Reply Brief — Excel Corp. v. Estate of Kriefall

Supreme Cour, U.S.

FILED

FEB 24 2004

a, OFFICE OF THE CLEP

No. 03-862

Jn the Supreme Court of the Gnited States

EXCEL CORPORATION,

Petitioner,

Vv.

ESTATE OF BRIANNA L. KRIEFALL, ET AL.,

Respondents.

On Petition for a Writ of Certiorari to the

Court of Appeals of Wisconsin

REPLY BRIEF FOR PETITIONER

RALPH A. WEBER ANDREW J. PINCUS

AMELIA L. MCCARTHY Counsel of Record

SHAWN K. STEVENS RICHARD B. KATSKEE

Gass Weber Mullins LLC Mayer, Brown, Rowe &

309 North Water Street Maw LLP

Milwaukee, WI 53202 1909 K Street, NW

(414) 223-3300 Washington, DC 20006

(202) 263-3000

Counsel for Petitioner

TABLE OF CONTENTS

Page

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TABLE OF AUTHORITIES

Page(s)

Cases:

Alaska Dep’t of Envtl. Conservation v. EPA,

124 3. Ch, FOS (RD osc ota vscduases eee 1, 7,8

Boulahanis v. Prevo’s Family Mkt, Inc.,

583 N.W.2d 509 (Mich. Ct. App. 1998) ............ 10

Cipollone v. Liggett Group, Inc.,

S00 U.S. SIGS e) ox ccvivinnen nest baeeaseee 3

Cox Broad. Corp. v. Cohn,

SIG U.S. SOP EIT) a kev cs aavaveer se eee 1,a4

Fort Wayne Books, Inc. v. Indiana,

ee hf a errey ered ary Gee err’ 4

Grocery Mfrs. of Am., Inc. v. Gerace, 755 F.2d 993,

aff'd in relevant part, 474 U.S. 801,

cert. denied in part, 474 U.S. 820 (1985) ........... 10

Keating v. Superior Court, 645 P.2d 1192

(Cal. 1982), rev'd in part and appeal

dismissed in part, 465 U.S. 1 (1984) ............... 4

Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996) .......... 3

National Pork Producers Council v. Bergland,

G51 Fe 5353 COG. TD. 6 vec ene eas wee eeens 10

Public Citizen v. Foreman, 631 F.2d 969

Se Se OE Sa ce an oe en eee er

Southland Corp. v. Keating, 465 U.S. 1 (1984) ......... 4

ill

TABLE OF AUTHORITIES — Continued

Page(s)

Statutes and Regulations:

ES A 9

EE re 7

ea ee hide oss ss kescevcedevss 3,9

re 5 55 5 oy ob nse eek dcwndens 2

Or wee. eee Or. azo (Ct. 7, 2002) .... 2. eee e ee ese 7

REPLY BRIEF FOR PETITIONER

The decision below displaces the considered, long-

established views of the expert federal agency that Congress

authorized to interpret and implement the Federal Meat

Inspection Act (FMIA), eliminates the uniformity mandated by

Congress, and opens the door to multiple conflicting state

standards that would make it virtually impossible to distribute

meat without the risk of substantial criminal and civil penalties.

Respondents nonetheless assert that the decision below is

unworthy of this Court’s attention. In part they claim that the

consequences of the ruling will be trivial, and in part they

contend that uniform regulation of meat safety is neither

necessary nor desirable.

The amici curiae supporting the petition have conclusively

refuted the former argument and Congress has by statute

foreclosed the latter. But the federal government obviously is

the most knowledgeable authority on the flaws in the decision

below and its adverse effect on the Secretary of Agriculture’s

administration of the FMIA. The Court therefore may wish to

invite the Solicitor General to file an amicus brief in this case

expressing the views of the United States.

Alternatively, because the court of appeals’ ruling is plainly

inconsistent with this Court’s recent decision in Alaska

Department of Environmental Conservation v. EPA, 124 S. Ct.

983 (2004), the Court may wish to consider granting the

petition, vacating the judgment below, and remanding the case

for reconsideration in light of that intervening authority.

