Bestfoods v. United States , 2004 CIT 82 ( 2004 )

Slip Op. 04 - 82
UNITED STATES COURT OF INTERNATIONAL TRADE
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BESTFOODS, :
Plaintiff, :
v. : Court No. 98-12-03230
THE UNITED STATES, :
Defendant. :
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Opinion
[Upon cross-motions as to class-
ification of REDUCED FAT SKIPPY®,
summary judgment for the defendant.]
Decided: July 9, 2004
Neville Peterson LLP (John M. Peterson, George W. Thompson and
Maria E. Celis) for the plaintiff.
Peter D. Keisler, Assistant Attorney General; Barbara S.
Williams, Attorney-in-Charge, International Trade Field Office,
Commercial Litigation Branch, Civil Division, U.S. Department of
Justice (Amy M. Rubin); and Office of Assistant Chief Counsel,
International Trade Litigation, U.S. Bureau of Customs and Border
Protection (Yelena Slepak), of counsel, for the defendant.
AQUILINO, Judge: Notwithstanding provision for peanut
butter and paste eo nomine by a subheading (2008.11.02 et seq.
(1997)) of the Harmonized Tariff Schedule of the United States
("HTSUS") and dictum in Bestfoods v. United States, 260 F.3d 1320,
1322 (Fed.Cir. 2001), that "[p]eanut slurry and peanut butter are
classified under the same tariff classification, HTSUS 2008.11[]",
Court No. 98-12-03230 Page 2
comes the plaintiff in this action with a motion for summary
judgment, praying that its merchandise which it describes as
"Skippy® brand reduced fat peanut butter spread, a peanut-flavored
food preparation imported from Canada"1, be classified as a nut
puree or paste under HTSUS subheading 2007.99.65 or, alternatively,
as a condiment per subheading 2103.90.90.
I
Plaintiff's motion, which is made pursuant to USCIT Rule
56, is accompanied by a requisite Statement of Material Facts As To
Which No Genuine Issue Exists, to wit:
1. The subject merchandise in its condition as
imported is Skippy® reduced fat peanut butter
spread, a peanut-flavored food preparation
imported from Canada. . . .
2. The United States Food and Drug Administration
(FDA) regulations, 21 C.F.R. §164.150, provide
the standard of identity for "peanut butter",
and require that, to be labeled and marketed
as peanut butter, a product must have no more
than 10% other ingredients in addition to its
peanut material.
3. The peanut spread contains approximately 40%
additional ingredients, including hydrogenated
vegetable oil, corn syrup solids, salt, sugar,
and a protein/vitamins/mineral mix. This pro-
duct is not "peanut butter" according to the
FDA standard of identity, 21 C.F.R. § 164.150.
4. The FDA permits Bestfoods to market and label
the subject merchandise as a "reduced fat pea-
nut butter spread."
1
Memorandum of Points and Authorities in Support of
Plaintiff's Motion for Summary Judgment [hereinafter cited as
"Plaintiff's Memorandum"], p. 2.
Court No. 98-12-03230 Page 3
5. . . . [E]ntry number 551-5501565-8 . . . was
liquidated on April 10, 1998, and Customs
classified the subject spread under . . .
HTS[] subheading 2008.11.05 as peanut butter.
6. Plaintiff timely protested the classification
of the subject merchandise, asserting that it
was classified under HTS subheading 2106.90.-
99, as other food preparations. Upon denial
of its protest, plaintiff timely filed this
action.
7. Plaintiff[] subsequently amended its claim,
adding HTS subheading 2007.99.65[2], which pro-
vides for nut purees and pastes, as an appro-
priate heading for the classification of the
subject spread.
In its response to this statement, the defendant admits
paragraphs 4-6 and paragraph 7, save the "validity of the amended
claim." As for the first three averments, the defendant:
1. Admits that the subject merchandise is Skippy®
reduced fat peanut butter spread. Denies that
the subject merchandise is a peanut-flavored
food preparation. Avers that the subject
merchandise is peanut butter or paste. . . .
2. Admits that the . . . FDA[] regulations, 21
C.F.R. § 164.150, provide the standard of
2
In its motion for leave to amend its complaint to add this
alternative claim, the plaintiff cited Jarvis Clark Co. v. United
States, 733 F.2d 873, reh'g denied, 739 F.2d 628 (Fed.Cir. 1984),
to the effect that
this Court has "the duty to find the correct answer by
appropriate means" concerning the classification of mer-
chandise, even though the arguably correct classification
had not been raised before the trial court. Thus, the
Court has the ability to consider plaintiff's proffered
alternative in any event.
