A three-judge panel of the Court of Appeals for the Federal Circuit ruled May 13 that certain Teva brand sports sandals are properly classified as other slip-on footwear under HTSUS subheading 6404.19.35 (37.5% duty). Plaintiff Deckers Corporation had sought classification as sports footwear under HTSUS subheadings 6404.11.80 (valued over $6.50 but not over $12 per pair; $0.90 per pair + 20% duty) or 6404.11.90 (valued over $12 per pair; 20% duty). The CAFC reached the same conclusion in 2008 in a separate test case brought by Deckers and holds that it must abide by that decision.
The sandals at issue all have rubber or plastic soles and cloth or textile straps in the upper portion of the shoe. The toe and heel sections are open, and the upper sections do not fully enclose the foot. The sandals are intended to be used for athletic pursuits such as running, jogging, hiking, canyoneering and a variety of water-based activities. In the 2008 test case, the CAFC ruled that similarly constructed sandals are classified under subheading 6404.19.35 because they lack the fundamental feature of exemplars listed in subheading 6404.11 as sports footwear (tennis shoes, basketball shoes, gym shoes, training shoes and the like); i.e., an enclosed upper that contains features that stabilize the foot and protect against abrasion and impact.
In this case Deckers advanced a different legal theory, that the sandals are designed, marketed, sold and used as training shoes and are therefore classifiable as such under subheading 6404.11 whether they have an enclosed upper or not. According to the CAFC, Deckers argued (and apparently submitted new factual evidence to illustrate) that the sport sandals “are merely an evolutionary step in improving traditional training shoes by providing greater breathability, and that tariff terms are written to embrace future improvements to merchandise that maintain the same function as their predecessors.”
Deckers therefore asserted that the test case decision is not controlling because it addressed a different issue of law. Deckers explained that while that decision relied on an ejusdem generis analysis of subheading 6404.11 (determining the essential characteristics shared by all products under a given subheading, including the listed exemplars), this case argues that the sandals should be classified under that subheading eo nominee (by name) because they are training shoes.
Sandler, Travis & Rosenberg attorney Arthur Purcell states that Deckers had a valid point in contending that prior court decisions construing tariff provisions are not binding on later courts in tariff classification cases and thus do not preclude them from considering new legal issues and arguments. The issue, says Purcell, was whether the ejusdem generis analysis in the test case can truly be said to have addressed the eo nomineargument for training shoes.
The CAFC concluded that it did, stating that both types of analysis involve the same legal issue — the construction of subheading 6404.11 — and that as a result “any legal conclusion regarding the scope of that heading [in the test case] presumptively applies.” The court thus determined that both it and the Court of International Trade are bound by the test case decision under the principle of stare decisis, which requires courts to adhere to decided cases construing the same principle of law applied to similar facts. Notably, the instant case had been stayed at the CIT pending a resolution of the test case and, according to Deckers at that time, involved the same class or kind of goods and “the same claims” as the test case.
Deckers further argued that the CAFC’s earlier decision is clearly erroneous and that the court is therefore obligated to revisit and potentially reject it. However, the CAFC responded that only through an en banc opinion (i.e., by a full panel of the court), intervening Supreme Court precedent or a change in the underlying statute by Congress is it allowed to deviate from its prior construction of a customs classification provision through a showing of clear error. As a result, absent such a development the CAFC’s classification decisions are binding on the CIT and CAFC in later protest cases involving the same subheading or heading. The court concluded that if Deckers wants to overturn the original construction of subheading 6404.11 it will need to seek review en banc. (The CAFC notes that its holding does not prevent an importer or the government from arguing, or the courts from concluding, that a different governing legal issue is involved in the later appeal or that the goods at issue are materially different from those in the earlier case.)
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