Estee Lauder, Inc. v. United States

• Decision Date: 03 January 2012
• Docket Number: Slip Op. 12–1.Court No. 07–00217.
• Citation: 34 ITRD 1026,815 F.Supp.2d 1287
• Parties: ESTEE LAUDER, INC., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

34 ITRD 1026

815 F.Supp.2d 1287

ESTEE LAUDER, INC., Plaintiff,

v.UNITED STATES, Defendant.

Slip Op. 12–1.Court No. 07–00217.

United States Court of International Trade.

Jan. 3, 2012.

Pisani & Roll, LLP (Michael E. Roll, Robert J. Pisani, Washington, DC, and Brett Ian Harris), for the plaintiff.

Tony West, Assistant Attorney General; Barbara S. Williams, Attorney–In–Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Marcella Powell), Office of the Assistant Chief Counsel, International Trade Litigation, U.S. Customs and Border Protection (Yelena Slepak), of counsel, for the defendant.

OPINION

MUSGRAVE, Senior Judge:

Plaintiff Estée Lauder, Inc. challenges U.S. Customs and Border Protection's (“Customs”) classification of its “Blockbuster” cosmetic sets. Proper administrative protest procedure having been undertaken and all liquidated duties, taxes and fees having been paid, see 19 U.S.C. §§ 1514, 1515, jurisdiction is proper pursuant to 28 U.S.C. § 1581(a).

I. Facts

Plaintiff Estée Lauder is “well known for being a makeup, skin care and fragrance company”.¹ Estée Lauder chose the makeup colors in the set at issue herein so as to have an appealing assortment of makeup shades that work well together and to allow a consumer to create different makeup looks. Pl's Material Facts ¶¶ 23–4. The target customer of the “Blockbuster” cosmetic set is the Estée Lauder customer who uses makeup. Id. ¶ 16. The sets contain makeup that is designed to be put on by the consumer. Id. ¶ 22.

The Blockbuster sets are imported and sold in a glossy metallic gold-colored carton dotted with snowflakes. The sets contain lipstick, lip pencil, lip gloss, eye pencil, mascara, eye shadow, nail lacquer, blush, a cosmetic case ², a makeup brush case, cosmetic brushes and an applicator. The cosmetic case contains the items listed above except the brushes, which are packed separately in the makeup brush case. Both cases are packed in the gold carton. The cosmetics are either promotional sizes or are contained in promotional packaging. Defendant's Statement of Undisputed Material Facts (“Def's Material Facts”), ¶ 38.

The cosmetic case contains a “vacform” plastic insert into which the makeup products are fitted to protect the goods during shipment, as well as to allow the items to be self-displayed at retail. Pl's Material Facts ¶ 42. The cosmetic case is significantly larger than the cosmetics contained therein, and conceivably could carry anything that is smaller than the case itself. Def's Material Facts ¶¶ 8, 40. The cosmetic case is suited for use on a flat surface, such as a table, vanity, etc. Pl's Material Facts ¶ 54. The case is constructed without gussets and thus is unsuited to be opened like a handbag. Id. ¶ 56. The cosmetic case is not a piece of luggage. Def's Material Facts ¶ 39. The case facilitates the storage and use of the cosmetics stored within the case.³ The makeup brush case contains three brushes, and is designed to be placed in the cosmetic case after purchase. Pl's Material Facts ¶ 50. The makeup brush case is approximately the same size as the brushes contained therein. Id. ¶ 64.

The sets were sold as part of the Estée Lauder Blockbuster promotional effort. The sets were displayed in the cosmetic section of department stores. Id. ¶ 45. The sets were sold as a “purchase with purchase” promotion, meaning that the consumer must purchase an Estée Lauder full-price fragrance in order to qualify to purchase the Blockbuster set. Id. ¶¶ 10–11. The items' packaging all complement each other visually as part of the Estée Lauder “Pure Color” line of products. For example, there are gold accents on each of the items. Id. ¶¶ 28–32. None of the items comprising the set were sold separately. Id. ¶ 8. The set was advertised as the “Makeup Artist Professional Color Collection.” Id. ¶ 14, Def's Exh. F (Estée Lauder Advertisement). The cost of the makeup components that comprise the set is more than 50% of the material cost of the set. Pl's Material Facts ¶ 68.

