Supreme Court of the United States

Transcription

1 No IN THE Supreme Court of the United States DECKERS OUTDOOR CORPORATION, Petitioner, v. UNITED STATES OF AMERICA, Respondent. ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT BRIEF OF AMICUS CURIAE, THE AMERICAN ASSOCIATION OF EXPORTERS AND IMPORTERS IN SUPPORT OF PETITIONER April 9, 2014 John M. Peterson Counsel of Record Richard F. O Neill NEVILLE PETERSON LLP 17 State Street, 19th Floor New York, NY Tel: (212) jpeterson@npwny,com

2 No IN THE Supreme Court of the United States DECKERS OUTDOOR CORPORATION, Petitioner, v. UNITED STATES OF AMERICA, Respondent. ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT MOTION FOR LEAVE TO FILE BRIEF AMICUS CURIAE OUT OF TIME Pursuant to Rules 33.1, 37.2, and 37.5 of the Supreme Court of the United States, the American Association of Exporters and Importers (AAEI), respectfully requests leave of Court to file the attached brief amicus curiae in support of Petitioner, Deckers Outdoor Corporation ( Deckers ). AAEI has conferred with Petitioner, which consents to the relief sought in this motion. Respondent, the United States, indicates that it takes no position on this Motion; however, pursuant to Rule 37.3(a), Respondent consented on April 1, 2014, to AAEI s filing of the amicus curiae brief. (i)

3 ii Deckers Petition for a writ of certiorari was filed on January 7, 2014, and the docket initially indicated a response due date of February 6. Thereafter, on January 28, the Court entered an order extending time to file a response until March 10. On February 20, the Court entered a second order further extending the time to respond until April 9. AAEI was informed of the extension orders and consulted Rule 37.2, which states An amicus curiae brief in support of a petitioner or appellant shall be filed within 30 days after the case is placed on the docket or a response is called for by the Court, whichever is later, and that time will not be extended. Undersigned counsel interpreted the above language as establishing a deadline for amicus curiae briefs contemporaneous with the deadline for a respondent to file its response brief. We interpreted the language time will not be extended to mean that amicus curiae cannot independently move the Court for an extension of time. Here, because the Court ordered two extensions of time, and called for a response due date of April 9, AAEI understood that our amicus curiae brief would also be due on that date. We also consulted Rule 30, which governs Computation and Extension of Time. There is no indication in Rule 30 that orders extending response deadlines do not apply to amicus curiae briefs. During a recent discussion with the Clerk s office on an unrelated issue, we were in-

4 iii structed that the deadline for the submission of amicus curiae briefs was February 6, and the extension orders did not apply to our intended submission. Deckers Petition presents issues that are extremely important to the administration and judicial review of tariff classification disputes. As detailed in the attached brief, AAEI has extensive experience in classification cases before the U.S. Court of International Trade (CIT) and the U.S. Court of Appeals for the Federal Circuit, and we submit that the discussion presented in our brief will be helpful to the Court s determination to grant or deny a writ of certiorari. We also submit that the granting of this Motion will not be prejudicial to the Respondent in view of its consent to the filing of an amicus curiae brief and the fact that our filing is contemporaneous with the filing of Respondent's brief. For these reasons, we submit that good cause exists to grant this Motion.

5 iv WHEREFORE, AAEI respectfully requests that the Court grant the instant motion for leave to file the attached brief amicus curiae. April 9, 2014 Respectfully Submitted, /s/ John M. Peterson John M. Peterson Counsel of Record Richard F. O Neill NEVILLE PETERSON LLP 17 State Street, 19th Floor New York, NY Tel: (212) jpeterson@npwny.com

6 v TABLE OF CONTENTS PAGE TABLE OF AUTHORITIES... vi INTEREST OF AMICUS CURIAE... 1 SUMMARY OF ARGUMENT... 3 ARGUMENT... 7 I. Certiorari is Warranted to Consider the Availability of Skidmore Deference to Depthless Agency Pronouncements II. Certiorari is Warranted to Preserve the Role of the Trade Courts in Resolving Customs Disputes A. The CIT Has Well-Developed and Extensive Interpretive Tools for Resolving Classification Disputes.. 12 B. The CIT and Federal Circuit Have Struggled to Apply Mead C. Certiorari Is Warranted to Reaffirm the CIT s Adjudicatory Role in Classification Cases CONCLUSION... 26

7 Cases vi TABLE OF AUTHORITIES Anhydrides & Chemicals v. United States, 130 F.3d 1481 (Fed. Cir. 1997)... 23, 24 Archer Daniels Midland Co. v. United States, 32 C.I.T. 343 (2008) Arko Foods Inc. v. United States, 679 F. Supp. 2d 1369 (Ct. Int l Trade 2009) Bausch & Lomb, Inc. v. United States, 957 F. Supp. 281 (Ct. Int l Trade 1997)... 4 Brookside Veneers, Ltd. v. United States, 847 F.2d 786 (Fed. Cir. 1988)... 4 CamelBak Prods., LLC. v. United States, 704 F. Supp. 2d 1335 (Ct. Int l Trade 2010) Chevron U.S.A. v. Natural Resources Defense Council, 467 U.S. 837 (1984)... passim Daw Indus., Inc. v. United States, 714 F.2d 1140 (Fed. Cir. 1983) Deckers Outdoor Corp. v. United States, 714 F.3d 1363 (Fed. Cir. 2013)... 3, 5, 6, 17 Deckers Outdoor Corp. v. United States, 844 F. Supp. 2d 1324 (Ct. Int l Trade 2012)... 3 E.M. Chems., v. United States, 920 F.2d 910 (Fed. Cir. 1990) Global Sourcing Group, Inc. v. United States, 611 F. Supp. 2d 1367 (Ct. Int l Trade 2009)... 20, 22 PAGE(S)

