The Container Store v. United States

United States Court of Appeals
for the Federal Circuit
______________________
THE CONTAINER STORE,
Plaintiff-Appellant
v.
UNITED STATES,
Defendant-Appellee
______________________
2016-1666
______________________
Appeal from the United States Court of International
Trade in No. 1:09-cv-00327-MAB, Judge Mark A. Barnett.
______________________
Decided: July 18, 2017
______________________
ROBERT B. SILVERMAN, Grunfeld, Desiderio, Lebowitz,
Silverman & Klestadt LLP, New York, NY, argued for
plaintiff-appellant. Also represented by ALAN R.
KLESTADT, ROBERT FLEMING SEELY.
MARCELLA POWELL, International Trade Field Office,
Commercial Litigation Branch, Civil Division, United
States Department of Justice, New York, NY, argued for
defendant-appellee. Also represented by AMY RUBIN,
JEANNE E. DAVIDSON, BENJAMIN C. MIZER; PAULA S.
SMITH, Office of the Assistant Chief Counsel, United
States Bureau of Customs and Border Protection, United
States Department of Homeland Security, New York, NY.
2 THE CONTAINER STORE v. UNITED STATES
______________________
Before NEWMAN, MAYER, and O’MALLEY, Circuit Judges.
MAYER, Circuit Judge.
The Container Store appeals the final judgment of the
United States Court of International Trade (“Trade
Court”) granting the government’s motion for summary
judgment and concluding that imported elfa® top tracks
and hanging standards were properly classified under
subheading 8302.42.30 of the Harmonized Tariff Schedule
of the United States (“HTSUS”) as “[b]ase metal mount-
ings, fittings and similar articles suitable for furniture.”
See Container Store v. United States, 145 F. Supp. 3d
1331, 1348–49 (Ct. Int’l Trade 2016) (“Container Store
II”). Because we conclude that the subject imports should
instead be classified under HTSUS subheading
9403.90.80 as parts of unit furniture, we reverse and
remand.
BACKGROUND
The Container Store’s top tracks and hanging stand-
ards are two components of its elfa® modular storage and
organization system. See id. at 1333. Consumers can
assemble the different components of this system “in a
variety of configurations to create a customized, modular
storage unit.” Id. The top tracks and hanging standards,
which are made of epoxy-bonded steel, see id., “serve as
the frame or support structure in a complete elfa® sys-
tem,” id. at 1344.
A top track has a flat back and is designed to be af-
fixed horizontally, using screws or anchors, to a vertical
surface such as a door or a wall. It has top and bottom
edges that “protrude and respectively bend downward and
upward to form the track’s upper and lower lips.” Id. at
1333. A hanging standard, which has an open back and a
flat front with rows of evenly spaced slots, is suspended
THE CONTAINER STORE v. UNITED STATES 3
vertically “from a top track by means of notches on the top
end of the standard that slide into the top track’s lower
lip.” Id. Consumers can attach various additional elfa®
components, such as baskets, drawers, and shelves, to the
hanging standards. Id. at 1334. The top tracks and
hanging standards are designed to be used only with
other elfa® system components. Id.The Container Store imported the elfa® top tracks
and hanging standards through the Port of Houston,
Texas, in October 2007 and January 2008. See id. U.S.
Customs and Border Protection (“Customs”) liquidated
the subject merchandise under subheading 8302.41.60, a
provision for base metal mountings and fittings suitable
for buildings. The Container Store filed timely protests
challenging Customs’ classification, arguing that the
subject merchandise should instead be classified under
subheading 9403.90.80 as parts of furniture. Customs
denied these protests, relying on a prior Customs ruling
that had been issued to The Container Store. See Cust. B.
& Dec. HQ 967149, 2004 U.S. CUSTOM HQ LEXIS 411,
at *1 (Nov. 2, 2004) (“HQ 967149”). In that prior ruling,
Customs held that the elfa® top tracks and hanging
standards at issue were properly classified under sub-
heading 8302.41.60 as mountings suitable for buildings.
