Lion Raisins, Inc. v. U.S.

• Decision Date: 22 July 2005
• Docket Number: No. 04-5027.,No. 04-5037.,04-5027.,04-5037.
• Parties: LION RAISINS, INC., and Lion Bros., Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1356

416 F.3d 1356

LION RAISINS, INC., and Lion Bros., Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee.

No. 04-5027.

No. 04-5037.

United States Court of Appeals, Federal Circuit.

July 22, 2005.

James A. Moody, of Washington, DC, argued for plaintiffs-appellants. Of counsel on the brief was Brian C. Leighton, of Clovis, California.

Cristina C. Ashworth, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee. With her on the brief were Peter D. Keisler, Assistant Attorney General, David M. Cohen, Director and Mark A. Melnick, Assistant Director.

Before BRYSON, LINN, and DYK, Circuit Judges.

DYK, Circuit Judge.

This is a consolidated appeal from two decisions of the Court of Federal Claims, Lion Raisins, Inc. v. United States, 58 Fed.Cl. 391 (2003) ("Lion I" or "the reserve pool case"), and Lion Raisins, Inc. v. United States, 57 Fed.Cl. 435 (2003) ("Lion II" or "the bins case"). In both cases, plaintiffs Lion Raisins, Inc. and Lion Brothers allege takings arising from actions undertaken by the Raisin Administrative Committee ("RAC"), a marketing agency created pursuant to the Agricultural Marketing Agreement Act of 1937, as amended, 7 U.S.C. § 601 et seq. ("AMAA" or "Act"). In each case, the Court of Federal Claims dismissed, holding that the non-appropriated fund instrumentality ("NAFI") doctrine barred the exercise of jurisdiction. We disagree, and hold that the Court of Federal Claims has jurisdiction over takings claims against the United States based on the actions of the RAC, because the RAC is an agent of the United States.

We nonetheless affirm the dismissals. In the reserve pool case, we hold that the case must be dismissed because Lion has failed to allege a cognizable takings claim. With respect to the bins case, we hold that the takings claim may not be brought against the government because the statute provides for an administrative remedy and for judicial review in district court.

BACKGROUND

I

At the heart of this case is the administration of the AMAA. The AMAA was originally enacted during the Depression, with the objective of helping farmers obtain a fair value for their agricultural products. Pescosolido v. Block, 765 F.2d 827, 828 (9th Cir.1985); 7 U.S.C. § 602 (2000). The Supreme Court has upheld the constitutionality of the AMAA. United States v. Rock Royal Co-Op., Inc., 307 U.S. 533, 59 S.Ct. 993, 83 L.Ed. 1446 (1939). "The Act contemplates a cooperative venture among the Secretary, handlers, and producers the principal purposes of which are to raise the price of agricultural products and to establish an orderly system for marketing them." Block v. Cmty. Nutrition Inst., 467 U.S. 340, 346, 104 S.Ct. 2450, 81 L.Ed.2d 270 (1984); see also Kyer v. United States, 177 Ct.Cl. 747, 369 F.2d 714, 716 (1966), cert. denied, 387 U.S. 929, 87 S.Ct. 2050, 18 L.Ed.2d 990 (1967).

The Act operates through the implementation of Marketing Orders, designed "to prevent over-production of agricultural products and excessive competition in marketing them, with price stabilization as the ultimate objective." Parker v. Brown, 317 U.S. 341, 368, 63 S.Ct. 307, 87 L.Ed. 315 (1943). The Act delegates authority to the Secretary of Agriculture ("the Secretary") to issue marketing orders, upon request of the affected producers, regulating the sale and delivery of various commodities, including raisins, "in order to avoid unreasonable fluctuation in supplies and prices." Kyer, 369 F.2d at 716-17; 7 U.S.C. §§ 608c, 602(4) (2000).

Marketing orders must be approved by either two-thirds of the affected producers or by producers who market at least two-thirds of the volume of the commodity. 7 U.S.C. § 608c(9)(B). The AMAA restricts the marketing orders "to the smallest regional production areas . . . practicable." 7 U.S.C. § 608c(11). The Raisin Marketing Order, codified at Part 989 of Title 7 of the Code of Federal Regulations, was originally promulgated in 1960. Its applicable regional production area is the State of California. 7 C.F.R. § 989.4 (2005).

The statute authorizes the Secretary to delegate the responsibility of implementing marketing orders to marketing committees and to empower those committees to issue rules and regulations. 7 U.S.C. § 608c(7)(C)(i)-(iv). The RAC is the marketing committee charged with administering the Raisin Marketing Order. 7 C.F.R. § 989.35(a) & (b). The 47 members of the RAC come from the raisin production industry (with one public member and one representative of the industry's collective bargaining association), and are appointed by the Secretary after industry nomination. Lion I, 58 Fed.Cl. at 393; 7 C.F.R. § 989.26.

