Global Sourcing Group, Inc. v. U.S.

• Decision Date: 23 April 2009
• Docket Number: Slip-Op. 09-33.,Court No. 05-00405.
• Citation: 611 F.Supp.2d 1367
• Parties: GLOBAL SOURCING GROUP, INC., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

611 F.Supp.2d 1367

GLOBAL SOURCING GROUP, INC., Plaintiff, v. UNITED STATES, Defendant.

Slip-Op. 09-33.

Court No. 05-00405.

United States Court of International Trade.

April 23, 2009.

COPYRIGHT MATERIAL OMITTED

Fitch, King and Caffentzis, New York, NY (Peter J. Fitch), for Plaintiff Global Sourcing Group, Inc.

Michael F. Hertz, Deputy Assistant Attorney General, Jeanne E. Davidson, Director Barbara S. Williams, Attorney-in-Charge, (Mikki Cottet), Senior Trial Counsel, International Trade Field Office, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Sheryl A. French, Attorney, Of Counsel, Office of the Assistant Chief Counsel, International Trade Litigation, U.S. Customs and Border Protection, for Defendant United States.

OPINION

BARZILAY, Judge.

Plaintiff Global Sourcing Group, Inc. ("Global") moves for summary judgment, arguing that its imported merchandise, described by both parties as "binders," was not properly classified by U.S. Customs and Border Protection ("Customs"). Defendant United States (the "Government"), contests the court's jurisdiction over two specific binder models, asking the court specifically to (1) dismiss part of the action for lack of subject matter jurisdiction, (2) deny Global's motion for summary judgment, and (3) set the balance of the action for trial. In the alternative, the Government requests that the court deny Global's motion in its entirety. Guided by the Federal Circuit and its reasoning in Avenues in Leather, Inc. v. United States, 423 F.3d 1326, 1333-34 (Fed.Cir.2005), the court grants Plaintiffs Motion for Summary Judgment. The court denies Defendant's Motion for Summary Judgment in part and grants in part, for reasons explained herein.

I. Background

The present action involves nine entries,¹ comprised of nineteen different binder models,² made through the Port of New York (JFK) on or between March 25, 2003 and February 19, 2004. See Summons. Though differing somewhat in size and shape, the binders are made of a rigid paperboard core (i.e., spine, as well as front and back components), one or more layers of foam padding, and an outer covering of either vinyl or textile fabric.³ Pl. Br. 1; Def. Br. 2. Specifically, the binders exhibit the following characteristics: a permanently affixed ring binding mechanism having six or seven rings; pen loops and various slots on the inside of the binders for business cards; and flat, non-expandable pockets on the inside (and in some instances, on the outside) of the binder where some separate sheets of paper may be placed. Pl. Statement of Material Facts ¶ 6; Pl. Br. Tab A, Wise Decl. ¶ 2. Though dedicated to the organization and use of stationery items—six and seven-hole sheets of paper, or paper inserts such as note pads, calendars, diaries, agendas, and address books—the binders are also designed to hold non-paper products like pens, pencils, plastic page finders, business and credit cards, calculators and other small objects. Pl. Statement of Material Facts ¶ 7; Pl. Br. Tab A, Wise Decl. ¶ 3; Def. Resp. to Pl. Statement of Material Facts ¶ 7. At the time of importation, while nine models contained plastic inserts used as dividers, none of the binders included any paper or paper inserts. See Pl. Br. Ex. 2-A to 2-D, 2-F to 2-H, 2-Q & 2-R; Def. Resp. to Pl. Statement of Material Facts ¶ 8.

Following its standard practice, Customs classified and liquidated the binders based on their outer material, with the vinyl-covered binders classified under Heading 3926⁴ (subheadings 3926.10.00 and 3926.90.98, at a duty rate of 5.3% ad valorem) and the textile-covered binders under Heading 6307⁵ (subheading 6307.90.98, at a duty rate of 7% ad valorem) of the Harmonized Tariff Schedule of the United States ("HTSUS").⁶ Compl. ¶¶ 5-6; see Binders Wholly or Mainly Covered with Leather, Sheeting of plastics, etc.; Imported Without Stationery Goods; Headings 4205 and 3926, HQ 967329 (Nov. 15, 2004), Def. Br. Ex. A, Attach. 8 ("HQ 967329"); Classification of Notepad Holders; Planners; Organizers; Diaries; Paper Inserts, HQ 959328 (Apr. 3, 1997), Def. Br. Ex. B ("HQ 959328"). Global argues, in contrast, that the more appropriate classification for the subject merchandise is "binders" under Heading 4820⁷—and more specifically, subheading 4820.30.00— duty-free.⁸ Pl. Br. 3.

II. Subject Matter Jurisdiction and Standard of Review

The court has exclusive jurisdiction over all civil actions commenced under § 515 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1515, to contest protests denied by Customs. See 28 U.S.C. § 1581(a).

