GRK Can., Ltd. v. United States

• Decision Date: 15 July 2016
• Docket Number: Court No. 09-00390,Slip Op. 16-70
• Parties: GRK Canada, Ltd., Plaintiff, v. United States, Defendant.
• Court: U.S. Court of International Trade

180 F.Supp.3d 1260

GRK Canada, Ltd., Plaintiff,

v.United States, Defendant.

Slip Op. 16-70

Court No. 09-00390

United States Court of International Trade.

Signed July 15, 2016

Craig E. Ziegler , Montgomery, McCracken, Walker & Rhoads, LLP, of Philadelphia, PA, for plaintiff.

Jason Matthew Kenner , Trial Attorney, 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, and Amy M. Rubin , Assistant Director, International Trade Field Office. Of Counsel on the brief was Beth Brotman , Office of the Assistant Chief Counsel International Trade Litigation, U.S. Customs and Border Protection, of New York, NY.

OPINION

Kelly

, Judge:

Before the court are cross-motions for summary judgment regarding the proper classification of imports of certain steel screw fasteners. See Def.'s Mot. Summ. J., Feb. 29, 2016, ECF No. 65; Mot. Summ. J. Pl. GRK Canada, Ltd., Feb. 29, 2016, ECF No. 68. Defendant maintains United States Customs and Border Protection (“Customs”) properly classified GRK Canada, Ltd.'s (“GRK”) entries of steel screw fasteners under Harmonized Tariff Schedule of the United States (2007) (“HTSUS”) subheading 7318.12.00, which covers “Other wood screws.” See Def.'s Mem. Supp. Mot. Summ. J., Feb. 29, 2016, ECF No. 65 (“Def. Br.”). Plaintiff argues that Customs improperly denied GRK's protest of Customs' classification of GRK's imported steel screw fasteners and that the merchandise is properly classified under HTSUS subheading 7318.14.10, which covers “Self-tapping screws.” See Br. Supp. Mot. Summ. J. Pl. GRK Canada, Ltd., Feb. 29, 2016, ECF No. 70 (“GRK Br.”).

This matter returns to the court following a decision by the United States Court of Appeals for the Federal Circuit, which vacated and remanded the court's earlier decision granting summary judgment in favor of Plaintiff. See GRK Canada, Ltd v. United States, 37 CIT ––––, 884 F.Supp.2d 1340 (2013)

( “GRK I”), vacated and remanded, 761 F.3d 1354 (Fed.Cir.2014) (“GRK II”). The court presumes familiarity with the prior decisions and will only recount the prior proceedings as necessary.

After reviewing the undisputed facts, the court in GRK I

undertook an examination of the language of the tariff terms, aided by the Harmonized Commodity Description and Coding System's Explanatory Notes (“Explanatory Notes”), lexicographic sources, industry standards for mechanical fasteners, and expert testimony. GRK I at ––––, 884 F.Supp.2d at 1346–52. The court identified the competing subheadings as eo nomine provisions and held that the screws imported by GRK were properly classified as self-tapping screws rather than as other wood screws, rejecting any consideration of “use” as informing the meaning of either tariff term. Id. at ––––, 884 F.Supp.2d at 1345, 1352–56. The Court of Appeals vacated and remanded the court's decision in GRK I, holding that it was error for the court to “refuse[ ] to consider the use of the screws at any step of determining the classification of the subject articles at issue.” GRK II, 761 F.3d at 1355. The Court of Appeals subsequently denied a petition for rehearing en banc. See GRK Canada, Ltd. v. United States, 773 F.3d 1282 (Fed.Cir.2014) (“GRK III”).

Upon remand, the Court of International Trade ordered pretrial discovery in the matter reopened “limited to the issues of ‘intended use,’ or ‘principal use,’ or ‘actual use’ of the imported screws at issue.” Scheduling Order, Mar. 31, 2015, ECF No. 59. The parties completed discovery on November 13, 2015, see Order, Aug. 4, 2015, ECF No. 62, and on February 29, 2016 the parties cross-moved for summary judgment. Together with their motions for summary judgment, the parties submitted separate statements of undisputed material facts. See Pl. GRK Canada, Ltd.'s Statement of Undisputed Facts, Feb. 29, 2016, ECF No. 69 (“GRK Facts”); Def.'s Statement of Material Facts Which There Are No Genuine Issues to be Tried, Feb. 29, 2016, ECF No. 67 (“Def. Facts”). Thereafter, the parties submitted responses to the statements of undisputed facts, see Resp. Pl. GRK Canada, Ltd. Def.'s Statement of Undisputed Facts, Apr. 4, 2016, ECF No. 75 (“GRK Facts Resp.”); Def.'s Resps. Pl. GRK Canada, Ltd., Rule 56.3 Statement of Material Facts, May 6, 2016, ECF No. 79 (“Def. Facts Resp.”). Briefing in the action concluded on May 20, 2016 after the parties submitted responses and replies to the motions for summary judgment. See Br. Pl. GRK Canada, Ltd. Opp'n Government's Mot. Summ. J., Apr. 4, 2016, ECF No. 74 (“GRK Resp.”); Def.'s Mem. Opp'n Pl.'s Mot. Summ. J. and Reply Pl.'s Resp. Def.'s Mot. Summ. J., May 6, 2016, ECF No. 78 (“Def. Resp. & Reply”); Reply Br. Pl. GRK Canada, Ltd. Further Supp. Mot. Summ. J., May 20, 2016, ECF No. 80. For the reasons set forth below, the court grants Plaintiff's motion for summary judgment and denies Defendant's motion for summary judgment.

