La Verne Co-Op. Citrus Ass'n v. United States

• Decision Date: 20 June 1944
• Docket Number: No. 10266.,10266.
• Citation: 143 F.2d 415
• Parties: LA VERNE CO-OP. CITRUS ASS'N et al. v. UNITED STATES (and four other cases).
• Court: U.S. Court of Appeals — Ninth Circuit

143 F.2d 415 (1944)

LA VERNE CO-OP. CITRUS ASS'N et al. v. UNITED STATES (and four other cases).

No. 10266.

Circuit Court of Appeals, Ninth Circuit.

June 20, 1944.

Guy Richards Crump, of Los Angeles, Cal., for appellants.

Tom C. Clark, Asst. Atty. Gen., John S. L. Yost and W. Carroll Hunter, Sp. Assts. to Atty. Gen., David P. Gordon, Atty., U. S. Dept. of Agriculture, of Washington, D. C., and Charles H. Carr, U. S. Atty., and John McPherson Gault and Wm. W. Worthington, Asst. U. S. Attys., both of Los Angeles, Cal., for appellee.

Before WILBUR, DENMAN, and STEPHENS, Circuit Judges.

STEPHENS, Circuit Judge.

The United States at the request of the Secretary of Agriculture brought five actions against various lemon associations to enjoin the handling of lemons in violation of Order No. 53 issued by the Secretary of Agriculture pursuant to the provisions of the Agricultural Adjustment Act of 1933, 48 Stat. 31, as amended and as reenacted and amended by the Agricultural Marketing Agreement Act of 1937, 50 Stat. 246, 7 U.S.C.A. § 601 et seq. (hereinafter referred to as the Act). The district court ordered that the five cases be tried together and that the evidence introduced be applied to each case where relevant. On the appeal the five cases were so heard upon a single record of the trial in the district court. Judgments were given permanently enjoining the lemon associations from violating the provisions of Order No. 53 until further order of the district court, or until the entry of judgment in another specified action determining Order No. 53 invalid or inapplicable to the lemon associations. The lemon associations appeal.

The Act directs the Secretary of Agriculture to issue orders regulating the handling of specified agricultural commodities, including lemons, which handling is in the current of interstate or foreign commerce or which directly burdens, obstructs, or affects such commerce, 7 U.S.C.A. § 608c(1). A hearing and due notice thereof are prerequisites to the issuance of an order, § 608c(3). Orders referring to fruits may limit the total quantity of the commodity which may be marketed by all handlers during a specified period and may provide methods for allotting the amount of any such commodity which each handler may market during a specified period, the quantity to be based upon the amounts the handler has available for current shipment or upon the amounts shipped by the handler in a prior representative period, § 608c(6).

Under the Act a handler subject to any order may petition the Secretary of Agriculture for modification of the order or for exemption therefrom on the ground that the order or any obligation thereunder is not in accordance with the law. The Secretary's ruling, after a hearing on the matter, is final "if in accordance with law," § 608c(15) (A).¹ However, within twenty days the petitioner may file a bill in equity in a federal district court for a review of the Secretary's ruling, § 608c(15) (B). The district courts are also given jurisdiction "specifically to enforce, and to prevent and restrain" violations of orders made pursuant to the Act, § 608a(6).² Each violation of an order is subject to a fine unless a petition under § 608c(15) was filed in good faith when no fine is incurred for violations between the date the petition is filed and the date the violator is given notice of the Secretary's ruling thereon, § 608c(14).

"The pendency of proceedings instituted pursuant to this subsection (15) shall not impede, hinder, or delay the United States or the Secretary of Agriculture from obtaining relief pursuant to section 8a(6) of this title 7 U.S.C.A. § 608a(6). Any proceedings brought pursuant to section 8a(6) of this title * * * shall abate whenever a final decree has been rendered in proceedings between the same parties, and covering the same subject matter, instituted pursuant to this subsection (15)," § 608c(15) (B).