1. Apparently desperate to insulate the court of appeals’

decision from this Court’s scrutiny, respondents expend

considerable energy arguing that this Court lacks jurisdiction

because the decision below supposedly is not final under Cox

Broadcasting Corp. v. Cohn, 420 U.S. 469 (1975). They do not

dispute that the federal issue has been determined finally by the

2

Wisconsin court; their entire argument is that the case does not

satisfy Cox’s statement that reversal of the state court on the

federal issue should be preclusive of further litigation.

Respondents are plainly wrong.

To begin with, their argument rests on a mischaracterization

of the issue before this Court; they proceed as if we had sought

review only of the narrow issue whether deference should be

accorded to the Secretary’s policy. In fact, the question

presented to this Court is whether that policy should have been

accorded deference and upheld in the circumstances of this

case. See Pet.i. Thus, all of the alleged factual and legal issues

raised by respondents are before this Court. If the Court

resolves them, which it has the power to do, there will be no

further litigation against petitioner on respondents’ tort claims.

Moreover, respondents’ contentions are baseless. For

example, they imply (Opp. 11-12) that the court of appeals

found that the meat at issue in this case was not “intact” within

the meaning of the Secretary’s policy because petitioner’s

HAACP plan “recognized that its intact cuts of beef were

‘intended to be sold raw . . . for further processing at retail.’”

Pet. App. 18a (omission in original). But the plan actually

stated that meat from petitioner’s plant was “intended to be sold

raw (fresh or frozen) as packaged or for further processing at

retail or export.” Ct. App. Rec. 77 (emphasis added). The

court of appeals accepted the trial court’s determination that the

meat here was packaged (see Pet. App. lla, 17a (meat

consisted of wrapped intact cuts)), which meant that it was not

subject to further processing. Moreover, USDA regulations

define “further processing” to mean additional preparation “in

an Official establishment” — such as a federally-inspected

smoking or canning facility. 9 C.F.R. § 301.2. Because

respondent Sizzler is not an “official establishment” under the

FMIA, it could not as a matter of law subject meat to “further

processing.” Indeed, USDA has specifically acknowledged

3

that Excel meat of the sort at issue here qualifies as intact and

unadulterated even if it bears E. coli. See Pet. App. 61a.

Respondents also try to argue (Opp. 13-14) that the FMIA’s

preemption provision might not apply either because the

particular requirements imposed by state law here might not

conflict with the federal standards or because state rules

formulated in tort cases might be exempt from preemption. But

respondents cannot obscure the fundamental fact that they seek

to impose liability for an action (allegedly distributing intact

meat bearing E. coli) that is authorized by federal law. While

tort liability for conduct that violates federal law is entirely

consistent with the statutory scheme, tort liability for

permissible conduct plainly constitutes additional

“{r]equirements * * * with respect to premises, facilities and

operations” of federally-inspected establishments (21 U.S.C.

§ 678), because the threat of such liability will force meat

processors such as petitioner to change the USDA-mandated

and USDA-approved procedures at their plants across the

country in order to comply with the standards imposed by the

Wisconsin court (see Cipollone v. Liggett Group, Inc.,505 U.S.

504, 521-22 (1992); id. at 548-49 (Scalia, J., concurring in the

judgment in part and dissenting in part)). Indeed, the court

below acknowledged as much (see Pet. App. 30a), and it

attempted to avoid the express preemption provision by

replacing the Secretary’s definition of “adulterated” with its

own interpretation. '

' Respondents cite Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996), but

state tort liability survived federal preemption there only because the

state “requirements” were not “in addition to” federal ones; they

merely afforded remedies to parties injured by violations of federal

law whose losses would otherwise have remained uncompensated.

Id. at 486-87. Here, there is no alleged violation of federal law

because federal law plainly authorizes distribution of “unadulterated”

meat that the court of appeals’ decision expressly forbids.

4

Respondents imply that the Wisconsin court’s decision not

to address all of these issues somehow deprives this Court of

jurisdiction (even though anything the lower court might have

said with respect to these matters would have been unnecessary

to its holding). That is simply wrong. In Southland Corp. v.