8 vii PAGE(S) Goodman Mfg., L.P. v. United States, 69 F.3d 505 (Fed. Cir. 1995) Horizon Lines, Inc. v. United States, 752 F. Supp. 2d 1305 (Ct. Int l Trade 2010) Horizon Lines, Inc. v. United States, 800 F. Supp. 2d 1344 (Ct. Int l Trade 2011) Jarvis Clark Co. v. United States, 733 F.2d 873 (Fed. Cir. 1984) Jilin Henge Pharm. Co. v. United States, 342 F. Supp. 2d 1301 (Ct. Int l Trade 2004) Marbury v. Madison, 5 U.S. 137 (1803)... 2, 21 Marubeni Am. Corp. v. United States, 915 F. Supp. 413 (Ct. Int l Trade 1996) Orlando Food Corp. v. United States, 140 F.3d 1437 (Fed. Cir. 1998) Park B. Smith, Ltd. v. United States, 347 F.3d 922 (Fed. Cir. 2003)... 14, 19 Rapanos v. United States, 547 U.S. 715 (2006) Rockwell Automation, Inc. v. United States, 31 C.I.T. 692 (2007) Rollerblade, Inc. v. United States, 282 F.3d 1349 (Fed. Cir. 2002)... 16, 22, 24 Shinyei Am. Inc. v. United States, No , 2011 Ct. Intl. Trade LEXIS 65 (June 15, 2011) Skidmore v. Swift & Co., 323 U.S. 134 (1944)... passim

9 viii Structural Indus. Inc. v. United States, 356 F.3d 1366 (Fed. Cir. 2004) United States v. Haggar Apparel Co., 526 U.S. 380 (1999)... passim United States v. Mead Corp., 533 U.S. 218 (2001)... passim United States v. Wigglesworth, 28 F. Cas. 595 (C.C.D. Mass. 1842) Universal Electronics Inc. v. United States, 112 F.3d 488 (Fed. Cir. 1997)... 20, 21 Vanetta USA Inc. v. United States, 306 F. Supp. 2d 1313 (Ct. Int l Trade 2004) Warner-Lambert Co. v. United States, 407 F.3d 1207 (Fed. Cir. 2005) Statutes 19 U.S.C (Harmonized Tariff Sched. of the United States) (2014) U.S.C (1993) U.S.C (2011) U.S.C (1988) U.S.C (2009) U.S.C (1993) U.S.C. 251 (1994) U.S.C (1980)... 20, U.S.C (1993) U.S.C PAGE(S)

10 ix PAGE(S) 28 U.S.C U.S.C. 500 (1999) U.S.C. 553 (1966) U.S.C. 706 (1966) U.S.C. 551 (2011)... 8 Act of June 10, 1890, 51 Cong. Ch. 407, 26 Stat Act of May 28, 1926, 69 Cong. Ch. 411, 44 Stat Customs Courts Act of 1980, Pub. L. No , 94 Stat Federal Courts Improvement Act of 1982, Pub. L. No , 96 Stat Other Authorities Claire R. Kelly & Patrick C. Reed, Once More Unto the Breach: Reconciling Chevron Analysis and de Novo Judicial Review After United States v. Haggar Apparel Company, 49 Am. U.L. Rev. 1167, 1231 (2000)... 23, 24, 25, 26 Claire R. Kelly, Remnants of Customs Litigation: Jurisdiction and Statutory Interpretation, 26 Brooklyn J. Int l L. 861 (2001)... 15, 16 H.R. Rep. No (1980), reprinted in 1980 U.S.C.C.A.N Kenneth Culp Davis & Richard J. Pierce, Jr., Administrative Law Treatise (3d ed. 1994) 25

11 x PAGE(S) Patrick C. Reed, The Role of Federal Courts in U.S. Customs & International Trade Law (1997)... 13, 25 Ruth F. Sturm, Customs Law and Administration (3d ed., Oceana 1999) S. Rep. No (1979) The Merriam-Webster Online Dictionary, 9 Treasury Decision 93-88, 27 Cust. Bull. 213 (Oct. 25, 1993)... passim

12 INTEREST OF AMICUS CURIAE Pursuant to Rule 37 of the Supreme Court of the United States, the American Association of Exporters and Importers (AAEI) submits this brief amicus curiae supporting Petitioner, Deckers Outdoor Corporation ( Deckers ), 1 and asks that this Court grant a writ of certiorari to consider the question of whether administrative agency definitions of statutory terms, which have not been enacted as regulations pursuant to the Administrative Procedure Act (APA), 5 U.S.C. 500 et seq. (1999), should be given weight or deference by courts called upon to interpret the statute in question. AAEI has been, for more than ninety years, the voice of American businesses in support of free and open trade among nations. AAEI represents numerous manufacturers, distributors, and retailers of a wide spectrum of products including electronics, machinery, footwear, automobiles, automotive parts, 1 Pursuant to Rule 37.6 of the Supreme Court of the United States, amicus curiae AAEI affirms that no counsel for any party authored this brief in whole or in part and that no person or entity other than AAEI, its members, or its counsel made a monetary contribution specifically for the preparation or submission of this brief. Pursuant to Rule 37.3(a), Petitioner and Respondent have consented to the filing of this brief; all parties received notice at least ten days prior to the April 9, 2014 response deadline called for by this Court.