Id. at *11, *20–21. In declining to classify the merchan-
dise under subheading 8302.42.30 as mountings suitable
for furniture, Customs explained that “the top tracks and
hanging standards are not accessory items to be used
with furniture,” but “[i]nstead . . . form the structure of
the furniture.” Id. at *17. Customs further explained
that “[s]tructural elements of furniture are not mountings
and fittings suitable for furniture” and therefore cannot
be classified under subheading 8302.42.30. Id. The
Container Store then appealed to the Trade Court, which
placed the appeal on its reserve calendar pending resolu-
tion of another appeal filed by The Container Store in-
volving identical merchandise. See Container Store v.
4 THE CONTAINER STORE v. UNITED STATES
United States, 800 F. Supp. 2d 1329 (Ct. Int’l Trade 2011)
(“Container Store I”).
In Container Store I, Judge Ridgway granted The
Container Store’s motion for summary judgment, conclud-
ing that the elfa® top tracks and hanging standards at
issue were properly classified under subheading
9403.90.80 as parts of unit furniture. Id. at 1336–38.
Relying on this court’s decision in storeWALL, LLC v.
United States, 644 F.3d 1358 (Fed. Cir. 2011), Judge
Ridgway determined that the elfa® organization and
storage system, like the storeWALL organization and
storage system, “constitutes ‘unit furniture,’ because it
consists of components that are fitted together with other
pieces to form a larger system, it is designed to be hung
on or fixed to a wall, and it is assembled together so as to
suit specific individual consumers’ particular needs to
organize and store various objects or articles.” Container
Store I, 800 F. Supp. 2d at 1337. She emphasized, moreo-
ver, that “it is the very versatility and adaptability of
systems such as the elfa® system and the storeWALL
system that render them unit furniture and distinguish
them from the run-of-the-mill coat, hat and similar racks
that are specifically excluded from classification as furni-
ture.” Id. at 1338 (citations and internal quotation marks
omitted). According to Judge Ridgway, because the metal
elfa® top tracks and hanging standards, like the plastic
wall panels and locator tabs at issue in storeWALL, are
“dedicated solely for use with a completed” unit furniture
system, they are properly classified as parts of unit furni-
ture under heading 9403. 1 Id. (citations and internal
quotation marks omitted).
1 The government subsequently appealed Judge
Ridgway’s decision to classify the elfa® top tracks and
hanging standards under subheading 9403.90.80, but
later abandoned its appeal.
THE CONTAINER STORE v. UNITED STATES 5
Judge Barnett reached a different conclusion with re-
spect to the classification of the elfa® top tracks and
hanging standards at issue in the present appeal. See
Container Store II, 145 F. Supp. 3d at 1348–49. Judge
Barnett acknowledged that this court, in storeWALL, 644
F.3d at 1363–64, held that the plastic wall panels and
locator tabs used in the storeWALL modular storage
system were properly classified under heading 9403 as
parts of unit furniture. See Container Store II, 145 F.
Supp. 3d at 1340–41. He further acknowledged that the
“elfa® top [tracks] and hanging standards are functionally
equivalent to the storeWALL system.” Id. at 1344 (foot-
note omitted). Judge Barnett noted, however, that “Chap-
ter 94 Note 1(d) excludes parts of general use from
Chapter 94, while Section XV Note 2(c) specifically places
parts of general use into heading 8302, HTSUS.” Id. at
1346. In Judge Barnett’s view, because the elfa® top
tracks and hanging standards are parts of general use,
they are properly classified under heading 8302 and
excluded from heading 9403. Id. at 1349.
The Container Store then appealed to this court. We
have jurisdiction under 28 U.S.C. § 1295(a)(5).
DISCUSSION
I.