Keating, 465 U.S. 1 (1984), the question was whether a

California law regarding the arbitrability of certain disputes

was preempted by the Federal Arbitration Act (FAA). The

California Supreme Court did not address the contention that

the FAA applied only to disputes that fell within the jurisdiction

of the federal courts (645 P.2d at 1201), holding instead that the

FAA did not preclude the State from barring waiver of judicial

remedies. This Court did not conclude — as respondents urge

here — that the failure to address that alternative ground for

resolving the case foreclosed review. Instead, it held that

jurisdiction was available under Cox. 465 U.S. at 6-7.

Finally, respondents assert that jurisdiction is precluded by

the court of appeals’ failure to address their contention that

respondent Sizzler’s state-law warranty claims would survive

in the event the tort claims are preempted. Although we believe

that the warranty claims are also preempted, whether those

entirely separate causes of action may be maintained is

irrelevant under Cox. In Fort Wayne Books, Inc. v. Indiana,

489 U.S. 46 (1989), this Court held that it had jurisdiction to

consider a constitutional challenge to indictment for violations

of Indiana’s RICO statute despite the fact that the petitioner did

not also challenge his prosecution for the predicate offenses.

Because dismissal of the RICO counts “would bar further

prosecution on [those] counts,” the Court held that the case

“clearly satisfie[d]” Cox — even though the predicate state-law

counts remained pending against the petitioner. Jd. at 55.

Respondents’ attempts to deflect the Court’s attention from

the merits of the petition are thus unavailing: the Court has the

power to resolve the important legal issues presented in this

5

case. Indeed, if respondents’ interpretations of this Court’s

precedents were correct, then reconsideration of those

precedents would be appropriate. Preemption issues arise very

frequently in state-court proceedings — as defenses to tort

claims or government action. If this Court’s jurisdiction could

be defeated by the mere fact that the lower court did not address

possible alternative bases for its ruling, then a party could

effectively foreclose review by raising alternative appellate

arguments (meritorious or otherwise) sufficient to ensure that

the state court would decline to decide — or would merely

overlook — at least one of them. That would mean defendants

could almost never obtain review by this Court of unfavorable

state-court decisions (because remanded cases would fall within

the more than ninety-five percent of cases settled before trial),

while plaintiffs would be able to seek review (because a state-

court decision upholding a preemption defense would

necessarily address all of the alternative arguments advanced

against preemption). As a theory of appellate jurisdiction, that

unbalanced approach makes no sense.

2. Respondents devote most of their remaining effort to

defending the result reached by the court of appeals, but they

expend no effort whatsoever defending the court’s reasoning.

Their arguments serve principally to confirm the need for

intervention by this Court.

Respondents assert that the lower court decided that the

Secretary’s construction “lacked the ‘power to persuade.’”

Opp. 17. But that is not what the court did; it held that the

Secretary had no role whatever in defining “adulterated”:

“tnjone of the definitions of ‘adulterated’ in the Act makes a

distinction between intact or non-intact meat,” and therefore

USDA “was powerless to add that distinction to Congress’s

definition.” Pet. App. 19a. The court ignored the Secretary’s

policy and gave the broad terms of the statute a rigid

interpretation that requires application of the “adulterated” label

6

to meat bearing virtually any substance that might possibly be

harmful. See Pet. 13-14, 16-17; Pet. App. 13a-14a.”

Moreover, respondents’ invented rationale is no more

persuasive than the court of appeals’ actual reasoning. They

make three basic points. First, they simply disagree with the

Secretary’s judgment regarding the risks of E. coliO157:H7 on

intact meat. Undertaking their own analysis, they conclude that

“the risks here were not remote” and the court of appeals “had

ample evidence” of those risks. Opp. 19. As the meat-industry

amici explain (AMI Br. 17-19), however, the Secretary’s

judgment rests on detailed scientific analysis, including

assessment of potential costs and benefits, by recognized

experts of FSIS, the National Advisory Committee on

Microbiological Criteria for Foods, the CDC, the National

Academy of Sciences, USDA’s Agricultural Research Service,

and the National Institute of Allergy and Infectious Disease.

