GRK Can., Ltd. v. United States

• Decision Date: 20 March 2018
• Docket Number: 2016-2623
• Citation: 885 F.3d 1340
• Parties: GRK CANADA, LTD., Plaintiff–Appellee v. UNITED STATES, Defendant–Appellant
• Court: U.S. Court of Appeals — Federal Circuit

885 F.3d 1340

GRK CANADA, LTD., Plaintiff–Appellee

v.UNITED STATES, Defendant–Appellant

2016-2623

United States Court of Appeals, Federal Circuit.

Decided: March 20, 2018

Craig E. Ziegler, Montgomery, McCracken, Walker & Rhoads, LLP, Philadelphia, PA, argued for plaintiff-appellee.

Stephen Andrew Josey, International Trade Field Office, Commercial Litigation Branch, Civil Division, United States Department of Justice, New York, NY, argued for defendant-appellant. Also represented by Jason M. Kenner, Benjamin C. Mizer, Jeanne E. Davidson, Amy M. Rubin.

Before Prost, Chief Judge, Reyna, and Stoll, Circuit Judges.

Reyna, Circuit Judge.

The United States appeals from a final judgment of the United States Court of International Trade granting GRK Canada, Ltd.'s motion for summary judgment that various screws imported by GRK were properly classified as "self-tapping screws" under subheading 7318.14.10 of the Harmonized Tariff Schedule of the United States. Because the Court of International Trade properly classified GRK's imported screws, we affirm.

BACKGROUND

This matter returns to the court following remand to the Court of International Trade. GRK Can., Ltd. v. United States ("GRK IV "), 180 F.Supp.3d 1260 (Ct. Int'l Trade 2016) ; see also GRK Can., Ltd. v. United States ("GRK I "), 884 F.Supp.2d 1340 (Ct. Int'l Trade 2013)vacated and remanded , 761 F.3d 1354 (Fed. Cir. 2014) (" GRK II "), reh'g denied , 773 F.3d 1282 (Fed Cir. 2014) (per curiam) (" GRK III ").

Between January 2008 and August 2008, GRK imported three types of screw fasteners into the United States. GRK IV , 180 F.Supp.3d at 1263. The three types of screws at issue are GRK's Model R4 Screws ("R4"), RT Composite Trim Head Screws ("RT"), and Fin/Trim Head Screws ("Fin/Trim").¹ Id. GRK's screws are used to mate dissimilar materials, for example, to mate plastics or dense composite materials to wood. Id . at 1264. To that effect, all three GRK screws are made with corrosion-resistant, case-hardened steel and "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." Id . (internal quotation marks omitted).

Upon GRK's importation of the subject screws, United States Customs and Border Protection ("Customs") classified the screws as "other wood screws" under subheading 7318.12.00 of the Harmonized Tariff Schedule of the United States ("HTSUS"),² subject to an import duty of 12.5% ad valorem . Id. at 1263. GRK protested, claiming that the screws should have been classified under subheading 7318.14.10 as "self-tapping screws," a classification that carries a 6.2% ad valorem duty. Customs denied GRK's protest. Id. at 1272.³

GRK appealed Customs' decision to the Court of International Trade, which granted summary judgment in GRK's favor. The court determined, as eo nomine provisions that describe all forms of an article by a specific name, the subheadings for "other wood screws" and "self-tapping screws" cannot be interpreted based on use "[a]bsent limiting language or contrary legislative intent." GRK I , 884 F.Supp.2d at 1345. Applying the General Rules of Interpretation ("GRIs"), the Court of International Trade defined the classification scope of "other wood screws" and "self-tapping screws" without accounting for use. Id. at 1348, 1351–52. The court found, based on their design characteristics, that all three of GRK's imported screws are properly classified as "self-tapping screws" under subheading 7318.14.10. GRK I , 884 F.Supp.2d at 1356. The Government appealed.

On appeal, we held that the Court of International Trade erred in "refus[ing] 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. We instructed the Court of International Trade to consider use in interpreting the common and commercial meaning of HTSUS terms (1) where the name of the tariff provision itself inherently suggests a type of use, or (2) "once the tariff terms have been defined ... the use of subject articles defines an article['s] identity when determining whether it fits within the classification's scope." Id. at 1359 (first citing CamelBak Prods., LLC v. United States , 649 F.3d 1361, 1369 (Fed. Cir. 2011) ; then citing Carl Zeiss, Inc. v. United States , 195 F.3d 1375, 1379 (Fed. Cir. 1999) ). Accordingly, we vacated the judgment of the Court of International Trade and remanded for the court to consider use in both "defining the legal meaning of the tariff terms at issue" and in "determining the proper classification of the subject articles." Id. at 1361.