We review the grant of summary judgment by the
Trade Court de novo. Airflow Tech., Inc. v. United States,
524 F.3d 1287, 1290 (Fed. Cir. 2008); Russell Stadelman
& Co. v. United States, 242 F.3d 1044, 1048 (Fed. Cir.
2001). The proper interpretation of HTSUS headings and
subheadings is a question of law, reviewed without defer-
ence. Drygel, Inc. v. United States, 541 F.3d 1129, 1133
(Fed. Cir. 2008); see also Warner-Lambert Co. v. United
States, 407 F.3d 1207, 1209 (Fed. Cir. 2005) (emphasizing
that “this court has an independent responsibility to
decide the legal issue of the proper meaning and scope of
HTSUS terms”).
6 THE CONTAINER STORE v. UNITED STATES
“The HTSUS scheme is organized by headings, each of
which has one or more subheadings; the headings set
forth general categories of merchandise, and the subhead-
ings provide a more particularized segregation of the
goods within each category.” Wilton Indus., Inc. v. United
States, 741 F.3d 1263, 1266 (Fed. Cir. 2013). Classifica-
tion of merchandise under the HTSUS is guided by the
principles set forth in the General Rules of Interpretation.
See Millenium Lumber Distribution Ltd. v. United States,
558 F.3d 1326, 1328 (Fed. Cir. 2009). These rules are
applied in numerical order, and if a particular rule re-
solves the classification issue, there is no need to examine
subsequent rules. See CamelBak Prods., LLC v. United
States, 649 F.3d 1361, 1364 (Fed. Cir. 2011). Under
General Rule of Interpretation 1, a court must determine
the appropriate classification for merchandise “according
to the terms of the headings and any relative section or
chapter notes.” See Millenium, 558 F.3d at 1328–29.
“HTSUS terms are construed according to their common
and commercial meanings, which are presumed to be the
same absent contrary legislative intent.” Len-Ron Mfg.
Co. v. United States, 334 F.3d 1304, 1309 (Fed. Cir. 2003).
II.
The dispute here centers on whether the subject im-
ports are properly classifiable under HTSUS subheading
8302.42.30 as mountings and fittings suitable for furni-
ture or under HTSUS subheading 9403.90.80 as parts of
furniture. 2 Subheading 8302.42.30 covers:
8302 Base metal mountings, fittings and similar
articles suitable for furniture, doors, staircases,
windows, blinds, coachwork, saddlery, trunks,
chests, caskets or the like; base metal hat racks,
2 Subheading 8302.42.30 carries a 3.9% duty,
whereas subheading 9403.90.80 is a duty-free provision.
THE CONTAINER STORE v. UNITED STATES 7
hat-pegs, brackets and similar fixtures; castors
with mountings of base metal; automatic door
closers of base metal; and base metal parts there-
of:
8302.42 Other, suitable for furniture:
8302.42.30 Of iron or steel, of
aluminum or of zinc.
HTSUS subheading 9403.90.80 covers:
9403 Other furniture and parts thereof:
9403.90 Parts:
9403.90.80 Other.
In storeWALL, we defined “unit furniture,” for pur-
poses of heading 9403, as an article:
(a) fitted with other pieces to form a larger system
or which is itself composed of smaller complemen-
tary items, (b) designed to be hung, to be fixed to
the wall, or to stand one on the other or side by
side, and (c) assembled together in various ways
to suit the consumer’s individual needs to hold
various objects or articles, but (d) exclud[ing] oth-
er wall fixtures such as coat, hat and similar
racks, key racks, clothes brush hangers, and
newspaper racks.
644 F.3d at 1361 (citations and internal quotation marks
omitted); see also id. at 1363.
The government acknowledges that “[t]he elfa® sys-
tem facially satisfies this definition as it consists of va-
ri[ous] pieces that form a larger storage or organizational
system that is designed to be hung on a wall and assem-
bled in various ways to suit the consumer’s needs.” It
argues, however, that because the elfa® top tracks and
8 THE CONTAINER STORE v. UNITED STATES
hanging standards are “parts of general use” and such
parts are excluded from the scope of heading 9403, 3 they
cannot be classified under heading 9403 but must instead
be classified under heading 8302.
