A Bag Of Classification

Everyone knows what a Ziploc-brand sandwich bag is and has a general sense of the range of uses for them. Personally, I use a small resealable (and probably not Ziploc-brand) bag every time I go out for a bike ride to hold my phone, ID, a key and a little cash. It helps me organize and protect my items while I transport them and myself around the neighborhood. I also use a larger (i.e., non-sandwich sized) resealable bag to collect loose change that I don't want jangling around in my pockets. [Note to younger readers: Old people like me sometimes use currency. Such transactions occasionally result in an over payment that is offset with coins in a process we used to call "making change."]

What may be less clear is the tariff classification of resealable sandwich bags. That was the issue in S.C. Johnson & Son, Inc. v. United States. We covered the lead up to this decision here. Rereading that post and the paragraph above, I realize I am low on creativity. More creative writing would be a good resolution for 2020, but I can't figure out how to express that idea.

On the classification, the two provisions in issue are both in Chapter 39, which covers articles of plastic. The government contended that the correct classification is in Heading 3923 as "Articles for the conveyance or packing of goods, of plastics . . . ." The relevant subheading being 3923.21.00, which covers "Sacks and bags . . . of polymers of ethylene."

The plaintiff argued that the correct heading is 3924, which covers "Tableware, kitchenware, other household articles and hygienic or toilet articles of plastics . . . ." The proposed tariff item is 3924.90.56, which covers "other" such products.

We learned from the first decision in this case that Heading 3923 is a tariff classification that turns on the use of the product. In this case, that means that Ziploc bags are only classifiable there if they are principally used to convey or package goods. As discussed in the first post, the determination of principal use requires evidence, not just an interpretation of the statute. This decision thoroughly reviews the evidence of use following the so called Carborundum factors, which are:

[1] use in the same manner as merchandise which defines the class; [2] the general physical characteristics of the merchandise; [3] the economic practicality of so using the import; [4] the expectation of the ultimate purchasers; [5] the channels of trade in which the merchandise moves; [6] the environment of the sale, such as accompanying accessories and the manner in which the merchandise is advertised and displayed; and [7] the recognition in the trade of this use. 
I'm not going recapitulate the detailed discussion of each of these facts. Read the opinion for that. It is an excellent example of the back-and-forth between facts and arguments that is common in these cases. It suffices to say that the Court reviewed the evidence in light of the Carborundum factors and held that they support a finding that the bags are prima facie classifiable in Heading 3923.

That, however, is not the end of the case. Before reaching a conclusion, the Court must determine whether the bags are also classifiable in Heading 3924. The plaintiff submitted evidence that these plastic bags are found in the household. Thus, the Court found that the bags are also prima facie classifiable in Heading 3924.

The plaintiff asked the Court to reconsider its earlier decision that Heading 3924 is a use provision as well. Assuming Heading 3924 is a use provision, plaintiff contended that the Carborundum factors favor a finding that the principal use for the sandwich bags is in the household. Given that the principal use is the single most common use in the United States, a product with many uses can have only a single principal use. Thus, evidence of principal use in the household might have superseded evidence of principal use as a conveyance or for packaging. In a footnote, the Court reaffirmed its prior decision that 3924 is an eo nomine classification that describes the product by name, not use. Thus, there was no need for the Court to determine which use was the principal use.

When two or more headings describe merchandise, the correct classification can usually be determined through General Rule of Interpretation 3(a). Under that rule, the heading that provides the most specific description is preferred. A heading is more specific when it includes requirements that are more difficult to satisfy and describes the article with a greater degree of accuracy and certainty.

Heading 3923 is a use provision and, according to the Court, has requirements that are more difficult to satisfy. Furthermore, the Court found that "tableware, kitchenware, other household articles and hygienic or toilet articles" of Heading 9324 is a more diverse group of products than those described in Heading 3923, which are all containers, stoppers, and lids of some kind. As a result, the Court found that Heading 3923 is the more specific description of the product and, therefore, the correct classification is 3923.21.00.

I do want to address the process of how this case was handled, which echoes some of my thoughts from the first post. I am happy to see that both sides were able to agree on an efficient means of getting the merits before the Judge.

What happened is that the parties requested a "trial on the papers." Rather than bring live witnesses into court, the parties agreed to admit all the documents, deposition transcripts, and expert reports into evidence. This means that the parties worked together to resolve issues (or waive objections) relating to admissibility of documents. No witnesses were needed to lay the foundation for the introduction of business records and no time was wasted on evidentiary motions. There was also no time needed to prepare direct and cross examination or to prep witnesses. No one had to take time to testify and the Court did not need to travel to hear witnesses say exactly what was in the documents.

I realize many district court litigators will find this notion offensive, but the reality is that agreeing to the facts that are not reasonably in dispute and laying it before the judge with a written legal argument is entirely reasonable in most (but not all) classification cases. Agreeing to facts where possible is not the same as agreeing to the outcome of the case. Making the argument that the facts support the desired and correct result is how the lawyer earns his or her fees, not arguing about whether a plastic bag is, for example, made of plastic (to use an obviously extreme example).

I was not involved in this case. It is entirely possible that there were all manner of disputes about the facts and what was relevant and admissible. Even if that was the case, this dispute appears to have been well argued by lawyers who understood what was actually in dispute and how the case should be analyzed. Lawyers who know the law and the facts, as these apparently did, should be able to do this more often. Judges might consider whether early intervention in classification cases to focus the parties on the dispositive issues might help move cases to faster resolutions and encourage more meritorious classification cases to come before the Court of International Trade.


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