Gerawan Farming, Inc. v. Kawamura

• Decision Date: 03 June 2004
• Docket Number: No. S104019.,S104019.
• Citation: 33 Cal.4th 1,90 P.3d 1179,14 Cal.Rptr.3d 14
• Court: California Supreme Court
• Parties: GERAWAN FARMING, INC., Plaintiff and Appellant, v. A.G. KAWAMURA, as Secretary, etc., Defendant and Respondent.

14 Cal.Rptr.3d 14

90 P.3d 1179

33 Cal.4th 1

GERAWAN FARMING, INC., Plaintiff and Appellant, v. A.G. KAWAMURA, as Secretary, etc., Defendant and Respondent.

No. S104019.

Supreme Court of California

June 3, 2004.

Erik S. Jaffe, Washington, D.C.; Brian C. Leighton, Clovis; Mayer, Brown & Platt, Mayer, Brown, Rowe & Maw, Michael W. McConnell, Craig Canetti, Washington, D.C., and Sharon Swingle for Plaintiff and Appellant.

King & Spalding, Steven G. Brody, Jeanette M. Viggiano, New York, New York; Daniel J. Popeo, Richard Samp, R. Shawn Gunnarson, Washington, D.C.; Susan Liebeler; Thomas, Walton & Graves and John R. Walton, Los Angeles, for Washington Legal Foundation as Amicus Curiae on behalf of Plaintiff and Appellant.

Bill Lockyer, Attorney General, Richard M. Frank, Chief Assistant Attorney General, Herschel T. Elkins, Assistant Attorney General, Mary E. Hackenbracht, Linda Berg, Ronald A. Reiter, Seth E. Mermin and Tracy L. Winsor, Deputy Attorneys General, for Defendant and Respondent.

Kahn, Soares & Conway, George H. Soares, Dale A. Stern, Sacramento and Robert S. Hedrick for California Avocado Commission, California Apple Commission, California Asparagus Commission, California Cut Flower Commission, California Date Commission, California Egg Commission, California Forest Products Commission, California Grape Rootstock Improvement Commission, California Kiwifruit

Commission, Lake County Winegrape Growers Commission, Lodi-Woodbridge Winegrape Growers Commission, California Pepper Commission, California Pistachio Commission, California Rice Commission, California Sheep Commission, California Strawberry Commission, California Tomato Commission, California Walnut Commission and California Wheat Commission as Amici Curiae on behalf of Defendant and Respondent.

Baker, Manock & Jensen, Kendall L. Manock, Robert D. Wilkinson, Kathleen A. Meehan, Fresno; Wilmer Cutler Pickering and Seth P. Waxman, Washington, D.C., for the California Table Grape Commission as Amicus Curiae on behalf of Defendant and Respondent.

MORENO, J.

In Gerawan Farming, Inc. v. Lyons (2000) 24 Cal.4th 468, 101 Cal.Rptr.2d 470, 12 P.3d 720 (Gerawan I), we held that an agricultural producer's right to free speech under article I, section 2, subdivision (a) of the California Constitution (hereafter sometimes article I or the free speech clause)¹ was implicated by a program that compelled that producer to fund generic advertising about various agricultural products. In so holding, we parted company with the United States Supreme Court, which had held in Glickman v. Wileman Brothers & Elliott, Inc. (1997) 521 U.S. 457, 117 S.Ct. 2130, 138 L.Ed.2d 585 (hereafter sometimes Glickman) that a similar generic advertising program did not implicate the free speech clause of the First Amendment to the United States Constitution, but rather was a kind of economic regulation outside the sphere of First Amendment doctrine. The Gerawan I court did not, however, determine whether compelled funding of the generic advertising program at issue violated article I nor decide upon the proper test to be employed in making that determination. We left that task to the Court of Appeal on remand.

The Court of Appeal concluded that the program to which plaintiff Gerawan Farms, Inc. (Gerawan), objected was unconstitutional because, as discussed below, it was not supported by a valid government interest, owing to the fact that it had to be approved by a private association. We granted review specifically to assess the validity of this holding and more generally to address the constitutional questions remaining from Gerawan I. We conclude the compelled funding of generic advertising in this case should be tested by the intermediate scrutiny standard articulated by the United States Supreme Court in Central Hudson Gas & Elec. v. Public Serv. Comm'n (1980) 447 U.S. 557, 100 S.Ct. 2343, 65 L.Ed.2d 341 (Central Hudson), and that remand for further factfinding is required to determine whether the program at issue is constitutional. We conclude as well the Secretary of Food and Agriculture's (Secretary) claim that the generic advertising in question is constitutional because it is government speech also cannot be resolved on the pleadings and requires further factfinding. We also reaffirm our holding in Gerawan I that the marketing program in question does not violate the First Amendment, rejecting Gerawan's argument that the holding requires revision in light of the United States Supreme Court's most recent pronouncement on the compelled funding of generic advertising in United States v. United Foods, Inc. (2001) 533 U.S. 405, 121 S.Ct. 2334, 150 L.Ed.2d 438 (United Foods).

