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Corn Products Co. v. Department of Health

decided: May 14, 1970.

CORN PRODUCTS COMPANY, PETITIONER,
v.
DEPARTMENT OF HEALTH, EDUCATION AND WELFARE, FOOD AND DRUG ADMINISTRATION, RESPONDENT. DERBY FOODS, INC., PETITIONER, V. FOOD & DRUG ADMINISTRATION, U.S. DEPARTMENT OF H.E.W., RESPONDENT



Staley, Seitz and Stahl,*fn* Circuit Judges.

Author: Staley

Opinion OF THE COURT

STALEY, Circuit Judge.

Corn Products Company and Derby Foods, Inc.,*fn1 petition for review of an order of the Food and Drug Administration, Department of Health, Education and Welfare, which establishes a definition and standard of identity for the food product known as peanut butter.*fn2 They seek this review because their products, as they were formulated at the time of the order, fail to conform to the standard.*fn3

The order was promulgated under Section 401 of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 341.*fn4 Basically, it limits the percentage by weight of optional ingredients which may be added to the peanut ingredient to a maximum of ten per cent. It allows for the addition or removal of peanut oil and limits the fat content to 55 per cent. The standard also identifies allowable additives and specifies certain labelling requirements.*fn5

As originally constituted, peanut butter was composed of ground peanuts, salt, and sometimes sugar. However, this product had the disadvantages of oil separation, stickiness, short shelf-life, etc. These deficiencies have been diminished, if not eliminated, by the addition of stabilizing ingredients, hydrogenated vegetable oils. Today, peanut butter consists of the peanut ingredient, which has a solid component and an oil component, the stabilizer, and seasonings.

Petitioners are the major producers of peanut butter. Each has enjoyed a high degree of success. In 1965 Corn Products, the industry leader, claimed 22 per cent of the market for its brand, Skippy. Derby as the second leading producer had 14 per cent of the market from its product, Peter Pan.*fn6 Their product formulations fail to qualify under the standard since each uses in excess of ten per cent of optional ingredients as these are defined by the standard, but each for a different reason.

Both petitioners were unsuccessful in urging the Food and Drug Administration to adopt a standard which would allow 13 per cent of optional ingredients, i.e., consist of 87 per cent peanuts. Corn Products urges here that the adoption of the 90 per cent standard was unreasonable and arbitrary and that the standard will not promote honesty and fair dealing in the interest of consumers. It also argues that the findings upon which the order is based are not supported by substantial evidence. Both petitioners contend that they were entitled to specific findings as to why their products were eliminated.*fn7 Since this is an appeal from an order of an administrative agency, our first concern must be the extent of our authority to review the order.

The scope of review of the appellate court in considering such orders is defined by the Federal Food, Drug, and Cosmetic Act and the Administrative Procedure Act. Section 701(f) (3) of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 371(f) (3), provides:

"The findings of the Secretary as to facts, if supported by substantial evidence, shall be conclusive."

Section 10(e) of the Administrative Procedure Act, 5 U.S.C. § 706, provides:

"* * * The reviewing court shall * * * (2) hold unlawful and set aside agency action, findings, and conclusions found to be * * *

"(E) unsupported by substantial evidence * * *."

The Supreme Court has found the "substantial evidence" test to be the same under the Administrative Procedure Act as under the Taft Hartley Act. Universal Camera Corp. v. NLRB, 340 U.S. 474, 71 S. Ct. 456, 95 L. Ed. 456 (1951). This court has applied the teaching of Universal Camera to petitions for review of an order under the Federal Food, Drug, and Cosmetic Act, Cream Wipt Food Products Co. v. Federal Security Administrator, 187 F.2d 789 (C.A. 3, 1951); see also, ...


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