Home Depot, U.S.A., Inc. v. U.S.

• Decision Date: 07 April 2006
• Docket Number: Slip Op. 06-49.,Court No. 00-00061.
• Citation: 427 F.Supp.2d 1278
• Parties: THE HOME DEPOT, U.S.A., INC., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

427 F.Supp.2d 1278

THE HOME DEPOT, U.S.A., INC., Plaintiff, v. UNITED STATES, Defendant.

Slip Op. 06-49.

Court No. 00-00061.

United States Court of International Trade.

April 7, 2006.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Bryan Cave LLP (Adam J. Thurston, David R. Stepp, Michael B. Zara), Los Angeles, CA, for Plaintiff.

Peter D. Keisler, Assistant Attorney General; Barbara S. Williams, Attorney in Charge, International Trade Field Office, U.S. Department of Justice; Jack S. Rockafellow, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice; Beth Brotman, Office of Assistant Chief Counsel, International Trade Litigation, U.S. Bureau of Customs and Border Protection, for Defendant, of counsel.

OPINION

CARMAN, Judge.

The matter before this Court follows a bench trial in October 2005. Plaintiff Home Depot, U.S.A., Inc., ("Home Depot" or "Plaintiff") challenges the United States Customs Service's¹ ("Customs" or "Defendant") classification of lighting fixtures. The subject goods are identified by Stock Keeping Unit ("SKU") numbers assigned by Home Depot. This case involves a total of 124 SKUs, twenty of which are agreed upon represented SKUs. This consolidated case includes nine court numbers: 00-00061; 00-00062; 00-00063; 00-00064; 00-00363; 00-00364; 00-00365; 00-00440; and 01-00107. This Court finds for Plaintiff in part and for Defendant in part as discussed herein.

BACKGROUND

Home Depot is the importer of record for the entries which are the subject merchandise at issue. Customs classified the subject merchandise — various lighting fixtures — under the Harmonized Tariff Schedule of the United States ("HTSUS") subheading 9405.10.60 with a 7.6 percent duty. Home Depot claims the subject merchandise is properly classified under HTSUS subheading 9405.10.80 with a 3.9 percent duty.² Home Depot timely filed protests and summons, and all liquidated duties were paid. Nine cases were properly filed with this court between December 2001 and January 2002. In July 2003, parties met in Atlanta, Georgia, to review physical samples of the merchandise and attempted to designate representative SKUs with settlement as an ultimate goal. These negotiations, however, were unsuccessful. In September 2004, parties began a parallel track of discovery in preparation of litigation. In March 2005, this Court granted parties joint motion to consolidate cases. This Court held a bench trial during the week of October 17th-21st, on October 24th, during October 26th-28th, and adjourned on November 2, 2005.

STANDARD OF REVIEW

Jurisdiction of this Court is found under 28 U.S.C. § 1581(a) (2000). Although Custom's decisions are entitled to a presumption of correctness pursuant to 28 U.S.C § 2639(a)(1) (2000), this Court makes its determinations upon the basis of the record before it, not upon the record developed by Customs. See United States v. Mead Corp., 533 U.S. 218, 233 n. 16, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001). Accordingly, this Court makes the following findings of fact and conclusions of law de novo. See 28 U.S.C. § 2640(a) (2000).

DISCUSSION

The common issue throughout this consolidated case is the correct classification of the subject goods, more specifically whether metal or non-metal imparts the essential character of the lighting fixtures. Parties stipulated that the proper heading is 9405 and six-digit subheading is 9405.10. The parties assert that the ultimate determination is between two potentially applicable eight-digit subheadings: 9405.10.60 and 9405.10.80.³ See Final Amended Pretrial Order ("Final Pretrial Order"), Schedule C, ¶ 6. Customs originally classified the subject fixtures under HTSUS subheading 9405.10.60, claiming that these goods were "of base metal other than of brass."⁴ Home Depot, however, claims the subject merchandise is properly classified under HTSUS subheading 9405.10.80, challenging that these fixtures are "other than of base metal," and the non-metal consists of glass, plastic or wood. Regardless of competing tariff classifications purposed by parties, this Court is charged with reaching the correct classification. See Jarvis Clark Co. v. United States, 733 F.2d 873, 880 (Fed.Cir. 1984).

Parties urge this Court to adopt a single factor objective test for the essential character analysis. This the Court cannot do because both statute and case law instructs otherwise. Plaintiff claims the subject goods are decorative light fixtures, evidenced by Home Depot's selling these fixtures in a separate department from its utility fixtures, such as mere lamp holders.⁵ (Pl. The Home Depot, U.S.A., Inc.'s Post-Trial Br. ("Pl. Post-Trial Br.") 7.) Plaintiff advances that "Defendant seeks to remove the `decorative' from `decorative light fixtures.'" (Pl.Post-Tr.Br. 1.) Plaintiff advocates that "this Court can primarily look to the visible surface area of that fixture" to determine the essential character of the subject fixtures.⁶ (Pl.Post-Tr Br. 19.) Defendant offers a different test that focuses on the "structural framework" as the essential character for all 124 SKUs. (Def.'s Proposed Finds of Fact & Post-Trial Brief ("Def.Post-Tr.Br.") 11.)

