Berning v. Gooding

• Decision Date: 07 January 1986
• Docket Number: Civ. No. 84-895-PA.
• Citation: 643 F. Supp. 26
• Parties: Louis G. BERNING, Plaintiff, v. Fred GOODING, Ray Obendorf, Peter Rooney, George Signoratti, Herman Goschie, Robert Coleman, Bill Gasseling, Harlan Shinn, Melvin Newhouse, Ken Desserault, Alcid Roy, Mike Koreski, Rip Riel and Robert H. Eaton, Defendants.
• Court: U.S. District Court — District of Oregon

643 F. Supp. 26

Louis G. BERNING, Plaintiff, v. Fred GOODING, Ray Obendorf, Peter Rooney, George Signoratti, Herman Goschie, Robert Coleman, Bill Gasseling, Harlan Shinn, Melvin Newhouse, Ken Desserault, Alcid Roy, Mike Koreski, Rip Riel and Robert H. Eaton, Defendants.

Civ. No. 84-895-PA.

United States District Court, D. Oregon.

June 18, 1985.

On Motion To Dismiss Second Amended Complaint January 7, 1986.

Clifford N. Carlsen, Jr., John F. Neupert, Miller, Nash, Wiener, Hager & Carlsen, Portland, Or., for plaintiff.

Charles J. Merten, Merten & Fink, Portland, Or., for defendant Fred Gooding.

Paul T. Fortino, Calvin L. Keith, Portland, Or., for defendants Ray Obendorf, Peter Rooney, George Signoratti, Herman Goschie, Robert Coleman, Bill Gasseling, Harlan Shinn, Melvin Newhouse, Ken Desserault, Alcid Roy, Mike Koreski, Rip Reil, and Robert H. Eaton.

PANNER, Chief Judge.

In this action plaintiff Louis Berning alleges that he was damaged by defendants' violations of the antitrust laws and by defendants' tortious interference with prospective advantage. Plaintiff was a hop grower. All but one of the defendants are hop growers who were or are members of the Hop Administrative Committee (HAC). Defendant Robert Eaton, while not a grower, was HAC's manager during the relevant time, and still is.

Defendants move to dismiss, alleging that plaintiff fails to state a claim under either the antitrust laws or for tortious interference. I grant the motion with respect to both claims. The dismissal is without prejudice and plaintiff has leave to replead. Defendants Newhouse and Obendorf also move to dismiss for insufficiency of process. I deny their motion as moot.

BACKGROUND

HAC was created pursuant to the Agricultural Marketing Agreement Act of 1937 (the Act), 7 U.S.C. § 601 et seq. The Act empowers the Secretary of Agriculture to "establish and maintain ... orderly marketing conditions for agricultural commodities" so that farmers would receive "parity prices" for the commodities. 7 U.S.C. § 602(1). The Act allows the Secretary to issue marketing orders for certain commodities, including hops. 7 U.S.C. §§ 608c(1), (2). Hop orders may contain terms "limiting ... the total quantity ... during any specified period or periods" and "apportioning ... the total quantity of hops of the then current calendar year ... equitably among all producers." 7 U.S.C. § 608c(6)(G).

In 1966, at the request of hop growers, the Secretary issued the Hops Marketing Order (1966 Order), found at 7 C.F.R. § 991. Growers approved the 1966 Order by referendum. The 1966 Order provides for the creation of HAC. Members are growers appointed by the Secretary, and are subject to removal by the Secretary at any time. 7 C.F.R. §§ 991.17, 991.37.

HAC's duties include adopting a hops marketing policy and making recommendations to the Secretary for the "saleable quantity" and "allotment percentage" of hops. 7 C.F.R. § 991.36. The policy and recommendations pertain to the "ensuing marketing year," defined as from August 1 to July 31 of the next crop year. 7 C.F.R. §§ 991.10, 991.36. In making the recommendations, HAC should consider several factors affecting marketing conditions. 7 C.F.R. § 991.36.

On the basis of HAC's recommendation or other information, the Secretary may decide to limit the saleable quantity for that marketing year if this would effectuate the purposes of the Act. 7 C.F.R. § 991.37. The Secretary is not bound by HAC's recommendations.

Rights of the Secretary.

. . . . .

Each and every decision, determination, and other act of the committee shall be subject to the continuing right of disapproval by the Secretary at any time. Upon such disapproval, the disapproved action of the Committee shall be deemed null and void, except as to acts done in reliance thereon or in accordance thereof prior to such disapproval by the Secretary.

7 C.F.R. § 991.71.

In his complaint, plaintiff alleges the following. At HAC's 1980 meeting, defendants conspired to recommend "saleable percentages" for the 1981 to 1987 years. The percentages were to vary from 100% to 130%, with most years set at 130%. (Complaint, ¶ 11.) Presumably the Secretary adopted the percentages for the 1981 to 1984 crop years, as plaintiff alleges that the Secretary routinely approves the recommendations without conducting an independent analysis. (Complaint, ¶ 7.)

