Borden Company v. Liddy, Civ. No. 4-1158.

• Decision Date: 15 December 1961
• Docket Number: Civ. No. 4-1158.
• Citation: 200 F. Supp. 221
• Parties: BORDEN COMPANY, Plaintiff, v. L. B. LIDDY, Secretary of Agriculture of the State of Iowa, Defendant.
• Court: U.S. District Court — Southern District of Iowa

200 F. Supp. 221

BORDEN COMPANY, Plaintiff, v. L. B. LIDDY, Secretary of Agriculture of the State of Iowa, Defendant.

Civ. No. 4-1158.

United States District Court S. D. Iowa, Central Division.

December 15, 1961.

Maxwell A. O'Brien and Samuel G. O'Brien (Parrish, Guthrie, Colflesh & O'Brien), Des Moines, Iowa, for plaintiff.

Evan Hultman, Atty. Gen., and George E. Wright and William Yost, Asst. Attys. Gen., for defendant.

STEPHENSON, Chief Judge.

Plaintiff, The Borden Company (hereinafter referred to as Borden) brought suit against the defendant, L. B. Liddy, (hereinafter referred to as Liddy) Secretary of Agriculture of the State of Iowa, seeking an injunction and requesting declaratory judgment pursuant to Title 28, Section 2201, U.S.C. Jurisdiction is based upon Title 28, Sec. 1332, U.S.C. Borden is a New Jersey Corporation having its principal place of business in New York, New York. Liddy is a citizen of Iowa.

This controversy arose from the variation between the Iowa statute¹ providing that ice cream shall contain "not less than twelve percent by weight of milk fat and not less than twenty percent by weight of total milk solids," and the regulation issued by the Commissioner of Food and Drugs under authority delegated to him by the Secretary of Health, Education and Welfare pursuant to the authority provided in the Federal Food, Drug, and Cosmetic Act, Title 21, §§ 341, 371(e), U.S.C.A., which provides that "The kind and quantity of optional dairy ingredients used, as specified in paragraph (c) of this section, and the content of milk fat and nonfat milk solids therein, are such that the weights of milk fat and total milk solids are not less than 10 percent and 20 percent, respectively, of the weight of the finished ice cream;"² In other words Iowa requires that ice cream contain a minimum of 12 percent by weight of milk fat whereas the federal regulation requires a minimum of 10 percent by weight of milk fat. Iowa contends that Borden must comply with the Iowa law as to the manufacture and sale of ice cream within the state whereas Borden contends compliance with the federal regulation is sufficient.

Borden is engaged in the manufacture, processing, sale and distribution at wholesale of ice cream to customers in the States of Iowa, Illinois, Wisconsin, Missouri, Minnesota and others. It has manufacturing plants in Chicago, Illinois, Milwaukee, Wisconsin and Mason City, Iowa.

The parties have stipulated in part as follows:

"The Borden Company ships 1,300,000 gallons of ice cream per year into the State of Iowa from its Wisconsin plant and ships 940,000 gallons of its ice cream per year into the State of Iowa from its Chicago, Illinois pant. The Mason City plant manufactures, sells and distributes approximately 1,600,000 gallons of ice cream a year, of which about 1,500 gallons are shipped from Mason City, Iowa into the State of Missouri, approximately 60,000 gallons into the State of Minnesota and approximately 25,000 gallons into the State of Illinois."

It has been further stipulated to the effect that the plaintiff's three plants are not equipped with the same manufacturing equipment; that to comply with Iowa law rather than the federal regulation would require additional investment and result in a number of cost increases to the plaintiff, the total of which would amount to $364,000 per year; that if all Iowa requirements were made in Iowa, the plaintiff would be required to build a new plant in Iowa which would require an investment of $2,000,000 and result in duplication of manufacturing facilities, the cost of which would be approximately $110,000 per year.

It has also been stipulated that Liddy, in his capacity as Secretary of Agriculture has made demand upon Borden to comply with section 190.1(34) of the Code of Iowa, I.C.A., and threatens to enforce the provisions of section 189.19 against Borden, its officers and employees unless it immediately complies with section 190.1(34) "in regard to ice cream manufactured by The Borden Company outside of the State of Iowa for sale in Iowa and ice cream manufactured by The Borden Company in Iowa for delivery and sale in adjoining states in interstate commerce."

It is apparent that there are two phases of this controversy. The first is whether the federal regulation prevails over the Iowa statutes in regard to ice cream manufactured outside the State of Iowa and shipped into Iowa for sale. The second concerns the effect of the regulation upon the ice cream manufactured at the plaintiff's Mason City, Iowa plant and shipped into Illinois, Missouri and Minnesota.

