Hettinga v. U.S.
| Decision Date | 15 March 2011 |
| Docket Number | Civil Action No. 06–1637 (RJL). |
| Citation | 770 F.Supp.2d 51 |
| Parties | Hein HETTINGA and Ellen Hettinga d/b/a Sarah Farms, et al., Plaintiffs,v.UNITED STATES of America, Defendant. |
| Court | U.S. District Court — District of Columbia |
OPINION TEXT STARTS HERE
John F. Cooney, Venable, LLP, Washington, DC, Alfred W. Ricciardi, Hebert Schenk, P.C., Phoenix, AZ, for Plaintiffs.Peter J. Phipps, U.S. Department of Justice, Washington, DC, for Defendant.
Plaintiffs Hein and Ellen Hettinga d/b/a Sarah Farms (“plaintiffs”), bring this action against the United States (“defendant” or “Government”) as a facial challenge to the constitutionality of 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). They allege, in essence, that because they alone are subject to those provisions, MREA constitutes a bill of attainder and is also a violation of equal protection and due process. Now before the Court is the Government's Renewed Motion to Dismiss. After careful consideration of the relevant law, the pleadings and oral arguments of counsel, and the entire record, the Government's motion is GRANTED.
Milk markets in the United States are regulated by the Secretary of Agriculture, who is authorized under the Agricultural Marketing Agreement Act of 1937 (“AMAA”) to issue milk marketing orders that govern payments from milk processors and distributors (known as “handlers”) to dairy farmers (known as “producers”) within certain geographic regions. 7 U.S.C. §§ 601 et seq.; Hettinga v. United States, 560 F.3d 498, 501 (D.C.Cir.2009); see also Edaleen Dairy LLC v. Johanns, 467 F.3d 778, 779–780 (D.C.Cir.2006). Because the price of raw milk depends on its ultimate use (e.g., high-value uses such as fluid milk v. low-value uses such as butter and cheese processing ), handlers pay money into a “producer settlement fund” at fixed prices based on intended use. Edaleen Dairy, 467 F.3d at 780. The fund is then redistributed to producers to ensure that producers receive a uniform “blend price” for raw milk based on quantity sold regardless of end use. Id.
Until recently, entities that both produced and distributed their own milk products, known as “producer-handlers,” were exempt from the pricing and pooling requirements established by federal milk marketing orders. See id. at 780–82. Because producer-handlers did not have to pay into the pool, they had a competitive advantage over other milk handlers and could sell their milk at lower prices. Id. Similarly, the pricing and pooling requirements 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. First Amend. Compl. (“Compl.”) ¶ 17.1 [Dkt. # 16].
Plaintiffs operate a dairy business in Yuma, Arizona, under the trade name Sarah Farms. Id. ¶¶ 1, 11. Sarah Farms is an integrated producer-handler that processes and sells over three million pounds of its own farm-produced milk in the former Arizona–Las Vegas Milk Marketing Area, which is now known as the Arizona Marketing Area or “Order 131.” Id. ¶¶ 1, 17; see also 7 C.F.R. pt. 1131. Plaintiffs allege that they are the only producer-handler in Order 131 with monthly milk sales over three million pounds. Compl. ¶ 17.
Plaintiffs also own, with their son, a second, independent milk processing plant known as GH Dairy or GH Processing (“GH Dairy”). Id. ¶¶ 1, 17.1. GH Dairy, a handler located in Arizona, processes raw milk into bottled milk and milk products for sale exclusively in California. Id. ¶¶ 1.1, 17.1. Because California is not a federally regulated marketing area, GH Dairy was not subject to federal minimum price regulation prior to the passage of the MREA. Id. ¶ 17.1.
According to plaintiffs, other dairy producers and processers, who were subject to the federal pricing and pooling requirements, had long sought to eliminate the producer-handler exemption to eliminate Sarah Farms as a source of competition. Id. ¶¶ 19, 21, 23. On February 24, 2006, the USDA adopted a Final Rule (“USDA Rule”) that would have subjected producer-handlers operating in the Arizona–Las Vegas and Pacific Northwest Milk Marketing Areas to the pricing and pooling provisions of their respective marketing orders if they sold more than three million pounds per month of their own milk. Id. ¶ 24; see also 71 Fed. Reg. 9430 (Feb. 24, 2006). The USDA Rule was to go into effect on April 1, 2006.
