CAFC Affirms Classification as Articles of Plastic, Lowers Duty Rate for Cellphone Cases

CIT’s June 2015 decision had overturned CBP’s classification of the cellphone cases at liquidation as “similar containers” under subheading 4202.99.9000, which covers certain “trunks, suitcases, vanity cases, attache cases, briefcases, school satchels, spectacle cases, binocular cases, camera cases, musical instrument cases, gun cases, holsters and similar containers; traveling bags, insulated food or beverage bags, toiletry bags, knapsacks and backpacks, handbags, shopping bags, wallets, purses, map cases, cigarette cases, tobacco pouches, tool bags, sports bags, bottle cases, jewelry boxes, powder cases, cutlery cases and similar containers.” CBP had previously denied OtterBox’s protest claim that the cellphone cases should have been classified under subheading 3926.90.99 as “other articles of plastics.”

CAFC disagreed with the government’s argument that the lower court’s decision should be overturned because CIT “effectively imposed” a requirement that products classifiable in heading 4202 as “similar containers” meet all four criteria of organizing, storing, protecting, and carrying. CIT had found they only meet one -- protecting. “We take this opportunity to clarify that there is no requirement that the subject merchandise meet all four characteristics to qualify as a ‘similar container’ under Heading 4202,” the appeals court said. Instead, courts should consider the criteria collectively, it said. However, an item that only meets one of the four “almost certainly would not qualify as a ‘similar container’ under Heading 4202,” it said. “Allowing a single factor to satisfy the inquiry would, in almost all conceivable scenarios, render the scope of 'similar containers' so broad that it would lead to absurd results and make consistent application of the standard all but impossible.”

Nor did the trade court incorrectly impose a “fifth criteria” by holding that “similar containers” under heading 4202 do not allow for use of an article while inside the container. Classification as similar merchandise requires not just that the merchandise shares the characteristics of the exemplars to which it is being compared, but also that it does not have a “more specific primary purpose that is inconsistent with the listed exemplars,” CAFC said. In the case of OtterBox’s cellphone cases, CIT ruled that the purpose of allowing the cellphone to remain functional while inside the case “is inconsistent with the purposes of the exemplars in Heading 4202 and therefore distinguishes the subject merchandise from those exemplars,” the appeals court said. “That consideration did not impose a fifth characteristic, as the government contends; it simply completed the appropriate analysis, which requires a comparison of ‘purpose.’”

Instead, CIT correctly held that the cellphone cases are not classifiable in heading 4202 because they do not meet three of the four relevant criteria, CAFC said. They don’t organize because organizing requires “at least the possibility of storing multiple items.” They don’t store because they are meant to allow use of the cellphone while in the case, rather than put aside the cellphones for future use. They don’t carry because they don’t have any features that add to the user’s ability to carry the cellphone, the appeals court said. Unclassifiable in heading 4202, the cellphone cases are instead classified as articles of plastic in chapter 39, specifically in subheading 3926.90.99, CAFC said.

(Otter Products v. U.S., Fed. Cir. # 2015-1866, dated 08/24/16, Judges Prost, O’Malley and Chen)

(Attorneys: Louis Mastriani of Adduci Mastriani for plaintiff-appellee Otter Products; Beverly Farrell for defendant-appellant U.S. government)