Sports Shoes Re-Do?
For years, the Deckers Corporation has fought to have its rugged sandals classified as sports footwear, specifically training shoes. In two previous decisions, the Court of International Trade held that the open toes and heels present in the Teva-brand sandals precluded classification as athletic shoes of 6404.11. Rather, the Court classified them as footwear with open toes or open heels in 6404.19. This result was affirmed by the Court of Appeals for the Federal Circuit, which ultimately also denied a request for a rehearing by the entire court. One would think this is a settled matter.
But, that is not how customs law works. The Court of International Trade has once again classified sports sandals in 6404.19.
Under the 1927 ruling in a Supreme Court decision known as United States v. Stone & Downer, judicial decisions on the classification of a product do not preclude subsequent litigation by the same party on the same question. Thus, as is the case here, where the importer does not believe the Court of International Trade or the Court of Appeals for the Federal Circuit properly classified the merchandise, the importer can select a different denied protest and start over litigating the issue. Read more about that here.
This does not often happen. Typically, it is clear from the court's opinion that the decision turns on the interpretation of the tariff language and no new presentation of the facts is going to change that legal conclusion. But, occasionally, there is reason to believe that a different or better presentation of the case might produce a different result. That seems to be the case here.
On the surface, the parties are arguing about the extent to which the shoes cover the heels and toes. Really, what the plaintiffs want is to get back to the Court of Appeals to press a more general argument about the proper interpretation of the tariff schedule as applied to these shoes.
Here is an example of what is at issue. It is the Terra Fi style.
To get there, plaintiff has made a motion to compel the Government further explain its expert's statement that some training shoes have openings in the uppers. For its part, the Government has made a motion to compel a clear statement of facts supporting the position that the sandals are training shoes.
The Government also filed a motion for summary judgment seeking to dispose of the case in its entirety on the facts available. Plaintiff contends that a trial is necessary to establish disputed facts.
The Court would have none of that. Rather, it found that previous litigation on this issue established, as a matter of law, the proper construction of the relevant tariff provisions. That construction requires shoes to have enclosed uppers to qualify as athletic trainers.
Consequently, the Court of International Trade was able to look at the shoes and make a classification decision. The shoes in question have either open toe, open heels or both. As such, the CIT held them to be classified in 6404.19.35.
That, however, is not necessarily a loss for the plaintiffs. This case seems fully intended to be the launch pad for the argument on appeal. That argument will be that the Federal Circuit misconstrued the statute and that training shoes have some defining characteristic other than enclosed uppers and heels. Plaintiff will argue, for example, that the Court of International Trade should be permitted to look at how rugged the sole is and whether it seems designed for traction, whether there is ankle support, or the ability to drain and dry quickly . . . whatever might define the shoes as athletic.
The problem for Deckers is that when the CIT opted to decide the case as a matter of law, it precluded Deckers from adding to the factual record with, for example, expert testimony on the meaning of "athletic" and the actual use of these styles. That is a problem because the Federal Circuit will not consider new facts. Thus, the appeal may initially focus on whether the CIT was correct to decide the case on summary judgments. If it decides the case with no new factual record, then the value of Stone & Downer is significantly undercut and customs litigants will lose some of the safety net the option to re-litigate has provided.
There is certainly more to follow on this case.
But, that is not how customs law works. The Court of International Trade has once again classified sports sandals in 6404.19.
Under the 1927 ruling in a Supreme Court decision known as United States v. Stone & Downer, judicial decisions on the classification of a product do not preclude subsequent litigation by the same party on the same question. Thus, as is the case here, where the importer does not believe the Court of International Trade or the Court of Appeals for the Federal Circuit properly classified the merchandise, the importer can select a different denied protest and start over litigating the issue. Read more about that here.
This does not often happen. Typically, it is clear from the court's opinion that the decision turns on the interpretation of the tariff language and no new presentation of the facts is going to change that legal conclusion. But, occasionally, there is reason to believe that a different or better presentation of the case might produce a different result. That seems to be the case here.
On the surface, the parties are arguing about the extent to which the shoes cover the heels and toes. Really, what the plaintiffs want is to get back to the Court of Appeals to press a more general argument about the proper interpretation of the tariff schedule as applied to these shoes.
Here is an example of what is at issue. It is the Terra Fi style.
To get there, plaintiff has made a motion to compel the Government further explain its expert's statement that some training shoes have openings in the uppers. For its part, the Government has made a motion to compel a clear statement of facts supporting the position that the sandals are training shoes.
The Government also filed a motion for summary judgment seeking to dispose of the case in its entirety on the facts available. Plaintiff contends that a trial is necessary to establish disputed facts.
The Court would have none of that. Rather, it found that previous litigation on this issue established, as a matter of law, the proper construction of the relevant tariff provisions. That construction requires shoes to have enclosed uppers to qualify as athletic trainers.
Consequently, the Court of International Trade was able to look at the shoes and make a classification decision. The shoes in question have either open toe, open heels or both. As such, the CIT held them to be classified in 6404.19.35.
That, however, is not necessarily a loss for the plaintiffs. This case seems fully intended to be the launch pad for the argument on appeal. That argument will be that the Federal Circuit misconstrued the statute and that training shoes have some defining characteristic other than enclosed uppers and heels. Plaintiff will argue, for example, that the Court of International Trade should be permitted to look at how rugged the sole is and whether it seems designed for traction, whether there is ankle support, or the ability to drain and dry quickly . . . whatever might define the shoes as athletic.
The problem for Deckers is that when the CIT opted to decide the case as a matter of law, it precluded Deckers from adding to the factual record with, for example, expert testimony on the meaning of "athletic" and the actual use of these styles. That is a problem because the Federal Circuit will not consider new facts. Thus, the appeal may initially focus on whether the CIT was correct to decide the case on summary judgments. If it decides the case with no new factual record, then the value of Stone & Downer is significantly undercut and customs litigants will lose some of the safety net the option to re-litigate has provided.
There is certainly more to follow on this case.
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