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Grocery Manufacturers of America Inc. v. Gerace

February 14, 1985

GROCERY MANUFACTURERS OF AMERICA, INC., A DELAWARE CORPORATION, PLAINTIFF-APPELLEE CROSS-APPELLANT,
v.
JOSEPH GERACE, COMMISSIONER, NEW YORK DEPARTMENT OF AGRICULTURE AND MARKETS, AND THE NEW YORK DEPARTMENT OF AGRICULTURE AND MARKETS, DEFENDANTS-APPELLANTS CROSS-APPELLEES, JOHN R. BLOCK, AS SECRETARY OF AGRICULTURE OF THE UNITED STATES AND THE DEPARTMENT OF AGRICULTURE OF THE UNITED STATES, MARGARET M. HECKLER, AS SECRETARY OF HEALTH AND HUMAN SERVICES OF THE UNITED STATES, AND THE DEPARTMENT OF HEALTH AND HUMAN SERVICES OF THE UNITED STATES, ADDITIONAL DEFENDANTS ON COUNTERCLAIM-APPELLEES



Author: Meskill

Before FRIENDLY, MESKILL and PIERCE, Circuit Judges.

MESKILL, Circuit Judge:

This is an appeal from a judgment entered in the United States District Court for the Southern District of New York, Duffy, J., granting the motion of plaintiff-appellee Grocery Manufacturers of America (GMA) for preliminary and permanent injunctive relief. The district court, in a decision reported at 581 F. Supp. 658 (S.D. N.Y. 1984), enjoined the enforcement of N.Y. Agric. & Mkts. Law § 63 (section 63), which it found invalid on federal preemption and Commerce Clause grounds.

We affirm in part and reverse in part.

BACKGROUND

This litigation involves state and federal regulatory schemes that require descriptive labeling of cheese alternatives: products composed wholly or partly of food that looks, smells and tastes like cheese, but is not, in fact, cheese. The major focus of the dispute concerns the use and meaning of the modifier "imitation" as applied to these products. A brief discussion of cheese-making is in order.

Real cheese is made from milk with its milkfat content intact. Cheese alternatives may be made in two ways. One method begins with either milk from which the milkfat has been removed or casein, natural milk protein extracted from milk. The altered milk or casein is then combined with vegetable oil, which substitutes for milkfat. This type of alternative cheese is lower in calories and cholesterol than real cheese. It sells at prices fifty to sixty percent lower than real cheese. The other type of alternative cheese is chemically similar to real cheese but is made wholly or in part with substitute dairy products. This is presumably even less expensive to manufacture than the former. Vitamins and minerals may be added to raise the nutritional level of alternative cheese. Record of Administrative Rulemaking Proceedings in the Adopting of Imitation Cheese Labeling Regulations (before the New York Department of Agriculture and Markets), Record Doc. #6 at 152-60.

Alleging that New York's imitation cheese law was in conflict with federal labeling requirements and with the Commerce Clause, GMA commenced this litigation with a complaint requesting injunctive and declarative relief against defendants-appellants New York Department of Agriculture and Markets and the department's Commissioner, Joseph Gerace (collectively New York). New York counterclaimed and included as additional defendants the United States Department of Agriculture (USDA); the United States Department of Health and Human Services (HHS), the bureaucratic parent of the Food and Drug Administration (FDA); and the respective department secretaries. The counterclaim sought to have 21 C.F.R. § 101.3 (1984), the federal regulation that defines the term imitation for purposes of food package labeling, declared invalid.

The text of New York's section 63, enacted in 1982, is set out in the margin.*fn1 Briefly, it requires that alternative cheese products feature labels that display prominently the descriptive term "imitation." It also directs that anyone who sells prepared foods containing cheese alternatives, whether for carry out or for consumption on the premises, must display a sign that discloses in three inch letters those foods that contain "imitation cheese." Further, it provides that restaurant menus must append the words "contains imitation cheese" to the item designation of any offering containing alternative cheese. And, finally, alternative cheese products available for use by customers on the premises -- as, for example, something resembling grated parmesan -- must be conspicuously labeled as "imitation cheese."

Section 63 does not define imitation. The regulations promulgated pursuant to the statute define "imitation cheese" as any food simulating "cheese" as described or standardized by regulation but failing to meet that description or standard. N.Y. Admin.Code tit. 1, § 18.1(c). Neither the statute nor any of its regulations is concerned with nutritional values.

The federal scheme implicated here, which establishes the requisite information content of package labels for foods shipped in interstate commerce, involves three federal statutes and two federal agencies. Food labeling generally is governed on the federal level by the Federal Good, Drug, and Cosmetic Act (FDCA), 21 U.S.C. § 301 et seq. (1982), and its regulations, which come under the administrative aegis of the FDA. The FDCA does not contain any express preemption language.

