D & W Food Centers, Inc. v. Block, 85-1095

• Decision Date: 27 March 1986
• Docket Number: No. 85-1095,85-1095
• Parties: D & W FOOD CENTERS, INC., Plaintiff-Appellee, v. John R. BLOCK, individually and in his capacity as Secretary of the United States Department of Agriculture, and the United States of America, Defendants- Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 751

786 F.2d 751

D & W FOOD CENTERS, INC., Plaintiff-Appellee, v. John R. BLOCK, individually and in his capacity as Secretary of the United States Department of Agriculture and the United States of America Defendants- Appellants.

No. 85-1095.

United States Court of Appeals Sixth Circuit.

Argued Dec. 3, 1985.

Decided March 27, 1986.

Julie Ann Woods, Asst. U.S. Atty., James Michael Kelly (argued), Grand Rapids, Mich., Virginia Strasser, U.S. Dept. of Agriculture, Office of the General Counsel, Washington, D.C., for defendants-appellants.

Leonard M. Hoffius, Douglas W. VanEssen (argued), Grand Rapids, Mich., for plaintiff-appellee.

James M. Goldberg, Richard L. Frank, Dennis R. Johnson, Washington, D.C., for amicus.

Before KENNEDY and KRUPANSKY, Circuit Judges; and BROWN, Senior Circuit Judge.

BAILEY BROWN, Senior Circuit Judge.

Plaintiff-appellee D & W Food Centers, Inc. (D & W) filed this action in the federal district court for the Western District of Michigan. On the basis of briefs and stipulated facts, the district court issued a declaration that D & W's pizza-making operation was not covered by the continuous inspection provision of the Federal Meat Inspection Act, 21 U.S.C. Sec. 606 (1982) (FMIA), and an injunction prohibiting defendants-appellants John R. Block, Secretary of Agriculture (the Secretary), and the United States Department of Agriculture (USDA) from enforcing that provision against D & W. We conclude that the district court correctly determined that D & W may not, under the circumstances, be treated as a "packing ... or similar establishment" subject to that provision of the FMIA, and accordingly affirm the judgment of the district court.

I

D & W is a Michigan corporation, owning and operating a chain of thirteen retail grocery stores in the Grand Rapids area. The business operates entirely in intra state commerce; however, if the requirements of this regulatory statute are otherwise met, the pizzas sold would be treated as "prepared for commerce," 21 U.S.C. Sec. 606, and the preparation facility would be subject to USDA inspection, because Michigan is a "designated" state, i.e., a state designated by the Secretary for continuous federal inspection for lack of an adequate state inspection apparatus. See 21 U.S.C. Sec. 661(c)(1) (1982 and Supp.1985); 9 C.F.R. Sec. 331.2. ¹

In 1981, D & W began selling meat "deli" pizzas at its retail stores. In 1982, D & W constructed, at a cost of approximately $190,000.00, a central commissary at its Grandville, Michigan supermarket, for preparation and distribution of meat pizzas to all thirteen stores. The pizza-making area is connected to the main shopping area of the Grandville store by two swinging doors with windows. D & W claims to have constructed the centralized facility to improve quality control, cleanliness and efficiency. For delivery, D & W also purchased, at a cost of approximately $40,000.00, and uses a specially-equipped refrigerated truck.

It is undisputed that the pizzas thus-produced by D & W are "meat food products," as defined in 21 U.S.C. Sec. 601(j) (1982); 9 C.F.R. Sec. 301.2(vv), that are "prepared" at the central facility. 21 U.S.C. Sec. 601(1) (1982); 9 C.F.R. Sec. 301.2(y). The FMIA requires the Secretary to examine and inspect "all meat food products prepared for commerce in any slaughtering, meat-canning, salting, packing, rendering or similar establishment...." 21 U.S.C. Sec. 606 (emphasis added). Despite the fact that the meats used in preparing the pizzas have previously been inspected by the USDA, the Secretary argues that D & W's central facility is a "packing ... or similar establishment" which must be inspected because of the slicing of pepperoni and sausage that occurs there. The Secretary further contends that D & W must remodel parts of its facility before it will be in compliance with the regulations implementing the continuous inspection provisions.

The district court, however, found that D & W's facility is not a "packing ... or similar establishment," but a retail facility, not covered by the provisions of Sec. 606. D & W Food Centers, Inc. v. Block, No. G83-844 CA1, slip op. at 6-15 (W.D.Mich., July 20, 1984). ² In the alternative, the court concluded that even if the Secretary's interpretation of Sec. 606 were correct, it could not stand, because it would constitute a "rule" of "general applicability," invalid under the Administrative Procedure Act for lack of publication. 5 U.S.C. Sec. 552(a)(1)(D) (1982). The Secretary challenges each conclusion of law.

