joint - university of chicagowebcast-law.uchicago.edu/briefs/2004-1591jointappendix.pdf ·...

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JOINTAPPENDIX

04-1591

WEST/CRS

IN THE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

THE PILLSBURY COMPANY,

Plaintiff-Appellant,

Ve

EILEDU.S. COURT "OFApp

THE FEOERAL CI_AcL_OR

JUN - 2 ZOO5

JM HORBALy

UNITED STATES,

Defendant-Appellee.

On Appeal from the United States Court of International Trade in Court No.

00-12-00570, Judge Evan J. Wallach

CORRECTED

NON-CONFIDENTIAL

JOINT APPENDIX

Saul Davis

U.S. DEPARTMENT OF JUSTICE

Civil Division-Commercial

Litigation Branch

Counsel for Defendant-AppelleeUnited States

26 Federal Plaza

New York, New York 10278

(212) 264 3584

John M. Peterson

Counsel of RecordCurtis W. Knauss

NEVILLE PETERSON LLP

Counsel for Plaintiff-Appellant

The Pillsbury Company17 State Street, Suite 1900


(212) 635-2730

TABLE OF CONTENTS

Slip Opinion .........

Docket ..............

Complaint ...........

Answer .............

Statutes .............

Hearing Transcript . ..

Answer to Amended Complaint

Hearing Transcript II ........

Hearing Exhibits ............

.. 13

.. 27

.. 39

..47

.. 51

105"

130

• 655*

* Pursuant to the Judicial Protective Order of January 15, 2003, certain portions of the appendix

have been labeled as Confidential. Pursuant to CAFC Rule 30(h)(1)(B), following is a description

of the general nature of the material that has been deleted from the non-confidential version. Pages

97-A through 104 contain information regarding the ingredient formulae of the subject merchandise

and the Confidential Amended Complaint. Pages 535 through 610 also contain ingredient formulae

of the subject merchandise as well as manufacturing processes. Pages 663 through 1250 contain

sensitive marketing materials in addition to manufacturing processes.

SLIP-OP 04-84

UNITED STATES COURT OF INTERNATIONAL TRADE

THE PILLSBURY CO.,

Plaintiff, :

V. "

UNITED STATES, :

Defendant. :

PUBLIC VERSION

Before: WALLACH, JudgeCourt No.: 00-12-00570

[Judgment for Defendant.]

Decided: July 12, 2004

Neville Peterson, LLP, (John M. Peterson, Curtis W. Knauss) for Plaintiffs.

Peter D. Keisler, Assistant Attorney General; Barbara S. Williams, Attorney in Charge,

International Trade Field Office, Department of Justice, Civil Division, Commercial LitigationBranch; Saul Davis, Department of Justice, Civil Division, Commercial Litigation Branch;

Michael Heydrich, Office of the Assistant Chief Counsel, International Trade Litigation, U.S.Customs and Border Protection, of counsel, for Defendant.

WALLACH, Judge:

FINDINGS OF FACT & CONCLUSIONS OF LAW

I

INTRODUCTION

This matter is before the court for decision following a bench trial on November 13,

2003, and November 14, 2003. Plaintiff, the Pillsbury Company, challenges the United States

CustomsService's_("Customs")decisiontoclassify certain entries of frozen dessert bars as dairy

products under Harmonized Tariff Schedule of the United States ("HTSUS") subheading

2105.00.40 (1999). Plaintiff seeks an order directing reliquidation of these entries, classification

of the subject merchandise under HTSUS Subheading 2105.00.50, or in the alternative under

HTSUS Subheading 0403.10.90.00, 2and a refund of all duties paid, plus interest. This Court has

exclusive jurisdiction pursuant to 28 U.S.C. § 1581(a) (1994), which provides for judicial review

of denied protests filed in compliance with the provisions of 19 U.S.C. § 1514 (1999). Pursuant

to the following findings of fact and conclusions of law, and in accordance with USCIT R. 52(a),

the court enters a final judgment in favor of the Defendant and against Plaintiff.

II

BACKGROUND

Plaintiff entered certain Haagen-Dazs brand frozen dessert bars from Canada, through the

Port of Detroit, Michigan, between March 30, 1999, and September 17, 1999. The subject

merchandise is comprised of two flavors of Haagen-Dazs brand frozen dessert bars. One has

t Effective March 1, 2003, the United States Customs Service was renamed the United

States Bureau of Customs and Border Protection. See Homeland Security Act of 2002, Pub. L.

107-296, § 1502, 116 Stat. 2135, 2308-09 (2002); Reorganization Plan for the Department of

Homeland Security, H.R. Doe. No. 108-32 (2003).

2 HTSUS Subheading 0403.10.90.00 (1999), provides:

0403. Buttermilk, curdled milk, yogurt, kephir and other fermented or acidified

milk and cream, whether or not concentrated or containing added sugar or

other sweetening matter or flavored or containing added fruit, nuts orcocoa:

0403.10. Yogurt:

0403.10.90.00 Other.

chocolatesorbetontheoutsideandvanillayogurton theinside,onewith raspberrysorbetonthe

outsideandvanillayogurtontheinside) BetweenFebruary11,2000,andJuly28,2000,

CustomsclassifiedtheimportedfrozendessertbarsunderHTSUSSubheading2105.00.40,4

3 For convenience the core of both bars is herein referred to as yogurt, or the yogurt

portion. Except where explicitly addressed, this term is used for ease of reference and is not to

be construed as a finding of fact or law as to the proper classification of that portion of the

subject merchandise.

4 HTSUS Subheading 2105.00.30, through 2105.00.50 provide for:

2105.00 Ice cream and other edible ice, whether or not containing cocoa:Ice cream:

Other:

2105.00.30

Dairy products described in additional U.S. note 1

to chapter 4:

Described in additional U.S. note 10 to

chapter 4 and entered pursuant to its

provisions

2105.00.40 Other.

2105.00.50 Other.

Additional U.S. Note 1 to Chapter 4 states that "for the purposes of this schedule, the

term ....... means any of the followinggoods: malted milk, and articles of milk or cream (except (a) white chocolate and (b) inedible

dried milk powders certified to be used for calibrating infrared milk analyzers); articles

containing over 5.5 percent by weight of butterfat which are suitable for use as ingredients in the

commercial production of edible articles (except articles within the scope of other import quotas

provided for in additional U.S. notes 2 and 3 to chapter 18); or, dried milk, whey or buttennilk

(of the type provided for in subheading 0402. I0, 0402.21, 0403.90 or 0404.10) which contains

not over 5.5 percent by weight of butterfat and which is mixed with other ingredients, including

but not limited to sugar, if such mixtures contain over 16 percent milk solids by weight, are

capable of being further processed or mixed with similar or other ingredients and are not

prepared for marketing to the ultimate consumer in the identical form and package in which

imported."

assessedduty thereon at the rate of 51.7¢ plus 17.5% ad valorem, and liquidated accordingly.

Plaintiff paid all liquidated duties, fees and charges prior to the commencement of this action.

Between May 10, 2000, and July 31, 2000, Plaintiff filed four timely protests with the Port

Director at Detroit, Michigan, challenging Customs' classification. It claimed that the frozen

dessert bars were properly classified under HTSUS Subheading 2105.00.50, and entitled to duty-

free entry under NAFTA. Customs denied Plaintiff's protests between July 7, 2000, and October

26, 2000. On December 18, 2000, Plaintiff commenced the instant action by filing a Summons

with the Clerk of the Court.

In its Complaint, Plaintiff claims that the subject merchandise is properly classified under

HTSUS subheading 2105.00.50, or, in the alternative, under HTSUS Subheading 0403.10.90.00,

and seeks a refund of all duties paid, plus interest. The basis of Plaintiff's claim is that the

dessert bars are neither primarily characterized by their frozen yogurt component, nor is that

component properly classified as a "product of milk" as defined in HTSUS.

Defendant claims that the dessert bars were properly classified and thus requests

judgment in its favor, affirming its classification and assessment of duties. Defendant contends

that the frozen dessert bars are properly classifiable as 'articles of milk,' a term which they

contend, under statutory interpretation and case law, is broader than 'milk.' Defendant states

that, based on industry standards for ice cream and frozen yogurt, as well as the primary

ingredients of the subject product, the frozen yogurt is the basis of the product, it's essential

nature, whereas the sorbet portion is correctly viewed as a flavoring or coating. Furthermore,

according to Defendant, the yogurt core is not, in fact yogurt, but, based on limited portion of

fermented ingredients, milk.

The parties' contentions center on classifying the subject desert bars under one of three

possible HTSUS subheadings, 2105.00.40 (requiring a finding that the yogurt portion

predominates and that said portion constitutes an article of milk or cream as defined in U.S. note

I to chapter 4 of the HTSUS), 0403.10.90.00 (requiring a finding that the yogurt portion

predominates and that said portion constitutes yogurt), or 2105.00.50 (requiring a finding that the

sorbet portion predominates). Ultimately, which of the three categories these items fall into

depends on whether essential character is the 'yogurt' portion. If the essential character is the

sorbet portion, HTSUS subheading 2105.00.50 is eliminated as a possibility. If the essential

character is the 'yogurt' portion, and this portion is properly characterized as an 'article of milk',

Customs initial finding is confirmed, lfthe 'yogurt' portion is characterized as 'yogurt', its

proper classification lies under 0403.10.90.00)

III

STANDARD OF REVIEW

Plaintiffpaid all liquidated duties and charges prior to the timely commencement of this

action. Although Customs's decisions are entitled to a presumption of correctness under 28

U.S.C. § 2639(a)(1) (1994), the Court makes its determinations upon the basis of the record

made before the Court, rather than that developed by _ • • ,

533 U.S. 218, 233 n.16, 121 S. Ct. 2164, 150 L. Ed. 2d 292 (2001). Accordingly, the Court

makes the following findings of fact and conclusions of law as a result of the de novo trial. Se.._ge

28 U.S.C. § 2640(a) (1994).

5 All parties agree that classification under HTSUS subheadings covering ice cream

would be inappropriate. Se._._ePretrial Order at 6.

IVFINDINGS OF FACT

A

Facts Uncontested By The Parties And Agreed To In The Pretrial Order

1. The merchandise which is the subject of this case (the "subject merchandise")

consists of frozen dessert bars. Two varieties of the subject merchandise are included in this

case: (A) one bar consists of an outer shell of raspberry flavored sorbet and an inner filling of

vanilla-flavored frozen yogurt, and (B) the second bar consists of an outer shell of chocolate-

flavored sorbet and an inner filling of vanilla-flavored frozen yogurt.

2. In their condition as imported, the dessert bars are frozen, and are packaged forretail sale. Each of the frozen dessert bars features a wooden stick which is used to hold the bars

while they are being eaten.

3. Between March 30, 1999, and September 17, 1999, Plaintiff entered at the Port of

Detroit, Michigan, under cover of consumption entries listed in the Summons, shipmentscontaining the subject merchandise; frozen dessert bars.

4. Between February 11, 2000, and July 28, 2000, the Post Director of Customs at

the Port of Detroit, Michigan liquidated the subject entries, classifying the imported frozen

dessert bars in liquidation under HTSUS Subheading 2105.00.40, as "Ice cream and other edible

ice, whether or not containing cocoa: Other: Dairy products described in additional U.S. note 1

to chapter 4: Other" and assessing duty thereon at the rate of 51.7¢ plus 17.5% ad valorem.

Plaintiffpaid all liquidated duties, fees and charges prior to the commencement of this action.

5. Between May 10, 2000, and July 31, 2000, Plaintiff caused to be filed with the Port

Director of Customs at Detroit, Michigan, timely protests, challenging the classification in

liquidation of the imported merchandise, and asserting that the fiozen dessert bars are properly

classified under HTSUS Subheading 2105.00.50, as "Ice cream and other edible ice, whether or

not containing cocoa: Other: Other" and entitled to duty-free enlry under NAFTA.

6. The Port Director of Customs denied Plaintiff's protests between July 7, 2000, and

October 26, 2000.

7. On December 18, 2000, Plaintifftimely commenced the instant action by filing aSummons with the Clerk of the Court.

8. Neither the imported frozen dessert bars, nor any component thereof, constitute or

consists of"ice cream," as that term is commonly or commercially known. The imported frozen

dessert bars are not classifiable under HTSUS subheadings 2105.00.05 through 2105.00.20.

9. The merchandise which is the subject of this action was also the subject of New

York Customs Ruling Letter No. D84417 (Dec. 3, 1998), in which the Bureau of Customs and

Border Protection (then the United States Customs Service) classified the subject merchandise

under HTSUS subheading 2105.00.40.

B

Facts Established At Trial

10. Plaintiff's current packaging, entered into evidence as Plaintiff's exhibit 2, differs

from the subject merchandise as imported. However, although the box has been updated, the

subject frozen dessert bars inside remain unchanged.

1 !. The current packaging states that the box contains "FAT FREE VANILLAFROZEN YOGURT COATED WITH RASPBERRY SORBET." The packaging also specifies

that "[w]e take rich, creamy Haagen-Dazs yogurt and dip it in incredibly smooth Haagen-Dazssorbet..."

12. Although the packaging specifies that the yogurt is dipped in sorbet, in

manufacturing the subject merchandise, the sorbet is, in fact, poured into a mold and chilled.

When it reaches a certain temperature a portion of the unfrozen center is "sucked back" andsaved for future use. The frozen yogurt portion is then injected into the void to create the frozen

yogurt center.

13. Haagen-Dazs' development and marketing documentation demonstrates that the

yogurt portion of the dessert bars was tested with a variety of flavorings. The documentation

indicates that the subject merchandise was consistently identified by the yogurt component. ("PI.Ex.") 11-14.

14. The yogurt portion of the subject merchandise weighs 32 grams. The raspberry

portion of that flavor of dessert bar weighs 36 grams. The chocolate portion of that flavor of

dessert bar weighs 35.9 grams? An entire dessert bar weighs approximately 71 grams.

15. The documentation entered as PI. Ex. 3, p.48, describing the ingredients used to

produce the subject merchandise, demonstrates that by weight and volume, milk is an essentialingredient.

16. By weight, milk products ( LK skim/conditioned skim milk blend and condensed

fresh US Grade A skim milk) comprise 21.43% of the total weight of subject merchandise. Byvolume, milk products comprise approximately the same percentage.

17. This percentage of milk products is approximately equal to the weight of the fruit

6 The chocolate flavor of dessert bar has been discontinued.

ingredientsin the raspberry flavored bar.

18. The weight of the milk ingredients in both types of bars are exceeded only by the

weight of the water and sweeteners

19. The court finds highly probative and credible the expert testimony of Professor

Robert L. Bradley, Jr. The court designated Professor Bradley as an expert in the production,

processing and formulas relating to frozen yogurt and yogurt.

20. Professor Bradley is currently a Professor Emeritus at the University of Wisconsin,

where he earned his Ph.D. in 1964. From 1964 until the present, he has taught food science at

the University of Wisconsin and has published extensively. Professor Bradley holds

memberships in several professional societies and has received numerous awards. He has taught

courses in the manufacture of both yogurt and frozen yogurt.

21. Professor Bradley testified at trial that in his expert opinion the yogurt portion is

what gives the bars their essential character. His opinion is based on the industry and Code of

Federal Regulations standard of comparing solids content, a comparison of which portion is more

nutritious, and his review of Plaintiff's development, production, processing and manketingdocuments.

22. Plaintiffoffered certain product testing documents, entitled "Live and active

culture test for Haagen-Dazs fat free frozen yogurt" and admitted as PI. Ex. 8, which the court

admitted not to establish the validity of the tests or remits, but only to establish that from time to

time, the Pillsbury Company tests frozen yogurt.

23. Professor Bradley reviewed these testing documents and Plaintiff's formula

documents concerning the composition of the subject merchandise.

24. Professor Bradley testified credibly that yogurt, according to the National Yogurt

Association and under the Code of Federal Regulations, 7 is a product in which all milk solidshave been fermented.

25. The yogurt portion of the subject merchandise is not one in which all milk solidshave been fermented.

26. National Import Specialist Thomas Brady, with the National Commodity Specialist

Division of Customs, testified regarding the practices of Customs regarding classification of

7 Se.____e21 C.F.R. §§ 131.200, 131.203, 131.206 (1999) covering yogurt generally. Each

states that yogurt is a "food produced by culturing one or more of the optional dairy ingredients

specified in paragraph (c) of this section with a characterizing bacterial culture that contains the

lactic acid-producing bacteria, Lactobacillus bulgaricus and Streptococcus thermophilus."

merchandiseundertheprovisionsof Heading 2105. This testimony was credible and probative.

27. The decision to classify the subject merchandise under 2105.00.40 was based on

the agency's determination that the frozen desert bars constituted an "article of milk or cream"

under HTSUS additional U.S. note l to chapter 4.

28. Brian Sweet, Product Quality Manager for Haagen-Dazs testified. Mr. Sweet

identified the subject merchandise, and discussed how it is manufactured. He testified as to the

formulation of the components. He also described the marketing plans and product development

within Pillsbury during the time of the subject entries. His testimony was credible and probative.

29. The product does not contain full cream milk, or skimmed milk.

30. The yogurt portion of the subject merchandise is made from 88% by weight of a

"vanilla flavored ice milk base" and 12% by weight of a "yogurt base."

31. The "vanilla flavored ice milk base" portion of the yogurt core is made from [a

percentage] by weight of a reduced lactose skim milk blend, together with [a percentage of]

liquid amber sugar, [a percentage of] corn syrup solids, [a percentage] of a blend of corn syrup

and liquid sugar, [a percentage] of charcoal-filtered water, and [a percentage of] specialty corn

syrup solids.

32. The "yogurt base" portion of the yogurt core is made from [a percentage] by

weight of condensed fresh U.S. Grade A skim milk, [a percentage of] charcoal-filtered water,

and [a percentage of certain types of] yogurt cultures.

33. Of the yogurt portion, only a very small percentage actually contained yogurt

cultures. This percentage is diluted with the "vanilla flavored ice-milk base" to provide theflavor of yogurt.

34. Once the "yogurt base" and "vanilla flavored ice-milk base" are mixed, there is no

further fermentation due to the concentration of sugars.

35. The vanilla flavored ice-milk base which made up a majority of the 'yogurt'portion was never fermented

36. Plaintiffoffered into evidence the requirements of the National Yogurt Associationfor live and active culture yogurt. PI. Ex. 7.

37. Based on these standards, as well as the testimony of Prof. Bradley and Mr. Sweet,

in order to meet the criteria of the National Yogurt Association criteria for live and active culture

yogurt, sampling and analytical procedures National Yogurt Association, a product must, inter

alia, contain a certain level of active cultures, l0 7 CFU per gram, at the end of the stated shelf

life, and have a certain titratable acidity, at least 0.15%, obtained from fermentation.

38. Plaintiff failed to establish through credible evidence that the yogurt portion of the

subject merchandise contained the requisite level of active cultures at the end of the stated shelflife.

39. Plaintiff failed to establish through credible evidence that the yogurt portion of the

subject merchandise had the requisite titratable acidity as a result of fermentation.

40. If any of these Findings of Fact shall more properly be Conclusions of Law, theyshall be deemed to be so.

V

CONCLUSIONS OF LAW

1. Plaintiffdid not meet its burden of proving that the imported desert bars are not

within the scope of the tariffprovision for "article[s] of milk or cream" of a kind described inadditional U.S. Note 1 to HTSUS Chapter 4.

2. Based on the foregoing Findings of Fact, the court finds the essential character of the

subject merchandise to be the yogurt portion of the dessert bar. 8 The subject bars are composite

goods, consisting of two or more materials or components classi fled in different headings of the

tariff, frozen yogurt portion under 2105.00.40, and sorbet portion classifiable under 2105.00.50.

The essential character of an entry is "that attribute which strongly marks or serves to distinguish

what it is. Its essential character is that which is indispensable to the structure, core or condition

of the article, i.e., what it is. Webster's Third New International Dictionary, 1966 edition." Oak

Laminates D/O Oak Materials Group v. United States, 8 CIT 175, 180 (1984) (citing United

•, Cust. Ct. 386, C.D. 3637, 293 F. Supp. 734 (1968)). The

marketing of the merchandise, the weight and volume of the ingredients, and the product itself, in

addition to other facts revealed at trial support this conclusion. The court in Mead Corp..v.

8 General Rule of Interpretation 3(b) states that:

Mixtures, composite goods consisting of different materials or made up of

different components, and goods put up in sets for retail sale, which cannot be

classified by reference to 3(a), shall be classified as if they consisted of the

material or component which gives them their essential character, insofar as this

criterion is applicable.

Explanatory note to General Rule of Interpretation 3(b) states that "[t]he factor which

determines essential character will vary by the nature of the material or component, its bulk,

quantity, weight or value, or by the role of a constituent material in relation to the use of the

goods."

10

United States, 283 F.3d 1342, 1349 (Fed. Cir., 2002), explained that "[w]hile the importer's

marketing of the goods will not dictate the classification, such evidence is relevant to thedetermination." Thus, in accordance with General Rule of Interpretation No. 3 (b), this court

finds that the yogurt portion gives the merchandise its essential character.

3. HTSUS subheading 2105.00.40 covers "Ice cream and other edible ice, whether or

not containing cocoa: Other: Dairy products described in additional U.S. note 1 to chapter 4:

Other." The court finds that the yogurt portion of dessert bars constitutes a dairy product

described in additional U.S. note I to Chapter 4 of the HTSUS, given that this portion is not

entirely fermented and based upon the nature of the ingredients used.

4. Note 1 to Chapter 4 of the HTSUS states that "It]he expression 'milk' means full

cream milk or partially or completely skimmed milk."

5. Additional U.S. note 1 to Chapter 4 of the HTSUS states that "[f]or the purposes of

this schedule, the term 'dairy products described in additional U.S. note 1 to chapter 4' means

and of the following goods: malted milk, and articles of milk or cream..." Thus, the range of

items covered by "dairy products described in additional U.S. note I to chapter 4", are broaderthan full cream milk or partially or completely skimmed milk.

6. As the court explained in United States v. Andrew Fisher Cycle Inc., 57 CCPA 102,

426 F.2d 1308 (197 1 F.3d 224 (1994), the name

under which merchandise is marketed is not dispositive for classification purposes. Thus, the

fact that Plaintiff routinely refers to the core as "yogurt" and markets the dessert bars that way is

not sufficient to establish then, legal classification as yogurt.

7. As the fermented part comprises only about 12% of the yogurt portion, this court

finds that it would be improper to classify the entire yogurt portion, and thus the entire entry, as

yogurt.

8. Merchandise must be examined to determine whether, as imported, it contains thenamed ingredients.. 17 CIT 650 (1993). Here the merchandise was

not comprised chiefly of yogurt as imported. The dessert bars did contain articles of milk or

cream as defined in HTSUS additional U.S. note 1 to Chapter 4.

9. By operation of the finding that the subject merchandise contains articles of milk or

cream, the dessert bars cannot be classified under HTSUS heading 0403 covering YOGURT.

The Explanatory Notes discuss the scope of Chapter 4, which includes the "yogurt" of HTSUS

heading 0403, it states:

The Chapter also excludes, inter alia, the following:

(c) Ice cream and other edible ice (heading 21.05).

11

HarmonizedCommoditydutyDescriptionandCodingsystem,ExplanatoryNotes(lst ed.1986)at30.

10. Asaconfection,dessert,ornovelty,thesubjectmerchandiseisproperlycovered

by HTSUS heading 2105.

11. Because the evidence shows that the subject merchandise is an article of milk as

defined in U.S. note 1 to chapter 4 of the HTSUS, the court finds that the merchandise is properly

classified under HTSUS subheading 2105.00.40.

12. Accordingly, Plaintiffhas failed to overcome the presumption of correctness,

pursuant to 28 U.S.C. § 2639(a) (1994), that attaches to Customs' classification decisions.

13. If any of these Conclusions of Law shall more properly be Findings of Fact, theyshall be deemed to be so.

Dated: July 12, 2004New York, New York

/s/Evan. J. Wallach

Judge

12

U.S. Court oflntemational Trade (LIVE Database) - Dock... https://ecf.cit.uscourts.gov/cgi-bin/DktRpt.pl?347047554...

U.S. Court of International Trade

LIVE Database (New York)CIT DOCKET FOR CASE #: l:00-cv-00570-EJW

The Pillsbury Company v. United States

Assigned to: Evan J. Wallach

Lead Docket: None

Jurisdiction:

28USC § 1581(a) Denied Protest(s)

Category:

Classification 19USC § 1514(a)(2)

Rate of Duty 19USC § 1514(a)(2)

Agency:U.S. Customs Service

Product Description:

Frozen Sorbet/Yogurt Bars

Export Country:

Date Filed: 12/18/00

Jury Demand: N

Date Terminated: 07/12/2004

Date Reopened:

Plaintiff

The Pillsbury Company represented by John M. Peterson

Neville Peterson, LLP

17 State Street

19th Floor

New York, NY 10004

(212) 635-2730

Fax : (212) 635-2734

Email: [email protected]

LEAD ATTORNEY

ATTORNEY TO BE NOTICED

Defendant

13

U.S. Court of International Trade (LIVE Database) - Dock... https://ecf.cit.uscourts.gov/cgi-bin/DktRpt.pl?347047554.

United States represented by Saul Davis

U.S. Department of JusticeInternational Trade Field Office

26 Federal Plaza

New York, NY 10278

(212) 264-3584

Fax : (212) 264-1916

Email: [email protected] ATTORNEY

ATTORNEY TO BE NOTICED

Filing Date

12/18/2000

12/18/2000

12/18/2000

07/05/2001

03/13/2002

#

1

2

3

14

Docket Text

Summons filed by John M Peterson of Neville,Peterson & Williams on behalf of The Pillsbury

Company. Filing fee collected, receipt #w/finance.