13 2 food, household consumer goods, textiles, and apparel as well as international companies, freight forwarders, customs brokers, and banks. AAEI is the premier national association that represents the interests of exporters and importers before the United States, its agencies, Congress, the trade community, foreign governments, and international organizations. AAEI s members regularly litigate customs issues before the trade courts. They have an enduring interest that those courts be given clear guidance concerning the appropriate basis, and sources of authority, for deciding issues of law arising under the customs laws, including the Harmonized Tariff Schedule of the United States (HTSUS), 19 U.S.C By granting deference in this case to non-regulatory agency definitions of statutory terms, the lower courts contradicted this Court s pronouncements in Skidmore v. Swift & Co., 323 U.S. 134 (1944), and United States v. Mead Corp., 533 U.S. 218 (2001), and allowed U.S. Customs and Border Protection (CBP or Customs ) to undermine the role of the courts to say what the law is. Marbury v. Madison, 5 U.S. 137, 177 (1803). AAEI s members have an interest in ensuring that the trade courts are given clear guidance concerning appropriate sources of authority in interpreting the customs and trade laws, and the proper weight and deference, if any, to be given to such sources.

14 3 SUMMARY OF ARGUMENT This case concerns the question of whether Deckers UGG Classic Crochet Boots, designed to be pulled on with the hands, are footwear of the slip on type, as defined in subheading of the HTSUS. 2 In Deckers Outdoor Corp. v. United States, 714 F.3d 1363 (Fed. Cir. 2013), panel reh g denied (Fed. Cir. Oct. 10, 2013) (per curiam), aff g 844 F. Supp. 2d 1324 (Ct. Int l Trade 2012), the Federal Circuit majority, in deciding this issue, granted dispositive deference to a Customs definition of the term slip on as referenced in an agency-compiled list of footwear definitions. These definitions were never the subject of notice-and-comment rulemaking, but were published for informational purposes in Treasury Decision (T.D.) 93-88, 27 Cust. Bull. 213 (Oct. 25, 1993). Although the trial record contained evidence that boots were not considered slip on footwear in common and commercial meaning, the Federal Circuit adopted Customs definition as the basis of its decision, holding that the consistency of Customs interpretation enhanced the persuasive power of its definition. 714 F.3d at HTSUS subheading provides for Footwear with outer soles of rubber, plastics... and uppers of textile material... footwear of the slip-on type, that is held to the foot without the use of laces or buckles or other fasteners... Other (emphasis added).

15 4 The Circuit Court s adoption of Customs non-regulatory definition as the basis for interpreting the tariff term, and deciding this case, represents a remarkable departure from two centuries of customs law. The common meaning of a tariff term is a question of law traditionally reserved for determination by the courts, which may consult dictionaries and scientific authorities, as well as its own understanding of the term. Brookside Veneers, Ltd. v. United States, 847 F.2d 786, 789 (Fed. Cir. 1988), cert. denied, 488 U.S. 943 (1988); see also Bausch & Lomb, Inc. v. United States, 957 F. Supp. 281, 288 (Ct. Int l Trade 1997), aff d, 148 F.3d 1363 (Fed. Cir. 1998). Where Congress intends to foreclose judicial inquiry into the common meaning of a tariff term, it enacts a statutory definition of the term. Brookside Veneers at 789. And in United States v. Haggar Apparel Co., 526 U.S. 380 (1999), this Court held that, through notice and comment rulemaking, an agency could limit judicial inquiry into a tariff term not otherwise defined, and demand deference to its rule under Chevron U.S.A. v. Natural Resources Defense Council, 467 U.S. 837 (1984). But never before have the trade courts granted deference to a non-regulatory agency definition. In United States v. Mead Corp., supra, this Court held that a Customs interpretation embodied in an agency ruling might be given non-binding deference of a kind described in Skidmore, 323 U.S. at 140, based on (i) the thoroughness evident in its consideration ;

16 5 (ii) the validity of its reasoning ; (iii) its consistency with earlier and later pronouncements ; and (iv) all those factors which give it power to persuade. Customs footwear definitions, however, have none of the characteristics governing application of Skidmore deference. They are definitional pronouncements by agency fiat, containing no reasoning, no talisman of consideration, and relating to neither earlier nor later pronouncements. Deckers, 714 F.3d at 1375 (Dyk, J., dissenting). The Federal Circuit s decision in this case intolerably blurs the line between the power of the Judiciary to interpret the laws enacted by Congress, and the power of the Executive to fill the gaps in Congressional enactments through notice-and-comment rulemaking. Chevron, 467 U.S. at 844. While courts are required to defer to a reasonable interpretation made by the administrator of the agency, Id., at 845, the authorship and sources of Customs footwear definitions are unknown. Customs itself, in publishing the definitions, disclaimed any regulatory force, noting that they were provided merely as guidelines and are not to be construed as Customs rulings of a kind susceptible to Skidmore or Mead deference. See T.D , at 1. Characterizing the definition as persuasive, the Federal Circuit in effect found it reasonable a standard of review and deference typically accorded only to formal regulations. 714 F.3d at In so doing, the Federal Circuit effectively abandoned

