Crane v. COM'R OF DEPT. OF AGR., FOOD & RURAL RES.

• Decision Date: 07 February 1985
• Docket Number: Civ. No. 85-0010-B.
• Citation: 602 F. Supp. 280
• Parties: Leroy CRANE, et al., Plaintiffs, v. COMMISSIONER OF DEPARTMENT OF AGRICULTURE, FOOD AND RURAL RESOURCES, et al., Defendants.
• Court: U.S. District Court — District of Maine

602 F. Supp. 280

Leroy CRANE, et al., Plaintiffs, v. COMMISSIONER OF DEPARTMENT OF AGRICULTURE, FOOD AND RURAL RESOURCES, et al., Defendants.

Civ. No. 85-0010-B.

United States District Court, D. Maine.

February 7, 1985.

COPYRIGHT MATERIAL OMITTED

Linda Smith Dyer, and Clifford Goodall, Dyer, Goodall & Zeegers, Augusta, Me., for plaintiffs.

Jeffrey M. Frankel, and Cabanne Howard, Asst. Attys. Gen., Augusta, Me., for defendants.

Richard A. Spencer, Kathleen Barry, Drummond, Woodsum, Plimpton & MacMahon, Portland, Me., for intervenors.

MEMORANDUM DECISION ON MOTION FOR PRELIMINARY INJUNCTION

CYR, Chief Judge.

Five Maine milk producers brought this action against the Commissioner of the Maine Department of Agriculture, Food and Rural Resources and against the Maine Milk Commission,¹ challenging the constitutionality of the Maine Milk Pool Act Act, the core provisions of which appear in 7 M.R.S.A. §§ 3153 and 3154. Plaintiffs preliminarily sought to enjoin defendants from disbursing monies pooled under the Act; ultimately, they demand permanent injunctive relief and a judicial declaration that the Act violates the supremacy, commerce, and equal protection clauses of the Federal Constitution.² Defendants assert that the Act is constitutional, that injunctive relief is inappropriate and that the action is barred by the principles of res judicata.³

Upon consideration of all of the pleadings, affidavits and memoranda, and after hearing and consideration of all representations and arguments of counsel, the court is satisfied that plaintiffs are not entitled to preliminary injunctive relief.

The Act and the Classified Pricing System for Milk

Prices paid to Maine dairy producers are established under two separate regulatory schemes: (1) the Maine Milk Commission Law, 7 M.R.S.A. §§ 2951-61 (1979 & Supp. 1983-84), and (2) Federal Milk Order No. 1 Order, 7 C.F.R. § 1001 (1984), promulgated pursuant to the Agricultural Marketing Agreement Act of 1937, as amended, 7 U.S.C.A. §§ 601-24 (1980 & Supp.1984). Under both regulatory schemes dairy producers are paid for their milk according to a "classified pricing system," which requires dealers to pay for milk according to the nature of the actual use to which the milk is put. 7 M.R.S.A. § 2954(2)(A); 7 C.F.R. § 1001.40 et seq. Thus, if the dealer sells his milk in fluid form for drinking purposes the dealer is required to pay a higher "Class I" price, but if the milk is sold by the dealer for other purposes, such as for cheese or ice cream, the dealer pays a lower "Class II" price. 7 M.R.S.A. § 2954(2)(A); 7 C.F.R. § 1001.50. The dairy producer in turn receives a "blend price" calculated on the basis of the weighted average of Class I and Class II sales. 7 M.R.S.A. § 2956(3); 7 C.F.R. §§ 1001.60, 1001.73.

Under the Maine statutory scheme, 7 M.R.S.A. §§ 2951-61, the blend price paid to Maine market producers, see 7 M.R.S.A. § 3152(1), is calculated by computing the percentages of Class I and Class II milk sold by each dealer, so that the blend price paid to Maine market producers varies from dealer to dealer. 7 M.R.S.A. § 2956(3). Maine producers selling to different Maine market dealers generally receive different blend prices per hundred weight for their milk. See generally Maine Milk Producers, Inc. v. Commissioner of Agriculture, Food and Rural Resources, 438 A.2d 1213, 1216 (Me.1984).

Maine's Boston market producers, that is, Maine milk producers who sell their milk to dealers subject to the regulatory authority of the Federal Order, see 7 M.R.S.A. § 3152(3), are paid a blend price for their milk calculated on the basis of the weighted average of all Class I and Class II milk sold in the entire Boston market. 7 C.F.R. § 1001.73. The result is that under the Federal Order all dealers pay their producers the same marketwide blend price, irrespective of the actual use to which any particular Boston market dealer's milk is put. The uniform payments to Boston market producers are accomplished by means of a "producer settlement fund," which requires dealers with above average Class I sales to pay their producers the marketwide blend price and to pay any Class I premium into the producer settlement fund. The settlement fund is later disbursed to dealers with below average Class I sales to enable them to pay their producers the average blend price. 7 C.F.R. §§ 1001.70-1001.72.

