Milnot Company v. Richardson, 4664.

• Decision Date: 09 November 1972
• Docket Number: No. 4664.,4664.
• Citation: 350 F. Supp. 221
• Court: U.S. District Court — Southern District of Illinois
• Parties: MILNOT COMPANY, a Michigan corporation, Plaintiff, v. Elliot RICHARDSON, Secretary of Health, Education and Welfare, Defendant.

350 F. Supp. 221

MILNOT COMPANY, a Michigan corporation, Plaintiff, v. Elliot RICHARDSON, Secretary of Health, Education and Welfare, Defendant.

No. 4664.

United States District Court, S. D. Illinois, S. D.

November 9, 1972.

Alfred F. Newkirk and Herman G. Bodewes, Springfield, Ill., Shea, Gallop, Climenko & Gould, New York City, for plaintiff.

Donald B. Mackay, U. S. Atty., Springfield, Ill., Max J. Lipkin, Asst. U. S. Atty., Peoria, Ill., Steven McNamara, Dept. of Health, Education and Welfare, Rockville, Md., for defendant.

DECISION AND ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT

ROBERT D. MORGAN, District Judge

This is an action for declaratory judgment brought pursuant to Rule 57, F.R. Civ.P., asking the court to declare that the product known as "Milnot," manufactured by the plaintiff, is not within the purview of the provisions of 21 U.S. C. §§ 61-64; or, in the alternative, to declare that Act unconstitutional on the ground that it violates the provisions of the Fifth Amendment to the Constitution of the United States. The court has jurisdiction under 28 U.S.C. § 1346(a) (2). Pending for decision are cross motions for summary judgment under Rule 56, F.R.Civ.P.

The following facts are undisputed. Plaintiff is a Michigan corporation which has its principal place of business in the State of Illinois. The defendant is the duly appointed Secretary of Health, Education and Welfare of the United States, who is charged with enforcement of various food and drug laws, including the Filled Milk Act, 21 U.S.C. §§ 61-64. The substance involved in this case, Milnot, is a food product which basically is a blend of fat free milk and vegetable soya oil, to which are added vitamins A and D. In the production of this product cream is skimmed from whole fresh milk. The cream contains the butterfat content of the milk including the fat-soluble vitamins A, D and E. To the portion of the milk which remains after the skimming process, plaintiff adds, inter alia, soybean oil as well as vitamins A and D. This restores the liquid to a milk-like consistency and composition. The mixture is then evaporated so as to remove a portion of the water content. That Milnot is wholesome, nutritious, and useful as a food source is clear from the record.

The Filled Milk Act, promulgated by Congress in 1923, prohibits interstate shipment of filled milk products. Following enactment of that statute, plaintiff, then known as Carolene Products Company, violated it and was convicted. After much litigation, the United States Supreme Court twice upheld the validity of the statute. United States v. Carolene Products Co., 304 U.S. 144, 58 S.Ct. 778, 82 L.Ed. 1234 (1938), and United States v. Carolene Products Co., 323 U.S. 18, 65 S.Ct. 1, 89 L.Ed. 15 (1944). At least since affirmance of its second conviction, plaintiff has limited its distribution of Milnot to intrastate commerce in the several states where it is produced. In 1950, Carolene Products Company changed its name to Milnot Company.

It is further undisputed that through technical advancements since 1944, and a proliferation of treatments, including breakdowns, buildups, and various reconstitutions of whole fluid milk, several food products have appeared on the market in competition with Milnot, which are permitted to be shipped in interstate commerce, subject to regulation by defendant, and which are commonly known as imitation milk or imitation dairy products, as distinguished from filled milk products. Content analyses reveal that certain of these products are produced in part by combining skim milk with vegetable oil, while others are made by combining sodium caseinate with water and vegetable oils. It is clear and undisputed that sodium caseinate is a soluble white powder which is produced primarily by treating skim milk with an acid.

Both sides contend, and this court agrees, that there is no genuine issue as to any material fact for trial here. The legal questions presented by the undisputed factual record before the court and the briefs of counsel are:

(1) Is Milnot presently a "filled milk" within the meaning of 21 U.S.C. § 61?

(2) Is relitigation of the constitutionality of the Filled Milk Act barred by principles of res judicata?

(3) If not, does the Filled Milk Act deprive plaintiff of due process of law?

COVERAGE

Congress has defined "filled milk" as "any milk, cream, or skimmed milk, whether or not condensed, evaporated, concentrated, powdered, dried, or desiccated to which has been added, or which has been blended or compounded with, any fat or oil other than milk fat, so that the resulting product is in imitation or semblance of milk, cream, or skimmed milk, whether or not condensed, evaporated, concentrated, powdered, dried, or desiccated. . . ." 21 U.S.C. § 61(c).

Milnot, by plaintiff's own description, "consists of a blend of fat free milk and vegetable soya oil"; and plaintiff makes no convincing argument that its product is really not "in imitation or semblance of" milk. Nor is it argued that Milnot comes within an exception provided in § 61(c) of the Act. It seems clear, therefore, that the Filled Milk Act does by its terms prohibit interstate shipment of the present-day product known as Milnot.

RES JUDICATA

The defendant argues that since Milnot is a filled milk within the meaning of the statute and the constitutionality of the Act has been previously resolved by the United States Supreme Court, then, under principles of res judicata, the present action cannot be maintained. While it is true that the essential elements of res judicata are frequently listed as identity of parties, of subject matter, and of cause of action, that listing of elements is not adequate for all purposes and res judicata should not apply here. Even though the parties have previously litigated the issue of the constitutionality of the Filled Milk Act as applied to an earlier and quite similar Milnot product, subsequent litigation is not precluded where facts and conditions occurring after the prior judgment furnish a new basis for claims. 50 C.J.S. Judgments § 650. The defendant has cited many cases which he argues as support for the application of res judicata or collateral estoppel here, but all of these cases are inapposite because they do not involve changed circumstances. This court considers that the principle announced in Chastleton Corp. v. Sinclair, 264 U.S. 543, 44 S.Ct. 405, 68 L.Ed. 841 (1924), is controlling. Writing for the Court, Mr. Justice Holmes said,

"A law depending upon the existence of an emergency or other certain state of facts to uphold it may cease to operate if the emergency ceases or the facts change even though valid when passed." 264 U.S. at 547 & 548, 44 S.Ct. at 406.

Plaintiff suggests, and this court agrees, that the appearance and continued existence of new products on the market and in interstate commerce which are quite similar in composition to and competitive with Milnot, and also in imitation or semblance of milk as fully as is Milnot (even though perhaps not "filled milk" in a technical sense under the statutory definition), creates a new factual situation upon which the court should reconsider the constitutionality of the Filled Milk Act as applied to Milnot. The existence of imitation milk or "non-dairy creamers" is most certainly not irrelevant to this inquiry as the defendant contends. While Congress may select a particular evil and regulate it to the exclusion of other possible evils in the same industry, any distinction drawn must at least be rational. Present distinctions which defendant finds between Milnot and other similar wholesome milk derivative products, in relation to the Filled Milk Act and its purposes, seem clearly subject to present examination on that score.

COURT'S DISCRETION IN DECLARATORY JUDGMENT ACTION

Defendant suggests, as an alternative basis for...