Presumably, this rule of law is the basis for suggesting the
other, alternative classification (under HTSUS subheading
2103.90.90) in plaintiff's instant summary judgment motion.
Court No. 98-12-03230 Page 4
identity for "peanut butter." Denies that the
regulation requires that, "to be labeled and
marketed as peanut butter, a product must have
no more than 10% other ingredients in addition
to its peanut material." Avers that the
regulation provides that "seasoning and stabi-
lizing ingredients do not in the aggregate
exceed 10 percent of the weight of the fin-
ished food." Avers further that 21 C.F.R.
§130.10(a) permits the use of a name of a
standardized food to label a substitute food
that does not comply with the standard of
identity for the standardized food. Avers
further that Customs does not have to follow
the FDA regulations for purposes of classify-
ing the imported merchandise under the HTSUS.
3. Admits, except denies that the product con-
tains approximately 40% of additional ingre-
dients. Avers that the peanut butter spread
contains approximately 34-40% of additional
ingredients. . . . Avers further that the
subject merchandise qualifies and may be
labeled as a substitute peanut butter.
This response has been served and filed in conjunction
with a cross-motion by the defendant for summary judgment that
contains its own Statement Of Additional Material Facts As To Which
There Are No Genuine Issues To Be Tried, namely:
1. The imported product was invoiced as Skippy
Reduced Fat Peanut Butter.
2. The imported product is a peanut paste made
primarily of peanuts with the addition of some
other ingredients.
3. The imported product looks, tastes and has the
consistency of peanut butter.
4. The imported product is advertised, marketed,
sold, intended for use and used in the same
manner as peanut butter.
5. Dictionary definitions of the term "peanut
butter" do not require that it contain more
Court No. 98-12-03230 Page 5
than 90 percent peanuts by weight. Peanut
butter is defined in the Oxford English Dic-
tionary (Second Edition) . . . as "paste made
with ground roasted peanuts," and in the
Random House Dictionary for the English Langu-
age, (the Unabridged Edition 1969), p. 1060,
as "smooth paste made from finely ground
roasted peanuts, used as a spread or in cook-
ery." Peanut butter is also described in the
Encyclopedia of Food Technology at 683 . . .
(1974)[] as "a cohesive, comminuted food
product prepared by dry roasted, clean, sound,
mature peanuts from which the seed coat and
'hearts' are removed, and to which salt, hy-
drogenated fat and (optional) sugars, antioxi-
dants and flavors are added."
6. The imported product is peanut butter pursuant
to the common meaning of that term found in
dictionaries.
7. Peanuts (also known as ground-nuts) are leg-
umes.
8. Peanuts are not nuts botanically.
9. The imported product is not made of nuts.
10. The imported product is not a nut puree, nor a
nut paste.
11. The imported product is not a condiment.
The plaintiff denies defendant's foregoing paragraphs 6
and 9-11. As for the others, it responds as follows:
1. Admits that the imported product was invoiced
as "reduced fat peanut butter." However,
avers that the product is labeled "reduced fat
peanut butter spread" and cannot be sold in
the United States as "peanut butter." Further
avers that the entry for which the invoice was
prepared was a related party transaction
designed solely to invoke this Court's protest
jurisdiction, and thus did not reflect the
usual commercial practice.
Court No. 98-12-03230 Page 6
2. Admits that the importe[d] product is a peanut
paste made primarily from peanuts. Avers that
the imported product also may be classified as
a puree under the H[TSUS]. Further avers[]
that approximately 60% of the imported product
is made from peanuts and that the remaining
40% of the product consists of hydrogenated
vegetable oil, corn syrup, salt, sugar, and
other sweeteners.
3. Admits that the imported product resembles
peanut butter. Avers that even though the
imported product looks like peanut butter, it
may not be sold in the United States as peanut
butter.
4. Denies. Avers that the subject merchandise is
marketed and labeled as a "reduced fat peanut
butter spread."
5. Admits that the dictionary terms of peanut
butter do not require that peanut butter
contain more than 90 percent peanuts by
weight. Avers that the peanut butter industry
is required to label products "peanut butter"
only if they contain 90 percent or more of
peanuts pursuant to the F[DA] standard of
identity for peanut butter.
