Cecelia Packing Corp. v. U.S. Dept. of Agriculture/Agricultural Marketing Service

• Decision Date: 22 November 1993
• Docket Number: No. 92-15671,92-15671
• Parties: CECELIA PACKING CORPORATION, a California corporation, Plaintiff, Harris Farms, Inc., a California corporation; Kencarol, Inc., a California corporation; John Doe One; John Doe Two, a California corporation; and John Doe Three, Plaintiffs-Appellants, v. UNITED STATES DEPARTMENT OF AGRICULTURE/AGRICULTURAL MARKETING SERVICE; Sunkist Growers, Inc., Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 616

10 F.3d 616

62 USLW 2357

CECELIA PACKING CORPORATION, a California corporation, Plaintiff,

Harris Farms, Inc., a California corporation; Kencarol,

Inc., a California corporation; John Doe One;

John Doe Two, a California corporation; and John Doe Three, Plaintiffs-Appellants, v. UNITED STATES DEPARTMENT OF AGRICULTURE/AGRICULTURAL

MARKETING SERVICE; Sunkist Growers, Inc.,

Defendants-Appellees.

No. 92-15671.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Aug. 13, 1993.

Decided Nov. 22, 1993.

James A. Moody, Washington, DC, Brian C. Leighton, Fresno, CA, for plaintiffs-appellants.

Robert M. Loeb, U.S. Dept. of Justice, Washington, DC; Michael H. Bierman, Tuttle & Taylor, Los Angeles, CA, for defendants-appellees.

James S. Krzyminski, Washington, DC, for amicus curiae.

Appeal from the United States District Court for the Eastern District of California.

Before: SNEED, POOLE, and TROTT, Circuit Judges.

TROTT, Circuit Judge:

This case involves Constitutional challenges to 7 U.S.C. Sec. 608c(12) (1988), the provision of the Agriculture Marketing Agreement Act of 1937 ("AMAA") that requires the Secretary of Agriculture to consider the vote of a producer-cooperative association in a marketing order referendum as representing the votes of all the association's member-producers. The district court dismissed the complaint pursuant to Fed.R.Civ.P. 12(c), holding that the provision did not deprive the plaintiffs of their Constitutional rights of free speech and equal protection. The panel has jurisdiction of this timely appeal pursuant to 28 U.S.C. Sec. 1291 (1988), and we affirm.

I

This case challenges procedures followed by the Secretary of Agriculture in conducting referenda to determine whether or not to continue certain marketing orders imposed on navel and Valencia orange producers. A preliminary discussion concerning the history of these marketing orders is required as background prior to addressing the specific issues raised in this case.

A. History of Challenged Statute

1. Marketing Orders in General

"The Agricultural Marketing Agreement Act, 7 U.S.C. Sec. 601 et seq., authorizes the Secretary of Agriculture to issue marketing orders limiting the quantity of commodities shipped into markets identified by the Secretary, thus protecting prices for producers and maintaining orderly marketing conditions. 7 U.S.C. Sec. 602(1)." Riverbend Farms, Inc. v. Madigan, 958 F.2d 1479, 1483 (9th Cir.), cert. denied, --- U.S. ----, 113 S.Ct. 598, 121 L.Ed.2d 535 (1992).

Marketing orders ... may be issued only after the Secretary complies with the Act's detailed promulgation procedures. The Secretary must first give notice and an opportunity for a hearing upon any proposed order. See 7 U.S.C. Sec. 608c(3). After a hearing, if the Secretary finds "that the issuance of such order ... will tend to effectuate the declared policy" of the Act, id. Sec. 608c(4), he may submit the proposed order to producers for their approval. An order regarding citrus fruits does not generally become effective unless handlers of at least eighty percent (80%) of the oranges, and producers of two-thirds (66 2/3%) of the oranges or two-thirds (66 2/3%) of the producers approve of the Secretary's determination. Id. Sec. 608c(8).

Pescosolido v. Black, 765 F.2d 827, 828-29 (9th Cir.1985). The Secretary may terminate a marketing order at any time if he or she determines the order obstructs or fails to effectuate the declared policy of the AMAA. 7 U.S.C. Sec. 608c(16)(A).

"Since 1954 the Secretary has enforced marketing orders for the sale of Valencia oranges (and navel oranges) in Arizona and California." Sequoia Orange Co. v. Yeutter, 973 F.2d 752, 754 (9th Cir.1992), amended, 985 F.2d 1419 (9th Cir.1993). See also 7 C.F.R. Sec. 907.1 et seq. (navel oranges); 7 C.F.R. Sec. 908.1 et seq. (Valencia oranges). Prior to 1985, the Secretary could conduct a referendum at any time to determine whether the orange growers in the region favored continuing the marketing order. See 7 C.F.R. Secs. 907.83, 908.83 (1984). In 1985, however, the marketing order regulations were amended to require the Secretary to conduct a referendum at a minimum of every six years. ¹ 7 C.F.R. Secs. 907.83, 908.83 (1993).

