And Now, A Word from the CAFC

Before I get to Kahrs III: The Search for Refunds, I want to take a look at Faus Group, Inc. v. U.S., which the Federal Circuit issued yesterday. There are a number of reasons for that. First, Faus is short. Second, it's brevity seems to raise something of an issue. Third, it relates to some of the same legal questions. Fourth, it raises a truly important grammar question.

Faus involved the classification of laminated flooring panels as either fiberboard under heading 4411 or as "builders' joinery" under 4418. The Court of International Trade had upheld Customs and Border Protection's classification in 4411.

The merchandise is pre-cut, tongue-and-grooved flooring consisting of a fiberboard coated with a photographic image to simulate natural wood. The pieces are not structural and are designed to be installed on a secure subfloor. Within heading 4418, Faus asserted that the proper classification was in 4418.30.00 as parquet panels or in 4418.90.40 as other.

The Federal Circuit's analysis is refreshingly concise. The Court's first step was to define builders joinery as pieces of wood or fiberboard that are already joined or capable of being joined that function as non-structural finishing for the interior of buildings. According to the Court, that puts this merchandise prima facie in 4418.

The government argued that Note 4 to Chapter 44 narrowed the scope of 4418 by permitting 4411 to include articles that have been worked along an edge as long as the work does not give the article the essential character of merchandise described by another heading. The Court rejected this for the simple reason that Note 4 says nothing about the scope of 4418. In other words, applying the Note to limit the scope of 4418 requires a leap from the text in what I can best describe as an attempt to determine the subjective intent of the drafters (Note: that is me speaking, the CAFC did not say that). This is not a constitutional case requiring that kind of thinking (and it is debatable whether that kind of reasoning is necessary in a constitutional case).

Turning to 4411, the Court was faced with two interpretations of Note 4. Here, we need to quote the whole note:

Products of heading 4410, 4411 or 4412 may be worked to form the shapes provided for in respect of the articles of heading 4409, curved, corrugated, perforated, cut or formed to shapes other than square or rectangular or submitted to any other operation provided it does not give them the character of articles of other headings.

The issue is whether the final proviso applies to all of the listed operations (e.g., curved, corrugated, perforated, etc.) or only to "any other operation." The CIT held it applied only to other unlisted operations. Apparently, the premise here is that the tongue-and-groove gives the goods the shape of wood of 4409 but since it is not wood, it has "the character of articles" of 4418. Therefore, Note 4 prohibits classification in 4411. The government argued since the proviso only applies to "other operations," this fact is irrelevant.

The Court, to its credit, did not resolve this question. Rather, it said (effectively), "so what?" If we assume the the CIT was wrong, then the merchandise is excluded from 4411. If, on the other hand, we assume the CIT was correct, then what happens?

What happens is that the Court has to decide between 4411 and 4418 based on the General Rules of Interpretation. The way to do that is to apply GRI 3(a) and classify the merchandise in the heading that most specifically describes it.

There are a couple tests for specificity. The Court first considered which of the two heading is more difficult to satisfy. Builders' joinery, according to the Court, must be processed so that the pieces can be joined. Heading 4411, on the other hand, covers (among other things) raw fiberboard. The second test for specificity to to ask which of the two headings covers fewer items. Because builders' joinery covers only products used as non-structural elements, it has a more limited scope of use than does 4411 and covers a larger variety of products. Thus, under GRI 3(a), 4418 is the more specific and, therefore, applicable heading.

Having reached that conclusion, it becomes unnecessary to resolve the meaning of Note 4. Either Note 4 excludes the merchandise or 4418 is more specific. Either way, the CIT got to the wrong result. That leaves the correct classification as 4418.90.40.

That took the Federal Circuit 11 pages. In the course of its opinion, the Federal Circuit made the following interesting observation:

In a fifty-three page analysis, an analysis that can only be described as Talmudic in its breadth and thoroughness, the trial court parsed the verbiage contained in the competing headings, explored dictionary definitions, and sorted through a wealth of prior cases on the construction of HTSUS headings.

Why is this in the opinion? It strikes me as somewhat ambiguous. It might be intended to give credit to the trial court for its thoroughness and detail. On the other hand, it might be interpreted as an expression of frustration at having to parse through Talmudic reasoning to get to a relative specificity decision.

Is 53 pages too much for a relatively simple classification decision? How much is enough is a very tough call. Clearly, the Court wants the parties to know that all of the arguments and evidence were given full consideration. The CIT also needs to convey to the Federal Circuit that the case was decided carefully. When I was a clerk (admittedly a long time ago), my Judge had two rules. First, nothing gets into his opinion that is unnecessary to the outcome (i.e., no dicta). Second, nothing goes in that did not come from one side or the other. The latter is based on the usually correct premise that really good lawyers who fully understand their case have written the briefs. These rules make eminent sense to me. Among other things, they result in concise opinions.

I am in no way criticizing the CIT's opinion. I have no facts on which to do that. I have no idea how the briefs looked in this case. Certainly there was a lot of focus on the meaning of Note 4. It must have been presented as an important issue. Still, I subjectively feel like there is a general trend toward longer CIT opinions. Is the CAFC feeling that too? Can someone confirm whether there is such a trend? If so, how would that inform the advocacy at both courts?

I'm not sure of the answers to these questions; it is a MonsterQuest.

Last thing: page 2 of Faus contains the following sentence: "Faus protested Customs's classification." Here is the grammar question: is that the proper possessive form? I would generally go with Customs'. Literature from the agency says no apostrophe ever. I blogged about this in one of my very first posts. I might have to revisit this with a little statistical analysis. For now, I am hopeful Grammar Girl will accept this as a challenge.