West Lynn Creamery, Inc. v. Commissioner of Dept. of Food and Agriculture

Decision Date15 April 1993
PartiesWEST LYNN CREAMERY, INC., & another 1 v. COMMISSIONER OF the DEPARTMENT OF FOOD AND AGRICULTURE (and two companion cases 2 ).
CourtUnited States State Supreme Judicial Court of Massachusetts Supreme Court

Michael L. Altman, Boston (Margaret A. Robbins, with him), for plaintiffs.

Eric A. Smith, Asst. Atty. Gen., for defendant.

Robert J. Sherer, Boston, & Francis A. DiLuna, Woburn, amici curiae, for Massachusetts Farm Bureau Federation.

Allen Tupper Brown, Gill, amici curiae, for Massachusetts Ass'n of Dairy Farmers & others.

Marshall M. Schribman, Boston, amici curiae, for Massachusetts Co-op. Milk Producers Federation, Inc.

Steven J. Rosenbaum & Andrew I. Schoenholtz, Washington, DC, & Richard M. Zielinski, Neil V. McKittrick & Joshua M. Davis, Boston, amici curiae, for Milk Industry Foundation.

Before WILKINS, ABRAMS, NOLAN, LYNCH and GREANEY, JJ.

NOLAN, Justice.

The plaintiffs, West Lynn Creamery, Inc. (West Lynn), and LeComte's Dairy, Inc. (LeComte), are milk dealers licensed by the Department of Food and Agriculture (department) pursuant to G.L. c. 94A (1990 ed.). 3 West Lynn is a domestic corporation with its principal place of business in Lynn. West Lynn purchases milk from producers and producer-cooperatives and sells in Massachusetts about sixty per cent of the milk purchased. 4 West Lynn purchases most of its milk from out-of-State producers. LeComte is also a domestic corporation with its principal place of business in Somerset. LeComte purchases all of its milk from West Lynn and sells it to retailers, convenience stores, nursing homes, and restaurants.

Under G.L. c. 94A, the Commissioner of the department is vested with wide-ranging powers to supervise and regulate the milk industry of the Commonwealth. § 2. Among other things, the Commissioner is empowered to issue licenses to milk dealers, § 5, and to establish minimum prices to be paid for milk "which will best protect the milk industry in the commonwealth and insure a supply of pure, fresh milk adequate to cover consumer needs." § 10. The Commissioner fixes the minimum price to be paid to milk "producers" by issuing an order. §§ 11, 12. The Commissioner is empowered to suspend or revoke the license of a milk dealer who fails to comply with department orders, rules, or regulations. §§ 6, 7. The root of the dispute in the present cases is the Commissioner's revocation of the plaintiffs' milk dealers' licenses due to their failure to comply with a pricing order. The plaintiffs contend that the pricing order violates the commerce clause of art. I, § 8, of the United States Constitution. 5 We disagree.

The order that is the subject of this case was issued by the Commissioner in response to the economic crisis facing dairy farmers in Massachusetts. The background to the issuance of the order is as follows. In November, 1991, a petition was delivered to the department requesting that the Commissioner hold hearings regarding the state of the dairy industry in Massachusetts. See G.L. c. 94A, § 12. The Commissioner held public hearings in January, 1992, conducted subsequent investigations, and interviews, and thereafter declared that the Massachusetts dairy industry was in a state of emergency. 6

On February 26, 1992, in response to this state of emergency, the Commissioner issued an amended pricing order, pursuant to G.L. c. 94A, §§ 10-12. 7 The pricing order sets forth a plan designed to boost the amount of money local dairy farmers--the producers--receive for milk above and beyond that required by the Federal program. 8 The pricing order requires milk dealers to submit monthly reports and to contribute to the Massachusetts Dairy Equalization Fund (fund). The monthly reports require, among other things, each licensed milk dealer to report the amount of "Class I" milk sold for consumption in Massachusetts during the reporting period. 9 Each milk dealer's monthly contribution to the Fund is calculated by multiplying the volume of "Class I" milk sold during the reporting month, regardless of point of origin, by an "Order Premium." 10 The Commissioner distributes the fund to producers in proportion to the milk produced in Massachusetts during the preceding month. The pricing order took effect immediately. The first monthly report, covering April, 1992, was due May 25, 1992.

