Quaker Pet Grp., LLC v. United States

• Decision Date: 12 February 2018
• Docket Number: Slip Op. 18–9,Court No. 13–00393
• Parties: QUAKER PET GROUP, LLC, Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

287 F.Supp.3d 1348

QUAKER PET GROUP, LLC, Plaintiff,

v.UNITED STATES, Defendant.

Slip Op. 18–9

Court No. 13–00393

United States Court of International Trade.

Dated: February 12, 2018

As Corrected February 13, 2018

Alan Goggins, Barnes, Richardson & Colburn, LLP, of New York, NY, argued for plaintiff. With him on the Plaintiff's Second Supplemental Reply Memorandum was Helena D. Sullivan.

Monica P. Triana, Trial Attorney, Civil Division, Commercial Litigation Branch, U.S. Department of Justice, of Washington, DC, argued for defendant. With her on the brief were Benjamin C. Mizer, Principal Deputy Assistant Attorney General, and Amy M. Rubin, Assistant Director. Of counsel was Beth C. Brotman, Office of the Assistant Chief Counsel, International Trade Litigation, U.S. Customs and Border Protection, of New York, NY.

OPINION

Katzmann, Judge:

Catching sight of three tiny orphaned kittens wandering in a battlefield tent, President Abraham Lincoln directed Colonel Bowers of General Grant's staff: "Colonel, I hope you will see that these poor little motherless waifs are given plenty of milk and treated kindly."¹ Some eighty years later, President Harry Truman is famously said to have remarked, "[i]f you want a friend in Washington, get a dog."² It would certainly have been beyond the contemplation of the 16th or 33rd Presidents that their animals might be categorized as items or personal effects. Yet, the determination of that categorization under the domestic tariff scheme is central to the question presented by the case before this court: how should cloth pet carriers be classified for the purposes of determining what tariff rate should apply to their importation?

In this action, Plaintiff Quaker Pet Group, LLC ("Quaker Pet") contests the denials of its administrative protests by U.S. Customs and Border Protection ("Customs") and disputes the tariff classification under the Harmonized Tariff Schedule of the United States (2012) ("HTSUS")³ which Customs determined for five of its pet carrier products. Specifically, Quaker Pet contends that pets are not "personal effects" and therefore the pet carriers—cloth and mesh carrying bags used for transporting pets—are classifiable under the residual provision for textile articles, HTSUS heading 6307, carrying a duty rate of seven percent. The United States ("the Government") argues that Customs correctly classified the pet carriers under the HTSUS heading 4202, which covers travel, sports, and similar bags, and carries a 17.6 percent duty rate. Pl.'s Statement of Undisputed Facts ¶¶ 12–13, Sept. 18, 2015, ECF No. 21 ("Pl.'s Fact Statement"); Answer to Pl.'s Amended Compl. ¶ 10, Apr. 27, 2015, ECF. No. 13 ("Def.'s Answer"). Before the court is Quaker Pet's Motion for Judgment on the Pleadings as to Count I of its Amended Complaint, and its memorandum in support of the motion ("Pl.'s Br."). The court concludes that the pet carriers are not, as a matter of law, classifiable under heading 4202. However, the relevant record is not sufficiently developed yet for the court to determine whether the products are classifiable under heading 6307. Thus, Quaker Pet's motion for judgment on the pleadings is granted in part and denied in part, and the parties are directed to file a proposed schedule for future proceedings.

BACKGROUND

I. The Merchandise at Issue⁴

The imported merchandise consist of five styles of pet carriers. Amended Compl. ¶ 5, Feb. 12, 2015, ECF No. 7; Def.'s Answer ¶ 5. Pet carrier style numbers 55234, 55534, 97009, and 98791 were imported into Newark, NJ, and style number 94279 was imported into Long Beach, CA from China. Amended Compl. ¶¶ 6–7; Def.'s Answer ¶¶ 6–7. These pet carriers are used to carry cats, dogs, or other pets. Amended Compl. ¶ 8; Def.'s Answer ¶ 8. Subsequent to the commencement of this action, Quaker Pet, the importer of record, was sold to Worldwise, Inc. Letter from Plaintiff's Counsel, ECF No. 61. Worldwise has continued to import the same pet carriers, typically under the Sherpa™ brand trademark. Id.