I. FACTUAL BACKGROUND

Much of the factual background to this case may be found in Gerawan I. We began our analysis by discussing the legislative framework of the California Plum Marketing Program, which was enacted pursuant to the California Marketing Act of 1937(CMA). As Gerawan I explained, the CMA and its federal counterpart, the Agricultural Marketing Agreement Act of 1937 (AMAA), were legislative responses to the severe problems that the agricultural sector of the economy found itself facing, which were exacerbated by the Great Depression. These programs were rooted in the considered legislative judgment that government intervention in agricultural markets was necessary to preserve the agricultural industry. (See Gerawan I, supra, 24 Cal.4th at pp. 476-477, 101 Cal.Rptr.2d 470, 12 P.3d 720; see also id., pp. 524-525, 101 Cal.Rptr.2d 470, 12 P.3d 720 (dis. opn. of George, C. J.).)

As elaborated by the Court of Appeal in Voss v. Superior Court (1996) 46 Cal.App.4th 900, 907, 54 Cal.Rptr.2d 225, the CMA "grew out of the chaotic conditions which characterized California agriculture during the early part of the twentieth century. [Citation.] Before the promulgation of the CMA, each of California's many fruit and vegetable growers attempted to be the first in the market with his or her commodity, in order to take advantage of the premium prices paid on early shipments. This led to the marketing of inadequately ripened produce, and the glutting of the market during the peak season with poor quality commodities. Deceptive packaging, improper sampling, and false grading were often resorted to in order to attempt to enhance the attractiveness of the produce. This `unregulated scramble' had an `adverse effect upon consumer acceptance of California fruits and vegetables,' and the unstable and fluctuating markets `had an exaggerated impact on the livelihood of' the state's agricultural producers. [Citation.] The depression of 1929-1933 only exacerbated these problems; the prices paid to growers `plummeted.' [Citation.]"

Specifically, like the AMAA, "the CMA authorized . . . the Secretary of Food and Agriculture . . . to enter into `marketing agreements,' i.e., contract-like arrangements with the producers and handlers of agricultural commodities concerning marketing matters, which would be binding, expressly, only on those signatory thereto, and would be exempt, impliedly, from all state antitrust laws." (Gerawan I, supra, 24 Cal.4th at p. 478, 101 Cal.Rptr.2d 470, 12 P.3d 720.)

"[T]he CMA [also] authorized the [Secretary] to issue `marketing orders,' i.e., regulations governing marketing matters for the producers and handlers of agricultural commodities, which did the following: provided for participation in the administration of such orders by the regulated producers and handlers themselves; substantially restricted the terms of such orders generally to, among others, the determination of the existence and extent of any surplus, the limitation on total quantity marketed, the allotment of amounts for purchase, the allotment of amounts for marketing, the regulation of periods for marketing, the establishment of reserve pools, the institution of grading and standards, and, impliedly, the conduct of research; and mandated that the regulated producers and handlers had to contribute funds to cover related expenses. . . .

"But, unlike the AMAA, the CMA authorized the [Secretary] to impose, among the terms of such a marketing order, the establishment of `plans for advertising and sales promotion to create new or larger markets for agricultural commodities,' specifically, plans that are `directed toward increasing the sale of such commodity without reference to a particular brand,' etc. (Stats.1937, ch. 404, § 1, pp. 1335-1336.) It mandated that the regulated producers and handlers subject to a marketing order with such a term had to contribute funds to cover related expenses." (Gerawan I, supra, 24 Cal.4th at pp. 478-479,101 Cal.Rptr.2d 470,12 P.3d 720.)

At controversy here, as in Gerawan I, is a 1994 marketing order issued by the Secretary pursuant to the CMA, entitled the California Plum Marketing Program. As Gerawan I described the program, according to Gerawan's first amended complaint: "The California Plum Marketing Program provides for the establishment of a California Plum Marketing Board, which is virtually filled with, and totally controlled by, producers and/or producer-handlers of the fruit. In addition, and among other things, it provides for the board's administration of its terms. It also provides for the board's undertaking of activities extending to research; advertising, specifically generic advertising, along with sales promotion and market development; and the institution and implementation of quality standards and inspections. It provides as well for the board's assessment of funds from producers for expenses related to the foregoing activities, at a rate that may not exceed $0.20 per 28-pound box, including $0.02 for research, $0.11 for generic advertising along with sales promotion and market development, and $0.07 for quality standards and inspections." (Gerawan I, supra, 24 Cal.4th at p. 480, 101 Cal.Rptr.2d 470, 12 P.3d 720.)

It was the assessment of producers to pay for generic...