Rack Room Shoes v. United States

856 F.Supp.2d 1291

34 ITRD 1592

RACK ROOM SHOES, SKIZ Imports LLC, and Forever 21, Incorporated, Plaintiffs,

v.UNITED STATES, Defendant.

United States Court of International Trade.

Slip Op. 12–70.

Court No. 07–00404.

June 1, 2012.

John M. Peterson, George W. Thompson, Maria E. Celis, Russell A. Semmel, and Richard F. O'Neill, Neville Peterson LLP, of New York, NY, for the Plaintiff, Rack Room Shoes.

Michael T. Cone, McCullough Ginsberg Montano & Partners LLP, of New York, NY, for the Plaintiff, SKIZ Imports LLC.

Damon V. Pike, The Pike Law Firm P.C., of Decatur, GA, for the Plaintiff, Forever 21, Inc.

Tony West, Assistant Attorney General, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, for the Defendant. With him on the briefs were Jeanne E. Davidson, Director; Reginald T. Blades, Jr., Assistant Director, and Aimee Lee, Trial Attorney. Of counsel on the briefs were, Yelena Slepak, Office of Assistant Chief Counsel, International Trade Litigation, United States Customs and Border Protection, and Leigh Bacon, Office of the General Counsel, United States Trade Representative.

Before: DONALD C. POGUE, Chief Judge, JANE A. RESTANI, Judge, JUDITH M. BARZILAY, SR., Judge.

MEMORANDUM AND ORDER

POGUE, Chief Judge:

In this action, Plaintiff Rack Room Shoes, Inc. (“Rack Room”), together with other United States importers, allege, in their Amended Complaints, that certain glove, footwear and apparel tariff classifications violate the Equal Protection Clause of the Constitution. U.S. Const. amend. XIV, § 1, cl. 2. The court dismissed the complaints in Rack Room Shoes v. United States, 36 CIT ––––, 821 F.Supp.2d 1341 (2012) (dismissing for failure to state a plausible claim of intent to discriminate).¹

Rack Room, pursuant to USCIT Rule 59, now seeks reconsideration of the court's dismissal.² Rack Room asserts that there was legal error in the court's 1) failure to make necessary findings of fact, and 2) failure to articulate the applicable pleading standard or reconcile such a standard with USCIT Rule 9(b).

Because Rack Room's assertions are incorrect, as explained below, its motion for rehearing is denied.

STANDARD OF REVIEW

The court will grant a rehearing when there has been: “1) an error or irregularity, 2) a serious evidentiary flaw, 3) the discovery of new evidence which even a diligent party could not have discovered in time, or 4) an accident, unpredictable surprise or unavoidable mistake which impaired a party's ability to adequately present its case.” See, e.g., Target Stores v. United States, 31 CIT 154, 156, 471 F.Supp.2d 1344, 1347 (2007). However, the court does not grant a motion for rehearing merely to permit the losing party another chance to re-litigate the case. USEC, Inc. v. United States, 25 CIT 229, 230, 138 F.Supp.2d 1335, 1336 (2001). Rather, the moving party must show that the court committed a “fundamental or significant flaw” in the original proceeding. Id.

DISCUSSION

Rack Room first asserts that the court failed to make necessary findings of fact with regard to each provision of the Harmonized Tariff Schedule of the United States (“HTSUS”) challenged in the prior proceeding. Specifically, Rack Room claims that the court failed to find that each challenged provision was not facially discriminatory before proceeding to dismiss the case.³

But classification is an inherent part of the HTSUS and therefore a claim of facial discrimination in the HTSUS, specifically in classifications that include only a reference to age or gender, will be unavailing. Leathers v. Medlock, 499 U.S. 439, 451, 111 S.Ct. 1438, 113 L.Ed.2d 494 (1991) (“Inherent in the power to tax is the power to discriminate in taxation.”); Totes–Isotoner Corp. v. United States, 594 F.3d 1346, 1357, 1359 (Fed.Cir.2010), cert. denied,––– U.S. ––––, 131 S.Ct. 92, 178 L.Ed.2d 28 (2010), (“[W]e ... cannot assume that this differential treatment of different goods is invidious.”) (Proust, J., concurring) (noting also that gender- or age-based tariff classifications which impose burdens on importers rather than “gender- or age-based classes of people” are not facially discriminatory). Thus, no separate fact-finding step is necessary, with regards to each individual HTSUS subheading that the Plaintiff challenges, because the gender- and age-based classifications at issue, regardless of which specific subheading is referred to, are not facially discriminatory.⁴

Moreover, there is no difference in the form of the multiple classifications that Plaintiffs challenge. Compare subheadings 4203.29.30 (men's gloves) and 4203.29.40 (gloves for “other persons”), which were challenged in Totes–Isotoner Corp. v. United States, 32 CIT 739, 569 F.Supp.2d 1315 (2008), with 6403.99.60 (footwear for men, youths, and boys) and 6403.99.90 (footwear for women), which are among the many tariff subheadings challenged by the Plaintiffs. With regards to both classifications, the first heading makes reference to the gender or age of the intended user, then the classification further distinguishes items by characteristics such as the presence of lining, material, or simply states the name of the item.⁵ The facial form of all challenged headings is the same. See Appendix A (listing all headings challenged by Plaintiffs).