II. Procedural History

Quaker Pet challenges the classification and liquidation of the subject pet carriers under subheading 4202.92.30⁵ of the HTSUS, the provision covering traveling bags and similar containers of textile material. Amended Compl. ¶ 10; Def.'s Answer ¶ 10. As noted, this classification carries a 17.6 percent duty rate. HTSUS 4202.92.30. Quaker Pet—believing the pet carriers are classifiable under HTSUS subheading 6307.90.98, 'Other made up articles, including dress patterns:...Other:...Other,"⁶ which carries a duty rate of seven percent—contested the liquidations by filing a protest on April 25, 2013. Summons, Dec. 9, 2013, ECF No. 1. Customs denied the protest on June 21, 2013, and this action followed. Id. Initial disclosures were served on January 21, 2015 and supplemented on July 17, 2015. Def.'s Br. at Exhibits 1–2. Quaker Pet moved for judgment on the pleadings as to Count I of its Amended Complaint on September 18, 2015, and the Government filed its response on October 30, 2015. Pl.'s Br.; Def.'s Br. Quaker Pet filed its reply on November 12, 2015, and the first oral argument was held on February 11, 2016. Pl.'s Reply Br., ECF No. 29; Oral Argument, ECF No. 35. Supplemental briefs were filed in June, July, October, and November 2016. Pl.'s Suppl. Br. 1, June 17, 2016, ECF No. 38; Def.'s Suppl. Resp. Br. 1, June 17, 2016, ECF No. 39; Pl.'s Second Suppl. Br. 2, July 20, 2016, ECF No. 42; Def.'s Second Suppl. Resp. Br. 2, July 20, 2016, ECF No. 43; Pl.'s Suppl. Br. 3, Oct. 21, 2016, ECF No. 46; Def.'s Suppl. Resp. Br. 3, Oct. 21, 2016, ECF No. 47; Pl.'s Suppl. Br. 4, Nov. 4, 2016, ECF No. 49; Def.'s Suppl. Resp. Br. 4, Nov. 4, 2016, ECF No. 50.

On November 29, 2017, the case was reassigned to a new judge. Reassignment Order, ECF No. 52. Quaker Pet filed a motion to withdraw Count II of the amended complaint on December 14, 2017, and the Government filed its response on January 2, 2018. Motion to Withdraw Count 2, ECF. No. 57; Resp. to Motion to Withdraw Count 2, ECF No. 59. Oral argument was held anew on January 17, 2018. Oral Argument, ECF No. 60.

APPLICABLE LAW

I. Jurisdiction and Standard of Review

The Court has jurisdiction over this action under 28 U.S.C. § 1581(a) (2012), according to which the court has jurisdiction over an action brought under section 515 of the Tariff Act of 1930 as amended, 19 U.S.C. § 1515 (2012) to contest a denial of a protest by Customs.⁷

In a tariff classification case, the Court proceeds de novo. Park B. Smith, Ltd. v. United States, 347 F.3d 922, 924 (Fed. Cir. 2003) ; see Customs Courts Act of 1980 § 301, 28 U.S.C. § 2640(a)(1)(2012) (directing the Court of International Trade to review classification rulings on "the basis of the record made before the court"). The Court first considers whether "the government's classification is correct, both independently and in comparison with the importer's alternative." Value Vinyls, Inc. v. United States, 568 F.3d 1374, 1377, 1380 (Fed. Cir. 2009) ; Jarvis Clark Co. v. United States, 733 F.2d 873, 878 (Fed. Cir. 1984). The plaintiff has the burden of showing the government's determined classification to be incorrect. Park B. Smith, 347 F.3d at 925 ; Jarvis, 733 F.2d at 876. If the plaintiff meets that burden, the Court has an independent duty to arrive at "the correct result, by whatever procedure is best suited to the case at hand." Value Vinyls, 568 F.3d at 1377 (citing Jarvis, 733 F.2d at 878 ) (emphasis in original).

While the Court accords respect to Customs' classification rulings 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) ), the Court also has "an independent responsibility to decide the legal issue of the proper meaning and scope of HTSUS terms." Wilton Indus., Inc. v. United States, 741 F.3d 1263, 1265 (Fed. Cir. 2013) (citing Warner–Lambert Co. v. United States, 407 F.3d 1207, 1209 (Fed. Cir. 2005) ).

II. Judgment on the Pleadings under Rule 12

A party may move for judgment on the pleadings "after the pleadings are closed—but early enough not to delay trial." USCIT Rule 12(c). A Rule 12(c) motion for judgment on the pleadings is reviewed under the same standard as a motion to dismiss under Rule 12(b)(6) for failure to state a claim. See Forest Labs., Inc. v. United States , 29 CIT 1401, 1402–03, 403 F.Supp.2d 1348, 1349 (2005), aff'd, 476 F.3d 877 (Fed. Cir. 2007). USCIT Rule 12(b)(6) parallels Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. Compare USCIT R. 12(b)(6) with Fed. R. Civ. P. 12(b)(6). In deciding such a motion, the court assumes all factual allegations to be true and draws all reasonable inferences in favor of the non-moving party. See Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974) ; Cedars–Sinai Med. Ctr. v. Watkins, 11 F.3d 1573, 1584 n.13 (Fed. Cir. 1993) ; Gould, Inc. v. United States, 935 F.2d 1271, 1274 (Fed. Cir. 1991). A plaintiff's factual allegations must be "enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim of relief that is plausible on its face.' " Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly , 550 U.S. at 570, 127 S.Ct. 1955 ). The court may not rely on matters outside the pleadings unless it also treats the motion as one for summary judgment under USCIT Rule 56. See USCIT Rule 7(a), 12(d), 56.

III. Tariff Classification under the General Rules of Interpretation HTSUS

"In a classification case, the court construes the relevant (competing) classification...