Prune Bargaining Ass'n v. Butz

• Decision Date: 21 May 1975
• Docket Number: No. C-74-1976 WHO.,C-74-1976 WHO.
• Citation: 444 F. Supp. 785
• Court: U.S. District Court — Northern District of California
• Parties: PRUNE BARGAINING ASSOCIATION, a non-profit Cooperative Association, J. Massoni and Edward Massoni, as copartners doing business as J. & E. Massoni, Ben W. McCutchan and W. O. McCutchan, Jr., as co-partners doing business as McCutchan Ranches, J. A. Breeding, John A. Breeding, Jr., and Lester B. Breeding, as co-partners doing business as J. A. Breeding & Sons, Louis Matteucci and James Matteucci, as copartners doing business as Matteucci Bros., Donald Fredson and Leonard Fredson, as co-partners, Frank Bozzo, Sam Bozzo and Emil Rossi, co-partners doing business as Frank Bozzo & Son, James Brocker and John Brocker, copartners doing business as Brocker Bros., Ronald G. Waltenspeil and Rebecca Waltenspeil, co-partners doing business as Timber Crest Farms, W. L. Stile and W. L. Stile, Jr., co-partners doing business as W. L. Stile & Son, John J. Mezzanotte, Walter W. Kolthoff, George T. Kersh, Manuel George, Hereward G. Petersen, C. Hollis Black, Erwin C. Derrick, Henry S. Bisordi, George Bisordi, David C. Williams, Ray Pigoni, Carmen E. Filice, Peter L. Nissen, Erwin C. Derrick, Walter H. Nock, Ray M. Stanton, Robert A. Huffman, Silas Griffin, W. F. Wentz, Charles Anthony, Donald L. Eberly, Jack F. Douglas, A. J. Melani, Harold M. Ross, Leon Eller, Mitchell Soso, John A. Breeding, Jr., Sheridan Ballard, A. D. Saso, Manuel Souza, A. S. Hambly, Louie A. Lasich, Edward Massoni, Mildred Sanders, John Castello, Harold J. Cerrato, Francis N. Schwab, Raymond Brocker, Joseph A. Zanger, Charles D. Filice, Vincent Castello, Louis A. Scaglione Jr., Jack Baird, Ralph M. Santos, Ralph Santos Jr., Mary V. Reilly, Ewald Strom, Harold A. Hoskins, Mrs. Lillian B. Pilate, Gordon Holvick, Piara Singh Gosal, Gurman Singh Parma, Nirmal Singh, Mrs. Ida Rose, James H. Peterson, Bruno O. Buti, Bernard A. Lile, Barry Gold, Howard D. Harper, Angela A. Harper, Martin Rajkovich, Joseph Filice, Louis Lepara, Mike Cari, James S. Johnston and Claudine Johnston, copartners dba Ramona Ranch, John Saunders & Sons, Inc., Plaintiffs, v. Earl BUTZ, Secretary of Agriculture of the United States, Sunsweet Growers, Inc., a nonprofit Cooperative Association, Del Monte Corporation, Harter Packing Company, Paul A. Mariani Company, Mayfair Packing Company, Valley View Packing Co., Inc., Stapleton-Spence Packing Co., Battaglia Packing Co., First Doe through Fifteenth Doe, Defendants.

