Slip Op. 04 - 82

UNITED STATES COURT OF INTERNATIONAL TRADE

- - - - - - - - - - - - - - - - - - -x BESTFOODS, : Plaintiff, :

v. : Court No. 98-12-03230 THE UNITED STATES, : Defendant. :

- - - - - - - - - - - - - - - - - - x Opinion [Upon cross-motions as to class- ification of REDUCED FA T SKIPPY ® , summary judgment for the defendant.] Decided: July 9, 2004

Neville Peterson LLP ( John M. Peterson , George W. Thompsonand Maria E. Celis ) for the plaintiff. Peter D. Keisl e r , Assistant Attorney General; Barbara S. Williams , Attorney-in-Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, U.S. Departm en t 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 dictumin 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

1 Memor andum of Points and Authorities in Support of Plai n tiff's Motion for Summary Judgment [hereinafter cited as "Plaintiff's Memorandum"], p. 2. comes the plaintiff in this action with a motion for summary judgment, praying that its merchandise which it descr ibes 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 bya 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-fl av ored 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 m arketed 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 prod uc t is not "peanut butter" according to the FDAstandard of identity, 21 C.F.R. § 164.150. 4. The FDA permits Bestfoods to market and label the subject merchandise as a "reduced fat peanut butter spread."Court No. 98-12-03230 Page 3

2In 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 merchandise, 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. 5.
. . . [E]ntry number 551-5501565-8 . . . w as 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. Up on denial of its protest, plaintiff timely filed this action. 7. Plaintiff[] subsequently amended its claim, adding HTS subheading 2007.99.65[ 2 ], which provides for nut purees and pastes, as an appropriate 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[] regul ations, 21 C.F.R. § 164. 150, provide the standard ofCourt No. 98-12-03230 Page 4 identityfor "peanut butter." Denies that the regulationrequires that, "to be labeled and marketed as peanut butter, a product must have no more than 10% other ingredients in addition to its pea nut material." Avers that the regulationprovides that "seasoning and stabilizing ingredients do not in the aggregate exceed 10 percent of t he weight of the finished food." Ave rs fur ther 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 identityfor the standardized food. Avers further that Customs do es not have to followthe FDA regulations for purposes of classifying the imported merchandise under the HTSUS. 3. Admits, except denies that the product contains approximately 40% of additional ingredients. Aver s that the peanut butter spread contains approximately 34-40% of additional ingredients. . . . Avers further tha t the subject merchandise qualifies and may be labeled as a substitute peanut butter.

This response has been served and f iled i n conjunction witha 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 primarilyof 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 i n th e same manner as peanut butter. 5. Dictionarydefinitions of the term "peanut butter" do not req uire that it contain moreCourt No. 98-12-03230 Page 5

th an90 percent peanuts by weight. P eanu t butter is defined in the Oxford Engli sh Dictionary(Second Edition) . . . as "paste made withground roasted peanuts," and in the RandomHouse Dictionary for the English Language , (the Unabridged Edition 1969), p. 1060, as "smooth paste made from finely groundroasted peanuts, used as a spread or in cookery." Peanut butter is also described in the Encyclopedia of Food Technologyat 683 . . . (1974)[] as "a cohesive, comminuted food product prepared by dry roasted, clean, sound, mature pea nuts from which the seed coat and 'hearts' are removed, a nd to which salt, hydrogenated fat and (optional) sugars, antioxidants and flavors are added." 6. The imported product is peanut butter pursuant to the co mmon meaning of that term found in dictionaries. 7. Peanuts (also known as ground-nuts) are legumes. 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 peanu t bu tter spread" and cannot be sold in the United States as "peanut butter." Further avers that the entry for whichthe 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 frompeanuts. Avers that the imported product also maybe classified as a puree under the H[TSUS]. Furth er a vers[] that approximately 60% of the imported product is m ade 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 peanu t butter. Avers that even though th e imported product looks like peanut butter, it maynot 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 containmore than 90 percent peanuts by weight. Avers that the peanut butter industry is required to label products "peanut butter" onlyif they contain 90 per ce nt 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. Admi ts. 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 asdiscussed hereinafter, the court concurs that trial is not necessary. The dispositive issues at bar are matters of law.

II Jurisdictionover this action is pursuant to 28 U.S.C. §§ 1581(a), 2631( a). I t stems from rulings requested and received fromthe U.S. Customs Service byplaintiff'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 with in the limits described in additional U.S. note 5 to chap ter 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 insubheading 2008.11.1500, HTSUS, and dutiable at the 1996 general rate of 147 per cen t ad valorem. In addition, products classified in subheading 2008.11.1500, HTSUS, will be subject to additional duties based ontheir 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" inthe 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-entryruling letter of Customs overlooked the question ofCourt No. 98-12-03230 Page 8

3Defendant's Exhibit A, p. 4.

