Monday, June 23, 2014

Riddell Me This: When are Football Uniforms Not Sports Equipment?

Answer: when they are classified under the Harmonized Tariff Schedule of the United States.

This classification decision in Riddell v. United States, addresses one of my pet questions. At some point, is apparel designed for use in conjunction with participating in sports "sports equipment" rather than apparel?

The products at issue in this case are football jerseys, pants, and girdles. Each of them is designed to be worn in conjunction with protective football pads (both hard and soft). However, no pads were included with the merchandise when imported. Customs and Border Protection classified these items under chapters 61 and 62 if the HTSUS. Riddell argued that the merchandise was more properly classified as "Football . . . equipment . . . ." under subheading 9506.99.20. Because the imported goods were not imported with or otherwise incorporate padding or other protective features, the Court of International Trade held that the merchandise is clothing, not sports equipment.

On appeal, Riddell argued that these items constitute football equipment because . . . well, because hockey pants are sports equipment. We know that because the Court of Appeals for the Federal Circuit said so in Bauer Nike Hockey USA v. United States. But, those pants came imported with protective pads. Furthermore, the CAFC found that motorcycle jackets with foam padding were still apparel because they were not protective enough when compared to the helmets worn by motorcycle riders. In that case, the Court held that apparel will only classified as sports equipment when it is "almost exclusively protective in nature."

Stated another way, the Court said that "sports equipment" does not include merchandise that, as imported, would be understood as clothing. Rather, it must have a "transformative element" such as the pads in the hockey pants.

Lacking such transformative elements, i.e, protective padding, the Riddell products did not qualify as sports equipment.  The facts that they were designed for use in conjunction with playing football and that they were often required equipment, were not sufficient to transform them into protective equipment. Everyone involved, though, agreed that the girdles, if not sports equipment, are also classifiable in 6114 because they are not support garments of 6212.

To me, this case raises two questions. First, does Riddell have an opportunity to tariff engineer these products by importing them with the pads?

Second, what about this?

Specialized padding? Check. Designed specifically for cycling? Check. Not something you choose to wear off bike? Check. Lack of pockets and fly? Check. Seriously, if you import these, feel free to call.

Ford Recon Decision Redux

Back in 2004 and 2005, Ford Motor Company imported some vehicles from the UK, which I will assume were Jaguars even though that is completely irrelevant. Ford flagged the entries for reconciliation. When it filed the reconciliation entry, Ford sought a refund of overpaid duties. Ford did not get the refunds and ended up in the Court of International Trade seeking to recover overpaid duties on the grounds that the reconciliation entries liquidated by operation of law at the amount of duty asserted by Ford. Because I image these vehicles as expensive Jaguars, I assume a lot of money is involved. Customs, for its part, believes that the liquidation of the reconciliation entries were properly extended and that Ford was given proper notice.

The Court of International Trade agreed with the government in this opinion.

The dates involved become important to see how this plays out. Ford commenced the action on April 15, 2009. At that time, CBP had not liquidated any of the entries. However, while the case was pending, CBP liquidated and in some cases reliquidated the entries. Ford claims the liquidations or reliquidations are meaningless because the reconciliation entry was deemed liquidated a year after filing. So, the question is what happened first: deemed liquidation or affirmative liquidation? If deemed liquidation happened first, Ford wins.

If this all sounds familiar, it is because these issues had been addressed previously and, on appeal to the Federal Circuit, remanded back to the CIT. And, here we are . . . again.

Ford raised a number of related arguments. Its second point was that CBP did not give proper notice of the extension of the liquidation dates. According to Ford, this made any extensions invalid. Similarly, Ford argued that the notices did not provide a reason for the extension and that to the extent the reason was to permit CBP to gather more information, it never asked for it.

For two entries, Ford argued that Customs improperly extended the liquidation to a date beyond the four year maximum. And, for one entry, Ford argued that because CBP requested information prior to liquidation, it was not permitted to deny Ford's claim when Ford responded with legal objections to the request.

The government has asked the Court to dismiss a number of the claims because the two year statute of limitations applicable to these cases had expired when the case was filed. Despite Ford's argument that the Federal Circuit implicitly found the case to have been timely, the Court of International Trade noted that it has an obligation to ensure that cases are properly brought before it. Further, nothing in the decision from the Court of Appeals indicates that that Court considered the statute of limitations argument. Consequently, it considered the government's argument.

To have a claim, Ford must have brought this action within two years of the date it first had the right to do so and reasonably knew it could do so. Looking at three of the entries involved, the Court found that they were filed on June 29, July 28, and August 26, 2005. Absent a valid extension, they would have been deemed liquidated one year later, respectively. When Ford failed to receive a liquidation notice after "a reasonable period" following the allege deemed liquidation dates, it should have known it needed to pounce like a big predatory cat (a jaguar, maybe) within two years. According to the Court, even measured from the date of Ford's actual knowledge that a notice of extension should have been received, Ford failed to commence the action within the two-year limitations period.

The remaining issue for the Court was whether to entertain Ford's claim for declaratory judgment. This is an action that asks the Court to determine the rights of the parties to a real case or controversy. These cases are pretty unusual at the CIT, but bravo to Ford for pressing the issue. The Court seems to concede that it could have decided the issue presented in this claim.

However, on discretionary grounds, the Court declined to do so. The main point in favor of not addressing the issue was that Ford has another case currently pending in the CIT addressing denied protests covering the same issues and entries. This is a different way for the Court to review the same questions. But, in the review of a denied protest, the parties engage in discovery and the Court can look beyond the administrative record. Because that case will be arguably a better means of getting to a resolution of the matter, the CIT declined to decide the declaratory judgment action.

That means I will get to write at least on more post on this issue.

If I was less tired, I would go back and insert analogies to striking cobra's, galloping mustangs, and maybe the Court's need to focus on dates. Would be too much to imply that the analysis of the case explorer-ed a fusion of legal principles? At this point, Ford's counsel could probably use a pint-o' something cold to drink, although this is not a fiesta. Instead, I leave all that to your imagination.

Wednesday, June 11, 2014

Nerd Alert

I teach trade remedies law at the Center for International Law at the John Marshall Law School. It turns out that drafting an exam is a fairly difficult task that takes some level of inspiration. This year, I decided to let my geek flag fly and craft an exam based on an original comic book scenario. After grading the tests, I sent it to the completely awesome Law and the Multiverse, which was kind enough to run it as a guest post. Yesterday, it was picked up the by also awesome Above the Law. For me, that's a good day.

Read the exam and the resulting discussion at Law and the Multiverse. Can you tease out all the references to the DC universe?

Jean Loring, Esq. and Ray Palmer, Hero.