(Ricci, Rebecca) (Entered: 12/26/2000)

Form 5 Information Statement filed by John MPeterson of Neville, Peterson & Williams on behalf

of The Pillsbury Company. (Ricci, Rebecca)

(Entered: 12/26/2000)

Form 13 Corporate Disclosure Statement filed byJohn M Peterson of Neville, Peterson & Williams

on behalf of The Pillsbury Company. (Ricci,

Rebecca) (Entered: 12/26/2000)

Complaint against United States. Answer due by4/25/2002. Filed by John M Peterson of Neville,

Peterson & Williams on behalf of The Pillsbury

Company.(Ricci, Rebecca) (Entered: 03/13/2002)

All docket entries prior to the date of this entry are

contained in the attached docket sheet (5-13).


14

U.S. Court of Intemational Trade (LIVE Database) - Dock... g I https//ecf.cit.uscourts.gov/cgi-bin/DktRpt.pl?314604935

11/08/2002 22 Consent Motion for extension of time until

3/28/2002 to complete discovery and until 12/27/02

to respond to Deft's interrogatories and request for

production of documents. Filed by John M Peterson

I of Neville, Peterson LLP on behalf of The (Entered:

I11/26/2002 [ Order signed on granting Motion for23 1 1/26/2002

i extension of time to complete discovery(Relatedj Doc # 22). Responses due by 12/27/2002. (Ricci,

Rebecca) (Entered: 11/27/2002)...................................................................................

12/27/2002 24 Motion for extension of time until 1/24/2003 to

respond to Deft's interrogatories and request forproduction of documents. Responses due by

1/15/2003. Filed by John M. Peterson of Neville

Peterson LLP. on behalf of The Pillsbury Compan

(Entered: 12/30/2002).................. i ........... [ ....................................

12/31/2002 25 Response in consent to motion for EOT (related to

, motions(s)2_4.). Filed by Saul Davis of U.S., Department of Justice on behalf of United

. States.(Ricci, Rebecca)(Entered: 01/02/2003)......................................................................................

01/07/2003 2_6 Order signed on 1/7/2003 granting Motion forextension of time (Related Doc # 24). Response to

Deft's interrogatories and request for production due

by 1/24/2003. (Ricci, Rebecca) (Entered:

01/07/2003).......................................................................................................................

01/09/2003

01 / 15/2003

2.7

28

Consent Motion for protective order. Filed by JohnM. Peterson of Neville Peterson LLP. on behalf of

The Pillsbury Company.(Ricci, Rebecca) (Entered:

01 / 13/2003).................................................................................

Order signed on 1/15/2003 granting Motion for

protective order (Related Doc # 27). (Ricci,

Rebecca) (Entered: 01 / 15/2003)

15

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o4,ii;ioo2.......I.....I

05/29/2002

07/10/2002

t ...................

07/] 5/2002

08/05/2002

09/05/2002

09/10/2002

]5 Answer to complaint (Related Doc # 4). Filed bySaul Davis of U.S. Department of Justice on behalf

of United States.(Taronji, Steve) (Entered:'04/26/2002)

Order signed on 5/29/2002 assigning action to

Judge Evan J. Wallach.(Taylor, Marlene) (Entered:05/29/2002)

....

17 Consent Motion for leave to file joint statement of

jurisdiction out of time and request for change oftime for scheduling conference. Responses due by

7/22/2002. Filed by John M Peterson of Neville,

Peterson LLP on behalf of The Pillsbury Com(Entered: 11/13/2002)

.............................................................. I

18 Order signed on 7/15/2002. Pltf's consent motion for

leave to file joint statement out of time is Granted.Pltf's request for change of time for scheduling

conference is granted in part and denied in part

subject to rescheduling by the co (Entered:

11/13/2002)

19

20

Order signed on 8/5/2002 Discovery due by

12/16/2002.(Warner, Scott) (Entered: 08/05/2002)

Consent Motion for Extension of Time Until

1 l/l 1/2002 to Respond to Deft's Interrogatories and

Request for Production of Documents. Filed by John ,

M. Peterson of Neville, Peterson LLP. on behalf of

The Pillsbury Company. (Warner, Scott) (Entered: i

09/09/2002) ,i................................................

Order signed on 9/10/2002 granting Motion for

extension of time. ORDERED: Pltf shall respond to

Defl's interrogatories and request for production of

documents by 11/I 1/02. (Related Doc # 20).

(Warner, Scott) (Entered: 09/I 0/2002)

21

16

U.S.Courtof International Trade (LIVE Database) - Dock... _ l https://ecf.cit.uscourts.gov/cgi-binJDktRpt.pl?314604935...

Davis of U.S. Department of Justice on behalf ofUnited States.(Ricci, Rebecca) (Entered:

04/10/2003).......................................................................................................................................

04/15/2003 36 Order signed on 4/15/2003 granting Motion for

extension of time to complete discovery until

7/30/03(Related Doc # 3_5_).(Ricci, Rebecca)

(Entered: 04/15/2003)

........................................ _...........................................................................

07/07/2003 37 Consent Motion for extension of time until

9/30/2003 to complete discovery. Filed by John M.Peterson of Neville Peterson LLP. on behalf of The

, Pillsbury Company.(Ricci, Rebecca) (Entered:

07/09/2003)[ .............................................................................................................

07/10/2003 38 I Status conference to be held on 7/16/03 at 1 l:00 am

in Courtroom l.. (Ricci, Rebecca) (Entered:

07/10/2003)..........................................................................................................................

07/16/2003 39 Status Conference held on 7/16/03 at 11:00 am in

Courtroom 1.. (Ricci, Rebecca) (Entered:07/16/2003)

..................................................................

07/24/2003 , 4_0 Order signed on 7/24/2003 granting Motion for] extension of time to complete discovery(Related1I Doc # 3.7). Discovery due by 9/30/2003. (Ricci,

....................... _Re_b_ecca!.!Ent.ered1.07_/.24!2003.! ..........................

10/06/2003 ! 41 Order signed on 10/6/2003 Trial scheduled for4 11/13/03 at the Court of International Trade,r Courtroom 1 at 9:00 am..(Ricci, Rebecca) (Entered:

10/06/2003)

11/03/2003 _12 Consent Motion for extension of time until

11/5/2003 tofile pretrial order. Filed by John M.Peterson of Neville Peterson LLP. on behalf of The

Pillsbury Company.(Ricci, Rebecca) (Entered:

11/04/2003)

17

U.S. Court of International Trade (LIVE Database) - Dock... 91 https://ecf.cit.uscourts.gov/cgi-bin/DktRpt.pl?314604935..

02/19/2003

02/28/2003

03/06/2003

03/06/2003

03/31/2003

04/03/2003

04/09/2003

2_9. Consent Motion for extension of time until

4/18/2003 to respond to interrogatories and request

for production of documents, Consent Motion to

amenddiscovery schedule to end on 5/31/03. Filed

by Curtis Walter Knauss of Neville Peterson L

(Entered: 02/20/2003)

3_0

3_!

32

34

35

Consent Motion to alter/amend/correct complaint.

With proposed amended complaint (public &

comfidential). Filed by Curtis Walter Knauss of

Neville Peterson LLP. on behalf of The Pillsbury


Order signed on 3/6/2003 granting Motion to file

first amended complaint (Related Doc #3_0). (Ricci,

Rebecca) (Entered: 03/06/2003)

First Amended complaint deemed filed (public and

confidential) against United States. Filed by Curtis

Walter Knauss of Neville Peterson LLP. on behalf

of The Pillsbury Company.(Ricci, Rebecca)

(Entered: 03/06/2003)

Consent Motion for leave to file answer to amended

complaint out of time and for extention of time until

entry of this order, with proposed answer. Filed by

Saul Davis of U.S. Department of Justice on behalf

of United States.(Ricci, Rebecca) (Entered:

04/01/2003)

Order signed on 4/3/2003 granting Motion for leave

to file answer out of time, and for extension of time;

Deft's answer to amended complaint deemed filed

(Related Doe # 33). (Ricci, Rebecca) (Entered:

04/03/2003)

Consent Motion for extension of time until

7/30/2003 to complete discovery. Filed by Saul

18

U.S. Court of International Trade (LIVE Database) - Dock... L I https://ecf.cit.uscourts.gov/cgi-bin/DktRpt.pl?314604935...

03/08/2004)

........................................................................................................................................

03/10/2004 5__22 Order signed on 3/10/2004 granting Motion for

extension of time to file post trial brief until

3/19/04(Related Doe # 51). (Ricci, Rebecca)

(Entered: 03/10/2004)

.....................................................................................................................................................

03/19/2004 53 Consent Motion for excess pages, Consent Motion

for leave to file out of time a motion for EOT to file

Deft's post-trial brief Filed by Saul Davis of U.S.

Department of Justice on behalf of United

States.(Ricci, Rebecca) (Entered: 03/19/2004).............................................................................................................................

03/22/2004 54 Order signed on 3/22/2004 granting Motion for

excess pages, brief may not exceed forty pages

(Related Doc # 5__3_),granting Motion for leave to file

out of time an EOT until 3/24/04 for Deft to file

post-trial brief(Related Doc # 53). (Ricci, Rebec

(Entered: 03/22/2004)..............................................................................

03/24/2004 55 Confidential Post-trial Brief. Filed by Saul Davis of

U.S. Department of Justice on behalf of United

States. (Ricci, Rebecca) (Entered: 03/25/2004)..............................................................................................................

07/12/2004 5_6 Order signed on 7/12/2004, Slip Op. 04-84;

Confidential Version Issued. ORDERED: Judgment

is hereby entered in favor of Defendant..(Taronji,

Steve) (Entered: 07/12/2004)

.........................................................................................................................

08/19/2004 57 Letter regarding confidential information in Court's

opinion. Filed by Saul Davis of U.S. Department of

Justice on behalf of United States. (Ricci, Rebecca)

(Entered: 08/20/2004).........................................................................................................................................

08/19/2004 58 Consent Motion for leave to file out of time a letter

' regarding confidential matter. Responses due by

9/7/2004. Filed by John M. Peterson of Neville

Peterson, LLP on behalf of The Pillsbury

19

U.S. Court of International Trade (LIVE Database) - Dock... 81 https://ecf.cit.uscourts.gov/cgi-bin/DktRpt.pl?314604935..

11/04/2003

11/05/2003

I I/06/2003

11/14/2003

12/01/2003

01/20/2004

02/20/2004

02/24/2004

_4_3

_44

45

46

47

Order signed on 11/4/2003 granting Motion forextension of time until 11/5/03 for parties to file

pretrial order(Related Doc # 42). (Ricci, Rebecca)

(Entered: 11/04/2003)

Proposed pretrial order. Filed by Saul Davis of U.S.Department- of Justice on behalf of all parties.


Pretrial Order signed on 11/6/2003..(Ricci,

Rebecca) (Entered: I1/06/2003)

Trial held on 11/13/03 and 11/14/03 at 9:00 am in

Courtroom 1.. (Ricci, Rebecca) (Entered:11/14/2003)

Transcript (confidential) of Trial held on11/13/2003 filed with court. (Ricci, Rebecca)

(Entered: 12/02/2003)

48

4_

5_0

Brief (post-trial). Filed by John M. Peterson of

Neville Peterson LLP. on behalf of The Pillsbury

Company. (Ricci, Rebecca) (Entered: 01/22/2004)

Consent Motion for extension of time until 3/9/2004

to file brief(Post-trial). Filed by Saul Davis of U.S.

Department o f Justice on behalf of UnitedStates.(Ricci, Rebecca) (Entered: 02/23/2004)

L ..........................................

i Order signed on 2/24/2004 granting Motion forII extension of time until 3/9/04 to file Post-brief

i (Related Doc # 49). (Ricci, Rebecca) (Entered:

02/24/2004)

03/05/2004 51!IConsent Motion for extension of time until

3/19/2004 to file brief(post-trail). Filed by Saul ,i

Davis of U.S. Department of Justice on behalf of ]

United States.(Ricci, Rebecca) (Entered: i

20

6L,4tJ I

21

U.S.Court of International Trade (LIVE Database) - Dock...0E https://ecf.cit.uscourts.gov/cgi-bin/DktRpt.pl?314604935..

08/30/2004

08/30/2004

09/10/2004

i

I

I

iI ..........

09/23/2004

50_

60

.6_1

I

!

i

62


Order entered on 8/30/2004 granting Pltf's consent

motion, out of time, to file identified confidential

matter. Ordered: Pltfis granted until 8/19/2004 to

file comments regarding the bracketing of

proprietary information in The Pillsbury Co. v

(Entered: 08/30/2004)

Order entered on 8/30/2004, Public Slip Op.04-84

issued. (related document(s)56) .(Taronji, Steve)(Entered: 08/31/2004)

Notice of appeal of Slip Op. 04-84 filed. Filing fee

paid in amount of 255.00. Receipt no. w/finance(related document(s)56,5_6). Filed by John M.

Peterson of Neville Peterson, LLP on behalf of The

Pillsbury Company.(Ricci, Rebecca) (Entered:09/13/2004)

Appeal of Slip Op. 04-84 docketed on 9/17/2004 by

the USCAFC as appeal no. 04-1591 (relateddocument(s)6J ). (Ricci, Rebecca) (Entered:

09/23/2004)

22

Attorneys

Plaintiff(s)

John Peterson

Neville Peterson & Williams

80 Broad Street

34th Floor

New York, NY 10004

(212) 635-2730

Defendant(s)

23


120, 180

oo-zlS_OOKSe_ONumber 28 USC, 1,581(a)uunsofcuon Judge

Short Title

Pillsbury V. US

Administrative Investigation Information

Frozen Sorbet/Yogurt bars

Governmenl Agency: Treasury (xx)

Fee Paid 120 Receipt No.

I.T.C.( ) D.O.C.( ) D.O.L.( ) Other( )

Date Dec 20/00 Jury Demand( )

Tiile

The Pillsbury Company

PLAINTIFF(S)V.

United States

DEFENDANT(S)

24 DS-1A ( 4-1 2/Y

I I I I ....

25

00-I 2-00570 Pillsbury

Docket Number Plaintiff

Date Proceedings Int.(Filing/Entry)

(,) ','uw,",' ....Dec 18/00 Summons filed.

(2 } TOWIT

Dec 18/00 Form 5 filed.

(3) TOWITD_c 18/00(4) to wit

July 5/01(5)Sept 7/0h

6)

Se_)19/01

Oct 3/01

(8)Oct 4/01

Nov 19/01

Form 13 filed bv PILLSBURY.

Complaint filed.

Deft filed consent motion for EOT until ]O/lh/hl _n

respond to Pltf's complaint.

Deft's consent motion for EOT(#5) GRANTED.

Deft filed consent motion for EOT to respond to complain'iuntll Nov 2b/ol. ,

Deft's consent motion _7 GRANTED.

Deft filed consent motion fo@ EOT until January 25,2002

to respond to pltf's complaint.

rrl2/

rrl2/

rr]_l

_ 7

ss 9/

o_

rrlq

!rrlO

stllj

(i0)

Nov 20/01 Deft consent motion for EOT until January 25,2002 to

respond to pltf's complaint (#9) GRANTED. stll/

(II)

3an. 23/02

(Az)

Deft filed coDsent _tiop for EOT until April 25, 2002

to respond to pltf's complaint. gg 1

Jan. 25/02 Deft consent motion for EOT until April 25, 2002 to

respond to pltf's complaint (#II) GRANTED. gg 1

(13) TO WIT2/26/02 Plaintiff fl]_a amm_na=d/cnrrected pm_m !3, laa 3/

26

DS-2 (7,/92 2M)

(

0


THE PILLSBURY COMPANY, )

)Plaintiff, )

)V. )

)UNITED STATES, )

)))

Defendant.

Court No. 00-12-00570

Plaintiff, by its undersigned attorneys, for its Complaint does hereby state artd allege as

follows:

CAUSE OF ACTION

1. This action is brought to contest the denial, by the United States Customs Service, of

plaintiff's protest challenging the tariff classification, under the Harmonized Tariff Schedule of the

United States 0-1TSUS), of certain import entries of frozen sorbet/yogurt dessert bars fi'om Canada.

/I_J_2UI.CT3.O_

2. This Court has jurisdiction of this action pursuant to 28 U.S.C. § 1581(a).

3. All liquidated duties, fees and charges were paid prior to the commencement of this

action.

27

1If

!

]. --

• ql

|,

STATEMENT OF FACTS

4. Between March 30, 1999 and September 17, 1999, Piaintiffentered at the Port of Detroit,

Michigan, under cover of consumption entries listed in the Summons in this action shipments

containing Haagen-Dazs brand "frozen sorbet/yogurt dessert bars". The frozen sorbet-yogurt bars

are the product of Canada.

5. Between February 11, 2000 and July 28, 2000, the Port Director of Customs at the Port

of Detroit, Michigan liquidated the subject entries, classifying the imported frozen sorbet/yogurt

dessert bars in liquidation under HTSUS Subheading 2105.00.40, as "lee erearn and other edible ice,

whether or not containing cocoa: Other [than ice cream]: Dairy products described in Additional

U.S. Note 1 to Chapter 4; Other [than goods described in General Note 15 of the Tariff Schedule or

Additional U.S. Note 4 to I-ITS Chapter 21]{' and assessing duty thereon at the rate of 50.2¢ per

kilogram plus 17% ad valorem.

6. Between May 10, 2000 and July 30, 2000, Plaintiff caused to be filed with the Port

Director of Customs at DeO'oit, Michigan, timely protests, challenging the classification in

liquidation of the imported merchandise, and asserting that the merchandise was properly classified

under HTSUS Subheading 2105.00.50, as 'qce cream and other ed_le ice, whether or not containing

28

I

f.. ....

) •

cocoa; Other [than ice cream]: Other: Other [than Dairy products described in Additional U.S. Note

1 to Chapter 21 ]" and entitled to duty-free entry, as Products of Canada which are "originating", for

purposes of the North American Free Trade Agreement (NAFTA).

7. The Port Director of Customs denied Plaintiff's protests between July 7, 2000 and

October 26, 2000.

8. On December 18, 2000, Plaintiff timely commenced the instant action by filing a

Summons with the Clerk of the Court.

COUNT I (RAS,PBERRY SORBET/VANILLA YOGUBT BAR)

9. Paragraphs l through 8 are incorporated by reference as though fully set forth herein.

10. The merchandise which is the subject of the instant case is a frozen dessert confection

consisting offi'ozen yogurt and sorbet, and labeled as either "Raspberry Sorbet/Vanilla Yogurt Bar"

or "Chocolate Sorbet/Vaniila Yogurt Bar". Both products are imported and sold bearing the Hiiagen-

Dazs trademark, which is registered to, and owned by, plaintiff.

1 I. In its condition as imported, the Raspberry Sorbet/Vanilla Yogurt bar is a ready-to-eat

frozen confection, containing an outer layer of frozen raspberry sorbet which coats an inner core of

vanilla-flavored frozen yogurt. The product features a wooden stick, inserted at the bottom, to allow

29

forreadyhandlingby consumers.

12. The RaspberrySorbet/Vanilla Yogurt Bar is composed of the following ingredients,

listed in descending order of their relative volume and weight as they appear in the product: charcoal

filtered water, seedless raspberry puree, of a blend of skim milk and conditioned skim milk, corn

syrup/liquid sugar blend, liquid amber sugar, corn syrup solids, and minor quantities of speciality

corn syrup solids, frozen raspberry juice concentrate, pectin, vanilla extract, concentrated lemon

juice and yogurt cultures. The total milk solids present in the product in its condition as imported

account for less than 6% of the product's weight.

13. The milk and skim milk products used in the manufacture of the Raspberry

SorbetNanillaYogurtBar accountforaminor percentageofthecostofproducingthesearticles.

14. The RaspbcrrySorbeffVanilla Yogurt Bar is not malted milk, does not contain 5.5% by

weight of butter or butterfat, is not capable of being further processed or mixed with similar or other

ingredients, is in fact prepared for marketing to the ultimate consmcr in the form in which

imported, is not an "article of milk or cream," and is packaged ready for sale to retail consumers.

15. The Raspberry Sorbet/Vanilla Yogurt Bar is an "originating" product of Canada for

purposes of the North American Free Trade Agreement 0NAFrA).

16. Accordingly, as imported, Raspberry Sorbet/Vanilla Yogurt Bar is not a "Dairy product

30

described in Additional U.S. Note 1 to HTS Chapter 4, but is instead properly classifiable under

HTSUS Subheading2105.00.50,and isentitledtoentertheUnitedStatesfreeofdutyas aNAFTA

"originating"productofCanada.

COUNT H {CHOCOLATE SORBET/VANILLA YOGURT BAR)

17. Paragraphs 1 through 8 are incorporated by reference as though fully set forth herein.

18.The merchandisewhich isthesubjectoftheinstantcaseisafrozendessertconfection

consistingoffrozenyogurtand sorbet,and labeledaseither"RaspberrySorbet/VanillaYogurtBar"

or"ChocolateSorbet/VanillaYogurtBar".Bothproductsareimportedand soldbearingtheH_gcn-

Dazs a'ademark,which isregisteredto,and owned by,plaintiff.

]9. In its condition as imported, the Chocolate Sorbet/Vanflla Yogurt bar is a ready-to-eat

frozen confection, containing an outer layer of frozen chocolate-flavored sorbct which coats an inner

core of vanilla-flavored frozen yogurt. The product features a wooden stick, inserted at the bottom,

to allow for ready handling by consumers.

20. The Chocolate Sorbet/Vanilla Yogurt Bar is composed of the following ingredients,

shown in descending order of their relative volume and weight as they appear in the product: water,

31

cornsyrup, skim milk, liquid sugar, egg whites, conditioned skim milk, specialty corn syrup,

defattcd cocoa, and small quantities of specialty corn syrup solids, cocoa syrups, pectin, vanilla

extracts, salt and yogurt cultures.

21. The skim milk and conditioned skim milk products contained in the Chocolate

Sorbet/Vanilla Yogurt Bar, taken together, account for a minor percentage of the cost of the sorbet

bars, and milk solids account for less than 6% of the bars, on a full weight basis.

22. The Chocolate Sorbet/Vanilla Yogurt Bar is not malted milk, does not contain 5.5% by

weight of butter or butterfat, is not capable of being further processed or mixed with similar or other

ingredients, is in fact prepared for marketing to the ultimate consumer in the form in which

imported, is not an "article of milk or cream," is packaged ready for sale to retail consumers.

23. The Chocolate Sorbet/Vanilla Yogurt Bar is an "originating" product of Canada, for

purposes oft.he North American Free Trade Agreement (NAFTA).

24.Accordingly,asimported,ChocolateSorbet/VaniUaYogurtBar isproperlyclassifiable

under HTSUS subheading2105.00.50,and isentitledto entertheUnited Statesfi'eeof dutyas

NAFTA-originatingarticleofCanada.

32

COUNT HI fALTER.NATIVE CLAIM AS TO BOTH PRODUCTS)

25. Paragraphs 1 through 24 are incorporated by reference as though fully set forth herein.

26. In their condition as imported, the Raspberry Sorbet/Vanilla Yogurt bars and the

Chocolate Sorbet/VaniUa Yogurt Bars are "composite" goods, composed of two materials: fi'ozen

yogurt and frozen sorbet (edible ice).

27. Pursuant to General Rule of Interpretation 3('o) of the Harmonized Tariff Schedule,

composite goods are to be classified as if they consisted of that material or component which imparts

the "essential character" to the good.

28. Pursuant to General Rule of Interpretation 3(c) of the Harmonized Tariff Schedule,

where no single component or material comprising a "composite good" can be identified as

imparting the essential character to the good, the good is to be classified as if it consisted of that

component or material which occurs last in numerical order in the tariff, among those which merit

equal consideration.

29. Frozen yogurt is classifiable as "Ice Cream" under HTS subheadings 2 ]05.00.05 through

2105.00.20.

30.Frozensorbetisclassifiableas"'Icecream and otheredibleice:Other [thanicecream];

33

Other [than Dairy products described in Additional U.S. Note 1 to Chapter 4" of the HI'S, under

HTS subheading 2105.00.50.

31. The frozen sorbet components of these articles is the component which imparts the

essential character thereto, in that the frozen sorbet is the predominant component by weight,

volume and functional importance to the article as a whole.

32. By operation of General Rule of Interpretation 3('o) to the HTS, these products are

classifiable under HTS subheading 2105.00.50, and are entitled to enter the United States duty free

as NAFTA "originating" products of Canada.

33. In the alternative, if these products are determined to be composite goods whose

essential character is imparted by their frozen yogurt component, they are properly classifiable under

HTS subheadings 2105.00.10 [if Described in Additional U.S. Note 5 to Chapter 21 and entered

pursuant to its provisions], duty flee as NAFTA "originating products of Canada" or under HTS

subheading 2105.00.20.

34. In the alternative, if these products are determined to be composite goods whose essential

character component cannot be determined, they are properly classifiable pursuant to General Rule

of Interpretation 3 (c) to the HTS under subheading 2105.00.50, and are entitled to duty-free entry

as NAFTA "originating" products of Canada.

34

|

PRAYER_OR RELIEF

WHEREFORE, Plaintiffpmys that this Court enter judgmem in its favor, and enter an order

directing thePort Director of Customs at Detroit, Michigan to reliquidate the entries which are the

subject of this ease, classifying the subject merchandise under HTSUS Subheading 2105.00.50, and

entitled to duty free entry as NAFTA "originating" products of Canada; or, in the alternative, to

reliquidate the entries under HTSUS subheading 2105.00.10, entitled to duty-free entry as NAFTA

"originating" products of Canada; and issuing to Plaintiff refunds of all duties paid, plus interest

as provided by law; and granting Plaintiffsueh further and additional relief as this Court may deem

just.

Dated: July 5, 2001

Respectfully submitted,

Neville, Peterson LLPCounsel for Plaintiff

The Pillsbury Company

80 Broad Street, 34 _ Floor

New York, New/_k 10004

B_A4_(212)635-27 V

M. e,erso /_urtis W. Knauss

35

CERTIFICATE OF SERVICE

I hereby certify that ] caused a copy of the annexed document to be served, by

first-class mail, postage prepaid, upon:

July 5, 2001

Attorney in Charge

United States Department of JusticeCivil Division, Commercial Litigation BranchInternational Trade Field Office

26 Federal Plaza

Room 346


36

,-r,_' '-'-_ ,".FtLEO_._.,.,,_ ,......

2001JUL-q P 2:55

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b

ORIGINALUNITED STATES COURT OF INTERNATIONAL TRADE


UNITED STATES,

V.