The Container Store does not dispute that parts of
general use covered by heading 8302 are excluded from
the scope of heading 9403. It asserts, however, that the
elfa® top tracks and hanging standards are not parts of
general use because they are essential structural compo-
nents of the elfa® system. It further contends that be-
cause the elfa® top tracks and hanging standards, like
the plastic locator tabs and wall panels at issue in store-
WALL, 644 F.3d at 1363–64, are components of a unit
furniture system, they are properly classified as parts of
unit furniture under heading 9403.
We agree with The Container Store. In concluding
that the elfa® top tracks and hanging standards consti-
tute parts of general use, the Trade Court failed to give
due consideration to Explanatory Note 83.02, which
provides pertinent guidance as to the merchandise cov-
ered by heading 8302. See World Cust. Org., Harmonized
Commodity Description & Coding Sys. Explanatory Notes,
Explanatory Note 83.02. “The World Customs Organiza-
tion’s Explanatory Notes that accompany each Chapter of
the HTSUS, while not legally binding, are persuasive and
are generally indicative of the proper interpretation of the
3 Note 1(d) to Chapter 94 states, in relevant part,
that the chapter does not include “[p]arts of general use
as defined in note 2 to section XV.” Note 2 to section XV,
which covers articles of base metal, states that the phrase
“[p]arts of general use” includes “[a]rticles of heading . . .
8302.” Read together, these notes indicate that if items
are parts of general use covered by heading 8302, they
cannot be classified in heading 9403. See Container Store
II, 145 F. Supp. 3d at 1345–46.
THE CONTAINER STORE v. UNITED STATES 9
tariff provision.” Lemans Corp. v. United States, 660 F.3d
1311, 1316 (Fed. Cir. 2011) (citations and internal quota-
tion marks omitted); see also Rocknel Fastener, Inc. v.
United States, 267 F.3d 1354, 1360 (Fed. Cir. 2001) (ex-
plaining that the Explanatory Notes were “prepared by
the World Customs Organization to accompany the inter-
national harmonized schedule”). Explanatory Note 83.02
states:
[Heading 8302] covers general purpose classes of
base metal accessory fittings and mountings such
as are used largely on furniture, doors, windows,
coachwork, etc. Goods within such general classes
remain in this heading even if they are designed
for particular uses (e.g., door handles or hinges for
automobiles). The heading does not, however, ex-
tend to goods forming an essential part of the
structure of the article, such as window frames or
swivel devices for revolving chairs.
This provision draws a sharp distinction between
“general purpose . . . accessory fittings and mountings,”
which fall within the scope of heading 8302 and “goods
forming an essential part of the structure of [an] article,”
which do not. The top tracks and hanging standards
provide the indispensable structural framework for the
elfa® modular storage unit, and without them the system
could not hang from a vertical surface. See Container
Store II, 145 F. Supp. 3d at 1334 (explaining that the top
tracks and hanging standards “serve as the frame or
support structure in a complete elfa® system”); see also
Container Store I, 800 F. Supp. 2d at 1332 (stating that
the “[t]op tracks and hanging standards are the core
components of the elfa® system” and “serve as the ‘back-
bone’ of [that] system”). Because the subject imports are
essential structural components of the elfa® modular
storage unit, they are excluded from heading 8302. See
HQ 967149, 2004 U.S. CUSTOM HQ LEXIS 411, at *17
(explaining that elfa® top tracks and hanging standards
10 THE CONTAINER STORE v. UNITED STATES
cannot properly be classified in subheading 8302.42.30
because they are “structural elements of the shelving unit”
(emphasis added)).