17 6 the Judiciary s role to consult traditional sources of common meaning and to interpret the law. If the Federal Circuit s decision in this case is allowed to stand, administrative agencies could effectively foreclose judicial review into whether their actions and decisions are consistent with law, simply by adopting definitions of statutory terms, with no public participation or comment, and demanding the same level of judicial respect for those definitions that are accorded to the products of formal APA rulemaking. Agency positions in litigation could thereby be transformed into sources of statutory meaning, or objects of judicial deference. This court should grant certiorari to clarify the status, if any, of the kind of depthless agency pronouncements represented by CBP s footwear definitions in the interpretation of the customs laws. These definitions should not be allowed to join, nor even to displace, the traditional evidentiary sources of common meaning to which the courts have turned when interpreting tariff terms. Even within the context of Skidmore-Mead deference, a doctrinal debate between broad and narrow application of such deference lies beneath the surface of countless product classification decisions of the CIT and Federal Circuit. As Federal Circuit Judge Dyk noted in his dissent below, T.D does not provide any reasoning for its definitions, but simply asserts by fiat that boot[s] which must be pulled on are slip-on[s]. 714 F.3d at 1375 (emphasis added).

18 7 In the past fifteen years, this Court has twice granted certioriari to speak to the proper place, in customs law, of both interpretive regulations and formal agency rulings. See Haggar, supra; Mead, supra. This case provides an appropriate and necessary vehicle for this Court to speak to the proper place of agency definitions by fiat of statutory terms in the courts review of agency decisions involving the interpretation of those terms. As agencies supplement traditional forms of communicating with the public, such as the Federal Register, with new outlets such as internet publications that provide guidance and interpretation, the issue is of exceptional importance. ARGUMENT I. Certiorari is Warranted to Consider the Availability of Skidmore Deference to Depthless Agency Pronouncements. This Court s Chevron and Mead decisions provided the trade courts with valuable guidance regarding the relationship of agency pronouncements to the task of judicial review. This Court s holding in Mead that Customs classification rulings are not per se entitled to judicial deference clarified the limits of Chevron deference, and reaffirmed the application of the tests set out in Skidmore for determining whether or when agency determinations may be considered persuasive. While Mead speaks to Customs ruling letters, which involve the agency s application of the law to specific

19 8 facts, that case does not address whether or how to apply Skidmore deference to generalized pronouncements such as Customs footwear definitions. This Court recognizes two types of judicial deference applicable to agency interpretive statements in customs cases. Binding Chevron deference is accorded to Customs regulations, adopted pursuant to the notice-and-comment rulemaking procedures of the APA, 5 U.S.C. 551 et seq. See also Haggar, 526 U.S. at 394. The Supreme Court has explained [A]dministrative implementation of a particular statutory provision qualifies for Chevron deference when it appears that Congress delegated authority to the agency generally to make rules carrying the force of law, and that the agency interpretation claiming deference was promulgated in the exercise of that authority. Delegation of such authority may be shown in a variety of ways, as by an agency s power to engage in adjudication or notice-and-comment rulemaking, or by some other indication of a comparable congressional intent. Mead, 533 U.S. at Substantive rules of general applicability are required to be adopted as regulations, through notice and comment rulemaking. See 5 U.S.C. 553(c) (1966). Customs footwear definitions are problematic, as they are general in nature, and are claimed to be binding on the public ( footwear importers are required to abide by Customs terminology, T.D , at 1), yet disclaimed by the agency as regulations, or

20 9 even rulings. The footwear definitions are neither fish nor fowl, neither regulation nor ruling, yet CBP presses them on the courts in this litigation as a source of statutory meaning. What are courts to do when faced with such a request? Lacking evidence as to the care in their preparation (or even the source of their authorship), unaccompanied by reasoning (they are definitions by fiat ) and with neither prior nor subsequent pronouncements to which to compare them, the definitions provide no context for application of Skidmore deference. Nor do the definitions state self-evident truths: it is far from evident that boots that must be pulled on (with no small measure of effort) are footwear of the slip-on type. When the Circuit majority states that it finds the Customs definition persuasive, it appears to be saying that it finds the definition reasonable the standard reserved for upholding, and deferring to, definitions enacted as regulations. 3 This is the danger to the judicial system this case presents. If agencies can displace or supplement the traditional judicial tools of statutory interpretation by adopting definitions without the rigors of notice-and- 3 Persuasive and reasonable are kin terms. The Merriam- Webster Online Dictionary defines persuasive as tending to persuade and defines persuade as to cause (someone) to do something by asking, arguing or giving reasons. See, last accessed Apr. 9, 2014) (emphasis added).

21 10 comment rulemaking, and then pressing these in litigation as sources of legal authority, they will encroach on the role of the courts. 4 It is undisputed that the footwear definitions contained in T.D do not qualify for Chevron deference. The other type of deference, Skidmore, applies to various types of agency pronouncements that may earn differing levels of deference depending on established factors and considerations. In Mead, this Court held that Customs rulings, while beyond the Chevron pale, 533 U.S. at 308, were not necessarily outside the pale of being owed any deference whatsoever, ibid. The Court held that classification rulings are best treated like interpretive statements to be analyzed under Skidmore s holding that an agency s interpretation may surely claim the merit of its writer s thoroughness, logic, and expertness, its fit with prior interpretations, and any other sources of weight. Mead at 309 (quoting Skidmore, 323 U.S. at 140). In analyzing rulings under this standard, the trade courts have considered factors such as whether the ruling addresses the particular product or transaction at bar, the care evident in preparing the ruling, the amount of, and quality of, analysis in the ruling, and 4 Had Customs definition of slip on footwear been embodied in a regulation, Deckers could have attacked the validity of the regulation as arbitrary, capricious, an abuse of discretion, or not otherwise in accordance with law pursuant to 5 U.S.C. 706(2)(A) (1966). Deckers had neither an avenue nor a standard of review for challenging Customs definitions by fiat.