Plaintiff,

Defendant.

Court No. 00-12-00570

hNSWER TO ¢OrvmLAINT

Pursaumt to Rule 7(a) of the Rules of the United States Court ofl.ntemational Trade, the

United States, defendant, responds to the allegations of plaintiffs complaint as follows:

1. Denies that the merchandise is "frozen sorbet/yogurt dessert bars." Avers that the

merchandise is frozen yogurt bars coated with sorbet. Admits the remaining allegations of this

paragraph.

2. Admits.

3. Admits.

4. Denies for lack of information or knowledge sufficient to form a belief as to whether

the merchandise is the product of Canada. Denies that the merchandise is "frozen sorbet/yogurt

dessert bars." Admits the remainder of the allegations set forth in this paragraph.

5. Denies that Subheading 2105.00.40 provides as quoted. Avers that Subheading

2105.00.40 is the best evidence of its contents. Denies that the merchandise is "frozen

sorbet/yogurt dessert bars." Denies that duty was assessed on the merchandise at a rate of 50.2¢

per kilogram plus 17% ad valorem and avers that the duty assessed was at a rate of 51.7¢ per

kilogram plus 17%ad valorem. Admits the remaining allegations set forth in this paragraph.

39

6. Admitsthatplaintiff ftlcd timely protests at Detroit, Michigan, between May I0 and

July 31 (not July 30), 2000, challenging the classification of the merchandise upon liquidation_

Denies the remaining allegations of the paragraph and avers that the protests are the best

evidence of their contents.

7. Admits.

8. Admits.

COUNT I (RASPBERRY SORBET/VANILLA YOGURT BAR)

9. Defendant repeats and realleges the responses to the allegations contained in

Paragraphs 1 through 8, as if set forth in full herein.

I0. Denies that the merchandise is a frozen dessert confection consisting of frozen yogurt

and sorbet and avers that the merchandise consists of a frozen yogurt bar covered with a sorbet

coating. Denies that the merchandise is labeled as either "Raspberry Sorbet/Vanilla Yogurt Bar"

or "Chocolate Sorbet/Vanilla Yogurt Bar" and avers that the merchandise is labeled as either

"Frozen Yogurt Raspberry & Vanilla" and "Frozen Yogurt Chocolate & Vanilla" and is invoiced

as either "I-I. Dazs Rasp/Van Yogurt Bar" or 'q-hagen Dazs Yog Choc/Van Bar." Admits both

products are imported bearing the Hiiagen Daze trademark. Denies the remaining allegations for

lack of information or knowledge sufficient to form a belief as to the truth of the matters

asserted.

11. Denies the allegations of the first sentence and avers that the merchandise is a ready

to eat article of milk or cream containing frozen yogurt with a raspberry sorbet coating. Admits

the allegations of the second sentence.

40

12.Denies for lack of information or knowledge sufficient to form a belief as to the truth

of the matters asserted.

13. Denies for lack of information or knowledge sufficient to form a belief as to the truth


14. Denies that the merchandise is not an "article of milk or cream." AdmSts the article

is prepared for marketing to the ultimate consumer in the form in which imported and is

packaged ready for sale to retail consumers. Denies the remaining allegations set forth in this

paragraph for lack of information or knowledge sufficient to form a belief as io the truth of the

matter asserted.



16. Doxies.

COUNT II (CHOCOLATE SORBET/VANILLA YOGURT BAR)

17. Defendant repeats and realleges the responses to the allegations of Paragraphs 1

through8,asifsetforthinfullherein.

18. Deniesthatthemerchandiseisa frozendessertconfectionconsistingoffrozenyogurt

and sorbetand aversthatthemerchandiseconsistsofafrozenyogurtbar coveredwithasorbet

coating.Deniesthatthemerchandiseislabeledaseither"RaspberrySorbet/VanillaYogurtBar"

or"ChocolateSorbet/VanillaYogurtBar" and aversthatthemerchandiseislabeledaseither

"FrozenYogurtRaspberry& Vanilla"and "FrozenYogurtChocolate& Vanilla"and isinvoiced

aseither'2-I.Dazs Rasp/Van YogurtBar" or'q-hagenDazs Yog Choc/Van Bar." Admits both

productsareimportedbearingtheHtiagenDazs tradclnark.Deniestheremainingallegationsfor

41

lack of information or knowledge sufficient to form a belief as to the truth of the matters

asserted.

19. Denies the allegations of the first sentence and avers that the merchandise is a ready

to eat article of milk or cream containing fi'ozen yogurt with a raspberry sorbet coating. Admits

the allegations of the second sentence.





22. Denies that the merchandise is not an "article of milk or cream." Admits the article

is prepared for marketing to the ultimate consumer in the form in which it is imported, and is

packaged ready for sale to retail consumers. Denies the remaining allegations set forth in this

paragraph for lack of information or knowledge sufficient to form a belief as to the truth of the

matters asserted.



24. Denies.

COUNT HI _ALT_ERNATIVE CLAIMS AS TO BOTH PRODUCTS)


through 24, as if set forth in full herein.

26. Denies.

42

6

27. Thisallegationconsistsoflegalargument and no responseisrequired.Ifaresponse

is required, admits.

28. This allegation consists of legal argument and no response is required. Ifa response


29. Admits, provided that the "frozen yogurt" meets all of the legal requirements for ice

cream, such as, but not limited to, the 10% milk fat requirement; otherwise, denies..

30. Admits, provided that the "frozen sorbet" does not meet the requirements of any of

the preceding subheadings of Heading 2105; otherwise, denies.

31. Denies.


the frozen yogurt bars with sorbet coating are originating products of Canada for NAFTA

purposes. Denies the remaining allegations of this paragraph.


the frozen yogurt bars with sorbct coating are originating products of Canada for NAFI'A

purposes. Denies the remaining allegations of this paragraph.


the frozen yogurt bars with sorbet coating are originating products of Canada for NAFTA

purposes. Denies that the merchandise is alternatively classifiable under Subheading 2105.00.50.

WHEREFORE, defendant respectfully requests that judgment be entered dismissing this

43

action, overruling plaintiffs claims, sustaining the decisions of the appropriate Customs officials,

and granting defendant such other and further rcl/cf as may bc just and appropriate.

Dated: April 25, 2002


ROBERT D. McCALLUM, JR.

Assistant Attorney General

International Trade Field Office

SAUL DAVISSenior Trial Counsel

Dept. of Justice, Civil DivisionCommercial Litigation Branch26 Federal Plaza


Attorneys for Defendant

Tel. No. (212) 264-9230 or 3584

44

CERTIFJ_.CATE OF SERVICE BY MAIL

SAUL DAVIS certifies that I am a trial attorney in the office of the Assistant Attorney

General, Civil Division, Commercial Litigation Branch, International Trade Field Office, with

offices located at 26 Federal Plaza, New York, NY 10278, and that on April 25, 2002, on behalf

of the United States, defendant(s) herein, I caused the annexed answer to be served upon:

John M. Peterson, Esq.

Curtis W. Knauss, Esq.Neville, Peterson & Williams80 Broad St.

New York, N.Y. 10004

the attorneys for the plaintiff(s) herein by the deposit of a copy thereof in a United States mail

receptacle, properly enclosed in a securely closed envelope, duly franked or postage prepaid,

addressed to said attorney(s) as above indicated.

45

_7-.7" :.....:. : ,':'.vl..___'D

Z6'_Zt._., 25 P l;" 07

,.L.'

•-_ ._,'" . •q ..J.. ...... ,',

/,, " l :i

a_" - _/ ,"_.',,7'I "_ I _"

• . _ ---'t",i ' ": "' ":" '_; " -'_

46

III. RELEVANT STATUTES

HARMONIZED TARIFF SCHEDULE OF THE UNITED STATES

GENERAL RULES OF INTERPRETATION

3. When, by application of rule 2(b) or for any other

reason, goods are, prima facie, classifiable under two or

more headings, classification shall be effected asfollows:

(b) Mixtures, composite goods consisting of different

materials or made up of different components, and goods

put up in sets for retail sale, which cannot be classified

by reference to 3(a), shall be classified as if they

consisted of the material or component which gives them

their essential character, insofar as this criterion is

applicable.

(c) When goods cannot be classified by reference to

3(a) or 3(b), they shall be classified under the heading

which occurs last in numerical order among those which

equally merit consideration.

Notes:


CHAPTER 4

1. The expression "milk" means full cream milk or

partially or completely skimmed milk.

Additional U.S. Notes:

I. For the purposes of this schedule, the term "dairy

products described in additional U.S. note 1 to chapter 4"

47

means any of the following goods: malted milk, andarticles of milk or cream (except (a) white chocolate and(b) inedible dried milk powders certified to be used forcalibrating infrared milk analyzers); articles containingover 5.5 percent by weight of butterfat which are suitablefor useas ingredients in the commercial production ofedible articles (except articles within the scope of otherimport quotas provided for in additional U.S. notes 2 and3 to chapter 18); or, dried milk, whey or buttermilk (ofthe type provided for in subheadings 0402.10, 0402.21,0403.90 or 0404.10) which contains not over 5.5 percentby weight of butterfat and which is mixed with otheringredients, including but not limited to sugar, if suchmixtures contain over 16 percent milk solids by weight,are capable of being further processedor mixed withsimilar or other ingredients and are not prepared formarketing to the ultimate consumer in the identical formand package in which imported.

10. The aggregate quantity of dairy products describedin additional U.S. note 1to chapter 4, entered undersubheadings 0402.29.10, 0402.99.70, 0403.10.10,0403.90.90, 0404.10.11, 0404.90.30, 0405.20.60,1517.90.50, 1704.90.54,1806.90.05, 1901.10.35,1901.20.45, 1901.90.42,

1806.20.81,1806.32.60,1901.10.80,1901.20.05,1901.90.46,2105.00.30,

2106.90.06, 2106.90.64, 2106.90.85 and 2202.90.24 inany calendar year shall not exceed 3,665,000 kilograms(articles the product of Mexico shall not be permitted orincluded under the aforementioned quantitativelimitation and no such articles shall be classifiable

therein).

Of the quantitative limitations provided for in this note,Australia shall have accessto a quantity of not less than1,016,046 kilograms, and Belgium and Denmark

48

(aggregated)shall have accessto a quantity of not lessthan 154,221kilograms.

2105


CHAPTER 21

Ice cream and other edible ice, whether or not containing

cocoa:

1¢ _1, ¢¢

2105.00.30

2105.00.40

2105.00.50

Other [than ice cream]:

Dairy products described in

additional U.S. note 1 to

chapter 4:

Described in additional U.S. Note 10

to Chapter 4 and entered pursuant to

its provisions ...20%

Other .... 51.7¢+17.5%

Other ... 17.5%

Free (A+,CA,E,IL,J,MX)


CHAPTER 4

0403 Buttermilk, curdled milk and cream, yogurt, kephir and other

fermented or acidified milk and cream, whether or not

concentrated or containing added sugar or other sweetening

matter or flavored or containing added fruit, nuts or cocoa:

49

0403.10

0403.10.05

0403.10.10

0403.10.50

0403.10.90

Yogurt:In dry form:

Described in general note 15of thetariffschedule and entered pursuant to itsprovisions ........................... 20%

Free (A+,CA,E,IL, 20% J,MX)

Described in additional U.S. note 10

to this chapter and entered pursuant toits provisions ........................... 20%

Free (A+,CA,E,IL, 20% J)

Other............................ $1.065/kg +See9906.04.32- $1.217/kg +17.5% 9906.04.34 (MX) 20%

Other....................................17.5%Free (A+,CA,E,IL, 20% J,MX)

50

I

2 A

3 Q

is thatcorrect?

Yes, those products are distinguished.

And which is also the same for -- well, I

4 should say isn't it true that the tar/ff distinguishes

.5 between milk or -- I'm sorry -- whole or skim milk

6 from yogurt.

7 Is that correct?

8 A The tariff distinguishes between whole or

9 skim milk --

lO Q From--

I 1 A --and fermented milk --

12 Q And yogurt.

13 A -- and yogurt. Yes, they're provided for

14 under different headings.

15 Q Do you happen to know how acidified milk is

16 produced?

?7 A I would have to say no.

l g Q Okay. Do you happen to know how fermented

19 milk is produced?

20 A Yes.

21 0 Couldyou describethatforme?

22 A Generally, the milk that's going to Ix_

23 fermented is pasteurized, and the pasteurized milk

24 product then is inoculated with lactobacilli. The

25 lactobacilli ferment the milk.

5]

I whole incident occurred.

2 Q Okay. And, would this identify -- would

3 these documents identify who were the vendors for the

4 particular--

5 A And, since they're invoices--

6 Q -- products at that time?

7 A -- from the vendors, they mention

8 specifically what the ingredient was, and the name of

9 the vendor.

IO Q Do you know where the dairy components --

11 the dairy ingredients that went into the sorbet/yogurt

12 bar, were sourced? l believe you testified there was

13 the skim milk, and then there was the reduced-lactose

14 milk components.

15 Do you know where those were sourced?

16 A Those were from Parmalat Dairy, which is

17 kind of next-door. And, --

18 Q Next -- next door to --

19 A -- this -- this manufacturing site is in

20 London, Ontario, Canada.

21 Q Okay.

22 A So, the dairy was also in London, Ontario,

23 Canada.

24 Q Okay. Do you know whether, in 1999,

25 Pillsbury bought dairy components to make this product

52

1 from any source other than Parmalat?

2 A Haagen-Dazs only uses fresh, which means not

3 dried, not concentrated, not, you know -- dairy

4 components. So -- and, you have to use them quickly?

5 So, if they were made in Canada, the dairy had to have

6 come from Canada.

7 Q The -- okay. And, the dairy would be -- in

8 other words, when you say the dairy came from Canada,

9 you mean it was produced in Canada? Is that what your

l0 testimony is?

I I A It was surely pasteurized there. I assumed

12 that the herds were, actually, also in Canada.

13 Q Okay.

14 (Pause)

15 MR. PETERSON: Okay, at this time, Your

16 Honor, may I just have a moment to confer with my co-

l 7 counsel?

18 (Counsel conferring)

19 BY MR. PETERSON:

20 Q Okay, I'm sorry, Mr. Sweet. One more

21 question.

22 You testified earlier this morning that, in

23 producing the sorbet [sic] component of the product,

24 the cultured yogurt base was mixed with the reduced-

25 lactose milk component.

53

(Counsel conferring)

2 MR. PETERSON: Okay, again, with the Court's

3 permission, I'd like to approach the witness. We have

4 to do this part real early in the trial, Your Honor.

5 [Laughter]

6 MR. PETERSON: Forobvious reasons rclated

7 to the first law of thermodynamics.

8 BY MR. PETERSON:

9 Q I'd like to show you an item that is

10 designated as Plaintiffs Exhibit 2, and ask if you

11 can identify that, or what that item appears to be?

12 (Witness examining exhibit)

13 A This is a sorbet and yogurt bar, raspberry

14 and vanilla. It's in its current packaging. But, it

15 is essentially exactly the same bar that we've been

16 manufacturing for approximately ten years.

17 Q Okay. And, would that bar be, to your

18 knowledge, identical to the merchandise that was

19 imported in 1999. and that is the subject of this

20 case?

21

22

23

24

25

A Yes, sir.

Q Okay. Now, with respect to the

sorbet/yogun bars that the Plaintiffs imported during

1999, are you familiar with the range or the types of

sorbet/yogurt bar products that the Plaintiff imported

54

I during that year?

2 A I know we've manufactured many different

3 flavors in that year, I know there was also a

4 chocolate sorbetand yogurt bar.

5 Q Could you just describe for the Court what

6 the chocolate sorbet and yogurt bar consisted of?.

7 A It was very similar to this bar, except the

8 sorbet was a chocolate sorbct, instead of a raspberry

9 sorbet.

l0 Q Okay. Now, the Plaintiff is unable today to

11 produce a copy or to produce a sample of the chocolate

12 sorbet/yogurt bar.

13 Could you tell us, Mr. Sweet, whether that

14 bar is currently produced today.'?

15 A To my knowledge, that's not being produced

16 any more.

17 Q Okay. But, you testified that it's similar

t8 or identical to the bar but for the flavor of the

19 sorbct.

20 Is that correct?

21 A The ratios and everything are almost

22 identical.

23 MR. PETERSON: Okay. With the Court's

24 permission, I'd like to ask Mr. Sweet if he could open

25 the package -- well, l'd like to move Plaintiffs

55

I single pack. It has one bar inside. It's also sold

2 in a multi-pack, which is indicated in Mr. Davis's

3 photograph. There are several bars inside.

4 The single pack is primarily sold in

5 convenience stores. And, the multi-pack size, or with

6 multiple bars, is primarily sold in grocery stores.

7 Q I see. Thank you.

8 Now, Mr. Sweet, arc you familiar with the

9 way in which the sorbet/yogurt bar that you've

10 identified as Plaintiff's Exhibit 2 is manufactured?

11 A Oh, yes.

12 Q And, specifically, are you familiar with the

13 way in which the product is manufactured in Canada?

14 A Yes. I've seen that operation and developed

15 products for that operation.

16 Q And, are you familiar with the way that the

17 product was manufactured in Canada during 1999?

18 A Yes, sir.

19 Q Okay. Could you please describe for the

20 Court the way in which that product is manufactured?

21 A It's almost easier to start with how it's

22 put together. This bar is -- actually, this sorbet

23 mix is poured into a mold. That mold is embedded in a

24 very cold brine solution, so it freezes from the

25 outside in, similar to how you would imagine a

56

I Popsicle would be made. And, that's called

2 quiescently frozen.

3 And, as it's freezing from the outside in,

4 it gets to a certain point where we have enough frozen

5 to -- to reach the quantity we want ofsorbet. We put

6 a tube inside, and suck back out the un-frozen part,

7 and it leaves a cavity.

g And that, then, we take yogurt mix, freeze

9 that to a fairly runny consistency, but partially

l0 frozen, and put -- put that inside. It continues to

I I freeze.

12 As that freezes into the center, it gets

13 finn enough that it will, actually, hold the stick.

14 So, we insert the stick. It freezes a little bit more

15 solidly.

16 Then, it goes into a stage where the outside

17 is put into a warmer water, to help it release it. We

18 pull them out by the stick, dip it in this exterior

19 dip we call, basically, a water and juice solution.

20 That freezes on it just from the cold that the bar

21 was, itself, and then it's packaged.

22 Q Okay.

23 THE COURT: And, is this an assembly-line

24 process.'?

25 THE WITNESS: Oh, oh. yeah. There are

.57

1 several molds across,and they just index through.

2 The whole machine has several hundred molds in it.

3 BY MR. PETERSON:

4 Q So-- so, with respect to the portion of

5 Exhibit 2 that you've identified as -- as Plaintiff's

6 - that you've identified as Plaintiff's Exhibit 2,

7 the frozen sorbct portion is formed first, if I

8 understand your testimony correctly7

9 A Correct.

10 Q And, after that, yogurt is put into the --

I I into the frozen sorbet bar, as it were?

12 A Yes.

13 Q Now, you testified that during this process

14 of quiescent freezing, some of the frozen sorbct, or

15 the sorbet is removed from the bar.

16 A The un-frozen part, right.

17 Q Okay. Is there a name for that process that

18 is used in production?

19 A Well, when we remove the -- actually, the

20 official term is suck-back.

21 Q Now, what would happen in the production

22 process if you did not perform the suck-back

23 operation7

24 A You wouldn't have room -- you couldn't get

25 the yogurt in, and you would end up with just a sorbet

58

I in your own words for the Court?

2 A Yeah. Let me -- if l could take a little

3 time here, I'll point to some pages in -- in -- if

4 that would be helpful, Your Honor? Of where I'm

5 getting some of the numbers from?

6 THE COURT: If it's helpful to you.

7 THE WITNESS: Okay. I don't remember, to

8 six decimal places, all of this information.

9 THE COURT: We were on the description of

l0 the ice milk --

II THE WITNESS: Right.

12 THE COURT: -- portion of--

13 A (Continuing) The ice milk base is on Bates

14 Number 646, and it's a combination of a lactose-

15 reduced skim and condensed skim blend, some liquid

16 sugar, various forms of corn syrup, and water. That

17 is pasteurized and put into a tank.

18 The second component is what we call the

19 frozen yogurt base. The ingredients of that are

20 shown on Bates Number 636, or Page 6 of-- of this

21 document. It's a combination of condensed skim milk

22 and water. Those two ingredients are pasteurized, put

23 into a culturing or a fermentation tank, brought to

24 the appropriate temperature.

25 And then, the third ingredient here, which

59

I is the cultures, or the yogurt cultures, are added to

2 that, and then that's incubated for a sufficient

3 amount of time for the organisms to grow to the high

4 numbers.

5 Q Okay. Now, let me just -- I want to focus

6 for a minute on the component that's shown here in

7 Bates Number 636, which is part of Exhibit 4.

8 A Okay.

9 Q You've testified that you combine, 1

10 believe, skim milk and water, and then introduce

11 cultures into the mix.

12 A Yes.

13 Q Could you tell the Court what type of

14 cultures these are?

15 A I don't -- the organism names are longer

16 than what I can remember, but they're classic yogurt

17 cultures, the same ones that are required in most

18 identification documentation for yogurt.

19 Q Okay.

20 A They're -- lactic acid bacteria is the

21 general classification.

22 Q Okay. And, I believe you indicated that a

23 culture reaction or culturing process takes place,

24 once you introduce these cultures?

25 A Yeah. The organisms come in as, kind of,

60

I freeze-dried.

2 Q Okay.

3 A When we put them in there, in the right --

4 it's, like, body temperature, a hundred degrees

5 Fahrenheit, and with the milk, it starts to,

6 basically, eat part of the milk components, primarily

7 the lactose and the milk sugar, convening that to

8 lactic acid, and it's the acidity that makes yogurt

9 taste sour.

I0 Q Now, again, we're talking about the

I 1 component that's described here on Page 636.

12 Could you tell us how long this yogurt

13 reaction, or culturing reaction goes on?

14 A Actually, it -- let me check here. That's

15 actually a required part of the process. If it would

16 be too short or too long, it would indicate something

17 was going wrong.

18 So, the culturing -- (witness perusing

19 document) -- is on Bates Page 642, Step Number 26 and

20 27 -- oh, excuse me, Step Number 24, fermentation

21 time, eight to twelve hours.

22 Q Okay. And, directly above that line, on

23 Page 642, there's a statement ferment yogurt until

24 break titratable acidity is reached.

25 Do you see that statement, Mr. Sweet?

61

I A Yes.

2 Q Could you explain to the Court what that

3 statement means?

4 A We know when it's done, so to speak, when it

5 has an appropriate amount of acid in it. The way we

6 measure that is just a test method called titratable

7 acidity. It's a titration method.

8 Q And, what -- what, exactly, does titratable

9 acidity measure? What property of the producl does it

I0 measure?

I1 A It measures acidity, in general. But, in

12 this case, it -- it - it loosely correlates to kind

13 of the --

14 MR. DAVIS: Objection. Foundation.

15 MR. PETERSON: I need to get a read back.

16 THE COURT: Well, what's your objection, Mr.

17 Davis? He is--

18 MR. DAVIS: My objection is that --

19 THE COURT: - their research and

20 development --

21 MR. DAVIS: - that the-

22 TIlE COURT: -- or former research and

23 development manager.

24 MR. DAVIS: Yes, but my objection is, is

25 that he has not shown a background in science that

62

I

2

3

4

5

6 O

THE COURT: Okay. Your objection --

MR. DAVIS: -- 1 don't [inaudible]

THE COURT: -- is overruled.

MR. DAVIS: Okay.

BY MR. PETERSON:

Let me ask a couple of other questions

7 beforewe-- okay.

g Duringthecourseofyouremployment as

9 productqualitymanagerfortheHaagcn-Dazsbrand,

I0 haveyou hadoccasiontowork withthisconceptof

I I titratable acidity?

12 A I -- I have performed this test before, not

13 -- not as a quality manager, but certainly, in my

14 career with dairy products.

15 Q And, arc you familiar with the role of

16 titratable acidity, if any, in these types of

17 products?

18 A Yes.

19 Q Okay. And, again, referring you to Item 23

20 on Page 642, could you again explain for the Court --

21 I believe the answer was interrupted -- on wb.at the

22 statement means, ferment yogurt until break

23 titratablc acidity is reached ?

24 A Again, that's-- that's a measurement of the

25 amount of acid that's been produced. And, what we

63

I want to have happen is for the organisms to grow, as

2 -- or multiply. As theyYe multiplying, they're --

3 they're consuming the lactose, creating lactic acid,

4 and it tells us when we have the level of sourness or

5 acidity, and the level of organisms that we -- that we

6 want.

7 Q

8 A

Okay.

And, 1 -- specifically, can go to the

9 chemistry of the test, but I didn't think that's what

]0 you were asking.

11 Q Now, you testified that these organisms work

12 on the lactose in the milk.

13 A Yes.

14 Q Now, is -- is that a product known as --

15 when -- when there's a reference to culturing milk,

16 would this be the process that -- that occurs.'?

17 A Culturing or fermentation of milk is what is

18 the process that's occurring here, yes.

19 Q Are you familiar with the term acidified

20 milk ?

21 A I have heard the term. I've read a little

22 bit about it. Yeah.

23 Q Okay.

24 A Yes.

25 Q The product that is produced as a result of

64

l A Correct.

2 Q What happens to the acidity, or what happens

3 to the -- to those cultures, when you blend these

4 products together? And, by -- when I say blending

5 together, I'm referring to the yogurt base and the

6 ice milk base.

7 A Yeah. One piece 1 didn't mention is the

8 yogurt, after it reaches the level of fitratable

9 acidity, and the organisms have grown, now it's

l0 cooled. If it's cooled below forty-five, fifty

11 degrees below that, then the organisms stop growing.

12 So, we kind of lock them there.

13 But, if you would warm them up again, they

14 would start growing again, like in your intestines, or

15 some place like that.

16 In this case, the organisms are active, but

17 they're not growing. When they're blended into what

18 we call the ice milk base, they're equally distributed

19 throughout the whole thing, and become an integral

20 part, then, of that total mix.