Both parties' recommendations have appeal. Industries and parties should be able to rely on prior case law and decisions because "international trade prospers best when the participants can rely on established rules and regulations." Hemscheidt Corp. v. United States, 72 F.3d 868, 872 (Fed.Cir. 1995). However, reliance on uniformity cannot be obtained by forsaking a court's duty of a proper legal analysis. Despite the appeal that a single factor, bright line test has for predictability and uniformity, this Court must reject both parties' suggestions. An essential character inquiry requires a fact intensive analysis. See Toy Biz, Inc. v. United States, 26 CIT 816, 828, 219 F.Supp.2d 1289 (2002).

While Defendant asserts "metal . . . is always the only indispensable material . . . which function as a structure" (Def. Post — Tr. Br. 2 (footnote omitted)), this Court notes that structure is only one factor that must be considered. The same applies to Plaintiff's submission of a visible surface area bright line rule. In the case at bar, this Court is to consider all facts in evidence to determine essential character. In reviewing an essential character determination in Better Home Plastics Corp. v. United States, the Court of Appeals for the Federal Circuit ("CAFC") saw "no error in the [Court of International Trade's] ultimate conclusion of essential character" because the trial court "carefully consider[ed] all of the facts" and conducted a "reasoned balancing of all the facts." 119 F.3d 969, 971 (Fed.Cir. 1997) ("Better Home II"). Although the task is laborious, this Court will accomplish its duty by considering all of the evidence presented, assigning weight to each piece of evidence, and deciding whether the metal or nonmetal components impart the essential character of the subject fixture.

I. FACTS

A. Uncontested Facts to Which the Parties Stipulate

The parties agreed upon certain facts, and this Court adopts them. The Uncontested Facts to Which the Parties Stipulate ("Uncontested Facts") are as follows:

1. The merchandise at issue in the nine consolidated cases consists of the lighting fixtures, identified by Stock Keeping Unit ("SKU") number, listed in the joint report by the parties filed September 20, 2005, entitled Joint Report Regarding Lighting Fixtures In The Nine Consolidated Cases And Stipulations Regarding Representative Fixtures (the "Joint Report").⁷

2. Plaintiff is importer of the merchandise at issue set forth in the Joint Report.

3. The Court has [jurisdiction over all of the [] protests and entries listed on the Joint Report.

4. The protests and summonses at issue in the above-captioned nine consolidated cases were timely filed.

5. All liquidated duties have been paid.

6. The subject merchandise listed on the Joint Report consists of "chandeliers and other electric ceiling or wall lighting fittings, excluding those of a kind used for lighting public open spaces or thoroughfares," within the meaning of subheading 9405.10 of the [HTSUS].

7. The subject merchandise listed on the Joint Report was classified by Customs as chandeliers and other electric ceiling or wall lighting fittings, excluding those of a kind used for lighting public open spaces or thoroughfares, of base metal [other than of brass], under HTSUS subheading 9405.10.60, and were assessed with duty at the rate of 7.6 percent ad valorem.

Final Pretrial Order, Schedule C.

B. Findings of Fact Established at Trial

In addition to the Uncontested Facts, this Court finds the following facts were established by a preponderance of the evidence during the bench trial. The following findings are not exhaustive as specific findings will be discussed in the individual fixture analyses below.

1. Home Depot imported the subject merchandise into the United States from various countries, under numerous entries, and through different ports.

2. There are 124 SKUs at issue in this consolidated case for which parties presented evidence during trial. (Trial Tr. 1785, Nov. 2.)

3. Of the 124 SKUs at issue, eleven were deemed "representative SKUs" covering twenty "represented SKUs" by stipulation. (Joint Report.)

4. The subject goods consist of indoor and outdoor ceiling and wall light fixtures.

5. The subject goods are sold in Home Depot's decorative light department.

6. The subject merchandise is for personal homes and their surrounding exterior spaces.

7. Plaintiff's proposed classification is HTSUS subheading 9405.10.80 with a duty rate of 3.9 percent ad valorem.

8. Plaintiff's fact witness Greg St. John, Interior Lighting Merchant for Home Depot, is credible.

9. Plaintiff's expert witness David Mintz, Lighting Designer of Mintz Lighting Group, is credible.

10. Plaintiff's expert witness Alan Goedde...