Coffee-Rich, Inc. v. Fielder

• Decision Date: 19 September 1972
• Docket Number: INC,COFFEE-RIC
• Citation: 104 Cal.Rptr. 252,27 Cal.App.3d 792
• Court: California Court of Appeals Court of Appeals
• Parties: , 1972 Trade Cases P 74,186 , a Delaware corporation, and Rich Products Corporation, a Delaware corporation, Plaintiffs, Respondents and Appellants, v. Jerry W. FIELDER, (appointed as Successor to Richard Lyng), as Director of Agriculture of the State of California, et al., Defendants, Appellants and Respondents. Civ. 38748.

Page 252

104 Cal.Rptr. 252

27 Cal.App.3d 792, 1972 Trade Cases P 74,186

COFFEE-RICH, INC., a Delaware corporation, and Rich Products Corporation, a Delaware corporation, Plaintiffs, Respondents and Appellants, v. Jerry W. FIELDER, (appointed as Successor to Richard Lyng), as Director of Agriculture of the State of California, et al., Defendants, Appellants and Respondents.

Civ. 38748.

Court of Appeal, Second District, Division 2, California.

Sept. 19, 1972.

Rehearing Denied Oct. 16, 1972.

Hearing Denied Nov. 15, 1972.

Evelle J. Younger, Atty. Gen., Sanford N. Gruskin, Asst. Atty. Gen., Walter E. Wunderlich, Jeffrey C. Freedman, Deputy Attys. Gen., for appellants and respondents Dept. of Agriculture, State of California.

Flint & MacKay, Edwin Freston, Louis W. Myers, II, Los Angeles, for appellants and respondents Coffee-Rich, Inc.; Ellis G. Arnall and Elliott H. Levitas, of Arnall, Golden & Gregory, Atlanta, Ga., of counsel.

Murphy, Murphy, Black & Williams, Frank Murphy, Jr., Santa Cruz, and John C. Hamilton, Los Angeles, for amici curiae.

ROTH, Presiding Justice.

Plaintiffs Coffee-Rich, Inc. and Rich Products, separate Delaware corporations with their respective principal places of business in Buffalo, New York, seek a judgment against various officials of the State Department of Agriculture, herein sometimes referred to as defendants or Department, declaring that certain amendments to the Agricultural Code effected by Chapter 1250 of Statutes and Amendments (1968) either have no application to the sale in California of their products or that the amending legislation is unconstitutional. ¹ Plaintiffs' products, Coffee-Rich and three types of whipped topping, including 'Spoon n' Serve' and 'Rich's Whip Topping', collectively 'Rich Toppings', are used as additives to beverages and solid foods, have been sold in California since 1960 and, in the case of Rich Toppings, with substantial changes in composition, since 1945. In a two and a half year period commencing in 1967, the most popular of the three toppings enjoyed sales in California in excess of one million dollars, and Coffee-Rich for the same period had sales approximating $600,000.

The trial resulted in a permanent injunction restraining defendants in substantial part, although not completely, from '* * * enforcing the provisions of Statutes 1968, Chapter 1250, with respect to the manufacture, importation, handling, distribution, sale or use * * *' in California of plaintiffs' named products. ²

Plaintiffs appeal from several specific orders of the trial court interpreting and applying certain sections of Chapter 6 but only to the extent that some of these interpretations are unfavorable to plaintiffs, and from finding (21) that the products, when not in containers, could be mistaken for milk products.

Defendants, dissatisfied with the court's interpretation of certain sections of the Agricultural Code, appeal from portions of the judgment (discussed Infra) as well as from the finding (20) and resulting decree that when the products are packaged, they cannot be mistaken for milk products.

Amici curiae, the Dairymen's Task Force, and the Consumer's Cooperative of Berkeley, Inc., have filed a brief supportive of defendants' position on some of the various issues at bench.

A detailed description of plaintiffs' products is set forth in footnote 3. ³ As the parties correctly point out the right to supervise the disposition of plaintiffs' products in this State must rest on section 38912 of Chapter 6 which reads: 'Products resembling milk products means any food product for human consumption, except those referred to in section 38903, which has the appearance, taste, smell, texture or color of a milk product and which, taken as a whole, bears resemblance to a milk product, or could be mistaken for a milk product.'

Chapter 6, predicated as it is on section 38912, constitutes an exercise of police power.

