Warner-Lambert Co. v. United Stat

Slip Op. 08-31
UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS
_____________________________________
:
WARNER-LAMBERT COMPANY, :
:
Plaintiff, :
: Consolidated
v. : Court No.: 02-00520
:
UNITED STATES, :
:
Defendant. :
_____________________________________ :
Held: Plaintiff’s motion for summary judgment is granted in part
and denied in part. Plaintiff’s motion for sanctions is denied.
Dated: March 14, 2008
Rode & Qualey, (Patrick D. Gill); of counsel: Eleanore Kelly-
Kobayashi, for Warner-Lambert Company, Plaintiff.
Jeffrey S. Bucholtz, Acting Assistant Attorney General, Barbara S.
Williams, Attorney-in-Charge, International Trade Field Office,
Bruce N. Stratvert, Civil Division, Commercial Litigation Branch,
United States Department of Justice; of counsel: Chi S. Choy,
International Trade Litigation, United States Customs and Border
Patrol, for the United States, Defendant.
OPINION
TSOUCALAS, Senior Judge: Plaintiff Warner-Lambert Company
(“Plaintiff” or “WLC”) challenges the classification of the
merchandise at issue by the United States Bureau of Customs and
Border Protection (“Customs”) under subheading 1704.90.35 of the
Harmonized Tariff Schedule of the United States (“HTSUS”) covering
Court No. 02-00520 Page 2
“confections or sweetmeats ready for consumption, other.”
Plaintiff maintains that the merchandise is properly classified
under subheading 3306.90.00, HTSUS, as “preparation for oral or
dental hygiene, other.” This matter is before the Court on
Plaintiff’s motion for summary judgment pursuant to USCIT R. 56.
Plaintiff also moves for sanctions against Defendant pursuant to
USCIT R. 11(c).
JURISDICTION
The Court has jurisdiction over this matter pursuant to 28
U.S.C. § 1581 (2000).
STANDARD OF REVIEW
On a motion for summary judgment, the Court must determine
whether there are any genuine issues of fact that are material to
the resolution of the action. See Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986). A factual dispute is genuine if it might
affect the outcome of the suit under the governing law. See id.Accordingly, the Court may not decide or try factual issues upon a
motion for summary judgment. See Phone-Mate, Inc. v. United
States, 12 CIT 575, 577, 690 F. Supp. 1048, 1050 (1988). When
genuine issues of material fact are not in dispute, summary
judgment is appropriate if a moving party is entitled to judgment
Court No. 02-00520 Page 3
as a matter of law. See USCIT R. 56; see also Celotex Corp. v.
Catrett, 477 U.S. 317, 322-23 (1986).
DISCUSSION
I. Background
This consolidated action concerns the proper classification of
the subject merchandise, which Plaintiff purports to be Certs®
Powerful Mints. See Complaint ¶ 6; Answer ¶ 6. Certs® Powerful
Mints are sugar-free breath mints containing the active ingredient
Retsyn®, which consists of partially hydrogenated cottonseed oil
and copper gluconate. See Complaint ¶¶ 9, 11, 12; Answer ¶¶ 9, 11,
12. Customs liquidated the subject entries under subheading
1704.90.35 as a sugar confectionery. See Complaint ¶ 7; Answer ¶
7. WLC timely protested said classification pursuant to 19 U.S.C.
§ 1514. See Complaint, ¶ 4; Answer ¶ 4.
The United States Court of Appeals for the Federal Circuit
(“CAFC”) previously considered the sugar-free Certs® Powerful Mints
(hereinafter “test case”) and found them to be properly classified
under subheading 3306.90.00, HTSUS, covering oral or dental hygiene
products. See Warner-Lambert Co. v. United States, 407 F.3d 1207(Fed. Cir. 2005). Familiarity with the CAFC’s opinion in Warner-
Lambert Co. v. United States, 407 F.3d 1207 and the trial court’s
opinion in Warner-Lambert Co. v. United States, 28 CIT 788, 343 F.
Court No. 02-00520 Page 4
Supp. 2d 1315 (2004), is presumed.
Plaintiff maintains that the goods covered in the subject
entries are identical to the Certs® Powerful Mints considered in
the test case. See Mem. Supp. Pl.’s Mot. Summ. J. (“Pl.’s Mem.”)
at 1-7. Plaintiff also argues that the Court should rule in its
favor by application of the principles of res judicata or stare
decisis. See Pl.’s Mem. at 8-10. Customs concedes that if the
subject merchandise is in fact identical to the Certs® Powerful
Mints considered in the test case, then it would be properly
classified under subheading 3306.90.00, HTSUS. See Def.’s Mem.
Supp. Opp. Pl.’s Mot. Sum. J. at 4. However, Customs contends that
summary judgment is inappropriate because there are material facts
in dispute concerning whether the merchandise is in fact Certs®
Powerful Mints. See id. at 2-3.