21 Q Okay. So, then, the total mix, doesthe

22 total mix have a property oftitratable acidity?

23 A The blended yogurt mix -- well, all milk has

24 titratable acidity. This has a higher titratable

25 acidity than it would have if we hadn't added the

65

1 THE COURT: I'm sorry, Mr. Peterson.

2 MR. PETERSON: I'm -- I'm sorry, l just

3 want to re-phrase it for the witness, mainly for

4 myself, I think, but --

5 [Laughter]

6 BY MR. PETERSON:

7 Q Now, you testified, when the yogurt or the

8 cultured component, the yogurt base, is blended with

9 the ice milk base, --

10 A Yes.

I I Q -- that the resulting blended product had a

12 certain titratable acidity.

13 A Yes.

14 Q Now, could you -- are there any statements

15 you could make regarding what that level oftitratable

16 acidity is, compared to whole milk, or to regular skim

17 milk?

18 A It's -- it's higher than whole milk, or

19 regular skim milk. Obviously, you're adding acid to

20 what was skim milk. It's a property that we very

21 tightly control, because that -- that tells us what

22 the flavor properties and the acidity and things like

23 that are.

24 THE COURT: Does the reduction ofthc

25 lactose in the filtering affect that acidity? Is that

66

l

2

3

4

5

6 Q

previously marked for

identification as Plaintiff's

Exhibit No. I, was admitted into

evidence.)

BY MR. PETERSON:

Okay. Now, Mr. Sweet, are you familiar -- I

7 think I asked this -- with the merchandise that's the

8 subject ofthislawsuit?

9 A Yes, I am.

10 Q And, could you describe for the Court what

II that merchandise is?

12 A It's a -- a novelty -- an ice cream novelty.

13 Those are kind of-- we just basically call it a

14 stick bar. It's a frozen dessert novelty. It has

15 sorbet on the outside, and a fat-free frozen yogurt in

16 the center.

17 Q Okay.


19 MR. PETERSON: My colleague, Mr. Knauss, is

20 now taking Exhibit 2 out of a bag. And, this bag,

21 actually, has been to court before.

22 [Laughter]

23 MR. PETERSON: It was used for demonstration

24 work in the case of Dolly, Incorporated versus United

25 States a couple of months ago.

67

1 petri dish, and so forth.

2 Depending upon the media used, the ranges

3 were ten to the sixth, ten to the seventh organisms.

4 And then, they incubated for four hours and -- and did

5 the plating again. And, essentially, they looked like

6 they all went up one log cycle, but the test was done

7 at four months, instead of expiration date, which I

8 believe Mr. Sweet said was one year.

9 (Pause)

10 BY MR. DAVIS:

I I Q Based upon your review of the development,

12 production, processing, and marketing materials

13 provided by Haagen-Dazs, do you have an opinion

14 regarding which component provides the essential

15 character of these dessert bases?

16 A Yes, I do.

17 Q What is your opinion?

18 A It's the frozen yogurt that supplies the

19 essential character.

20 Q And, what are the bases for your opinion7

21 A Well, it has the highest concentration of

22 solids. Therefore, it's in predominance, from a

23 solids basis, in that yogurt.

24 Q Why do you consider the solids comparison to

25 be critical?

68

I THE COURT: All right. Then, well let you

2 go through your direct, and then break for lunch.

3 MR. PETERSON: Okay.

4 THE COURT: And then, do cross after lunch.

5 For some reason, the Court just has this urge to go

6 out and have a big dish of chocolate and raspberry

7 yogurt.

8 [Laughter]

9 MR. PETERSON: We can recommend a very good

I0 brand, Your Honor.

I I [Laughter]

12 BY MR. PETERSON:

13 Q Could you go into the formula-in column, and

14 identify for the Court those components of the

15 raspberry/vanilla sorbet/yogurt bar which are milk or

16 made from milk?

17 A It's identical to the chocolate sorbet and

18 yogurt bar. They're not all exactly in the same

19 place, but one is the condensed skim milk, eight-

20 point-two four percent. And, at the bottom, the same

21 LR-skim, at thirteen-point-one nine.

22 Q Okay. And, could you again show us in the

23 formula-out column which components of the bar are

24 milk or are dairy products?

25 A Certainly. The third one, which is the LR-

69

l skim condensed skim blend. And, the skim milk

2 condensed, which is the sixth one down.

3 Q Okay. Now, if you could look at Plaintiffs

4 Exhibit 3, is there contained in there the formula for

5 the raspberry yogurt -- the raspberry sorbet -- I

6 apologize -- that is included in the bar?

7 A Just the sorbet mix formula?

8 Q The sorbet mix formula.

9 A Yeah. That, actually, is in the part with

I0 the Bates numbers. I mean, it's embedded in here, but

I I it's toughto pull out, but the totaJ-- Ihc total --

12 Q Okay.

13 (Witness perusing document)

14 A This was made a little bit differently than

15 the -- the chocolate one? The chocolate one, you can

16 put the cocoa and everything through the

17 pasteurization. But, you don't want to add that heat

18 to the raspberry. So, we put it together in two

19 places.

20 One is Bates Number 1274, which is corn

21 syrup, water, liquid sugar, and pectin.


23 A And, that shows on Bales Page )281, where we

24 take that, what we call the un-flavored sorbet base

25 here, that I mentioned before, combine that with lemon

70

I juice and raspberry puree.

2 Q Okay. And, the ingredient that you've

3 called the un-flavored raspberry sorbet base, is the

4 item that was shown on Bates Page 1274?

5 A Correct.

6 Q Okay. Now, referring to the formula for the

7 raspberry sorbet shown on Bates Page 1281, is there

8 any -- is there any dairy content in that formula?

9 A No.

10 Q Okay.

I I (Pause)

12 Q Now, Mr. --

13 THE COURT: Just as -- while you're looking,

14 Mr. Pete=son, just as an absolutely irrelevant

15 parenthetical by the Court, and a commentary on

16 society, it's interesting that I notice just today,

17 looking through here, that somewhere in your testing,

18 you found that people don't like it when it has too

19 much fruit in it.

20 MR. PETERSON: Well,--

21 THE WITNESS: Thank you.

22 [Laughter]

23 THE WITNESS: Yeah. It's a long story.

24 MR. PETERSON: We are happy to discuss that

25 -- that very subject now, Your Honor.

71

I

2

3 Q

MR. PETERSON: Yes.

BY MR. PETERSON:

Is there anything done to the skim milk

17

18

19

20

21 Q

22 milk ?

23 A

24 Q

4 components of the frozen yogurt during the processing,

5 that would change their characteristics as skim milk,

6 and transform them into something else?

7 A Some of the condensed skim milk is used in

8 the yogurt base, itself, that actually gets chemically

9 modified through fermentation, and the lactose is

10 convened to lactic acid.

I I There is the lactose-reduce process, but

12 that's as we purchase it. That doesn't - that does

13 not occur during the process.

14 There is also some skim milk in -- in the

15 ice milk base. That ispretty much intact. When you

16 add the acid and the culture to it, however, it

becomes so integrated, you can't really separate out

what was the skim milk and what was the fermented skim

milk. It's all kind of insidious, throughout the

whole thing.

Now, you used the term fermented skim

Yeah.

Is fermented skim milk recognized in

25 commerce or industry as something other than skim

72

l percent milk solids not fat.

2 Q Okay. Now, with reference to the frozen

3 yogurt component of the sorbet/yogurt bar that you'Ve

4 testified you're familiar with, my next question to

5 you is, in your understanding, is that sorbet/yogurt

6 bar or sorbet -- I_ sorry. Is that frozen yogurt

7 component of the sorbet/yogurt bar whole milk?

8 A No, it is not.

9 Q Okay. And, do you have an understanding of

10 what the term skim milk means, as it's used in

I1 commerce and industry in the United States?

12 A Yes.

13 Q And, could you tell the Court what your

14 understanding of that term is?

15 A Again, there is a C.F.R. standard of

16 identity, and that reads that it -- that skim milk

17 contains not more than a half-percent fat, and not

18 less than eight and a quarter percent milk solids not

19 fat, if memory serves me correctly on the latter.

20 Q Okay. And, again, with reference to the

21 frozen yogurt component of the sorbet/yogurt bar

22 that's at issue in this case, would you consider that

23 frozen yogurt component to be skim milk?

24 A No, sir.

25 Q Okay. Now, within common understanding of

73

I known as full cream milk in United States industry and

2 commerce?

3 A No.

4 THE COURT: When you said sorbet/yogun, do

5 you mean frozen yogurt?

6 Q I mean -- I'm sorry. The frozen yogurt

7 component. Is that frozen yogurt component, as it

appears in the bar, a product that is known in

9 industry as full cream milk?

IO A It's -- it's more than that. No, it'snot

11 milk.

12 Q Okay. Could you tell me what the difference

13 is between the frozen yogurt that appears in this bar

14 and full cream milk? What are the differences?

15 A One, it's fat-free. So, it's not whole

16 cream.

17 Second, it has an organism level and a

18 titratabl¢ acidity which would not be -- normally, you

19 know, would not be considered part of just full cream

20 milk.

21 Q Are there any other ways that this sorbet --

22 that the imported frozen yogurt differs from full

23 cream milk?

24 A Well, the milk is usually not sweetened.

25 Flavored whole milks would be, but the sugars and the

74

1 Q Okay. Now, you've testified as to the way

2 in which the frozen yogurt component of this product

3 is manufactured.

4 Can you tell the Court whether any whole

5 cream milk is used in manufacturing the frozen yogurt

6 component of the bar?

7 A There is no whole cream milk in this

8 product.

9 Q And, can you tell the Court whether there is

10 any skim milk used in production of the yogurt

I I component of the imported bar?

12 A There is a condensed skim milk, and a

13 lactose-reduced skim milk used in this bar.

14 Q And, you testified that the reduced-fat skim

15 milk is processed prior to being put in the form of

16 the frozen yogurt, correct?

_7 A Say that one more time7

18 Q You -- you testified earlier this morning as

19 to the processes that are performed, for example, to

20 the yogurt base, and to the ice milk base, in order to

21 make frozen yogurt. -_

22 THE COURT: Mr. Peterson, I'm going to let

23 you build to something, if you need to, but try to

24 avoid being repetitive of what he's already testified

25 to, all right?

75

I flavor, it would not be just milk.

2 Q Okay. Now, are you familiar with the term

3 skimmed milk, as it is used, or skim milk, as that

4 term is used in United States commerce and industry?

5 A Yes.

6 Q And, could you tell the Court what that term

7 means?

8 A Skim milk, skimmed milk, non-fat milk, fat-

9 free milk are all the same thing. That's where you

10 take whole milk, or full cream milk, and by

I I centrifugation, remove the cream from that. What's

12 left over is the fat-removed milk, or the skimmed

13 milk.

14 O Okay. Now, is the frozen yogurt portion of

15 the imported merchandise a product that is known or

16 recognized in United States commerce or industry as

17 skim orskimmed milk?

18 A It is not skim milk, no.

19 Q And, could you explain for the Court why the

20 frozen yogurt is not skim milk?

21 A Similar to why it's not full cream milk,

22 because it has an organism level which would not be

23 typical of, you know, consumable milk, an acidity

24 which would not make it skim milk, and the sweeteners

25 and flavors.

76

I

2

3 Q

THE WITNESS: Is that okay?

BY MR. PETERSON:

Okay. Now, are you familiar -- are you

4 familiar with the product known as yogurt ? Just

5 generically.

Yes, yes.

And, could you tell the Courl what yogurt

6 A

7 Q

8 is?

9 A Yogurt is cow's milk that has been cultured,

10 fermented, similar to the process that we're talking

I I here, with specific organisms. They're in the lactic

12 acid bacteria family. Again, similar to what we're --

13 what we_'e using herc.

14 As I've been looking into that recently, it

15 -- there is -- there are minimum titratab|e acidity

16 requirements. There are minimum requirements of how

17 that's all cultured, before it's consumed.

18 Oftentimes, fruit or sugar or something,

19 then is added to that later, before it's eaten.

20 Q Okay. Now, you testified earlier that the

21 white portion at the center oftbe imported

22 merchandise is something that is known as frozen

23 yogurt.

24 Is that correct?

25 A Yes.

77

I industry and commerce in the United States, is yogurt

2 understood to be a different product from whole milk?

3 A Yes.

4 Q Is it understood also to be a different

5 product than skim milk?

6 A Yes.

7 Q Within industry in the United States, does

8 the term cultured milk refer to a different product

9 than whole milk?

10 A Not necessarily.

II Q What about skim milk?

12 A Not necessarily.

13 Q And, in what sense could an -- or could a

14 cultured milk be a whole milk or a skim milk?

15 A Either one of those could be the starting

16 material for making a cultured milk.

17 Q You mean whole milk or skim milk could be

18 the starting point for making a cultured milk.

19 Is that your testimony?

20 A Correct.

21 Q Okay.

22 THE COURT: Ifl can just ask, so I can

23 understand it, and I don't know what the importance of

24 this is, but I want to understand it. You start with

25 whole milk to get a cultured milk, but when you finish

78

16

17

18

19

1 flavoring element made with condensed skim independent

2 from the blend of-- of lactose-reduced skim milk and

3 condensed skim.

4 Q Now, can you get condensed skim milk or

5 lactose-reduced skim milk, or the blend, without

6 having whole milk someplace down the line, as a

7 starting point?

8 A No.

9 Q Would the same be true with a fully cultured

10 yogurt? Somewhere down the line, you have to have

I I whole milk to make that fully cultured yogurt.

12 A Yes, sir. Your starting point is going to

13 be a raw milk, which -- which is -- well, ifit's got

14 more than three and a half percent fat, then it --

15 then, it fulfills the definition for whole milk.

(Pause)

THE COURT: Does raw milk ever fall below

that?

THE WITNESS: Yes. In fact, in the standard

20 of identity allowed by the State of Wisconsin, raw

21 milk can be as low as three percent. But, the -- the

22 federal standard is -- is three and a quarter.

23 We had -- several years ago, we -- three,

24 four years ago, we had a drought in Wisconsin, and we

25 had very poor feed for the dairy cattle as an end

79

I in this -- in this case, in an amended complaint. It

2 wasn't, therefore, before the Agency when they made

3 their ruling.

4 If you have competition between Chapter --

5 Chapter 4, the yogurt provision, 0403, and 2105, based

6 upon what you've testified to today, where would you

7 classify that merchandise?

8 A In 2105.

9 MR. DAVIS: All right. I have no further

10 questions, Your Honor.

I 1 (Pause)

12 MR. KNAUSS: May it please the Court: My

13 name is Curtis Knauss, also representing The Pillsbury

14 Company, the Plaintiffin this matter. Let me say,

15 it's good to get up here, once and for all.

16 CROSS-EXAMINATION

17 BY MR. KNAUSS:

18 Q Mr. Brady, good morning.

19 A Good morning.

20 Q Good to see you again.

21 Customs has a mandate to classify goods in

22 the condition as their imported.

23 Is that correct?

24 A Yes, that's correct.

25 Q Isn't -- isn't it true that, under the

80

I Q And, do you happen to know how yogurt is

2 produced?

3 A Yogurt is a fermented milk. It's -- in the

4 manufacturing process, the milk is pasteurized. Then,

5 it's inoculated with -- with the two characterizing

6 bacteria. The fermentation process proceeds, and -°

7 and the product is -- comes into being.

8 Q So, isn't it true that -- that all dairy

9 products start as whole or skim milk?

10 A I would say all dairy products probably

II start as whole milk, because that's what comes from

12 tbe cow.

13 Q Once -- once milk or skim milk is acidified

14 or fermented, as you've described, can it then be

15 called an article ofmilk ?

16 (Pause)

17 A I think, at that point, its identity is

18 simply fermented milk or acidified milk. 1_ not

19 quite sure how to -- how to understand your question.

20 Yogurt is a fermented milk. It might be

21 characterized an article ofmilk, since it's a

22 commercial product.

23 Q Once a milk is fermented or acidified, can

24 it -- can it be restored to its original status?

25 A I don't believe so.

81

I establish that this particular product is yogurt or

2 not, for tariff purposes, in its imported condition,

3 it's in the form of a frozen dessert product. And,

4 the explanatory note directs that when you're

5 comparing those two products, go to Chapter 21. That

6 takes precedence. So, to that extent, I can be a

7 little bit disinterested. I don't feel that it's an

8 issue.

9 l think what we have is -- is a product

l0 that's known in commerce and industry as yogurt, and

I I that's the product that's defined in the C.F.R.

12 standards. And then, there's a distinct product,

13 called frozen yogurt. And that, in essence, is a

14 confection or frozen dessert-type product. And,

15 that's perceived by the industry as a different type

16 product.

17 It's made -- it's made differently. Not

18 only is the -

19 THE COURT: Well, from what I had gotten

20 from Professor Bradley, it's made two -- one -- frozen

21 yogurt is made in one of two different ways.

22 THE WITNESS: Yes, that's right. I just

23 think it's not -- the yogurt, itself, is more or less

24 the material. It's a fermented milk.

25 So, what we have, the alternatives that were

82

I

2 A

3 Q

4 A

5 Q

forty Fahrenheit -- minus forty Fahrenheit, --

Urn bmm.

-- and as cold as minus fifty Fahrenheit.

Okay.

Now, given your typical table speeds,

6 wouldn_ that mean that you can have a permissible

7 variation of shell thickness because of these variable

g speeds?

9 In other words, you could have one

10 production run where the temperature of the brine is

1! forty-five degrees, another one where it's minus

12 forty, and another one where it's minus fifty.

13 Wouldn't that affect the thickness of the shell?

14 A If you allowed the brine temperature to

15 control the sorbet thickness, that would be true. Wc

16 do it the other way around. We measure the thickness

17 to adjust the brine temperature.

18 So, this allows enough variation so that we

19 can manipulate it to get the right thickness.

20 Q When do you measure the shell?

21 A As it's coming off the ver_ end, after we

22 extract it from the mold.

23 Q You will have already produced the completed

24 frozen yogurt bar at that point.

25 Is that --

83

I (Pause)

2 THE COURT: You don't even need to answer

3 that. It'sjust idle curiosity.

4 THE WITNESS: I'm not -- ] don1 know. I

5 could be made to believe it, but I don't know.

6 THE COURT: Okay.

7 BY MR. PETERSON:

8 Q Previously, you testified, I believe, that

9 -- that Haagen-Dazs today continues to make raspberry

10 sorbet/yogurt bars.

I ! Is that con'¢_?

12 A Yes. Raspberry sorbet and yogurt, yes.

13 Q Now, the other product involved in this case

14 is a chocolate sorbeVvanilla yogurt bar.

15 To your knowledge, does Haagen-Dazs still

16 manufacture that bar?

17 A No, that's no longer being manufactured.

18 Q And, do you know why that is?

19 A The only difference in the bar was the

20 flavor ofsorbet, so I assume it's -- that was just

21 not a combination that worked.

22 Q Okay. Now, Mr. -- Mr. Sweet, in your

23 position as product quality manager, do you have

24 occasion to become involved in determining what

25 ingredients are to be used in a sorbet/yogurt bar?

84

2

3

4

5

6 0

THE COURT: Lay a foundation for his --

MR. PETERSON: Okay.

THE COURT: -- his examination of the fact.

MR. PETERSON: Okay.

BY MR. PETERSON:

In manufacturing the imported merchandise,

7 does the Plaintiffattempt to comply with these

8 criteria that you've identified in Plaintiff's

9 Exhibit 7?

10 A We certainly attempt to. We've done more

11 thanthat.

12 Q Okay. Could you describe for the Court what

13 you've done?

14 A When you -- you send in a request or I don't

15 now exactly what it's called, to the National Yogurt

16 Association, to ask for their permission to use their

17 logo on our packaging, which we do -- we do use, you

18 have to submit some information.

19 One is -- and, again, it's -- it's in here,

20 too, what you do, but you have to test your product

21 for the live and active cultures, make sure it meets

22 the ten to the seventh. We do that whenever we start

23 up new production, or a new flavor, to confirm it

24 meets those criteria. We rely on the time and

25 temperature, and the fact that it develops this

85

I product.

2 Q Okay. So, in other words, in order to meet

3 the National Yogurt Association standard, the product

4 has to have ten million grams?

5 A Ten million--

6 Q Or ten million organisms?

7 A -- in each gram.

8 Q Okay. Now, to your knowledge, does the

9 Plaintifftest its yogurt formula for the

10 sorbet/yogun bar at issue here to determine wbether

1] it meets that ten to the seventh requirement?

! 2 A We do not test every batch. But, we test

13 the process. And, when we get the certification, we

14 submit that data, showing that we've tested several

15 different lots and they all have met that minimum

16 standard or higher.

17 MR. PETERSON: With the Court's permission,

18 I'd like to show the witness Plaintiff's Exhibit

19 Number 8 for identification, and ask him -

20

21

22

23

24

25

THE COURT: Surely.

MR. PETERSON: -- if he recognizes it?

(Witness perusing document)

BY MR. PETERSON:

Mr. Sweet, could --

Yes, I recognize this.

86

I

2

3

4 q

THE WITNESS: Yes.

THE COURT: Um hmm.

BY MR. PETERSON:

Okay. Now, to your knowledge -- well, let's

5 go to the first page of this exhibit, and do you see a

6 paragraph where the word text appears above the

7 paragraph?

8 A Yes.

9 Q Could you just read into the record the

10 first sentence that appears under that, starting with

I 1 the word background ?

12 A Certainly. Background. This test is done

13 to be sure that the Haagen-Dazs fat-free frozen yogurt

14 is fermented with both L. delbrueckii sub--species

15 bulgaricus and S. thermophilus, and has at least ten

16 to the seventh CFU per gram.

17 Q So, to your knowledge, would this be a test

18 done to determine compliance with the NYA requirements

19 for frozen yogurt?

20 A That is why it was done. In fact, near the

21 top of this, the objective is just that, to make -- to

22 -- to test this to assure it meets those criteria.

23 Q Okay. And, if I could just ask you to scan

24 through this first document, is there a test result

25 reported for the -- the products that are the subject

87

1

2 A

3 Q

4 A

point-one-five to point-one-eight?

What do I base them on?

Yes.

This is -- this is common knowledge in the

5 industry, and a very notable textbook by Hugo Sommer,

6 S-O-M-M-E-R, illustrates that very, very well.

7 Q Now, taking into account the apparcnt

8 acidity ofthe milk products, the basic milk products,

9 in your opinion, has Pillsbury shown that the

10 fermentation process of-- l_n sorry, that point-

11 fifteen percent of the total acidity was, in fact,

12 obtained by fermentation, rather than by apparent

13 acidity?

14 A Well, we've - we've seen no quality

15 assurance documentation. If- if they were going to

16 prove that point-one-five percent were a part of their

17 finished product, they would have had to do an initial

18 titration before the culture was added -- excuse me.

19 They would have had to do an ifiitial titration on the

20 ice milk base, as they call it, and then they would

21 have to do a final titration on the flavor

22 concentrate, and a final titration on the finished

23 blended frozen yogurt mix.

24 Q Their standards state that they are looking

25 for point-three percent to point-four percent

88

I titratable acidity in the final product.

2 Is that correct?

3 A That's correct.

4 Q Given the apparent acidity that's present in

5 dairy product -- in milk products, would that -- they

6 achieved point-three percent titratable acidity.

7 Would they have, in fact, obtained at least point-

8 fifteen percent of total acidity by fermentation?

9 A From -- from my calculations, and I've got

10 them written over there, but I think I can do it from

I 1 memory, the titratable acidity in their product, from

12 the apparent acidity viewpoint, varies between point-

13 two and point-two-five, depending upon whether you use

14 point-one-five or point-one-eight as your reference to

15 apparent acidity.

16 And, consequently, if you use -- if you used

17 point-two-five, for example, that exceeds their limit

18 ofpoint-four on titration. They -- in their

19 specifications, they want the finished product, ifl

20 recall correctly, to be between point-three and point-

21 four titratable acidity.

22 If-- if you use point-one-eight to develop

23 the apparent acidity calculation, based on the milk

24 products that are in there, you will determine that

25 that apparent acidity is point-two-five. And then,

89

I Haagen-Dazs marketed these dessert bars?

2 A I heard from Brian Sweet the way they

3 marketed it today, yes.

4 Q And, have you examined their packaging, a

5 variety of their packaging, also?

6 A I have seen Xerox copies of their packaging

7 materials, and then the exhibit that was given today,

8 also the -- a similar exhibit at deposition.

9 Q Based upon your review of the production and

10 processing materials, do you have an opinion whether

I 1 the frozen yogurt core is yogurt?

12 A Yes, l have.

13 Q What is your opinion?

14 A In -- in my expert report, I stated that all

15 of the milk constituents must be fermented in order to

16 call it yogurt.

17 Q Why is that necessary?

18 A This has been a fact of long standing with

19 the industry, in spite of the fact that other -- other

20 methods of manufacture are used in making frozen

21 yogurt, or another method is used in the manufacture

22 of frozen yogurt.

23 Q Was this also one of the requirements of the

24 National Yogurt Association, for yogurt and frozen

25 yogurt?

90

I A The National Yogurt Association does require

2 that all milk solids be fermented. However, ifl'm

3 allowed to continue?

4 Q Please.

5 A However, I had the opinion, from industry

6 practices, prior to the nineties, roughly, that frozen

7 yogurt must be made from -- or frozen yogurt requires

8 that all of the mil,k solids be fermented. And, it's

9 only been since Plaintiff's counsel produced the

10 National Yogurt Association bulletin off the website

I 1 that I learned that they also require that all of the

12 milk solids be fermented.

13 MR. DAVIS: If[ may have a moment, Your

14 Honor?

15 (Pause)

16 THE COURT: Well, while you're doing that, I

17 want to ask a question.

18 At the beginning of your testimony, 1

19 remember you talked about frozen product that was made

20 from a mixture, and I -- I asked you what you called

21 that, and you said frozen yogurt.

22 THE WITNESS: Yes.

23 THE COURT: Was that --

24 THE WITNESS: In -- in class?

25 THE COURT: Um hmm.

91

1 THE WITNESS: Yes.

2 THE COURT: Was that one in which all the

3 milk solids were fermented?

