Ugg. A Decision on Boots.
When last we considered the tariff classification of Ugg Classic Crochet boot, the Court of International Trade held that the boots are "of the slip-on type" and, therefore classifiable in HSTUS item 6404.19.35. Ugg appealed to the Court of Appeals for the Federal Circuit, which has now affirmed the CIT.
First, a note on usage. The Federal Circuit almost uniformly refers to the Court of International Trade as the "Trade Court." I wonder why that is. I am not aware of any practitioners who appear before that Court using that phrase. I think the common usage is either "CIT" as the shorthand or "Court of International Trade" in full. But, I like "Trade Court" and think I will adopt it (within the limits of satisfying Google that this is a place to find information on the Court of International Trade). Second, in this case, the majority decision decided to refer to HTSUS item 6404.19.35 as "subheading 19.35"). That is very much in line with the practice in which patent numbers are truncated for simplicity. I kind of like that approach, but would add an apostrophe as they do in patent practice. Thus, I would say "defendant argued for classification in subheading '19.35." Of course, that only works when you are talking about subheadings in a single heading.
The legal question here was whether the Ugg boots are "of the slip-on type that is held to the foot without the use of laces or buckles or other fasteners."
Deckers contended that slip-on footwear covers shoes, presumably loafers, slippers, and similar non-laced shoes that the wearer steps into without much in the way of assistance. Further, Deckers argued that the boots were not "slip-on" because getting into them requires that they be pulled on with the hands.
On the first point, the Court noted that the general term "footwear" is broader than shoes and, on its face, would cover boots as well as shoes. According to the Court, had Congress intended only to cover slip-on shoes and not boots, it would have said so. Further, the Court said that the definition of slip-on footwear in Treasury Decision 93-88 includes boots and, because it has been consistently applied, was persuasive.
Deckers argued that the term "slip-on" is not used in the industry to refer to boots. In an important bit of analysis, the Federal Circuit reviewed a number of retail web sites as examples of common and commercial usage. This is important because the Court did so in an effort to cite "reliable sources" of the meaning of the term. The reason this is important is that classification cases sometimes get bogged down on questions relating to the admissibility of evidence showing usage because it is very difficult properly lay a foundation for an advertisement. Typically, an ad is not a business document of the importer, the author is unknown, and the ad does not run in a publication that is known to be authoritative and reliable. So, one side or the other might object on the grounds that anything said in the ad is inadmissible hearsay.
It's not. The reason it is not is two fold. First, this is not evidence of a fact that is in dispute. In the context of this case, it is not important whether the particular shoe or boot being advertised might in fact be slipped on one's foot. Rather the issue is whether the term "slip-on" is commonly and commercially used in connection with boots. Because we are not using an out-of-court statement to prove the truth of the matter asserted, it is not hearsay. Second, the Court decides the scope of the tariff terms as part of its task of construing the law. In my view, there really should not be disputes over these sorts of examples of usage. The only real question should be whether the Court deems the example to be reliable. In other words, when making decisions as to the meaning of the law, the Court is not relying on evidence in a legal sense but on its understanding of the English language.
Deckers' next argument was that a boot that must be pulled on using the hands cannot be "slipped-on." Unfortunately, the Court of Appeals noted that many articles of clothing that are consider to be slip-on require the use of the hands. The best example is gloves, which require some effort to get on.
Related to this is a grammar argument over the words "that is" in the tariff language. The question is whether the words "that is" in the phrase "of the slip-on type, that is held to the foot without the use of laces or buckles or other fasteners" signal that "held to the foot without the use of laces or buckles or other fasteners" defines "slip-on type." In that interpretation, "that is" means i.e. and should have been set off by commas before and after. On the other hand, if the second phrase merely qualifies "slip-on," then to be classifiable in this provision the footwear must be BOTH slip-on and without fasteners. That is an interesting question.
In the Court's view, Congress should have inserted commas. Otherwise, according to the Court, other language in the tariff becomes meaningless. For example, the heading covers footwear with open heels. These are obviously slip-on and would be included in '19.35 (see how well that works?) without the need to specify that they have open heels. While that makes sense, I am not sure I see how it resolves the argument about what "that is" means. In fact, I think the dissent is right on this point.
The case includes one final interesting (at least to me) bit of procedure. This is a decision on a motion for summary judgment. That means that one party, in this case the government, believed that the only open question was the proper interpretation of the tariff and that no material facts were disputed. The Federal Circuit agreed that there are no disputes as to the material facts regarding the physical nature of the boots; leaving only a question of statutory interpretation. In that context, the Federal Circuit said that the Court of International Trade "may examine many resources to ascertain the common meaning or commercial understanding of a particular tariff term . . . . a court may consult dictionaries, scientific authorities . . . and lexicographic and other materials." This again is a good statement as to the job of the Court of International Trade in these cases and the fact that the Trade Court (see that?) is pretty free to roam where it wants to find the meaning of the tariff. Deckers, unfortunately, did not present enough evidence to refute the agreed-upon facts and, as a result, the Court of International Trade granted the government's motion for summary judgment over Deckers' assertion that, if a trial were held, it could present more contrary evidence.
As has been the case recently, I like the dissenting opinion here. Judge Dyk believes that if Congress had intended the subheading to cover all slip-on footwear defined as footwear without laces or buckles or other fasteners, then there would be no need for the HTSUS to add the phrase "slip-on," because that would be co-extensive with footwear lacking laces, etc. According to Judge Dyk's dissent, the subheading covers footwear that can be slipped on without external assistance (such as the use of the hands) AND that lack fasteners. A slip-on shoe with fasteners would be excluded.