Emphatic approval of the exercise by a State of this power to regulate specifically milk products and resembling products was announced 78 years ago by the Supreme Court of the United States:

'If there be any subject over which it would seem the States ought to have plenary control, and the power to legislate in respect to which it ought not to be supposed was intended to be surrendered to the general government, it is the protection of the Regulation of a food product 'which resembles milk' was held to be a proper exercise of such power by our Supreme Court. (In re Reineger, 184 Cal. 97, 193 P. 81.) The court said at page 104, 193 P. at page 84: 'The proposition that a compound of this kind which is not milk, but which resembles milk, and which for many purposes may be used as a substitute for milk, is subject to reasonable regulations under the police power, designed to prevent it from being sold to consumers as real milk, is settled by the decision of the Supreme Court of the United States in Hebe Co. v. Shaw, 248 U.S. 297, 39 S.Ct. 125, 63 L.Ed. 255.' The findings listed in footnote 3 (supra) leave no doubt that plaintiffs' products are 'for many purposes * * * used as a substitute for milk.'

people against fraud and deception in the sale of food products.' (Plumley v. Massachusetts, 155 U.S. 461, 472, 15 S.Ct. 154, 158, 39 L.Ed. 223.) See Florida Lime and Avocado Growers v. Paul, 373 U.S. 132, 143--146, 83 S.Ct. 1210, 10 L.Ed.2d 248, (California regulations affecting imported avocados upheld).

Such resembling products are not merely subject to appropriate intra-state regulation. They may be prohibited from interstate commerce (United States v. Carolene Products Co., 304 U.S. 144, 148, 58 S.Ct. 778, 82 L.Ed. 1234), even when, in terms of nutrition, such products are at least as good as the milk product they resemble. (Carolene Products Co. v. United States, 323 U.S. 18, 21--25, 65 S.Ct. 1, 89 L.Ed. 15; see also Sage Stores Co. v. Kansas, 323 U.S. 32, 34--36, 65 S.Ct. 9, 89 L.Ed. 25.) Several recent decisions, although there is authority to the contrary, have upheld state statutes which prohibited rather than regulated products resembling milk products. (Quality Food Products, Inc. v. Beard, 286 F.Supp. 351, 353--355, 359--362 (M.D.Ala.N.D.1968) (prohibition of product which manufacturer intended to label 'imitation milk'); Martin v. Wholesome Dairy, Inc., Tex.Civ.App., 437 S.W.2d 586, 601--602; (prohibition of filled products in 'imitation or semblance' of a dairy product); Reesman v. State, 74 Wash.2d 646, 445 P.2d 1004, 1008--1010.)

The California Legislature specifically declares in Chapter 6 (section 38902) that its intent in enacting the legislation at bench was in the interest of public health, welfare and safety and the protection of the consumer from false and misleading marketing of products resembling milk products. It finds in section 38902(a) that there is an increasing advent into the market-place of food products resembling milk products which are frequently mistaken for milk products, which have the same uses as milk products, and which are 'frequently' manufactured and marketed in the same manner and the same places as milk products. The trial court's findings affirm these declarations of fact by the Legislature.

Aside from a plea of res judicata, plaintiffs' specific legal attack on the judgment insofar as it is unfavorable to them is in two parts. The first is predicated on the argument that the findings of the trial court entitled them to a complete injunction against defendants and the second, if the first fails, is that certain sections of Chapter 6 which affect the marketing of plaintiffs' products, are unconstitutional.

FINDINGS DO NOT WARRANT AN INJUNCTION

Plaintiffs argue that findings 16 and 20 entitle them to a complete injunction. They point out that the trial court in its finding 16 held 'when compared to and alongside of milk products, plaintiffs' products have distinctive differences in appearance, taste, odor, color and texture.' And in its finding 20 it held that 'when plaintiffs' products are sold in the original labeled package (or, in the case of 'Coffee-Rich', when in powdered form), the products do not bear resemblance to any milk product nor could they be mistaken for any milk product.' Predicated upon findings 16 and 20, they argue that these pertinent findings should compel a judgment excluding Finding 21, however, recites as fact that 'When plaintiffs' products are served to the consumer * * * not in labeled containers which identify the product as a non-dairy product, each of said products, taken as a whole, Could be mistaken for milk products, and are subject to the Act.' (Emphasis added.)

their products from regulations under Chapter 6.

We proceed to an analysis of the findings in question.

At the outset, it must be noted that we treat, as do plaintiffs, 16 and 20 as findings of fact. Because finding 21 uses statutory language to state the ultimate facts found, plaintiffs insist that finding 21 is actually a conclusion of law. A finding of ultimate facts in the words of the statute is sufficient. (Southern California Jockey Club v. Cal. Horse Racing Board, 36 Cal.2d 167, 177--178, 223 P.2d 1; Lumberman's Mut. Cas. Co. v. Ind. Acc. Com., 29 Cal.2d 492, 498, 175 P.2d 823, and cases cited therein; Goss v. Fanoe, 114 Cal.App.2d 819, 823, 251 P.2d 337.) Findings 16, 20 and 21 all use statutory language. Obviously, plaintiffs cannot have it both ways. We treat all three as findings of fact (text Infra.)

Findings 16 and 20 do not satisfy section 38912 which all litigants concede to be the key statute and they are inconsistent with finding 21.

Section 38912 does not say that the Test of '* * * resembling milk products' is to be made '* * * alongside of milk products * * *.'

It is logical to assume that the ordinary consumer, when comparing 'milk products' which are 'alongside' of resembling products, would be far less likely to be mistaken as to which was which than if the two types...