Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-98-05244/USCOURTS-caDC-98-05244-0/pdf.json

Nature of Suit Code: 891
Nature of Suit: Agricultural Acts
Cause of Action: 

---

<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 9, 1999 Decided April 9, 1999

No. 98-5244

The Original Honey Baked Ham Company

of Georgia, Inc., Appellee

v.

Daniel R. Glickman, Secretary,

United States Department of Agriculture, et al.,

Appellants

Appeal from the United States District Court

for the District of Columbia

(97cv00440)

Constance A. Wynn, Attorney, U.S. Department of Justice,

argued the cause for appellants. With her on the briefs were

Frank W. Hunger, Assistant Attorney General, Wilma A.

Lewis, U.S. Attorney, and Barbara C. Biddle, Assistant Director, U.S. Department of Justice.

USCA Case #98-5244 Document #428314 Filed: 04/09/1999 Page 1 of 9
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

Robert G. Hibbert argued the cause and filed the brief for

appellee.

Before: Wald, Henderson, and Randolph, Circuit Judges.

Opinion for the Court filed by Circuit Judge Randolph.

Randolph, Circuit Judge: Thanksgiving, Christmas and

Easter are the busiest times of year for The Original Honey

Baked Ham Company of Georgia. To capture more of the

market during these periods, Honey Baked decided to open

temporary "kiosks" in shopping malls near its ninety-seven

retail stores. Two of the company's products--cooked hams

and turkeys--attracted the attention of the Agriculture Department's Food Safety and Inspection Service, which enforces the Federal Meat Inspection Act, 21 U.S.C. s 601 et

seq., and the Poultry Products Inspection Act, 21 U.S.C.

s 451 et seq. The question in this appeal from the judgment

of the district court is whether the retail stores supplying the

kiosks are subject to certain federal inspection requirements

imposed by those statutes.

The Honey Baked Ham Company purchases its hams and

turkeys from federally-inspected meat and poultry processors; the products arrive at the company's retail stores

fully cooked.1 The Agriculture Department inspects the

hams and turkeys during slaughtering, and again during the

cooking and curing processes. At Honey Baked's retail

stores, the hams are sliced and glazed, the turkeys sliced, and

both items are packaged for sale. Before the current dispute

arose, the company's retail stores had never been subject to

the inspection requirements of the Meat Inspection Act or the

Poultry Inspection Act. But after Honey Baked revealed its

plan to open kiosks in shopping malls during its peak sales

periods, the Agriculture Department said that federal inspection requirements would apply to the company's retail stores

__________

1 The company also owns and operates a federally-inspected meat

and poultry processing facility in Carrollton, Georgia, where its

hams and turkeys are sliced, glazed, packaged and shipped by

common carrier to mail order customers.

supplying the kiosks.2 (At the kiosks, which are booths with

refrigeration units, no product preparation would occur.)

Given this official advice, the company understood that if it

went forward with its marketing plan without permitting

federal inspection of its retail stores, it could be subject to

product seizures, criminal prosecutions and other regulatory

sanctions. The company therefore sued for a declaratory

judgment and an injunction, which the district court granted

on the company's motion for summary judgment. See The

Original Honey Baked Ham Co. v. Glickman, C.A. No. 97-

440, mem. op. at 7 (D.D.C. Apr. 17, 1998). The Agriculture

Department has now appealed. Reviewing the district court's

grant of summary judgment de novo, see Troy Corp. v.

Browner, 120 F.3d 277, 281 (D.C. Cir. 1997), we affirm.

USCA Case #98-5244 Document #428314 Filed: 04/09/1999 Page 2 of 9
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

The Department derives its inspection authority, as far as

the company's hams are concerned, from the following section

of the Federal Meat Inspection Act:

[T]he Secretary shall cause to be made, by inspectors

appointed for that purpose, an examination and inspection of all meat food products prepared for commerce in

any slaughtering, meat-canning, salting, packing, rendering, or similar establishment, and for the purposes of any

examination and inspection said inspectors shall have

access at all times, by day or night, whether the establishment be operated or not, to every part of said establishment....

See 21 U.S.C. s 606. The Meat Inspection Act defines "prepared" as "slaughtered, canned, salted, rendered, boned, cut

up, or otherwise manufactured or processed." See 21 U.S.C.

s 601(l ). The parallel section of the Poultry Products Inspection Act provides that "[t]he Secretary, whenever processing operations are being conducted, shall cause to be

made by inspectors post mortem inspection of the carcass of

each bird processed...." See 21 U.S.C. s 455(b). The Poultry Inspection Act's definition of "processed" is almost identi-

__________

2 In the meantime, the company started operating some kiosks,

supplying them directly from its Carrollton processing facility.

cal to the Meat Inspection Act's definition of "prepared."

