23 F.3d 1134 (7th Cir. 1994), 93-2423, Smith v. Wisconsin Dept. of Agriculture, Trade and Consumer Protection

Docket Nº:93-2423.
Citation:23 F.3d 1134
Party Name:Donald SMITH and Walter Lundeen, Jr. on their own behalf and on behalf of all others similarly situated, Plaintiffs-Appellants, v. WISCONSIN DEPARTMENT OF AGRICULTURE, TRADE AND CONSUMER PROTECTION; Howard C. Richards; Alan T. Tracy; Helene Nelson; William D. Mathias; William J. Hansen; Byron Dennison; Gary Bauer; Steven Steinhoff; C. Thomas Leitzk
Case Date:May 02, 1994
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit

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23 F.3d 1134 (7th Cir. 1994)

Donald SMITH and Walter Lundeen, Jr. on their own behalf and

on behalf of all others similarly situated,




PROTECTION; Howard C. Richards; Alan T. Tracy; Helene

Nelson; William D. Mathias; William J. Hansen; Byron

Dennison; Gary Bauer; Steven Steinhoff; C. Thomas

Leitzke; Raymond Cress; Jon Dresser; Robert Thiele;

Brian Moyer; and Doe's A through Z, being other employees

of the Department presently unknown, Defendants-Appellees.

No. 93-2423.

United States Court of Appeals, Seventh Circuit

May 2, 1994

Argued Jan. 3, 1994.

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Matthew A. Biegert (argued), Thomas Bell, Doar, Drill & Skow, New Richmond, WI, for plaintiffs-appellants.

Paul L. Barnett (argued), Office of the Atty. Gen., Wisconsin Dept. of Justice, Madison, WI, for defendants-appellees.

Before CUMMINGS and CUDAHY, Circuit Judges, and ROSZKOWSKI, District Judge. [*]

CUDAHY, Circuit Judge.

Though it is reported that California has recently surpassed Wisconsin as the nation's largest producer of milk and milk products, see Scott Pendleton, Dairy Industry Moves Southwest Seeking Warmer, Drier Climate, Christian Science Monitor, Jan. 21, 1994, at 10, Wisconsin dairy farming is nonetheless very big business. 1 There are about 24,000 Grade A dairy farms in the state, and Wisconsin's dairy industry is a multi-billion dollar enterprise. Assuring the safety and purity of the state's milk products is therefore an important state priority. Wisconsin dairy farmers are as a result subject to an extensive set of state health and safety regulations. But the regulation of milk safety is more than just a matter of state law. The regulatory regime involves a complicated patchwork of overlapping state and federal oversight. This case presents a constitutional challenge to the regime for regulating milk safety in Wisconsin.

I. The regulatory framework.

All food shipped in interstate commerce is regulated by the Food and Drug Administration ("FDA"), 21 U.S.C. Sec. 301 et seq., though

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the FDA has in part delegated the responsibility for regulating milk safety to the National Conference on Interstate Milk Shipments ("NCIMS"), a voluntary cooperative of state regulatory agencies in which every state (Wisconsin included) and every U.S. Territory participates.

The FDA publishes standards for Grade A milk and dairy farm sanitation in the form of a model ordinance: the Grade A Pasteurized Milk Ordinance ("PMO"). The PMO, first published in 1924 and now in its fifteenth revision, spells out the basic standards that dairies must meet to produce Grade A milk. 2 The NCIMS is the governing body for state regulatory agencies that implement the PMO. Its executive board contains members from state health and agricultural departments, as well as from the FDA, the U.S. Department of Agriculture and the milk industry. The NCIMS must approve all changes to the PMO, though the FDA has veto power over any proposed changes.

The NCIMS requires that state law comply with the PMO, and Wisconsin statutory law accordingly requires that the milk safety administrative regulations promulgated by the Wisconsin Department of Agriculture, Trade and Consumer Protection ("DATCP") be in accordance with the PMO. Wis.Stat. Sec. 97.24(3).

In addition, the FDA has adopted the PMO as a statement of the minimum requirements that a state regulatory and enforcement program must meet in order for the state to be certified, and the FDA inspects, and can decertify, state regulatory programs that fail to satisfy this standard. The effect of decertification would be to forbid milk from the decertified state from being introduced in interstate commerce.

