Strickland v. Flue-Cured Tobacco Co-op.

• Decision Date: 27 August 1986
• Docket Number: Civ. A. No. 86-311-3.
• Citation: 643 F. Supp. 310
• Court: U.S. District Court — District of South Carolina
• Parties: Draxel P. STRICKLAND, Jack Grainger, Charles Freeman and James H. Roberts, Plaintiffs, v. FLUE-CURED TOBACCO COOPERATIVE STABILIZATION CORPORATION, the American Tobacco Company, the Austin Company, Inc., Austin-Carolina Co., Inc., Brown & Williamson Tobacco Corporation, Carolina Leaf Tobacco Company, Inc., Carolina Leaf International Corporation, Dibrell Brothers, Incorporated, Export Leaf Tobacco Company, Gallaher, Ltd., Imperial Tobacco Group, Limited, Liggett Group, Inc., Lorillard, Inc., A.C. Monk & Company, Inc., Phillip Morris, Incorporated, Mullins Leaf Tobacco Company, Inc., R.J. Reynolds Tobacco Co. (R.J. Reynolds, Inc.), J.P. Taylor Company, Incorporated, Universal Leaf Tobacco Company, Incorporated, C.W. Walters Company, Incorporated, T.S. Ragsdale Company, Inc., Richard E. Lyng, Secretary of Agriculture of the United States, Commodity Credit Corporation, ABC Corporation, John Doe and Richard Roe, Defendants.

643 F. Supp. 310

Draxel P. STRICKLAND, Jack Grainger, Charles Freeman and James H. Roberts, Plaintiffs, v. FLUE-CURED TOBACCO COOPERATIVE STABILIZATION CORPORATION, the American Tobacco Company, the Austin Company, Inc., Austin-Carolina Co., Inc., Brown & Williamson Tobacco Corporation, Carolina Leaf Tobacco Company, Inc., Carolina Leaf International Corporation, Dibrell Brothers, Incorporated, Export Leaf Tobacco Company, Gallaher, Ltd., Imperial Tobacco Group, Limited, Liggett Group, Inc., Lorillard, Inc., A.C. Monk & Company, Inc., Phillip Morris, Incorporated, Mullins Leaf Tobacco Company, Inc., R.J. Reynolds Tobacco Co. (R.J. Reynolds, Inc.), J.P. Taylor Company, Incorporated, Universal Leaf Tobacco Company, Incorporated, C.W. Walters Company, Incorporated, T.S. Ragsdale Company, Inc., Richard E. Lyng, Secretary of Agriculture of the United States, Commodity Credit Corporation, ABC Corporation, John Doe and Richard Roe, Defendants.

Civ. A. No. 86-311-3.

United States District Court, D. South Carolina.

August 26, 1986.

Judgment August 27, 1986.

COPYRIGHT MATERIAL OMITTED

E.N. Zeigler, P.O. Drawer 150, Florence, S.C., for plaintiffs.

James K. Dorsett, Jr., Nigel (Tex) B. Barrow, Jr., Raleigh, N.C., D. Laurence McIntosh, Florence, S.C., for Flue-Cured Tobacco Cooperative Stabilization Corp.

Daniel O. Neil, Paul Pennoyer, Chadbourne & Parker, New York City, H. Simmons Tate, Jr., Boyd, Knowlton, Tate & Finlay, Columbia, S.C., for American Brands, Inc. The American Tobacco Co., Gallaher, Ltd.

Ray V. Hartwell, III, Robert Brooks, Virginia Powell, Hunton & Williams, Richmond, Va., Mark W. Buyck, Jr., Wilcox Law Firm, Florence, S.C., for The Austin Co., Inc., Austin-Carolina Co., Inc., Carolina Leaf Tobacco Com'n Inc., Carolina Leaf Intern. Corp., Dribrell Brothers, Inc., A.C. Monk & Co., Inc., and C.W. Walters Co., Inc.