4 THE WITNESS: Yes, sir.

5 THE COURT: Okay.

6 THE WITNESS: I've made it both ways, and --

7 and I have -- I started off, initially, making it only

8 with the milk solids fermented, the entire lot of milk

9 solids fermented. And then, I made it both ways,

10 subsequently, at the end of my tenure at the

I I University.

12 THE COURT: And, in -- in both ways, did you

13 still call it frozen yogurt, or--

14 THE WITNESS: For want of a better title,

15 yes. But, I explained to the students exactly what

16 was -- what industry practices were, and -- and what

17 industry -- industry's former practices were.


19 THE WITNESS: The -- the easiest way to make

20 a frozen yogurt, Your Honor, is the way that

21 Haagen-Dazs is making it right now. It's the easiest

22 way to control that finished product. If you have to

23 ferment all of the milk solids, you need to -- you

24 need to have good control. Otherwise -- and -- and

25 monitoring. Otherwise, you may have greater acidity

92

I than you want.


3 THE WITNESS: And so, there's an obvious

4 need then to dilute. And, to minimize that

5 responsibility, 1 guess you could call it, to

6 industry, you make a base and you add this flavored

7 concentrate, is what 1call it, the highly fermented

8 yogurt mixture, you add that to the base that you've

9 prepared and call it frozen yogurt.

10 However, by national yogurt standard, and my

11 former position, 1guess my first position, on the

12 manufacture of frozen yogurt, the -- you escape the

13 requirement of all solids being fermented.

14 THE COURT: Other than Haagen-Dazs, do other

15 companies do that?

16 THE WITNESS: Yes, they do.

17 THE COURT: Do a lot of them?

18 (Pause)

19 THE WITNESS: 1 cannot tell you. I cannot

20 tell you, because I have not been privy to what they

21 do in other manufacturing sites.

22 THE COURT: Do you have any idea what the

23 industry standard is? I mean, just practice -- by

24 practice, and not by --

25 THE WITNESS: Industry standard is

93

I simplicity and ease of control. They dont hire PhDs

2 in dairy science or food science to come in and run

3 their program for them.

4 THE COURT: So -- so, what you seem to be

5 telling me is there would be a bias, if you will,

6 towards doing it the way Haagen-Dazs does it, in order

7 to make it as -- as easy to get that flavor

8 concentration that the customer likes as possible,

9 (Pause)

10 THE WITNESS: Unforlunatcly, that may be

I I true. But, you aren'_ getting the flavor, --

12 THE COURT: The true --

13 THE WITNESS: -- because you're putting in a

14 very small portion. What you're getting is the

15 acidity.

16 THE COURT: Um hmm. 1 understand what

17 you're saying. From a --

18 THE WITNESS: And--

19 THE COURT: -- from a purist viewpoint, it's

20 not the same thing.

21 THE WITNESS: That's correct.


23 THE WITNESS: And, from the NYA viewpoint,

24 it's not the same thing.

25 THE COURT: Um hmm. You know, it's a very

AI 94

] control, yes.

2 Q Okay. So, producing frozen yogurt this way

3 is not -- well, let me strike that and begin again.

4 I think you testified on direct examination

5 that, in industry practice, there are a number of

6 producers of frozen yogurt who make their product the

7 same -- using the same method that Haagen-Dazs does.

8 Is that correct.'?

9 A Yes, bat I'm not sure that all of those

10 manufacturers have the National Yogurt seal on their

II finished product container.

12 Q Okay. But, it is a common way to make the

13 product known as frozen yogurt in the United States.

)4 A That -- that is one of two ways of doing it,

15 yes, sir.

16 Q Okay.

17 A Whether it's common or not, I don_ know.

18 Q Okay. And, now do you -- you recall that,

19 back on August 28th, we took your deposition in

20 Minneapolis.

21 Do you recall that?

22 A Yes, I do.

23 Q I'm sure it's unforgettable. Not -- not

24 every lawyer asks you about whale milk all the time.

25 With the Court's permission, there's an

95

1 THE WITNESS: Your Honor? The reason -- the

2 reason industry can get away with this juggling act

3 is, as I just -- or we talked about previously. There

4 is -- there is no standard of identity under FDA to --

5 to mandate that industry prepare the product in a

6 specific way. The only -- the only standard is what

7 NYA has.

8 THE COURT: And, that's that one, two,

9 three, four on -- on that page that's in front of you,

10 right? The product must be fermented with --

I I THE WITNESS: Yes, yes. And, let me go back

12 to that page. Yes.

13 THE COURT: Okay. And, if they--if they

14 send in a certified, legitimately certified test that

15 meets those four standards, that's sufficient, as far

16 as the -- as the National Yogurt Association is -- is

17 concerned? For purposes of satisfying their testing

18 requirements?

19 THE WITNESS: It appears like that might be

20 the only requirement. And -- and, certified? I doubt

21 if it needs to be certified. Certainly, it doesn't

22 indicate that an independent third-party laboratory

23 must do this analysis for you.

24 THE COURT: Certified by even the producer?

25 Okay. And, it is--

96


BEFORE: HON. EVAN J. WALLACH, JUDGE


UNITED STATES,

Plaintiff,

Defendant.

Court No. 00-12-00570

ANSWER TO AMENDED COMPLAINT

Pursuant to Rule 7(a) of the Rules of the United States Court of international Trade, the

United States, defendant, responds to the allegations of plaintiffs amended complaint as follows:


the merchandise described in the allegation as "frozen sorbet/yogurt dessert bars" contains yogurt

for purposes of the tariff. Denies that the merchandise is "frozen sorbet/yogurt dessert bars" and .

avers that the merchandise is an article of milk coated with sorbet. Admits the remaining

allcgauons of this paragraph.

2. Admits.

3. Admits.

4. Denies that the merchandise is "frozen sorbet/yogurt dessert bars" and avers that the

merchandise is an article of milk coated with sorbet. Admits the remainder of the allegations set

forth in this paragraph.

5. Denies that the merchandise is "frozen sorbet/yogurt dessert bars" and avers that the

merchandise is an article ofmilk coated with sorbet. Denies that duty was assessed on the

merchandise at a rate of 50.2¢ per kilogram plus 17% ad valorem and avers that the duty assessed

105

was at a rate of 51.7¢ per kilogram plus 17% ad valorem. Admits the remaining allegations set

forth in this paragraph.

6. Admits that plaintiff filed timely protests at Detroit, Michigan, between May 10 and

July 31 (not JuJy 30), 2000, challenging the classification of the merchandise upon liquidation.

Denies the remaining allegations of the paragraph and avcrs that the protests are the best

evidence of their contents.

7. Admits.

8. Admits.

COUNT I

9. Defendant repeats and realleges the responses to the allegations contained in

Para_aphs 1 through 8, as if set forth in full herein.

10. Admits that the merchandise is a frozen dessert bar. Denies for lack of information

or knowledge sufficient to form a belief as to whether the merchandise described in the allegation

as containing "frozen sorbet/yogurt" contains yogurt for purposes of the tariffand avers it is an

article of milk covered with sorbet. Denies that the merchandise is labeled as either "Raspberry

/Vanilla Yogurt Bar" or "Chocolate Sorbet/Vanilla Yogurt Bar" and avers that the merchandise is

labeled as either "Frozen Yogurt Raspberry & Vanilla" and "Frozen Yogurt Chocolate &

Vanilla" and Lsinvoiced as either "H. Dazs Rasp/Van Yogurt Bar" or "Haagen Dazs Yog

Choc/Van Bar." Admits both products are imported bearing the Htiagen Dazs trademark.

asserted.

11. Denies for lack of inlbrmation or knowledge sufficient to form a belief as to the truth

of the mailers asserted.

106



13. Denies that the merchandise is not "articles of milk or cream." Admits the article is

prepared for marketing to the ultimate consumer in the form in which imported from Canada and

is packaged ready for sale to retail consumers. Denies the remaining allegations set forth in this

paragraph for lack of information or knowledge sufficient to form a belief as to the truth of the

matter asserted.

] 4. Denies.

COUNT !I


through 14, as ifset forth in full herein.



17. Denies that the merchandise is not an "article of milk or cream." Admits the article is

prepared for marketing to the ultimate consumer in the form in which imported from Canada and

is packaged ready for sale to retail consumers. Denies the remaining allegations set forth in this

paragraph for lack of infor'mation or knowledge sufficient _o form a belief as to the truth of the

matter asserted.

18. Denies.

COUNT !II



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20. This para_aph is not comprehensible, therefore, denies.

21. Admits that the cited rulings held that sorbet is classifiable as edible ice. Otherwise

denies. Denies an), inference that the subject merchandise is classifiable under Subheading

2105.00.50 or that it is edible ice.

22. Denies for lack of information or knowledge sufficient to.form a belief as to the truth


23. Admits the rulings cited in paragraph 23 held that frozen yogurt products are not

classifiable as "ice cream"; avers that these rulings were issued prior to the amendment to

Additional U.S. Note 1 to Chapter 4, which is applicable to the subject merchandise.

24. Denies that the merchandise is not "'articles of milk or cream." Denies the last phrase

of this allegation because it is not comprehensible. Admits the article is prepared for marketing

to the ultimate consumer in the form in which imported from Canada and is packaged ready for

sale to retail consumers. Denies the remaining allegations set forth in this paragraph for lack of

information or knowledge sufficient to form a belief as to the truth of the matter asserted..

25. This allegalion consists of legal argument and no response is required, ira response

is required, denies.

26. Denies for lack of information sufficient to forma belief as to the truth thereof.

COUNT IV



28. This allegation consists of legal argument and no response is required. Ifa response

is required, denies.

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29. This allegation consists of legal argument and no response is required. If a response


30. Denies.

31. Denies.

COUNT V


through 31, as if set forth in full herein, purposes. Denies the remaining allegations of this

paragraph.

33. Denies.

34. Admits that Subheading 0403.10.90 provides as quoted. Denies any inference that

the imported merchandise is classifiable under this provision. Denies that the last two digits in

0403.10.90.00 are part of the statutory language of the provision.

35. Denies.

WHEREFORE, defendant respectfully requests that judgment be entered dismissing this

action, overruling plaintifPs claims, sustaining the decisions of the appropriate Customs officials,

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and granting defendant such other and further relief as may be just and appropriate.


ROBERT D. MeCALLUM, JR.

Assistant Attorney General

By: JOHN J. MAHON

Acting Attorney in ChargeInternational Trade Field Office

Daled: March 31, 2003

SAUL DAVIS

Senior Trial Counsel

Dept. of Justice, Civil Division

Commercial Litigation Branch26 Federal Plaza


Attorneys for Defendant

Tel. No. (212) 264.9230 or 3584

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20

I previously marked for

2 identification as Plaintiff's

3 Exhibit No. I, was admitted into

4 evidence.)

5 BY MR. PETERSON:

6 Q Okay. Now, Mr. Sweet, are you familiar -- I

7 think I asked this -- with the merchandise that's the

8 subject of this lawsuit?

9 A Yes, I am.

10 Q And, could you describe for the Court what

11 that merchandise is?

12 A It's a -- a novelty -- an ice cream novelty.

13 Those are kind of -- we just basically call it a

14 "stick bar." It's a frozen dessert novelty. It has

15 sorbet on the outside, and a fat-free frozen yogurt in

16 the center.

17 Q Okay.


19 MR. PETERSON: My colleague, Mr. Knauss, is

20 now taking Exhibit 2 out of a bag. And, this bag,

21 actually, has been to court before.

22 [Laughter]

23 MR. PETERSON: It was used for demonstration

24 work in the case of Dolly, Incorporated versus United

25 States a couple of months ago.

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Counsel, in their schedule, said that they had no

objection.

T"HE COURT: All right. They're part of the

Court's record already, are they not?

MR. DAVIS: Yes, Your Honor.

BY MR. DAVIS:

Q All right. I'm going to show you the --

attached to that entry paper is a photocopy of the

packaging of a Haagen-Dazs raspberry and vanilla

frozen yogurt bar coated with raspberry sorbet.

THE COURT: _Fnere are you in the record?

MR. DAVIS: This is the actual entry, one of

the actual entries in this case, Your Honor.

THE COURT: Do I have that material?

MR. DAVIS: It's a copy that's Defendant's

Exhibit D for identification.

THE COURT:

MR. DAVIS:

THE COURT:

"B" as in "bravo"?

"D" as in "davis."

Oh. Thank you.

BY MR. DAVIS:

Q This is attached to the actual entries of

the imported merchandise. If you notice, it has an

ACS date of 11/98.

Would that be November of '98?

(witness perusing document)

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A Yes.

Q would that have been the packaging for the

imported merchandise?

A Could you remind me of the time frame of

this import case?

Q This import occurred on May 6, ' 99.

A That time seems recent -- or recently before

that. I don't know if there was a change between

11/98 and -- and that date. It -- it seems pretty

close. It could have been.

Q But, is it correct to state that the

packaging in Plaintiff's Exhibit 2 for identification

is definitely not the packaging for the imported

merchandise, based on the ACS date you've testified

to?

A

graphic.

This -- there was some change in this

Actually, in this case, the most recent

change was the fact that it changed from the

Haagen-Dazs Company to a company called "Ice Cream

Partners," and that was this graphics change.

The one before that, I'm not exactly sure of

the dates of that, but specifically, this art copy

could not have been used in that time frame.

Q Thank you.

MR. DAVIS: Your Honor, we have no objection

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l in your own words for the Court?

2 A Yeah. Let me -- if I could take a little

3 time here, I'll point to some pages in -- in -- if

4 that would be helpful, Your Honor? Of where I'm

5 getting some of the numbers from?

6 THE COURT: If it's helpful to you.

7 THE WITNESS: Okay. I don't remember, to

8 six decimal places, all of this information.

9 THE COURT: We were on the description of

10 the ice milk --

I[ TH]E WITNESS: Right.

|2 THE COURT: -- portion of --

13 A (Continuing) The ice milk base is on Bates

14 Number 646, and it's a combination of a lactose-

]5 reduced skim and condensed skim blend, some liquid

16 sugar, various forms of corn syrup, and water. That

17 is pasteurized and put into a tank.

18 The second component is what we call the

]9 "frozen yogurt base." The ingredients of that are

20 shown on Bates Number 636, or Page 6 of -- of this

21 document. It's a combination of condensed skim milk

22 and water. Those two ingredients are pasteurized, put

23 into a culturing or a fermentation tank, brought to

24 the appropriate temperature.

25 And then, the third ingredient here, which

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1 is the cultures, or the yogurt cultures, are added to

2 that, and then that's incubated for a sufficient

3 amount of time for the organisms to grow to the high

4 numbers.

5 Q Okay. Now, let me just -- I want to focus

6 for a minute on the component that's shown here in

7 Bates Number 636, which is part of Exhibit 4.

8 A Okay.

9 Q You've testified that you combine, I

]0 believe, skim milk and water, and then introduce

II cultures into the mix.

12 A Yes.

]3 Q Could you tell the Court what type of

]4 cultures these are?

15 A I don't -- the organism names are longer

16 than what I can remember, but they're classic yogurt

17 cultures, the same ones that are required in most

18 identification documentation for yogurt.

19 Q Okay.

20 A They're -- lactic acid bacteria is the

21 general classification.

22 Q Okay. And, I believe you indicated that a

23 culture reaction or culturing process takes place,

24 once you introduce these cultures?

25 A Yeah. The organisms come in as, kind of,

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1 want to have happen is for the organisms to grow, as

2 -- or multiply. As they're multiplying, they're --

3 they're consuming the lactose, creating lactic acid,

4 and it tells us when we have the level of sourness or

acidity, and the level of organisms that we -- that we

want.

Q

A

Okay.

And, I -- specifically, I can go to the

chemistry of the test, but I didn't think that's what

you were asking.

Q Now, you testified that these organisms work

on the lactose in the milk.

A Yes.

Q Now, is -- is that a product known as --

when -- when there's a reference to _culturing milk,"

would this be the process that -- that occurs?

A Culturing or fermentation of milk is what is

the process that's occurring here, yes.

Q

milk"?

A I have heard the term.

bit about it. Yeah.

Q

A

Q

Are you familiar with the term "acidified

I've read a little

Okay.

Yes.

The product that is produced as a result of

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l this yogurt reaction, would that be a product that

2 would be considered to be a cultured milk product, in

3 your opinion -- or, in your -- in your experience?

4 MR. DAVIS: Objection. He's asking for an

5 opinion.

6 MR. PETERSON: I corrected my question.

7 MR. DAVIS: And, even under the questiDn,

8 he's asking for an opinion. And, counsel specifically

9 stated that this was going to be a fact witness, not

10 expressing opinion. And, we deposed him, based upon

II that fact, and we didn't conduct an expert deposition,

12 with that -- based upon that statement by counsel.

|3 THE COURT: Mr. Peterson?

14 MR. PETERSON: I'll be happy to re-phrase my

15 questions, Your Honor.

16 THE COURT: Go ahead and re-phrase it,

]7 because I'm sustaining the objection as it stands.


19 BY MR. PETERSON:

20 Q Mr. Sweet, in industry, to your knowledge,

2! is there a product or a group of products known by the

22 term "cultured milk'?

23 A I have no used that term in industry, but I

24 have heard of it.

25 Q And, could you tell us what that term means?

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1 A

2 been cultured.

3 Q And, when you say "cultured,

4 --

5 A

Q

A

Well, I mean, cultured milk, milk that's

" what would be

where --

-- what would be done to culture milk?

Where organisms have been allowed to grow

and multiply within the substrate of the milk.

Q Now, you testified that organisms are added

to this component of the frozen yogurt.

Yes.

And, would those organisms be considered

A

Q

cultures?

A

Q

Yes.

And, would the process that they perform

upon this component of the frozen yogurt be considered

a culturing process?

MR. DAVIS: Objection. Leading.

THE COURT: Well, sustained.

MR. PETERSON: Okay.

THE COURT: Re-phrase it.

BY MR. PETERSON:

Q What would be the name of the process that

these yogurt -- that these cultures perform on the

milk product which is included in this component?

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| A As I stated before, it,s a culturing or

2 fermentation process.

3 Q Thank you.

4 Now, after the culturing process has been

5 performed to this component of the frozen yogurt, is

6 anything else done to manufacture the frozen yogurt

7 component of Exhibit 2?

8 A As I had mentioned previously, yes. This,

9 then, is combined with some additional ingredients,

10 and the sweeteners, and stuff.

II Q Okay. Could you describe for us precisely

12 the additional ingredients that this component is

13 combined with?

14 A That was the ice milk base, that I referred

15 to previously.


17 THE COURT: /Lnd, lots of sugar, corn syrup,

A

yeah.

Q

And -- and, the lactose-reduced skim milk,

Thank you, Your Honor.

And, I'm sorry, that's how on -- is that --

THE COURT: It's at 646.

THE WITNESS: Oh, there you go. Thank you,

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Your Honor.

MR. PETERSON: Thank you, Your Honor.

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] A Correct.

2 Q What happens to the acidity, or what happens

3 to the -- to those cultures, when you blend these

4 products together? And, by -o when I say "blending

5 together," I'm referring to the yogurt base and the

6 ice milk base.

7 A Yeah. One piece I didn't mention is the

8 yogurt, after it reaches the level of titratable

9 acidity, and the organisms have grown, now it's

]0 cooled. If it's cooled below forty-five, fifty

|| degrees below that, then the organisms stop growing.

12 So, we kind of lock them there.

|3 But, if you would warm them up again, they

]4 would start growing again, like in your intestines, or

]5 some place like that.

]6 In this case, the organisms are active, but

17 they're not growing. When they,re blended into what

|8 we call the ice milk base, they're equally distributed

]9 throughout the whole thing, and become an integral

20 part, then, of that total mix.

2| Q Okay. So, then, the total mix, does the

22 total mix have a property of titratable acidity?

23 A The blended yogurt mix -- well, all milk has

24 titratable acidity. This has a higher titratable

25 acidity than it would have if we hadn't added the

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[No response]

For the actual imported --

The frozen yogurt base is combined with what

l requirements, "B" and "C"?

2 (Pause )

3 MR. DAVIS: My understanding is one is tied

4 into the other.

5 (pau s e )

6 THE COURT: What's the basis for your

7 understanding, Mr. Davis? I don't want you to

8 testify. You tell me what's the basis. Do you have

9 expert testimony as to that?

I0 MR. DAVIS: Consultation with my expert, and

I] a different printout from the website. May I have a

12 moment, Your Honor?


14 MR. DAVIS : My apologies, Your Honor. I

15 misunderstood that. I'll withdraw that aspect, and

16 I'll leave it for my expert. I do have one further

17 question.

18 BY MR. DAVIS:

19 Q Mr. Sweet, you testified in your earlier

20 testimony that the frozen yogurt mix is combined with

21 the flavored ice milk mix.

22 Is that correct?

23 A

24 Q

25 A

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we call an ice milk base.

Q The flavored ice milk base.

Is that correct?

A [No response]

Q I think that's what --

A I -- I don't recall if we flavor it before

or after we add that yogurt base.

MR. PETERSON: Objection, Your Honor. Does

this go to the voir dire?

MR. DAVIS: This goes to the testing, yes,

Your Honor.

THE COURT: I'll allow you to tie it up, but

that wasn't the Court's recollection of the witness's

testimony.

A (Continuing) But, I can confirm that. Just

one second.


You are correct. The ice milk base is

And then, the yogurt base is added to that.

A

flavored.

Correct.

O Okay.

temperature of less than forty-five degrees,

if my memory serves me correctly.

Is that correct?

A

Now, you also stated that it was at a

if I --

I think what I testified to was that it

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1 needed to be below forty-five to fifty, to stop the

2 growth of the organisms.

3 Q Right.

4 A But, what it actually is, is it is below

5 forty-five.

6 Q Okay. Now, if it,s below forty-five, that

7 means that the organisms cannot cause any further

8 fermentation.

9 Is that correct?

I0 A That's correct.

II Q So, at that stage, when the ice milk base

12 was added -- was mixed, rather, with the frozen yogurt

]3 base, after the mixing, there was no further

14 fermentation of the ice milk base.

]5 Is that correct?

16 A Correct.

17 Q I refer you to Plaintiff's Exhibit 7, at

18 Page 7.

19 THE COURT: What would the heading of that

20 be, please?

2] MR. DAVIS: National Yogurt Association

22 Criteria for Live and Active Culture Yogurt.

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THE COURT:

referring?

MR. DAVIS:

Okay. What -- to what are you

The top of the page.

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BY MR. DAVIS:

Q It says "live and active culture yogurt,

paten, refrigerated cup and frozen yogurt, is the food

produced by culturing Grade A dairy ingredients with a

characterizing bacterial culture in accordance with

the standards of identity for yogurt, low-fat yogurt,

and non-fat yogurt."

Do you see that?

A At the very top, yes.

Q All right. Now, was the entire -- was the

entire dairy portion -- milk portion -- cultured --

THE COURT: How does this relate to your

voir dire regarding that testing document, --

MR. DAVIS: Because, the testing document --

THE COURT:

examination.

MR. DAVIS:

-- as -- as opposed to cross-

The testing document indicates

certain criteria that have to be met, but that

criteria is not met by the frozen yogurt, per se.

It's met only by the --

document.

THE COURT:

MR. DAVIS :

THE COURT :

Mr. -- Mr. Davis, --

Yes.

-- you're asking about a testing

That's all you're limited to right now.

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You tell me how this relates to the testing document.

MR. DAVIS: The testing document purports to

test the -- the vanilla frozen yogurt bar, and to

provide results from that testing. One of the -- for

purposes of live and active culture yogurts.

One of the criteria for live and active

culture yogurts, frozen yogurt, is that the entire --

the entire milk portion be cultured. That's the

portion that we just read now. Plus, the -- and,

besides that, the federal regs cited also require

that.

If this testing was done on a product that

was not completely cultured, then the testing is

irrelevant, because, in any event, it doesn't comply

with the live and -- with the criteria for frozen

yogurt by the National Yogurt Association.

THE COURT: Well, I'll let you ask the

question. Go ahead.

BY MR. DAVIS:

Q Does that statement require that -- or

define yogurt as a product that has been fermented?

A I'm sorry. Ask that one more time?

Q Does that statement define yogurt as a

product, both refrigerated cup and frozen yogurt, as

a product that has been fermented?

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3 Q

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fermented.

A

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It defines it as a -- as a product produced

By culturing.

-- by culturing.

And, "by culturing" means it has to be

Is that correct?

Produced from --

NOI --

-- the fermented milk, yes.

food produced --

Q By culturing.

A Okay.

This says a

Q "By culturing _ means the product that is

known as "yogurt" or "frozen yogurt" has to be --

A Has been cultured.

Q -- cultured.

A Correct.

Q Was the ice milk base cultured?

A No.

Q Does this test reflect a test for results

relating to compliance with the NYA requirements for

frozen yogurt, --

A The --

Q -- for the entire bar?

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address the relevance objection, first.

We are not contending that the test records

that we're looking to move into evidence relate to the

imported merchandise. We're not saying that these

test records relate to the merchandise that were

imported in 1999. They couldn't have. They're dated

1995 and 1997.

THE COURT: If you're saying there's no

relation whatsoever, then --

MR. PETERSON: No, the reason that we're

introducing them is we are introducing them simply in

support of Mr. Sweet's statement that, from time to

time, I believe he testified, The Pillsbury Company

tests frozen yogurt.

formula was started,

THE COURT:

there --

MR. PETERSON:

THE COURT: --

MR. PETERSON:

I believe he indicated when the

to see what the --

Well, now you're saying that

-- culture level was.

is a relation.

well, we're -- well, we're

not offering these documents for the proposition

regarding what specifically the live and active yogurt

culture level in the merchandise at bar was. I

believe Mr. Sweet testified they don't perform that

testing for every --

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1 Q Okay. Now, you've testified as to the way

2 in which the frozen yogurt component of this product

3 is manufactured.

4 Can you tell the Court whether any whole

5 cream milk is used in manufacturing the frozen yogurt

6 component of the bar?

7 A There is no whole cream milk in this

8 product.