22 11 the consistency of the ruling with past and subsequent ones. While Customs rulings relate to particular goods or transactions, and have a factual context against which they can be judged, Customs footwear definitions do not have such context. Yet despite the complete absence of any of the factors guiding Skidmore analysis, the Federal Circuit majority elected to provide Skidmore deference to the definitions, without subjecting the document as a whole, or any of the individual definitions, to any of the controlling factors that warrant Skidmore deference. Warner-Lambert Co. v. United States, 407 F.3d 1207, 1209 (Fed. Cir. 2005). T.D and the footwear definitions cannot be evaluated under the Skidmore factors. First, the thoroughness of the definitions cannot be gauged, for they are selective, unexplained definitions of tariff terms not a comprehensive glossary of footwear industry terms. Second, the validity of the [document s] reasoning cannot be gauged since no reasoning is given. Third, the consistency with earlier and later pronouncements cannot be intelligently judged absent any prior or subsequent announcements. The mere fact that the definitions may have been longstanding does not, by itself, compel judicial deference, when the agency interpretation is contrary to statutory text, dictionary definitions or canons of statutory construction. See e.g., Rapanos v. United States, 547 U.S. 715 (2006). Lastly, the definitions in

23 12 T.D are supported by no other sources of weight that would give any power to persuade. According deference to an agency s (potentially self-serving) definitions by fiat is wholly at odds with the standards of Mead and Skidmore. This Court should grant certiorari to refocus the role of the trade courts in customs litigation, and to curtail agency attempts to encroach on judicial prerogative to interpret statutes using traditional sources and canons of statutory interpretation II. Certiorari is Warranted to Preserve the Role of the Trade Courts in Resolving Customs Disputes. As noted in the preceding section, allowing the courts to grant weight or deference to non-regulatory agency definitions undermines the role of the judiciary in reviewing agency action. Such intrusions into the judicial function are particularly inappropriate in customs cases, where the CIT and Federal Circuit have both specialized focus and extensive statutory and common law tools for resolving tariff disputes. A. The CIT Has Well-Developed and Extensive Interpretive Tools for Resolving Classification Disputes. When the Court of International Trade was established in 1980, Congress recognized that specialized knowledge in customs and trade matters is required to adjudicate classification issues. See Customs

24 13 Courts Act of 1980, Pub. L. No , 94 Stat The Customs Courts Act was intended to create a comprehensive system of judicial review utilizing the specialized expertise of the United States Customs Court and the United States Court of Customs and Patent Appeals. H.R. Rep. No , at 20 (1980), reprinted in 1980 U.S.C.C.A.N. 3729, ; accord S. Rep. No , at 2, 5 (1979) ( expertise of the United States Customs Court ). Congress delegated exclusive jurisdiction to the CIT to resolve ambiguities in the HTSUS, and provided it with de novo review (a Latin phrase meaning anew. ). 28 U.S.C (1993); see also, e.g., 19 U.S.C. 1514(a) (2011), 1516(d) (1988); 28 U.S.C , The CIT is the latest adjudicatory body dedicated to the review of customs and trade matters. Until the last decade of the nineteenth century, customs disputes were handled by the Federal courts of general jurisdiction. Patrick C. Reed, The Role of Federal Courts in U.S. Customs & International Trade Law 66 (1997). This began with the Board of General Appraisers (BGA), which was formed as part of the Treasury Department. See Act of June 10, 1890, 51 Cong. Ch. 407, 26 Stat. 131, 136. The U.S. Customs Court replaced the BGA in See Act of May 28, 1926, 69 Cong. Ch. 411, 44 Stat The Customs Court became an Article III court in See Act of July 14, 1956, 84 Cong. Ch. 589, 70 Stat. 532 (codified at 28 U.S.C. 251(a) (1994)). On the appellate side, the Federal Courts Improvement Act of 1982, Pub. L. No , 96 Stat. 25, abolished the U.S. Court of Customs and Patent Appeals (CCPA), created the U.S. Court of Appeals for the Federal Circuit, and transferred the jurisdiction, docket, and judges of the CCPA to the newly established Federal Circuit.

25 14 When an action involves the proper statutory classification of merchandise, the court s inquiry is fundamentally two-fold: it must (i) ascertain the proper meaning of specific terms in relevant tariff provisions, which is a question of law; and (ii) determine whether the article falls within the description of such terms as properly construed, which is a question of fact. See Park B. Smith, Ltd. v. United States, 347 F.3d 922 (Fed. Cir. 2003). As the meaning of a tariff term is a legal question, the meaning to be accorded to a tariff term is its common and commercial meaning, which are presumed to be the same. E.M. Chems., v. United States, 920 F.2d 910, 913 (Fed. Cir. 1990). In classification cases, the CIT has developed specialized interpretive tools to deconstruct and interpret the unique scheme of statutory terms and phrases in the HTSUS. 6 Where Congress leaves a statutory term undefined, an administering agency may seek to fill the gap by enacting definitions in the form of regulations, but only by forging them in the crucible of notice-and-comment APA rulemaking. Haggar, 526 U.S. at 394. In Haggar, this Court recognized that the CIT s expertise guides it in making complex determinations in a 6 The HTSUS is a self-contained system designed for determining a single correct classification for a product, and it is well settled that [c]lassification is to be determined according to the terms of the tariff headings and any relevant section or chapter notes. Orlando Food Corp. v. United States, 140 F.3d 1437, 1440 (Fed. Cir. 1998).

