Delano Farms Co. v. Cal. Table Grape Comm'n, S226538

• Citation: 233 Cal.Rptr.3d 45,4 Cal.5th 1204,417 P.3d 699
• Decision Date: 24 May 2018
• Docket Number: S226538
• Court: California Supreme Court
• Parties: DELANO FARMS COMPANY et al., Plaintiffs and Appellants, v. CALIFORNIA TABLE GRAPE COMMISSION, Defendant and Respondent.

4 Cal.5th 1204
417 P.3d 699
233 Cal.Rptr.3d 45

DELANO FARMS COMPANY et al., Plaintiffs and Appellants,
v.
CALIFORNIA TABLE GRAPE COMMISSION, Defendant and Respondent.

S226538

Supreme Court of California.

Filed May 24, 2018

Brian C. Leighton, Clovis; Sagaser, Watkins & Wieland, Howard A. Sagaser, Fresno; Kirkland & Ellis, Michael W. McConnell and Danielle R. Sassoon for Plaintiffs and Appellants.

Benbrook Law Group, Bradley A. Benbrook, Sacramento, and Stephen M. Duvernay for The Cato Institute, Institute for Justice and Reason Foundation as Amici Curiae on behalf of Plaintiffs and Appellants.

Jenner & Block, Rick Richmond, Los Angeles, Jessica Ring Amunson and Samuel C. Birnbaum for DKT Liberty as Amicus Curiae on behalf of Plaintiffs and Appellants.

Baker, Manock & Jensen, Robert D. Wilkinson, Fresno; Wilmer Cutler Pickering Hale and Dorr, Seth P. Waxman, Brian M. Boynton, Thomas G. Saunders, Francesco Valentini, Ari Holtzblatt, Thomas G. Sprankling, Palo Alto, and Franceso Valentini for Defendant and Respondent.

Kamala D. Harris, Attorney General, Janill L. Richards, Acting State Solicitor General, Mark J. Breckler, Chief Assistant Attorney General, Linda Gándara, Deputy State Solicitor General, Robert W. Byrne, Assistant Attorney General, Kathleen Vermazen Radez, Associate Deputy State Solicitor General, Randy L. Barrow and Ali A. Karaouni, Deputy Attorneys General, for California Department of Food and Agriculture as Amicus Curiae on behalf of Defendant and Respondent.

CANTIL-SAKAUYE, C.J.

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Pursuant to the Ketchum Act ( Food & Agr. Code, § 65500 et seq. ; sometimes hereafter referred to as the Act), the

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activities of the California Table Grape Commission (sometimes hereafter referred to as the Commission) are funded by assessments on shipments of California table grapes. Plaintiffs and appellants are five growers and shippers of these grapes. They contend that the collection of assessments under the Act to subsidize promotional

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speech on behalf of California table grapes as a generic category violates their right to free speech under article I, section 2, subdivision (a) of the state Constitution (sometimes hereafter article I, section 2 ). Specifically, plaintiffs believe that the table grapes they grow and ship are exceptional, and cast the assessment scheme as infirm insofar as it requires them to sponsor a viewpoint (promoting all California table grapes equally) with which they disagree.

The Commission responds that the Act’s compelled-subsidy program does not violate article I, section 2 because the promotional messaging it underwrites represents government speech, as opposed to private speech. Both the Commission’s position and that of plaintiffs recognize this court’s prior determinations that a government program that compels market participants to subsidize generic promotional speech over their objections implicates article I, section 2 ( Gerawan Farming, Inc. v. Lyons (2000) 24 Cal.4th 468, 509-510, 101 Cal.Rptr.2d 470, 12 P.3d 720 ( Gerawan I ) ) and is subject to intermediate scrutiny ( Gerawan Farming, Inc. v. Kawamura (2004) 33 Cal.4th 1, 6, 14 Cal.Rptr.3d 14, 90 P.3d 1179 ( Gerawan II ) )—if these communications represent private speech. Gerawan II also indicated, however, that significantly more deference would be accorded to a compelled-subsidy scheme that funds only government speech. ( Id ., at pp. 26-28, 14 Cal.Rptr.3d 14, 90 P.3d 1179.) In Gerawan II , whether the challenged program produced government speech was left for development and determination on remand. ( Id ., at p. 28, 14 Cal.Rptr.3d 14, 90 P.3d 1179.) This proceeding picks up where Gerawan II left off, presenting the question whether promotional speech generated by a compelled-subsidy program amounts to government speech and for that reason avoids heightened scrutiny under article I, section 2.