These dual marketing and pricing schemes have produced certain discrepancies between the prices received by Maine market producers and those received by Maine's Boston market producers. As the Maine Supreme Judicial Court observed:

Historically, Maine market dealers have had higher Class I utilization rates than their Boston market counterparts. As a result, producers selling on the Maine market get a higher price for their milk than producers selling on the Boston market. This extra amount is sometimes referred to as the `Maine market premium.' The Maine market dealers' higher utilization rates come from their practice of buying `short'; they purchase locally only enough milk to satisfy their average needs and buy any additional amounts needed or sell any local surplus on the Boston market. That practice benefits both Maine market producers, who receive higher blend prices as a result, and Maine dealers, who avoid handling large amounts of excess local production for which they have little use and on which they sometimes bear a cost. The Maine market premium has been going to fewer and fewer producers in the recent past. As Maine market producers increase production and add to the Maine dealers' milk supply, the dealers drop some producers onto the Boston market.

Maine Milk Producers, Inc. v. Commissioner of Agriculture, Food and Rural Resources, 483 A.2d at 1216-17. To correct these inequities the Maine Legislature enacted the Act, the purpose of which, inter alia, is to serve "a redistributive function to the end of achieving substantial price equality for all Maine produced milk," id. at 1217.

Under the Milk Pool Act, each Maine market dealer must compute its blend price twice, 7 M.R.S.A. § 3153(2)(A): the first computation is based on its individual utilization rate, while the second is based on the combined utilization rates of all the Boston market dealers. The producers selling to these Maine market dealers are immediately paid the Boston market blend price. The dealers then pay the difference between their individual blend prices and the Boston market blend price into the Maine Milk Pool. At this point in the process, the Maine market producers and the Boston market producers have received the same price for their milk, namely, the Boston market blend price, while the Maine market premium has been paid into the pool. Then, the pool is equally allocated among Maine market and Boston market producers on a per hundredweight basis.

Id.

PRELIMINARY INJUNCTIVE RELIEF

In order to obtain preliminary injunctive relief the plaintiffs must show: (1) that they will suffer irreparable injury if the injunction is not granted; (2) that such injury outweighs any harm which granting injunctive relief would inflict on the defendants; (3) that plaintiffs are likely to succeed on the merits; and (4) that the public interest will not be adversely affected by the granting of the injunction. Planned Parenthood League of Massachusetts v. Bellotti, 641 F.2d 1006, 1009 (1st Cir.1981); Women's Community Health Center, Inc. v. Cohen, 477 F.Supp. 542, 544 (D.Me.1979).

Likelihood of Success

I. Res Judicata

On May 17, 1984, two weeks before the Act was to take effect,⁴ Maine Milk Producers, Inc. MMP, a membership corporation comprised of Maine market producers, and certain of its member producers filed a civil action in the Kennebec County Superior Court against the Commissioner of the Maine Department of Agriculture, Food and Rural Resources Commissioner and the Maine Milk Commission Milk Commission, seeking preliminary and permanent injunctive relief enjoining implementation of the Act, as well as a judicial declaration that the Act violated certain provisions of the Maine Constitution and the supremacy, commerce, equal protection and due process clauses of the Federal Constitution. Because there was no dispute as to the material facts underlying the litigation the presiding justice consolidated the requests for preliminary and permanent injunctive relief.

On June 29, 1984 the superior court entered its judicial declaration that the Act violated Article I, § 6-A (equal protection clause) and Article IX, § 8 (tax clause) of the Maine Constitution, and enjoined the Commissioner from implementing the Act.⁵ The state court defendants timely appealed the order of the superior court to the Law Court and on October 31, 1984 the Law Court reversed the judgment of the superior court and vacated the injunction. The Law Court held that the Act is a valid exercise of the legislative power to engage in economic regulation. The Law Court expressly found no merit "in any of the alternative arguments presented by plaintiffs for affirming the Superior Court's declaration of unconstitutionality." Maine Milk Producers, Inc. v. Commissioner of Agriculture, Food and Rural Resources, 483 A.2d at 1221. Plaintiffs' motion for reconsideration was denied on December 5, 1984. On December 6, 1984 the Law Court issued its mandate. Plaintiffs did not seek review by the United States Supreme Court.

Under general principles of res judicata a final judgment on the merits bars further claims by parties or their privies based on the same cause of action and prevents litigation of all grounds for, or defenses to, recovery that were previously available to the parties, regardless of whether they were asserted or determined in the prior proceeding.⁶ Ramirez Pluguez v. Cole, 571 F.2d 70, 71 (1st Cir.1978), citing Lovely v. Laliberte, 498 F.2d 1261, 1263 (1st Cir.), cert. denied, 419 U.S. 1038, 95 S.Ct. 526, 42 L.Ed.2d 316 (1974). Res judicata...