26 15 specialized area of the law, id. at 382, and held that the CIT shall not give Chevron deference to agency interpretations unless a duly promulgated regulation has been enacted, id. at That Congress empowered the CIT with exclusive de novo review of classification matters led some to criticize the doctrine announced in Haggar that an agency regulation may limit judicial inquiry into a statutory tariff term. One law professor, now a judge of the CIT, commented after Haggar was announced With such an array of specific interpretative tools, general rules of statutory interpretation and the availability of a holistic approach in the final analysis, it seems probable that Chevron, step two, often need not be reached in customs cases. [T]he infinitely changing number of products and customs issues cautions that Congress could not have always spoken to the precise issue at hand. But, because of these same factors, it seems Congress already had devised a unique methodology to account for its institutional inadequacies. Claire R. Kelly, Remnants of Customs Litigation: Jurisdiction and Statutory Interpretation, 26 Brooklyn J. Int l L. 861, 891 (2001) (footnotes omitted). 7 The unique methodology devised by Congress refers to the vast array of interpretive tools [that] enable [the CIT] to ascertain the meaning of a statutory 7 Judge Kelly received commission to the CIT in 2013.

27 16 term without giving deference to the agency s regulatory interpretation under step two of Chevron. Id. at 873, 875 (footnotes omitted). These tools resolve ambiguities in classification cases, and include the General Rules of Interpretation (GRIs), the doctrine of common and commercial meaning, the Explanatory Notes, the various use tests, and the authority to consider dictionaries, lexicons, and even hear expert testimony. 8 Id. at 875 (footnotes omitted). Moreover [I]nterpretations of customs statutes also are susceptible to theoretical justification and analysis. Theories of textualism, intentionalism, purposivism, or dynamism can be, and have been, applied to customs laws to serve both normative and prescriptive designs. Application of these theories are woven throughout customs cases in a variety of patterns. Ibid. (footnotes omitted). Of course, Judge Kelly s characterization of the CIT s unique rules of statutory construction applies outside the realm of Chevron and Haggar in which they were originally presented. That the HTSUS, like its predecessors, incorporates extensive statutory definitional and interpretive supplemented by two centuries of judicially adopted canons 8 Courts may look to dictionaries, scientific authorities, and other reliable information sources in determining the common meaning of a term, Rollerblade, Inc. v. United States, 282 F.3d 1349, 1352 (Fed. Cir. 2002); as well as to advisory testimony of businesspersons, who are presumed to have knowledge concerning the goods in which they deal, Marubeni Am. Corp. v. United States, 915 F. Supp. 413, 417 (Ct. Int l Trade 1996).

28 17 of construction, 9 suggests that the courts should be particularly loath to discard these tools in favor of deferring to an agency s non-regulatory definition of a statutory term. B. The CIT and Federal Circuit Have Struggled to Apply Mead. The notion that Customs may simply issue an untested glossary of tariff terms, and assert a claim to judicial deference thereto, gravely undermines traditional rules and sources of tariff interpretation. Such an effect is evident in the instant case: the Federal Circuit s majority deferred to Customs definitions in T.D , 714 F.3d at , despite evidence that the industry does not define slip-on footwear to include boots. 10 The erroneous decision in Deckers is not uncommon, and lower courts are exhibiting confusion over the role of Skidmore deference in litigation. Since Mead was decided, Customs has asked the courts to 9 See e.g., Ruth F. Sturm, Customs Law and Administration, (3d ed., Oceana 1999) (discussing the canons, their development, and their application to tariff classification matters). 10 Deckers presented substantial evidence in this regard, and Judge Dyk s dissenting opinion cites many technical sources of industry definitions for slip on, shoe, boot, and the like. 714 F.3d at That the CIT and the Federal Circuit looked to untested, hearsay internet information to shore up Customs definitions further erodes long-established tariff interpretation jurisprudence. Id. at 1369.

29 18 grant Skidmore deference to a dizzying assortment of agency pronouncements, including Classification rulings addressed to the merchandise at bar before the court, see Archer Daniels Midland Co. v. United States, 32 C.I.T. 343, 347 (2008) rev d on other grounds, 561 F.3d 1308 (Fed. Cir. 2009) (ruling lacked power to persuade); Classification rulings concerning different merchandise than those at issue before the court, see CamelBak Prods., LLC. v. United States, 704 F. Supp. 2d 1335 (Ct. Int l Trade 2010), rev d on other grounds, 649 F.3d 1361 (Fed. Cir. 2011); see also Structural Indus. Inc. v. United States, 356 F.3d 1366, 1371 (Fed. Cir. 2004) ( [P]rior rulings with respect to similar but nonidentical items are also of little value in assessing the correctness of the classification of a similar but not identical item. ); Pre-classification rulings and oral communications with Customs laboratories, see Rockwell Automation, Inc. v. United States, 31 C.I.T. 692 (2007); Customs guidelines to the interpretation of statutory terms, see Arko Foods Inc. v. United States, 679 F. Supp. 2d 1369 (Ct. Int l Trade 2009) (classification rulings on different products, articulating a 5% standard for determining whether an article contains an appreciable

