UNITED STATES COURT OF INTERNATIONAL TRADE

Transcription

1 Case 111-cv N/A Document 4 Filed 08/16/11 Page 1 of 12 UNITED STATES COURT OF INTERNATIONAL TRADE BEFORE x Pacific Sunwear of California, Inc., Plaintiff, Court No v. UNITED STATES, Defendant x case COMPLAINT Plaintiff, through its undersigned attorneys, alleges the following as its complaint in this CAUSE OF ACTION 1. Plaintiff is an importer of footwear and apparel, and has imported such merchandise for a period of time in excess of two years prior to the original commencement of this action. Plaintiff continues to import such merchandise following the filing of the original Complaint in this matter. 2. This action is brought to contest the assessment of duties upon plaintiff s merchandise by Customs and Border Protection ( Customs ) under various provisions of the Harmonized Tariff Schedule of the United States ( HTSUS ) at a duty rate for one gender (e.g., women s) or one age group (e.g., men s or women s) that is higher than the same product for the other gender (e.g., men s) or age group (e.g., other persons) as detailed below. Plaintiff was assessed with, and paid the higher duties based upon gender upon its importations under the

2 Case 111-cv N/A Document 4 Filed 08/16/11 Page 2 of 12 HTSUS provisions set forth in the left column of Schedule A attached hereto. The corresponding HTSUS provisions for like merchandise at lower duty rates are set forth in the right column of Schedule A. JURISDICTION 3. This action is brought under 28 U.S.C. 1581(i). 4. Because this action challenges the constitutionality of laws of the United States, exhaustion of administrative remedies is not necessary. 5. Plaintiff is entitled to bring this action pursuant to 28 U.S.C. 2631(i). 6. The assessment of higher duties based upon gender and/or age upon plaintiff s importations is illegal, null and void, as being in violation of the Equal Protection Clause of the U.S. Constitution, perforce of the Due Process Clause of the Fifth Amendment to the U.S. Constitution. STANDING 7. The interests of importers and the purchasers of their imported footwear and apparel in being free from unconstitutional gender and age discrimination are within the zone of interests to be protected by the Equal Protection Clause. Therefore, Plaintiff has standing to bring this suit. 8. This action covers all importations of footwear and apparel that were liquidated commencing two years prior to the original commencement of this action, pursuant to 28 U.S.C. 2636(i). Should Plaintiff prevail in this matter, it will be entitled to a refund of customs duties with respect to all entries of the relevant items.

3 Case 111-cv N/A Document 4 Filed 08/16/11 Page 3 of 12 FACTS 9. The initial tariffs on footwear enacted by the First Congressional Congress of the newly formed United States in 1789 were not based on gender or age. They provided On boots, per pair, fifty cents; On all shoes, slippers, or goloshoes, made of leather, per pair, seven cents; On all shoes, or slippers made of silk or stuff, per pair, ten cents. See Attached Exhibit A. The initial tariffs on apparel were also not based on gender or age. They provided for duties on seven and a half per centum ad valorem On clothing ready made. See attached Exhibit A at Such classifications without regard to age or gender continued through the passage of the Tariff Act of 1930 ( the Tariff Act ), which became effective on June 18, The Tariff Act provided for the classification of footwear under paragraph 1530(e), in pertinent part, as Boots, shoes, or other footwear (including athletic or sporting boots and shoes), made wholly or in chief value of leather, not specifically provided for, 20 percent ad valorem. See attached Exhibit B. The Tariff Act provided for the classification of apparel according to the chief value of its fabric. For example Clothing, and articles of wearing apparel of every description, wholly or in chief value of vegetable fiber, except cotton, for 35 per centum ad valorem; shirt collars and cuffs, wholly or in part flax, 40 per centum ad valorem. Par Outerwear and articles of all kinds, knit or crocheted, finished or unfinished, wholly or in chief value of wool, and not specially provided for, valued at not more than $2 per pound, 44 cents per pound and 45 cents per centum ad valorem; valued at more than $2 per pound, 50 cents per pound and 50 per centum ad valorem. Par. 1114(d).