II. Wisconsin's regulatory regime.

Wisconsin's milk safety regulations were, until August 1, 1989, contained in Wis.Admin.Code Sec. Ag 80. Those regulations employed a "double debit" suspension procedure. Under these procedures, an inspector would visit each Grade A dairy farm at least twice a year. Where an "imminent health hazard" existed, the DATCP could temporarily suspend a Grade A permit without notice or a hearing. Wis.Admin.Code Sec. Ag 80.17(3). 3 Otherwise, Wis.Admin.Code Sec. Ag 80.04(1) directed an inspector who found a violation of the dairy farm standard to provide the farmer with written notice of the violation. No adverse consequences would flow from this first finding of a violation. The farmer was simply directed to correct the violation, and it is only if she failed to do so by the next inspection (which was typically held within the next six months), that the farmer's Grade A permit would be suspended. 4 Wis.Admin.Code Sec. Ag 80.04. But even though a farmer was not penalized by a first finding of a violation (assuming that it was corrected), she could nonetheless obtain a hearing on the inspection's findings within twenty days.

By the same token, if on reinspection the DATCP inspector found that a previously noted violation had not been corrected (and therefore suspended the farmer's Grade A permit), the farmer again had an opportunity to seek a hearing (available within twenty days) on the inspector's findings. Wis.Admin.Code Sec. Ag 80.07(24)(e). But relatively few farmers endured the trouble and expense of a hearing, since a farmer could instead simply correct the alleged violation and request reinstatement within a few hours or days after the suspension. Although thousands of Grade A dairy permits were suspended between 1985 and 1989, fewer than ten dairy farmers requested hearings to challenge their suspensions.

Between 1987 and 1989, a number of Wisconsin state courts found this double debit

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suspension procedure to violate two separate provisions of Wisconsin law. Section 97.12(3)(b) of the Wisconsin Statutes limits DATCP's authority to suspend a farmer's license or permit without notice or hearing to situations where "continuation of the violation constitutes a serious danger to public health." Additionally, Section 227.51 of the Wisconsin Statutes, which governs state administrative law more generally, indicates that except in cases where "public health, safety or welfare imperatively requires emergency action," no state agency can suspend a license unless the agency provides the licensee "an opportunity to show" that he is in compliance with the relevant regulations. The double debit procedure of Wis.Admin.Code Sec. Ag 80.04(1) allowed DATCP to suspend a dairy farmer's Grade A permit, arguably without providing an opportunity to be heard, 5 in circumstances where the alleged violation did not pose any threat to public health. On that basis three Wisconsin state courts apparently found the regulatory regime to violate the statutory requirements. 6

In response to these decisions, the state undertook to revamp its regulatory procedures. But it had only so much leeway to do so, because whatever regulatory mechanism it set up was required to comply with the PMO. This posed something of a dilemma, because the PMO requires the immediate suspension of a Grade A permit by an inspector whenever a repeat violation is discovered. 7 It therefore drafted Sec. Ag 60 of the Wisconsin Administrative Code, which formally went into effect on August 1, 1989, though it apparently had been enforced informally as early as July 1988.

Under Sec. Ag 60, dairy farms continued to be inspected at least twice annually. Where a "key violation" is found, 8 the farmer receives a notice that if the problem is not corrected by a specified date, the Grade A permit will be suspended. It also informs the farmer of her right to a hearing.

If, on reinspection, the key violation is not corrected, the farmer's permit is suspended. The notice of suspension also provides the producer with notice that he is entitled to a hearing on the suspension. As for "key violations,"

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then, the revised Sec. Ag 60 was no different than its predecessor, Sec. Ag 80. But because the administrative code defines any repeat violation as a "key violation," for infractions that are not otherwise "key violations" Sec. Ag 60 essentially replaces Sec. Ag 80's "double debit" procedure with a "triple debit" rule. 9

III. Smith's and Lundeen's challenges.

Donald Smith is a retired Wisconsin dairy farmer, who formerly operated a dairy farm near Merrill, Wisconsin. He brought this action against DATCP and a number of its officials in a Wisconsin state court, claiming that his constitutional rights under the due process clause were violated by the enforcement of the former regulatory regime set out in Sec. Ag 80. While still in state court, the complaint was amended to add Walter Lundeen, Jr. as a plaintiff. Lundeen is currently a Wisconsin dairy farmer, who operates a farm in Frederic, Wisconsin. Though he had not yet had his permit suspended under the new regulatory framework, he contended that the procedures set out under Wis.Admin.Code Sec. Ag 60 violate his due process rights, and asked that the court enjoin their enforcement.

DATCP then brought a third-party complaint seeking indemnification against the United States, the FDA and six FDA milk safety officers, on the theory that, if it had violated the plaintiffs' due process rights, it was only because it was required to do so in order to comply with the PMO and retain its FDA certification. The United States removed the case to the federal district court, where DATCP soon thereafter voluntarily dismissed the third party complaint against the United States, the FDA and its officers. The district court then certified a class of farmers, represented by Smith, who have had their Grade A permits suspended pursuant to Wis.Admin.Code Sec. Ag 80.


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