We conclude that the Commission’s advertisements and related messaging represent government speech, and hold that the

417 P.3d 702

Ketchum Act’s compelled-subsidy scheme does not violate plaintiffs’ rights under article I, section 2. The government speech doctrine recognizes that a properly functioning government must express potentially controversial viewpoints as a matter of course, and that payers of taxes and fees may be required to subsidize this speech, even when they disagree with it, without implicating their constitutional right to free speech. Yet, as the United States Supreme Court recently cautioned, although "the government-speech doctrine is important—indeed, essential—it is a doctrine that is susceptible to dangerous misuse." ( Matal v. Tam (2017) 582 U.S. ––––, 137 S.Ct. 1744, 1758, 198 L.Ed.2d 366 ( Matal ).) Therefore, courts must take care in distinguishing government speech from

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private speech, and apply the government speech doctrine in a manner mindful of its potential impact on protected free speech interests.

Here, the relevant circumstances establish sufficient government responsibility for and control over the messaging at issue for these communications to represent government speech that plaintiffs can be required to subsidize without implicating their rights under article I, section 2. Meanwhile, no triable issue of fact exists that the Ketchum Act violates plaintiffs’ article I, section 2 rights under a different theory, such as one asserting that the statute’s compelled-assessment scheme effectively prevents them from speaking. Accordingly, we hold that plaintiffs have advanced no viable claim under article I, section 2. Because the Court of Appeal rejected plaintiffs’ challenge to the Ketchum Act on similar grounds, we affirm the judgment below.

233 Cal.Rptr.3d 49

I. FACTUAL AND PROCEDURAL BACKGROUND

California leads the nation in the production of agricultural commodities, with its farms and ranches generating more than $47 billion in value in the 2015 crop year. (Cal. Dept. of Food and Agriculture, California Agricultural Statistics Review 2015-2016 (2017) pp. 1-2 (Agricultural Statistics Review).) Table grapes are among the agricultural products for which this state is well known. Table grapes are distinguished from other types of grapes, such as raisin grapes and wine grapes, in that they are generally eaten while fresh instead of being consumed only after being dried or turned into wine. (See Food & Agr. Code, § 65523.)¹ This opinion therefore sometimes refers to table grapes as "fresh grapes." The 2015 harvest of California table grapes had an estimated total value in excess of $1.7 billion. (Agricultural Statistics Review, at p. 12.) The parties have stipulated that as of 2012, there were approximately 475 growers of table grapes in California.

A. The Ketchum Act and Its Implementation

The Ketchum Act responded to challenging market conditions encountered by the state’s producers of fresh grapes in the 1960s.² As will be explained in

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more detail below, the Act created the California Table Grape Commission, a public corporation vested with the power and duty to engage in activities intended to increase consumer demand for California fresh grapes. These activities

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are funded by assessments imposed upon shippers of these grapes, which are passed along to their producers.

1. Legislative Findings

The Ketchum Act begins with a series of findings by the Legislature. Several of these findings concern the importance assigned to the production and marketing of California fresh grapes, and the challenges faced by growers of these grapes. These findings include, "[g]rapes produced in California for fresh ... consumption comprise one of the major agricultural crops of California, and the production and marketing of such grapes affects the economy, welfare, standard of living and health of a large number of citizens residing in this state" ( § 65500, subd. (a) ); and "[i]ncreased plantings of vineyards and improved cultural practices for the production of California grapes for fresh ... consumption have increased and will continue to increase the production thereof and unless the fresh ... consumption of California grapes is increased by the expansion

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of existing markets and the development of new markets, the interests of the fresh grape industry of California, and the public interest of the people of this state, will be adversely affected" (id ., subd. (b) ). Furthermore, the Legislature found that "[t]he inability of individual producers to maintain or expand present markets or to develop new or larger markets for such grapes results in an unreasonable and unnecessary economic waste of the agricultural wealth of this state" (id ., subd. (c) ); and "[s]uch conditions and the accompanying waste...