MICHIGAN CANNERS AND FREEZERS ASSOCIATION, INC., ET AL., APPELLANTS
V. AGRICULTURAL MARKETING AND BARGAINING BOARD, ET AL.
   No. 82-1577
   In the Supreme Court of the United States
   October Term, 1983
   On Appeal from the Supreme Court of Michigan
   Brief for the United States as Amicus Curiae Supporting Appellants
            TABLE OF CONTENTS
   Statement
   Summary of argument
   Argument:
      By compelling individual producers to support
      accredited associations and adhere to the
      terms of contracts negotiated by such
      associations, the Michigan Act frustrates the
      purposes and objectives of the Agricultural Fair
      Practices Act
   Conclusion
                          QUESTION PRESENTED
   Whether certain provisions of Michigan's Agricultural Marketing and
Bargaining Act are preempted by the Federal Agricultural Fair
Practices Act of 1967.
   This brief is filed to elaborate upon the views of the United
States submitted in response to the Court's invitation to the
Solicitor General of March 16, 1983.
                               STATEMENT
   This case is a challenge to certain provisions of Michigan's
Agricultural Marketing and Bargaining Act, which are alleged to
conflict with the federal Agricultural Fair Practices Act of 1967.
The Michigan Supreme Court found that the state law was not preempted
by the federal Act.
   1. The federal Agricultural Fair Practices Act of 1967 (AFPA), 7
U.S.C. 2301 et seq., guarantees farmers and other producers of
agricultural commodities (producers) /1/ the freedom to join
cooperative associations without fear of reprisal from those who
acquire agricultural products (handlers).  /2/ 7 U.S.C. 2303 makes it
unlawful for any handler to engage in practices that interfere with a
producer's freedom to associate.  Section 2303(a) prohibits any
handler to "coerce any producer in the exercise of his right to join
and belong to or to refrain from joining or belonging to an
association of producers * * *." Section 2303(b) forbids handlers to
discriminate against producers concerning price, quantity, quality, or
terms of purchase, because of membership in an association.  Section
2303(c) forbids handlers to coerce producers into, or out of, a
membership agreement or contract with an association.  Section 2303(d)
prohibits handlers to offer money or other inducements to keep
producers from joining an association.  Handlers are also forbidden to
make false reports about the finances, management, or activities of
associations (7 U.S.C. 2303(e)).
   Although the Act forbids handlers to interfere with a producer's
decision to join (or not to join) an association, it does not prevent
handlers and producers from dealing or refusing to deal with one
another for other reasons.  7 U.S.C. 2304 states that "(n)othing in
this chapter shall prevent handlers and producers from selecting their
customers and suppliers for any reason other than a producer's
membership in or contract with an association of producers, nor
require a handler to deal with an association of producers." The Act
does not attempt to occupy the entire field of regulation.  Its
provisions "shall not be construed to change or modify existing State
law nor to deprive the proper State courts of jurisdiction" (7 U.S.C.
2305(d)).
   2. The Michigan Agricultural Marketing and Bargaining Act, Mich.
Comp. Laws Section 290.701 et seq. (1979), enacted in 1972, makes
illegal the same handler conduct forbidden by the AFPA.  Mich. Comp.
Laws Section 290.704(1).  But the Michigan Act goes beyond the federal
Act by regulating producers as well as handlers.  It creates an
Agricultural Marketing and Bargaining Board, within the Michigan
Department of Agriculture, that accredits producer associations and
mediates disputes.  Mich. Comp. Laws Sections 290.703, 290.707,
290.715.  The Michigan Act forbids associations to discriminate
against producers;  to refuse to bargain with handlers with whom the
association or its members have had substantial prior dealing;  to
coerce or intimidate handlers in certain respects;  and to make
unsubstantiated reports about the finances, management, or activities
of other associations or handlers.  Mich. Comp. Laws Section
290.704(2).