4 Case 111-cv N/A Document 4 Filed 08/16/11 Page 4 of 12 Clothing and articles of wearing apparel of every description, manufactured wholly or in part, wholly or in chief value of silk, and not specially provided for, 65 per centum ad valorem. Par See attached Exhibit B. Again, the classification of footwear and apparel was not determined by gender or age, but rather the material of which the imported goods were made. 11. Footwear and apparel of both genders and all age groups were considered to be, respectively, the same class of merchandise by Congress. 12. Between 1930 and 1960, the classification of footwear was amended 24 times by Presidential proclamation, and not by Congress. See attached Exhibit C at In 1951, President Harry S. Truman signed the Torquay Protocol to the General Agreement on Tariffs and Trade, which amended the Tariff Act, par. 1530(e), to provide for women s shoes made of leather dutiable at 20% ad valorem and men s shoes made of leather dutiable at 10% ad valorem. See attached Exhibit D; A. Zerkowitz & Co. v. United States, 54 Cust. Ct. 151 (1965), T.D (1951). 14. In 1951, after one hundred sixty years of unified tariff provisions on footwear, the government intended to and did begin to discriminate on the basis of gender and/or age in its classification determinations. 15. In 1965, the United States Customs Court in A. Zerkowitz & Co. v. United States, supra, construed the meaning of this 1951 amendment. The Court held that a. Classification under par. 1530(e) and the lower duty rate of 10% for men s, youths, or boys was an exception carved out of a general rule. 54 Cust. Ct. at 159. The situation of the basketball shoe is different so far as the term implies that the shoe is designed for a sport more commonly indulged in by males. 54 Cust. Ct. at 157. b. Often, if not usually, items worn on the body are so different, according to which sex they are meant for, that no one would willingly put on an item appropriate to the other

5 Case 111-cv N/A Document 4 Filed 08/16/11 Page 5 of 12 sex. This is above all true of leather footwear. The trade agreement negotiators had in mind certain items mdubitably [sic] masculine. 54 Cust. Ct. at 159. See attached Exhibit D. 16. In 1954, Congress passed the Customs Simplification Act of 1954, as amended. Title I of the Act directed the Tariff Commission (the Commission ) (now known as the U.S. International Trade Commission ( ITC )) to make a comprehensive study of U.S. laws prescribing the tariff status of imported articles, and to submit to the President and to the Chairman of the House Committee on Ways and Means and the Senate Committee on Finance, a revision and consolidation of those laws that, in the Commission s judgment, will accomplish to the extent practicable the following purposes See attached Exhibit E at ix. (1) Establish schedules of tariff classifications which will be logical in arrangement and terminology and adapted to the changes that have occurred since 1930 in the character and importance of articles produced in and imported into the United States and in the markets in which they are sold. (2) Eliminate anomalies and illogical results in the classification of articles. (3) Simplify the determination and application of tariff classifications. 17. In 1958, during a hearing on proposed revised and consolidated tariff schedules before the Commission held on June 3, 1958, the Commission indicated that This [wa]s the fourth of the series of hearings to be held by the Tariff Commission for the purpose of receiving views of interested persons on proposed revised and consolidated U.S. tariff schedules prepared by the Commission pursuant to title I of the Customs Simplification Act of 1954, as amended. During the Commission s discussion regarding footwear, the Commission hearing also indicated that

6 Case 111-cv N/A Document 4 Filed 08/16/11 Page 6 of 12 See attached Exhibit F. [W]e feel that the Commission is acting wisely in its proposal to eliminate differentiation by gender, and we would not recommend continuing that differentiation, and that is the reason why we have established the single rate for cemented footwear in our proposal. 18. In 1960, the Tariff Classification Study (the Study ) was issued by the Commission and included a report regarding classification of certain footwear under the Tariff Act, par. 1530(e). The Commission indicated that distinctions between the age and sex of the wearer of certain footwear should be eliminated, because [t]hese distinctions are often difficult if not impossible to make and their economic justification is questionable. See attached Exhibit E at The Study also indicated that footwear provisions as to age and sex distinctions should be eliminated because [d]omestic production greatly exceeds imports in all classes of turned footwear. The rate changes involved in the proposed item are not expected to have a significant impact on the volume of imports. 20. Nonetheless, the Study in 1960 proposed increasing the duty rate on certain leather footwear items sold to women to 20% ad valorem, while retaining a lower duty rate for men, youths, or boys. See attached Exhibit E at In 1963, par. 1530(e) became the basis for the footwear provisions in the Tariff Schedules of the United States ( TSUS ). 22. The Explanatory Notes of this time did not contemplate the classification of footwear based on age or gender. See attached Exhibit G. 23. Leather footwear that was classified under par. 1530(e) became classifiable under Items et seq. of the TSUS.

