Stark v. Brannan, Civ. No. 12944.

• Court: United States District Courts. United States District Court (Columbia)
• Citation: 82 F. Supp. 614
• Docket Number: Civ. No. 12944.
• Parties: STARK et al. v. BRANNAN.
• Decision Date: 24 February 1949

82 F. Supp. 614

STARK et al.
v.
BRANNAN.

Civ. No. 12944.

United States District Court District of Columbia.

February 24, 1949.

82 F. Supp. 615

Edward B Hanify, of Boston, Mass., Harry Polikoff, of New York City, and Edgar J. Goodrich, of Washington, D. C., for plaintiffs.

George Morris Fay, U. S. Atty. and Mary Connor Myers, of Dept. of Agriculture, both of Washington, D. C., for defendant.

William E. Leahy, of Washington, D. C., and Seward A. Miller, of New York City, for Dairymen's League Cooperative Ass'n, Inc., intervening defendant.

HOLTZOFF, District Judge.

This is an action brought by several dairy farmers against the Secretary of Agriculture, to enjoin the enforcement of a section of an Order regulating the handling of milk in the Greater Boston marketing area. The challenged provision directs the deduction of certain sums of money from the producers' settlement fund and the payment of such deductions to cooperative associations. The plaintiffs claim that there is no basis in law for this preferential scheme. The sole question presented for the determination of this court is whether this provision is authorized by statute.

The Order in question was issued by the Secretary of Agriculture under the provisions of the Agricultural Adjustment Act of 1937, Act of June 3, 1937, 50 Stat. 246, 7 U.S.C.A. § 601 et seq. Among other things, the statute empowered the Secretary of Agriculture to issue orders governing persons engaged in the handling of agricultural commodities, 7 U.S.C.A. § 608c. In the case of milk and its products, it was provided that Orders of the Secretary should contain one or more of the terms and conditions enumerated in the statute and no others, Sec. 608c(5). In brief, the terms and conditions permitted by the Act related to classification of milk, minimum prices, time of payment, payment of uniform prices to producers, and payment for certain services to producers, except as to those for whom the services were rendered by a cooperative marketing association.

82 F. Supp. 616

The prices to be paid by handlers and the prices to be paid to producers were to be subject only to adjustments for factors expressly enumerated by the statute

In addition, the statute provided that all Orders relating to agricultural commodities might contain one or more terms or conditions therein enumerated. None of these are material in this action except the last, which authorized the inclusion of terms: "(D) Incidental to, and not inconsistent with, the terms and conditions specified in subsections (5), (6), and (7) and necessary to effectuate the other provisions of such order." Sec. 608c(7).

Pursuant to statutory authority, the Secretary of Agriculture, on July 28, 1941, issued an Order regulating the handling of milk in the Greater Boston marketing area. This Order was amended on August 1, 1947. The provisions to which the plaintiffs object are found both in the original and in the amended Order. In substance the Orders, insofar as material, may be summarized as follows.

All milk sold by dairy farmers is divided into two classes: Class I, milk sold for use as fluid milk; and Class II, milk sold for use for other purposes, such as manufacture of butter and cheese. Customarily for economic reasons, the two classes of milk are sold at different prices. The Orders created an equalization plan whereby every dairy farmer (generally known as "producer") receives a proportionate share of the total proceeds of all milk sold in the marketing area, irrespective of whether his milk is used by the purchaser as Class I or Class II milk. The device by which this object is accomplished is known as the "blended price". The Orders provide for fixing minimum prices for Class I and Class II milk to be paid by the distributors, who purchase from the farmers and who are generally known as "handlers". Each handler pays for the milk that he receives. The Market Administrator, however, computes, on the basis of the minimum prices, the value of all milk sold in the area each month and, after making certain adjustments prescribed by the Orders, calculates a weighted average price, or "blended price", as it is called. Each producer is paid on the basis of the blended price, subject again to certain adjustments. The Orders establish machinery whereby each handler makes partial advance payments to his supplier, while final settlements are later made with the Administrator. Before the blended price is computed, however, the Administrator is required to make a deduction prescribed by the Orders and to pay the amount so deducted to those producers that are cooperative associations of dairymen. No similar payment is made to other producers.

The plaintiffs are producers who are not members of any cooperative association. They dispute the legality of the provision for this deduction and payment to cooperative associations. They contend that this direction exceeds the Secretary's statutory authority and results in an unlawful diminution of the proceeds ultimately paid to them. They bring this suit as a class action to secure an injunction against the enforcement of this provision and for an adjudication that it is invalid.

In limine the question is raised as to the right of the plaintiffs to bring this suit. It will be disposed of before entering on a discussion of the merits. The Supreme Court has already ruled in this action that on the allegations of the complaint, these plaintiffs, being milk producers who have an interest in the common fund, may maintain a class action in order to restrain the Secretary of Agriculture against what they deem to be an unlawful diversion of a part of the money. Stark v. Wickard, 321 U.S. 288, 64 S.Ct. 559, 88 L.Ed. 733.

It is now urged by the defendant and by the intervenor that actually the interest of the plaintiffs in the disputed payments is comparatively small and amounts possibly to a few hundred dollars. Moreover, it is contended that, in fact, the expenses of the litigation are borne principally, if not entirely, by other persons. It is argued that these circumstances...