30 19 amount of milk, held not entitled to deference or respect in determining the meaning of statutory term article of milk or cream ); Longstanding administrative practices, see Horizon Lines, Inc. v. United States, 752 F. Supp. 2d 1305, 1313 (Ct. Int l Trade 2010); 11 U.S. Department of Commerce antidumping liquidation instructions, see Jilin Henge Pharm. Co. v. United States, 342 F. Supp. 2d 1301 (Ct. Int l Trade 2004), vacated as moot, 123 Fed. App x 402 (Fed. Cir. 2005); Customs interpretations of antidumping liquidation instructions, see Shinyei Am. Inc. v. United States, No , 2011 Ct. Intl. Trade LEXIS 65 (June 15, 2011) (deference denied since Customs has no substantive role in the antidumping process); and Customs protest decisions rendered without a statement of reasoning, see Park B. Smith, 347 F.3d at 925 (holding that although no formal decision was issued when the merchandise was 11 In Horizon Lines, 752 F. Supp. 2d at 1313, the CIT granted in part and denied in part the defendant s motion for summary judgment, stating, [T]he Federal Circuit requires this court to accord some deference to a long-standing administrative practice even where, as here, judicial review is de novo (citation omitted). See also Horizon Lines, Inc. v. United States, 800 F. Supp. 2d 1344 (Ct. Int l Trade 2011) (denying defendant s motion for directed verdict), aff d, 494 Fed. App x 86 (Fed. Cir. 2012).

31 20 classified, Skidmore weight should be given to Customs position ). Application of deference by the trade courts is all over the map. At one end of the spectrum, in Global Sourcing Group, Inc. v. United States, 611 F. Supp. 2d 1367, 1372 (Ct. Int l Trade 2009), the CIT conflated Skidmore deference with a statutory presumption of correctness, 28 U.S.C (1980), stating (some internal citations omitted) A classification by Customs is presumed to be correct under 28 U.S.C. 2639(a)(1) and the court affords deference to the classification in accordance with Skidmore v. Swift & Co. See 323 U.S. 134, 140 (1944) (holding that the weight of a classification determination depends upon all those factors which give it power to persuade ). Parties challenging decisions by Customs have the burden of proof in overcoming the presumption of correctness. See 2639(a)(1). The court did not distinguish 2639 s presumption of correctness (which applies to an agency s factual conclusions) from Skidmore deference (which can apply to an agency s factual and legal interpretations). This distinction is made clear in Universal Electronics Inc. v. United States, 112 F.3d 488, 492 (Fed. Cir. 1997), where the Federal Circuit explained The presumption of correctness certainly carries force on any factual components of a classification decision, such as whether the subject

32 21 imports fall within the scope of the tariff provision, because facts must be proven via evidence. The situation is quite different, however, with respect to pure questions of law, such as the proper interpretation of a particular tariff provision or term. Questions of law such as these lie within the domain of the courts, for it is emphatically the province and duty of the judicial department to say what the law is. Marbury v. Madison, 5 U.S. 137, 177 (1803). The statutory presumption of correctness is analytically distinct from the deference afforded to Customs decision, which is instead governed by standards of review. 112 F.3d at 493. The Universal Electronics court indicated that Customs does not shy away from seeking deferential review of its legal conclusions through 2639 [M]uch of the confusion in this area of law arises from commingling the notion of a presumption of correctness with the notion of deference two notions that are designed to serve separate functions. Id. at 492 (citing Goodman Mfg., L.P. v. United States, 69 F.3d 505 (Fed. Cir. 1995)). The 2639 presumption of correctness is overcome when Customs determination is not in accord with the rule that the most specific tariff provision must govern. Daw Indus., Inc. v. United States, 714 F.2d 1140, 1144 (Fed. Cir. 1983); see Jarvis Clark Co. v. United States, 733 F.2d 873, 878 (Fed. Cir. 1984) (holding that the trade courts must reach a correct

33 22 decision in every case ). 12 A presumption that an agency s factual statements are correct is quite different from deference to its legal conclusions. The commingling of these distinct notions by the CIT in Global Sourcing Group is one of many examples of the confusion exhibited by the trade courts in applying the deference doctrine articulated in Skidmore. C. Certiorari Is Warranted to Reaffirm the CIT s Adjudicatory Role in Classification Cases. While it is true that Customs is responsible in the first instance for classifying imported goods under the HTSUS, see 19 U.S.C (1993), the CIT s expertise and specialized interpretive tools make it uniquely qualified to adjudicate classification disputes de novo 12 This principle was applied by the CIT in Vanetta USA Inc. v. United States, 306 F. Supp. 2d 1313, 1319 (Ct. Int l Trade 2004), where the court held that Skidmore deference is not owed to rulings relied upon by the Government in a classification case involving imported components of the plaintiff s animal feed premixes because defendant s classification of plaintiff s products under HTSUS chapter 29 (1994) is entitled to deference, but not to the extent of foreclosure of [the product s] most correct classification. Id. at 1319 (emphasis added). Indeed, the CIT s charter to reach the correct decision in classification cases would be subverted if Customs interpretation of a classification term was given deference. Rollerblade, Inc., 112 F.3d at 484 (holding that the CIT must independently decide legal issues. ), cited with approval by Haggar, 526 U.S