The complaint was filed on July 7, 1961, at which time a temporary restraining order was issued enjoining Liddy from enforcing the Iowa statute. It has since been extended by agreement of the parties until further order of the court. A stipulation of facts was filed August 29, 1961, following which the cause was submitted on its merits on written briefs. At the court's request, oral argument was held on November 30, 1961. At that time Liddy conceded that the second phase of the controversy was not an issue in view of Iowa Code Section 189.26³ (1958), I.C.A., and that Borden, by complying with this statute could manufacture at its Mason City plant ice cream with less than twelve per cent milk fat for shipment into other states. As a result the court is only concerned with the question of ice cream manufactured outside of Iowa and shipped into Iowa for sale.

Borden contends it is entitled to relief because all we are concerned with in this lawsuit is a "labeling" statute; that in view of Iowa Code Sec. 189.11⁴ which provides that any food product labeled in accordance with federal requirements is deemed labeled in conformance with the law of Iowa, Borden is not in violation of Iowa law. If limited to this statute plaintiff's argument is correct, but this argument tends to ignore the effect of Iowa Code Sec. 189.15⁵ which prohibits the sale of adulterated food.

The State of Iowa specifically prohibits mislabeling.⁶ Plaintiff may meet federal requirements in this regard and be deemed in conformance with any labeling laws of Iowa. However, merely labeling an article correctly does not satisfy the Iowa law regarding adulterated food. It is in this respect plaintiff's argument fails. Accepting all of plaintiff's contentions concerning the proper labeling of food products, still, plaintiff would run afoul of Sec. 189.15 which prohibits the sale of adulterated food, if it sells ice cream with less than 12 per cent milk fat by weight. Plaintiff contends that both Secs. 189.14 and 189.15 were interpreted as only a "labeling law" in State v. Hutchinson Ice Cream Co., 1914, 168 Iowa 1, 147 N.W. 195, affirmed, 1916, 242 U.S. 153, 37 S.Ct. 28, 61 L.Ed. 217. At the time of the Hutchinson case sections 189.14 and 189.15 were combined in section 4999-a20, which provided as follow:

"Manufacture and sale of adulterated foods prohibited. No person, firm or corporation, by himself, officer, servant or agent, or as the officer, servant, or agent of any other person, firm or corporation, shall manufacture or introduce into the state, or solicit or take orders for delivery, or sell, exchange, deliver or have in his possession with the intent to sell, exchange or expose or offer for sale or exchange, any article of food which is adulterated or misbranded, within the meaning of this act. Provided that none of the penalties set forth in this act shall be imposed upon any common carrier for introducing into the state, or having in its possession, any adulterated or misbranded articles of food, where the same were received by said carrier for transportation in the ordinary course of its business and without actual knowledge of the adulteration or misbranding thereof. Provided that any manufacturer, wholesaler or jobber may keep goods specifically set apart in his stock for sale in other states, which might otherwise be in violation of the provisions of this act. (31 G.A., ch. 166, § 6.)"

Neither Hutchinson decision stated that this statute related only to labeling as Borden contends. As is true today, the statute prohibited the sale of misbranded (now mislabeled) and adulterated food. The legislature has since made this even more clear by dividing section 4999-a20 into two sections, one aimed at mislabeled articles; the other adulterated articles. Therefore Borden's contention that compliance with federal labeling requirements constitutes conformance with the Iowa law prohibiting the sale of adulterated food cannot be sustained.

Borden further contends it is entitled to relief for two additional reasons. (1) that the federal government "has preempted the field of labeling as it relates to frozen desserts, and, therefore, Federal regulations and statutes apply rather than the State laws." (2) that "enforcement of the Iowa statute relating to labeling of ice cream would constitute an undue burden on interstate commerce."

The court has already determined that the Iowa law defining ice cream is more than a labeling statute. It prescribes the standard for ice cream, violation of which constitutes adulteration. However, the court will consider whether the federal government has pre-empted the field by establishing a minimum standard for ice cream, and in addition, whether the establishment and enforcement of the Iowa standard is an undue burden on interstate commerce.

Borden bases its pre-emption argument on the ground that the ice cream industry is today operated on a large interstate scale as opposed to the rather limited local nature of its operations a few years ago and that to have fifty different state regulations governing the standards for these products would unreasonably and greatly restrict the economic development of the food industry, leading to confusion, inefficiency and a burden on the natural growth of the industry.

On the other hand, Liddy contends that the regulation promulgated by the...