677 F.3d 471 (D.C. Cir. 2012), 11-5065, Hettinga v. United States
|Citation:||677 F.3d 471|
|Opinion Judge:||PER CURIAM:|
|Party Name:||Hein HETTINGA, et al., Appellants v. UNITED STATES of America, Appellee.|
|Attorney:||Alfred W. Ricciardi argued the cause and filed the briefs for appellants. Kelsi Brown Corkran, Attorney, U.S. Department of Justice, argued the cause for appellee. With her on the brief were Tony West, Assistant U.S. Attorney, and Michael S. Raab, Attorney. R. Craig Lawrence, Assistant U.S. Attor...|
|Judge Panel:||Before: SENTELLE, Chief Judge, BROWN and GRIFFITH, Circuit Judges. Concurring opinion filed by Circuit Judge BROWN, with whom Chief Judge SENTELLE joins. Concurring opinion filed by Circuit Judge GRIFFITH. BROWN, Circuit Judge, with whom Chief Judge SENTELLE joins, concurring: GRIFFITH, Circuit J...|
|Case Date:||April 13, 2012|
|Court:||United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit|
Argued Dec. 12, 2011.
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Appeal from the United States District Court for the District of Columbia (No. 1:06-cv-01637).
Plaintiff-appellants Hein and Ellen Hettinga appeal the dismissal of their constitutional challenges to two provisions of the Milk Regulatory Equity Act of 2005 (" MREA" ), Pub.L. No. 109-215, 120 Stat. 328 (2006) (codified at 7 U.S.C. § 608c). The Hettingas alleged that the provisions, which subjected certain large producer-handlers of milk to contribution requirements applicable to all milk handlers, constituted a bill of attainder and violated the Equal Protection and Due Process Clauses. The district court disagreed, and we affirm.
Milk markets in the United States are regulated by a complex system of price controls dating back to the New Deal. The Agricultural Marketing Agreement Act of
1937, 7 U.S.C. §§ 601-74 (" AMAA" ), authorizes the Secretary of Agriculture to issue regional milk marketing orders that govern payments from milk processors and distributors (" handlers" ) to dairy farmers (" producers" ). Id. § 608c(1). Under a typical milk market order, a dairy farmer supplies raw milk to a processor or distributor, and the handler pays money into a centralized " producer settlement fund" at fixed prices based on the intended use of the milk. Edaleen Dairy LLC v. Johanns, 467 F.3d 778, 779-80 (D.C.Cir.2006). Handlers using their milk for " high value" uses, such as fluid milk, pay higher prices than handlers that engage in " low-value" uses, such as the processing of butter or cheese. Id. The money that handlers pay into the producer settlement fund is then proportionally redistributed to milk producers at a uniform " blend price" based on quantity of milk sold. See 7 U.S.C. § 608c(5)(B)(ii). This system ensures that all dairy farmers receive the same price for their raw milk regardless of whether they sell to high-value or low-value handlers.
Firms that operate as both producers and handlers create serious complications for this system. In such cases, there is no opportunity for the producer-handler to pay into the centralized producer settlement fund because there is no intermediate sale of raw milk. Edaleen Dairy, 467 F.3d at 780. Until recently, the Secretary of Agriculture therefore exempted producer-handlers from the pricing and pooling requirements of federal milk marketing orders. Id. The pricing and pooling requirements also did not apply to handlers who sold milk in geographic areas that were not regulated by federal milk marketing orders, even if the handler itself was located in a federally-regulated area.
The Hettingas own two dairy operations that fell within these exemptions. The first is Sarah Farms, an integrated producer-handler located in Yuma, Arizona. Sarah Farms processes and sells over three million pounds of its own milk per month in the federally regulated Arizona Marketing Area. The second is GH Dairy, an independent milk processing plant which they own in partnership with their son. GH Dairy, a handler located in Arizona, processes raw milk into bottled milk and milk products that are sold exclusively in California. Because California is not a federally regulated milk marketing area, GH Dairy was not subject to the federal pricing and pooling requirements.
On February 24, 2006, the USDA adopted a Final Rule that would have eliminated the producer-handler exemption for firms that operate in the Arizona and Pacific Northwest Marketing Areas and sell more than three million pounds of their own milk per month— a group that includes Sarah Farms. See Milk in the Pacific Northwest and Arizona-Las Vegas Marketing Areas; Order Amending the Orders, 71 Fed.Reg. 9,430 (Feb. 24, 2006) (" USDA Rule" ). The decision to eliminate the exemption for these large producer-handlers was based on evidence of " disorderly marketing conditions" — specifically, that large producer-handlers were obtaining a " competitive sales advantage" over fully-regulated handlers, and were causing a " measurabl[e] and significant[ ]" decrease in the blend price being paid to regulated producers. Milk in the Pacific Northwest and Arizona-Las Vegas Marketing Areas; Final Decision on Proposed Amendments to Marketing Agreement and to Orders, 70 Fed.Reg. 74,166, 74,186-88 (Dec. 14, 2005). The USDA Rule was scheduled to go into effect on April 1, 2006. The Hettingas filed suit in the U.S. District Court for the Northern District of Texas, challenging the legality of the USDA Rule and seeking a preliminary injunction.
Oral argument was scheduled for March 29, 2006.
On the day before the Texas district court heard arguments in the Hettingas' case, Congress amended the AMAA by passing the MREA.1 President Bush subsequently signed the MREA into law on April 11, 2006. Subsection N of the MREA, 7 U.S.C. § 608c(5)(N), codified the USDA Rule's revocation of the exemption for large producer-handlers in the Arizona Marketing Area, including Sarah Farms. Unlike the USDA Rule, however, it applied neither to Nevada, which Congress exempted from coverage by any federal milk marketing orders, nor to the Pacific Northwest Milk Marketing Area. Subsection M of the MREA, id. § 608c(5)(M), imposed the federal pricing and pooling requirements on handlers, like GH Dairy, that were located in a federally regulated area but sold packaged milk exclusively in a state not covered by a federal milk marketing order, such as California.
The Hettingas challenged the constitutionality of the MREA in the U.S. District Court for the District of Columbia. First, they alleged that Subsections M and N of the MREA violate the Bill of Attainder Clause by singling them out for legislative punishment. Compl. ¶ ¶ 53-57. Second, the Hettingas claim the MREA denies them equal protection by " singling them out for adverse treatment that is extended to no other producer-handler in any other Milk Marketing Area." Id. ¶ 65. Finally, they claim the MREA denied them due process of law by foreclosing judicial review of the USDA Rule in the Northern District of Texas. Id. ¶ 60. The district court initially dismissed the Hettingas' claims for failure to exhaust administrative remedies, but this Court reversed and remanded, holding that the AMAA's exhaustion requirements do not apply to facial constitutional challenges. Hettinga v. United States, 560 F.3d 498, 504-06 (D.C.Cir.2009). On remand, the district court dismissed the Hettingas' complaint for failure to state a claim under Fed.R.Civ.P. 12(b)(6) and denied leave to file a supplemental complaint. Hettinga v. United States, 770 F.Supp.2d 51 (D.D.C.2011).
We review de novo a district court's dismissal of a claim under Rule 12(b)(6). Atherton v. Dist. of Columbia Office of the Mayor, 567 F.3d 672, 681 (D.C.Cir.2009). To survive a motion to dismiss, a complaint must have " facial plausibility," meaning it must " plead[ ] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). In evaluating a Rule 12(b)(6) motion, the Court must construe the complaint " in favor of the plaintiff, who must be granted the benefit of all inferences that can be derived from the facts alleged."...
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