Court Opinion

ID: 818745
Source: CourtListenerOpinion
Date Created: 2013-02-03 08:27:58.502621+00
Date Added: 2024-06-11T15:25:11.807061
License: Public Domain

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