Zani v. United States , 25 Ct. Int'l Trade 966 ( 2001 )

Slip. Op. 01-98____
UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE: RICHARD W. GOLDBERG, SENIOR JUDGE
___________________________
X
THOM S. ZANI D/B/A X
WHOLESALE ART & FRAME LTD., X
X
Plaintiff, X Court No. 95-07-00907
X
v. X
X
UNITED STATES, X
X
Defendant. X
X
____________________________X
[Judgment for Plaintiff]
Peter S. Herrick and Neil B. Mooney, for plaintiff.
Stuart E. Schiffer, Acting Assistant Attorney General; Joseph I.
Leibman, Attorney in Charge, International Trade Field Office
(Amy M. Rubin), Commercial Litigation Branch, Civil Division,
United States Department of Justice.
Dated: August 9, 2001
O P I N I O N
GOLDBERG, Senior Judge: This matter is before the Court following
trial de novo. It involves the proper classification of certain
paintings from Hong Kong and South Korea. Upon review of the
evidence presented at trial, the Court finds in favor of the
plaintiff, Thom S. Zani. The Court exercises jurisdiction
pursuant to 28 U.S.C. § 1581(a) (1994).
Page 2
BACKGROUND
The merchandise at issue was classified by the United States
Customs Service (“Customs”) under the provision for “[o]ther made
up articles:...Other” in subheading 6307.90.99 of the Harmonized
Tariff Schedule of the United States (“HTSUS”). Plaintiff, an
importer and distributor of paintings and frames, claims that the
merchandise is properly free of duty under the provision in
subheading 9701.10.00 HTSUS, for “[p]aintings, drawings, and
pastels, executed entirely by hand.” On the merits, the issue is
whether the imports were “executed entirely by hand,” as claimed
by the plaintiff.
On September 15, 1997, Senior Judge James L. Watson granted
summary judgment to defendant, sustaining Customs’s
classification. Zani v. United States, 976 F. Supp. 1033 (CIT
1997). On appeal, the Federal Circuit vacated the grant of
summary judgment and remanded for a trial to resolve disputed
issues of fact, including the reliability of Customs’s laboratory
test. See Thom S. Zani d/b/a Wholesale Art & Frame Ltd. v.
United States, Appeal No. 97-1115, 1998 WL 729247 (Fed. Cir.
October 16, 1998). Specifically, the Federal Circuit remanded
the case, “[b]ecause there are genuine issues of fact to be
resolved, including the adequacy of the Custom Service’s sampling
of the paintings imported by Mr. Zani, the reliability of the
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Customs Service’s laboratory report regarding the sampled
paintings, and the exact nature of the methods used in producing
the paintings at issue, and because there is an open question as
to the meaning of the term ‘stencil’ in relation to subheading
9701.10.00 of the HTSUS.” Id.A bench trial was held on January 11, 2001, in Fort
Lauderdale, Florida.
STANDARD OF REVIEW
Customs’s tariff classification decisions are presumed to be
correct, and the importer has the burden of proving otherwise.
See 28 U.S.C. § 2639(a)(1)(1994). To determine whether the
importer has overcome this presumption, the Court must consider
whether Customs’s classification is correct. This evaluation is
conducted both independently and in comparison with the
importer’s proposed alternative. See Jarvis Clark Co. v. United
States, 2 Fed. Cir. (T) 70, 75, 733 F.2d 873, 878 (1984) reh’g
denied, 2 Fed. Cir. (T) 97, 739 F.2d 628 (1984).
DISCUSSION
I. ARGUMENTS AT TRIAL
At trial, Customs argued that the imports are properly
classifiable under subheading 6307.90.00, HTSUS, rather than
subheading 9701.10.00, HTSUS, because they are not “executed
entirely by hand.” Customs claimed that its classification
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decision is supported by laboratory testing and a report by the
Customs laboratory in Savannah, Georgia dated January 19, 1994,
concluding that the three paintings sampled from the merchandise
at issue were produced with the use of a stencil. Customs
asserted that the use of a stencil precludes classifying the
merchandise at issue as “executed entirely by hand.”