Plaintiff's second alleged basis for reconsideration asserts that the court overlooked USCIT Rule 9(b) when ruling that Plaintiffs must plead sufficient facts to plausibly show that Congress had an invidious intent to discriminate in adopting the challenged HTSUS provisions.⁶ This claim also fails.

USCIT Rule 9(b) states that “[m]alice, intent, knowledge, and other conditions of a person's mind may be alleged generally.” USCIT R. 9(b). It follows, certainly, that intent may be alleged generally. Nonetheless, Plaintiffs must also allege facts sufficient to raise a plausible claim. See, e.g., Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007); Totes–Isotoner, 594 F.3d at 1358 (holding that plaintiffs claiming discrimination are “required to allege facts sufficient to establish a governmental purpose to discriminate”). Rather than being mutually exclusive, as Plaintiffs seem to suggest, the now-familiar Twombly standard, with its threshold plausibility requirement, is supplemental to, and informs the application of, Rule 9(b). Accordingly, our dismissal of Plaintiffs' Amended Complaints for failure to state a plausible claim is not inconsistent with USCIT Rule 9(b).

CONCLUSION

For the forgoing reasons, Plaintiff's motion for rehearing is denied.

So Ordered.

Appendix of challenged Tariff classifications¹

1. The court has organized the bare HTSUS heading numbers that Plaintiffs submitted in support of their argument that these provisions facially discriminate based on gender or age. However, Plaintiffs' submissions contained multiple miscategorizations and factual errors, including but not limited to mislabeling the category under which the tariff heading allegedly discriminates and not correcting for repeated listings of HTSUS headings. This appendix represents our best effort to correct these mistakes and present them in a clear and organized manner.

+-----------------------------------------------------------------------------+
¦                          ¦Imported Female Product   ¦Imported Male Product  ¦
+--------------------------+--------------------------+-----------------------¦
¦Heading: 6403: Footwear   ¦Heading: 6403: Footwear   ¦                       ¦
¦with outer soles of       ¦with outer soles of       ¦                       ¦
¦rubber, plastics, leather ¦rubber, plastics, leather ¦                       ¦
¦or composition leather and¦or composition leather and¦                       ¦
¦uppers of leather         ¦uppers of leather         ¦                       ¦
+--------------------------+--------------------------+-----------------------¦
¦1                         ¦                          ¦                       ¦
+--------------------------+--------------------------+-----------------------¦
¦Subheading: 19.70: Sports ¦Subheading: 19.40: Sports ¦                       ¦
¦footwear, Other, For other¦footwear, Other, For men, ¦                       ¦
¦persons, Other            ¦youths and boys, Other,   ¦                       ¦
¦                          ¦Other                     ¦                       ¦
+--------------------------+--------------------------+-----------------------¦
¦Heading: 6403: Footwear   ¦Heading: 6403: Footwear   ¦                       ¦
¦with outer soles of       ¦with outer soles of       ¦                       ¦
¦rubber, plastics, leather ¦rubber, plastics, leather ¦                       ¦
¦or composition leather and¦or composition leather and¦                       ¦
¦uppers of leather         ¦uppers of leather         ¦                       ¦
+--------------------------+--------------------------+-----------------------¦
¦2                         ¦                          ¦                       ¦
+--------------------------+--------------------------+-----------------------¦
¦Subheading: 19.50: Sports ¦Subheading: 19.30: Sports ¦                       ¦
¦footwear, Other, For other¦footwear, Other, For men, ¦                       ¦
¦persons, Golf Shoes       ¦youths and boys, Other,   ¦                       ¦
¦                          ¦Golf Shoes                ¦                       ¦
+-----------------------------------------------------------------------------+

+-----------------------------------------------------------------------------+
¦Heading: 6403: Footwear with outer   ¦Heading: 6403: Footwear with outer     ¦
¦soles of rubber, plastics, leather or¦soles of rubber, plastics, leather or  ¦
¦composition leather and uppers of    ¦composition leather and uppers of      ¦
¦leather                              ¦leather                                ¦

...