Ranchers-Cattlemen Action Legal Fund v. Perdue, CV-16-41-GF-BMM

• Decision Date: 27 March 2020
• Docket Number: CV-16-41-GF-BMM
• Citation: 449 F.Supp.3d 944
• Parties: RANCHERS-CATTLEMEN ACTION LEGAL FUND, UNITED STOCKGROWERS OF AMERICA, Plaintiff, v. Sonny PERDUE, in his official capacity as Secretary of Agriculture, and the United States Department of Agriculture, Defendants, v. Montana Beef Council, et al., Defendant-Intervenors.
• Court: U.S. District Court — District of Montana

449 F.Supp.3d 944

RANCHERS-CATTLEMEN ACTION LEGAL FUND, UNITED STOCKGROWERS OF AMERICA, Plaintiff,

v.Sonny PERDUE, in his official capacity as Secretary of Agriculture, and the United States Department of Agriculture, Defendants,

v.Montana Beef Council, et al., Defendant-Intervenors.

CV-16-41-GF-BMM

United States District Court, D. Montana, Great Falls Division.

Signed March 27, 2020

David S. Muraskin, Pro Hac Vice, Public Justice, P.C., Washington, DC, John D. Butler, Pro Hac Vice, Butler Farm & Ranch Law Group PLLP, Benton, MS, William A. Rossbach, Rossbach Law, P.C., Missoula, MT, for Plaintiff.

Daniel Jon Halainen, Michelle Renee Bennett, Rebecca Michelle Kopplin, United States Department of Justice, Washington, DC, for Defendants Tom Vilsack, United States Department of Agriculture.

Randy J. Cox, Boone Karlberg, P.C., Missoula, MT, Bryan J. Harrison, Pro Hac Vice, Bryan Cave Leighton Paisner, LLP, Washington, DC, Mollie E. Harmon, Pro Hac Vice, Robert M. Thompson, Pro Hac Vice, Bryan Cave Leighton Paisner, LLP, Kansas City, MO, for Defendants-Intervenors Montana Beef Council, Nebraska Beef Council, Pennsylvania Beef Council, Texas Beef Council, Lee Cornwell, Gene Curry, Walter J. Taylor, Jr.

ORDER ADOPTING FINDINGS AND RECOMMENDATIONS

Brian Morris, Chief District Judge

Introduction

This Court answered the exact question now before it nearly three years ago when it adopted Magistrate Judge John Johnston's findings and recommendations to grant a preliminary injunction in favor of Plaintiffs on the basis that the federal Beef Checkoff Program violated the First Amendment. This Court adopted Magistrate Judge Johnston's findings in full. The Ninth Circuit affirmed. As this litigation wound

its way from the Magistrate Judge to the Ninth Circuit, the United States Department of Agriculture ("USDA") began entering into memorandums of understanding with a number of qualified state beef councils that remain parties to this litigation. These memorandums gave USDA broad new authority over any potential speech that the beef councils might produce. The parties all filed motions and cross motions for summary judgment.

Magistrate Judge Johnston reversed course and now recommended granting summary judgment in favor of Defendants and Defendant-Intervenors. He outlined why the memorandums of understanding—which no beef council had entered until after Magistrate Judge Johnston had issued his first findings and recommendations—provided sufficient control of qualified state beef councils’ speech for that speech to qualify as government speech and thus not run afoul of the First Amendment. All parties objected in full, or in part, to Magistrate Judge Johnston's Findings and Recommendations. And so, three years after having answered this question once before, this Court faces the questions of whether the federal Beef Checkoff Program violates the First Amendment.

Standard of Review

The Court reviews de novo findings and recommendations to which the parties make objections. 28 U.S.C. § 636(b)(1). No review is required of proposed findings and recommendations to which no objection has been made. Thomas v. Arn , 474 U.S. 140, 149-152, 106 S.Ct. 466, 88 L.Ed.2d 435 (1986). "The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a).

Background

Congress passed The Beef Promotion and Research Act of 1985 ("Beef Act") "to strengthen the beef industry's position in the marketplace and to maintain and expand domestic and foreign markets." 7 U.S.C. § 2901(b). To accomplish this goal, Congress imposed a $1 assessment, or "checkoff," on cattle producers for each head of cattle sold in the United States. See id. The checkoff would fund beef-related promotional campaigns. Congress also created the Beef Board and Beef Promotion Operating Committee to run the checkoff program and assist in crafting the research and promotion plans undertaken with checkoff funds. 7 U.S.C. § 2904(1) - (5) ; see also 7 C.F.R. §§ 1260.141, 1260.161.

While Congress created this federal program to strengthen the beef industry, it also recognized that "State and national organizations [already] conduct[ed] beef promotion, research, and consumer education programs that [were] invaluable to the efforts" of maintaining beef markets. 7 U.S.C. § 2901(a)(5). So Congress gave these state entities a role to play in this new beef-market-strengthening regime by allowing qualified state beef councils ("QSBCs") to collect the checkoff assessments on behalf of the Beef Board. See 7 C.F.R. § 1260.172(a)(2). QSBCs must receive certification from the Beef Board before they may collect assessments. See id. § 1260.181(a). In certain limited circumstances, the Beef Board may decertify QSBCs. (See Doc. 40-1 (Payne Declaration) ¶ 29 (citing 7 C.F.R. § 1260.181 ).)

