People ex rel. Lockyer v. Shamrock Foods Co., S082325.

• Citation: 24 Cal.4th 415,11 P.3d 956,101 Cal.Rptr.2d 200
• Decision Date: 06 November 2000
• Docket Number: No. S082325.,S082325.
• Court: California Supreme Court
• Parties: The PEOPLE ex rel. Bill LOCKYER, as Attorney General, etc., Plaintiff and Respondent, v. SHAMROCK FOODS COMPANY, Defendant and Appellant.

101 Cal.Rptr.2d 200

24 Cal.4th 415

11 P.3d 956

The PEOPLE ex rel. Bill LOCKYER, as Attorney General, etc., Plaintiff and Respondent, v. SHAMROCK FOODS COMPANY, Defendant and Appellant.

No. S082325.

Supreme Court of California.

November 6, 2000.

DeCuir & Somach, Somach, Simmons & Dunn, Michael E. Vergara, Sacramento; Blodgett, Makechnie & Vetne, John H. Vetne, Newburyport, MA; Landels, Ripley & Diamond, Milberg, Weiss, Bershad, Hynes & Lerach and Sanford Svetcov, San Francisco, for Defendant and Appellant.

Daniel E. Lungren and Bill Lockyer, Attorneys General, George Williamson, Roderick E. Walston and Richard M. Frank, Chief Assistant Attorneys General, Charles W. Getz IV and Mary E. Hackenbracht, Assistant Attorneys General, Randall B. Christison and Mark J. Urban, Deputy Attorneys General, for Plaintiff and Respondent.

Hanson, Bridgett, Marcus, Vlahos & Rudy, John J. Vlahos and Robert L. Rusky, San Francisco, for Californians for Nutritious Milk, California Dietetics Association, Foundation for Osteoporosis Research and Education, Choices for Children, Bert D. Johnson, Frederick R. Singer, Jo Ann Hattner, Ann M. Coulston, Western United Dairymen and Alliance of Western Milk Producers as Amici Curiae on behalf of Plaintiff and Respondent.

Grant Woods, Attorney (Arizona) and Thomas J. Dennis, Assistant Attorney General, for States of Arizona and Iowa as Amici Curiae.

MOSK, J.

Milk and milk products constitute an important source of nutrition for the people of the State of California, supplying various essential nutrients. They also amount to a substantial economic resource, since the state's dairy industry, which is the nation's largest, is the state's leading agricultural enterprise.

The cause before us involves milk, in the form commonly called whole milk, and milk products, in the forms commonly called lowfat milk and skim milk, and the interplay of the laws of the United States and those of the State of California as they apply thereto.

We granted review to resolve an issue concerning certain statutory provisions relating to whole milk, lowfat milk, and skim milk, specifically, state provisions that are more stringent and federal provisions that are less stringent.

The question is whether the more stringent state provisions alone apply or whether the less stringent federal provisions are applicable as alternatives.

The answer, as we shall explain, is that the more stringent state provisions alone apply.

I

The Federal Food, Drug, and Cosmetic Act (Act of June 25, 1938, ch. 675, § 1 et seq., 52 Stat. 1040 et seq.) was enacted by Congress in 1938, has subsequently been amended, and is codified at section 301 et seq. of title 21 of the United States Code. It provides for the establishment of standards of identity, labeling requirements, etc., for various foods in interstate commerce, including milk and milk products. A standard of identity generally defines a food and lists its components, and hence is sometimes referred to as a standard of composition to the extent that it contains both the definition and the list. The statute is implemented by regulations promulgated by the Secretary of Health and Human Services through the Commissioner of Food and Drugs, which are codified in title 21 of the Code of Federal Regulations.

The Milk and Milk Products Act of 1947 was enacted in the year indicated (Stats. 1947, ch. 939, § 4 et seq., p. 2164 et seq.), was given its title in 1967 (Stats.1967, ch. 15, § 2, p. 360 et seq.), has subsequently been amended, and is codified at section 32501 et seq. of the Food and Agricultural Code. It establishes standards of identity, labeling requirements, etc., for milk and milk products in California. It makes it "unlawful for any person" to "sell" or "deliver" any milk or milk product that "does not conform" to its provisions. (Food & Agr.Code, § 32901.) It declares that a "person shall not make or cause to be made any statement ... in connection with" the sale or delivery of any milk or milk product that "is false, deceptive, or misleading in any manner." (Id., § 32914.)

Regulations implementing the Federal Food, Drug, and Cosmetic Act establish a standard of identity for whole milk (21 C.F.R. § 131.110 (2000)), and through 1997, which includes the period pertinent here, established standards of identity for lowfat milk (id, former § 131.135 (1997)) and skim milk (id., former § 131.143 (1997)) as well. Whole milk, lowfat milk, and skim milk are each essentially composed of water, milkfat, and nonfat milk solids, each carrying its nutrients, including calories, fat, cholesterol, sodium, carbohydrates, protein, vitamins, and calcium and other minerals, in its milkfat and nonfat milk solids. The federal standards of identity effectively set the maximum and/or minimum percentages of water, milkfat, and nonfat milk solids.