* * *
7. Admits. Avers that even though peanuts are
legumes in their botanical definition they are
considered nuts in the United States.
8. Admits. Avers that even though peanuts are
not nuts in their botanical definition they
are considered nuts in the United States.
Despite the foregoing differences between the parties
over the facts, each side is of the view that summary judgment on
its behalf would be appropriate as no genuine issue that requires
a trial is joined. See, e.g., Defendant's Cross-Motion for Summary
Judgment, p. 1; Plaintiff's Reply Memorandum, p. 4. Having re-
Court No. 98-12-03230 Page 7
viewed and considered all their motion papers and exhibits, and as
discussed hereinafter, the court concurs that trial is not neces-
sary. The dispositive issues at bar are matters of law.
II
Jurisdiction over this action is pursuant to 28 U.S.C. §§
1581(a), 2631(a). It stems from rulings requested and received
from the U.S. Customs Service by plaintiff's corporate predecessor,
in particular HQ 959816 (Feb. 25, 1997), holding that plaintiff's
product
is classified . . . in subheading 2008.11.0500, HTSUS, if
imported in quantities that fall within the limits
described in additional U.S. note 5 to chapter 20, and
dutiable at the 1996 general rate of duty of 1.3 cents
per kilogram. If the quantitative limits of additional
U.S. note 5 to chapter 20 have been reached, the product
will be classified in subheading 2008.11.1500, HTSUS, and
dutiable at the 1996 general rate of 147 percent ad
valorem. In addition, products classified in subheading
2008.11.1500, HTSUS, will be subject to additional duties
based on their value, as described in subheadings 9904.-
20.01-9904.20.10, HTSUS (1996).
Defendant's Exhibit A, p. 5.
The core of the controversy then as now is that the
product "may not meet the standard of identity of the . . . FDA[]
for peanut butter". Id. at 2. To summarize plaintiff's argument
renewed at bar, it is that the merchandise is not "peanut butter"
in the commercial sense of that term. That foodstuff fails to meet
the FDA's standard of identity for peanut butter and cannot be
labelled or marketed as such in the United States. The foregoing
pre-entry ruling letter of Customs overlooked the question of
Court No. 98-12-03230 Page 8
commercial designation and thus lacks persuasiveness on this
central issue. Plaintiff's Memorandum, pp. 6-7. In short, for
lack of thoroughness, failure to address commercial
designation, inconsistency with prior rulings, and ab-
sence of valid reasoning[,] Ruling 959816 deserves no
deference by this Court.
Id. at 16.
What the plaintiff is obviously seeking to undermine is
that a Customs ruling like the foregoing "is eligible to claim re-
spect according to its persuasiveness", United States v. Mead
Corp., 533 U.S. 218, 221 (2001), citing Skidmore v. Swift & Co.,
323 U.S. 134 (1944), based on "the thoroughness evident in its
consideration, the validity of its reasoning, its consistency with
earlier and later pronouncements, and all those factors which give
it power to persuade, if lacking power to control." 323 U.S. at
140. This attempt by the plaintiff, however artful, does not
achieve its goal in this court's opinion.
A
HQ 959816 appreciates that one of the purposes of FDA
standards of identity "is to promote honesty and fair dealing in
the interest of consumers by truthful and informative labeling of
food products"3 and also that such standards are "helpful in
defining a product but . . . not controlling in determining [its]
classification . . . under the H[TSUS]."4 See, e.g., Nestle Re-
3
Defendant's Exhibit A, p. 4.
4
Id.Court No. 98-12-03230 Page 9
frigerated Food Co. v. United States, 18 CIT 661, 666 (1994)("FDA
standards of identity are not controlling for tariff classification
purposes"), citing Charles Jacquin et Cie v. United States, 14 CIT
803 (1990); Alexandria Int'l, Inc. v. United States, 13 CIT 689(1989); Joseph F. Hendrix v. United States, 82 Cust.Ct. 264, C.D.
4809 (1979). Cf. United States v. Mercantil Distribuidora, S.A.,
43 CCPA 111, 116-17, C.A.D. 617 (USDA regulation interpreting
meaning of "cured beef" not binding for tariff purposes); Amersham
Corp. v. United States, 5 CIT 49, 56, 564 F.Supp. 813, 817 (1983),
aff'd, 728 F.2d 1453 (Fed.Cir. 1984)(rules and regulations to
protect public safety not determinative of tariff classification
disputes). Indeed, as pointed out at the beginning hereof, the
HTSUS subheading under review provides for peanut butter and paste
eo nomine, which kind of provision has long been understood to
encompass all forms of the substance within that nomenclature.