9 Q And, can you tell the Court whether there is

10 any skim milk used in production of the yogurt

l| component of the imported bar?

12 A There is a condensed skim milk, and a

]3 lactose-reduced skim milk used in this bar.

14 Q And, you testified that the reduced-fat skim

15 milk is processed prior to being put in the form of

]6 the frozen yogurt, correct?

17 A Say that one more time?

18 Q You -- you testified earlier this morning as

19 to the processes that are performed, for example, to

20 the yogurt base, and to the ice milk base, in order to

21 make frozen yogurt.

22 THE COURT: Mr. Peterson, I'm going to let

23 you build to something, if you need to, but try to

24 avoid being repetitive of what he's already testified

25 to, all right?

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] MR. PETERSON: Yes.

2 BY MR. PETERSON:

3 Q Is there anything done to the skim milk

4 components of the frozen yogurt during the processing,

5 that would change their characteristics as skim milk,

6 and transform them into something else?

7 A Some of the condensed skim milk is used in

8 the yogurt base, itself, that actually gets chemically

9 modified through fermentation, and the lactose is

|0 converted to lactic acid.

]] There is the lactose-reduce process, but

]2 that's as we purchase it. That doesn't -- that does

13 not occur during the process.

14 There is also some skim milk in -- in the

]5 ice milk base. That is pretty much intact. When you

16 add the acid and the culture to it, however, it

17 becomes so integrated, you can't really separate out

18 what was the skim milk and what was the fermented skim

19 milk. It's all kind of insidious, throughout the

20 whole thing.

21 Now, you used the term "fermented skimQ

milk"?

A

Q

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25

Yeah.

Is fermented skim milk recognized in

commerce or industry as something other than skim

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] THE COURT: All right. Then, we'll let you

2 go through your direct, and then break for lunch.


4 THE COURT: And then, do cross after lunch.

5 For some reason, the Court just has this urge to go

OUt and have a big dish of chocolate and raspberry

yogurt.

[Laughter]

MR. PETERSON:

brand, Your Honor.

0

We can recommend a very good

[Laughter]

BY MR. PETERSON:

Could you go into the formula-in column, and

identify for the Court those components of the

raspberry/vanilla sorbet/yogurt bar which are milk or

made from milk?

A It's identical to the chocolate sorbet and

yogurt bar. They're not all exactly in the same

place, but one is the condensed skim milk, eight-

point-two four percent. And, at the bottom, the same

LR-skim, at thirteen-point-one nine.

Q Okay. And, could you again show us in the

formula-out column which components of the bar are

milk or are dairy products?

A Certainly. The third one, which is the LR-

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1 skim condensed skim blend. And, the skim milk

2 condensed, which is the sixth one down.

3 Q Okay. Now, if you could look at Plaintiff's

4 Exhibit 3, is there contained in there the formula for

5 the raspberry yogurt -- the raspberry sorbet -- I

6 apologize -- that is included in the bar?

7 A Just the sorbet mix formula?

8 Q The sorbet mix formula.

9 A Yeah. That, actually, is in the part with

10 the Bates numbers. I mean, it's embedded in here, but

II it's tough to pull out, but the total -- the total --

12 Q Okay.


14 A This was made a little bit differently than

]5 the -- the chocolate one? The chocolate one, you can

16 put the cocoa and everything through the

17 pasteurization. But, you don't want to add that heat

18 to the raspberry. So, we put it together in two

19 places.

20 One is Bates Number 1274, which is corn

21 syrup, water, liquid sugar, and pectin.

22 (witness perusing document)

23 A And, that shows on Bates Page 1281, where we

24 take that, what we call the "un-flavored sorbet base"

25 here, that I mentioned before, combine that with lemon

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would have been shown in the formula-in/formula-out.

As you go across, there,s a percentage used.

The,e shou]d be very s_m_lar, again, to the

formula-in/formula-out.

There,s a little bit of difference in the

way we do accounting on milk, because we buy it on a

solids basis, and some things like that.

Q Okay. When you talk about the percentage --

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I0 THE COURT: Excuse me. The Court has a

II problem with this proposed exhibit. As the witness

12 indicated, what's in front of him -- and I'm sure that

13 I can look and see that it's the same as what's in

]4 front of me -- cuts off the names of the ingredients

]5 on the left side, such that for -- for a substantial

16 num_r of them, I can't tell what they are, and I know

|7 -- and the witness said he can't tell what at least

18 some of them are.

19 MR. PETERSON: Well, I don't -- again, I

20 don't know that the witness said he couldn't identify

21 the ingredients. He indicated they were cn/t off. If

22 it would help the Court, we could ask the witness if

23 he could identify the full names of these ingredients.

24 THE COURT: Well, he did say on some of them

25 that he couldn't. But -- but, let's hear on 1368 what

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1 THE COURT:

2 MR. DAVIS:

3 identification.

4 THE COURT:

5 MR. DAVIS:

THE COURT:

Where are you?

Plaintiff's Exhibit 14 for

189

Oh, thank you. Bates 10237

1023. And --

All right. Are you asking him6

7 to testify from something that's not admitted?

8 MR. DAVIS: No, but what I'm asking him is

9 that is there a difference in price, a significant

10 difference in price of an ingredient that just doesn't

I| appear here, in this sheet, at all.

]2 A (Continuing) So, ask me that one more time.

13 Q All right. Taking a look at --

14 A Yes.

]5 Q -- Plaintiff's Exhibit 14, --

16 A Yes.

17 Q -- do you see a price per kilogram in

]8 Canadian dollars there?

19 A Right.

20 Q That's a very large amount, isn't that?

21 A [NO response]

22 Q That doesn't appear at all on Plaintiff's

23 Exhibit 15 for identification, at 1368.

24 A I understand why that's confusing. When you

25 buy condensed milk products, you pay for it on a

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1 solids basis. And, when the people do financing,

2 sometimes they bring ic back to the actual formula?

3 You -- so, you're really paying for -- even

4 though it's a kilogram, for example, the unit is a

5 kilogram. It's really a kilogram of solids.

6 And, the -- and, the water is part of the

It -- that's -- I know it's -- I know it'sformula.

confusing.

MR. DAVIS: Your Honor, I don't see the

connection with the imported -- costing for the actual

imported merchandise in this case. I object.

basis.

THE COURT :

MR. DAVIS:

You're objecting on irrelevance

On a -- on irrelevance and

connection basis.

Davis.

THE COURT :

MR. DAVIS:

But, yes, irrelevance basis.

That's what irrelevance is, Mr.

I'm sorry, Your Honor, yes.

He hasn't shown it, and he's testified that

one of the very important ingredients on the frozen

yogurt side is not even in 1368.

THE COURT: well, let me hear -- let me hear

from you, Mr. Peterson, why proposed fourteen -- or

proposed fifteen is relevant, not based on what Mr.

Davis just said, but -- because I understand exactly

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| Its purpose -- purpose was to communicate to

2 the co-packer what the requirements and standards

3 were.

4 Q were these documents approved by higher-

5 level officials of Pillsbury before they were issued?

6 A There are several people who have to review

7 them and sign them. Typically, only to a manager

8 level, which would have been me.

9 Q All right. Were you actually involved with

I0 the -- with the documents depicted in exhibit -- what

11 I call Three-A?

]2 A These particular documents, for these

]3 particular products, no, I did not specifically review

14 these.

15 Q That would have been another manager at

16 Pillsbury?

]7 A Yeah.

]8 Q Do you know why they were titled

19 "Haagen-Dazs -- frozen yogurt"?

20 A Versus anything else?

21 Q Well, what is that? What is that title?

22 What does that designate?

23 A That first column there is the category of

24 products that we just put that in to help track how

25 many specs we have in different categories. It's part

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of how you search for items in our spec system.

Q Okay. So, that's a category that

Haagen-Dazs developed, and then it put this product in

that category.

Is that what you're saying?

A It was what we titled the category, to put a

bunch of specs in there, yeah.

Q Okay. And then, the next line, it says

"raspberry and vanilla fat-free yogurt bar."

What does that describe?

A Classically, that then is the name of the

product put on -- put on the package.

I will admit, being one of the people who

review this, these kinds of things, X tend to be, you

know, go more into the formula changes, and the

titling may or may not have been exactly what the

packaging read.

Q Axe there any Pillsbury procedures for

putting products in one category or another category?

A No. It's just wherever they seem to fit.

THE COURT:

THE WITNESS:

MR. DAVIS:

what page are you on?

Oh, I'm sorry.

That was -- that was the first

page, Your Honor, of exhibit -- what I had as Three-A.

The first numbered page is Page i.

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THE COURT: Yeah, that's my problem.

getting this Three-A, Three-B. I apologize.

MR. DAVIS: I know, that's -- I had some

problems with that, too, Your Honor.

BY MR. DAVIS:

Q Going to what I have as Three-B, that begins

with the Bates numbers -- I'm sorry, Four, Bates

Number 620.

A Okay.

Q The date on that document is also May i0.

'99, which is the period in issue,

Again, that product is the chocolate and

vanilla fat-free frozen yogurt bar? Is that correct?

A That's what the document is titled, yes.

Q All right. And, what category was that put

in?

217

I keep

A Similar to the other one, right above it, it

says, "Haagen-Dazs dash frozen yogurt."

Q All right. During this period of time, did

Haagen-Dazs also have a, quote, "sorbet" category?

A Yes.

(Pause)

Q Now, going to the entry papers --

MR. DAVIS: May I approach the witness, Your

Honor?

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1 THE COURT: You may.

2 (Counsel and Court Clerk conferring)

3 BY MR. DAVIS:

4 Q I'm going to show you the entry for,

5 according to the entry papers in this case -- we

6 discussed it earlier -- Entry Number 2060596-9.

7 THE COURT: 2060596-9?

8 MR. DAVIS: That's correct.

9 Q In that entry package is a photocopy of

10 packaging that you testified earlier was used as of at

]] least November of ' 98.

]2 Is that correct?

]3 A Correct.

[4 Q All right. And, that describes -- that's

15 packaging for the product in issue, a raspberry and

16 vanilla frozen yogurt bar.

]7 Is that correct?

18 A This is the multi-pack for a frozen yogurt

19 raspberry and vanilla bar, yes.

20 THE COURT: Speak loudly, Mr. Davis. I can

21 hear you, but I'm not sure.

22 MR. DAVIS: Thank you, Your Honor.

23 Q Do you know why the pack is just titled

24 =frozen yogurt"?

25 A As I looked into this, it was -- it was

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Q

A

Q

the bar?

A

219

] actually very interesting. When we first launched

2 this category of bars, they were called -- the main

3 title was "frozen yogurt." At some point, we changed

4 it to "sorbet and yogurt."

5 It appears that, at some point, they went

6 back to "frozen yogurt." And now, you see it's a

7 "sorbet and yogurt" bar, again.

8 Q All right. Looking at Plaintiff's

9 Exhibit 2, I think it was, the package for the

|0 imported merchandise, they called it "sorbet and

I] yogurt," but if you take a look at the right top hand

|2 [sic] corner, it says "fat-free vanilla frozen yogurt

]3 bar coated with raspberry sorbet. _

14 A Yes.

15 Q Is that a reference to a frozen yogurt bar?

16 Is that the -- the bar, itself?

17 You can't eat one without the other.

]8 Right.

]9 I mean, if I took --

20 What is a "yogurt bar"? The bar? What is

The bar is a -- I mean, it has yogurt in it

and it has sorbet in it.

You eat the whole thing.

you're asking, Mr. Davis.

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25

So, I mean, what is the bar?

I'm not quite sure what

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Q Have you ever seen packaging for Haagen-Dazs

ice cream that's coated with a chocolate film, or a

chocolate coating?

A Yes.

Q Am I correct in stating that the -- it,s

called an "ice cream bar with a chocolate coating"?

A I imagine it does. I can't visualize that

in front of my face right now.

Q In that situation, am I correct in stating

that the essence of the bar is the ice cream, and the

coating is a flavoring?

A From a consumer standpoint, you'd have to

ask the consumer. In -- in that particular case, it's

ninety percent ice cream, ten percent coating. So,

the predominance of the bar is the ice cream.

If you talk to consumers when we sell that

bar, it,s the coating that seems to drive liking,

actually, more than the ice cream. Interestingly

enough, Haagen-Dazs doesn't like to admit that, but --

[Laughter]

Q Now, if you take a look at this entry again,

there's an invoice here with a description of the

goods. There are three different categories of

merchandise here.

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process.

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Do you see that?

A Yes.

Q Which of the categories describes the

merchandise in this case?

A The three categories here are lemon sorbet,

a mango sorbet, and a raspberry -- =rasp, slash, van,

yogurt bar." It certainly would be the bar.

Q Is there any mention of the sorbet in the

invoice description?

A No.

(Pause)

Now, you described the manufacturing

Is it correct to state that this is a

continuous assembly line, if you will, type process?

Absolutely.

Is it desirable to stop the process at any

A

Q

stage?

A

Q

No.

Is it undesirable to stop it at any stage,

considering the speed of the process?

A Yeah, because the timing and how -- how much

it freezes, and when you suck that back, is critical,

if you would stop it.

Q And also, when you put in the -- the core

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I into the shell is very critical, the timing?

2 correct?

3 A

4 Q

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Is that

The timing?

In other words, after you suck out the --

the liquid raspberry portion, --

6 A Um hmm.

7 Q -- the next step is to pump in the frozen

8 yogurt portion.

9 Is that correct?

|0 A Correct.

1| Q Isn't the timing of that also a very

12 important?

13 A That's probably -- the timing of that is

14 probably the least critical. Once the -- the well has

15 been made, that's -- that maintains itself pretty

16 readily.

17 Q Are there times when Pillsbury desires to

18 stop the manufacturing process and, let's say, take

19 any portion out during the -- any component out,

20 during the manufacturing process?

21 A If we did, we'd have to throw away that

22 whole tray's worth of product.

23 Q

24 A

25 0

SO, it's not --

So, no, we would never stop the process.

Okay.

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1 (Pause)

2 A Or, in this case, Nestl_.

3 Q Nestl_.

4 Based upon your experience, have you ever

5 seen Pillsbury -- Pillsbury or anyone else sell a

6 raspberry sorbet that had a liquid core of raspberry,

7 in that condition?

8 A Where a frozen product would still be liquid

9 in the center? No.

]0 Q Okay. Now, at the point of suck-out, as you

11 referred to it earlier, the portion that's sucked out

|2 is the liquid raspberry portion.

13 Is that correct?

14 A It's the un-frozen sorbet, yes.

15 Q Okay. Do you know anyone who would buy it

]6 in the condition of the hard, three millimeter shell,

17 and just the raspberry liquid portion?

18 A No.

]9 Q Now, are you familiar with any situation

20 where Pillsbury has actually sold just the raspberry

21 shell, without anything inside? Just the shell?

22 A We have sold a sorbet bar, where it hardened

23 all the way through, but --

24 Q That's not my question.

25 A -- but, certainly, if it was just the shell,

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I there's no place to put the stick, so no. we wouldn't

2 -- we would not sell that as a bar.

3 Q So, just the shell, by itself, is not an

4 article of commerce.

5 Is that correct?

6 A [No response]

7 Q From Pillsbury's stand -- standpoint?

8 A We don't sell just the shell.

9 Q Okay. And, the -- just to clarify, the

10 shell with the liquid raspberry sorbet in it, is not

|i an article of commerce either.

]2 Is that correct?

]3 A That's a very temporary article, yeah. It

14 goes away --

15 Q You don't sell it that way.

16 A No, we don't sell it that way.

17 Q Okay.

18 Now, if you'd go to Plaintiff's Exhibit 4?

19 (Pause)

20 Q Do you know who made that exhibit? Again,

21 was that the R and D people?

22 A Yes. The R and D people made the -- yes.

23 Q And, was it approved by management-level

24 people?

25 A Up to manager level, yes.

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Okay. Now, if you go to Bates Number 692.

Okay.

That,s dated May i0, '99.

Is that correct?

A Yes.

Q All right.

importation.

That's right about the period of

Is that correct?

9 A That's my understanding.

I0 Q Do you know why it's referred to as "yogurt

II bar process"?

12 A The graphic, itself, --

13 Q The title, at the top.

14 A -- is -- is imported -- when this is made,

15 it's not -- it's not made as a one-up. It's a -- it's

16 not like a hand-typed document, and created from

17 scratch each time.

18 Our specification process imports pieces in

19 different stages. This graphic is a stage. It gets

20 pulled into a lot of specs.

21 When the spec was approved, that graphic was

22 also, in effect, re-approved. But, it was originally

23 created well before that date.

24 Q All right. How far back was Pillsbury

25 making a frozen yogurt bar with a raspberry or

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| chocolate coating?

2 '91/'927

3 A That was -- yeah,

4 there, yes.

(Pause)

226

Am I correct it goes back to about

witness?

THE COURT: You may.

' 92/,93, somewhere in

5

6 Q Now, you had discussed some of the marketing

7 information that's depicted in Plaintiff' s

8 Exhibits 11, 12, and 13.

9 A Um hn_n.

]0 Q Were those documents part of a much larger

J | marketing submission?

12 A Submission?

]3 Q Or document, if you will?

14 A The size of these documents, and the size of

15 the report is a common size. It's a top-line report.

|6 And, oftentimes, it is just the report.

17 Specifically, these documents were before my

18 time, so I'm not -- I'm not familiar with whether or

19 not there's a larger document or not.

20 (Pause)

2| Q Now, I'm going to show you Defendant's

22 Exhibit C, Tab 4, for identification.

23 MR. DAVIS: Your Honor, may I approach the

24

25

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] A Thank you.


3 Q Have you seen that document before?

4 A I have seen this style of document before.

5 This is Bates Number 189.

6 Q Could you describe what that is?

7 A It's what we call a PAD, or a project

8 initiation document. This document was filled out,

9 usually, by marketing, to indicate to the business

10 that they were intending to launch a new project which

|I might end up in actually launching a new product.

12 Q Is this a Pillsbury business record?

13 A Yes.

14 Q Is this the type of document that Pillsbury

15 typically makes when it decides to launch new

16 products?

17 A Yes. It's basically to get approval by some

18 senior management to go ahead and look in -- look into

19 the possibility of launching a new product.

20 MR. DAVIS: I would move this document into

2[ evidence, Your Honor.

22 MR. PETERSON: No objection, Your Honor.

23 THE COURT: What's your exhibit number?

24 MR. DAVIS: It's Exhibit C, Tab 5 [sic],

25 beginning at Bates Number 189 through Bates Number

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THE COURT:

MR. DAVIS:

THE COURT:

MR. DAVIS:

228

Exhibit C, Tab 5?

Yes.

What is it?

I'm sorry.

Four or five?

Four. I looked at5

6 the wrong side. My apologies, Your Honor.

7 THE COURT: Exhibit C, Tab 4, is admitted,

8 there being no objection.

9 (The document referred to above,

I0 previously marked for

II identification as Defendant's

12 Exhibit C, Tab 4, was admitted

13 into evidence.)

14 BY MR. DAVIS:

15 Q Now, you've stated that you've seen this

16 type of document on -- with regard to other products

17 also.

18 Is that correct?

19 A Yes, um hmm.

20 Q when it talks about _project," what is the

21 intent of that category?

22 A Just an overall description, to let senior

23 management know the -- the product category that we're

24 looking to launch a new product in.

25 Q Is this a yogurt bar with a sorbet -- does

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this encompass, rather, a yogurt bar with a sorbet

coating?

A The term "frozen yogurt bar" has been used

by Pillsbury and Haagen-Dazs to refer to this style of

bar, yes.

Q

A

O

This -- I'm sorry?

Style of bar.

Okay. This style of bar being a -- a bar

with a frozen yogurt center and a coating of sorbet?

A Yeah, yes.

Q When you're --

A With --

Q -- referring to this style of bar, were you

-- were you holding up Plaintiff's Exhibit 2?

A I was holding -- holding this up just to

have the picture. The bar, itself, in the form, has

So, this -- when I say "this style,"never changed.

N?

Q

A

Q

It's at Bates Number 189,

Okay.

-- all throughout its many names? Yes.

Do you know who Paul Curhan is? C-U-R-H-A-

at the top, right under


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Q

Oh I - _

-- H-A-N.

NO, I'm not familiar with that gentleman.

Okay. Now, in this document, if you look

under "business rationale," it says -- in the second

6 category, it says, "currently only have one strong

7 SKU, raspberry, dash, vanilla."

8 A Um hmm.

9 Q What does the "SKU" stand for?

I0 A I never remember. Basically, every

]l individual item, as it's sold, has a different SKU. A

12 multi-pack is a different SKU. It's a single-

|3 something-unit. I don't know.

14 Q Is that like a reference to a model number,

15 if you will?

16 A No. It's more of a inventory number, or a

]7 different unit as sold.

]8 (Pause)

19 Q If you take a look at Bates Number 190 in

20 that exhibit? At the bottom, under Roman numeral six,

21 for SKU rationalization, --

22 A

23 0

24 A

25 Q

Okay.

-- sub-B, as in =boy"?

Okay.

It says, "For each new SKU, slash_ flavor,

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1 please indicate whether intention is broadening taste

2 options, et cetera."

3 Does that SKI/, slash, flavor indicate that

4 the term SKU is referring to separate flavors? Each

5 SKU being a different flavor?

6 A In this instance, it's -- it's being used to

7 just say "flavor _ and not necessarily package type,

8 yes.

9 Q Okay.

]0 (Pause)

|1 Q I refer you to Plaintiff's -- to Defendant's

12 Exhibit C, Tab 3, for identification, beginning with

13 Bates Number 25 through 60.

14 A I have it.


]6 Q Is it correct that you've seen this doctunent

17 before, and that you testified that this is the actual

]8 product planning documents for the merchandise in

]9 issue?

20 A I don't recall if we've discussed this

21 specific document yet.

22 Q No, I'm talking about at your deposition.

23 Did you identify it that way?

24 (pause)

25 A Please state your question again?

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Q All right. Are these -- is this document a

Pillsbury business record?

A Yes.

O Is this the type of document that Pillsbury¢

issues when it intends to develop prototypes of its

various dessert bars?

A This is a marketing document which was -- is

put together during -- after the project has been

initiated, to start to -- to start to screen through

concepts.

So, it's not necessarily announcing we're

going to. This is, actually, part of the going to.

Q Okay.

A We are -- we are actually, now, starting to

understand how we're going to approach the project.

Q Is this type of document normally produced

by the Pillsbury personnel as part of their duties, in

the course of going through the prototype process?

A Prototype process usually means making up

bars. This is actually a -- this talks about

prototypes, but it's really do it more on concepts.

I can answer your question as yes, but

technically, it's --

Q It's not prototype process, but it's

normally done by Pillsbury personnel in the course of

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| their duties during their technical write-ups.

2 A And developing --

3 THE COURT: Conceptualizing.

4 A -- the market concepts, yes.

5 Q And developing the market concepts.

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you.

Thank

MR. DAVIS: Your Honor, I would move this

into evidence as a business -- a better business

THE COURT:

MR. DAVIS:

That's C-three?

That's C-three, for

record.

No objection, Your Honor.

There being no objection, C-

233

(The document referred to above,

previously marked for

identification as Defendant's

Exhibit C, Tab 3, was acimitted

into evidence.)

Do you

identification.

MR. PETERSON:

THE COURT:

three is admitted.

BY MR. DAVIS:

Q Now, if you look at Bates Number 25?

have that in front of you?

A Yes. Thank you.

Q It says "raspberry sorbet with vanilla

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yogurt bar."

Is that the imported merchandise?

A Yes.

THE COURT: Say, just to shortcut this,

unless you need to do otherwise, why are you doing

this foundational examination, Mr. Davis, when the

Plaintiffs don't object to your Exhibits A, B, or C?

MR. DAVIS: Well, I just wanted to identify

-- I'm sorry. Well, I guess it may be easier just to

move them in, as I go along, rather than -- the reason

I do it is that the Court has an option, even though

Plaintiff doesn't object, just to exclude it, if the

Court so wishes.

THE COURT:

MR. DAVIS:

Well, --

But, if -- if the Court desires,

1,11 be happy just to move it in and then go to my

substantive questions.

THE COURT: Why don't you do that?

MR. DAVIS: Thank you, Your Honor.

BY MR. DAVIS:

Q If you take a look at the category, what

category was this bar placed in, in this document?

A What category? We were calling this --

let's see, 1991, we were calling this "frozen yogurt

bars, _ at that time.

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| THE COURT: Is there a Yogurt Bureau of

2 Investigation?

3 [Laughter]

4 A I mean, certainly they review the documents

5 when you submit. But, after that, I don't know.

6 Q And, the -- all right.

7 Now, you testified during direct examination

8 in a series of questions whether or not the frozen

9 yogurt portion of the imported bars is full cream

10 milk, or skim milk.

11 Do you recollect that testimony?

12 A Yes.

13 Q All right. Now, my question to you is are

14 the frozen yogurt components, the dairy components,

15 made down the line from whole milk?

16 A At one point, all milk starts as whole milk.

17 Q And, further up the totem pole, if you will,

18 were they made from skim milk?

19 A Well, that would be further down the totem

20 pole.

21 Q

22 A

23 going.

24 Q

25 A

Well, --

Well, it depends which direction you're

Going, right.

Okay. You're starting at the bottom.

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[Laughter]

A Okay. I usually start at the top.

The ingredients we use came out of the cow.

They were turned into skim milk, and then condensed.

Q Okay.

(Pause )

Q I refer you to Defendant's Exhibit C-IO, Tab

Do you have that?


A Yes, sir.

Q At Bates Number 13467 Do you see that?

(Pause)

A Yes.

Q Now, the yogurt temperature --

MR. DAVIS:

THE COURT:

MR. DAVIS:

THE COURT:

And, does Your Honor have that?

I do now.

Okay, thank you.

Thank you.

BY MR. DAVIS:

Q In Step Number 14, yogurt temperature?

you see that?

A Yes.

Q At what stage of the process is that

temperature being measured?

A That's when it's exiting the freezer, as

Do

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SO, - -

Q

A

Q

A

It's twenty-five millimeters to an inch.

All right.

-- you do the math.

Right.

My brain is getting a little tired today.