All liquidated duties with respect to the subject entries were
paid prior to the commencement of this action. See Complaint ¶ ;
Answer ¶ 5. On August 14, 2007, the record of the test case was
incorporated in the record of this case.
II. Res Judicata And Stare Decisis
Neither res judicata nor stare decisis requires the Court to
find in favor of the Plaintiff. The United States Supreme Court
held long ago that res judicata does not apply to customs
classification cases. See United States v. Stone & Downer Co., 274
Court No. 02-00520 Page 5
U.S. 225, 233-37 (1927); DaimlerChrysler Corp. v. United States,
442 F.3d 1313, 1321 (Fed. Cir. 2006); Avenues in Leather, Inc. v.
United States, 317 F.3d 1399 (Fed. Cir. 2003); Schott Optical
Glass, Inc. v. United States, 750 F.2d 62, 64 (Fed. Cir. 1984).
Moreover, “the doctrine of stare decisis applies to only legal
issues and not issues of fact[.]” Avenues In Leather v. United
States, 423 F.3d 1326, 1331 (Fed. Cir. 2005). The determination of
whether the subject merchandise falls within the description of a
tariff provision, as is the case here, is a question of fact. See
id. Thus, the Court rejects Plaintiff’s arguments that res
judicata and/or stare decisis requires a judgment in its favor.
III. Material Facts Alleged To Be In Dispute
Customs argues that summary judgment should not be granted in
favor of the plaintiff with respect to the merchandise imported
under entry numbers 201-1338775-5 and 201-1338890-2. See Def.’s
Mem. Supp. Opp’n Pl.’s Mot. Summ. J. (“Def.’s Opp’n”) at 3.
According to Customs, there exists a dispute as to a material fact
with regard to these two entries because the commercial invoices1
1
Although Defendant states that the invoices for entry
numbers 201-1338775-5 and 201-1338890-2 describe Certs Peppermint
Standard with item number 35600-00 and Certs Spearmint Standard
with item number 35650-00, this is inaccurate. See Def.’s Opp’n
at 3. The actual invoices for these two entries reflect item
numbers 35600-40 and 35650-40 for Certs Peppermint Standard and
Certs Spearmint Standard, respectively. See Pl.’s Mem., Exhibits
M and N. The Court will employ the item numbers appearing on the
Court No. 02-00520 Page 6
describe the goods as “Certs Peppermint Standard” with
corresponding item number 35600-40 and “Certs Spearmint Standard”
with corresponding item number 35650-40 while the corresponding
bills of lading describe the same goods as “Cool Mint Drops.”2 See
Def.’s Opp’n at 3. Based on the conflicting evidence, Customs
contends that there exists an issue of fact as to the identity of
the goods covered in these two entries. See id. at 3.
Plaintiff counters that Defendant’s position is in conflict
with the record testimony for the test case because the invoices
have the identical descriptions, product codes, and item numbers3
as those in the test case, which were held by this Court to be
Certs® Powerful Mints. See Pl.’s Reply Def.’s Mem. Opp’n Pl.’s
Mot. Summ. J. (“Pl.’s Reply”) at 1-3. Plaintiff also claims that
Defendant’s statements concerning the bills of lading are hearsay
invoices.
2
Certs® Cool Mint Drops are also breath mints imported
by WLC that contain sugar rather than artificial sweetener. The
classification of Certs® Cool Mint Drops is currently pending
litigation. See Warner Lambert Co. v. United States, 32 CIT __,
Slip Op. 08-25 (March 3, 2008).
3
Defendant notes that the item numbers appearing on the
invoices for the entries at issue, 35600-40 and 35650-40 are not
identical to the item numbers from the test case, which were
35600-00 and 35650-00. See Def.’s Opp’n at 2-3. As Plaintiff
notes, however, Plaintiff’s witness testified at trial in the
test case that item numbers beginning with ‘356’ indicate Certs®
Powerful Mints. See Pl.’s Reply at 2-3. Thus, the item numbers
35600-40 and 35650-40 are consistent with item numbers for Certs®
Powerful Mints.
Court No. 02-00520 Page 7
and of no probative value. See Pl.’s Reply at 9.
