Abbotts Dairies Div. of Fairmont Foods, Inc. v. Butz, Civ. A. No. 71-549.

• Decision Date: 04 October 1976
• Docket Number: Civ. A. No. 71-549.
• Citation: 421 F. Supp. 415
• Parties: ABBOTTS DAIRIES DIVISION OF FAIRMONT FOODS, INC., Plaintiff, v. Earl L. BUTZ, Secretary of Agriculture.
• Court: U.S. District Court — Eastern District of Pennsylvania

421 F. Supp. 415

ABBOTTS DAIRIES DIVISION OF FAIRMONT FOODS, INC., Plaintiff, v. Earl L. BUTZ, Secretary of Agriculture.

Civ. A. No. 71-549.

United States District Court, E. D. Pennsylvania.

October 4, 1976.

COPYRIGHT MATERIAL OMITTED

Roland Morris, Philadelphia, Pa., for Abbotts.

Donald F. Copeland, Philadelphia, Pa., for intervenor.

John H. Sandor, Dept. of Agriculture, Washington, D.C., for defendant.

OPINION

DITTER, District Judge.

This case involving judicial review of a milk-pricing decision of the Secretary of Agriculture is before the court for the third time. Presently under consideration are the motion of various dairy cooperatives to intervene, the motion of the Secretary for reconsideration of my decision¹ granting summary judgment, and the question of an appropriate order regarding prospective relief.² After briefly outlining the factual and procedural history of this case, I will address these issues seriatim.

I. Factual Background

Prior to June, 1969, the prices paid by handlers (dairies) to producers (farmers) for milk in the Delaware Valley Marketing Area, which is sometimes referred to as "Order No. 4",³ were tied to certain economic indices. Under this system, known as bracketed pricing, the price of milk did not change unless the indices crossed a fixed boundary. When they did, the price per hundred pounds of milk would be adjusted in brackets of twenty cents.

In June, 1969, the Secretary held a hearing to consider, inter alia, milk pricing in the Northeastern United States, including Order No. 4. Before the Secretary were two proposals. One, by various New York and New England dairies, was to peg the price of milk in the whole Northeast to the Chicago price and then move it on a penny-by-penny basis with any change in the Chicago index. The other, proposed by a Delaware Valley cooperative, recommended that a bracketed pricing system, pegged to the Minnesota-Wisconsin price, should be adopted solely for Order No. 4. On August 20, 1969, the Secretary of Agriculture issued a new pricing order for the Delaware Valley that provided for penny-by-penny price movements based upon changes of price in the Minnesota-Wisconsin area. 34 Fed.Reg. 13601. Objection to the abandonment of bracketed pricing having been raised, the hearing was reopened on October 30, 1969, and thereafter, on January 20, 1970, the Secretary issued a further decision, again retaining the penny-by-penny pricing method. 35 Fed.Reg. 1017. After unsuccessfully exhausting its administrative remedies, Abbotts instituted the present suit for judicial review pursuant to Section 8c(15)(B) of the Agricultural Marketing Agreement Act, 7 U.S.C. § 608c(15)(B).

In an opinion issued on November 27, 1972,⁴ I concluded that there was no showing in the record there before me that the Secretary's order of August 20, 1969, was supported by substantial evidence, a deficiency which was not cured by subsequent administrative decisions. At the Secretary's suggestion, the matter was remanded so that his Judicial Officer could review all of the record to see if it could be shown that the Secretary's decision was supportable by substantial evidence. In a locquacious opinion that went far beyond the remand order, the Judicial Officer not only held that the Secretary's decision was supported by substantial evidence, but also held that substantial evidence was not required as a basis for the Secretary's action, that the Secretary's decision was not reviewable by this court, and that the case had become moot because of subsequent changes in federal milk marketing orders.

After the issues were once again briefed by the parties, I issued an opinion on January 9, 1975,⁵ in which I granted summary judgment in favor of Abbotts Dairies. Because all of the evidence at the hearing which preceded the August, 1969, decision, and on which it was required by statute to be based, supported bracketed pricing in the Delaware Valley, I held that the Secretary's decision to adopt penny-by-penny pricing was not based upon substantial evidence and must be set aside.⁶

II. Motion to Intervene

The movants for intervention,⁷ Pennmarva Dairymen's Cooperative Federation, Inc., Lehigh Valley Cooperative Farmers and Capital Milk Producers Cooperative, Inc., represent approximately 5200 farmers that supply about 75 percent of the milk in the area encompassed by the present Order No. 4. Their stated reasons for wishing to intervene are to seek clarification of the court's decision of January 9, 1975, as to what pricing structure is operative in Order No. 4 at this time and to join in the Secretary's motion for reconsideration of that decision. They claim that they have a direct financial interest in preserving a stable and orderly market structure in Order No. 4 and that through the producer settlement fund they would ultimately be liable for any damages the court may award in this case.