See also Pet. 10. Respondents offer no reason why their

armchair analysis is more persuasive.

Second, respondents try to create the impression that some

of the Secretary’s pronouncements support their position.

Certainly the Secretary has set as a goal the elimination of all

E. coli 0157:H7, but the adoption of that target for meat

processing facilities’ inspection plans (see Pet. 6-7) does not

mean that the Secretary has concluded that failure to achieve it

should subject meat processors to criminal and civil liability for

the shipment of adulterated meat. To the contrary, the

Secretary has explicitly determined that imposing that liability

> Thus, respondents’ assertion (Opp. 18 n.9) that the decision below

would not affect other naturally-occurring pathogens simply is not

true of the decision that the court of appeals wrote; it applies only to

the very different analysis respondents use to defend the result below.

7

is not appropriate for intact meat.’ Respondents’ selective

quotations from USDA cannot obscure that basic fact.

Third, respondents’ argument rests on misunderstandings

about the inspection process. For example, they assert (Opp.

13) that Congress did not mean to preempt tort claims arising

out of “approved” but “contaminated” meat. But we do not

contend that USDA approval is the relevant standard; if meat

is “adulterated” within the meaning of the statute, the processor

is subject to liability — even if the meat was inspected and

approved by the federal inspectors located at the plant. In

addition, respondents’ claim (Opp. 19) that federal inspectors

and plant employees may not know the intended use of every

carcass at the time of its inspection is beside the point. The

FMIA requires federal inspectors to approve not only the

carcasses, but also each meat product through the entire

process, up until the time that it is sealed in a package and

labeled for shipment and sale (21 U.S.C. § 607).

Not surprisingly, respondents fail to mention this Court’s

recent decision in Alaska Department of Environmental

Conservation v. EPA. There, the Court adopted EPA’s con-

struction of the Clean Air Act even though not embodied in a

formal rule, stating that “[c]ogent ‘administrative interpre-

tations . . . not the products of formal rulemaking .. .

nevertheless warrant respect.’” 124 S. Ct. at 1001 (brackets and

citation omitted). Significantly, the Clean Air Act’s numerous

> USDA first announced the goal of reducing the presence of E. coli

in meat to “an undetectable level” in 2002, more than two years after

the plaintiffs in this case were injured. 67 Fed. Reg. 62,325, 62,329

(Oct. 7, 2002). Respondents’ attempt to equate that announcement

with USDA’s pre-existing “zero tolerance” standard for visible fecal

material (Opp. 14, 21) is belied by the Secretary’s recognition, in

setting the standard, that elimination of visible fecal material does not

guarantee meat to be bacteria-free. See Pet. 10-11 n.2.

8

assignments of specific rulemaking responsibilities to EPA did

not include the issue before the Court, yet the Court — unlike

the court below — did not find that the absence of specific

authority obligated it to ignore completely the agency’s

interpretation of the statute. See also id. (“well-reasoned views

of an expert administrator rest on a body of experience and

informed judgment to which courts and litigants may properly

resort for guidance”) (quotation marks and citations omitted).

Given the close similarities between the two cases, this

Court may wish to consider granting the petition, vacating the

judgment below, and remanding the case for reconsideration in

light of the intervening decision in Alaska Department of

Environmental Conservation.

3. The practical consequences of the decision below for

the meat industry are severe. The Wisconsin court blithely cast

aside an important federal standard in an area in which uniform

national regulation is critical. As the meat-industry amici

explain, the court of appeals’ declaration that the Secretary

lacks authority to interpret the FMIA’s key terms will erode the

national rules that Congress and USDA have developed over

the past century to bring predictability, stability, and uniformity

to the meat processing industry on the one hand (AMI Br. 11-

15), and to ensure stable supplies of wholesome, affordable

meat for consumers on the other (id. at 15-17).

Respondents’ principal arguments are that the effects on

uniformity will not be that great and that uniformity is not

really necessary in any event. Both are demonstrably false.

