Delano Farms Co. v. California Table Grape Com'n, CV-F-96-6053 OWW/DLB.

• Decision Date: 31 March 2008
• Docket Number: No. CV-F-96-6053 OWW/DLB.,CV-F-96-6053 OWW/DLB.
• Citation: 546 F.Supp.2d 859
• Parties: DELANO FARMS COMPANY, a Washington corporation; the Susan Neill Company, a sole proprietorship of Susan Neill; and Lucas Bros. Partnership, a California Partnerships, Plaintiffs, v. The CALIFORNIA TABLE GRAPE COMMISSION, Defendant.
• Court: U.S. District Court — Eastern District of California

Page 859

546 F.Supp.2d 859

DELANO FARMS COMPANY, a Washington corporation; the Susan Neill Company, a sole proprietorship of Susan Neill; and Lucas Bros. Partnership, a California Partnerships, Plaintiffs, v. The CALIFORNIA TABLE GRAPE COMMISSION, Defendant.

No. CV-F-96-6053 OWW/DLB.

United States District Court, E.D. California.

March 31, 2008.

Brian C. Leighton, Law Offices of Brian Leighton, Clovis, CA, for Plaintiffs.

Gerald Douglas Vinnard, Gilmore Wood Vinnard Chittick and Magness, Kendall Manock, Robert Donald Wilkinson, Baker Manock and Jensen, Fresno, CA, Seth Paul Waxman-Pro Hac Vice, Brian Matthew Boynton, Wilmer Cutler Pickering Hale & Dorr LLP, Washington, DC, Walter Eugene Wunderlich, Attorney General's Office for the State of California, Sacramento, CA, for Defendant.

MEMORANDUM DECISION GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT (Doc. 289) AND GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION FOR PARTIAL SUMMARY JUDGMENT (Docs. 311 & 312)

OLIVER W. WANGER, District Judge.

Plaintiffs Delano Farms Company, Susan Neill Company, and Lucas Bros Partnership (hereinafter referred to as Plaintiffs) have filed a motion for partial summary judgment and/or summary adjudication of issues: (1) regarding the "government speech" defense; (2) whether Glickman v. Wileman Brothers & Elliott, Inc. or United Foods, Inc. v. United States applies; and (3) whether Central Hudson intermediate "scrutiny is not applicable." Defendant California Table Grape Commission (hereinafter referred to as the Commission) has filed a cross — motion for summary judgment on the grounds that (1) requiring Plaintiffs to fund the government speech of the Commission does not implicate the First Amendment; (2) the Ketchum Act is constitutional under Abood's "germaneness" test; (3) the Ketchum Act is constitutional under intermediate scrutiny; and (4) Plaintiffs First Amendment rights are not implicated by compelled funding of most of the Commission's activities.

A. PROCEDURAL BACKGROUND.

Plaintiffs commenced this action in the fall of 1996 by bringing two separate complaints against the Commission, alleging, inter alia, that the Commission's regulation and the statute establishing the Commission — the Ketchum Act, California Food & Agric. Code §§ 65500 et seq. (the Act) — violate Plaintiffs' rights under the First and Fourteenth Amendments to the United States Constitution and their civil rights under 42 U.S.C. § 1983.¹ Plaintiffs initially sought preliminary injunctive relief to permit them to pay the disputed assessments into escrow, and in November 1996 and March 1997, the Court issued two preliminary injunctions granting that relief.

In June 1997, the United States Supreme Court decided Glickman v. Wileman Brothers & Elliott, Inc., 521 U.S. 457, 117 S.Ct. 2130, 138 L.Ed.2d 585 (1997), reversing the Court of Appeal's decision that reversed the trial court's grant of summary judgment for defendant against the Plaintiff growers who were challenging a generic advertising program for tree fruit under the Agricultural Marketing Agreement Act (AMAA) on First Amendment grounds. The Supreme Court held that because the generic advertising program was germane to a broader regulatory scheme and did not involve the funding of ideological activities, id. at 473, 117 S.Ct. 2130, it should be reviewed "under the standard appropriate for the review of economic regulation" rather than "under a heightened standard appropriate for the review of First Amendment issues," id. at 469, 117 S.Ct. 2130.

In light of Glickman, the Commission sought dismissal of Plaintiffs' complaints under Rule 12(b)(6), Federal Rules of Civil Procedure. In September 1997, Plaintiffs' First Amendment claim was dismissed to the extent that it alleged that the Commission's program as a whole, as opposed to particular acts in administering the program, violated Plaintiffs' rights. (Doc. 96). The preliminary injunctions were modified to require Plaintiffs pay 98% of the disputed assessments to the Commission and to pay only 2% into escrow.

In 1999, the Court of Appeals for the Sixth Circuit decided United Foods, Inc. v. United States, 197 F.3d 221 (6th Cir.1999), reversing a grant of summary judgment for the United States. The Sixth Circuit distinguished Glickman and held that a generic mushroom advertising program was subject to First Amendment scrutiny. Id. at 224-225.