The plaintiff contended that Customs’s testing and
laboratory report were unreliable because the samples were not
representative of the subject merchandise and the test utilized
fails under the admissibility factors for the use of “scientific,
technical, or other specialized knowledge.” Daubert v. Merrel Dow
Pharmaceuticals, Inc., 509 U.S. 579, 589 (1993).1 The plaintiff
also argues that the “stencils” referred to in the Explanatory
Notes to the HTSUS are the type that are used in a mechanized
system of manufacturing machine-produced painted or silk-screened
articles. Therefore, because plaintiff’s artists only
occasionally use a single hand-held stencil when painting, the
1
Daubert established that when considering the admissibility
of scientific, technical or specialized knowledge, evidence or
expert testimony a court should consider: 1) the testability of
the hypothesis; 2) whether the theory or technique has been
subject to peer review or publication; 3) the known or potential
error rate; and 4) whether the technique is generally accepted.
See Daubert, 509 U.S. at 589. In Libas Ltd. v. United States,
193 F.3d 1362 (Fed Cir. 1999), the Federal Circuit explicitly
expanded the Daubert test to questions of reliability.
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plaintiff argues that the artwork is “executed entirely by hand”
under subheading 9701.10.00.
II. CUSTOMS’S LABORATORY TEST AND REPORT
Customs based its classification on a test it conducted on
three paintings sampled from the merchandise at issue. See Gov’t
Ex. A., Notice of Damage, Shortage, or Samples Retained (“Sample
Notice”); Gov’t Ex. B., United States Custom Service Laboratory
Report (“Lab Report”). After a visual inspection with the aid of
a magnifying glass, a trained chemist of the Customs Service
Laboratory in Savannah, Georgia, Ms. Laurie Lungwitz, concluded
that “the paintings showed evidence that a mechanical device (a
stencil) was used in the production of the paintings,” and thus
“the paintings were not executed entirely by hand.” See Lab
Report. Ms. Lungwitz testified that the paintings showed no
evidence of brush strokes and the paint appeared, in part, to be
applied by spray application. See id. Three separate Customs
employees verified the test results. See id.The trial testimony and evidence, however, exposed
significant shortcomings in both Customs’s general testing
procedure and this specific test. First, the plaintiff
established that the entry numbers on the Lab Report and the
entry number on the Sample Notice, did not match. Through
further testimony, Customs was able to explain the discrepancy as
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a likely typographical error. The entry number discrepancy,
however, regardless of the cause, damages the integrity of the
laboratory test.
Second, the testimony revealed that Customs destroyed the
sampled paintings. During the trial, Ms. Lungwitz explained that
under normal Customs procedure an import specialist would notify
the Customs laboratory to retain samples once a protest is filed.
In this case, however, for some reason the import specialist
failed to make that notification, and the sampled paintings were
destroyed.
Third, on cross-examination Ms. Lungwitz testified that
Customs’s laboratory test did not meet any of the Daubert
factors. See 509 U.S. at 589.
III. TESTIMONY OF WANDA BARNEY
Ms. Barney, a professional artist, was qualified by the
Court as an expert to testify on the issue of whether the
paintings were painted by hand.2 Ms. Barney testified that in
2
Customs challenged the Court’s expert witness designation
of Ms. Barney. The Court, however, considered Ms. Barney to be
qualified as an expert for the purposes of determining if art
objects were created by hand. See F.R.E. 702. Ms. Barney
testified that in over thirteen years as a professional artist
she created thousands of art objects using oils, acrylics,
watercolors, mixed media, media collages, silk screening, paper
casting, sculpturing, and bas relief. The Court determined that
Ms. Barney’s knowledge, skill, experience and training would
assist the Court in understanding the evidence. See id.Page 7
late 1993 or early 1994, while visiting Zani’s place of business,
she examined the paintings that are now at issue in this case.