UNDISPUTED FACTS

The following facts are not in dispute. GRK imported the steel screw fasteners at issue into the United States between January 2008 and August 2008. GRK Facts ¶¶ 5, 6; Def. Facts Resp. ¶¶ 5, 6. Customs classified GRK's imported screws under HTSUS subheading 7318.12.00 as “Other wood screws” dutiable at 12.5% ad valorem, and the entries were liquidated by Customs between November 2008 and January 2009. GRK Facts ¶¶ 7, 14; Def. Facts Resp. ¶¶ 7, 14. GRK paid all liquidated duties assessed on the merchandise and filed timely protests, all four of which were denied by Customs. GRK Facts ¶¶ 7–10; Def. Facts Resp. ¶¶ 7–10.

The screw fasteners that are the subject of GRK's protests consist of two models: (1) R4 screws and (2) Trim Head screws. GRK Facts ¶ 12; Def. Facts Resp. ¶ 12. GRK's Trim Head Screws are available in two varieties—RT Composite Trim Head (“RT”) screws and Fin/Trim Head (“Fin/Trim”) screws. GRK Facts ¶ 13; Def. Facts Resp. ¶ 13. Each of these screws has a head, is made of steel, and is manufactured in varying lengths and diameters. GRK Facts ¶ 12; Def. Facts Resp. ¶ 12. All of GRK's screws are available in heat-treated case-hardened carbon steel, and all of these carbon steel screws are also available with a “Climatek” coating. Def. Facts ¶¶ 11, 18; GRK Facts Resp. ¶¶ 11, 18; GRK Facts ¶¶ 16–17; Def. Facts Resp. ¶¶ 16–17. The Climatek coating includes a water-based lubricant intended to reduce the torque required to drive the screw, allowing GRK's case-hardened carbon steel screws to be used in very dense materials. Def. Facts ¶ 27; GRK Facts Resp. ¶ 27; GRK Facts ¶ 62; Def. Facts Resp. ¶ 62. The color of the Climatek coating matches almost all wood finishes. Def. Facts ¶ 28; GRK Facts Resp. ¶ 28. Certain sizes of GRK's screws are also available in stainless steel. Def. Facts ¶¶ 12, 19, 29; GRK Facts Resp. ¶¶ 12, 19, 29; GRK Facts ¶ 16; Def. Facts Resp. ¶ 16. “Stainless steel is a harder material than non-case-hardened carbon steel.” GRK Facts ¶ 19; Def. Facts Resp. ¶ 19.

The screws at issue are manufactured to meet minimum torsional strength requirements,¹ which require a harder screw than screws that do not meet such torsional requirements. GRK Facts ¶¶ 22, 24; Def. Facts Resp. ¶¶ 22, 24. The screws can be used to penetrate materials such as “sheet metal, plastics, medium-density fiberboard, polyvinyl chloride

(PVC) board, cement fiberboard, melamine, arborite, and other man-made composite materials.” GRK Facts ¶ 30; Def. Facts Resp. ¶ 30. GRK's screws are used to mate dissimilar materials, such as plastics or dense composite materials to wood. GRK Facts ¶ 31; Def. Facts Resp. ¶ 31. GRK's screws, at least in some applications, are able to pierce the material without the need to pre-drill a bore hole. GRK Facts ¶ 30; Def. Facts Resp. ¶ 30.

The screws at issue all have gimlet points with a point angle of between 25 and 35 degrees.² GRK Facts ¶ 25; Def. Facts Resp. ¶ 25. Some of GRK's screws have a Type 17 point that GRK calls a “Zip-tip.” GRK Facts ¶ 27; Def. Facts ¶¶ 6, 14; GRK Facts Resp. ¶¶ 6, 14. All RT and Fin/Trim screws have a Type 17 point and R4 screws that are 11/4 inches and longer have a Type 17 point. Def. Facts ¶¶ 6, 14; GRK Facts Resp. ¶¶ 6, 14. GRK's Type 17 point can be described as

a gimlet point with a slot or groove with sharp edges cut into the point. This cut-out groove or slot adds an additional cutting edge to the point, which cuts and removes material that the screw is penetrating. The presence of this cutting groove allows the screw to get started more easily and reduces the torque needed to drive the screw.

GRK Facts ¶ 28; Def. Facts Resp. ¶ 28.

The Type 17 point gives screws the ability to start quickly in certain materials. Def. Facts ¶ 20; GRK Facts Resp. ¶ 20. The American National Standards Institute and the American Society of Mechanical Engineers (collectively “ANSI/ASME”) jointly publish industry standards for screw fasteners (“ANSI/ASME Standard”), and the Type 17 point is not listed as a point that is specified for tapping screws.³ GRK Facts ¶¶ 38, 42; Def. Facts Resp. ¶¶ 38, 42.

R4 and Trim Head screws that are 1¼ inches and longer also have a patented thread design that is referred to as “W-Cut” threading. Def. Facts ¶¶ 8, 15; GRK Facts Resp. ¶¶ 8, 15. The W-Cut threading acts as a sawblade and easily cuts through a variety of materials. Def. Facts ¶ 21; GRK Facts Resp. ¶ 21.

All R4 screws have a “self-countersinking” head with saw-blade-like-cutting teeth and six self-contained cutting pockets, which allow the screw to be installed flush with the surface without a separate countersinking operation.⁴ Def. Facts ¶¶ 10, 23; GRK Facts Resp. ¶¶ 10, 23. This self-countersinking head is designed to penetrate hard, brittle, or thin plasticized surfaces veneered onto lumber or composite woods without causing the surface of the material to crack, tear, or “mushroom,” i.e., when material displaced by a screw rises to the surface and...