The Court finds, however, that Defendant has established that
there exists a dispute as to a material fact. “As the moving
party, [Plaintiff has] the burden of showing the absence of a
genuine issue as to any material fact, and for these purposes the
material it lodged must be viewed in the light most favorable to
the opposing party.” Adickes v. S. H. Kress & Co., 398 U.S. 144,
157 (1970). Viewed in the light most favorable to Customs, the
nonmoving party, the conflicting description of goods in the bills
of lading could reasonably support a determination that the
merchandise at issue is not Certs® Powerful Mints, but rather
Certs® Cool Mint Drops. The Court finds no merit to Plaintiff’s
conclusory claim that bills of lading are hearsay and of no
probative value. Commercial invoices, packing slips and bills of
lading are all evidence which can aid the Court in reaching the
proper classification. See, e.g., Peterson Electro Musical
Products v. United States, 7 CIT 293, 295 (1984). Thus, this
contradiction speaks to a material fact in dispute because if the
goods were, in fact, Cool Mint Drops, as described in the bills of
lading, the decision of the test case would not be dispostive in
their classification. See supra note 2. Plaintiff cannot rest
upon the trial court’s findings of fact from the test case in this
instance because there is no evidence that the trial court was
presented with similar conflicting descriptions of the merchandise.
Court No. 02-00520 Page 8
Accordingly, Court denies Plaintiff’s motion for summary judgment
with respect to entry numbers 201-1338775-5 and 201-1338890-2.
With respect to the remaining entries,4 the Court finds that
Plaintiff has successfully established that the goods are Certs®
Powerful Mints based on the commercial invoices and packing slips
for these entries, which are consistent with the trial court’s
finding of fact from the test case that “the subject merchandise
was described on plaintiff’s invoices as Powerful Mints Spearmint,
Certs® Peppermint Standard, and Certs® Spearmint Standard but all
constitute Certs® Powerful Mints.” Warner-Lambert Co., 28 CIT at
789, 343 F. Supp. 2d at 1317. Moreover, consistent with the trial
testimony from the test case, the item numbers and product codes
for the goods covered in these remaining entries begin with “356"
and “710," respectively, indicating that they are Certs® Powerful
Mints.
Defendant nearly concedes that the remaining entries are
classifiable in heading 3306, HTSUS, because Customs previously
4
The remaining entries consist of entry numbers 201-
1667714-5, 201-1667816-8, 201-1667927-3, 201-1667970-3, 201-
1668031-3, 201-1668358-0, 201-3033223-0, 201-1337537-0, 201-
3034291-6, 201-1337894-5, 201-1337885-3, 201-1338169-1, 201-
1339496-7, 201-1339256-5, 201-3036725-1, 201-1669985-9, 201-
1670460-0, 201-1669761-4, 201-1669949-5, 201-1671009-4, 201-
1341873-3, 201-1669537-8, 201-1669399-3 and 201-3033876-5
(hereinafter “remaining entries”). Excluded from the remaining
entries are: (1) entry numbers 201-1338775-5 and 201-1338890-2
for reasons discussed, supra; (2) entry numbers 201-1669985-9 and
201-1669399-3 which were liquidated duty-free under the General
System of Preference, see Pl.’s Mem. at 3, FN *, and (3) entry
number 201-1337821-8, which Plaintiff abandons. See id..
Court No. 02-00520 Page 9
approved other protests involving merchandise invoiced with item
numbers 35650-40 and 35600-40. See Def.’s Opp’n at 3. Customs,
however, insists that it approved those protests on the ground that
the goods are sugar-free and not necessarily because they are
Certs® Powerful Mints. See id. The Court finds this argument
less than convincing. Sugar-free breath mints without more are not
per se classifiable under Heading 3306, HTSUS, as an oral or dental
hygiene product.
In short, the Court finds that Defendant failed to put forth
any specific evidence to rebut Plaintiff’s evidence that
merchandise covered in the remaining entries are Certs® Powerful
Mints. “[I]f the adverse party does not respond with specific
evidence, summary judgment, if appropriate, shall be entered
against the adverse party.” Saab Cars USA Inc. v. United States,
434 F.3d 1359, 1369 (Fed. Cir. 2006) (internal quotation marks
omitted)(quoting USCIT R. 56e). Accordingly, the Court holds that
Customs incorrectly classified the remaining entries under
subheading 1704.90.35, HTSUS, and grants summary judgment in favor
of Plaintiff with respect to the remaining entries.
Court No. 02-00520 Page 10
IV. Plaintiff’s Motion For Sanctions
Subdivision (b) of USCIT R. 11 provides:
(b) Representation to Court. By presenting to the court
(whether by signing, filing, submitting, or later advocating)
a pleading, written motion, or other paper, an attorney or
unrepresented party is certifying that to the best of the
person's knowledge, information, and belief, formed after any
inquiry reasonable under the circumstances, – (1) it is not
being presented for any improper purpose, such as to harass or
to cause unnecessary delay or needless increase in the cost of
litigation; (2) the claims, defenses, and other legal
contentions therein are warranted by existing law or by a non-
frivolous argument for the extension, modification, or reversal
of existing law or the establishment of new law; (3) the
allegations and other factual contentions have evidentiary
support or, if specifically so identified, are likely to have
evidentiary support after a reasonable opportunity for further
investigation or discovery; and (4) the denials of factual
contentions are warranted on the evidence or, if specifically
so identified, are reasonably based on a lack of information
or belief.
