School Dist. of Phila. v. PA. MILK MARKETING BD.

• Decision Date: 14 February 1995
• Docket Number: Civ. A. No. 94-5656.
• Citation: 877 F. Supp. 245
• Parties: SCHOOL DISTRICT OF PHILADELPHIA, Hubert Chester, Holliday Hammond and Cumberland Farms, Inc. (intervenor), v. PENNSYLVANIA MILK MARKETING BOARD, Leon H. Wilkinson, J. Robert Derry, Donald E. Lanius and O. Frank Degarcia.
• Court: U.S. District Court — Eastern District of Pennsylvania

877 F. Supp. 245

SCHOOL DISTRICT OF PHILADELPHIA, Hubert Chester, Holliday Hammond and Cumberland Farms, Inc. (intervenor), v. PENNSYLVANIA MILK MARKETING BOARD, Leon H. Wilkinson, J. Robert Derry, Donald E. Lanius and O. Frank Degarcia.

Civ. A. No. 94-5656.

United States District Court, E.D. Pennsylvania.

February 14, 1995.

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Sheldon A. Weiss, Millburn, NJ, Jackie B. Sparkman, Office of Gen. Counsel, Philadelphia, PA, for plaintiffs.

Ernest D. Preate, Jr., Atty. Gen., Gwendolyn T. Mosley, Sr. Deputy Atty. Gen., John G. Knorr, III, Chf. Deputy Atty. Gen., Chief, Litigation Section, Harrisburg, PA, for defendants.

MEMORANDUM

JOYNER, District Judge.

Defendants have moved this Court to dismiss the instant action for a number of reasons that include improper venue, lack of standing, Eleventh Amendment immunity, and failure to state a claim upon which relief can be granted. This case arises out of the Pennsylvania Milk Marketing Board (PMMB) Order A-863, which establishes minimum milk prices in PMMB Area # 1. Area # 1 consists of Southeastern Pennsylvania, including Philadelphia, and falls entirely within the Eastern District. 31 Pa.Stat.Ann. § 700j-201 (1958 & Supp.1994).

The School District of Philadelphia and two taxpayers and parents of children attending schools in the School District have sued the PMMB and its three Members and Chief Executive Officer for alleged Constitutional violations based on the minimum milk prices the PMMB has set. Plaintiffs seek declaratory and injunctive relief to remedy violations of the Commerce Clause, 42 U.S.C. § 1983 (1994), and substantive and procedural due process and equal protection under the Fourteenth Amendment. Cumberland Farms, Inc. is a New Jersey milk supplier that has intervened as a Plaintiff to assert rights under the Commerce Clause to free access to the School District's milk market.

Federal law regulates the prices that processors must pay to dairy farmers for their raw milk. 7 U.S.C. §§ 601-24 (1980 & 1994). It does not set any minimum price for the re-sale of finished milk to consumers or wholesalers by processors. Pennsylvania's Milk Control Law, 31 Pa.Stat.Ann. §§ 700j-101 — 700j-1302 (1958 & Supp.1994) (the Milk Law) does set such minimum prices, which in Area # 1 are allegedly about 5 cents more per half pint than the price for half pints of milk in neighboring states.

Pursuant to its creating statute, the PMMB's purpose is to:

ascertain and maintain such prices paid to producers, to dealers and to stores for milk ... as will be most beneficial to the public interest, best protect the milk industry of the Commonwealth and insure a sufficient quantity of pure and wholesome milk to inhabitants of the Commonwealth, having special regard to the health and welfare of children residing therein.

31 Pa.Stat.Ann. § 700j-801. Plaintiffs contend that this law, enacted during the Depression to preserve the milk economy, exists now only to protect the fortunes of milk processors and dealers. In addition, Plaintiffs assert that because the PMMB sets minimum prices based on each milk marketing area's dealers' costs, it is specifically designed to protect inefficient in-state dealers from competition from more efficient out-of-state dealers.

VENUE

Defendants argue that venue is improper in this district and the case should be dismissed entirely or transferred to the Middle District of Pennsylvania pursuant to 28 U.S.C. § 1406(a) (1993). According to 28 U.S.C.A. § 1391(b) (1993):

A civil action wherein jurisdiction is not founded solely on diversity of citizenship may, except as otherwise provided by law, be brought only in:

(1) a judicial district where any defendant resides, if all defendants reside in the same State,

(2) a judicial district in which a substantial part of the events or omissions giving rise to the subject of the action is situated, or

(3) a judicial district in which any defendant may be found, if there is no district in which the action may otherwise be brought.

Defendants use (b)(1) to argue that venue is improper in the Eastern District because all defendants, being a state agency and officers of that agency, are residents of the Middle District for venue purposes. Plaintiffs, however, use (b)(2) to argue that venue is proper in the Eastern District because a substantial part of the events giving rise to their claims occurred here.

Although the issue is not framed as such, the parties' dispute seems to be whether we should read § 1391(b) conjunctively or disjunctively, i.e., whether either (b)(1) or (b)(2) can be used to establish venue, or whether (b)(2) can only be used if (b)(1) cannot. The question is affected by the fact that the venue statute was substantively amended in 1990. Pub.L. 101-650, Title III, § 311, 104 Stat. at 5114.