For its part, the Milk and Milk Products Act of 1947 establishes standards of identity for whole milk (Food & Agr.Code, § 35784), lowfat milk (id, §§ 38191 [1 percent fat milk], 38211 [2 percent fat milk] ), and skim milk (id., § 38181). Again, whole milk, lowfat milk, and skim milk are each essentially composed of water, milkfat, and nonfat milk solids, each carrying its nutrients in its milkfat and nonfat milk solids. The state standards of identity are like the federal standards in effectively setting the maximum and/or minimum percentages of water, milkfat, and nonfat milk solids. The state standards of identity are unlike the federal standards in the percentages that they set. Among other things, the state standards of identity require a higher percentage of nonfat milk solids than the federal standards—generally resulting, for example, in a higher percentage of protein and calcium, sometimes substantially so. Usually, such higher percentage does not occur naturally, but must be achieved through addition. The state standards of identity are more stringent than the federal standards. They date back almost 40 years to their ultimate source. (See Stats.1961, ch. 2126, § 1, p. 4386.)

The Nutrition Labeling and Education Act of 1990 (hereafter the NLEA) (Pub.L. No. 101-535, § 1 et seq. (Nov. 8, 1990) 104 Stat. 2353 et seq.), which was enacted by Congress in the year indicated, has subsequently been amended, and is codified in section 343-1 et al. of title 21 of the United States Code. It deals with standards of identity, labeling requirements, etc., for foods in interstate commerce. In section 6(a), as amended and codified in section 343-1(a) of title 21, the act declares a rule of preemption: A state may not "directly or indirectly" "establish" or "continue in effect" any standard of identity, labeling requirement, etc., for (practically) any food in interstate commerce that "is not identical to" a federal counterpart, if one exists. Also in section 6(a), codified in section 343-l(b) of title 21, the act provides for an exception to its rule of preemption: The Secretary of Health and Human Services may administratively "exempt" a state therefrom upon its petition. By the act's term, the rule of preemption does not apply, and an exception is not needed, to the extent that any food is not in interstate commerce. (See 58 Fed.Reg. 2462 (Jan. 6, 1993).)

Through the Director of the Department of Food and Agriculture—who is now styled the Secretary of Food and Agriculture (Food & Agr.Code, § 50)—the State of California, in 1990, filed a petition for administrative exemption from the NLEA's rule of preemption covering the less stringent federal standards of identity for whole milk, lowfat milk, and skim milk, and, in 1993, filed a superseding petition to the same effect, in which it expressly declined to seek exemption from the rule of preemption covering federal labeling nomenclature.

Before the Secretary of Health and Human Services acted on the State of California's petition for administrative exemption, the Federal Agriculture Improvement and Reform Act of 1996 (hereafter FAIRA) was enacted by Congress, effective April 4, 1996. (Pub.L. No. 104-127, § 1 et seq. (Apr. 4, 1996), 110 Stat. 888 et seq.) In section 144 of FAIRA, which is codified at section 7254 of title 7 of the United States Code, Congress granted the State of California alone a statutory exemption from, inter alia, the federal standards of identity for whole milk, lowfat milk, and skim milk, declaring that "[n]othing in ... any ... provision of law"—including the NLEA— "shall be construed to preempt, prohibit, or otherwise limit the authority of the State of California, directly or indirectly, to establish or continue to [sic: in?] effect any law, regulation, or requirement regarding," among other things, standards of identity for whole milk, lowfat milk, and skim milk. (See generally Shamrock Farms Co. v. Veneman (9th Cir.1998) 146 F.3d 1177, 1180-1182.)

II

On July 24, 1996, the People of the State of California, by the Attorney General, then Daniel E. Lungren and now Bill Lockyer, brought this action in the Superior Court of San Diego County against Shamrock Foods Company, under section 17200 et seq. of the Business and Professions Code, the so-called unfair competition law (Stop Youth Addiction, Inc. v. Lucky Stores, Inc. (1998) 17 Cal.4th 553, 558, fn. 2, 71 Cal.Rptr.2d 731, 950 P.2d 1086), for violations of the Milk and Milk Products Act of 1947 with respect to whole milk, lowfat milk, and skim milk.

By way of complaint, the People made allegations, in pertinent part, to the following effect: Shamrock is an Arizona corporation with offices in San Diego County; on and after April 5, 1996—the day after FAIRA became effective—it sold and delivered whole milk, lowfat milk, and skim milk that did not meet the state standards of identity, and made, or caused to be made, statements in connection therewith that were false, deceptive, or misleading because it failed to disclose that these foods did not meet these standards; in so doing, it victimized elderly and/or disabled...