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BORDEN CO. v. FREEMAN

June 10, 1966

The BORDEN COMPANY, a New Jersey corporation, Plaintiff,
v.
Orville L. FREEMAN, Secretary of Agriculture, United States of America, S. R. Smith, Administrator, Agricultural Marketing Services, Department of Agriculture, United States of America, and G. R. Grange, Deputy Administrator, Agricultural Marketing Services, Department of Agriculture, United States of America, Defendants, and Campbell Soup Company, a New Jersey corporation, Intervenor-defendant



The opinion of the court was delivered by: LANE

 On September 21, 1964, The Borden Company filed a complaint in this court contesting the validity of certain amended regulations promulgated by defendant, the Secretary of Agriculture of the United States, pursuant to regulatory powers granted him under the Poultry Products Inspection Act, *fn1" hereinafter referred to as the Poultry Act. The regulations scheduled to be effective as of January 1, 1965, would have prohibited plaintiff's subsidiary, Wyler and Company, from continued sale of "Wyler's Chicken Noodle Soup Mix" and "Wyler's Chicken Rice Soup Mix" as labeled and formulated prior to that date. *fn2"

 Plaintiff's soup mixes involved here are dehydrated food products sold throughout the United States in foil envelopes. The Wyler chicken noodle soup mix has been sold for over 25 years and contains powdered chicken meat in an amount greater than 2% of the weight of the package, but less than 2% of the volume of the soup in its ready-to-serve state. The Wyler chicken rice soup has been sold for over 15 years, and contains the same proportion of powdered chicken. Since their introduction into the market, these soups have borne the same labels and been produced pursuant to substantially the same formulae as at present.

 The regulations as amended (§§ 81.134 and 81.208) are the latest product of nearly continuous efforts by the Secretary of Agriculture since the passage of the Poultry Act in 1957 to resolve a dilemma. The Secretary has sought to remove from his jurisdiction certain products which contain so little poultry that to regulate them constitutes an unnecessary burden on the Department of Agriculture and a waste of its expertise. By promulgating the predecessors of §§ 81.134 and 81.208, the Secretary had exempted from the operation of the Poultry Act all soup products with less than 2% poultry content.

 Under that prior regulatory scheme, such products as dehydrated soups containing less than 2% poultry meat bore the label "Chicken Soup" or other indication of substantial poultry meat content. Having divested himself of jurisdiction over such products, the Secretary of Agriculture was powerless to insure that their labels were not false and misleading. Also, soup manufacturers such as Campbell Soup Company, whose products contain more than 2% poultry meat and are necessarily more expensive to purchase, were complaining that their soups alone should be entitled to bear the unqualified "Kind" label, "Chicken Soup."

 Early in 1964, the Secretary initiated steps calculated to effect more acceptable exemption provisions. Informal hearings were held in Washington, D.C., on March 23-25, 1964. Some interested parties, including plaintiff and other soup producers, expressed their views at these hearings. Others supplied written information or expressed their opinions by letter. On June 1, 1964, the amended regulations were issued. They read, where pertinent, as follows:

 
§ 81.134 Product specifications for labeling purposes.
 
(a) Authorization to establish specifications. The Administrator is authorized to establish specifications covering the principal constituents of any poultry food product with respect to which a specified name of the product or other labeling terminology may be used, whenever such action is necessary to prevent sale of the product under a false or deceptive name or other false or misleading labeling. The requirements of this section are hereby found to be necessary for this purpose.
 
* * *
 
(6) Other poultry dishes and specialty items. (i) * * * Products * * * having less than the specified minimum poultry meat content, may use the "Kind" name in the product name, provided it is appropriately qualified to distinguish such products from those containing the specified minimum meat content.
 
(ii) Products of the types specified in § 81.208(a) and (b) will be deemed to have false, deceptive or misleading labeling if they use the "Kind" name of the poultry (chicken, turkey, etc.) in the product name without appropriate qualification. For example, a consumer packaged noodle soup product containing less than 2 per cent chicken meat on a ready-to-serve basis may not be labeled as "Chicken Noodle Soup" but, when appropriate, could be labeled as "Chicken Flavored Noodle Soup."
 
* * *
 
§ 81.208 Exemption from definition of "poultry product" of certain human food products containing poultry.
 
(a) Any human food product (in a consumer package) not provided for in paragraph (c) of this section, if: (1) It contains less than 2 per cent cooked poultry meat (deboned white or dark poultry meat, or both); * * * and (5) the product does not in any respect have a false or misleading label. (See § 81.134 with respect to labeling.) The aforesaid percentages of ingredients shall be computed on the basis of the moist, deboned, cooked poultry in the ready-to-serve product when prepared according to the serving directions on the consumer package.

 Plaintiff, following the publication of these regulations, brought action in this court; and after hearing, defendant was preliminarily enjoined from enforcing the regulations, pending judicial review of the administrative proceedings. Upon due application to this court, Campbell Soup Company, on September 30, 1965, was granted leave under F.R.Civ.P.24(b) to intervene as a party defendant.

 This court will consider not only the question of the evidentiary support for the contested rulings, but also several critical jurisdictional and procedural issues raised by plaintiff.

 Plaintiff Borden alleges first that there is not statutory authority for the promulgation of such general, quasi-legislative standards of identity for poultry products as are set forth in § 81.134. Plaintiff also contends that the Secretary may not condition a product's exemption from the operation of the governing act upon the type of label used, as is done in § 81.208.

 The relevant statutory provisions in the Poultry Act are as follows:

 21 U.S.C. § 453. Definitions

 
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