(Pause)

THE COURT: I think before you ask a lawyer

to do math, Mr. Sweet, you should realize that the

reason we're not doctors is because we couldn't do the

math to get into medical school.

[Laughter]

THE WITNESS: Yeah, thank you, Your Honor.

MR. DAVIS: Or, we couldn't stand the sight

of blood.

[Laughter]

BY MR. DAVIS:

Q Now, you testified during my voir dire on

Plaintiff's Exhibit 15, that Pillsbury and,

presumably, Nestl_'s, purchased milk on a solids

basis.

Do you recollect that?

A I know that milk many times is purchased on

a solids basis. I didn't look at that particular

invoice long enough to determine if that's how that

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1 was done, but it looked that way.

2 Q All right. Well, my recollection says that

3 was something to the effect that you said that we

4 usually purchase on a solids basis.

5 A On a solids basis.

6 Q Why is the -- why is that done? Why not on

7 a liquid basis?

8 A If you just buy a pound of milk, it could

9 allow milk suppliers to add water and -- and cause

10 some problems. If you buy it on a solids basis, it

|I kind of keeps them honest.

12 Q Wel_, what kind of problems would the

13 addition of water cause?

14 A Then you wouldn't be buying what you thought

15 you were buying.

16 I mean, it is also true that there is

17 variation cow-to-cow, herd-to-herd, season-to-season,

]8 and we actually formulate on a solids basis. So, we

19 just need to know that that's what we're buying.

20 Q From what you're saying, the solids basis

21 seems to be the most accurate basis for purchasing

22 milk?

23 A

24 Q

25

Exactly.

Okay.

(Pause)

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| Culture Yogurt.


3 A I have it.

4 Q All right. Can you read that first

5 sentence?

6 A Starting "Live and active culture yogurt"?

7 Q Yes. It's in the record already. Just read

8 it to yourself, if you can.

9 A Yes.

]0 (Pause )

l] A Yes.

12 Q Under that requirement, can an article be

13 treated as cultured yogurt, or a refrigerated cup of

]4 frozen yogurt, for purposes of the NYAA -- I'm sorry,

15 NXA requirements, without the entire dairy constituent

]6 being fermented?

]7 A No, it cannot, according to this sentence.

]8 Q Now, have you examined -- you stated that

19 you examined Haagen-Dazs's documents, processing

20 documents.

21 Do you remember what percentage of the

22 yogurt bar -- I'm sorry, the yogurt core was the

23 frozen yogurt base that was actually fermented?

24 A Twelve percent.

25 (Pau se )

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THE WITNESS: Your Honor? The reason -- the

reason industry can get away with this jugg1{ng act

is, as I just -- or we talked about previously. There

is -- there is no standard of identity under FDA to --

to mandate that industry prepare the product in a

specific way. The only -- the only standard is what

NYA has.

THE COURT: And, that's that one, two,

three, four on -- on that page that's in front of you,

right? The product must be fermented with --

THE WITNESS: Yes, yes. And, let me go back

to that page. Yes.

THE COURT: Okay. And, if they -- if they

send in a certified, legitimately certified test that

meets those four standards, that's sufficient, as far

as the -- as the National Yogurt Association is -- is

concerned? For purposes of satisfying their testing

requirements?

THE WITNESS:

the only requirement.

It appears like that might be

And -- and, certified? I doubt

if it needs to be certified. Certainly, it doesn't

indicate that an independent third-party laboratory

must do this analysis for you.

THE COURT: Certified by even the producer?

Okay. And, it is --

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THE WITNESS: On the letterhead, maybe, --

THE COURT: It says, the way I read --

THE WITNESS: -- is all that's required --

THE COURT: -- this thing, here's the first

two paragraphs, which are the criteria for live and

active culture yogurt, right?

THE WITNESS: Yes.

THE COURT: And, that's what the title --

THE WITNESS: And -- and frozen yogurt.

THE COURT: Yeah, and that's what the title

says.

THE WITNESS: Um hmm.

THE COURT: National Yogurt Association

Criteria. And then, it -- you have this paragraph you

read, with the reference to the C.F.R., and so on.

And then it says, underneath, in order to

meet these criteria, you have to satisfy these

requirements, which implies to me that what they're

saying is, if you satisfy these requirements, as far

as we're concerned, you've met these -- these

criteria; even though, in reality, you're telling me

you don,t necessarily.

TEE WITNESS:

don't.

It could very well be that you

THE COURT: But, by their standards, you do.

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| THE WITNESS: That's correct.

2 THE COURT: Okay.

3 BY MR. DAVIS:

4 Q Just for clarification purposes, and I'm not

5 sure I'm clear on this.

6 Are you saying, Professor, that you can have

7 an article that is considered "yogurt" or "frozen

8 yogurt," under the NYA criteria, even if, in fact, it

9 doesn't meet all elements of the criteria enunciated

10 in this document?

1] A All I intimated was that there is no

12 policing of these standards. It's -- it's the

13 integrity of the manufacturer that requires them to

14 be, first and foremost, with honesty.

]5 Q Right. But, the Association, the industry

16 association, in fact, requires products to meet these

17 standards in order for them to be categorized as

|8 "yogurt" or "frozen yogurt. _

19 Is that correct?

20 A That's correct.

21 Q Okay.

22 THE COURT: Now, I'm not going to leave it

23 there, Mr. Davis. I'm not, because I have to decide

24 this thing correctly.

25 Again, the way I understood your testimony,

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] Professor, you have the listing of criteria, but

2 underneath is that four-part test. And, what I got

3 from you was that the Yogurt Association, not you, as

4 an expert, but the Yogurt Association seems to say

5 that if you meet this four-part test, as far as

6 they're concerned, you've satisfied the criteria

7 above, even though, in reality, you may well not. Or,

8 in reality, according to you.

9 THE WI_ESS: If you -- well, I -- I

]0 indicated integrity on the part of the manufacturer.

|I THE COURT: Right, but --

12 THE WITNESS: And that's -- that is --

13 that's first and foremost. If they're -- if they're

14 going to lie, --

15 THE COURT: Okay, oh, I understand that.

16 But, I'm saying if somebody files a report which truly

17 says I meet these four criteria, according to the

18 National Yogurt Association, you've met our criteria,

19 even though you may not, really, because you may not

20 be using entirely live cultured solids.

21 THE WITNESS: Your Honor, there's a --

22 there's a --

23 THE COURT: That's my problem here.

24 THE WITNESS: -- there's an initial mandate

25 --

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"_IE COURT: Um l'mLm.

THE WITNESS: -- that all milk solids be

fermented. And, following that, if you meet the four

parts below -- the correct culture organisms, the

correct population, and so forth -- then you've

complied with their requirement. You must have -- you

must fulfill one through four, yes. But, you must

start with all milk solids being fermented.

THE COURT: How do you get that? Because,

that seems different than what you told me a few

minutes ago. Okay? It seemed to me that we were in

agreement that some people --

THE WITNESS:

THE COURT:

THE WITNESS:

manufacturer.

THE COURT:

Well, I indicated it was --

-- could meet the --

-- the integrity of the

But before that, before Mr.

Davis brought that out, --

THE WITNESS: Yes.

THE COURT: -- what you seemed to be saying

was the first two paragraphs, we went through, are the

criteria. And then it says, in order to meet these

criteria, here's what you need to do.

THE WITNESS: Okay.

THE COURT: Here is the --

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THE WITNESS: But, in addition to the

criteria, the initial criteria, fermenting everything,

THE COURT:

THE WITNESS:

THE COURT:

But -- but, it doesn't say that

-- then you've got to do this.

But, it doesn't say that, and I

need to know this.

criteria.

criteria.

Okay? You know, I --

THE WITNESS: I'm -- I'm sorry that I --

THE COURT: It says, in order to meet these

It doesn't say in addition to these

You know, I'm going to have to interpret

this thing, as a document, you know, in -- in line

with the common English usage.

THE WITNESS: Okay.

THE COURT: So, when I -- when I read this,

the way I look at it, it seems to me -- and this is

why I was asking about it -- it seems to me it says in

order to meet these criteria above, here's what you

need to do for tests.

THE WITNESS: But, it further states, beyond

meeting the criteria, that live and active culture

yogurt must satisfy each of these requirements. And,

the only way that you get live and active culture

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yogurt is to fulfill the first sentence. Live and

active culture yogurt --

THE COURT: Okay, where does it say that in

yogurt --

THE WITNESS: -- refrigerated cup and frozen

THE COURT: Okay, but where does it say that

in that four-part test? That's my -- my problem.

THE WITNESS: Well, it -- it leads you to

the four-part test if you have live and active culture

yogurt.

THE COURT: Okay. I see what you're saying.

Okay.

THE WITNESS: If -- if you have -- if you

have fulfilled --

THE COURT: So, it's not live and active

culture yogurt unless it meets these other criteria is

what you're telling me.

THE WITNESS: You must start correctly to

gain that position.

THE COURT: Okay, okay. I may be dense, but

it's -- it's sinking in.

THE WITNESS: No, you're not, sir.

THE COURT: Okay. I understand what you're

saying. And, let me just take a look at it.

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l THE WITNESS : It 's the inability of the

2 professor to get the message across. That's all.

3 [Laughter]

4 THE COURT: Okay, I've got -- I've got what

5 you're saying. So, the phrase "live and active

6 culture yogurt" is a predicate to anything else that

7 -- in these tests.

8 THE WITNESS : Yes.

9 THE COURT: Gotcha. Okay, thank you.

I0 You've just clarified something for me.

I| THE WITNESS: Thank you.

12 BY MR. DAVIS :

13 Q Now, do you remember the breakout of the

14 yogurt portion? You had a -- a frozen yogurt base

15 that was mixed with an ice milk base?

16 A Correct.

17 Q Now, the final product from that side was

]8 the frozen yogurt core.

19 Do you recollect that?

20 A Yes.

21 Q Now, if you take a look at one, the first

22 criteria on that page of the NYA Criteria for Live and

23 Active Culture Yogurt, --

24 A We're still on Page 7.

25 Q Yes.

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| A Your Page 7.

2 O My Page 7. It says the product must be

3 fermented with both -- I can't even pronounce it, so

4 let's just say the -- the yogurt cultures --

5 A Lactobacillus delbrueckii subspecies

6 bulgaricus and streptococcus thermophilus.

7 Q All right. Now, the product being the

8 frozen yogurt core, was that product fermented with

9 both of these cultures?

I0 A According to the documents, these two

I| cultures -- according to the documents submitted by

12 Haagen-Dazs, that I reviewed, both of these organisms

13 were used in their culture to ferment yogurt. However

14 -- or ferment the milk base to produce yogurt.

15 However, that represented twelve percent of the

16 composite.

17 Q So, if the product is the frozen yogurt

18 core, was that entire core -- not just the twelve

19 percent -- was that entire core fermented with both of

20 these cultures?

21 A No, it was not.

22 Q All right.

23 Now, other than this requirement for

24 fermenting the entire dairy base, are there any other

25 bases, looking at these criteria, for your opinion

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1 that the importation is not yogurt?

2 A They have to have a population of organisms

3 that's -- that meets their standard. And, that's ten

4 raised to the seventh power, or ten million organisms

5 or colony forming units per gram of yogurt finished.

6 Q Has Pillsbury or Haagen-Dazs demonstrated

7 this -- meeting this criteria for the importations in

8 this case?

9 THE COURT: I'm sorry. I didn,t catch the

]0 last --

II Q All right. Has Pillsbury or Haagen-Dazs

12 demonstrated meeting this criteria for the

13 importations in this case?

14 A No, they have not, --

15 Q And, what do you --

]6 A -- to the best of my knowledge, because we

17 have seen no quality assurance documents whatsoever.

18 (Pause)

]9 Q Now, if yOU take a look at Number 3 on that

20 page, beginning with =the cultures must be active at

21 the end of the stated shelf life as determined by the

22 activity test described in the sampling and analytical

23 procedures."

24 If you could, read that to yourself, and

25 tell me if they have met that requirement.

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To the best of my knowledge, no, they have

Q And what do you base that on?

A We have seen no quality assurance documents.

Q Now, finally, the fourth criteria, "in the

case of frozen yogurt," --

THE COURT: Wait. Let me interrupt again.

The -- the report, the lab report, internal

lab-type report that was signed -- you know what I'm

referring to in the record, do you not?

THE WITNESS :

That 's the one?

THE COURT :

There was one done in 1995.

Right, right. Did -- did that

constitute an attempt to satisfy this four-part test?

You know, you say there is no quality assurance

documents. I'm -- I'm curious whether you -- you're

THE WITNESS: Well, this -- this was --

THE COURT: -- including that.

THE WITNESS: -- this was done back in 1995,

and we don't know that that represents -- and, it was

done in a plant in the United States, not done in a --

with product made in Canada.

THE COURT: But, would that be a quality

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| assurance document? You know, if there was one of

2 those for each batch, or --

3 THE WITNESS: Well, if it is, it's done

4 wrong.

5 THE COURT: Okay.

6 THE WITNESS: Okay? This was -- that

7 document showed that the activity test, and they were

8 trying, I believe, to show ten to the seventh --


|0 THE WITNESS: -- organisms.

lJ THE COURT: That's what sticks in my mind.

12 THE WITNESS: This is an activity test, or

|3 that type of test, rather, should have been applied to

14 see if they got one log or ten-fold increase in

15 population at the end of the shelf life of that

16 product.

17 THE COURT: I see.

18 THE WITNESS: At the pull date.

]9 THE COURT: And, that's a --

20 THE WITNESS: And, they did it --

21 THE COURT: That says it's alive and

22 kicking, or --

23 THE WITNESS: Yes, yes. And, --

24 THE COURT: -- or whatever they do.

25 THE WITNESS: -- they did it, if I recall,


418

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] four months -- four months, somewhere in that range,

2 time range.

3 BY MR. DAVIS:

4 Q What is the effect of doing this test -- or

5 performing this test on a product that was not at the

6 end of the shelf life? What is the importance of the

7 end of the shelf life??

8 A Well, because -- because of the storage

9 conditions under which these frozen yogurt bars are

]0 held, you -- you have freezing and thawing going on.

I| They're held in a freezer, obviously. And, many

12 freezers, unless it's -- unless it's a large

13 commercial freezer, many of these freezers are -- are

14 virtual torture chambers, rather than freezers,

15 because they -- they thaw every night, or they thaw

16 multiple times during a twenty-four hour interval.

17 A_d, every time that happens, the air warms

18 up, the product loses ice crystals. The only place

19 you make ice crystals in a frozen product is in that

20 mechanical freezer that scrapes ice off the barrel, if

21 you will, as it passes from the back side to the front

22 side. Every place else beyond that point, you make

23 ice crystals larger.

24 And, this is why your -- your ice cream that

25 you keep in your home freezer, if you -- if you leave

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[ a half gallon in there for a short period of time, and

2 then open the lid, it looks like a -- millions of ice

3 crystals on top. A/Id, that's because of the

4 freeze/thaw phenomenon. You only re-freeze to

5 existing ice crystals. And, those ice crystals get

6 bigger and bigger.

7 And, the bigger they get, the more injurious

8 they are to bacteria, and particularly the rod-shaped

9 bacteria, which represents half the population, and

10 the lactobacilli are rod-shaped bacteria, and they

11 will be lysed by ice crystals.

12 Q So, what is the intent of this section of

13 the test criteria, of having it at the end of the

]4 shelf life?

]5 A Well, it's -- it's a two-fold test. Number

16 one, the -- the test shows that the product has been

17 stored correctly. And, number two, it's -- it's a

18 test to show that you still have some live bacteria.

19 Q Now, the final criteria was, "In the case of

20 frozen yogurt, the product shall have a total

21 titratable acidity expressed as a lactic acid of at

22 least zero-point-three percent at all times. At least

23 zero-point-one-five percent of the total acidity must

24 be obtained by fermentation. This is confirmed by

25 demonstrating the presence of both D and L forms of

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I lactic acid."

2 In your opinion, did Pillsbury demonstrate

3 meeting this criteria?

4 A I haven't seen any documentation.

5 Q Have you performed any calculations

6 yourself, using their documentation, that would

7 indicate to you that they have not met the criteria?

8 A I attempted to do some calculations that

9 show what the initial acidity is in their product, and

10 what they might have, if they went beyond that point,

|] by adding their flavor concentrate. Yes, I have.

12 Q And, what did your calculations show?

13 A Well, we have to go back. We have to go

]4 back to the term "apparent acidity." And, it is well

15 known in the dairy industry that milk has an acidity.

|6 However, there is no acid present.

17 There are components of milk which give a

18 value to your titration, when you use the standard

19 technique. And those components are carbon dioxide,

20 the proteins, the milk proteins, the whey proteins,

21 and casein, and two salts -- the citrates and the

22 phosphates. Those all contribute to give you point-

23 one-five to point-one-eight percent titratable acidity

24 expressed as lactic per gram of product.

25 Q And, what do you base those figures on? The

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! point-one-five to point-one-eight?

2 A What do I base them on?

3 Q Yes.

4 A This is -- this is common knowledge in the

5 industry, and a very notable textbook by Hugo Sommer,

6 S-O-M-M-E-R, illustrates that very, very well.

7 Q Now, taking into account the apparent

8 acidity of the milk products, the basic milk products,

9 in your opinion, has Pillsbury shown that the

10 fermentation process of -- I'm sorry, that point-

I] fifteen percent of the total acidity was, in fact,

]2 obtained by fermentation, rather than by apparent

13 acidity?

14 A Well, we've -- we've seen no quality

[5 assurance documentation. If -- if they were going to

[6 prove that point-one-five percent were a part of their

17 finished product, they would have had to do an initial

18 titration before the culture was added -- excuse me.

]9 They would have had to do an initial titration on the

20 ice milk base, as they call it, and then they would

21 have to do a final titration on the flavor

22 concentrate, and a final titration on the finished

23 blended frozen yogurt mix.

24 Q Their standards state that they are looking

25 for point-three percent to point-four percent

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titratable acidity in the final product.

Is that correct?

A

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That's correct.

Given the apparent acidity that's present in

dairy product -- in milk products, would that -- they

achieved point-three percent titratable acidity.

Would they have, in fact, obtained at least point-

8 fifteen percent of total acidity by fermentation?

9 A From -- from my calculations, and I've got

I0 them written over there, but I think I can do it from

11 memory, the ti_ratable acidity in their product, from

12 the apparent acidity viewpoint, varies between point-

]3 two and point-two-flve, depending upon whether you use

]4 point-one-five or point-one-eight as your reference to

]5 apparent acidity.

16 And, consequently, if you use -- if you used

17 point-two-five, for example, that exceeds their limit

18 of point-four on titration. They -- in their

19 specifications, they want the finished product, if I

20 recall correctly, to be between point-three and point-

2] four titratable acidity.

22 If -- if you use point-one-eight to develop

23 the apparent acidity calculation, based on the milk

24 products that are in there, you will determine that

25 that apparent acidity is point-two-five. And then,

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1 point-one-five on top of that gets them to the point-

2 four or slightly above.

3 Q But, if they're meeting point-three, would

4 it mean that the apparent acidity is such, meant that

5 less than point-one-five titratable acidity was

6 achieved by fermentation?

7 A That's correct.

8 Q Is there any data to show which part of the

9 range the frozen yogurt core met? Whether it was the

I0 point-three or point-four?

II A I have seen no evidence.

12 THE COURT: What did that report we

13 discussed earlier indicate? DO you recall?

]4 (Pause]

15 THE COURT: I can dig it out for you.

16 THE WITNESS: That -- yes. I -- I can

17 recall it, because I was -- from a research point of

18 view, I didn't like the way it was written.

19 What they did -- what they did in there was

20 determine the total plate count of their yogurt,

21 several flavors of it, using three different culturing

22 mediums, and these are growth media to allow -- it's

23 food for the bacteria to grow on.

24 THE COURT: Right.

25 THE WITNESS: And, they do it in a -- in a

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! petri dish, and so forth.

2 Depending upon the media used, the ranges

3 were ten to the sixth, ten to the seventh organisms.

4 And then, they incubated for four hours and -- and did

5 the plating again. And, essentially, they looked like

6 they all went up one log cycle, but the test was done

7 at four months, instead of expiration date, which I

8 believe Mr. Sweet said was one year.

9 (Pause)

]0 BY MR. DAVIS:

I| Q Based upon your review of the development,

12 production, processing, and marketing materials

13 provided by Haagen-Dazs, do you have an opinion

14 regarding which component provides the essential

]5 character of these dessert bases?

16 A Yes, I do.

]7 Q What is your opinion?

18 A It's the frozen yogurt that supplies the

19 essential character.

20 Q And, what are the bases for your opinion?

21 A Well, it has the highest concentration of

22 solids. Therefore, it's in predominance, from a

23 solids basis, in that yogurt.

24 Q Why do you consider the solids comparison to

25 be critical?


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1 A It's the common ground for any calculation

2 used in the dairy industry. Because water is a

3 diluent, and -- and, as a diluent, it could be more or

4 less. And, the only common ground is solids.

5 Q Have you done comparisons between dairy

6 products and ingredients?

7 A I'm sorry?

8 Q Have you, in the course of your professional

9 life, performed comparisons between dairy products and

I0 dairy ingredients?

1] A Yes.

]2 Q How long have you done these types of

13 comparisons?

14 A If -- if we're speaking of -- of -- I guess

]5 I'm -- I'll ask for clarification on that, because I

]6 -- I want to know where you're directing your

17 thoughts.

]8 0 Well, have you done comparisons using solids

19 as the basis for the comparison?

20 A Yes, I have.

21 Q How long have you performed those types of

22 comparisons?

23 A How have I?

24 Q How long have you performed those types of

25 comparisons? For how many years?


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1 A I've -- I've been at the University for

2 thirty-seven years, and I'm still doing it, even in

3 retirement. I have discussions with industry people,

4 and the common ground, when you talk about a product

5 is what's its composition, and composition is always

6 solids. Even in the C.F.R., when you look at the

7 definition for -- for milk, for example, it will tell

8 you three -- minimum, three and quarter percent

9 milkfat, eight and quarter percent milk solids, not

10 fat. Those are, combined together, total solids.

|| It,s the common ground.

]2 Q Other than the comparison of the solids

13 content, were there any other criteria that were a

14 basis for opinion that the frozen yogurt portion of

15 the bar constitutes the essential character of the

16 bar?

]7 A Well, people -- people eat food for -- or

18 eat -- yeah, they eat food for -- for nutrition. And,

]9 the milk component, the frozen yogurt component, is

20 the most nutritious component there.

2| (Pause)

22 THE COURT: I just want to interject,

23 Professor, that I think you're absolutely right on

24 there. I've never eaten a pint of Haagen-Dazs when it

25 wasn't for nutrition.


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[Laughter]

MR. DAVIS: Was that the ice cream or the

frozen yogurt, Your Honor?

[Laughter]

BY MR. DAVIS:

Q Based upon your examination of the

Haagen-Dazs documents, generally speaking, how did

Haagen-Dazs characterize -- categorize these bars

during the development of the bars and the subsequent

periods?

A All of the documentation that I have seen,

except for four, maybe five pieces of paper, indicate

that this product is a frozen yogurt.

(Counsel conferring with Court Clerk)

Q Now, in the most recent packaging that was

provided by Haagen-Dazs, --

MR. DAVIS: May I approach the witness, Your

Honor?

THE COURT: YOU may.

MR. DAVIS: Thank you.

BY MR. DAVIS:

Q It described -- the term sorbet and yogurt

is on the box, but then, in the right-hand corner is a

description "fat-free vanilla frozen yogurt bar coated

with raspberry sorbet."

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I Do you see that?

2 A Yes.

3 Q Now, is that type of description uncommon in

4 the frozen dessert industry? Or is it a common type

5 of description?

6 A Are you referring to the principal display

7 panel, or the upper right corner?

8 Q The upper right corner.

9 A In -- in today's NLEA atmosphere (pause) --

|0 nutrition -- nutritional education -- NL -- oh, wait a

]I minute. Nutritional --

]2 MR. PETERSON: Do you mean to refer to the

]3 Nutrition Labeling Education --

]4 A -- Labeling and Education Act. I knew --

15 stumbling over it. Thank you.

16 Nutritional Labeling and Education Act.

17 They want to make it abundantly clear what is in that

]8 box. And, the upper right corner portrays that very

]9 nicely.

20 Q Now, have you seen this type of description

2] on other dairy products, such as ice cream? Ice cream

22 bars and things of that nature?

23 A

24 chocolate,

25 Q

Ice cream bars, ice cream bars coated with

or something along that line?

Yes.

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] A Yes.

2 Q In your opinion, in that type of product,

3 what is the essence of the bar?

4 A [No response]

5 Q Is it the ice crea2u or the coating?

6 A It's the ice cream.

7 Q Jhnd, in your opinion, what is the essence of

8 the frozen yogurt bars, dessert bars in this case? Is

9 it the yogurt portion, frozen yogurt portion? Or is

10 it the coating?

]| A The frozen yogurt portion is the principal

]2 element.

13 (Pause)

]4 Q In ice cream or frozen yogurt dessert

]5 marketing and production, when the term "flavor" is

|6 used, what is that usually intended to connote?

]7 A When the term "flavor" --

]8 Q "Flavor" is used.

19 (Pause)

20 A It means the -- the flavor which you can

2] expect when you eat the product.

22 Q Does it -- does the flavor, per se, describe

23 the essence of the product?

24 A Does the flavor describe the?

25 Q Essence of the product.

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A It describes what you can -- what you will

perceive, when you eat the product, from a flavor

characteristic.

Q Now, if I have a -- a chocolate ice cream,

and I put an awful lot of cocoa in the ice cream to

get that chocolate flavor, is the essence of the

product the chocolate flavor, or is it the ice cream?

A I guess I would like to know how you're --

you're dealin 9 with the term "essence."

Q All right. Is the essential character of

the product the ice cream or the flavoring?

A It's -- the essential -- the essential

character of the product is the ice cream, and it can

be flavored whatever.

Q Okay. Now, are there a variety of different

ingredients that are used to flavor ice creams and

frozen yogurts?

A Yes.

flavors.

0

cream portion itself.

Is that correct?