QSBCs that collect the checkoff funds may retain $0.50 to fund its own promotional activities. It must send the remaining $0.50 to the Beef Board. 7 U.S.C. § 2904(8)(C) ; 7 C.F.R. § 1260.172(a)(3). This process operates as the default payment for checkoff funds. Producers, if they so choose, can opt-out under the "Redirection Rule" of paying QSBCs any of their assessment. This rule allows producers to "request a redirection of assessments from a Qualified State Beef Council to the Board" by "submitting a redirection request." 7 C.F.R. § 1260.172(a)(7). QSBCs agree that any such requests "will be honored" as a condition of certification. Id. § 1260.181(b)(8).

QSBCs may only uses checkoff funds in a limited manner. QSBCs may only engage in promotional activities that "strengthen the beef industry's position in the marketplace." 7 C.F.R. § 1260.181(b)(1) ; see 7 C.F.R. § 1260.169 (defining activities that QSBCs may conduct under § 1260.181(b)(1) to include "projects for promotion" of the beef industry). At the same time, QSBCs must certify that they will not use any of the money that they receive under the Beef Checkoff Program to promote "unfair or deceptive" practices, or to "influenc[e] governmental policy." 7 C.F.R. § 1260.181(b)(7).

On top of these limits, QSBCs have begun entering into Memoranda of Understaning ("MOU") that give USDA significant discretion to approve or reject any and all QSBC promotional activities. Under the MOUs, QSBCs agree to submit to USDA "for pre-approval any and all promotion, advertising, research, and consumer information plans and projects." (Ex. 18, Doc. 91-1 at RCALF_000045.) QSBCs also must provide USDA with advance notice of any QSBC board meetings and allow a USDA official to attend. (Id. ) USDA may "direct the Beef Board to de-certify" the QSBC if the QSBC fails to comply with the MOU. (Id. at RCALF_000046.) Decertified QSBCs cannot receive checkoff funds. (Id. )

I. R-CALF Possesses Article III Standing

Magistrate Judge Johnston determined that R-CALF had Article III standing to bring this lawsuit. (Doc. 135 at 4-7.) Article III limits courts to deciding "cases" or "controversies." See U.S. Const. art. III. Courts have distilled the case or controversy requirement into a familiar three-part test—injury-in-fact, causation, and redressability. Steel Co. v. Citizens for a Better Env. , 523 U.S. 83, 102-03, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998). As the party invoking the court's jurisdiction, R-CALF bears the burden of proof for each element. Spokeo, Inc. v. Robins , ––– U.S. ––––, 136 S. Ct. 1540, 1547, 194 L.Ed.2d 635 (2016).

Organizations can invoke a court's jurisdiction by demonstrating a few additional elements on top of the typical three. These additional requirements differ depending on whether the organization brings the lawsuit on behalf of itself or its members. To bring a lawsuit on behalf of its members, the organization must demonstrate that "(a) its members would otherwise have standing to sue;" (b) the suit is "germane to the organization's purpose;" and "(c) neither the claim asserted nor the relief requested requires the participation of individual members," as is the case here, where "the association seeks a declaration [or] injunction." Hunt v. Wash. State Apple Advert. Comm'n , 432 U.S. 333, 343, 97 S.Ct. 2434, 53 L.Ed.2d 383 (1977) (quoting Warth v. Seldin , 422 U.S. 490, 515, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975) ). An organization may bring a lawsuit on its own behalf " ‘[when] it show[s] a drain on its resources from both a diversion of its resources and frustration of its mission’ " in response to the alleged unlawful act. Valle del Sol Inc. v. Whiting , 732 F.3d 1006, 1018 (9th Cir. 2013) (additions in original) (quoting Fair Hous. Council of San Fernando Valley v. Roommate.com, LLC , 666 F.3d 1216, 1219 (9th Cir. 2012) ).

Magistrate Judge Johnston found that R-CALF had demonstrated associational standing to bring this lawsuit on behalf of itself against all of the QSBCs and on behalf of its members against 12 of the 15 QSBCs. (Doc. 135 at 6-7.) No party objected to this part of Magistrate Judge Johnston's analysis.

Although they do not object to Magistrate Judge Johnston's findings about organizational standing, Defendant-Intervenors object to whether R-CALF has satisfied the redressability prong of Article III standing. (Doc. 138 at 2-8.) Magistrate Judge Johnston rejected Defendant-Intervenors’ argument about redressability because this Court had "rejected a nearly identical argument in its opinion in 2016" and nothing since then would have changed Magistrate Judge Johnston's analysis. (Doc. 135 at 7.)

Defendant-Intervenors object to Magistrate Judge Johnston's findings in five ways. They seem to argue that Magistrate Judge Johnston contradicted himself because he ruled that QSBCs "were engaged in government speech " and thus this Court could not offer any redress. This argument impermissibly collapses the Court's standing analysis with its merits analysis. Plaintiffs only fail to satisfy the redressability prong if they cannot receive a...