The RAC employs its own staff. The RAC is funded by assessments paid by handlers; it receives no funding from Congress. Lion I, 58 Fed.Cl. at 393 (citing 7 C.F.R. § 989.79). In past cases, we have held that similar entities are non-appropriated funds instrumentalities, or NAFIs. See, e.g., Kyer, 369 F.2d at 718-19. The Raisin Marketing Order provides that members of the RAC are "subject to removal or suspension by the Secretary, in his discretion, at any time. Every decision, determination, or other act of the committee shall be subject to the continuing right of the Secretary to disapprove of the same at any time. Upon such disapproval, the disapproved action of the committee shall be deemed null and void." 7 C.F.R. § 989.95 (2005).

The Raisin Marketing Order divides those involved in the raisin industry into two categories—handlers and producers. The Raisin Marketing Order applies directly only to handlers. Under the Act, handlers are "processors, associations of producers, and others engaged in the handling" of covered agricultural commodities. 7 U.S.C. § 608c(1). Handlers are bound by the marketing orders promulgated pursuant to the AMAA. Stark v. Wickard, 321 U.S. 288, 303, 64 S.Ct. 559, 88 L.Ed. 733 (1944). The government may obtain injunctive relief, civil penalties, and criminal penalties against handlers who fail to comply with the regulatory provisions of a marketing order. 7 U.S.C. §§ 608a(5), 608a(6), 608c(14); see also United States v. Ruzicka, 329 U.S. 287, 67 S.Ct. 207, 91 L.Ed. 290 (1946). Although producers are not directly bound by the statute, 7 U.S.C. § 608c(13)(B), under the specific terms of the Raisin Marketing Order, all persons seeking to market California raisins out-of-state are deemed handlers and must comply with the Order.¹

The Raisin Marketing Order, like other fruit and vegetable orders established pursuant to the AMAA, seeks to stabilize producer returns by limiting the quantity of raisins sold by handlers in the domestic competitive market. 7 U.S.C. § 608c(6); see also John H. Vetne, Federal Marketing Order Programs, in 1 Agricultural Law 75, 78 (John H. Davidson ed., 1981) (describing various marketing control methods permissible under the AMAA for fruit and vegetable orders). The Raisin Marketing Order uses a reserve pool mechanism, authorized under 7 U.S.C. § 608c(6)(E), wherein the RAC can designate a portion of the yearly raisin crop as "free-tonnage" for sale without restrictions, and the surplus or "reserve-tonnage" is withheld for sale in secondary, non-commercial markets. 7 C.F.R. §§ 989.54(d), 989.65 (2005); see also Prune Bargaining Ass'n v. Butz, 444 F.Supp. 785, 788-89 (N.D.Cal.1975) (discussing a comparable reserve pooling mechanism under the California prune order). In accordance with its authority to administer the Order, the RAC issues regulations regarding, inter alia, whether a reserve should be established for the year; if so, the free and reserve percentages for each varietal type of raisin; and the procedures for governing management of the reserve raisins. See, e.g., 7 C.F.R. §§ 989.54, 989.56(a), 989.56(e), 989.58, 989.79, 989.80 (2005). "By regulating the amount of raisins in this market, the RAC can, in effect, regulate the price at which raisins are sold domestically." Lion I, 58 Fed.Cl. at 394.

Free-tonnage raisins may be disposed of by the handler in any marketing channel. Producers receive immediate payment from handlers, at the field market price, for the free-tonnage raisins. The market price for the free-tonnage raisins, or the field price, is not set by the RAC, but is determined through a private bargaining process carried out between producers' and handlers' bargaining associations. Producers are not paid immediately for reserve raisins. Reserve-tonnage raisins are held by handlers for the account of the reserve pool, which is operated by the RAC. Lion I, 58 Fed.Cl. at 394. Reserve raisins are sold, as authorized by the RAC, in non-competitive outlets, such as school lunch programs. Id.; 7C.F.R. §§ 989.65-67. The statute provides for "the equitable distribution of the net return derived from the sale [of reserve pool raisins] among the persons beneficially interested therein." 7 U.S.C. § 608c(6)(E). The RAC is charged with selling the reserve raisins in a manner "intended to maxim[ize] producer returns and achieve maximum disposition of such raisins by the time reserve tonnage raisins from the subsequent crop year are available." 7 C.F.R. § 989.67(d)(1). Since the mid-1990's, the RAC has been using the reserve pool to support an industry export program that effectively blends down the cost of exported California raisins thereby allowing handlers to be price-competitive in export markets where prices are generally lower than the domestic market.

Producers thus receive payment for their raisins in two installments. At the time of sale, they receive the field market price for free-tonnage raisins. For the reserve-tonnage raisins, they receive a share of the reserve pool sales proceeds, net of costs. "Funds generated from reserve pool sales programs, net of costs, become the growers' equity and are disbursed directly to each producer of record for that crop." Raisin...