Ms. Barney determined that the paintings were painted by hand and
not printed. Further, during her testimony, Ms. Barney examined
a painting similar to the paintings at issue and determined, by
considering its texture and layering, that it was executed
entirely by hand.
The Court found Ms. Barney’s testimony to be credible.
Moreover, the Court notes that Customs was not successful in
discrediting either Ms. Barney’s qualifications or testimony.
IV. ANALYSIS
The Court finds that Customs improperly classified the
merchandise at issue. Based upon the evidence presented at
trial, the paintings should have been considered to be executed
entirely by hand and thus classified under subheading 9701.10.00,
HTSUS. Specifically, the Court finds that the plaintiff has
overcome the presumption of correctness enjoyed by Customs, and
that Customs’s laboratory test has proven to be unreliable in
this instance.3
3
The Court is mindful of the Federal Circuit’s concerns
regarding the adequacy of Customs’s sampling and the meaning of
the term “stencil” within the HTSUS. See Zani, 976, F. Supp. at
1033. The Court declines to address these issues, however, as
the adequacy of Customs’s laboratory test is the only inquiry
necessary for resolution of this case.
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As a threshold matter, the Court finds that the plaintiff
has overcome the presumption of correctness enjoyed by Customs.
See Jarvis, 733 F.2d at 878. Ms. Barney testified that in her
professional opinion the paintings were executed entirely by
hand. As indicated supra, the Court considered Ms. Barney’s
testimony to be credible, notwithstanding challenges made by
Customs. During the trial, Customs argued that the plaintiff had
not presented enough evidence to overcome the presumption of
correctness. The Court agrees with Customs that stronger
evidence would be preferable. Specifically, the Court would
prefer that Ms. Barney examine the same samples examined by
Customs’s laboratory. Customs, however, destroyed such samples.
The Court will not allow Customs to benefit from its own
mismanagement of the tested samples.
Next, the Court finds that Customs’s laboratory test was
unreliable in this instance. The test, as used here, was
unreliable both because the destroyed samples could not be
examined in conjunction with the laboratory report, and because
the entry number discrepancy calls into question both the chain
of custody and the general accuracy of Customs’s work.
The Court also questions whether the Customs’s laboratory
test satisfies a Daubert analysis. Ms. Lungwitz testified that
the test did not meet any of the Daubert factors. Ms. Lungwitz’s
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testimony is the only trial evidence on the matter. The Court
recognizes that the Daubert test is not a bright-line test, and
that the factors should be considered within the context of the
test.4 The Court falls short of declaring that Customs’s
laboratory test fails the Daubert analysis for reliability in all
instances. The Court, however, does find in this instance that
Customs has presented no evidence of Daubert reliability. Thus,
for purposes of this case, Customs’s test is deemed unreliable.
CONCLUSION
Because the evidence at trial established that Custom’s
laboratory test was unreliable in this instance, the Court finds
that Customs erred in classifying the merchandise under
subheading 6307.90.99, HTSUS. Further the Court finds that the
merchandise is properly classifiable under subheading 9701.10.00,
HTSUS.
4
For instance, the court considers that peer review is
likely impractical in this context, because few individuals or
organizations would find it necessary to examine a painting to
determine if it was executed entirely by hand.
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JUDGMENT
This case having been heard at trial and submitted for
decision, and the Court, after due deliberation, having rendered
a decision herein; now, in conformity with said decision, it is
hereby
ORDERED, ADJUDGED, and DECREED: that the classification of
the merchandise at issue in this case, certain paintings from
Hong Kong and Korea, by the United States Customs Service
("Customs") under subheading 6307.90.99 of the Harmonized Tarrif
Schedule of the United States ("HTSUS") is reversed; and it is
further
ORDERED, ADJUDGED, and DECREED: that Customs shall
reliquidate the aforementioned subject merchandise under
subheading 9701.10.00 of the HTSUS. Customs shall refund all
excess duties paid with interest as provided by law. Judgment is
hereby entered for plaintiff.
____________________________
Richard W. Goldberg
SENIOR JUDGE
Dated: August 9, 2001
New York, New York