On remand, the Court of International Trade ordered pretrial discovery limited to the issues of "intended use," "principal use," and "actual use" of GRK's imported screws. GRK IV , 180 F.Supp.3d at 1262. Based on this additional discovery, the court recognized that the R4 screw is used in "wood, particle board, plastic, sheet metal, cement fiberboard and wood decking, pressure treated lumber decking, cedar and redwood decking," and "can be used in woodworking and other applications and is designed to affix thin metal to wood." Id. at 1265. With respect to the RT and Fin/Trim screws, the court noted that these screws are "used for most fine carpentry applications and trim applications," and can also be used "to anchor composite decking to wood beams." Id.

The Court of International Trade undertook a new classification analysis. As a threshold determination on whether to apply the GRIs or the U.S. Additional Rules of Interpretation ("ARIs"),⁴ the court determined that neither tariff term "other wood screws" nor "self-tapping screws" were so controlled by use such that the court would be required to consult the ARIs. Id. at 1271. The court found that the terms' physical characteristics "coincide to such an extent that the court must consider the intended use or design implicated by the tariff terms in addition to the physical characteristics" to distinguish between the terms' common and commercial meanings. Id. Therefore, the court applied the GRIs, as it had in GRK I , and additionally considered the subject screws' intended use. Specifically, the Court of International Trade considered "how a typical user would use the product, and its impact on defining the tariff term." Id. at 1277. It found that the Explanatory Notes suggest "that self-tapping screws are meant to be used to fasten a non-fibrous material (i.e., ‘sheets of metal, marble, slate, plastics’) to some other material." Id. In contrast, the court found that "[n]early all dictionary definitions suggest that wood screws are intended to be used to affix wood to wood or to other fibrous materials." Id. ; see id. at 1278 (first citing McGraw–Hill Dictionary of Scientific and Technical Terms 2302 (6th ed. 2003); then citing Academic Press Dictionary of Science and Technology 2378 (Christopher Morris ed., 1992) ). The court rejected any notion that self-tapping screws are somehow limited to fastening non-fibrous material to other non-fibrous material. Id. Rather it found that "industry standards and dictionary definitions support the conclusion that the tariff term self-tapping screw includes screws that are intended to fasten non-fibrous materials to fibrous materials as well as to non-fibrous materials." Id. at 1277–78 (citing Academic Press Dictionary of Science and Technology 1951 (Christopher Morris ed. 1992); ANSI/ASME Standard 18.6.4 ¶¶ 1.3.1, 1.3.2).

Based on the HTSUS headings, the section and chapter notes, the explanatory notes, the available lexico-graphic sources, and its review of intended use, the court concluded that (1) the common and commercial meaning of "other wood screw" is "a screw that forms its own thread by compressing surrounding material designed to fasten wood to wood or other fibrous material," and (2) the common and commercial meaning of "self-tapping screw" is a "specially hardened screw, that meets minimum torsional strength requirements, that can cut away material to form a mating thread in non-fibrous material, and is designed to fasten non-fibrous materials, such as metal, to either fibrous or non-fibrous materials." Id. at 1278 (internal quotation marks omitted). The court confirmed its conclusion by reviewing the parties' experts' testimonies, finding the testimonies to be consistent with its constructions. Id.

The court then turned to whether GRK's imported screws are properly classified as "other wood screws" or as "self-tapping screws" under the court's constructions. Id. at 1280. Based on the undisputed facts, it found that the R4, RT, and Fit/Trim screws are "self-tapping screws" because they are capable of cutting a mating thread in non-fibrous materials, are made of case-hardened carbon steel or stainless steel, and meet minimal torsional strength requirements. Id. at 1280–81. The Court of International Trade further found that the intended use of GRK's screws supports their classification as self-tapping screws because they are "intended for fastening non-fibrous materials to other materials." Id. at 1281. The court relied on the fact that GRK's screws have a "Climatek coating" for its case-hardened carbon steel screws which allow the screws "to be driven into even very, very dense materials." Id. (internal quotation marks and citation omitted). It also found that the design of the R4 and RT screws support classifying them as self-tapping because they have countersinking heads that allow for the screws to penetrate "hard, brittle, or thin plasticized surfaces veneered onto lumber or composite wood without causing mushrooming." Id. at 1282. "Mushrooming" occurs when "non-fibrous material that the screw cuts and removes as it is driven would rise and create mushroom on the surface," a concern that is not relevant for fastening wood or other fibrous materials. Id. (citations omitted). The RT screw also has...