A

0

A

Incredibly high numbers of different

And, many of the flavors are in the ice

[No response]

They're mixed together with the ice cream?

Yes.

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I Q Does the fact that it -- that ice creanLs

2 have a variety of flavors, or very expensive flavors,

3 or unique flavors, change the character of the article

4 from something that's ice cream into something that's

5 not ice cream?

6 A Ice cream is -- ice cream is ice cream,

7 regardless of the flavor.

8 Q Should it make any difference whether ice

9 cream is ice cream, whether the flavor is mixed in

10 with the ice cream or it's a coating on the ice cream?

II A It doesn't make any difference.

12 Q Would the same be true, with regard to

13 frozen yogurt desserts?

14 A That's -- that's the principal element in

15 there is frozen yogurt, whether it's -- whether it's

16 vanilla frozen yogurt, or strawberry frozen yogurt, or

17 cherry frozen yogurt, it's still frozen yogurt.

18 Q And, does it make a difference what the

19 coating is? Does that take it out of being a frozen

20 yogurt?

21 A The -- the coating is -- is -- well, as we

22 described with -- that provides some flavor, but

23 that's -- that's -- and, it may even provide some

24 crunch, depending upon what it is, but that's --

25 that's it.

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348

I Q Would the frozen yogurt core be a product

2 whose starting point was whole milk or skim milk?

3 A Yes, sir.

4 Q Would the frozen yogurt core of these bars

5 -- I'm sorry. Withdrawn.

6 Would whole milk or skim milk be used for

7 making the frozen yogurt core?

8 A With -- with the formulation that

9 Haagen-Dazs has, that I reviewed, you could use -- you

|0 could use skim milk instead of -- instead of water.

11 But, you have to make an accounting for the solids

12 contributed by that skim milk. And it -- and it makes

13 the manufacture a little bit more difficult, because

14 now you've got another ingredient that you've got to

15 keep on inventory, and keep under control, because it

16 will spoil.

17 Q were the -- was the frozen yogurt core made,

18 in part, from two varieties of skim milk? Lactose-

19 reduced skim milk and condensed skim milk?

20 A Yes -- yes, it was made from -- well,

21 actually -- actually --

22 Q

23 A

24 Q

25 A

Three.

-- three.

Right.

If -- if you want to call the yogurt

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349

flavoring element made with condensed skim independent

from the blend of -- of lactose-reduced skim milk and

condensed skim.

Q Now, can you get condensed skim milk or

lactose-reduced skim milk, or the blend, without

having whole milk someplace down the line, as a

starting point?

A No.

Q Would the same be true with a fully cultured

yogurt? Somewhere down the line, you have to have

whole milk to make that fully cultured yogurt.

A Yes, sir. Your starting point is going to

be a raw milk, which -- which is -- well, if it's got

more than three and a half percent fat, then it --

then, it fulfills the definition for whole milk.

(Pause)

THE COURT: Does raw milk ever fall below

that?

THE WITNESS: Yes. In fact, in the standard

of identity allowed by the State of Wisconsin, raw

milk can be as low as three percent. But, the -- the

federal standard is -- is three and a quarter.

We had -- several years ago, we -- three,

four years ago, we had a drought in Wisconsin, and we

had very poor feed for the dairy cattle as an end

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! named in Additional U.S. Note 1 to Chapter 4 is

2 significant and provides the character to the -- the

3 dairy character to the whole article? Would -- is

4 that a correct restatement of what you said?

5 A Yes, that's close.

6 Q All right. Now, what do you use -- what

7 factors does Customs use to determine whether the

8 dairy component is significant and provides the

9 character of the finished article?

l0 A Well, what I think we would try to do is to

II -- is to get an idea of how much milk solids are in

12 the product, to -- to give us an idea of how much milk

13 would have been added, that was required to _ke the

14 product. And -- and then, consider if there's a -- if

15 there's a non-dairy component in the product, does the

16 dairy component impart a dairy character to the

]7 product as a whole.

]8 Q Do you have an example of a -- of a ruling

]9 that discusses the use of the milk solids portion as a

20 criteria for determining the importance of the dairy

2] component?

22 A I -- I have a ruling. It's -- it's not on

23 an article in Heading 2105. It's on a -- a beverage

24 item.

25 Now, there is a similarity, I think it could

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THE COURT: You may.

MR. DAVIS: Thank you.

MR. PETERSON: Do you have a copy for us?

MR. DAVIS: No.

(Counsel conferring)

MR. DAVIS: I'm sorry. I should have done

that.

MR. PETERSON: No, no,

electronically, I'm sure.

MR. DAVIS: I'm sorry.

[inaudible] My apologies.

I have it

I should have

Honor?

May I go off the record for a moment, Your

THE COURT: Sure.

(Whereupon, a brief recess was taken.)

THE WITNESS: Heading, I believe, is the

second paragraph under the title "issue."

Subheading 2202.90.2000 HTSUS applies to

milk-based drinks. In classifying beverages under

this provision, consideration is given to the amount

and significance of the milk content present. Since

skim milk contains about nine percent milk solids,

beverages which contain over five percent milk solids

are considered to have an appreciable amount of milk,

enough to impart the drink's essential character in

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I many instances. The amounts of water, sweeteners, and

2 flavors present in these beverages are, of course,

3 common to most beverages of this type, so it is

4 believed that the milk content, which is of the

5 highest percentage next to the water and sweeteners,

6 that imparts the individual character to these

7 products.

8 BY MR. DAVIS:

9 Q Now, has Customs, in 2105 rulings and in

|0 rulings involving dairy products combined with other

]I products, used the milk solids criteria?

12 A Yes, they have.

13 Q Have they used it consistently, to your

14 experience?

15 A Yes, I believe so.

]6 Q And, what is, generally speaking, the cut-

17 off point that Customs has used --

18 A It --

19 Q -- for milk solids?

20 A It appears to be five percent or so, in --

21 O And, - -

22 A -- and --

23 MR. PETERSON: Your Honor, I'm -- I'm going

24 to object on grounds of relevance here. I mean, the

25 ruling that the witness has referred to involves

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] different tariff classification provisions, and it

2 doesn't even involve the same chapter of the tariff

3 that we're dealing with here. And, there has been no

4 connection made between the test of classification

5 under Chapter 22 with the classification of a product

6 under Chapter 21, which is what we're involved with

7 here.

8 THE COURT: Well, I'm going to let him do

9 it, because this is -- this is supposedly Customs'

|0 reasoning in reaching this decision.

|| But, I find it bothersome that the

]2 Defendant's witness doesn't know what Customs'

]3 reasoning was in reaching this decision. He is

14 providing his knowledgeable speculation, and I'm going

15 to let him provide that knowledgeable speculation,

16 because I think it -- it's relevant, to the extent

17 that that's the process they used.

18 On the other hand, the weight I give it is

19 going to be affected by his inability to tell me that

20 that's what they actually did.

2] MR. DAVIS: I understand, Your Honor.

22 THE COURT: So, your objection is overruled.

23 You may proceed.

24 MR. DAVIS: I understand, Your Honor.

25 BY MR. DAVIS:

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Q Have you read the Customs Ruling in this

case, involving this merchandise?

A Yes, I have.

Q Do you have that ruling?

A No, I don't.

(Pause)

Q Do you remember if they used a solids base

as the cut-off point?

A I -- to my best of my recollection, that the

-- there wasn't a rationale given in that ruling.

It's -- I have to say it's been a little while since

I've looked at it, but I don't recall that.

Has Customs applied this solids base cut-offQ

point - -

A

Q

Yes, it has.

-- to merchandise that was actually

classified in the quota provisions in 21057

A Yes, it has.

Q Has it done so consistently?

A I believe so.

Q Has it done so both in Headquarters and New

York rulings?

A I have some rulings. Do you mind if I look

at them?

THE COURT: You can go ahead.


493

Sampling And Analytical Procedures

The app!Jcant should submit sample.% one each representing e single line ofproduct. =deally _aV.en from the begi_r_to9, middle and er_d of a manufacturing rut_that dsmonsbates tibet tt_e yogurt nee mat the standard. The samples will beanalyzed according to the following procedures:

Refr kjetated Yogurt

a. Total viable yogurt counts w_ll be enumerated by th_ attached ID_

procedure. Tl_e total viable count will be repelled on the NYA "Laboratory

Report Form." The total vrable count is the sum of colony forming un_ of

Streptococ;cu._ thermopnilus and LactobacllJus delbrueckii ,uosp.

bulgaricus oar gram of t_e Droduc_,

b. At the end of the stale0 shelf lile designated by 1he applicant, activity of the

culture will be reported for at least two of the three random _amples on the

NYA"Lsboratory Repor_ Porto."

The activity te_! is corned out by pasteurizing 12% 5ol_ds non-fat dry milk at

92"C (lea°F) for seven minutes, cooJit_gto 110°F, addlog 3% inoculum of

the meterlal under test and fermentm_ at 110°F for four houm. The total

yogurt organisms in the inoculated milk subr, trote are to be enumerated

both before a_d afte: fermentation by _OF me_ho_o_eg_

The activity test wl] be reported as log increase in yogurt organisms

(CFLJIg) following fermentation of the defined substrata under the standard

condition at the end of the stated shell li_E.

Frozen Yogurt

a. The _bgtable ac_di_ ol sample's, one each reoresen'0ng beginnint;, midOle

and and at"a manufacturzng run w_lr be determi_e_ as per enclosed IO_'

pfocedurc and reposed on the NYA "Laboratory Report Form " In add_tlot_.

tl'e epl_icant mu_ certify that at least 0.15% t_trateble acidity in the product

was derived flora yogurt fermentation

b. Total viable yogurt cw,nts will be enumerateo by the attached I DF

i_ocedure. The 1oral viable count wifl _ reported on the NYA "Laboratory

Repot1 Form." Tr_e "_otal viable count is the sum of colony forming un_ of

5treptoooocus thermophllus end Lactobaciilus delbrueckii subsp

d?ht_p://w'o_w,aboutyogurt.com/industryAndRe_ources/la¢S ampling.asp

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bulgladcus per gram of the product.

At the end of the stated shelf hfe designat¢d by the apDIrcant, act_lty of the

culture wiI_be rap0ned for _t leas_ two of '_he_ree rsn_Om _amples on the

NYA "Laboratory Report Form."

The activity test is carried out _y pasteurizing 12% so]iUs non-fat dry milk

92*C (190=F} for seven minutes, cooling to 110°F, adding 3% Jnoculum of

the mater_al under test and fermen_ng st 110°F for four hours. The total

yogurt organisms in t_e inoculated miIR subsfr_te are to be enumerated

both before and after termenzatlon by IDF methodology.

The a_vity will be reoortec:l as Log increase in yogurt _roanisms (CFU/g)

following fermentat/on of the defined substrate under the standard

condtbons at the enO of the stated _helf life

http:Hwww, abouty ogurt.com/industryAa]dResources/lacSampling.asp

£_'d 9_E_; !79e E_E 3314_0 30_± -I.LNI J'O,--..

656

National Yogurt Association Seal Application RulesAnd Procedures

Home

The tollow_ng sets forth the rules and procedures for o_ining permi_,_ion to usethe Nat_onal YoguE Association (NYA)'Seal for refngerated cup and/or frozenyogurt products containing live anU active cultures. The rules and procedures maybe modified from t;me to brae by the NYA Board of Directors.

ELIGI_,_LITY

A. Any company which produces and/or distributes yogurt

(refrigerated cup and/or frozen) in _i_e Umted States, wi_ether or not

a member of the NYA, may apply to use the NYA Seal on proOuct

labels or m labeling or adve_sing.

I_. A separate applicat=on must be submitted for each product for

wNch usa of the NYA Sea( essought. Fee purposes st this program.

"product" Is defined of, e branO of yogurt of a t:_rticular tyl:_ or form

including an aggre_a1!on at d¢fferent flavors of a ty_e of term By

way of example, each of the foltow_ng msCOnsidered a separate

proGuct.

• nonfat yogurt - fruit on the bottom (all flavors)

• Iowfet yogurt • f=uil on 1he botlom (all flavors)

• Cu_rd style yogu_l (_1 flavom)

• Iowfat #ozen yogurt {all flavors)

Yogurt sweetened w=th aspartame (or any olher s=milar sweetener)

and yogurt sweetened w_th a nuttitbe sweelener, such as sucrose,

also are considered separate products

C, If a company subm=ts tes_ results for the same product, as de_nwd

in Secbon I B., that is so|d under more that one brand name, the

application must contain a I_stof all the brand names under which

_he product is sold.

D. A Company whmh wishes to apply to use the Seal must su_'nff a

signed application form with the specified infor:natJon and fee, to

the National Yogurt h,ssooiation, 2000 Corporate Ridge, Suite 1000,

McLean, VA 22102-7805, ATTN: Seal Program

Applicetinns must be accompanied by the fee speeifie_ in Section

II.A,

E.

FEES

A comoany which prodL_ces and(o_ distributes yogurl product_ may

apply to use the Seal at a cost of $2,500 per applica_on So, for

http,I/www.aboutyogurt, comlindustry AndResourcesllacSealRules.asp

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example, if a company wants to use the Seal on four d;fferent types

o1 yogu_ products (as defined in I._.) the total fee would be

$_ O,000 The fee, which is non-refundable, IS for the sole purpose

of offsetting the costs of the adm)nietration of the pro0ram.

B The dues of Voting Members of the NYA include funcls to cover

ten aDplicabons per calendar year, The dues of Active Nonvoting

Members of the NYA inc.Judafunds to cover five apphca_ons bar

calendar year Ad_bonal 8ppJICet]Dns must be accompan}ed by the

fee set tenh m paragraph A

Ill CONTENT OF APPLICATIOI_

An al_ica_on shall consist of the following:

1. A completed and signed Application Form for each type of yogurt

product on which the requester intends to use the Seal

2. "The results of the analytical tesl_ (conducted in accord=nee with

_e p|Gtocol set forth in A!_pendix B, including full reports of

analytmal procedures, Signed worksheets, etc.) which establish the

presence of live and active yogurt cultures in the procluct The

analytical tests must be conducted at independent leborateries (mat

is, not in the laboratories Of 1he compar_y which is spaying to use

the Seal) A ttst of independem laboratories know_ to be

expenenced in conduclJng tests m aCCOrdanCe with the reQuisite

protocols is found _n Appendix C. Other laboratories may be equally

qualified to pedorm t_e analy_cal work.

3. A check payable to the NYA for the appropriate fee, i_ a f_ is

required. See Sec_on II of this document.

IV. TEST PROTOCOLS

A The company shall provide to the independent laboratory it has

selected three sarnl_les for the "activity" test and three saml_es for

the "culture" test. The samples shall be randomly selected ffern 1he

begmnthg, middle and end of ==i_tocuction run. The independent

laboratory shall analyze two (2} of those _emples to determine if

they meet the ectwity anti cuiturt9 level requirements speclfieo in

Appendix B.

B. If both samples pnss the a_ivffy end cu_ure tests, _he product

satisfi¢_ the requirements for use of the Seal.

C If one of the two samples do_ not pass the a_vity and/or culture

tests, the laboratory shall lest the thttd sample

I. if the third Samite passes the activity and/or cullure lest_,

the produCt sat=sties the requirements for use of the Seal

2. If the th=rd sample tails the aCbv=ty or culture tests, the

company must begin the entire testing proce_.s again by

taking three new samples from a single produClion run.

D. Ir both of the original setup|as fair the activity or culture tests, a

company shall proceeci as If the third sample tailed the aclJvity e_

culture tests, and thus foltow the procedures specified in Section

_V.C.2. Reports submitted with an application shall include all

results, including results of analyse= on samples which diO not pass

the a_vity end/or culture test.

V. AWARD/DENIAL OF SEAL

A, Decisions regarding whether tO awa;d oz deny us_ of the Seal shall

be made by the NYA Seal Program Committee. which consists of

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the Prc6idcnt of NYA (Chairperson of the Comm_ee) and two o_e_

representatives from rhP. staff of NYA. The daosion is based solely

On whether'. (1) the application submitted is complete, and, (2)

whet_er results of the analy'bcal tests demonattete that the product

COmities wfth the specified requirements for uae of the Seal. 1"he

Commit'lee. in its discretlozL rney ask the aPpheant for additional

reformation.

B. The Seal Program Commtnee may consult wl_ the Scientific Affairs

Committee of the Associalion. If the product being reviewed

involves an NYA member, the member's represen_tive on the

_dentlfic AffaLm Carom=tree is not _.rrnitted to cerise on that

product.

C. Decisions on whether to award or deny use of the Seal shall be

made within 10 we_kiog days from the date a completed apphcatlon

is received. Applicanta sha[I be notified in writing promptly of the

Seal Program Comm_.lee's Oecision

APPEALABILITY OF DECISION

A If an applicant's request for use of the Seal is denied, the applicant

may reque_l e hearing before tea Se_l Program Committee. The

heedng shell be held within 20 working days from the date of tee

request, unless the applicant and the Seal Program Commzttee

agree to extend the time period.

B. The hearing ahell be held in the Washington, D.C. area Thu

hearing may be by tetephene. _t agreecl to by the applicant

C. The hearing shall be informal Jnnature. The appJieent may present

whiten or oral testimony andlQr argument and may be rel_esented

by courtssl. A memorandum of the he_ring sha_| be _adc by %he

chairman of the Seal Program Committee end provided Io the

apl01ic_nt.

D The Seal Program Committee shs_l render a cleci_'.iot_within fNe

working days following a hearing. All decisions made by the

Comm_tlee on appeal shall be final.

ANNUAL RE NEWAURECE RTIFICATION

A. Use of the .Seat m valid for one year from the date of approval.

15. Continued u_e ofthe Seat shallbe grantedeach year upon

submfBaion of a renewal application oemfying that e materiel

change (e.g. change in cultures used. sigmfiCent char}ge in

ma_ectunng processes., u,_e of a d{fferent sweetener, etc ) has

not occurred in the manufacture of tee product mat reesonal_,y

could effect compliance with the requirements, or upor_ _)rovmion to

_e Seal Program Committee of current informa_on which

demonstrates that the product still eonform_ to the required cnteda.

Where new information is proviOed, r_ults ol the analysis in

_.cordance with Appendix B also must be submitted

C. A malarial change in the procluct or its method of manufacture

shall cause the right to use the Seal to end immediately,

unless a new application ha_ _n approved.

D. When a material change has occurred in a product, the renewal

aDl:_cati_)n shell be accompanied by a no_-refundeb_e fee el

$;2,500 for that pro(_uct. If there are no matedal changes in the

product, the renewal fee is $2,000 for that produCt. Voting B_d

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VIII.

Active No_voting Members' clues include funds for ten and five

initial and/or renewal applications respectively per calender year.

E. Tests conducted to determine ehgll_hty for the Seal are valid for

three years (unless tasting is otherw, se required under the Seal

criteria). On the anniversary of the fourth renewal, a company must

6uDmit v_th its eppl=catJon for renewal, test result_ lnerformeO In t_e

previous three months which demonstrate the I_roduct for which the

renewal application is submitted still meels NYA Seal criteria.

F. It shall be the duty of any company that wishes to continue to use

the Seal to ensure compliance with tt_e renewal Drovisions under

thi_ sec'=uon.

USE OF NYA Seal

A. The NYA Seal is as follOWS:

B. NYA recommenUs that the logo portion of the S_al appear on the

PrincTpal Display Panel of the product's label printed with a pcsd=ve

_mage. The acceptable minimum size is when the "L" in the word

"Live" of the logo equals 1/16th of an inch.

C. NYA recommends that the logo be as dose as possible to the

bottom left hand corner of the Principal E)mplay Panel TMe

asteri,skecl e_tement should be as close as pos'sible to the logo but

it may aplDear anywhere on the label.

Q. Color: For NYA Seals on packages, NYA recommencls Process

Magenta or Process i31ue on packages with 4-color procesSing On

non-4-color processing, NYA recommend= ¢,the use o! the d_rke_ or

most prominent colo¢ of the package graphics. On labehng and m

a_ertising, any suitable color may be u_ed.

E. A company may use the Seal on the product's label, labelmq, or

adve_smg or In other promotional materials.

(As adopted by the National Yogurt Assecda_on Board on May 25. 1991.September 17. 1991 and Set, ember 27. 1993.)

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National Yogurt Association Cdteria For Live andActive Culture Yogurt

Live end act, s culture yogurt (refrigerated cup and frozen yogurt) Is the food \

produced by culturing Grade A dmry maredents wRh s charactanzm 9 bactenal )culture m accordance with the standards of idenIRy for yogurt (21 C.F.R. S

131 2D0), Iowfat yogurt (21 C.F.R S _31.203), and nonfat yogurt (21 C.FR. S

131.206). In sd0i_on to the use of the bacterial ¢,_ure_ raquered bytes referenced

federal standards of iclet_tlly and by _ese NYA critene, bye ancl at'rive culture

yogurt may contain other safe and suitable food gra_e bacterial cultures.

Declarer|on of the presence of cultures on the label of live and active culture yogurtis up, anal.

Heat _reatment of live and active yogurt i9 i_consistent with the maintenance of live

and active curtures in the oroduct, accordingly, heet treatment which i6 intended to

kill the hve and active organisms shall not be undoRaken after fermentation.

L_kewise. manufacturers of hve an_l actwe culture yogurt shou[_l undertske their

best efforts to ensure th_ distnb_on !Otactices, code dates, and handhng

_n._tructions are conducive to the maintenance of live and actwe cultures.

In orOer to meet these NYA crRens, live and actwe culture yogurt must set, sty each

of these requirements'

'L The pcoduct must be fermented w#th both L delbrueckii su_p.

bulgarlcus and S. thermophilus.

2. For refdgereted yogurt, the total viable count at the t_me of manufa_.lure will

be 10 e CFU per gram. In the case of frozen yogurt, the total viable count at

• e time of manufacture wiJl be 107 CFU per gram•

The cultures must be ac'0ve at the end ol the stated shelf.life as

determined by the activity test described =n the '%amDl_ng _nd _aly'_i_l

Procedures." Compliance with this requirement shall be determined by

meeting the cnten_ for the _ctlvrty test on two of the three reprcsentabve

samples of yoguM which have been stored a_ temperatures between 32

degrees F. and _5 0egress F. for rcfngerated cup yogurt and at

temperatures of 0 degrees F. or colder for frozen yogur_ for the entire

stated shelf-life of t_o oroduct. Ti3e ac'_vity lest is met if there is an

_ncreaseof one log duringfermentation,

4. In the case of frozen yogurt, the _roduct shall hove o total l_trateb_e acidity

expressed as le_c acid of at least 0.3% ef _11times. At least 0. _ 5% of total

acidity must be obtained by fermentation. Th_s =e confirmed by

_lemonsttetmg the presence of both 13 & L iorms of lacticacid

J

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Yogurt - A Glossary of Terms

yogurt Varieties I Yogurt Facts I Hot All Yoaur_ Are Created I;;q.nlGlossary t _A/holesorp_Foocl for Every Boaly

Here are _he common terms nssociated wrth yogurt that cDntBins Itve ancl sctiv_ cuItur0s nnd th0productE; called "yogurt" that do not contain live and active cultures when paokaoed end dmtributr

Sore(.• descriptJons are estabhsheO by the Food and Drug Administration (FDA,), while Others arede?ermined by the manufacturers,

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Live & Active Culture Yogurt

Home.What makes yogurt, welt, yogurt? The words "live and active cultures" refer to thelivingorganisms. Lactobao/lus bu/gadcusand Streptococcusthermaophl/us, wh=chConvet'tpasteurized milk to yogurt duringfermentation Note that the milk ispmsteurizedbefore culturingto remove any harmful bacteria. The pro(;ess Is verysimilar to that used when making beer, wine or cheese, in that beneficialorganisms ferment anc_transformthe basicfood. This fermenfaOon process iswhat crea_es yogurt,_th i1_unique taste, textule end healthful attriDutes

Some yogurt Droductsare heat-treated after fermentation, which kills most of thebenefiaal actJvecultures(ound_n1he ,/ogu_L To help you edenti_V_he_e yogu_p'oduct_ that conteir) live axeda_ive ¢ultu[es, the National Yogurt Association(NYA) has established a special/./us & Act;re Cultures seal. The NYA is a natJonalnon.profittrade organization whose purpose _Sto sponsor health and medicalresearch for yogurtwith I_veand active culturesand sane as an informationsource to the trade and the general ou_ic The Live& Active Cu/tL_reseal, whichappears on refngeratedand frozen yogurtcontainers, helpsyou recognize thoseproductscor_ainmg significant amounts of hveand acl_vecultures, The seal is avoluntary=dentfftc_ationavailable to all manufacturers of refrigerated yOgurtwhoseproducts contain at least 100 mllhon culturesper gram atthe time of manufacture,and whose frozen yogurtcontainsat least 10 m_llionculturesper gram at the timeof manufacture. Since the se_t _rogram eS,_olun_ary,some yogurt pcoductsmayhave some live culturesbLRnot carry theseal. It is, however, the industryvaliclationof the presenceend ac'_vi_ of _gniflcant levels of live cultures.

Look ferlhe Live & Active Cultures seal on the yogurt you buy. and learn mo__

about hueand active cultureyogurt by chokingon the following: YogurtWt}olesome Food froEvery Body

i, Yogurt varie'_es• Live end Active Cultures Yogurt Facts• Don_tt_e Fooled: Not All Yo_urts Are Crea_ed F.-.quel• Yogurt - A Giossarv of Terms• Yogurt Wry_ores_ariseFood for Every Body

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AFFIDAVIT OF SERVICE

Howard Daniels, being duly sworn, deposes and says that deponent is not party to the action, and is

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CORRECTED NONCONFIDENTIAL

JOINT APPENDIX

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BY FEDERAL EXPRESS NEXT BUSINESS DAY DEUVERY

Saul DavisU.S. Department of JusticeCivil Divisior_Commercial Litigation Branch26 Federal PlazaNew York, New York 10278

Sworn to me this

June 22, 2005NADIA R, OSWALD

Notary Public. State of Ne_v YorkNo. 010S6101366

Qualified in Kings CountyCommission Expires November I0, 2007

Case Name: Pillsbury Co. v. US

Docket/Case No. O4-1591