444 F. Supp. 785

PRUNE BARGAINING ASSOCIATION, a non-profit Cooperative Association, J. Massoni and Edward Massoni, as copartners doing business as J. & E. Massoni, Ben W. McCutchan and W. O. McCutchan, Jr., as co-partners doing business as McCutchan Ranches, J. A. Breeding, John A. Breeding, Jr., and Lester B. Breeding, as co-partners doing business as J. A. Breeding & Sons, Louis Matteucci and James Matteucci, as copartners doing business as Matteucci Bros., Donald Fredson and Leonard Fredson, as co-partners, Frank Bozzo, Sam Bozzo and Emil Rossi, co-partners doing business as Frank Bozzo & Son, James Brocker and John Brocker, copartners doing business as Brocker Bros., Ronald G. Waltenspeil and Rebecca Waltenspeil, co-partners doing business as Timber Crest Farms, W. L. Stile and W. L. Stile, Jr., co-partners doing business as W. L. Stile & Son, John J. Mezzanotte, Walter W. Kolthoff, George T. Kersh, Manuel George, Hereward G. Petersen, C. Hollis Black, Erwin C. Derrick, Henry S. Bisordi, George Bisordi, David C. Williams, Ray Pigoni, Carmen E. Filice, Peter L. Nissen, Erwin C. Derrick, Walter H. Nock, Ray M. Stanton, Robert A. Huffman, Silas Griffin, W. F. Wentz, Charles Anthony, Donald L. Eberly, Jack F. Douglas, A. J. Melani, Harold M. Ross, Leon Eller, Mitchell Soso, John A. Breeding, Jr., Sheridan Ballard, A. D. Saso, Manuel Souza, A. S. Hambly, Louie A. Lasich, Edward Massoni, Mildred Sanders, John Castello, Harold J. Cerrato, Francis N. Schwab, Raymond Brocker, Joseph A. Zanger, Charles D. Filice, Vincent Castello, Louis A. Scaglione Jr., Jack Baird, Ralph M. Santos, Ralph Santos Jr., Mary V. Reilly, Ewald Strom, Harold A. Hoskins, Mrs. Lillian B. Pilate, Gordon Holvick, Piara Singh Gosal, Gurman Singh Parma, Nirmal Singh, Mrs. Ida Rose, James H. Peterson, Bruno O. Buti, Bernard A. Lile, Barry Gold, Howard D. Harper, Angela A. Harper, Martin Rajkovich, Joseph Filice, Louis Lepara, Mike Cari, James S. Johnston and Claudine Johnston, copartners dba Ramona Ranch, John Saunders & Sons, Inc., Plaintiffs, v. Earl BUTZ, Secretary of Agriculture of the United States, Sunsweet Growers, Inc., a nonprofit Cooperative Association, Del Monte Corporation, Harter Packing Company, Paul A. Mariani Company, Mayfair Packing Company, Valley View Packing Co., Inc., Stapleton-Spence Packing Co., Battaglia Packing Co., First Doe through Fifteenth Doe, Defendants.

No. C-74-1976 WHO.

United States District Court, N. D. California.

May 21, 1975.

James L. Browning, Jr., U.S. Atty., William T. McGivern, Jr., Asst. U.S. Atty., San Francisco, Cal., for Earl Butz.

A. James Roberts, III, Tuttle & Taylor, Los Angeles, Cal., for Sunsweet Growers.

Robert M. Westberg, Reginald D. Steer, Pillsbury, Madison & Sutro, San Francisco, Cal., for Del Monte.

Mezzetti & Testa, Hoge, Fenton, Jones & Appel, San Jose, Cal., for Harter Packing, Paul A. Mariani Co., Mayfair Packing, Valley View Packing, Stapleton-Spence Packing.

MEMORANDUM OPINION

ORRICK, District Judge.

Plaintiffs, Prune Bargaining Association — an organization representing 217 of the approximately 2,500 producers of California prunes — and numerous individual prune growers, seek to permanently enjoin defendants Earl Butz, the Secretary of Agriculture of the United States, and several prune handlers from enforcing certain provisions of regulations promulgated by the Secretary under the authority delegated him by the Agricultural Marketing Agreement Act of 1937 ("the Act") (7 U.S.C. § 601 et seq.). This Court denied plaintiffs' motion for a preliminary injunction after a full hearing on October 24, 1974, on the grounds that the sought-after relief would severely disturb the status quo and that plaintiffs were unlikely to succeed on the merits. King v. Saddleback Junior College District, 425 F.2d 426 (9th Cir. 1970); Tanner Motor Livery, Ltd. v. Avis, Inc., 316 F.2d 804 (9th Cir. 1963), cert. denied, 375 U.S. 821, 84 S.Ct. 59, 11 L.Ed.2d 55 (1963). A second hearing was held on November 22, 1974, at which time the parties argued the merits of plaintiffs' motion for a permanent injunction and cross motions for summary judgment. The Court having received oral argument and having duly considered the affidavits and memoranda filed in support of and in opposition to the motions, and being fully advised in the premises, denies plaintiffs' motions and grants defendants' motion for summary judgment.