The labeling of meat and poultry products shipped in interstate commerce is specifically controlled by the Federal Meat Inspection Act (FMIA), 21 U.S.C. § 601 et seq. (1982), and the Poultry Products Inspection Act (PPIA), 21 U.S.C. § 451 et seq. (1982), and their respective regulations, 9 C.F.R. § 317 et seq. (1984). The FMIA and the PPIA are administered by the USDA. Both statutes contain substantially identical preemption language which permits some concurrent state enforcement but prohibits state "marking, labeling, packaging, or ingredient requirements in addition to, or different than, those" mandated by federal law. 21 U.S.C. § 678 (FMIA); see also 21 U.S.C. § 467e (PPIA).

The FDCA specifically prohibits, among other things, misbranded foods. Under the FDCA, a food is misbranded if it is sold under the name of any other food, 21 U.S.C. § 343(b), or if it purports to be a food, such as cheese, for which a standard of identity has been prescribed by regulation and it does not conform exactly to that standard, 21 U.S.C. § 343(g). In addition, a food that "is an imitation of another food" is misbranded unless its label contains the work "imitation" in prominent letters immediately preceding the name of the food imitated. 21 U.S.C. § 343(c).

The FDCA does not define imitation; that task was accomplished by regulation in 1973. An imitation food is defined as a food which "is a substitute for and resembles another food but is nutritionally inferior to that food." 21 C.F.R. § 101.3(e)(1). Nutritional inferiority is determined by comparing the percentages of so-called "essential nutrients" in the substitute to those in the food for which it substitutes. 21 C.F.R. § 101.3(e)(4). The essential nutrients are protein and the nineteen vitamins and minerals for which the federal government has established recommended daily allowances (U.S. RDAs). Id.; § 101.9(c)(7)(iv). Basically, if the substitute contains less of any essential nutrient present to a measurable degree in the food substituted for, the substitute must be labeled with the word "imitation."

A nutritionally equivalent or superior substitute food would be misbranded under federal law if it was labeled with the term "imitation."*fn2 Such foods must be identified by an appropriate common or usual name or, if none exists, a descriptive term.*fn3 The fact that such foods are substitute foods would thus be evident from the foods' labels, albeit less so than if the word "imitation" was used.

The FMIA and the PPIA contain misbranding provisions essentially identical to the FDCA's. Compare 21 U.S.C. § 453(h) (PPIA) and § 601(n) (FMIA) with 21 U.S.C. § 343 (FDCA). Unlike the FDCA, both the PPIA and the FMIA, to prevent misbranding, require that all proposed labels be reviewed and approved by USDA agents prior to use. 21 U.S.C. § 457(c) & (d) (PPIA); § 607(d) & (e) (FMIA). Neither the text of nor the regulations under either the FMIA or the PPIA define imitation. However, the USDA avers that it has adopted the FDA's definition.

Thus federal labeling requirements for alternative cheese products and for meat and poultry products containing cheese alternatives are uniform. If the product is nutritionally inferior to the food it resembles, it must be labeled "imitation." If, however, it is nutritionally equivalent or superior to its model, it would be misbranded if it was labeled "imitation."

In the court below, the parties agreed and the district judge found that there were no unresolved material issues of fact. 581 F. Supp. at 661. The judge therefore deemed summary judgment as to GMA's motion for preliminary and permanent injunctive relief appropriate. Id. Accordingly, the court held that New York's labeling requirements as applied to alternative cheese were preempted by the FDCA because the federal requirements, as applied in compliance with the FDA's definition of imitation, and the state requirements were in actual conflict. Further, it held that the state labeling requirements as applied to meat and poultry products containing alternative cheese were preempted by the FMIA and the PPIA because the USDA's adoption of the FDA's definition of imitation created actual conflict between the state and federal schemes and, also, because of the express preemption language in the federal statutes. Finally, the district court held that the sign, menu and container provisions were invalid because they placed an undue burden on interstate commerce in violation of the Commerce Clause.

On appeal, New York challenges all three of the district court's conclusions. It argues that the state labeling provisions are not preempted by the FDCA because the federal regulation defining imitation violates the meaning and purpose of the FDCA and is therefore invalid. Invalidation of the regulation, of course, would vitiate the actual conflict between the state and federal schemes. New York also maintains that even if the definition is valid under the FDCA, the USDA's adoption of the definition was procedurally defective. Thus, New York reasons, the state statute is not in conflict with either the FMIA or the PPIA. Further, New York claims that the requirements of the state statute fall ...


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