Subdivision (c) of USCIT R. 11 provides, inter alia,:
(c) Sanctions. If, after notice and a reasonable opportunity
to respond, the court determines that subdivision (b) has been
violated, the court may, subject to the conditions stated
below, impose an appropriate sanction upon the attorneys, law
firms, or parties that have violated subdivision (b) or are
responsible for the violation.
Plaintiff contends that Customs violated Rule 11(b) by filing
certain unqualified denials in its Answer.5 See Pl.’s Mot.
5
In particular, Plaintiff objects to paragraphs 6, 25
and 38 of the Answer. Plaintiff alleges in paragraph 6 of the
Complaint that “[t]he merchandise in issue is Certs Powerful
Mints.” Defendant denies this allegation. See Answer ¶ 6.
Plaintiff alleges in paragraph 25 of the Complaint that
“[t]he merchandise in issue is Certs Powerful Mints identical to
the merchandise involved in the Test Case.” Defendant denies
this allegation. See Answer ¶ 25.
Plaintiff alleges in paragraph 38 of the Complaint that
Court No. 02-00520 Page 11
Sanctions at 1-3. Arguing that the Answer filed in this case is
contradictory to knowledge and information in Defendant’s
possession, Plaintiff claims Defendant caused unnecessary delay and
needless increase in the cost of litigation in violation of USCIT
R. 11(b)(1). See id. at 10. Plaintiff further argues that
Defendant violated Rule 11(b)(3) by making allegations and factual
contentions in the Answer that lack evidentiary support and are
contrary to the evidence available to Defendant. See id. at 11.
Moreover, Plaintiff argues that Defendant violated Rule 11(b)(4)
because the denials of factual contentions are not warranted on the
evidence and the denials for lack of information are contrary to
the facts in the incorporated record. See id. Thus, Plaintiff
seeks an award of attorneys’ fees to Plaintiff’s attorneys, along
with compensation for expenses pursuant to Rule 11(c)(2). See id.
Customs counters that it was not improper to deny the allegations
of the Complaint because none of the answers were inaccurate and
all of them had reasonable support. See Def.’s Resp. Pl.’s Mot.
Sanctions at 1-5.
The Court has carefully considered Plaintiff’s arguments, but
“[i]nasmuch as the imported merchandise in issue is identical
with the merchandise involved in the Test Case, it must be
classified as preparations for oral or dental hygiene under
subheading 3306.90.00, HTSUS, as claimed herein.” Defendant
avers that “the allegations of this paragraph constitute
conclusions of law to which no response is required. To the
extent a response is required, denies.” See Answer ¶ 38.
Court No. 02-00520 Page 12
finds that Defendant’s conduct in this litigation does not warrant
imposition of sanctions. Defendant’s responses to the allegations
contained in the Complaint were not improper in light of the
variations and contradictions in the description of the goods in
the commercial invoices, bills of lading and packing slips.6 There
is insufficient evidence to demonstrate that the Answer was filed
for an improper purpose such as to harass or to cause unnecessary
delay and needless increase in the cost of litigation. The
allegations and factual contentions in the Answer are sufficiently
supported by evidence. The denials of factual contentions and the
denials for lack of information are also consistent with the
evidence. Indeed, it was not unreasonable for Customs to question
the identity of the exact merchandise involved in the entries of
this action.7 In short, the Court is unconvinced that by engaging
in the conduct which Plaintiff complains of Customs violated USCIT
R. 11. As such, Plaintiff’s motion for sanctions is denied.
6
Moreover, the Answer was filed before the record of the
test case was incorporated in the record of this action.
7
It appears that at least one entry covered goods
described as “Certs Spearmint Bulk” on the commercial invoice.
The records of this case and the test case do not reflect any
evidence that “Certs Spearmint Bulk” is the same as “Certs
Powerful Mints.”
Court No. 02-00520 Page 13
CONCLUSION
For the foregoing reasons, Plaintiff’s motion for summary
judgment is denied with respect to entry numbers 201-1338775-5 and
201-1338890-2 and is granted with respect to the remaining entries.
Plaintiff’s motion for sanctions is also denied.
/s/ Nicholas Tsoucalas
NICHOLAS TSOUCALAS
SENIOR JUDGE
Dated: March 14, 2008
New York, New York
ERRATA
Warner-Lambert Co. v. United States, Consol. Court No. 02-00520,
Slip-Op. 08-31, dated March 14, 2008.
Page 1 of the Order, Paragraph 2, Line 6: “201-1669985-9" should
be deleted.
Page 1 of the Order, Paragraph 2, Line 8: “201-1669399-3" should
be deleted.
Page 1 of the Order, Paragraph 3, Line 2: “1704.90.35" should
read: “3306.90.00"
March 14, 2008