The term means "slaughtered, canned, salted, stuffed, rendered, boned, cut up, or otherwise manufactured or processed." See 21 U.S.C. s 453(w).3 The Department's position is that the inspection provisions generally apply to retail

establishments, unless those establishments fall within the

Acts' express retail exemptions, of which more in a moment.

In the Department's view, the company's stores cannot qualify for the retail exemptions if products prepared there are

sold elsewhere.

Both parties believe, as do we, that the Meat Inspection

Act and the Poultry Inspection Act should, so far as possible,

be construed to have the same meaning. The company's

retail establishments supplying kiosks should, in other words,

either be subject to federal inspection or not, regardless

whether they handle hams or turkeys, or both. We say this

not only because the Acts are parallel in most respects, and

identical in others. See Kenney v. Glickman, 96 F.3d 1118,

1124 (8th Cir. 1996). We say it as well because the Acts

share the common purpose of ensuring that meat and poultry

products are "wholesome, [and] not adulterated," all to the

end of protecting the "health and welfare of consumers" and

the market for wholesome and unadulterated products. See

21 U.S.C. ss 451, 602.

That the inspection provisions of the Acts do not generally

apply to meat and poultry products prepared in retail establishments is tolerably clear. So far as we can tell, this had

USCA Case #98-5244 Document #428314 Filed: 04/09/1999 Page 3 of 9
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

been settled for some time as a result of a 1972 Opinion of the

Attorney General regarding the Meat Inspection Act, an

opinion we find thoroughly convincing. Compare Benavides

v. DEA, 968 F.2d 1243, 1248 (D.C. Cir. 1992). The Meat

Inspection Act lists the sorts of establishments subject to

federal inspection: "any slaughtering, meat-canning, salting,

packing, rendering, or similar establishment." See 21 U.S.C.

s 606. Because the list does not include retail establishments, one would suppose that meats prepared in retail

__________

3 We will refer to these provisions of the two statutes as the

"inspection provisions," or the "inspection requirements."

USCA Case #98-5244 Document #428314 Filed: 04/09/1999 Page 4 of 9
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

stores are not subject to the federal inspection requirements.

See, e.g., Michigan Citizens for an Indep. Press v. Thornburgh, 868 F.2d 1285, 1292-93 (D.C. Cir. 1989). Retail stores

are not "similar" to the types of wholesale businesses listed in

the statute. See 21 U.S.C. s 606. The functions of slaughtering and packing plants differ considerably from those of

retail establishments. See Applicability of the Federal Meat

Inspection Act to Retail Establishments, 42 Op. Att'y Gen.

461 (1972). The Meat Inspection Act thus strongly suggests

that retail establishments are exempt from the federal inspection requirements. See D & W Food Centers, Inc. v. Block,

786 F.2d 751, 756-57 (6th Cir. 1986). That the statute does

not contain an explicit exception for retail operations is not

particularly significant. A statute listing the things it does

cover exempts, by omission, the things it does not list. As to

the items omitted, it is a mistake to say that Congress has

been silent. Congress has spoken--these are matters outside

the scope of the statute. See Engine Mfrs. Ass'n v. EPA, 88

F.3d 1075, 1088 (D.C. Cir. 1996).

Another provision in the Meat Inspection Act fortifies the

conclusion that retail establishments are not subject to inspection. The Act applies when meat food products are

"prepared" in the types of establishments listed. The Act

defines "prepared" to include cutting up or boning meat, see

21 U.S.C. s 601(l ), activities routinely performed in retail

stores. But the definition closes with the phrase "or otherwise manufactured or processed," thus qualifying all the

activities mentioned. See id. Slicing ham in a retail store is

not "processing" or "manufacturing," as those terms are

generally understood. See 42 Op. Att'y Gen. at 461-62.

Operations traditional to retail stores therefore fall outside

the scope of the Meat Inspection Act.

The language of the Poultry Inspection Act points in the

same direction. This Act requires inspection "whenever processing operations are being conducted ... of the carcass of

each bird processed," a phrasing somewhat different than the

parallel section of the Meat Inspection Act. See 21 U.S.C.

s 455(b), compare s 606. As the Agriculture Department

points out, the Poultry Inspection Act also does not contain a

USCA Case #98-5244 Document #428314 Filed: 04/09/1999 Page 5 of 9
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

descriptive list of establishments subject to inspection, but

refers generally to "processing operations." See 21 U.S.C.

s 455(b). Although the Attorney General's opinion does not

discuss the Poultry Inspection Act, some elements of his

analysis are nevertheless apt. The Poultry Inspection Act's

definition of "processed," like the Meat Inspection Act's definition of "prepared," could be read to reach routine retail

store activities such as slicing poultry. See 21 U.S.C.

ss 601(l ), 453(w). But slicing a chicken or turkey is not a

"processing operation[ ]," as that term is generally understood, just as slicing a ham at a retail store is not "manufacturing" or "processing," as those terms are generally understood. Compare 42 Op. Att'y Gen. at 461-62.4 Given the

desirability of reading these two Acts in pari materia, we

therefore believe retail stores where poultry is simply sliced

and packaged also fall outside the scope of the inspection

provision in the Poultry Inspection Act.

