United States v. 40 CASES, ETC.

• Decision Date: 19 April 1961
• Docket Number: Docket 26724.,No. 295,295
• Citation: 289 F.2d 343
• Parties: UNITED STATES of America, Appellant, v. 40 CASES, MORE OR LESS OF Six One Gallon Cans Article Labeled in Part (Can) PINOCCHIO BRAND 75% CORN, PEANUT OIL AND SOYA BEAN OIL BLENDED WITH 25% PURE OLIVE OIL — Packed by A. M. S. Packing Company, New York — at Syracuse, New York, A. M. S. Packing Co., Appellee.
• Court: U.S. Court of Appeals — Second Circuit

289 F.2d 343 (1961)

UNITED STATES of America, Appellant, v. 40 CASES, MORE OR LESS OF Six One Gallon Cans Article Labeled in Part (Can) PINOCCHIO BRAND 75% CORN, PEANUT OIL AND SOYA BEAN OIL BLENDED WITH 25% PURE OLIVE OIL — Packed by A. M. S. Packing Company, New York — at Syracuse, New York, A. M. S. Packing Co., Appellee.

No. 295, Docket 26724.

United States Court of Appeals Second Circuit.

Argued February 10, 1961.

Decided April 19, 1961.

William W. Goodrich, Asst. Gen. Counsel, U. S. Dept. of Health, Education & Welfare, Washington, D. C. (Theodore F. Bowes, U. S. Atty., Northern Dist. of New York, Syracuse, N. Y., Sydney Brodie, Duane L. Nelson, Dept. of Justice, Washington, D. C., Joanne S. Sisk, U. S. Dept. of Health, Education & Welfare, Washington, D. C., on the brief), for appellant.

Julius Zizmor, New York City, for appellee.

Before LUMBARD, Chief Judge, MADDEN, Judge, United States Court of Claims,^* and WATERMAN, Circuit Judge.

LUMBARD, Chief Judge.

The single question before us on this appeal is whether § 304(a) of the Federal Food, Drug, and Cosmetic Act, 21 U.S. C.A. § 334(a), authorizes the United States to proceed against and seize mislabeled or adulterated cans of blended vegetable oils mixed entirely within the State of New York from various oils shipped under proper labels from other states and foreign countries. Section 304(a) permits seizure of food which is "adulterated or misbranded when introduced into or while in interstate commerce or while held for sale (whether or not the first sale) after shipment in interstate commerce. * * *" The district judge held that the blended oil was a "new product" and therefore not the same as those shipped in interstate commerce. He dismissed the libel. D.C.N.D. N.Y.1960, 188 F.Supp. 290.

In its libel, the allegations of which must be taken as true on review of the decision to dismiss, the United States charged that forty cases of six one-gallon cans of "Pinocchio" brand oil were delivered to the La Gondola Food Corporation in Syracuse; that they were being held for sale after interstate shipment; that the cans were labeled "25 per cent pure olive oil"; that examination showed that the cans contained little or no olive oil; and that the oil was therefore "adulterated" within the meaning of § 402(b) (2) or "misbranded" within the meaning of § 403(a) of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C.A. §§ 342(b) (2), 343(a).

An answer to the libel was filed by the A. M. S. Packing Company, which alleged that it had blended and packed the oil attached under the libel; that the blend was as represented on the labels of the cans; and that all steps in the manufacturing and/or blending of the oils had taken place within the State of New York. On the basis of its allegation that the blending had been done in New York, the company put in issue the jurisdiction of the federal court and moved to dismiss the libel.

The United States did not in the district court or here challenge the truth of the company's assertion that the blending process was done entirely within the State of New York, nor did it claim that the blended oil was carried across any state line. It is also undisputed that the various oils from which the blend was made had been shipped under proper labels from New Jersey, Illinois and Georgia, and that olive oil had been transported to the company's plant in Ozone Park, New York, from Spain, Italy and Tunisia. The United States contends that although the component oils were correctly labeled when shipped interstate, the misbranding or adulteration which occurred during or after the blending of the oils brought them within the compass of the federal act as articles of food held for sale after interstate shipment.

From 1938 to 1948, the Food, Drug, and Cosmetic Act provided for condemnation of articles of food that were adulterated or misbranded only "when introduced into or while in interstate commerce." This language was held not to authorize seizure of food that was pure and properly labeled while in interstate commerce and became adulterated or misbranded only after the interstate voyage had been completed. United States v. Phelps Dodge Mercantile Co., 9 Cir., 1946, 157 F.2d 453, certiorari denied 1947, 330 U.S. 818, 67 S.Ct. 675, 91 L.Ed. 1270. In 1948, however, Congress amended § 304 (a) so as also to permit seizure of food that is adulterated or misbranded "while held for sale (whether or not the first sale) after shipment in interstate commerce." 62 Stat. 582. Had the company in this case not mixed the oils it received from various sources but instead pasted new misleading labels on the containers in which they were shipped in interstate commerce or otherwise adulterated the oils, seizure would have been authorized. The appellee would have us hold here that the blending of the oils which had been transported in interstate commerce took the final product out from under federal regulation although each of its separate components was being held for sale after shipment in interstate commerce. We do not agree.

The original Food and Drugs Act of 1906 authorized seizure only if the adulterated or misbranded food or drug was being transported in interstate commerce, "or, having been transported, remains unloaded, unsold, or in original unbroken packages." § 10, 34 Stat. 771, 21 U.S. C.A. § 14. The "original package"...