Monday, September 24, 2012

CIBA Vision: Questions of Law vs. Fact

In CIBA VISION Corporation v. United States, the Court of International Trade waded into one of those legal issues that I wonder about when my head is not occupied with more useful thoughts concerning beer and comic books. Specifically, the question of whether the meaning of a tariff term is a question of law or a question of fact.

The case involves the tariff classification of something called Nelfilcon Polymer Solution, which is used in the production of disposable soft contact lenses. This material is made through the acetalization of polyvinyl alcohol. You are on your own to figure out what that means (though I did provide a handy link). Apparently, after this process, the resulting material is 95% acetalized PVA (meaning Nelflicon) and used exclusively for molding into contact lenses.

Customs treated the material as "Polymers of vinyl acetate or of other vinyl esters, in primary forms; other vinyl polymers in primary forms: Other: Other: Other (3905.99.80). CIBA protested and asserted that the correct classification is under 3905.30.00 as "Polymers of vinyl acetate or of othervinyl esters, in primary forms; other vinyl polymers in primary forms: Polyvinyl alcohols, whether or not containing unhydrolyzed acetate groups."

In most classification cases, the Court will note that classification is a two step process. In the first step, the Court determines the meaning of the tariff language. That is a question of law. The second step is to determine whether the imported merchandise fits within the properly understood tariff term. That is a question of fact.

In this case, the parties agreed as to the nature of the merchandise and that it belongs in Heading 3905. The case turned entirely on which of two subheadings was applicable to the goods. More specifically, the question for the Court to decide was whether Nelfilcon is a form of PVA, in which case it falls in 3905.30.00.

The tariff term "polyvinyl alcohol" must be given its common and commercial meaning (which are presumed to be the same). To determine that meaning, the Court may rely on its own understanding of the term as well as on "lexicographic and scientific authorities." As a side note, I suspect the CIT uses the word "lexicographic" more than any other institution in the world outside of the International Journal of Lexicography.

Here, the Court was apparently presented with several good definitions of PVA from CIBA regulatory filings as well as various technical journals. Also, in HQ 964854 Customs refers to the merchandise as "an acetylized polyvinyl alcohol (PVA)." The Commerce Department lists certain types of PVA as excluded from an antidumping duty order and describes them as classifiable in 3905.30.00. While none of this is binding on the Court, it strikes me as pretty good evidence of the common and commercial meaning of the term. Nevertheless, the parties' Joint Statement of Material Facts does not contain the legal conclusion that the merchandise is commonly known as PVA.

Given this lack of a smoking gun agreement, the Court found that it was not able to fully embrace or exclude either proposed classification. Thus, it denied both motions for summary judgment.

This is where I split a legal hair. The Court denied the motion because "a genuine dispute of material fact exists as to the meaning of 'polyvinyl alcohol' . . . ." I don't think that is really correct. Rather, I think the Court is simply not satisfied that it has a sufficient basis on which to decide the question of law. In that case, there may still be grounds to deny the motion for summary judgment and reason enough to have a trial to sort out the common and commercial meaning based on documentary evidence and testimony, if that will help the Court.

The more vexing legal problem is, I think, the nature of that trial. The older I get and the more classification cases I read, the more I think we might be missing the point of these proceedings. In most cases, like this one, there is no dispute as to the nature of the merchandise. That can often be stipulated by the parties. The only dispute is the meaning and scope of various tariff terms. That means the only thing before the Court is often a question of pure legal interpretation. I think that means that field of information available for the Court to review is far and wide.

Basically, I think any example of usage or illustration of meaning is fair game for the Court to consider. That is radically different from what we often do in these cases, where we get bogged down in questions of whether a particular document using the language in question is admissible, for example, as a business record or otherwise authenticated as reliable.

When Courts review the Constitution, statutes, and even contracts, they use whatever scholarly sources they find to decide the meaning of terms. That is what judges do, they interpret laws. I doubt that a classification case should be any different. Granted, the Court might still want to have a trial (or maybe "hearing" is a better term) to consider various examples of usage and maybe hear from experts in the relevant field on their views as to usage. But, the focus would be squarely on the law, not on the facts (unless there were a material fact in dispute).

For now, I leave it to you my fellow customs lawyers to tell me where I have gone wrong. This is an idea I am batting around and I am fully willing to have it crushed on legal or practical grounds. For now, it strikes me as something worth considering.

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