Gallo Cattle Co. v. U.S. Dept. of Agriculture

• Decision Date: 03 November 1998
• Docket Number: No. 97-15198,97-15198
• Citation: 159 F.3d 1194
• Parties: 98 Daily Journal D.A.R. 11,347 GALLO CATTLE COMPANY, a California limited partnership, Plaintiff-Appellant, v. THE UNITED STATES DEPARTMENT OF AGRICULTURE, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1194

159 F.3d 1194

98 Daily Journal D.A.R. 11,347

GALLO CATTLE COMPANY, a California limited partnership Plaintiff-Appellant, v. THE UNITED STATES DEPARTMENT OF AGRICULTURE, Defendant-Appellee.

No. 97-15198.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Dec. 12, 1997.

Decided Nov. 3, 1998.

Brian C. Leighton, Clovis, California, for plaintiff-appellant.

Mark W. Pennak, United States Department of Justice, Washington, D.C., for defendant-appellee.

Appeal from the United States District Court for the Eastern District of California; Edward J. Garcia, District Judge, Presiding. D.C. No. CV-96-1146 EJG/GGH.

Before: FLETCHER, T.G. NELSON, Circuit Judges, and WHALEY, ^* District Judge.

WHALEY, District Judge:

Gallo Cattle Company appeals the district court's dismissal of its Complaint for lack of subject matter jurisdiction. Gallo, a milk producer required under federal law to pay assessments to the National Dairy Promotion and Research Board, is currently challenging the constitutionality of these assessments in an ongoing administrative proceeding before the Secretary of Agriculture. In the administrative proceeding Gallo sought permission to escrow current and future assessments pending resolution of the administrative proceeding. Gallo's request was denied and Gallo brought suit in district court seeking review of the Secretary's decision denying Gallo's request for interim relief. Concluding that it lacked subject matter jurisdiction, the district court granted the Department of Agriculture's Motion for Judgment on the Pleadings. We affirm.

FACTUAL BACKGROUND

Gallo Cattle Company ("Gallo") owns one of the largest dairy herds in the nation. Gallo uses the milk from its herd solely for the production of cheese. As a dairy producer, Gallo is subject to the provisions of the Dairy and Tobacco Adjustment Act of 1983 ("Dairy Act"), Pub.L. No. 98-180, 97 Stat.

1128 (1983) (codified as amended 7 U.S.C. §§ 4501-38). The Dairy Act requires the Secretary of Agriculture to establish a national program for dairy product promotion, research, and consumer education, see 7 U.S.C. § 4504 (1992), which the Secretary did in 1984. See 7 C.F.R. pt. 1150 (1997). This program, the Dairy Promotion Program, is administered by the National Dairy Promotion and Research Board ("National Board"), which consists of 36 milk producers appointed by the Secretary of Agriculture. 7 C.F.R. § 1150.131 (1997).

Pursuant to the Dairy Promotion Program, milk producers are required to pay to the National Board a 15 per hundredweight assessment on milk for commercial use in fluid form or for manufactured products, including cheese. 7 C.F.R. § 1150.152 (1997). The assessment is reduced by up to 10 per hundredweight for payments made to a "qualified" state dairy program. 7 C.F.R. §§ 1150.153, 1150.152(c)(1997). ¹ The National Board uses the assessments to defray the cost of administering the Dairy Promotion Program, which includes the costs associated with dairy product promotion, research projects, and nutrition education projects. See generally 7 C.F.R. § 1150.140 (1997).

PROCEDURAL BACKGROUND

On April 16, 1996, Gallo filed a petition with the United States Secretary of Agriculture ("Secretary") challenging the assessments it was required to pay to the National Board pursuant to the Dairy Promotion Program as violative of the First Amendment of the United States Constitution. In its Petition, Gallo sought interim relief. Specifically, Gallo sought permission to pay its assessments into escrow pending a decision on the merits of the petition. In an Order filed on May 29, 1996, the judicial officer, who acts for the Secretary in the adjudication of these petitions, denied Gallo's request for interim relief.

On June 18, 1996, Gallo filed an action in the United States District Court for the Eastern District of California seeking review of the judicial officer's Order denying interim relief. On October 7, 1996, Gallo moved for a preliminary injunction and/or summary judgment, and on October 8, 1996, the respondent, the United States Department of Agriculture ("USDA") moved for judgment on the pleadings. On November 8, 1996, the district court ruled from the bench that neither the Dairy Act nor the Administrative Procedure Act vested it with jurisdiction over the action. Accordingly, the district court dismissed Gallo's Complaint for lack of subject matter jurisdiction and filed an order memorializing that ruling on November 13, 1996. On January 10, 1997, Gallo timely filed its Notice of Appeal.