   To be accredited, an association must have marketing and bargaining
contracts (for the relevant period) with more than 50% of the
producers in the bargaining unit.  These contracts must also include
more than 50% of the commodity produced in the bargaining unit.  Mich.
Comp. Laws Section 290.707(c).  Once accredited, the association acts
as the exclusive bargaining agent for all producers in the bargaining
unit, and producers must pay a service fee to the association.  A
producer must pay the fee, and abide by the terms of the contracts
negotiated with handlers, even if he chooses not to become a member of
the association.  Mich. Comp. Laws Sections 290.710(1), 290.713(1).
   3. The Michigan Agricultural Cooperative Marketing Association,
Inc. (MACMA) is an association accredited under the Michigan Act.  It
is the sole sales and bargaining representative for certain Michigan
producers for asparagus.  In 1974 MACMA negotiated contracts with
handlers.  Shortly thereafter appellants (representatives of handlers
and producers) sued in the Ingham County Circuit Court for a
declaration that the portions of the Michigan Act requiring service
fees, and mandatory producer adherence to the association contracts,
were preempted by the federal Act.  The circuit court ruled that the
case could be brought only in the Michigan Court of Appeals, and
dismissed (J.S. App. A33-A37).  The Michigan Court of Appeals also
dismissed for want of jurisdiction (id. at A38-A39), and an appeal was
taken to the Michigan Supreme Court.  The Michigan Supreme Court
remanded the matter to the circuit court, which it found was empowered
to hear the case (id. at A44-A59).  After a non-jury trial the circuit
court ruled that the state statute was not preempted (id. at A60-A76).
   4. The Michigan Supreme Court affirmed (J.S. App. A1-A32).
Appellants argued that the federal Act gave handlers a right to deal
with producers of thier choice, and producers a right to deal with
handlers of their choice.  They urged that the Michigan Act, by
requiring all producers in a bargaining unit to pay a service fee and
adhere to the terms of the contract negotiated by the association,
violated these rights.
   The Michigan Supreme Court rejected that claim.  It found the
federal Act limited to preventing certain kinds of handler misconduct.
 The court thus viewed Michigan's regulation of producers as a step
into an area that the federal government had not attempted to regulate
(J.S. App. A14):
      In our view, the provisions of AMABA affording exclusive
      representation to a producers' cooperative created by a majority
      of the producers of a particular commodity, and the requirement
      of service fees, was a step by the Michigan Legislature into a
      previously unregulated area;  a step which furthers both the
      goals of (the AFPA) and others not prevented by (the AFPA) by
      taking an active role in enhancing the bargaining position of
      producers, protecting not only individuals, but also their
      associations from internal and external pressures.
   The court also rejected appellants' argument that compliance with
the two statutes was physically impossible (J.S. A16-A17).
                          SUMMARY OF ARGUMENT
   1. The Michigan Act, insofar as it requires all producers in an
accredited bargaining unit to pay a service fee and adhere to the
terms of the contract negotiated by the association, frustrates the
purposes and objectives of the AFPA.  It is evident from the language
of the federal Act that Congress explicitly forbade associations to
coerce individual producers into joining an association, making or
maintaining a marketing contract with an association, or terminating
contractual relationships individually negotiated with handlers.  7
U.S.C. 2303(a) and (c) (prohibited practices);  id. Section 2302(a)
and (d) (prohibited practices section applies to associations).
   That conclusion emerges even more clearly from the legislative
history of the AFPA.  The version of the Act first introduced made no
mention of a producer's right to remain independent from marketing and
bargaining associations.  That omission was the primary focus for
criticism of the bill in the Senate hearings.  Opponents of the bill
gave a number of reasons for inclusion of such a right.  In some cases
handlers were in direct competition with cooperative associations that
performed processing or marketing functions for their members.  In
such cases compulsory association membership would have the effect of
driving competing handlers out of business.  And even where the
association acted only as a bargaining agent for producers, handlers
felt that if membership were not voluntary they would lose both the
price advantages and control over product quality that they enjoyed in
direct dealing with independent producers.  Similar fears were
expressed by some producers, who felt that they could fare better
(because of the quality of their products) by dealing independently
than they could through an association.  Still another concern
frequently voiced was that compulsory association membership could
result in producer monopolies, and thereby frustrate the policies of
the antitrust laws.  Finally, it was urged that a desirable
competition among cooperative associations for members would be
impeded if producer membership were not voluntary.