Norwood Robinson, Michael L. Robinson, Petree, Stockton & Robinson, Winston-Salem, N.C., Hubert E. Yarborough, III, C. Diane Smock, Yarborough, Moore & Smock, Greenville, S.C., for Brown & Williamson Tobacco Corp. and Export Leaf Tobacco Co.

Z. Hardy Rose, Rose, Jones, Rand & Orcutt, P.A., Wilson, N.C., Mark W. Buyck, Jr., Wilcox Law Firm, Florence, S.C., for Imperial Tobacco Group, Ltd.

Joe Rogers, Marion S. Riggs, Rogers & Riggs, Manning, S.C., for Liggett Group, Inc.

Joseph W. Gleb, Jay Fastow, Weil, Gotshal & Manges, New York City, Barney O. Smith, Jr., Rita McKinney, Greenville, S.C., for Lorillard, Inc.

Bruce L. Montgomery, Timothy J. Lindon, Arnold & Porter, Washington, D.C., Henry Smythe, Buist, Moore, Smythe & McGee, Charleston, S.C., for Phillip Morris, Inc.

W.G. Champion Mitchell, Mark N. Poovey, Martin L. Holton, III, Gary W. Jackson, Womble, Carlyle, Sandridge & Rice, Winston-Salem, N.C., David L. Freeman, Henry L. Parr, Jr., Wyche, Burgess, Freeman & Parham, Greenville, S.C., Saunders M. Bridges, Sr., Bridges & Orr, Florence, S.C., for R.J. Reynolds Tobacco Co. (R.J. Reynolds, Inc.)

Mark W. Buyck, Jr., Wilcox Law Firm, Florence, S.C., for T.S. Ragsdale Co., Inc.

Samuel W. Hixon, III, Walter J. McGray, Margaret I. Bascigal, Williams, Mullen & Christian, Richmond, Va., William M. Grant, Jr., Bryan F. Hickey, Haynsworth Law Firm, Greenville, S.C., for J.P. Taylor Co., Inc. and Universal Leaf Tobacco Co., Inc.

David H. White, Dept. of Justice, Washington, D.C., John B. Grimball, Asst. U.S. Atty., Columbia, S.C., Paul Wilburn, Asst. U.S. Atty., Greenville, S.C., for Richard E. Lyng, Sec. of Agriculture of the U.S. Commodity Credit Corp.

ORDER

GEORGE ROSS ANDERSON, Jr., District Judge.

Given the public interest in this action and in the interest of time, the Court issued an Order dated July 31, 1986, dismissing this case pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. The Court hereby issues this detailed Order providing the reasons for its decision.

FINDINGS OF FACT

The plaintiffs are growers of flue-cured tobacco. They brought this lawsuit as representatives of a class consisting of all producers of flue-cured tobacco in the United States who sold tobacco to the corporate defendants and who are members or stockholders of the defendant Flue-Cured Tobacco Cooperative Stabilization Corporation. The Defendants are Richard E. Lyng, Secretary of Agriculture (the "Secretary"); the Commodity Credit Corporation ("CCC"), a federally chartered corporation through which the price support program is administered by the Secretary; the Flue-Cured Tobacco Cooperative Stabilization Corporation ("Stabilization"), a cooperative incorporated under the laws of the State of North Carolina whose members are flue-cured tobacco growers and which executes the tobacco price support program under contract with CCC; and several tobacco purchasing companies, including the nation's largest cigarette manufacturers and numerous tobacco dealers.

The plaintiffs challenge the payment of rebates to purchasers of the 1985 crop of flue-cured tobacco pursuant to the Federal Tobacco Price Support Program (the "Tobacco Program"). The Tobacco Program was created to provide producers with higher prices for their product than they would normally receive. 7 U.S.C. § 1311, et seq.