First, a note on usage. The Federal Circuit almost uniformly refers to the Court of International Trade as the "Trade Court." I wonder why that is. I am not aware of any practitioners who appear before that Court using that phrase. I think the common usage is either "CIT" as the shorthand or "Court of International Trade" in full. But, I like "Trade Court" and think I will adopt it (within the limits of satisfying Google that this is a place to find information on the Court of International Trade). Second, in this case, the majority decision decided to refer to HTSUS item 6404.19.35 as "subheading 19.35"). That is very much in line with the practice in which patent numbers are truncated for simplicity. I kind of like that approach, but would add an apostrophe as they do in patent practice. Thus, I would say "defendant argued for classification in subheading '19.35." Of course, that only works when you are talking about subheadings in a single heading.
The legal question here was whether the Ugg boots are "of the slip-on type that is held to the foot without the use of laces or buckles or other fasteners."
Deckers contended that slip-on footwear covers shoes, presumably loafers, slippers, and similar non-laced shoes that the wearer steps into without much in the way of assistance. Further, Deckers argued that the boots were not "slip-on" because getting into them requires that they be pulled on with the hands.
On the first point, the Court noted that the general term "footwear" is broader than shoes and, on its face, would cover boots as well as shoes. According to the Court, had Congress intended only to cover slip-on shoes and not boots, it would have said so. Further, the Court said that the definition of slip-on footwear in Treasury Decision 93-88 includes boots and, because it has been consistently applied, was persuasive.
Deckers argued that the term "slip-on" is not used in the industry to refer to boots. In an important bit of analysis, the Federal Circuit reviewed a number of retail web sites as examples of common and commercial usage. This is important because the Court did so in an effort to cite "reliable sources" of the meaning of the term. The reason this is important is that classification cases sometimes get bogged down on questions relating to the admissibility of evidence showing usage because it is very difficult properly lay a foundation for an advertisement. Typically, an ad is not a business document of the importer, the author is unknown, and the ad does not run in a publication that is known to be authoritative and reliable. So, one side or the other might object on the grounds that anything said in the ad is inadmissible hearsay.
It's not. The reason it is not is two fold. First, this is not evidence of a fact that is in dispute. In the context of this case, it is not important whether the particular shoe or boot being advertised might in fact be slipped on one's foot. Rather the issue is whether the term "slip-on" is commonly and commercially used in connection with boots. Because we are not using an out-of-court statement to prove the truth of the matter asserted, it is not hearsay. Second, the Court decides the scope of the tariff terms as part of its task of construing the law. In my view, there really should not be disputes over these sorts of examples of usage. The only real question should be whether the Court deems the example to be reliable. In other words, when making decisions as to the meaning of the law, the Court is not relying on evidence in a legal sense but on its understanding of the English language.
Deckers' next argument was that a boot that must be pulled on using the hands cannot be "slipped-on." Unfortunately, the Court of Appeals noted that many articles of clothing that are consider to be slip-on require the use of the hands. The best example is gloves, which require some effort to get on.
Related to this is a grammar argument over the words "that is" in the tariff language. The question is whether the words "that is" in the phrase "of the slip-on type, that is held to the foot without the use of laces or buckles or other fasteners" signal that "held to the foot without the use of laces or buckles or other fasteners" defines "slip-on type." In that interpretation, "that is" means i.e. and should have been set off by commas before and after. On the other hand, if the second phrase merely qualifies "slip-on," then to be classifiable in this provision the footwear must be BOTH slip-on and without fasteners. That is an interesting question.
In the Court's view, Congress should have inserted commas. Otherwise, according to the Court, other language in the tariff becomes meaningless. For example, the heading covers footwear with open heels. These are obviously slip-on and would be included in '19.35 (see how well that works?) without the need to specify that they have open heels. While that makes sense, I am not sure I see how it resolves the argument about what "that is" means. In fact, I think the dissent is right on this point.
The case includes one final interesting (at least to me) bit of procedure. This is a decision on a motion for summary judgment. That means that one party, in this case the government, believed that the only open question was the proper interpretation of the tariff and that no material facts were disputed. The Federal Circuit agreed that there are no disputes as to the material facts regarding the physical nature of the boots; leaving only a question of statutory interpretation. In that context, the Federal Circuit said that the Court of International Trade "may examine many resources to ascertain the common meaning or commercial understanding of a particular tariff term . . . . a court may consult dictionaries, scientific authorities . . . and lexicographic and other materials." This again is a good statement as to the job of the Court of International Trade in these cases and the fact that the Trade Court (see that?) is pretty free to roam where it wants to find the meaning of the tariff. Deckers, unfortunately, did not present enough evidence to refute the agreed-upon facts and, as a result, the Court of International Trade granted the government's motion for summary judgment over Deckers' assertion that, if a trial were held, it could present more contrary evidence.
As has been the case recently, I like the dissenting opinion here. Judge Dyk believes that if Congress had intended the subheading to cover all slip-on footwear defined as footwear without laces or buckles or other fasteners, then there would be no need for the HTSUS to add the phrase "slip-on," because that would be co-extensive with footwear lacking laces, etc. According to Judge Dyk's dissent, the subheading covers footwear that can be slipped on without external assistance (such as the use of the hands) AND that lack fasteners. A slip-on shoe with fasteners would be excluded.
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