II

Because any one of the conclusions of the district court constitutes an independent ground for its decision, the Secretary would be entitled to prevail only if he were correct on each point.

A

The Secretary concedes that a grocery store that prepared and marketed meat pizzas for sale therein would not be a "packing ... or similar establishment" subject to continuous inspection under Sec. 606. He contends, however, that in preparing meat pizzas at its central facility and transporting those pizzas for sale to its other twelve stores, D & W becomes a "packing ... or similar establishment" within the meaning of that section.

In reaching the conclusion that D & W's operation is not covered by Sec. 606, the district court relied in part on an opinion by the Attorney General of the United States (AG). In 1972, the AG reviewed the language and the legislative history of Sec. 606, and concluded that Congress had intended that "a retail establishment normally would not be considered an establishment 'similar' to a slaughtering, meat-packing, canning or rendering plant." 42 Op.Att'y Gen. 459, 461 (1972). The AG noted that the facilities to which establishments must be "similar" in order to be covered by Sec. 606--slaughtering, canning, salting, packing or rendering plants--all were "usually wholesale businesses." Id. The AG thought it clear that "the obvious differences in the marketing functions" of these two kinds of businesses, id., suggested that Sec. 606 was not intended to provide universal coverage of all meat preparation facilities (except those expressly exempted), and indeed suggested the reverse:

that retail establishments like ordinary grocery stores and restaurants are not, as such, covered by the inspection and sanitation provisions ... regardless of their location and whether or not they offer their products for sale interstate.

Id. at 466. ³

While conceding that Sec. 606 was not intended to reach ordinary grocery stores, the Secretary urges that the district court erred because D & W's operation may not be characterized as an ordinary grocery store. Quoting the AG's opinion, the Secretary characterizes D & W's operation as a "new type of specialized processing establishment," a category of facility analogous to a packing house which the AG expressly noted would not be exempt from Sec. 606. 42 Op.Att'y Gen. at 466. As support for his position, the Secretary points out that unlike "strict retail activities," D & W's operation involves "shipment" of goods "after processing" in one store for sale in another. Safeway Stores, Inc. v Freeman, 369 F.2d 952, 955 n. 6 (D.C.Cir.1966). Relying on this footnote in Safeway, the Secretary claims that D & W's practice of selling its pizzas in stores other than the store of preparation brings the operation within the purview of Sec. 606.

The Secretary's attempt to use Safeway to show that D & W is a "packer" because its operation involves "shipment ... after processing" is misguided. The court in Safeway held that nationwide food chains that operated centralized meat processing plants, where carcasses were broken, boned and trimmed, and beef was corned, made into sandwich spread, or sliced and wrapped, were properly found by the Secretary to be within the definition of "packer" in the Packers and Stockyards Act of 1921, 7 U.S.C. Secs. 181-229 (1982) (the Stockyards Act). 369 F.2d at 954-55. The statute in question included "any person engaged in the business ... of manufacturing or preparing meats or meat products for sale or shipment in commerce." 7 U.S.C. Sec. 191(b). The case is distinguishable in at least two important regards.

First, although the Stockyards Act's definition of "packer" is similar to that in the FMIA, the statutes have quite different purposes. The FMIA is a public health statute, aimed at "preventing the use in commerce of meat and meat food products which are adulterated...." 21 U.S.C. Sec. 603(a) (1982). In contrast, the Stockyards Act is a fair trade practices law, and "the 'chief evil' at which it was aimed was 'the monopoly of the packers, enabling them unduly and arbitrarily to ...' " injure consumers and suppliers by controlling pricing. Mahon v. Stowers, 416 U.S. 100, 106, 94 S.Ct. 1626, 1629, 40 L.Ed.2d 79 (1974) (per curiam) (citation omitted). Identifying "packers" properly subject to the provisions of the Stockyards Act thus is only limited authority, if any, for the proposition that even similar businesses should be "packers" for purposes of the FMIA.

The second important distinction between Safeway and the instant case is that the scope of the chains' operations in Safeway was enormous. Hundreds of millions of pounds of raw meat, including whole carcasses, were processed by the chains in Safeway, thus making their central facilities resemble packing houses much more closely than the thirteen-store supplier in the present case. In reaching its decision, the Safeway court relied on the large scope of the chains' operations as support for its conclusion that they should be treated as packers. Safeway, 369 F.2d at 956 & n. 12 (chains should be treated as packers because they "buy for 6,684 stores doing over $8,033,893,421 of business a year," having "absorbed part of the preparation and manufacturing function ... that the 'Big Five' formerly performed"). In contrast, under the USDA's own regulations, D & W's operation apparently continues to...