7 Case 111-cv N/A Document 4 Filed 08/16/11 Page 7 of In June 1983, the ITC issued a conversion of the TSUS into HTSUS nomenclature. 25. The HTSUS replaced the TSUS on August 23, TSUS Items et seq. for leather footwear were replaced by the provisions under HTSUS heading 6403, maintaining the disparate and discriminatory treatment between gender and/or age of various types of footwear. 26. A notice issued by the Tariff Commission in Infants Wear of Wool, United States Tariff Commission Notice of Public Hearing (Dec. 23, 1930), employ[ed] a term heretofore never found in any of the various Tariff Acts or customs regulations thereto appertaining, namely infants. Lord & Taylor v. United States, T.D (June 7, 1937). Exhibit H. 27. In 1932, par. 1114(d) of the Act was amended to provide An increase in the rates of duty expressly fixed in paragraph 1114(d) of Title I of said act on infants outerwear, knit or crocheted, finished or unfinished, wholly or in chief value of wool, and not specially provided for, valued at more than $2 per pound, from 50 cents per pound and 50 per centum ad valorem to 50 cents per pound and 75 per centum ad valorem. See attached Exhibit H. (Emphasis added). 28. The Court in Lord & Taylor v. United States, T.D stated that It is evident that the use by the President or the Tariff Commission of a term entirely foreign to previous terminology might in and of itself be considered unreasonable as to the issue of notice, especially where such term is unaccompanied by definition or elucidation. 29. The United States Court of Customs and Patent Appeals also discussed the use of the term infants in United States v. Best & Co., Inc., No. 3995, T.D (Nov. 9, 1936) and stated that

8 Case 111-cv N/A Document 4 Filed 08/16/11 Page 8 of 12 We have examined the record with great care and find that Judge Brown has correctly stated the substance of the testimony of the two groups of witnesses. The testimony shows that there is a vast difference of opinion as to the common meaning of the term infants outerwear in the trade and commerce of the country where knit outerwear for children is bought and sold. (Emphasis added). See attached Exhibit I. This was because outerwear was sold with regard to size and material rather than distinctions as to age. T.D at 779 (explaining that when they sell them, practically all the witnesses say, they offer them only by style and size numbers and dimensions ). 30. In 1960, the Tariff Classification Study (the Study ) was issued by the Commission and indicated in Part 6 Wearing Apparel and Accessories, that Headnote 2(c) women s and girls wearing apparel is wearing apparel for females over 6 years of age, including wearing apparel commonly worn by either sex and not identifiable as being intended exclusively for the wear of men or boys. Exhibit E at 211. The Tariff study went on to indicate that [t]he definitions in headnote 2 distinguishing wearing apparel according to the age and sex of the persons for whom it is intended conforms to established customs practice (CAD 9). Exhibit E at 223. However, this practice was not established by customs, but rather foisted upon the agency. 31. After at least one hundred and forty years of unified tariff provisions, at some point, on apparel, the government intended to and did begin to discriminate on the basis of gender and/or age in its classification determinations. 32. In 1963, the provisions for apparel from the Tariff Act of 1930 became Items 370 et seq. in the Tariff Schedules of the United States ( TSUS ).

9 Case 111-cv N/A Document 4 Filed 08/16/11 Page 9 of TSUS Items 370 et seq. for apparel were replaced by the provisions under HTSUS Chapters 61 and 62, maintaining the disparate and discriminatory treatment between gender and/or age of various types of apparel. 34. Thus, a government agency has indicated there is no actual important governmental objective is at stake for different rates of Customs duty or tax based on gender. 35. There is no evidence of an important governmental objective in imposing a higher duty rate based on gender. 36. There is similarly no evidence that an important governmental objective could be accomplished by imposing a different duty rate based on gender on certain items in the tariff. 37. Similarly, there is no legitimate governmental objective at stake that would justify duty rates based on age. 38. There is also no evidence that an important governmental objective could be accomplished by imposing a different duty rate based on age on certain items in the tariff. CAUSE OF ACTION 39. Historically, as explained above, gender and age played no role in the tariff classification of footwear and apparel. 40. The current HTSUS provisions for footwear and apparel disadvantage certain purchasers and users based on gender and/or age. 41. The government has continued to impose duty rates on the basis of gender and age even though from the beginning these goods were of one class, and remain of one class - notwithstanding that the Tariff Commission has determined that such classification distinctions were difficult if not impossible to make and their economic justification is questionable.