34 23 [T]he customs laws are administered in a splitenforcement institutional framework, in which enforcement by the administrative agency in the first instance is separated from de novo adjudication of contested cases in the CIT. Deference to the agency s interpretation in the absence of a regulation would reject the historical tradition of independent statutory interpretation exercised by the adjudicatory component of the split-enforcement customs regime. Claire R. Kelly & Patrick C. Reed, Once More Unto the Breach: Reconciling Chevron Analysis and de Novo Judicial Review After United States v. Haggar Apparel Company, 49 Am. U.L. Rev. 1167, 1231 (2000). It is important to realize that there are good reasons for Congress to have separated the enforcement and adjudicatory functions in customs administration. Ibid. First, it is well-established that there is a rule of strict construction of statutes that impose tax obligations to raise revenue, and the courts are best positioned to ensure that those laws are properly construed. In Anhydrides & Chemicals v. United States, 130 F.3d 1481, 1485 (Fed. Cir. 1997), the Federal Circuit applied the rule of construction of revenue statutes whereby unclear or ambiguous [statutory provisions] have traditionally been resolved in favor of the [taxpayer]. The court then explained that This rule of construction has applied at least since Justice Story s explanation that revenue

35 24 statutes, which are neither remedial nor an implementation of public policy, are in doubtful cases construed in favor of the citizen, lest burdens be imposed beyond the statutory revenueproducing purpose. Ibid. (citing United States v. Wigglesworth, 28 F. Cas. 595, (C.C.D. Mass. 1842)). The Anhydrides court confirmed that the rule of strict construction of revenue statutes remains in force today, and cited its decision in Rollerblade, 112 F.3d at 484, in support. 130 F.3d at Second, whether deference can be given to the pronouncements of an agency that is directly responsible for the administration and enforcement of revenuegenerating customs laws is questionable. An agency charged with collection of revenue such as the Customs Service is potentially, if not always, in an adversarial position vis-à-vis taxpayers. Kelly & Reed, 49 Am. U.L. Rev. at To this end, it cannot be overlooked that Customs is an interested party in every classification case filed in the CIT. Just as an importer may seek classification of its goods at the lowest possible rate of duty, in the same way Customs may look to assign the provision with the highest possible duty rate. Both parties will be driven by fiscal considerations. However, when an action is brought under 28 U.S.C (2009) or 1582 (1993), the CIT s exclusive jurisdiction and de novo review attaches, and the court is well positioned with interpretive principles [that] are revenue-neutral. Kelly & Reed at 1209.

36 25 Lastly, the modern scale of import administration, the volume of merchandise being entered, and the multitude of laws being applied are too numerous for Customs to administer without independent judicial oversight. The management processes required for Customs to administer the customs laws mean that, [i]n the large majority of customs cases, the agency interpretation was simply the decision by customs officials at the port of entry, and [t]he legal principles used to interpret the tariff laws and fill statutory gaps developed through judicial rather than administrative precedent. Reed, The Role of Federal Courts, supra, at 284. Indeed, the number of import transactions and multitude of legal issues involved has made Customs a mass justice agency. Kelly & Reed, 49 Am. U.L. Rev. at 1204 n.234 ( Such mass justice cases typically involve classes of numerous small and quick decisions which are not readily susceptible to systems of precedents (i.e. a customs officer cannot be bound by precedents in deciding whose bags to open).) (citing Kenneth Culp Davis & Richard J. Pierce, Jr., Administrative Law Treatise (3d ed. 1994)). Judge Kelly argues [T]he mass justice problem also increases the likelihood of factual or legal error by local officials. Consequently, it is appropriate to require a more extensive mechanism of judicial review for correction of such errors than in a regulatory regime where the procedures at the administrative level are more thorough and could be expected to yield more reliable results.

37 26 Kelly & Reed at The Mead Court recognized Customs burgeoning responsibilities and cautioned inferior courts from presuming that deference is owed to classification ruling letters, reasoning that, [a]ny suggestion that rulings intended to have the force of law are being churned out at a rate of 10,000 a year at an agency s 46 scattered offices is simply self-refuting. 533 U.S. at 233. Mead s admonition has gone unheeded in favor of broad grants of deference to agency pronouncements that do not come close to satisfying the preconditions for Skidmore deference. Certiorari is warranted to reaffirm the traditional sources of statutory meaning under the customs laws. CONCLUSION As the foregoing demonstrates, certiorari is warranted to consider whether unsupported agency pronouncements deserve any judicial deference, where Congress has provided extensive statutory guidance in the classification of merchandise, supplemented by judicially-developed canons of construction. If, as the Circuit majority held, Customs can adopt non-regulatory definitions and compel the courts to grant them weight or deference as a source of statutory meaning, the role of the specialized trade courts will be vastly diminished.

38 27 For these reasons, amicus curiae AAEI respectfully requests that the Petition for a writ of certiorari should be granted. April 9, 2014 Respectfully Submitted, /s/ John M. Peterson John M. Peterson Counsel of Record Richard F. O Neill NEVILLE PETERSON LLP 17 State Street, 19th Floor New York, NY Tel: (212) jpeterson@npwny.com