II. Applicable Legal Standards

Proper tariff classification is determined by the General Rules of Interpretation (“GRIs”) of the Harmonized Tariff System of the U.S. (“HTSUS”) and the Additional U.S. Rules of Interpretation. Orlando Food Corp. v. United States, 140 F.3d 1437, 1439 (Fed.Cir.1998). The GRIs are applied in numerical order. BASF Corp. v. United States, 482 F.3d 1324, 1326 (Fed.Cir.2007). Classification is a question of law requiring ascertainment of proper meaning in relevant tariff provisions and determining whether the merchandise comes within the description of such terms. Pillowtex Corp. v. United States, 171 F.3d 1370, 1373 (Fed.Cir.1999). Interpretation of the HTSUS begins with the language of the tariff headings and subheadings of the HTSUS and their section and chapter notes, and may also be aided by the Explanatory Notes published by the World Customs Organization. Trumpf Med. Sys., Inc. v. United States, 34 CIT ––––, ––––, 753 F.Supp.2d 1297, 1305–1306 n. 20 (2010).

Both parties move for judgment pursuant to USCIT Rule 56, which is appropriate “if the pleadings, depositions, answers to interrogatories, and 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 judgment as a matter of law.” USCIT R. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The court will grant a motion for summary judgment “if the pleadings, discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” USCIT R. 56(c); see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

At the summary judgment stage, facts must be viewed in the light most favorable to the nonmoving party only if there is a “genuine” dispute as to those facts. Fed. Rule Civ. Proc. 56(c). As we have emphasized, “[w]hen the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts.... Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no ‘genuine issue for trial.’ ” Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586–587 [106 S.Ct. 1348, 89 L.Ed.2d 538] (1986) (footnote omitted).

Scott v. Harris, 550 U.S. 372, 380, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007).

Customs' presumption of correctness, 28 U.S.C. § 2639(a)(1), attaches only to Customs' factual determinations. Universal Elecs. Inc. v. United States, 112 F.3d 488, 492 (Fed.Cir.1997). The proper scope and meaning of a tariff classification term is a question of law, while whether the subject merchandise falls within a particular tariff term as properly construed is a question of fact. Franklin v. United States, 289 F.3d 753, 757 (Fed.Cir.2002) (citations omitted). However, where the nature of the merchandise is undisputed, “ ‘the classification issue collapses entirely into a question of law,’ and the court reviews Customs' classification decision de novo.” Dell Prods. LP v. United States, 34 CIT ––––, 714 F.Supp.2d 1252, 1256 (CIT 2010), aff'd 642 F.3d 1055 (Fed.Cir.2011) (quoting Cummins Inc. v. United States, 454 F.3d 1361, 1363 (Fed.Cir.2006)). Customs' statutory presumption of correctness is irrelevant with regard to classification decisions on summary judgment. Blakley Corp. v. United States, 22 CIT 635, 639, 15 F.Supp.2d 865, 869 (1998).

III. Competing Tariff Provisions

As entered, the items were classified separately under several subheadings.⁴ Plaintiff contends the cosmetics should be classified as sets, under subheading 3304.20, HTSUS because the eye makeup gives the cosmetic set its essential character. The government contends that the goods should remain classified separately, or if the goods are classifiable as a set, the cosmetic case gives them their essential character and so the sets should be classified under subheading 4202.12.20, HTSUS.

The primary subheadings at issue are as follows:

3304: Beauty or make-up preparations and preparations for the care of the skin (other than medicaments), including sunscreen or sun tan preparations; manicure or pedicure preparations:

+---------------------------------------------------------+
                ¦3304.10:  ¦Lip make-up preparations                ¦Free ¦
                +----------+----------------------------------------+-----¦
                ¦3304.20:  ¦Eye make-up preparations                ¦Free ¦
                +----------+----------------------------------------+-----¦
                ¦3304.30:  ¦Manicure or pedicure preparations       ¦Free ¦
                +----------+----------------------------------------+-----¦
                ¦3304.91:  ¦Other                                   ¦     ¦
                +----------+----------------------------------------+-----¦
                ¦3304.91.00¦Powders, whether or not compressed      ¦Free ¦
                +---------------------------------------------------------+
                

4202: Trunks, suitcases, vanity cases, attache cases, briefcases, school satchels, spectacle cases, binocular cases, camera cases, musical instrument cases, gun cases, holsters and similar containers; traveling bags, insulated food or beverage bags, toiletry bags, knapsacks and backpacks, handbags, shopping bags, wallets, purses, map cases, cigarette cases, tobacco pouches, tool bags, sports bags, bottle cases, jewelry boxes, powder cases, cutlery cases and similar containers, of leather or of composition leather, of sheeting of plastics, of textile materials, of vulcanized fiber or of paperboard, or wholly or mainly covered with such materials or with paper:

Trunks, suitcases, vanity cases, attache cases, briefcases, school satchels and similar containers:

* * *

4201.12: With outer surface of plastics or of textile materials:

4202.12.20: With outer...