Logitech, Inc. v. United States
| Decision Date | 24 August 2021 |
| Docket Number | Court No. 16-00017,Slip Op. 21-106 |
| Citation | 532 F.Supp.3d 1358 |
| Parties | LOGITECH, INC., Plaintiff, v. UNITED STATES, Defendant. |
| Court | U.S. Court of International Trade |
Patrick D. Gill and Deborah B. Stern, Sandler, Travis & Rosenberg, P.A., of New York, N.Y., for Plaintiff Logitech, Inc.
Jamie L. Shookman, Jason M. Kenner, and Peter A. Mancuso, Trial Attorneys, U.S. Department of Justice, Civil Division, Commercial Litigation Branch, New York, N.Y., argued for Defendant United States. On the brief were Brian M. Boynton, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Justin R. Miller, Attorney-in-Charge, International Trade Field Office. Of counsel was Paula S. Smith, Office of the Assistant Chief Counsel, U.S. Customs and Border Protection of New York, N.Y.
Plaintiff, Logitech, Inc. ("Logitech" or "Plaintiff"), challenges the denial by U.S. Customs and Border Protection ("Customs") of Logitech's protest of Customs’ classification of the imported merchandise that fall into two categories: "Webcams" and "ConferenceCams" (collectively, "subject merchandise"), as "television cameras" under subheading 8525.80.3010 of the Harmonized Tariff Schedule of the United States ("HTSUS"), with a duty rate of 2.1 percent ad valorem.
Plaintiff claims that the subject merchandise are properly classified as "other apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network" under HTSUS Subheadings 8517.69.0000 (Webcams) and 8517.62.0050 (ConferenceCams), each duty free.
The court has jurisdiction pursuant to 28 U.S.C. § 1581(a) (2018). For the reasons set forth below, the court enters judgment for Plaintiff that the subject ConferenceCams are classifiable under HTSUS Subheading 8517.62.00 and the subject Webcams are properly classifiable under HTSUS Subheading 8517.69.00.
Plaintiff and Defendant filed cross-motions for summary judgment. See Pl.’s Mot. for Summ. J., ECF No. 31; Def.’s Cross-Mot. for Summ. J., ECF No. 37. The court denied the parties’ cross-motions for summary judgment, explaining that HTSUS Heading 8517 is a principal use provision, and the court could not grant summary judgment in favor of either party on the fact-intensive principal use factors set forth in United States v. Carborundum Co., 63 C.C.P.A. 98, 102, 536 F.2d 373, 377 (1976) without it impermissibly finding facts about the principal use of the subject merchandise (particularly given the summary judgment standard requiring the court to draw all reasonable inferences in favor of the non-movant on contested fact issues). See Memorandum and Order at 2, ECF No. 42. Before trial, the court delineated the uncontested facts in its Pretrial Order. See Pretrial Order, Schedule C, ECF No. 81 ("Joint Uncontested Facts").
The court held a bench trial on November 20–22, 25, 2019. Trial, ECF No. 83.
After the conclusion of the trial, the parties submitted proposed findings of fact and conclusions of law. See Plaintiff's Proposed Findings of Fact and Conclusions of Law, ECF No. 107 ("Pl.’s FOF & COL"); Defendant's Proposed Findings of Fact and Conclusions of Law, ECF No. 108 ("Def.’s FOF" & "Def.’s COL"); Defendant's Confidential Proposed Findings of Fact, ECF No. 109. The parties also submitted post-trial briefs. See Plaintiff's Post-Trial Brief ("Pl.’s Br."), ECF No. 110; Defendant's Confidential Post-Trial Brief ("Def.’s Br."), ECF No. 112.1
The court reviews Customs’ protest decisions de novo. 28 U.S.C. § 2640(a)(1) (2018). The classification of merchandise involves a two-step inquiry. ADC Telecomms., Inc. v. United States, 916 F.3d 1013, 1017 (Fed. Cir. 2019). First, the court ascertains the meaning of the terms within the relevant tariff provisions, which is a question of law; second, the court determines whether the subject merchandise fits within those terms, which is a question of fact. Id. This case presents both questions of law, the meaning and scope of HTSUS Headings 8517 and 8525, as well as questions of fact—how the imported products are principally used.
In actions under 28 U.S.C. § 1581(a), the court reviews Customs’ legal interpretations of the tariff schedule relative to their "power to persuade," United States v. Mead Corp., 533 U.S. 218, 235, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001) (citing Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 89 L.Ed. 124 (1944) ). A corollary is "the rule of construction of revenue statutes whereby unclear or ambiguous tariff classifications have traditionally been resolved in favor of the importer." Anhydrides & Chems., Inc. v. United States, 130 F.3d 1481, 1485 (Fed. Cir. 1997) ().