A review of the products listed in Explanatory Note
83.02 reinforces our conclusion that heading 8302 does
not cover the subject merchandise. Explanatory Note
83.02 states that items “such as” swivel devices for revolv-
ing chairs and frames for windows, which “form[] an
essential part of the structure of [an] article,” are exclud-
ed from heading 8302. A swivel device, which is integrat-
ed between the base and the seat of a revolving chair, is
part of the framework of the chair and allows it to rotate.
A window frame holds and positions the window glass.
The elfa® top tracks and hanging standards are analo-
gous to these products. Just as a swivel device is an
indispensable skeletal component of a revolving chair and
a window frame is an indispensable skeletal component of
a completed window assembly, the top tracks and hanging
standards are essential skeletal components of an elfa®
modular storage unit. See, e.g., Lemans, 660 F.3d at1320–22 (analyzing a list of examples provided in the
Explanatory Notes in interpreting the term “sports
equipment”); Totes, Inc. v. United States, 69 F.3d 495,
499–501 (Fed. Cir. 1995) (considering the examples listed
in the Explanatory Notes when determining the proper
classification for automobile “trunk organizers”).
III.
As the government correctly points out, Explanatory
Notes may not be deployed to contravene the plain mean-
ing of a tariff provision. See Airflow Tech., 524 F.3d at
1293 (“[W]hen the language of the tariff provision is
unambiguous and the Explanatory Notes contradictory,
we do not afford [the Explanatory Notes] any weight.”
(citations and internal quotation marks omitted) (second
alteration in original)). According to the government, the
language of Explanatory Note 83.02 which excludes
THE CONTAINER STORE v. UNITED STATES 11
“goods forming an essential part of the structure of [an]
article” from the scope of heading 8302 should be disre-
garded because it “conflict[s] with the actual terms of that
heading by removing goods that are indisputably classi-
fied there.” In support, the government argues that door
hinges and door knobs are classifiable in heading 8302,
notwithstanding the fact that both hinges and knobs are
“essential to doors.”
This argument fails. Explanatory Note 83.02 does not
exclude from heading 8302 any mounting or fitting “es-
sential” to an article, but instead excludes only those
mountings and fittings that “form[] an essential part of
the structure of the article.” While a hinge or a knob may
be essential to the operation of a door, they are not essen-
tial parts of the structure of the door itself. Items such as
hinges and knobs are attached to, or placed on, a door. By
contrast, the top tracks and hanging standards actually
create the structure of the elfa® modular storage unit.
Without them, the elfa® system would not exist. See HQ
967149, 2004 U.S. CUSTOM HQ LEXIS 411, at *17
(explaining that “the top tracks and hanging standards
are not accessory items to be used with furniture,” but
“[i]nstead . . . form the structure of the furniture”).
IV.
Honda of America Manufacturing, Inc. v. United
States, 607 F.3d 771 (Fed. Cir. 2010), upon which the
government relies, is inapposite. There the issue was
whether the Trade Court erred in concluding that import-
ed oil bolts were classifiable as “parts of general use”—
more specifically, as screws—under HTSUS subheading
7318.15.80 rather than as parts of motor vehicles under
Chapter 87. Id. at 774–75. The importer conceded that
the oil bolts had the fastening characteristics of metal
screws, but argued that they were not parts of general use
because they did “not function solely in a fastening capac-
ity, but [instead] also conduct[ed] fluids and prevent[ed]
12 THE CONTAINER STORE v. UNITED STATES
leakage.” Id. at 775 (citations and internal quotation
marks omitted). We rejected this argument, however,
explaining that the relevant “Explanatory and Section
Notes [did] not restrict heading 7318 to items whose sole
function is to fasten,” but instead clarified that the head-
ing “include[s] all types of fastening bolts and metal
screws regardless of shape and use.” Id. (citations and
internal quotation marks omitted). We further explained
that because the oil bolts were properly classified as parts
of general use under heading 7318, they could not be
classified as parts of motor vehicles under Chapter 87. Id.at 774–76.