In light of the Sixth Circuit's decision in United Foods, and contemporaneous Ninth Circuit authority, Plaintiffs moved for reconsideration of the dismissal order. In June 2000, the Court denied Plaintiffs' motion for reconsideration, relying on the Ninth Circuit's recent decisions in Gallo Cattle Co. v. California Milk Advisory Board, 185 F.3d 969 (9th Cir.1999), and Cal Almond Inc. v. U.S. Department of Agriculture, 192 F.3d 1272 (9th Cir.1999), cert, denied, 530 U.S. 1213, 120 S.Ct. 2215, 147 L.Ed.2d 248 (2000), distinguishing the Commission's table grape program from the mushroom program at issue in United Foods. (Doc. 125). On August 14, 2000, the parties stipulated to dismiss all remaining causes of action with prejudice except Plaintiffs' cause of action under the First and Fourteenth Amendments and 42 U.S.C. § 1983, which the parties and the Court agreed could proceed to appeal. Plaintiffs then appealed to the Ninth Circuit.

After briefing in the Ninth Circuit but before any oral arguments or decision, the Supreme Court affirmed the Sixth Circuit's decision in United Foods. United States v. United Foods, Inc., 533 U.S. 405, 121 S.Ct. 2334, 150 L.Ed.2d 438 (2001). The Supreme Court held that the challenged mushroom advertising program was distinguishable from the tree fruit advertising program in Glickman.

On January 27, 2003, the Ninth Circuit reversed the dismissal of Plaintiffs' claims in this case. Delano Farms Co. v. California Table Grape Commission, 318 F.3d 895 (9th Cir.2003).

Thereafter, the Commission amended its Answer and Plaintiffs filed a motion for judgment on the pleadings. By Order filed on December 11, 2003, Plaintiffs' motion for judgment on the pleadings was denied. (Doc. 260).

The Scheduling Conference Order summarizes the parties' factual and legal contentions. Only the First Cause of Action remains. It alleges that the Ketchum Act violates Plaintiffs' free speech and association rights under the First and Fourteenth Amendments and Section 1983. Plaintiffs seek declaratory and injunctive relief and a refund of their assessments. They further contend that the Ninth Circuit's decision in this case is dispositive and that each of the Commission's affirmative defenses lack legal and factual merit. The Commission contends that it has not violated Plaintiffs' constitutional rights; that the advertisements at issue are government speech and therefore not subject to First Amendment restrictions; or that the program is part of a comprehensive regulatory scheme and therefore exempt from First Amendment scrutiny; or, to the extent that its program is or' implicates speech, the program passes scrutiny under Central Hudson Gas & Electric Corp. v. Public Service Commission of New York, 447 U.S. 557, 100 S.Ct. 2343, 65 L.Ed.2d 341 (1980). and/or Abood v. Detroit Board of Education, 431 U.S. 209, 97 S.Ct. 1782, 52 L.Ed.2d 261 (1977). The Commission further maintains that the Ketchum Act is severable, and that if any section, clause, or part of the Act, or any part of the Commission's activities, is held unconstitutional, such holding does not affect the remaining portions of the Act or any part of the Commission's activities. The Commission raises a number of affirmative defenses to defeat Plaintiffs' claims, in whole or in part, including that Plaintiffs are guilty of unclean hands; they have waived any rights regarding any alleged acts or omissions by the Commission; they are estopped from asserting any rights for alleged acts or omissions by the Commission; their claims are barred by the applicable statute of limitations; their claims are barred by the doctrine of laches; they have not been damaged; their assessments have not been spent for non-germane ideological or political speech; and that Plaintiffs would be unjustly enriched if they are not assessed for the Commission's programs but continue to benefit from them.

B. STANDARDS GOVERNING RESOLUTION OF SUMMARY JUDGMENT OR SUMMARY ADJUDICATION MOTIONS.

Summary judgment is proper when it is shown that there exists "no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56. A fact is "material" if it is relevant to an element of a claim or a defense, the existence of which may affect the outcome of the suit. T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987). Materiality is determined by the substantive law governing a claim or a defense. Id. The evidence and all inferences drawn from it must be construed in the light most favorable to the nonmoving party. Id.

The initial burden in a motion for summary judgment is on the moving party. The moving party satisfies this initial burden by identifying the parts of the materials on file it believes demonstrate an "absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The burden then shifts to the nonmoving party to defeat summary judgment. T.W. Elec, 809 F.2d at 630. The nonmoving party "may not rely on the mere allegations in the pleadings in order to preclude summary judgment," but must set forth by affidavit or other appropriate evidence "specific facts showing there is a genuine issue for trial." Id. The nonmoving party may not simply state that it will discredit the moving party's evidence at trial; it must produce at least some "significant probative evidence tending to support the complaint." Id. The question to be resolved is not...