For contested factual issues, a statutory presumption of correctness imposes on Plaintiff the burden of proof. See 28 U.S.C. § 2639(a)(1) (2000) ; Universal Elecs., Inc. v. United States, 112 F.3d 488, 492 n.2 (Fed. Cir. 1997) ; Chrysler Corp. v. United States, 33 C.I.T. 90, 97, 601 F. Supp. 2d 1347, 1353–54 (2009), aff'd, 592 F.3d 1330 (Fed. Cir. 2010). Despite its name, the statutory presumption of correctness is not a true evidentiary presumption governed by Federal Rule of Evidence 301, but rather an "assumption" that allocates to plaintiff the burden of proof on contested factual issues that arise from the protest decision. Universal Elecs., 112 F.3d at 492 n.2 ; 21B Charles A. Wright & Kenneth W. Graham, Jr., Fed. Prac. & Proc. Evid. § 5124 (2d ed. 2021) (). Plaintiff's burden of proof carries an initial burden of production (to make an evidentiary proffer), and an ultimate burden of persuasion to establish by a preponderance plaintiff's operative facts. Universal Elecs., 112 F.3d at 492. Importantly, the presumption does not "change the rule of strict construction of revenue statutes, or negate judicial responsibility for correct construction of tariff classifications." Anhydrides & Chemicals, Inc., 130 F.3d at 1486. In this action, the presumption of correctness imposes a burden on Plaintiff to establish by a preponderance that the merchandise is principally used as other apparatus for the transmission or reception of voice, images or other data, for communication in a wired or wireless network.
A. Harmonized Tariff Schedule of the United States
The HTSUS governs the classification of merchandise imported into the United States. See Wilton Indus., Inc. v. United States, 741 F.3d 1263, 1266 (Fed. Cir. 2013). The HTSUS "is organized by headings, each of which has one or more subheadings; the headings set forth general categories of merchandise, and the subheadings provide a more particularized segregation of the goods within each category." Id. "The first four digits of an HTSUS provision constitute the heading, whereas the remaining digits reflect subheadings." Schlumberger Tech. Corp. v. United States, 845 F.3d 1158, 1163 n.4 (Fed. Cir. 2017). "[T]he headings and subheadings ... are enumerated in chapters 1 through 99 of the HTSUS (each of which has its own section and chapter notes) ...." R.T. Foods, Inc. v. United States, 757 F.3d 1349, 1353 (Fed. Cir. 2014). The HTSUS "also contains the ‘General Notes,’ the ‘General Rules of Interpretation’ (‘GRIs’), the ‘Additional [U.S.] Rules of Interpretation’ (‘ARIs’), and various appendices for particular categories of goods." Id. (footnote omitted).
The GRIs and the ARIs govern the classification of goods within the HTSUS. See Otter Prods., LLC v. United States, 834 F.3d 1369, 1375 (Fed. Cir. 2016). "The GRI apply in numerical order, meaning that subsequent rules are inapplicable if a preceding rule provides proper classification." Schlumberger Tech., 845 F.3d at 1163. GRI 1 provides, in relevant part, that "classification shall be determined according to the terms of the headings and any relative section or chapter notes." GRI 1 (emphasis added). "Under GRI 1, a court first construes the language of the heading, and any section or chapter notes in question, to determine whether the product at issue is classifiable under the heading." Schlumberger Tech., 845 F.3d at 1163 (internal quotation marks and citation omitted). "[T]he possible headings are to be evaluated without reference to their subheadings, which cannot be used to expand the scope of their respective headings." R.T. Foods, 757 F.3d at 1353 (citations omitted).
"Absent contrary legislative intent, HTSUS terms are to be construed according to their common and commercial meanings, which are presumed to be the same." Well Luck Co. v. United States, 887 F.3d 1106, 1111 (Fed. Cir. 2018) (internal quotation marks and citation omitted). "To discern the common meaning of a tariff term, [the court] may consult dictionaries, scientific authorities, and other reliable information sources." Kahrs Int'l, Inc. v. United States, 713 F.3d 640, 644 (Fed. Cir. 2013) (citation omitted).
"After consulting the headings and relevant section or chapter notes" consistent with GRI 1, the court may consider the relevant Explanatory Notes ("EN"). Fuji Am. Corp. v. United States, 519 F.3d 1355, 1357 (Fed. Cir. 2008). "The [ENs] provide persuasive guidance and are generally indicative of the proper interpretation, though they do not constitute binding authority." Chemtall, Inc. v. United States, 878 F.3d 1012, 1019 (Fed. Cir. 2017) (internal quotation marks and citation omitted).
Once the appropriate heading is determined, the court applies GRI 6 to determine the appropriate subheading. See Orlando Food Corp. v. United States, 140 F.3d 1437, 1442 (Fed. Cir. 1998). GRI 6 provides...
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