The situation here is readily distinguishable from that
presented in Honda. Heading 7318, the “parts of general
use” tariff provision at issue in Honda, specifically includ-
ed “screws” and the importer conceded that its oil bolts
functioned as screws. Id. at 775. Furthermore, as dis-
cussed above, the relevant Explanatory Notes clarified
that heading 7318 covered all types of screws, regardless
of use. See id. Here, by contrast, Explanatory Note 83.02
makes clear that while heading 8302 covers “base metal
accessory fittings and mountings such as are used largely
on furniture,” it does not extend to essential structural
parts.
V.
In storeWALL, we concluded that plastic components
of a home storage and organization system were properly
classified under heading 9403 as parts of unit furniture.
644 F.3d at 1363–64. At issue there were “locator tabs,”
which were used to affix the system to a wall, and wall
panels, which rested upon the locator tabs. Id. at 1360.
Consumers then had the option of attaching various
additional components, such as shelves, baskets, and
hooks, to the wall panels in order “to create a customized
storage or display unit.” Id.THE CONTAINER STORE v. UNITED STATES 13
In concluding that the storeWALL system constituted
“unit furniture,” we explained that “[t]he fact that the end
user has the option with the storeWALL system to add or
subtract accessories is the very reason any such system is
unit furniture,” and that “[e]ven if equipped only with
hooks, the . . . system retains the essential versatility and
adaptability that is the very essence of unit furniture.”
Id. at 1364. We further concluded that “because both the
wall panels and . . . locator tabs are dedicated solely for
use with a completed storeWALL system, and such a
system is unit furniture, the Court of International Trade
clearly erred by not classifying the products as ‘parts’ of
unit furniture under [s]ubheading 9403.90.50, HTSUS.”
Id. (footnote omitted).
A similar analysis applies here. 4 The elfa® system
constitutes “unit furniture” because it is designed to be
4 Contrary to The Container Store’s assertions,
however, stare decisis did not compel the Trade Court to
classify the elfa® top tracks and hanging standards in
heading 9403. “Stare decisis . . . is limited to only the
legal determinations made in a prior precedential opinion
and does not apply to either issues of fact, such as classifi-
cation of specific goods within a construed tariff provision,
or issues of law that were not part of a holding in a prior
decision.” Deckers Corp. v. United States, 752 F.3d 949,
956 (Fed. Cir. 2014). In storeWALL, 644 F.3d at 1363–64,
we concluded that plastic components of a home storage
system should be classified as parts of unit furniture
under subheading 9403.90.50 rather than as “[o]ther
articles of plastics” under subheading 3926.90.98. We did
not, however, resolve the precise issue presented here,
which is whether metal top tracks and hanging standards
should be classified as metal mountings and fittings
suitable for furniture under subheading 8302.42.30 or
instead as parts of unit furniture under subheading
14 THE CONTAINER STORE v. UNITED STATES
hung on a wall, is “fitted with other pieces to form a
larger system,” and can be “assembled together in various
ways to suit the consumer’s individual needs to hold
various objects or articles.” Id. at 1361 (citations and
internal quotation marks omitted). Given that the top
tracks and hanging standards are designed exclusively for
the elfa® unit furniture system, they are properly classi-
fied as parts of unit furniture under HTSUS subheading
9403.90.80. See Container Store II, 145 F. Supp. 3d at
1334 (“By design, consumers may only use top tracks and
hanging standards with other elfa® system compo-
nents.”).
CONCLUSION
Accordingly, the judgment of the Court of Interna-
tional Trade is reversed and the case is remanded for
further proceedings consistent with this opinion.
REVERSED AND REMANDED
COSTS
No costs.
9403.90.80. See Brecht v. Abrahamson, 507 U.S. 619, 631
(1993) (explaining that stare decisis applies where an
issue was “squarely addressed” in a prior opinion).