In addition to the red-faced REDUCED FAT SKIPPY® on the
front label of plaintiff's 18-oz. jar, defendant's exhibit E, that
exhorts would-be purchasers cum consumers to "SPREAD THE FUN!" a-
top a depiction of swirls of the sticky stuff, that label embla-
zons "CREAMY Peanut Butter Spread" above "60% peanuts". Customs
reacted to this presentment in its ruling letter by pointing out
that the FDA has a definition for "peanut spread" found in 21
C.F.R. §102.23 to the effect that the common or usual name of a
spreadable peanut product with more than ten percent nonpeanut
Court No. 98-12-03230 Page 10
ingredients "shall consist of the term 'peanut spread' . . .".5
Furthermore:
. . . [A] peanut spread . . . and . . . peanut
butter . . . both consist of roasted ground peanuts and
both are spreadable by the consumer on bread, crackers,
and biscuits. We do not see a difference in calling a
product peanut butter, peanut butter and paste, or a
peanut butter spread for purposes of subheadings 2008.-
11.02 and 2008.11.05, HTSUS. The question is whether the
product is classifiable under the tariff schedule as
peanut butter and paste. Counsel does not claim that the
instant product is covered by the standard of identity
for peanut spread. This standard does not permit the
product to be labeled as "Peanut Butter" or as a "Peanut
Butter Spread". The standard permits the product to be
labeled as a "Peanut Spread", not as a Peanut Butter
Spread. Counsel does claim that the instant product does
not meet the standard of identity for peanut butter in 21
CFR 164.150. Yet, counsel states that his client has an
agreement with FDA authorizing the labeling of the
instant product as a "Peanut Butter Spread". This is
further evidence that the instant product is a modified
form of peanut butter. It is a contradiction to label a
product as peanut butter, albeit, with the added word of
spread, and contend that the product is not peanut
butter.6
B
Of course, as this agency reasoning recognizes, the
enacted language of the subheading at issue includes the words "and
paste", signifying something in addition to, or other than, the
"butter" of the legume in question. There is no indication of the
intent of the legislature with regard to that addition and also no
prescribed definition thereof. Whereupon the court must determine
its common meaning and "may consult dictionaries, lexicons, scien-
5
Id., quoting 21 C.F.R. §102.23.
6
Ibid.Court No. 98-12-03230 Page 11
tific authorities, and other such reliable sources"7 in doing so.
Opening Funk & Wagnalls Standard Dictionary of the English Language
(Int'l ed. 1963) to page 923 reveals definition of the noun paste
as, among others,
[a]ny doughy or moist plastic substance; anything of the
consistency of paste, as for consumption or application:
usually with a qualifying word: fish paste; almond paste.
Italics in original. Definition 1d of that noun in Webster's
Third New International Dictionary of the English Language
Unabridged, p. 1652 (1981) is "a smooth food product made by
evaporation or grinding ". Cf.
Plaintiff's Memorandum, pp. 18-19. There is no mention of butter8
or peanut in any of the paste definitions in the two lexicons just
quoted. And, unlike the "butter" of peanuts, the record before the
court does not refer to any particular standard peanut content to
be a paste thereof. Suffice it to thus state that this court is
unable to conclude that the 60-or-more-percent peanut content of
plaintiff's product herein9 is insufficient to constitute peanut
7
Lonza, Inc. v. United States, 46 F.3d 1098, 1106 (Fed.Cir.
1995), citing C.J. Tower & Sons of Buffalo, Inc. v. United States,
69 CCPA 128, 133-34, 673 F.2d 1268, 1271 (1982).
8
Of course, the primary definition of this term is the fat of
milk solidified via churning, although there is secondary reference
to "butterlike" products made by grinding nuts, stewing fruits,
etc. See, e.g., Webster's New Collegiate Dictionary, p. 113
(1961).
9
Cf. Affirmation of Stephan P. Lypinski, Jr., Plaintiff's
Memorandum, Exhibit A, para. 9; Affirmation of Richard Wilkes,
Plaintiff's Memorandum, Exhibit D, para. 6.