To determine whether continuance is favored by producers, the required percentages set forth in the act with respect to producer approval of the issuance of a marketing agreement and order ... shall be used. In the event that a referendum is utilized to aid in making this determination, such required percentages for continuance shall be held to be complied with if ... the percentage favoring continuance is equal to or in excess of the percentage required.

7 C.F.R. Sec. 907.83(c)(2) (navel oranges); see also 7 C.F.R. Sec. 908.83(c)(2) (Valencia oranges) (same language).

2. Congressional Policy on Cooperative Associations

"The [AMAA] was passed in response to unstable marketing conditions during the Depression, with an objective of helping farmers obtain a fair value for their agricultural products." Pescosolido, 765 F.2d at 828. Through the provisions of the AMAA, Congress sought "to establish and maintain such orderly marketing conditions for any agricultural commodity enumerated in section 608c(2) of this title as will provide, in the interests of producers and consumers, an orderly flow of the supply thereof to market throughout its normal marketing season to avoid unreasonable fluctuations in supplies and prices." 7 U.S.C. Sec. 602(4). To accomplish this goal, Congress instructed the Secretary of Agriculture to "accord such recognition and encouragement to producer-owned and producer-controlled cooperative associations as will be in harmony with the policy toward cooperative associations set forth in existing Acts of Congress, and as will tend to promote efficient methods of marketing and distribution." 7 U.S.C. Sec. 610(b)(1).

Two of the "existing Acts" referred to in the AMAA clearly support congressional efforts to promote producer cooperatives. In the Agricultural Marketing Act, 12 U.S.C. Sec. 1141 (enacted 1929), Congress declared:

It is declared to be the policy of Congress to promote the effective merchandising of agricultural commodities in interstate and foreign commerce, so that the industry of agriculture will be placed on a basis of economic equality with other industries, and to that end to protect, control, and stabilize the currents of interstate and foreign commerce in the marketing of agricultural commodities and their food product--

....

(3) by encouraging the organization of producers into effective associations or corporations under their own control for greater unity of effort in marketing and by promoting the establishment and financing of a farm marketing system of producer-owned and producer-controlled cooperative associations and other agencies.

12 U.S.C. Sec. 1141(a)(3).

Congress also encouraged cooperatives by providing limited antitrust immunity for such organizations. Pursuant to 7 U.S.C. Sec. 291 (enacted 1922), the "Capper-Volstead Act", orange growers are authorized to act together in associations for the benefit of all. The Act "removed from the proscription of the antitrust laws cooperatives formed by certain agricultural producers that otherwise would be directly competing with each other in efforts to bring their goods to market." National Broiler Mktg. Assoc. v. United States, 436 U.S. 816, 822, 98 S.Ct. 2122, 2127, 56 L.Ed.2d 728 (1978). "By allowing farmers to join together in cooperatives, Congress hoped to bolster their market strength and to improve their ability to weather adverse economic periods and to deal with processors and distributors." Id. at 826, 98 S.Ct. at 2129.

In line with the policy to encourage producer participation in cooperatives, Congress included in the AMAA the provision challenged in this case, 7 U.S.C. Sec. 608c(12), which provides:

Whenever, pursuant to the provisions of this section, the Secretary is required to determine the approval or disapproval of producers with respect to the issuance of any order, ... the Secretary shall consider the approval or disapproval by any cooperative association of producers ... as the approval or disapproval of the producers who are members of, stockholders in, or under contract with, such cooperative association of producers.

B. Parties Involved

Given the nature of the claims involved, the identity of the parties is important. First, defendant-appellee Sunkist Growers, Inc., is a nonprofit cooperative marketing association formed by citrus fruit producers. As a cooperative of producers, Sunkist is entitled to bloc vote pursuant to section 608c(12).

Second, plaintiff-appellant Harris Farms is an independent producer of navel and Valencia oranges. ²

Third, plaintiff-appellant Kencarol, Inc., a California corporation, is a producer of navel and Valencia oranges, which during the 1989-90 crop year packed and marketed its oranges through Sunkist. At the time of the 1991 referenda, June, 1991, considered to be within the 1990-91 crop year, Kencarol was no longer packing and marketing its oranges through Sunkist. However, pursuant to the rules of the 1991 referendum, Sunkist was entitled to vote on behalf of Kencarol, because voting qualifications were established based upon the 1989-90 crop year; and we so hold.

Finally, plaintiffs-appellants John Does One, Two and Three were producers of navel and Valencia oranges and members of the Sunkist cooperative who wished to vote to terminate the marketing orders.

C. 1991 Referenda

Pursuant to the six-year requirements found in 7 C.F.R. Secs. 907.83, 908.83, the Secretary announced on April 5, 1991, that referenda would be conducted during June, 1991, to determine whether growers favored continuation of marketing order programs for both navel and Valencia oranges. See 56 Fed.Reg. 22364. Accordingly, the Secretary mailed ballots to each of the 3750 navel orange producers and...