Plaintiff further alleges that the saleable percentages were made without regard to factors affecting marketing conditions, that there was no notice or opportunity for hearing regarding the recommendations, and that the recommendations were made in a way that allowed the "filling of deficiencies through illegal means." (Complaint, ¶ 13.) Plaintiff says that these tactics allowed defendants to "usurp the market for hops to themselves," leaving plaintiff unable to profitably grow or market hops. (Complaint, ¶ 14.)

Defendants have moved to dismiss both claims for failure to state a claim, pursuant to Fed.R.Civ.P. 12(b)(6). Defendants base their motion on several grounds, the most important of which is that defendants are expressly or impliedly immune from liability for their acts as HAC members. I grant the motion to dismiss the first claim on this ground. I also grant the motion to dismiss the second claim because of express regulatory immunity, and because it is a pendent claim for which no other ground of jurisdiction is stated. The dismissal is without prejudice and plaintiff has twenty days leave to file an amended complaint.

STANDARDS

When a federal court rules on a motion to dismiss for failure to state a claim, the court must review the sufficiency of the complaint. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974). The court should construe the allegations in the complaint most favorably to the pleader.

In evaluating the sufficiency of the complaint we follow, of course, the accepted rule that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.

Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957) (footnote omitted).

DISCUSSION

Defendants are expressly immune from antitrust liability for the conduct alleged in the complaint. Section 608b of the Act provides:

In order to effectuate the declared policy of this chapter, the Secretary of Agriculture shall have the power, after due notice and opportunity for hearing, to enter into marketing agreements with processors, producers, associations of producers, and others engaged in the handling of any agricultural commodity or product thereof, only with respect to such handling as is in the current of interstate or foreign commerce or which directly burdens, obstructs, or affects, interstate or foreign commerce in such commodity or product thereof. The making of any such agreement shall not be held to be in violation of any of the antitrust laws of the United States, and any such agreement shall be deemed to be lawful: Provided, That no such agreement shall remain in force after the termination of this chapter.

7 U.S.C. § 608b.

The statute applies here. Plaintiff does not attack the statute's validity. Instead, he argues that section 608b applies only to "marketing agreements" made under section 608 and not to "orders" issued under section 608c, citing In re Midwest Milk Monopolization Litigation, 380 F.Supp. 880, 815 (W.D.Mo.1974). I do not accept this reasoning.

There is no substantial difference between the making of a marketing agreement and the issuance of a hop order. Marketing agreements are made between the Secretary and producers to limit production of agricultural commodities and allow for parity prices. 7 U.S.C. § 608(2). Orders are issued by the Secretary if he has reason to believe that they will effectuate the purposes of the Act, one of which is to achieve parity prices. 7 U.S.C. § 608c. Because the Secretary issued the annual hop orders after considering HAC's annual recommendations, the hop orders resemble marketing agreements for purposes of section 608b. Cf. Chiglades Farm, Ltd. v. Butz, 485 F.2d 1125, 1134-35 (5th Cir.1973), cert. denied, 417 U.S. 968, 94 S.Ct. 3170, 41 L.Ed.2d 1138 (1974). Section 608b immunity should apply. Accordingly, defendants are immune for acts committed within their statutory authority.

Defendants also argue that the antitrust claim and the tortious interference claim should be dismissed under 7 C.F.R. § 991.74, which provides:

Personal Liability.

No member or alternate member of the committee and no employee or agent of the committee shall be held personally responsible, either individually or jointly with others, in any way whatsoever, to any person for errors in judgment, mistakes, or other acts, either of commission or omission, as such member, alternate, employee, or agent, except for acts of dishonesty, willful misconduct, or gross negligence.

(emphasis added).

Other than vague and conclusory allegations, there are no charges that fit within the exceptions to immunity. Thus dismissal of both claims is appropriate under the regulation.

The antitrust claim should also be dismissed because the statutory and regulatory framework here creates an implicit immunity to the antitrust laws under Keogh v. Chicago & Northwestern Railway Co., 260 U.S. 156, 43 S.Ct. 47, 67 L.Ed. 183 (1922). In Keogh the Court held that a private party could not bring an antitrust action based on a conspiracy to fix limits already approved by the Interstate Commerce Commission. Here, plaintiff may not bring an antitrust action based on a conspiracy to set rates already approved by the Secretary. See also In re Wheat Rail Freight Rate Antitrust Litigation, 579 F.Supp. 517, 529-37 (N.D.Ill.1984).

In Phonetele, Inc. v. American Tel. & Tel. Co., 664 F.2d 716 (9th Cir.1981), cert. denied, 459 U.S. 1145, 103 S.Ct. 785, 74 L.Ed.2d 992 (1983), the...