Court No. 98-12-03230 Page 12
paste within the meaning of HTSUS subheading 2008.11.02 et seq.
Cf. Plaintiff's Response To Defendant's Statement Of Material Facts
As To Which No Genuine Issue Exists, para. 2, supra ("Admits that
the importe[d] product is a peanut paste made primarily from
peanuts").
III
In deciding herein that Customs classified correctly
plaintiff's merchandise, the court can confirm that it has con-
sidered able counsel's proposed alternative classification(s),
namely, a nut puree or paste under HTSUS subheading 2007.99.65 or
a condiment per subheading 2103.90.90, and has come to conclude
that neither argument merits much response. With respect to the
first proposed alternative, while the creator of the HTSUS has
subdivided its chapter 20 into headings numbered, among others,
2007 and 2008, which are encaptioned, respectively, "Jams, fruit
jellies, marmalades, fruit or nut pureé and fruit or nut pastes
. . ." and "Fruit, nuts and other edible parts of plants . . . not
elsewhere specified or included: Nuts, peanuts (ground-nuts) and
other seeds . . ." and the prevailing concept of Nature's universe
puts Arachis hypogaea, Latin for the primary plantstuff at bar,
with a bean-pod or pea-pod10, on its face the HTSUS does not. That
10
See, e.g., The Standard Cyclopedia of Horticulture, vol.
III, p. 2505 (1935); Webster's New International Dictionary of the
English Language Second Edition Unabridged, p. 1799 (1945).
Court No. 98-12-03230 Page 13
is, the court can find that Arachis hypogaea is not genuinely a
"nut"11, but the HTSUS, heading 2008, not 2007, makes it the same
as one for purposes of classification.
As for plaintiff's other proposed alternative, counsel
adopt the definition of condiment in United States v. Schoenfeld &
Sons, Inc., 44 CCPA 179, 181, C.A.D. 657 (1957), to wit:
"Something used to give relish to food, and to gratify
the taste; usually a pungent and appetizing substance as
pepper or mustard; seasoning[,]"
quoting Webster's New International Dictionary of the English Lan-
guage Second Edition Unabridged. Whereupon they argue that
plaintiff's REDUCED FAT SKIPPY®
gives flavor to all foods on which it is spread, particu-
larly on breads, crackers, toast, etc., and it is a sus-
pension of peanuts, oils, corn syrup, salt, and sweet-
ener. Generally, consumers purchase the subject spread
to make peanut butter sandwiches or to spread on crackers
to create a flavorful snack or in some cases, a meal.
Further, the peanut spread may be found in condiment
aisles in the supermarket. In numerous East Asian cul-
tures, the reduced fat peanut spread may even be used (as
a healthier substitute for peanut butter) as a spice or
flavorful addition to a chicken or fish, in a "satay"
dish.
Plaintiff's Memorandum, pp. 22-23, citing Gassenheimer, Mahi-mahi
makes flavorful peanut satay, Sodsook, Grilled Chicken Satay With
Curried Peanut Sauce, and Veggies Unite!, Peanut Burgers with Satay
11
See, e.g., Defendant's Statement of Additional Material
Facts As To Which There Are No Genuine Issues To Be Tried, paras.
7, 8, supra; Plaintiff's Response To Defendant's Statement Of
Material Facts As To Which No Genuine Issue Exists, paras. 7, 8,
supra.
Court No. 98-12-03230 Page 14
Sauce, together plaintiff's exhibit E thereto. See also Jimtown
Store, Jimtown Fresh Condiments, Plaintiff's Reply Memorandum,
Exhibit C. All this representation may well be true, but it cannot
and therefore does not trump the very first general rule of
interpretation ("GRI") of the HTSUS that, "for legal purposes,
classification shall be determined according to the terms of the
headings". Can it realistically be said that heading 2103,
encompassing
Sauces and preparations therefor; mixed condiments and
mixed seasonings; mustard flour and meal and prepared
mustard[,]
is the one which provides a more specific description of plain-
tiff's product within the meaning of the GRI than HTSUS heading
2008, supra? Obviously not.
IV
In view of the foregoing, plaintiff's motion for summary
judgment must be denied, with defendant's cross-motion granted.
Summary judgment will enter accordingly.
Decided: New York, New York
July 9, 2004
Thomas J. Aquilino, Jr.
Judge