On March 15, 2006, plaintiffs filed suit in the United States District Court for the Northern District of Texas challenging the legality of the USDA Rule and seeking a preliminary injunction. Compl. ¶¶ 25–26. Oral argument on the preliminary injunction was scheduled for March 29, 2006. Id. ¶ 26. On March 28, 2006, the House of Representatives passed MREA, which had passed in the Senate several months earlier. Id. ¶¶ 26, 32. It was then sent to President Bush for his signature, and ultimately enacted on April 11, 2006. Id. ¶ 33; see Pub. L. No. 109–215, 120 Stat. 328 (2006). Ultimately, the District Court for the Northern District of Texas denied plaintiffs' motion for a preliminary injunction, and plaintiffs voluntarily dismissed the case. Compl. ¶¶ 45–46; see also Def.'s Renewed Mot. to Dismiss (“Def.'s Mot.”), Exs. 1–2 [Dkt. # 44].
At issue in this case are subsections M and N of Section 2(a) of MREA (now codified at 7 U.S.C. § 608c(5)(M)-(N)). With respect to the treatment afforded producer-handlers, these subsections of MREA were similar to the USDA Rule but narrower in scope. Like the USDA Rule, MREA's Subsection N subjects producer-handlers in the newly-revised Arizona Milk Marketing Area that sell more than three million pounds of milk per month to federal pricing and pooling requirements. Compl. ¶ 35. Unlike the USDA Rule, under MREA Nevada was removed from coverage by any federal milk marketing orders; MREA also did not cover the Pacific Northwest Milk Marketing Area. Id. ¶ 31. In addition, Subsection M of MREA imposed the federal pricing and pooling requirements on handlers who sold packaged milk in a state not covered by a federal milk marketing order, such as California. Id.
Plaintiffs now bring three constitutional challenges to MREA. First, they allege that Subsections M and N of MREA single them out for legislative punishment, thereby violating the Bill of Attainder Clause. Id. ¶¶ 41–52.5. Second, they claim that MREA foreclosed them from obtaining judicial review of the USDA's Rule in the Northern District of Texas, and is thus a violation of the Due Process Clause. Id. ¶ 60. Finally, plaintiffs claim that MREA denies them equal protection by “specifically singling them out for adverse treatment that is extended to no other producer-handler in any other Milk Marketing area.” Id. ¶ 65.
Plaintiffs filed their initial complaint on September 22, 2006. The defendant moved to dismiss for lack of subject matter jurisdiction or for failure to state a claim on December 6, 2006, and amici 1 filed a brief in support of that motion on January 3, 2007. An amended complaint was filed February 6, 2007.
After hearing oral argument on the motion on March 26, 2007, I dismissed the action for lack of subject matter jurisdiction on July 31, 2007, finding that plaintiffs failed to exhaust the administrative review process. Hettinga v. United States, 518 F.Supp.2d 58 (D.D.C.2007). On April 3, 2009, our Circuit Court reversed my decision, finding that plaintiffs' challenge was not to an order or attendant obligation, but instead to the determination of which entities would be subject to that order, and that exhaustion was not jurisdictionally required. Hettinga, 560 F.3d at 501. Because it was a constitutional challenge, which the agency lacked both the institutional competence to resolve as well as the authority to grant relief, our Circuit Court also found that exhaustion was not prudentially required. Id. at 506.
After remand, the Government renewed its motion to dismiss, arguing that the plaintiffs lacked standing as well as failed to state a claim. Again, amici filed a brief in support of that motion. Oral argument was held on June 15, 2010, and the parties filed supplemental briefing on July 12, 2010.
The Government argues that the plaintiffs lack standing to challenge Subsection N of MREA, which applies to Sarah Farms, because separate USDA regulations impose the same three million pound monthly cap on the producer-handler exception. Def.'s Mot. 9. The standing requirement, which derives from Article Ill's limitation on “federal courts to adjudicate actual ‘cases' and ‘controversies,’ ” Allen v. Wright, 468 U.S. 737, 750, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984), is characterized as containing three elements: injury-in-fact, traceability, and redressability. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). According to the Government, plaintiffs cannot show that their injury is traceable to MREA, as the USDA Rule, which contains the same three million pound cap on the producer-handler exception, preceded the statute's passage. Further, the plaintiffs cannot demonstrate redressability, because even if Subsection N of MREA were declared invalid, plaintiffs would still be subject to the three million pound cap under the USDA Rule.2 Plaintiffs would only get relief if they were successfully able to challenge the regulations, which the government maintains is too speculative to support constitutional standing. Lujan, 504 U.S. at 561, 112 S.Ct. 2130 () (internal quotations omitted).
Unfortunately for the defendants, however, I am not persuaded by their arguments. Lujan addressed the standing of environmental groups...
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