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The Container Store v. United States

United States Court of Appeals, Federal Circuit

July 18, 2017

THE CONTAINER STORE, Plaintiff-Appellant
v.
UNITED STATES, Defendant-Appellee

         Appeal from the United States Court of International Trade in No. 1:09-cv-00327-MAB, Judge Mark A. Barnett.

          Robert B. Silverman, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP, New York, NY, argued for plaintiff-appellant. Also represented by Alan R. Klestadt, Robert Fleming Seely.

          Marcella Powell, International Trade Field Office, Commercial Litigation Branch, Civil Division, United States Department of Justice, New York, NY, argued for defendant-appellee. Also represented by Amy Rubin, Jeanne E. Davidson, Benjamin C. Mizer; Paula S. Smith, Office of the Assistant Chief Counsel, United States Bureau of Customs and Border Protection, United States Department of Homeland Security, New York, NY.

          Before Newman, Mayer, and O'Malley, Circuit Judges.

          MAYER, CIRCUIT JUDGE.

         The Container Store appeals the final judgment of the United States Court of International Trade ("Trade Court") granting the government's motion for summary judgment and concluding that imported elfa® top tracks and hanging standards were properly classified under subheading 8302.42.30 of the Harmonized Tariff Schedule of the United States ("HTSUS") as "[b]ase metal mountings, fittings and similar articles suitable for furniture." See Container Store v. United States, 145 F.Supp.3d 1331, 1348-49 (Ct. Int'l Trade 2016) ("Container Store II"). Because we conclude that the subject imports should instead be classified under HTSUS subheading 9403.90.80 as parts of unit furniture, we reverse and remand.

         Background

         The Container Store's top tracks and hanging standards are two components of its elfa® modular storage and organization system. See id. at 1333. Consumers can assemble the different components of this system "in a variety of configurations to create a customized, modular storage unit." Id. The top tracks and hanging standards, which are made of epoxy-bonded steel, see id., "serve as the frame or support structure in a complete elfa® system, " id. at 1344.

         A top track has a flat back and is designed to be affixed horizontally, using screws or anchors, to a vertical surface such as a door or a wall. It has top and bottom edges that "protrude and respectively bend downward and upward to form the track's upper and lower lips." Id. at 1333. A hanging standard, which has an open back and a flat front with rows of evenly spaced slots, is suspended vertically "from a top track by means of notches on the top end of the standard that slide into the top track's lower lip." Id. Consumers can attach various additional elfa® components, such as baskets, drawers, and shelves, to the hanging standards. Id. at 1334. The top tracks and hanging standards are designed to be used only with other elfa® system components. Id.

         The Container Store imported the elfa® top tracks and hanging standards through the Port of Houston, Texas, in October 2007 and January 2008. See id. U.S. Customs and Border Protection ("Customs") liquidated the subject merchandise under subheading 8302.41.60, a provision for base metal mountings and fittings suitable for buildings. The Container Store filed timely protests challenging Customs' classification, arguing that the subject merchandise should instead be classified under subheading 9403.90.80 as parts of furniture. Customs denied these protests, relying on a prior Customs ruling that had been issued to The Container Store. See Cust. B. & Dec. HQ 967149, 2004 U.S. CUSTOM HQ LEXIS 411, at *1 (Nov. 2, 2004) ("HQ 967149"). In that prior ruling, Customs held that the elfa® top tracks and hanging standards at issue were properly classified under subheading 8302.41.60 as mountings suitable for buildings. Id. at *11, *20-21. In declining to classify the merchandise under subheading 8302.42.30 as mountings suitable for furniture, Customs explained that "the top tracks and hanging standards are not accessory items to be used with furniture, " but "[i]nstead . . . form the structure of the furniture." Id. at *17. Customs further explained that "[s]tructural elements of furniture are not mountings and fittings suitable for furniture" and therefore cannot be classified under subheading 8302.42.30. Id. The Container Store then appealed to the Trade Court, which placed the appeal on its reserve calendar pending resolution of another appeal filed by The Container Store involving identical merchandise. See Container Store v. United States, 800 F.Supp.2d 1329 (Ct. Int'l Trade 2011) ("Container Store I").

         In Container Store I, Judge Ridgway granted The Container Store's motion for summary judgment, concluding that the elfa® top tracks and hanging standards at issue were properly classified under subheading 9403.90.80 as parts of unit furniture. Id. at 1336-38. Relying on this court's decision in storeWALL, LLC v. United States, 644 F.3d 1358 (Fed. Cir. 2011), Judge Ridgway determined that the elfa® organization and storage system, like the storeWALL organization and storage system, "constitutes 'unit furniture, ' because it consists of components that are fitted together with other pieces to form a larger system, it is designed to be hung on or fixed to a wall, and it is assembled together so as to suit specific individual consumers' particular needs to organize and store various objects or articles." Container Store I, 800 F.Supp.2d at 1337. She emphasized, moreover, that "it is the very versatility and adaptability of systems such as the elfa® system and the storeWALL system that render them unit furniture and distinguish them from the run-of-the-mill coat, hat and similar racks that are specifically excluded from classification as furniture." Id. at 1338 (citations and internal quotation marks omitted). According to Judge Ridgway, because the metal elfa® top tracks and hanging standards, like the plastic wall panels and locator tabs at issue in storeWALL, are "dedicated solely for use with a completed" unit furniture system, they are properly classified as parts of unit furniture under heading 9403.[1] Id. (citations and internal quotation marks omitted).

         Judge Barnett reached a different conclusion with respect to the classification of the elfa® top tracks and hanging standards at issue in the present appeal. See Container Store II, 145 F.Supp.3d at 1348-49. Judge Barnett acknowledged that this court, in storeWALL, 644 F.3d at 1363-64, held that the plastic wall panels and locator tabs used in the storeWALL modular storage system were properly classified under heading 9403 as parts of unit furniture. See Container Store II, 145 F.Supp.3d at 1340-41. He further acknowledged that the "elfa® top [tracks] and hanging standards are functionally equivalent to the storeWALL system." Id. at 1344 (footnote omitted). Judge Barnett noted, however, that "Chapter 94 Note 1(d) excludes parts of general use from Chapter 94, while Section XV Note 2(c) specifically places parts of general use into heading 8302, HTSUS." Id. at 1346. In Judge Barnett's view, because the elfa® top tracks and hanging standards are parts of general use, they are properly classified under heading 8302 and excluded from heading 9403. Id. at 1349.

         The Container Store then appealed to this court. We have jurisdiction under 28 U.S.C. § 1295(a)(5).

         Discussion

         I.

         We review the grant of summary judgment by the Trade Court de novo. Airflow Tech., Inc. v. United States, 524 F.3d 1287, 1290 (Fed. Cir. 2008); Russell Stadelman & Co. v. United States, 242 F.3d 1044, 1048 (Fed. Cir. 2001). The proper interpretation of HTSUS headings and subheadings is a question of law, reviewed without deference. Drygel, Inc. v. United States, 541 F.3d 1129, 1133 (Fed. Cir. 2008); see also Warner-Lambert Co. v. United States, 407 F.3d 1207, 1209 (Fed. Cir. 2005) (emphasizing that ...


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