Since the dismissal by the district court, the United States Supreme Court issued its opinion in Glickman v. Wileman Bros., 521 U.S. 457, 117 S.Ct. 2130, 138 L.Ed.2d 585 (1997). In Glickman, the Court upheld a marketing order promulgated by the Secretary of Agriculture under the Agricultural Marketing Agreement Act of 1937, the constitutionality of which had also been challenged as violative of the First Amendment. On November 14, 1997, this court ordered the parties to submit supplemental briefing on the effect, if any, of the Glickman decision on this appeal. ²

DISCUSSION

We review de novo a district court's conclusion that it lacks subject matter jurisdiction. Wilson v. A.H. Belo Corp., 87 F.3d 393, 396 (9th Cir.1996).

I. THE DAIRY PROMOTION PROGRAM DOES NOT GRANT THE DISTRICT COURT JURISDICTION TO REVIEW THE AGENCY'S DENIAL OF INTERIM RELIEF, UNTIL SUCH TIME AS THE SECRETARY RULES ON THE MERITS OF THE UNDERLYING PETITION.

Title 7 U.S.C. § 4509 (1992) sets forth the petition and review provisions of the Dairy Promotion Program. The statutory provision for administratively challenging the legality of any order issued pursuant to the Dairy Promotion Program is found in subsection (a) of § 4509, which provides:

Any person subject to any order issued under this subchapter may file with the Secretary a petition stating that any such order or any provision of such order or any obligation imposed in connection therewith is not in accordance with law and requesting a modification thereof or an exemption therefrom. The petitioner shall thereupon be given an opportunity for a hearing on the petition, in accordance with regulations issued by the Secretary. After such hearing, the Secretary shall make a ruling on the petition, which shall be final if in accordance with law.

7 U.S.C. § 4509(a) (emphasis added). The statutory provision conferring jurisdiction in the federal district courts to review the Secretary's administrative ruling is found in the next subsection of § 4509, which provides in relevant part:

The district courts of the United States in any district in which such person is an inhabitant or carries on business are hereby vested with jurisdiction to review such ruling, if a complaint for that purpose is filed within twenty days from the date of the entry of such ruling.

7 U.S.C. § 4509(b) (emphasis added).

Thus, Congress has explicitly provided the procedure that is to be used to challenge orders issued pursuant to the Dairy Promotion Program. ³ Such a procedure mandates exhaustion of administrative remedies prior to seeking judicial review in district court. See Rasmussen v. Hardin, 461 F.2d 595, 597-98 (9th Cir.1972) (interpreting the same language in 7 U.S.C. § 608c(15) as requiring a milk handler to exhaust administrative remedies prior to challenging marketing orders promulgated under the Agricultural Marketing Agreement Act). Further, while judicially-created exhaustion requirements may be waived by the courts for discretionary reasons, statutorily-provided exhaustion requirements deprive the court of jurisdiction and, thus, preclude any exercise of discretion by the court. See Reid v. Engen, 765 F.2d 1457, 1462 (9th Cir.1985).

Here, the district court correctly interpreted § 4509 as vesting it with jurisdiction only after the Secretary rules on the merits of Gallo's petition. Section 4509(a) provides that the Secretary will make "a ruling" on the petition. The use of the singular form of "ruling" in § 4509(a) indicates that only one ruling will be rendered for each petition filed-the Secretary's final decision on the merits of the petition. Pursuant to § 4509(b), "such ruling[s]" are reviewable by the district courts to determine if they are in accordance with law. The word "such" in § 4509(b), identifying those rulings over which the district court has jurisdiction to review, necessarily refers back to the "ruling on the petition" made by the Secretary pursuant to § 4509(a). Cf. Public Util. Comm'r The administrative decision that Gallo seeks the district court to review is not "such [a] ruling" as contemplated by § 4509 because it is not the ruling by the Secretary on Gallo's Petition. To the contrary, it is merely an order denying the interim relief, which Gallo is seeking pending the Secretary's ruling on its Petition. Accordingly, because the Secretary has not yet ruled on Gallo's Petition, the district court correctly concluded it had not yet acquired jurisdiction Pursuant to § 4509(b).

of Or. v. Bonneville Power Admin., 767 F.2d 622, 628 (9th Cir.1985) (concluding that beginning a sentence with the words "such suits" necessarily refers back to the "suits" specified in the previous sentence). Therefore, § 4509(b) vests jurisdiction in the district courts to review only the Secretary's final ruling on a petition filed pursuant to § 4509(a).

Gallo's argument to the contrary is difficult to discern; it is premised on the erroneous conclusion that § 4509(b) also vests the district court with jurisdiction to review final agency action by the Secretary that inflicts actual injury, even if that action occurs prior to the Secretary's ruling on a petition. That conclusion, however, cannot be reconciled with the plain language of § 4509. The agency action complained of here, whether denominated a ruling, a decision, or an order, is not the Secretary's ruling on Gallo's Petition challenging the assessments...