In 1982, Congress enacted legislation requiring the Tobacco Program to be self-supporting by charging annual assessments to growers on each pound of tobacco marketed.¹ The No Net Cost Tobacco Program Act (the "No Net Cost Act") was intended to enable the Tobacco Program to operate at no net cost to taxpayers. See 7 U.S.C. § 1445-1 (1982) (Note, "Congressional Findings and Declaration of Purpose"). The amount of assessments are calculated in accordance with this purpose. Payments of the assessments are held either by Stabilization in a separate no net cost tobacco fund ("Fund") or by CCC in a no net cost tobacco account ("Account"). Under the original legislation, moneys held in an Account by CCC or in a Fund by Stabilization could only be used to ensure that CCC suffered no net losses under its loan agreements with Stabilization. In 1983, the statute was amended to permit other uses of the Fund, including any use approved by the Secretary which would be mutually beneficial to CCC and the tobacco producers.²

Under legislation enacted in 1983, the price support level for 1985 was frozen at the 1982 level, $1.70 per pound, subject to the discretion of the Secretary to reduce the support price by approximately five cents per pound under certain conditions.³ Stabilization declared that the 1985 assessment required by the No Net Cost Act would be 25 cents per pound. The assessment for 1984 had been only 7 cents per pound.⁴

In 1985, the Secretary, pursuant to 7 U.S.C. § 1445-1(d)(3), authorized Stabilization to use some moneys from the Fund to pay rebates to purchasers of tobacco during the 1985 marketing season.⁵ Under the rebate plan, ten cents was to be rebated for each pound of tobacco purchased. An additional fifteen cents per pound was to be rebated if two conditions were met: (1) purchasers had to buy a total of 650,000,000 pounds of 1985 crop tobacco during the 1985 marketing season; and (2) purchasers had to buy at least 125,000,000 pounds from Stabilization's inventory of 1976-1984 crop tobacco by the end of 1985. The purpose of the rebate program was (1) to reduce the amount of 1985 crop tobacco going into Stabilization's inventory by lowering the effective price support level,⁶ and (2) to reduce the 1976-1984 crop tobacco already in the inventory. Full rebates were paid to tobacco purchasers and the plaintiffs thereafter commenced this action.

The defendants have moved to dismiss this action pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure on the ground that the Court lacks subject matter jurisdiction. Alternatively, the defendants have moved to dismiss pursuant to Rule 12(b)(6) on the ground that the plaintiffs have failed to state a claim upon which relief can be granted.

CONCLUSIONS OF LAW

In their motion to dismiss, the defendants claim that the plaintiffs lack standing to pursue this action. Article III of the United States Constitution confines federal courts to adjudicating actual "cases" and "controversies." Among the doctrines that have arisen from Article III is the doctrine that requires a litigant to have "standing" to invoke the power of a federal court. "In essence the question of standing is whether the litigant is entitled to have the court decide the merits of the dispute or of particular issues." Allen v. Wright, 468 U.S. 737, 104 S.Ct. 3315, 3324, 82 L.Ed.2d 556 (1984) (quoting Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 2204, 45 L.Ed.2d 343 (1975)).

To have standing, a plaintiff must allege the following: (1) an actual injury within the zone of interests protected by statute; (2) the injury must be fairly traceable to the specific agency action challenged; and (3) the injury must be such that it likely would be redressed by a favorable decision. Motor Coach Industries, Inc. v. Dole, 725 F.2d 958, 963 (4th Cir. 1984) (citing Simon v. Eastern Kentucky Welfare Rights Organization, 426 U.S. 26, 38, 96 S.Ct. 1917, 1924, 48 L.Ed.2d 450 (1976)). Specifically, the plaintiffs' complaint must contain allegations demonstrating that the action they challenge caused them injury-in-fact, economic or otherwise. Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970). The injury must be "distinct and palpable and not abstract or conjectural or hypothetical." Allen v. Wright, 468 U.S. at 751, 104 S.Ct. at 3325 (citations omitted). A plaintiff must allege "specific, concrete facts demonstrating that the challenged practices harmed him, and that he personally would benefit in a tangible way from the court's intervention." Warth v. Seldin, 422 U.S. at 508, 95 S.Ct. at 2210.

In the action before this Court, the Secretary's authorization for Stabilization to give rebates was not an actual injury...