp. to Def.'s SOF ¶ 26. As a result of the assembly operations performed at the Vermont facility, each of the imported components become part of a finished Generation II flashlight. Def.'s SOF ¶ 27; Pl.'s Resp. to Def.'s SOF ¶ 27.

The finished cost of a Generation II flashlight is $23.55,⁵ including parts and U.S. production costs, 45 percent of which is attributed to U.S. production costs. Pl.'s SOF ¶ 54; Def.'s Resp. to Pl.'s SOF ¶ 54.⁶ The total landed value of the imported components used in the production of the Generation II flashlight, including parts, duties, transportation and all costs is $12.96. Pl.'s SOF ¶ 52; Def.'s Resp. to Pl.'s SOF ¶ 52.

Standard of Review

The court will grant summary judgment only if "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law" based on the materials in the record. Fed. R. Civ. P. 56(a). The burden of demonstrating the absence of a genuine issue of material fact lies with the moving party. See Celotex Corp. v. Catrett , 477 U.S. 317, 322–23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The court must view the evidence in the light most favorable to the non-movant and may not weigh the evidence, assess the credibility of witnesses, or resolve issues of fact. See Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 249, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

When parties have filed cross-motions for summary judgment, the court must evaluate each party's motion on its own merits, drawing all reasonable inferences against the party whose motion is under consideration. Mingus Constructors, Inc. v. United States , 812 F.2d 1387, 1391 (Fed.Cir. 1987). Here, the material facts are undisputed. The only issue before the court is the legal issue of whether those undisputed facts support a finding of substantial transformation of the imported components. Accordingly, a grant of summary judgment for either side, based on the pleading and supporting documents, is appropriate.

This case is brought pursuant to 28 U.S.C. § 1581(e), which gives the court jurisdiction to review "any final determination...