Another feature common to both Acts tends to show that

the inspection provisions do not reach retail establishments.

See 42 Op. Att'y Gen. at 466-67. Provisions in both the Meat

and Poultry Inspection Acts exempt retail establishments

located in "designated" States if their products are distributed intrastate. See 21 U.S.C. ss 454(c)(2), 661(c)(2).5 The

__________

4 In addition, the Poultry Inspection Act directs the Secretary to

"exempt from specific provisions of this chapter," by regulation,

"retail dealers with respect to poultry products sold directly to

consumers in individual retail stores, if the only processing operation performed by such retail dealers is the cutting up of poultry

products on the premises where such sales to consumers are made."

See 21 U.S.C. s 464(a)(1); 9 C.F.R. s 381.10(a)(1) (exempting such

retail dealers from "[t]he requirements of the Act and the regulations for inspection"). The parties do not discuss the application of

this provision to this case.

5 The exemptions, virtually identical in both Acts, state:

The provisions of this chapter requiring inspection of [the

preparation of meat and meat food products or the processing

of poultry products] shall not apply to operations of types

traditionally and usually conducted at retail stores and restaurants, when conducted at any retail store or restaurant or

Secretary of Agriculture may designate a State if it fails to

develop or enforce inspection requirements equivalent to the

federal inspection regime. The Secretary may then apply

those requirements to the State's intrastate establishments,

except retail stores engaging in intrastate sales. See 21

U.S.C. ss 454(c)(1),(2), 661(c)(1),(2). One might argue that

the general inspection provisions apply to retail stores, because the special retail exemptions for designated States

would be unnecessary if they did not. See Bennett v. Spear,

520 U.S. 154, 173 (1997). Were that logic to prevail, however,

retail stores located in States having inferior inspection systems and distributing their products intrastate would wind up

being exempt from the federal requirements, while others

would not be. That would be a very strange result and one

that Congress could not possibly have intended, as legislative

USCA Case #98-5244 Document #428314 Filed: 04/09/1999 Page 6 of 9
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

history relating to the Meat Inspection Act indicates. See 42

Op. Att'y Gen. at 462-66, 468; see also Public Citizen v.

Department of Justice, 491 U.S. 440, 454-55 (1989); City of

Cleveland v. U.S. Nuclear Regulatory Comm'n, 68 F.3d 1361,

1366 n.4 (D.C. Cir. 1995).

The more sensible explanation, and one the Attorney General endorsed, is that Congress added the exemption in

s 661(c)(2) of the Meat Inspection Act to clarify that retail

stores were not the type of establishment included within the

federal inspection requirements. See 42 Op. Att'y Gen. at

467-68. We are led to the same conclusion regarding the

Poultry Inspection Act's identical express exemption. See 21

U.S.C. s 454(c)(2). Congress amended the Poultry Inspection Act to include Federal-State cooperation provisions (of

which the exemption is one) similar to those in the Meat

Inspection Act. See H.R. Rep. No. 90-1333, at 22 (1968),

reprinted in 1968 U.S.C.C.A.N. 3445-46.

__________

similar retail-type establishment for sale in normal retail quantities or service of such articles to consumers at such establishments if such establishments are subject to such inspection

provisions only under this paragraph (c)....

See 21 U.S.C. ss 454(c)(2), 661(c)(2) (emphasis added).

USCA Case #98-5244 Document #428314 Filed: 04/09/1999 Page 7 of 9
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

If Honey Baked Ham continued to operate its retail stores

as it had in the past, the stores would not be subject to

federal inspection for the reasons just given. That the company's retail stores supply temporary kiosks during holiday

seasons does not, in our view, transform them into "hybrid

retail/wholesale" establishments to which the federal inspection requirements apply. A wholesaler does not sell to the

ultimate consumer; a wholesaler is a middleman who sells to

a retailer. To the extent that Honey Baked Ham's retail

stores supply the company's kiosks, they still do not fit within

the category of "wholesalers." The stores do not sell their

products to the kiosks; the kiosks are simply an extension of

the stores' retail operations. According to the Agriculture

Department's own regulations, the company's stores fit within

the description of retail establishments, kiosks or not. Their

operations, of the sort "traditionally and usually conducted at

retail stores," will not change when they supply kiosks. The

stores glaze, slice and package products. See 9 C.F.R.