Neither party cites any authority that focusses on this particular issue. In fact, we have found very little case-law on the issue at all, and even less addressing the 1990 Amendments to § 1391. Before the 1990 Amendments, the Eastern District held that (b)(1) and (b)(2) were to be read conjunctively. Our Court held that "the view that Leroy v. Great Western United Corp., 443 U.S. 173, 99 S.Ct. 2710, 61 L.Ed.2d 464 (1979) an earlier case interpreting § 1391 permits suit to be brought in the district where the claim arise only if all defendants do not reside in the same district has some support. We do not, however, subscribe to that view." Reitnour v. Cochran, No. 86-4869, 1987 WL 9774, 1987 U.S.Dist. Lexis 3098 (E.D.Pa. Apr. 22, 1987). Likewise, our Court held that (b)(2) gives a plaintiff an "alternative forum for his or her lawsuit in addition to the defendants' home district." Catrambone v. Bloom, 540 F.Supp. 74, 76 (E.D.Pa.1982).

Since the 1990 Amendments, neither the Third Circuit nor the Eastern District has ruled on this issue. In Merchants National Bank v. SafraBank, 776 F.Supp. 538, 541 (D.Kan.1991), however, the Kansas District Court held that the 1990 Amendments lent even more support to the conjunctive theory it had adopted earlier.¹ Accordingly, we find that even though venue would be appropriate in the Middle District based on (b)(1), it can also be proper here if the requirements of (b)(2) are met.

We turn then, to the question of whether venue is proper under (b)(2). It is clear that the 1990 Amendments changed the venue rules as to (b)(2) so that venue can now be laid in more than one district, so long as each has a substantial relationship to the action. Cottman Transmission Sys. v. Martino, 36 F.3d 291, 294 (3d Cir.1994). What did not change, however, was that the venue rules are designed to be fair to the defendant, so that one is not "haled into a remote district having no real relationship to the forum." Id.

Plaintiffs argue that substantial events occurred within the Eastern District in that the PMMB: created Area # 1, which exists entirely within the Eastern District; set the minimum consumer prices to be paid within the Eastern District; used data from milk dealers within the Eastern District to set the minimum prices; and because all allegedly unconstitutional overcharges to the School District are made within the Eastern District. In addition, according to Plaintiffs, all of the evidence to support their claims is within the Eastern District. Defendants assert that because the PMMB sits in the Middle District and because the capital is in the Middle District that venue is proper there. They argue that only the impact of acts taken within the Middle District are felt in the Eastern District. Impact, they argue is insufficient to vest venue. Leroy v. Great Western United Corp., 443 U.S. 173, 184, 99 S.Ct. 2710, 2716, 61 L.Ed.2d 464 (1979).

Defendants' argument ignores the fact that under the 1990 Amendments to (b)(2), a case need not be tried in the best place, but merely a place with substantial contacts. The "`fact that substantial activities took place in district B does not disqualify district A as proper venue as long as substantial activities took place in A, too ... even if it is shown that the activities in B were more substantial.'" Database America v. Bellsouth Advertising & Publ., 825 F.Supp. 1216, 1224 (D.N.J.1993) (quoting Siegel, Commentary of 1990 Revision of Subdivisions (a), (b), and (e), in 28 U.S.C. 1391, at 4.)

We find that substantial acts giving rise to the action did occur in the Eastern District. Accordingly, venue is proper here under (b)(2), and we DENY this aspect of Defendants' Motion to Dismiss.

STANDING

In order to maintain a suit in federal court, each plaintiff must have standing to sue. This requirement ensures that federal courts only hear actual cases and controversies. U.S. Const. art. III. To show standing, a plaintiff must allege a "distinct and palpable injury" to itself. Warth v. Seldin, 422 U.S. 490, 501, 95 S.Ct. 2197, 2206, 45 L.Ed.2d 343 (1975).

Defendants argue that they, as an agency of the Commonwealth and the officials of that agency, (31 Pa.Cons.Stat.Ann. §§ 700j-103, 700j-201, 700j-203) cannot be sued by another arm of the Commonwealth, namely the School District. Northwestern School Dist. v. Pittenger, 397 F.Supp. 975, 979 (1975). Almost exclusively, the United States Supreme Court and all other courts have held that part of a state cannot sue another part of the state for Constitutional violations. See e.g., Hunter v. Pittsburgh, 207 U.S. 161, 28 S.Ct. 40, 52 L.Ed. 151 (1907); Trenton v. New Jersey, 262 U.S. 182, 43 S.Ct. 534, 67 L.Ed. 937 (1923); Williams v. Mayor and City Counsel of Baltimore, 289 U.S. 36, 53 S.Ct. 431, 77 L.Ed. 1015 (1933).

In recent years, however, a split has developed among the circuits on this issue. The Fifth Circuit started the split when it held that the Supreme Court cases cited above were not actually rulings on the issue of standing, but "substantive interpretations of the constitutional provisions involved." Rogers v. Brockette, 588...