Order No. 53, an "Order Regulating the Handling of Lemons Grown in the States of California and Arizona," was issued by the Secretary of Agriculture on April 5, 1941, and became effective on April 10, 1941. A public hearing, notice of which was given to appellants and to other interested persons, had been held, and the order was based upon evidence introduced at the hearing. The order regulates the handling of all lemons grown in California and Arizona and in the current of commerce between California, or Arizona, and any point in the United States or Canada outside the state. It establishes a Lemon Administrative Committee, which is charged with administering the order. It empowers the Secretary of Agriculture, upon the recommendation of the Committee, to fix the total quantity of lemons which may be handled during a specified week and to determine bi-weekly a prorate base for each handler who has applied to the Committee therefor. The prorate base is defined as the ratio between the quantity of each handler's lemons which are available for current shipment and the quantity of all handlers' lemons available for current shipment. The formula for determining each handler's weekly allotment is given as the product of the handler's prorate base and the total quantity of lemons fixed by the Secretary for handling during the week. The order indicates the basis upon which the quantity of lemons of a handler available for current shipment should be computed and includes provisions for variations in allotments under certain conditions.

The complaints herein charged the defendants with violations of Order No. 53 in that for a certain period they shipped in interstate and foreign commerce lemons in excess of their allotments. In accordance with the provisions of § 608a(6) of Title 7 U.S.C.A., the complaints seek to enjoin further handling of lemons contrary to the terms of the order. Temporary restraining orders against such violations were issued. Appellants admitted that they had shipped an excessive quantity of lemons during the period specified in disregard of the order. Denials in the answers raise the issues of whether non-compliance by appellants with the order was or would be injurious to foreign or interstate commerce in lemons or to growers, handlers or consumers of lemons, did or would threaten the stability of such commerce, and did or would tend to thwart the national policy of improving marketing conditions with respect to the handling of lemons and other specified commodities in interstate and foreign commerce.

Each of appellants alleges in its answer as an affirmative defense that Order No. 53 and the prorate orders issued pursuant thereto, as administered by the Lemon Administrative Committee and by the Secretary of Agriculture, are unreasonable, arbitrary, unjust and discriminatory as against appellant and that they deprive appellant of its property without due process of law, thereby violating the fifth amendment to the Constitution of the United States. In addition each claims that it is suffering irreparable loss because it handles silver and tree-ripe (yellow) lemons which have a much shorter storage life than green lemons and which therefore cannot be marketed in large quantities in fresh fruit form under the order, and because unreasonably low and discriminatory allotments allowed defendants have compelled it to dispose of a great amount of lemons in other than fresh fruit channels.

During the time involved herein appellants were pursuing their remedy under § 608c(15) of the Act. A petition before the Secretary of Agriculture was filed under § 608c(15) (A), praying for a modification or exemption from Order No. 53. The petition was dismissed by the Secretary. Thereafter, an action was brought in the District Court of the United States for the Southern District of California under § 608c(15) (B), which action was pending at the time of the district court's decree in the instant case. On August 4, 1943, the court in the action under subdivision (B) ordered that the proceedings on review be remanded to the Secretary of Agriculture with certain directions, and the matter has not yet been terminated.

At the trial of the instant cases appellants made offers of proof on the issues raised by the answers, but the court refused to admit any of the offered evidence on the ground that the Act in § 608c(15) provides for a complete and exclusive administrative remedy, including judicial review of the administrative ruling, by which the lawfulness of the order must be determined. Therefore, the findings were limited to the facts of the order and the noncompliance therewith, and injunctions restraining violations of Order No. 53 were issued.

The principal question involved herein is whether in enforcement proceedings under § 608a(6) of the Act handlers are precluded from introducing evidence to controvert the constitutionality of orders made pursuant to the Act, insofar as the applicability of such orders to the handlers are concerned, because of the administrative and judicial review provided for in § 608c(15).

Appellants do not contest the constitutionality of the Act or the validity of Order No. 53 on its face. They do question the validity of Order No. 53 in its application to them and contend that unless they may raise the point as part of their defense to the instant action for enforcement, they will be caused irreparable injury and therefore will be deprived of property without due process of law contrary to the terms of the fifth amendment.

The principle that administrative remedies must be exhausted before one may resort to equity is well established. In the instant case the statutory procedure of § 608c(15) including judicial review had not yet been terminated when the instant action for enforcement was brought; it is still pending. Therefore, we are concerned only with the situation where defendants in an action to enforce an order under the Act have diligently pursued their administrative remedy but have not yet received a final...