I. Background.

In creating the complicated scheme of administrative regulation that eventually became the Act, the declared policy of Congress was to establish and maintain orderly marketing conditions for agricultural commodities in interstate commerce and to establish and maintain parity prices for such commodities. 7 U.S.C. § 602.¹ Accordingly, the Act delegates to the Secretary broad regulatory power over handlers of specified agricultural products. The Secretary is authorized to issue (after notice and hearing) marketing orders which regulate the activities of handlers of controlled commodities. § 608c(1), (3) and (4). Marketing orders must contain one or more of the terms and conditions set forth in Section 608c(6),² and after approval by producers at a referendum (§ 608c(8), (9), (12) and (19)), a marketing order is published in the Code of Federal Regulations and carries the force of law. Marketing Order Number 993 ("the Order"), issued in accordance with the formal requirements of the Act, regulates the handling of "Dried Prunes Produced in California". 7 C.F.R. Part 993. The Order is only one of the 47 marketing orders dealing with the production and marketing of fruits and vegetables promulgated under the Act, although it is one of the more complex.

Pursuant to provisions of the Order, the Secretary delegated the responsibility of implementing the policy reflected in the Act and Order to a body known as the Prune Administrative Committee ("the Committee"). The Committee is composed of 21 members of the California Prune industry, 14 of whom are selected from among prune producers. The remaining 7 are selected from among prune handlers. 7 C.F.R. § 993.24 (1974).

In order to administer the Act and Order, the Committee is authorized to issue regulations — subject to the approval of the Secretary. Actions of the Committee must be recommended by majority vote of the members present and voting, but decisions relating to marketing policy, salable and reserve percentages, and any matters germane to the control or disposition of reserve prunes require at least 14 affirmative votes. 7 C.F.R. §§ 993.36(n), 993.33, 993.35 and 993.83.

The Act authorizes the Secretary to establish a reserve pool of the regulated commodity (§ 608c(6)(E)) in order to combat overproduction and the economic ailments that accompany it. The first prune marketing order, issued in 1949 (14 Fed.Reg. 4684), did not contain a reserve pool provision. In 1965, however, it was amended to include such a procedure. 30 Fed.Reg. 8850. The 1965 amendment was promulgated subsequent to a full rule-making proceeding and became effective after a referendum of producers.

The maintenance of the reserve pool is discussed in detail in the Order. 7 C.F.R. §§ 993.54, 993.59 and 993.65. The rules are quite detailed, and relate to such diverse aspects of procedure as the pricing of reserve prunes, the care of such prunes and allocation of the cost of maintaining the reserve pool. The crucial provision for purposes of the instant case is 7 C.F.R. § 993.65, which deals with the disposition of reserve prunes.³

Pursuant to the authority granted by Section 993.65(a), the Committee has entered into several yearly sales agreements with prune handlers since 1965. Such marketing agreements are regulated and defined by provisions enacted by the Committee and approved by the Secretary. See, e.g., 7 C.F.R. § 993.156.

The reserve pooling procedure is complex. A good deal of the complexity stems from the nature of the commodity itself because prunes are marketed in as many as 18 size categories. The categories are expressed in terms of numbers of prunes per pound and, generally, large size prunes command a greater market value than smaller prunes. Under the terms of the Order, each handler must set aside as reserve prunes a given percentage of prunes of each size he receives from each producer. These reserve prunes are not physically segregated from the salable prunes, however, and thus the reserve is, in fact, a paper reserve. Since California prunes are harvested in August and September for the most part, supplying buyers with prunes of the various sizes they desire is a relatively easy matter in the fall when handlers' stocks are plentiful in all grades. As the crop year progresses, however, prunes in some of the categories of salable tonnage tend to become scarce. So, to continue to fill all orders, handlers exchange reserve prunes of one size for reserve prunes of the size for which they may have an order that exceeds their supply of salable prunes. Since the reserve is only a paper reserve to begin with, the actual taking of reserve prunes from the desired size category is a simple matter. The reservesalable percentage of another category is then altered — again on paper only — in order to return the handler's stock to the designated overall reserve-salable balance.

II. Contentions of the Parties.

Plaintiffs do not challenge the constitutionality of the Act. Nor do they argue that the Marketing Order in its present form is not authorized by the Act. Rather, plaintiffs contend that: (1) the exchange of reserve and salable prunes as described above is not authorized by either the Act or the Order; and (2) the current method of pricing reserve prunes in general and exchanged reserve prunes in particular violates due process. Defendants controvert those allegations and, in addition, argue that plaintiffs have failed to exhaust the administrative remedy.

III. Jurisdiction.

The question of whether this Court has jurisdiction to hear ...