4 Id
. commerc ial 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 absence of valid rea soni ng[,] 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 claimrespect according to its persuasiveness", United States v. Mead Corp ., 533 U.S. 218, 22 1 (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 consistencywith earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to con trol." 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 FD A standards of identity "is to promote honesty and fair dealing in the interest of consumers by truthful and informative labeling of food products" 3and 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-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 classific at ion 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.

Inaddition to the red-faced REDUCED FA T SKIPPY ® on the front label of plaintiff's 18-oz. jar, defendant's exhibit E, that exhorts would-be purchasers cumconsumers to "SPREAD THE FUN!" atop a depiction of swirls of the st icky stu ff, that label emblazons "C REA MY Peanut Butter Spread" above "60% peanuts". Customs reacted to this presentment in its ruling letter by pointing out that the FDA has a definition f or "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 nonpea nu tCourt No. 98-12-03230 Page 10

5 Id ., quoting 21 C.F.R. §102.23.

6 Ibid

. 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 call ing a product peanut butter, peanut butte r 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 t ariff schedule as peanut butter and paste. Counsel does not claim that the instant product i s cove red by the standard of identity for peanut spread. This standard does not p ermit 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 CFR164.150. Yet, counsel states that his client has an agreement with FDA authorizing the la bel ing of the instant product as a "Pean ut Butter Spread". This is further evidence that the instant product is a modified formof peanut butter. It is a contradiction to label a product as peanut butter, albeit, withthe added word of spread, and contend that the product is not peanut butter. 6

B Of course, as this agency reasoning reco g nizes, 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 definitionthereof. Whereupon the court must determine its common meaning and "may consult dictionaries, lexicons, scien-Court No. 98-12-03230 Page 11

7 Lonza, Inc. v. Un ited 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).

8Of course, the primary definition of this term is the fat of milk solidified via churning, although there is secondaryreference t o "butterlike" products made by grinding nuts, stewing fru its , etc. S ee , 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 o f Richard Wilkes, Plaintiff's Memorandum, Exhibit D, para. 6. tific a uth orities, and other such reliable sources" 7 in doing so. Opening Funk & Wagnalls Standard Dictionaryof the English Language (Int'l ed. 1963) to page 923 reveals definition of the noun paste as, among others, [a]nydoughyor moist plastic substance; anything of the consistencyof paste, as for consumption or application: usuallywitha 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 evaporationor grinding < almo nd - > <tomato - > <sardine - >". Cf
. Plaintiff's Memorandum, pp. 18-19. There is no mentio n o f butter 8

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 t o th us state that this court is unabl e to c onclude that the 60-or-more-percent peanut content of plaintiff's product herein 9is insufficient to constitute peanutCourt No. 98-12-03230 Page 12

10 See , e . g ., The Standard C yclope dia of Horticulture, vol. III, p. 2505 (1935); Webster's New International Dictionary of the English Language Second Edition Unabridged, p. 1799 (1945). 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 imp orte[d ] product is a peanut paste made primarily from peanuts"). III

Indeciding herein that Customs classified correctly plaintiff's merchandise, the co urt can confirm that it has considered able counsel's proposed alternative classification(s), namely, a nut puree or paste under HTSUS subheading 2007.99.65 or

a condimen t 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 ot hers , 2007 and 2008, which are encaptioned, respectively, "Jams, fr ui t jellies, marmalades, fruit or nut pureé a nd fruit or nut pastes

. . ." and "Fruit, nuts and other edible parts of plants . . . not elsewhere specified or included: Nuts, pe an uts (ground-nuts) and other seeds . . ." and the prevailing concept of Nature's universe puts Arachis hypogaea , Latinfor t he primary plantstuff at bar, witha bean-pod or pea-pod 10 , on its face the HTSUS does not. ThatCourt No. 98-12-03230 Page 13

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 E xists, paras. 7, 8, supra . is, the court can find that Ara chis hypogaea is not genuinely a "nut" 11 , but the HTSUS, heading 2008, not 20 07, 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 relis h t o 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 EnglishLanguage Second Edit ion Unabridged. Whereupon they argue that plaintiff's REDUCED FA T SKIPPY ® gives flavor to all foods on which it is spread, particularlyon breads, crackers, toast, etc., and it is a suspensionof peanuts, oils, corn syrup, salt, a nd swe etener. 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 pe an ut spread may be found in condimentaisles in the supermarket. In numerous East Asian cultures, the reduced fat peanut spread may even be used (as a healthier substitute for peanut butter) as a spice or flavorful addit ion 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 withSatayCourt No. 98-12-03230 Page 14

Sauce , together pla int iff'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 interpret at ion("GRI") of the HTSUS that, "for legal purposes, classif ica tionshall 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 me al a nd prepared mustard[,] is the one which provides a more specific description of plaintiff's product within the meaning of the GRI than HTSUS heading 2008, supra ? Obviously not.

IV

Inview of the foregoing, plaintiff's motion for summary judgme nt m ust 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