Summary judgment is appropriate "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). The court, when determining the proper classification of imported merchandise, applies a two-step analysis whereby it "(1) ascertain[s] the proper meaning of the specific terms in the tariff provision; and [then] (2) determin[es] whether the merchandise at issue comes within the description of such terms as a properly construed." Pillowtex Corp. v. Unites States, 171 F.3d 1370, 1373 (Fed. Cir.1999) (citing Bausch & Lomb, Inc. v. United States, 148 F.3d 1363, 1365 (Fed. Cir.1998)). The first step in the analysis is a question of law and the second is a question of fact, both of which are determined de novo. See Pillowtex Corp., 171 F.3d at 1373; Rollerblade, Inc. v. United States, 282 F.3d 1349, 1351 (Fed.Cir.2002). A classification by Customs is presumed to be correct under 28 U.S.C. § 2639(a)(1) and the court affords deference to the classification in accordance with Skidmore v. Swift & Co. See 323 U.S. 134, 140, 65 S.Ct. 161, 89 L.Ed. 124 (1944) (holding that the weight of a classification determination depends upon "all those factors which give it power to persuade"); Rollerblade, Inc., 282 F.3d at 1352 (citing United States v. Mead Corp., 533 U.S. 218, 218, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001) ("Mead Corp. I"); Mita Copystar Am. v. United States, 21 F.3d 1079, 1082 (Fed.Cir.1994)). Parties challenging decisions by Customs have the burden of proof in overcoming the presumption of correctness. See § 2639(a)(1).

III. Discussion

A. Subject Matter Jurisdiction Over Model Numbers 18687 and 28471

Prior to addressing the propriety of Customs's classification, the court must dispense with a jurisdiction issue. The Government moves, pursuant to USCIT R. 12(b)(1), for dismissal of the part of the action related to the classification of model numbers 18687 and 28471 (Entry Nos. W90-0506822-1 and W90-0508118-2, respectively). Def. Br. 10. Specifically, the Government argues that the court lacks subject matter jurisdiction over these entries under § 1581(a) because (1) Global did not protest the classification and liquidation of model numbers 18687 and 28471, and (2) the entry under which model number 28471 was imported is not included on the summons of this action. Def. Br. 13.

Importers may challenge a classification ruling by filing a "protest" with Customs. 19 U.S.C. §§ 1514(a), 1515. "A protest may challenge the classification of a single entry of merchandise, or encompass a number of entries `if all such entries involve the same protesting party, and if the same category of merchandise and a decision or decisions common to all entries are the subject of the protest.'" Daimler-Chrysler Corp. v. United States, 442 F.3d 1313, 1314 (Fed.Cir.2006) (quoting 19 C.F.R. § 174.13(b)).

The importer may challenge the denial of a protest by filing suit in the U.S. Court of International Trade ("CIT"). § 1581(a). "The statutory prerequisites to filing suit are that [(1)] Customs has denied the protest containing the entry; [(2)] the importer paid all liquidated duties, charges, or exactions for the entry; and [(3)] the importer filed a summons listing either the protest or entry number within 180 days of the denial of the protest." Int'l Custom Prods., Inc. v. United States, Slip Op. 09-08, 2009 WL 205860, at *3 (Jan. 29, 2009) (quotations & citations omitted); see 28 U.S.C. §§ 2636(a), 2637 (emphasis added); DaimlerChrysler Corp., 442 F.3d at 1313.

This Court has held that "[t]he initial pleading in an action under [§ 1581(a)] is a summons." H & H Wholesale Servs., Inc. v. United States, 30 CIT 689, 691, 437 F.Supp.2d 1335, 1339 (2006) (citing USCIT R. 3(a)(1); DaimlerChrysler Corp., 442 F.3d at 1318). Further, "[t]he summons must establish the [C]ourt's jurisdiction, and because each protest forms the basis for a separate cause of action, the summons must establish the [CIT's] jurisdiction as to each protest." H & H Wholesale Serv., Inc., 30 CIT at 691, 437 F.Supp.2d at 1339 (quotations, brackets & citation omitted).

In this case, the summons filed by Global included Protest No. 4701-04-100708 listing six entries,⁹ and Protest No 4701-05-100114, listing three entries.¹⁰ Global, however, did not specifically enumerate Entry No. W90-0506822-1—the only entry which contained model number 18687—in the summons. As an initial matter, Global's failure to include Entry No. W90-0506822-1 in the summons thereby eliminated the entry from the jurisdictional reach of the Court. Moreover, even assuming that jurisdiction could be established over Entry W90-0506822-1 as a result of Global's inclusion of Protest No. 4701-04-100708 in its summons, the court would still lack jurisdiction over the entry in question. Although that protest included Entry No. W90-0506882 when originally filed, the protest was subsequently modified and the entry was stricken. See Protest No. 4701-04-100708 Ex 1. Therefore, because Entry No. W90-0506882-1 does not constitute part of Protest No. 4701-04-100708, and because model 18687 is not identified as being a part of any other protest or entry listed on the summons, Global did not challenge the classification and liquidation of model...