Intervention, whether claimed as a right or as permissive,⁸ must first of all be timely. Timeliness is not dependent upon the chronological progression of the action; rather, it must be determined from all the circumstances by a court exercising its sound discretion. NAACP v. New York, 413 U.S. 345, 365-66, 93 S.Ct. 2591, 2602-03, 37 L.Ed.2d 648 (1973).

The Judicial Officer issued a final opinion refusing to reinstate bracketed pricing on February 22, 1971. Shortly thereafter the present action was filed in this court. For four and one-half years this case had been litigated by plaintiff and defendant. Suddenly, and only after the elimination of bracketed pricing had been held unlawful, movants decided that they should become active parties to these proceedings. The only substantive reason given by movants for their inordinate delay was that they were surprised by Abbotts' claim for damages and other relief. Specifically, they contended that they were led to believe Abbotts only sought recovery of overpayments to the producer settlement fund⁹ and that after the court's favorable January 9, 1975, ruling, Abbotts changed its position to claim restitution of the differences between the invalid price imposed by the government and the price that would have been paid under a bracketed system. This argument is hardly persuasive.

It is clear from the entire record in this matter that Abbotts' position has always been that it is entitled to restitution from the producer settlement fund for overpayments made both to the fund and to producers themselves. The exhibits attached to Abbotts' memorandum in opposition to intervention show that some producers, and particularly those in the Interstate Milk Producers Cooperative, a member of Pennmarva, were on actual notice that Abbotts proposed to, and in fact, did withhold money from producers and from the producer settlement fund until enjoined from doing so by Judge Luongo in United States v. Abbotts Diaries, 315 F.Supp. 571 (E.D.Pa. 1970). Judge Luongo's opinion noted that Abbotts asked that "it be permitted to make the payments into court rather than to producers and to the producer-settlement fund." Id. at 573 (emphasis added). Although he denied this request, Judge Luongo went on to note that:

Abbotts will be adequately protected if the attack on the Order is ultimately upheld. There appears to be adequate provision within the workings of the producer-settlement fund for repayments or credits for such amounts as may be determined to have been overpaid to the fund.

Id. at 574. It is difficult to believe that movants were not adequately warned of the economic consequences of an adverse decision against the Government. Therefore, I conclude that the movant's motion to intervene was not timely made. See Hoots v. Commonwealth of Pennsylvania, 495 F.2d 1095 (3d Cir. 1974); Mack v. General Electric Co., 63 F.R.D. 368 (E.D.Pa.1974).¹⁰

Although for the reason stated above I refuse to allow the movants to intervene generally, because the damage issue presents exceedingly complex questions on which I have deferred decision pending receipt of further briefs from those already parties, I will allow movants to intervene for the limited purpose of presenting their views on this issue.¹¹

III. Motion for Reconsideration

The government advances numerous arguments in support of its Fed.R.Civ.Proc. 60(b)(1) and (b)(3) motion for reconsideration of my January 9, 1975, decision granting summary judgment in favor of Abbotts. First, it contends as did the movants for intervention, that Abbotts has misrepresented its position with respect to the claim for damages and that this requires reconsideration of the merits of the entire case. I reject this argument for essentially the same reasons discussed earlier in connection with the motion to intervene: an examination of the record simply fails to show any plausible basis for a claim of surprise. Elmer C. Flounders, Vice President of Abbotts, expressly informed the Market Administrator of Order 4 in February, 1970, of its position that it was entitled to pay farmers only the bracketed price it claimed the Secretary should have adopted. As noted previously, this was in fact the price Abbotts paid farmers until enjoined from doing so by Judge Luongo in a decision which specifically stated that Abbotts would be adequately protected from overpayments to producers if it ultimately won on the merits. United States v. Abbotts Diaries, supra, 315 F.Supp. at 574.¹² Thus, it seems clear to me that the government had ample notice of the type and extent of damages claimed by Abbotts.

The principal argument for reconsideration put forth by the government is that I erred when I concluded that bracketed pricing had been illegally terminated in Order No. 4. The Secretary's position is that bracketed pricing had been lawfully terminated prior to the June 1969 hearings and that those hearings were conducted for the purpose, inter alia, of considering whether bracketing should be reinstituted. Proceeding from this position the...