ss 303.1(d)(2)(i)(a),(c),(e), 381.10(d)(2)(i). They sell to

consumers only, not to retailers. See 9 C.F.R.

ss 303.1(d)(2)(iii)(a), 381.10(d)(2)(iii)(a). They use meat and

poultry products that are federally- or State-inspected and

passed. See 9 C.F.R. ss 303.1(d)(2)(iii)(c), 381.10(d)(2)(iii)(c).

Although Honey Baked hopes to increase its business

through the kiosks, there is no indication that its sales to

consumers will exceed normal retail quantities. See 9 C.F.R.

ss 303.1(d)(2)(ii), 381.10(d)(2)(ii). Because the company's retail stores will not lose their retail character or become

"similar" to wholesale establishments when the kiosk system

is fully implemented, the stores are not required to submit to

federal inspection under the Meat and Poultry Inspection

Acts.

If we credited the Department's contention that the inspection provisions of the Acts reach retail establishments, and

that those establishments may be exempt only if they fall

within the Acts' express retail exemptions, we would still

come to the same conclusion.6 The Department says the

__________

6 It bears mention that the Department's contention must fail,

because the Acts' retail establishment exemptions do not exempt

express exemptions, and its own regulations, apply only when

meat and poultry are sold to consumers from the place where

these products are prepared. See 21 U.S.C. ss 661(c)(2),

454(c)(2); 9 C.F.R. ss 303.1(d)(1), 381.10(d)(1).7 When the

kiosks are up and running, the preparation would be done in

the retail stores, so the Department insists that federal

inspectors must occupy the premises. We find the Department's interpretation of the express retail exemptions to be

arbitrary and capricious. See 5 U.S.C. s 706(2)(A); see

George E. Warren Corp. v. U.S. E.P.A., 159 F.3d 616, 622

(D.C. Cir. 1998). The Meat and Poultry Inspection Acts seek

to protect the "health and welfare of consumers ... by

assuring that [poultry products or meat products] distributed

to them are wholesome, not adulterated...." See 21 U.S.C.

ss 451, 602. The Department's construction of the express

USCA Case #98-5244 Document #428314 Filed: 04/09/1999 Page 8 of 9
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

retail exemptions bears no logical relationship to that goal.

The traditional preparation processes that occur at retail

stores pose no greater threat to the public health when the

fully prepared product is later sold at another location. The

study of the risks of contamination from simple retail store

processing, on which the Department relies, does not suggest

otherwise. And if transporting the prepared product creates

an additional risk of contamination, inspection at the originating retail stores is an utterly useless measure of protection.

As the company points out, the transportation would take

place out of the presence of a federal inspector.

__________

retail establishments generally, but only those that are located in

designated States and distribute their products intrastate. See 21

U.S.C. ss 661(c)(2), 454(c)(2).

7 The Department provides two sets of regulations. The relevant

portions are virtually identical. They state:

The requirements of the Act and the regulations ... for

inspection of the [preparation of meat products or processing of

poultry products] do not apply to operations of types traditionally and usually conducted at retail stores and restaurants,

when conducted at any retail store or restaurant or similar

retail-type establishment for sale in normal retail quantities or

service of such articles to consumers at such establishments.

See 9 C.F.R. ss 303.1(d)(1), 381.10(d)(1).

The Department's adherence to its so-called "two-store"

policy also suggests that its interpretation of the retail exemptions is arbitrary and unrelated to the purpose of the

Meat and Poultry Inspection Acts. Under this policy, which

has not been published, a retail store apparently is permitted

to prepare products on the store's premises and to sell them

to customers there and at one other location without triggering the federal inspection requirements. The policy applies

to single store operations only. Because Honey Baked Ham

owns many retail stores, it falls outside of the "two-store"

policy. Honey Baked Ham presumably could take advantage

of the policy if, like some of its competitors, its retail outlets

were run as franchise operations. If there were a health risk

posed by off-site sales of products prepared at retail stores, it

is impossible to understand why the form of corporate organization ought to be decisive. The short of the matter is that

the Department's "two-store" policy further undermines its

claim that public health concerns mandate federal inspection

of those Honey Baked retail stores supplying hams and

turkeys to kiosks in nearby shopping malls.

For the foregoing reasons the judgment of the district

court is affirmed.

So ordered.

USCA Case #98-5244 Document #428314 Filed: 04/09/1999 Page 9 of 9