United Corporation v. Federal Trade Commission, 4547.

• Decision Date: 11 March 1940
• Docket Number: No. 4547.,4547.
• Citation: 110 F.2d 473
• Parties: UNITED CORPORATION et al. v. FEDERAL TRADE COMMISSION.
• Court: U.S. Court of Appeals — Fourth Circuit

110 F.2d 473 (1940)

UNITED CORPORATION et al. v. FEDERAL TRADE COMMISSION.

No. 4547.

Circuit Court of Appeals, Fourth Circuit.

March 11, 1940.

George F. Shea, of Washington, D. C. (Martin F. O'Donoghue and Thomas X. Dunn, both of Washington, D. C., on the brief), for petitioners.

Martin A. Morrison, Asst. Chief Counsel, Federal Trade Commission, of Washington, D. C. (W. T. Kelley, Chief Counsel, and Edward L. Smith and James W. Nichol, Sp. Attys., Federal Trade Commission, all of Washington, D. C., on the brief), for respondent.

Before PARKER, SOPER, and DOBIE, Circuit Judges.

PARKER, Circuit Judge.

This is a petition to review and set aside an order of the Federal Trade Commission requiring petitioner, United Corporation, to cease and desist from representing orally or by other means that the corned beef hash and deviled ham which it sells are made from products originating in Virginia, from using the trade name "Virginia Products Company", from using labels containing the word "Virginia", and from invoicing its sales from Richmond or other place within the State of Virginia. As we are of opinion that the Commission was without jurisdiction to enter the order, we shall confine our discussion to that phase of the case.

Petitioner is a Virginia corporation engaged in the marketing of canned meat products including corned beef hash and deviled ham, which are packed for it by two licensed packers, Montell, Inc., of Cambridge, Md. and Emmart Food Products Co. of Chicago, Ill. The meats used in these products, except in the case of the deviled ham packed by Montell, Inc., are not obtained from cattle or hogs grown in Virginia; but the labels containing the word "Virginia" have been approved by the Secretary of Agriculture under the Meat Inspection Act, 21 U.S.C.A. § 75. Petitioner owns 20% of the capital stock of Montell, Inc., and of Emmart Food Products Co., and owned same at the time of the entry of the order by the Commission. Prior to the entry of the order, it had moved for the dismissal of the proceedings on the ground that it was a "packer" within the meaning of the Packers and Stockyards Act of 1921, 7 U.S.C.A. § 191, and hence was not within the jurisdiction of the Commission.

The Commission, while virtually conceding that petitioner at the time of the entry of its order came within the definition of a packer as contained in the Packers and Stockyards Act, contends that it had jurisdiction because petitioner had not acquired that status at the time of the filing of the petition before it. The facts as to this are that the petition was filed March 31, 1937. Petitioner acquired 20% of the stock of Montell, Inc., April 12, 1937 and 20% of the stock of Emmart Food Products Co. May 1, 1937. The order was not entered until August 2, 1939. As early as 1936 petitioner had entered into a contract entitling it to a one-fifth interest in the business of Montell, which was then operating as a partnership.

There can be no question but that upon the acquisition of the stock of Montell, Inc., and the Emmart Food Products Co., petitioner became a packer whose business was subject to the control of the Secretary of Agriculture under the Packers and Stockyards Act. It was engaged in the marketing of meat food products and it owned and controlled an interest in two corporations engaged in the business of "manufacturing or preparing meats or meat food products for sale or shipment in commerce." 7 U.S.C.A. § 191.

And we think it equally clear that, as a packer subject to the jurisdiction of the Secretary of Agriculture under the Packers and Stockyards Act, petitioner was excepted from the jurisdiction of the Federal Trade Commission. Sec. 406(b) of that Act, 42 Stat. 169, 7 U.S.C.A. § 227, provides: "(b) On and after the enactment of this Act, and so long as it remains in effect, the Federal Trade Commission shall have no power or jurisdiction so far as relating to any matter which by this Act is made subject to the jurisdiction of the Secretary, except in cases in which, before the enactment of this Act, complaint has been served under section 5 of the Act entitled `An Act to create a Federal Trade Commission, to define its power and duties, and for other purposes,' approved September 26, 1914, * * * and except when the Secretary of Agriculture, in the exercise of his duties hereunder, shall request of the said Federal Trade Commission that it make investigations and report in any case."

The exceptions to the general clause excluding jurisdiction by the Trade Commission manifestly do not preserve the jurisdiction of the Commission in this case, for the reason that the complaint herein had not been served at the time of the passage of the Act, which was August 15, 1921, and no investigation and report has been requested of the Commission by the Secretary of Agriculture. And, on the other hand, there can be no question but that the general clause excluding jurisdiction by the Commission applies to unfair practices in the marketing of meat food products by a packer, since this was a matter made subject to the jurisdiction of the Secretary of Agriculture by Secs. 202 and 203 of the Act, 42 Stat. 161, 7 U.S. C.A. §§ 192 and 193. Sec. 202 provides that it shall be unlawful for any packer to engage in or use any "unfair, unjustly discriminatory, or deceptive practice or device in commerce." And Sec. 203 vests in the Secretary of Agriculture jurisdiction to deal with violations of Sec. 202 and to require a packer to cease and desist therefrom.

Any doubt as to the correctness of this conclusion is removed if consideration be given to Sec. 5 of the Trade Commission Act, as amended by the Act of March 21, 1938, 52 Stat. 111, 15 U.S.C.A. § 45. That section as so amended provides:

"Sec. 5. (a) Unfair methods of competition in commerce, and unfair or deceptive acts or practices in commerce, are hereby declared unlawful.

"The Commission is hereby empowered and directed to prevent persons, partnerships, or corporations, except banks, common carriers subject to the Acts to regulate commerce, and persons, partnerships, or corporations subject to the Packers and Stockyards Act, 1921, except as provided in section 406(b) of said Act, from using unfair methods of competition in commerce and unfair or deceptive acts or practices in commerce." (Italics supplied.)

Section 203 of the Packers and Stockyards Act together with the provisions of the Meat Inspection Act of March 4, 1907, 34 Stat. 1262, 21 U.S.C.A. § 75, undoubtedly vest the Secretary of Agriculture with plenary power to regulate the branding and labeling of meat food products and to forbid unfair trade practices in the sale thereof. The Secretary has promulgated elaborate regulations with respect to the branding and labeling of such products, in which the use of deceptive labels is forbidden and the use of geographical names regulated. Regulations of 1922, Sec. 7, paragraphs 1 and 2(b), are as follows:

"Section 7. Paragraph 1. No meat or product, and no container thereof, shall be labeled with any false or deceptive name; but established trade names which are usual to such articles and are not false or deceptive and which have been approved by the Secretary of Agriculture may be used.

"Paragraph 2. No statement, word, picture, design, or device which conveys any false impression or gives any false indication of origin or quality shall appear on any label. For example:

* * * * *

"(b) Names of countries, States, and Territories, and such other geographical names as the department may approve, may be used on labels, only when followed by the word `style', `type', `cut', or `brand', in the same size and style of lettering as the geographical name, unless the products for which the labels are intended are prepared in the localities named: * * *".

The Supreme Court has sustained this exercise of power on the part of the Secretary of Agriculture and has held that exclusive power has been delegated to him by Congress with respect thereto. Brougham v. Blanton Mfg. Co., 249 U.S. 495, 39 S.Ct. 363, 365, 63 L.Ed. 725. The Court said in that case: "The test of the product is the meat inspection laws, not the trade-mark laws, and therefore we are concerned with the action of the Department of Agriculture and not...