10 Case 111-cv N/A Document 4 Filed 08/16/11 Page 10 of U.S. trade agreement negotiators intended to and did discriminate in promulgating tariff classifications based on sexist predicates. Zerkowitz, supra, 54 Cust. Ct. 151 (1965). 43. The provisions and determinations made after passage of the Tariff Act have been carried into the current tariff as indicated by the conversion studies. 44. The Due Process Clause of the Fifth Amendment to the Constitution of the United States guarantees the equal protection of its citizens, and prohibits defendants from discriminating in the assessment of taxes or duties on the basis of gender or age without a rational basis. 45. The Due Process Clause of the Fifth Amendment to the Constitution of the United States guarantees the equal protection of its citizens, and prohibits defendant from discriminating in the assessment of taxes or duties on the basis of age without a rational basis. 46. Tariff classification that imposes different duty rates for goods belonging to the same class of merchandise is unconstitutional and unreasonable when the different rates discriminate on the basis of gender and/or age. 47. The United States trading partner, Canada, has already virtually eliminated all classification and duty distinctions on the basis of gender. Canada explained that Some gender bias has crept into the Customs Tariff over the years, with differing tariff rates being applied to textiles depending on whether they are used in men's/boy's or women's/girl's apparel. The replacement of these gender-specific tariff items with gender-neutral provisions will help to modernize the Customs Tariff. The CITT report makes progress on this issue by recommending the consolidation of a number of existing genderspecific tariff items into new gender-neutral duty-free provisions. However, even with the implementation of these recommendations, there will still remain a number of gender-specific tariff items. To address these remaining items, the Department of Finance will be issuing a Canada Gazette Notice in the near future identifying the tariff items in question, proposing new wording to eliminate the gender-bias and indicating the requirements for submissions by interested parties.

11 Case 111-cv N/A Document 4 Filed 08/16/11 Page 11 of 12 See attached Exhibit J. 48. Plaintiff passes on its costs, including taxes and duties, to its ultimate customer. 49. Congress has recognized that it is customary for importers to include import duties in the price to its customers, which is why it mandates that import duties should be deducted from U.S. price in determining the deductive value of imported merchandise for Customs appraisement purposes (19 U.S.C. 1401a(d)(3)(A)(iv), and in determining export price and constructed export price in an antidumping calculation. 19 U.S.C. 1677a(c)(2)(A). 50. It is without rational basis for the government to burden one gender and/or age group with a higher rate of duty on the same class of goods imported into the United States. 51. The assessment of higher duties based upon gender and/or age upon plaintiff s importations is a form of discrimination against plaintiff which constitutes a denial of equal protection proscribed by the aforementioned Due Process Clause. 52. Plaintiff was assessed with, and paid the higher duties based upon gender and/or age, upon its importations under the present HTSUS provisions. WHEREFORE, plaintiff respectfully urges this Honorable Court to render judgment (i) Holding that the assessment and collection of duties under the HTSUS provisions as aforesaid are illegal, null, void and in violation of the U.S. Constitution; (ii) Directing defendant to refund to plaintiff all duties that were unconstitutionally exacted over the time period beginning two years prior to the commencement of this action up until a final decision is rendered in this case, plus lawful interest;

12 Case 111-cv N/A Document 4 Filed 08/16/11 Page 12 of 12 (iii) Enjoining defendant from assessing and collecting higher rates of duty based upon the gender and/or age for which the imported merchandise is intended under the relevant tariff items, or any other tariff provision hereinafter included in the HTSUS, after a final decision is rendered in this case; and (iv) Awarding such further and other relief as the court deems just and appropriate. Respectfully submitted, Grunfeld Desiderio Lebowitz Silverman&Klestadt, LLP Attorneys for Plaintiff 399 Park Avenue 25 th Floor New York, New York Tel s/ Robert F. Seely Robert B. Silverman Max F. Schutzman Frances P. Hadfield Dated New York, New York August 16, _1