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NABISCO BRANDS, INC. v. GERACE

December 9, 1986

NABISCO BRANDS, INC., River Road & DeForest Avenue East Hanover, N.J. 07936, Plaintiff,
v.
JOSEPH GERACE, Commissioner, New York Department of Agriculture and Markets, 1 Winners Circile, Capital Plaza, Albany, New York 12235, -and- THE NEW YORK DEPARTMENT OF AGRICULTURE AND MARKETS, 1 Winners Circle, Capital Plaza, Albany, New York 12235, Defendants



The opinion of the court was delivered by: LASKER

LASKER, D.J.

This suit concerns the question whether Nabisco Brands Inc. ("Nabisco" or "plaintiff") product called "Blue Bonnet Butter Blend" ("Butter Blend") is mislabeled under Sections 201(1) and 202-b of the New York Agriculture and Markets Law ("the statute") as well as whether the seizure of the inventory of Butter Blend from wholesale and retail sites throughout the state pending a determination of that question by the New York State courts has deprived Nabisco of property without due process of law under the Fourteenth Amendment of the United States Constitution.

Four causes of action are asserted by Nabisco in its complaint against the New York Department of Agriculture and Markets and its Commissioner (hereinafter "the State" or "defendants"). The first alleges that the determination by the State that Butter Blend is misbranded is without statutory authority, is arbitrary and capricious, and is without factual support. The second claims that the lack of any effective means by which to test the lawfulness of defendants' action in guarantining Butter Blend deprives Nabisco of its property without due process of law. The third asserts that because the labeling is not false and misleading the State's action violates plaintiff's right to commercial free speech. The fourth contends that the defendants' actions have served no legitimate or compelling state interest and, therefore, constitute an unreasonable burden on interstate commerce. Nabisco seeks various forms of declaratory relief and a permanent injunction barring the State from taking any action to interfere with the marketing or distribution of Butter Blend in New York State.

 Presently before the court are the State's motion to dismiss the complaint and Nabisco's motion for preliminary relief barring the State from interfering with its "right to continue to sell product while the labeling question is litigated."

 In February 1986 the State quarantined a token quantity of product at a single location and instituted proceedings under the statute against Nabisco, asserting that its then-label for Butter Blend violated the statute. In accordance with the requirements of the statute, a hearing was held before an administrative hearing officer with the result that the product was found to be "misbranded" within the meaning of the statute. The hearing officer's report was confirmed by the Commissioner on July 14, 1986 in a "Final Determination" in which he held that "the labelling of the quarantined spread is misleading since the name, 'Butter Blend,' suggests the spread is either a blend of butters or that butter is the primary ingredient when, butter is only 15% of the product." Thereafter, Nabisco was ordered within forty-five days to remove from sale at wholesale and retail the product so labeled. Nabisco then sought judicial review of the Commissioner's ruling in state court proceedings under the provisions of Article 78, N.Y.C.P.L.R., where the matter is still pending.

 Meanwhile, Nabisco continued to sell its product under a revised label which is the subject of the present litigation. The State apparently regarded the revised label as so inconsequentially changed from the original label as to be its practical equivalent. Whether as a result of that reaction or for independent reasons, the State then exercised the authority granted by the statute to quarantine Nabisco's goods, and 46 seizures were made at various locations throughout New York on September 30, 1986. After a request by Nabisco for a release of the product and a further hearing was rejected by the State, Nabisco, with the State's consent, removed the quarantined goods from New York. This suit followed.

 On November 7th, Judge Palmieri, of this court granted a temporary restraining order which barred the State and its officials, pending a hearing on plaintiff's motion for preliminary injunction, from quarantining or threatening to quarantine Butter Blend as then and now labeled and ordering the State defendants to conduct a hearing in the matter expeditiously. That hearing, with regard to the current, revised label, was held on November 26, 1986.

 I.

 The Motion To Dismiss

 The State moves to dismiss the complaint on four grounds: that venue is improper in this district, that under classic rulings of the Supreme Court of the United States this court should abstain from deciding the issues presented, that under Pennhurst State School & Hospital v. Halderman, 465 U.S. 89, 79 L. Ed. 2d 67, 104 S. Ct. 900 (1984), the Eleventh Amendment bars action against the State because, according to the defendants, the plaintiff is asking this court to entertain state law claims against state defendants and, finally, that the due process claim of the complaint is without merit.

 A. Venue

 The State argues that venue in this district is improper under 28 U.S.C. ยง 1391(b) because, according to the State, the claims in this action did not arise in this district and all defendants do not reside in this district. Nabisco answers that the defendants have an official residence not only in the state capital, which is in the Northern District of New York, but in New York City as well. It is not disputed that the Department has offices and conducts business in this district and that some of the seizures actually occurred in this district. In the circumstances, I conclude that, under the factors set forth in Cheeseman v. Carey, 485 F. Supp. 203, 207 (S.D.N.Y.), remanded on other grounds, 623 F.2d 1387 (2d Cir. 1980), where Judge Sofaer determined that venue could properly be laid in two districts for state officials who have dual residences, venue is proper in this district.

 B. Abstention

 The State argues that under the doctrine variously set forth in Younger v. Harris, 401 U.S. 37, 27 L. Ed. 2d 669, 91 S. Ct. 746 (1971); Burford v. Sun Oil Co., 319 U.S. 315, 87 L. Ed. 1424, 63 S. Ct. 1098 (1943) and Railroad Comm'n v. Pullman Co., 312 U.S. 496, 85 L. Ed. 971, 61 S. Ct. 643 (1941), the court should abstain from determining the issues before it. It contends that, as for example in Burford, a comprehensive state regulatory scheme exists with which, under policies of commity and federalism, this court should not interfere and that, as for example in Pullman, there are presented in this case federal constitutional issues which might be mooted by a state court determination of pertinent state law. In response, Nabisco asserts that the abstention decisions relied on by the State are inapplicable in this ...


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