West Lynn and LeComte submitted reports for the periods April through July, 1992. The plaintiffs paid their premiums for April and May, but discontinued payments thereafter. On July 24, 1992, the plaintiffs filed an action in the Superior Court Department alleging, among other things, that the pricing order violated the commerce clause. They argued that the pricing order places out-of-State farmers at a competitive disadvantage because it subsidizes Massachusetts farmers but not out-of-State farmers, all of whom are selling milk in Massachusetts, and sought declaratory relief, damages, a preliminary injunction, and a permanent injunction to prevent the Commissioner from collecting the monthly premiums. On July, 31, 1992, a judge in the Superior Court denied the plaintiffs' request because they had failed to establish irreparable harm. The judge also denied their request to deposit the required premiums with the court. 11

Meanwhile, West Lynn and LeComte continued to dispute the legality of the pricing order, and failed to comply with its provisions. In June and July, 1992, the Commissioner initiated administrative action against both West Lynn and LeComte seeking to suspend or to revoke their licenses for failing to comply with the pricing order.

In response to the Commissioner's action, on August 7, 1992, plaintiffs filed an "emergency" motion for a preliminary injunction seeking the same relief that the earlier motion sought: a preliminary injunction enjoining the Commissioner from imposing any penalty, including but not limited to, suspending or revoking their milk dealers' licenses for failure to pay the equalization premiums required by the Commissioner's amended pricing order. On August 14, 1992, the judge denied the requests for preliminary injunctive relief because the plaintiffs again failed to demonstrate any irreparable harm. The judge held that payment into the fund does not constitute irreparable harm because the pricing order does not require the plaintiffs to absorb the cost of the equalization premiums. Rather, the judge reasoned, the plaintiffs can pass on the equalization premiums to consumers. The judge also noted that, if the Commissioner should suspend or revoke the plaintiffs' licenses, his decision is reviewable, G.L. c. 94A, § 8; hence, their claim was premature.

On September 14, 1992, the Commissioner held hearings, and on November 16, 1992, conditionally revoked the plaintiffs' licenses, see G.L. c. 94A, §§ 6, 7, for failing to comply with the pricing order. 12 The Commissioner denied the plaintiffs' commerce clause challenge, stating, "[W]hile the [Pricing] Order is designed to benefit Massachusetts dairy farmers, it does not do so by discriminating against or burdening interstate commerce. The Order is applied evenhandedly to all milk dealers, wherever located, handling milk for sale in Massachusetts. The Order does not discriminate among dealers based on the source of the milk they purchase or the amount of milk they sell in other states."

On November 17, 1992, the plaintiffs filed a second emergency motion for a preliminary injunction requesting that the Superior Court enjoin the Commissioner from revoking their licenses. In an affidavit supporting its motion, West Lynn stated that it did not intend to comply with the conditions of the Commissioner's November 16, order. West Lynn also noted that, if it is not licensed to sell milk in the Commonwealth, more than 1,000 employees may be laid off. Additionally, on November 18, 1992, the plaintiffs filed separate actions in the Superior Court seeking judicial review of the Commissioner's decisions to revoke the plaintiffs' milk licenses, G.L. c. 94A, §§ 8, 21, and requesting stays of enforcement action pending judicial review.

On November 24, 1992, a Superior Court judge, in a consolidated order, amended on November 25, denied the plaintiffs' second request for an emergency preliminary injunction, and their request for a stay of the revocation action pending judicial review. The judge reasoned that the plaintiffs had failed to demonstrate a reasonable likelihood of success on the merits and that they would suffer irreparable harm. The judge wrote that the plaintiffs should "pay the assessment [premium] and seek an early hearing on the merits." The plaintiffs then petitioned a single justice of the Appeals Court, G.L. c. 231, § 118, 1st par. (1990 ed.), seeking interlocutory relief from the Superior Court's denial of the emergency motion for a preliminary injunction. On November 25, 1992, the single justice issued an order staying the Commissioner's November 16, 1992, revocation orders pending further review. After a hearing on December 1, 1992, the single justice agreed to extend the stay beyond December 15, 1992, if the plaintiffs paid the amounts due under the pricing order for the months June, July, and August, 1992.

On December 11, 1992, another judge in the Superior Court, reserved and reported the plaintiffs' cases concerning judicial review of the Commissioner's revocation orders to the Appeals Court. See Mass.R.Civ.P. 64, 365 Mass. 831 (1974). On December 15, 1992, the Appeals Court granted a motion to consolidate the three cases.

To expedite the appeals, the parties agreed, with the assent of the single justice, to seek interlocutory relief from a panel of the Appeals Court pursuant to G.L. c. 231, § 118, 2d par. We transferred these cases to this court on our own motion, and we hold the pricing order constitutional.

The sole question facing us from the three appeals concerns the constitutionality of the pricing...

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    • Antitrust Bulletin No. 39-3, September 1994
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