Because the definition of “adulterated” is the cornerstone of

the federal regulatory program for ensuring meat safety, the

court of appeals’ displacement of the Secretary’s authority to

interpret that term undermines her ability to identify and

prioritize potential health threats to consumers and to direct

scarce resources to meet the most pressing ones (especially

9

important when urgent threats such as Mad Cow Disease

impose competing demands on those resources). See Pet. 24;

AMI Br. 15. In commenting (Opp. 22) that the court below

lacks formal authority to order the Secretary to alter how she

implements the FMIA, respondents ignore the central issue that,

by authorizing additional and potentially conflicting standards,

backed by criminal and civil sanctions, the decision seriously

undercuts the Secretary’s ability to orchestrate a coherent

regulatory program that best serves the Act’s objectives.

And although respondents may not value uniformity in the

regulation of meat (Opp. 23), Congress plainly does (see 21

U.S.C. §§ 602, 678). In holding that the Secretary’s interpre-

tation of “adulterated” may not be accorded any judicial

respect, the decision of the court below stands as a blueprint for

other state courts, legislators, and regulators to impose on meat

processors their own idiosyncratic views — and not just with

respect to meat safety. As the Product Liability Advisory

Council explains in its amicus brief, the decision implicates the

authority of federal agencies to administer critically important

federal statutes dealing with, among other things, safety

standards for food, drugs, medical devices, cosmetics, motor

vehicles, and a broad array of other consumer products. See

PLAC Br. 7-12; see also AMI Br. 13.

If the Court has any doubts about either the dramatic

consequences to the meat processing industry or the substantial

threat to USDA oversight of meat safety, it may wish to invite

the Solicitor General to file an amicus brief expressing the

views of the United States — especially given USDA’s clear

reaffirmation of its policy following the events at issue in this

case. See Pet. App. 61a.

4. Respondents’ attempts to distinguish the decisions that

conflict with that of the court below simply confirm the

existence of a conflict that this Court should resolve.

10

They point out that Boulahanis v. Prevo’s Family Market,

Inc., 583 N.W.2d 509 (Mich. Ct. App. 1998), arose out of a sale

of ground beef prior to the time that USDA declared such meat

to be adulterated if it contains E. coli. But if the FMIA

preempted state tort liability when tiie Secretary had not

identified E. coli as an adulterant for any meat, then it follows

a fortiori that tort liability must also be foreclosed for the sale ~

of a category of meat — i.e., intact cuts — for which the

Secretary has maintained that position.

Meanwhile, respondents’ characterization of Grocery

Manufacturers of America, Inc. v. Gerace, 755 F.2d 993, aff'd

in relevant part, 474 U.S. 801, cert. denied in part, 474 U.S.

820 (1985), is manifestly false. Gerace involved challenges to

both an FDA regulation and a USDA interpretive rule; the

Second Circuit extended Chevron-type deference to the former

(see id. at 1001), but then independently analyzed and extended

Skidmore deference to the latter (see id. at 1002 (“while we

recognize that we are not bound by interpretive rules, we

discern no reason to reject the USDA’s longstanding

interpretation of the FMIA”) (citations omitted)).

And whiie National Pork Producers Council v. Bergland,

631 F.2d 1353 (8th Cir. 1980), and Public Citizen v. Foreman,

631 F.2d 969, 975 (D.C. Cir. 1980), involved formal rule-

making, that in no way undercuts their basic points that

Congress has granted the Secretary broad discretion to

implement standards under the FMIA (Bergland, 631 F.2d at

1362), and that deference to her reasoned judgments is

especially appropriate on issues “involving scientific and

medical controversies” (Foreman, 631 F.2d at 975) — such as

the very question at issue here.

For the foregoing reasons and those stated in the petition,

the petition for a writ of certiorari should be granted.

Respectfully submitted.

RALPH A. WEBER ANDREW J. PINCUS

AMELIA L. MCCARTHY Counsel of Record

SHAWN K. STEVENS RICHARD B. KATSKEE

Gass Weber Mullins LLC Mayer, Brown, Rowe &

309 North Water Street

Maw LLP

Milwaukee, WI 53202 1909 K Street, NW

(414) 223-3300 Washington, DC 20006

(202) 263-3000

FEBRUARY 2004