   As a result of these concerns, the Senate amended the original bill
to provide specifically that individual farmers should be "free to
join together or not to join together in cooperative organizations"
(113 Cong. Rec. 21410 (1967)(emphasis added).  The prohibited
practices section of the Senate bill was also explicitly addressed to
"any handler or association of producers" (ibid.(emphasis added)).
   In the House hearings the Senate amendments were fully discussed,
and the House Committee on Agriculture consciously decided to make no
change in the prohibited practices section.  The phrase "free to join
together or not to join together" in the opening section of the bill
was simply amended to read "free to join together voluntarily" (H.R.
Rep. 824, 90th Cong., 1st Sess. 3 (1967)).
   On the floor of the House the phrase "association of producers" was
deleted from the prohibited practices section.  It was stressed,
however, that since associations were already included in the
definition of "handler," the deletion worked no substantive change in
the bill.  114 Cong. Rec. 7464 (1968) (remarks of Rep. Sisk).  Among
the reasons discussed for preserving the producer's right not to join
an association was that "(t)he fees being charged by these
associations are no small matter to the farmer." 114 Cong. Rec. 7450
(1968) (remarks of Rep. Latta).
   2. The Michigan Supreme Court held that the AFPA, while it forbids
associations to coerce individual producers into becoming members,
does not apply to similar action by the states.  Michigan's Act,
however, does nothing more than empower associations that are
sufficiently large to do what the AFPA forbids.  It is essentially no
different from the Louisiana "nonsigner" law that this Court held to
be preempted by the Sherman Act in Schwegmann Bros. v. Calvert Corp.,
341 U.S. 384 (1951).  The analogy is particularly apt since one of the
very reasons for requiring voluntary association membership in the
AFPA was the concern that any other course would undermine the
policies of the antitrust laws.
   Nor is it significant that Michigan's Act does not require
nonsigning producers to formally join an accredited association.  In
the first place, the AFPA forbids not only compulsory membership but
also forcing any producer to "enter into * * * (a) marketing contract
with an association" (7 U.S.C. 2303(c)).  In any event, the
distinction between formal membership and what the Michigan Act
requires is insubstantial, since independent producers are required to
pay dues to the association and are bound by the terms of its bargain
with handlers.
   3. Appellants also argue that Congress in the AFPA intended "to
protect a processor's right to deal individually with farmers" (J.S.
18), and that the Michigan Act conflicts with that right.  We doubt
that that is so.  The Senate report makes clear that Congress did not
intend to "prevent or require" any particular form of dealing between
processors, on the one hand, and producers or associations on the
other.  S. Rep. 474, 90th Cong., 1st Sess. 7 (1967).  And the House
report specifically states that "the scope of the bill embrace(s) only
the prohibited acts in section 4" (H.R. Rep. 824, supra, at 5), which
protects individual producers, not processors.
                               ARGUMENT
 BY COMPELLING INDIVIDUAL PRODUCERS TO SUPPORT ACCREDITED ASSOCIATIONS
AND ADHERE TO THE TERMS OF CONTRACTS NEGOTIATED BY SUCH ASSOCIATIONS,
THE MICHIGAN ACT FRUSTRATES THE PURPOSES AND OBJECTIVES OF THE
AGRICULTURAL FAIR PRACTICES ACT
   This Court has held that federal regulation should not be deemed to
preempt state regulatory power except for persuasive reasons.  If
there is no explicit preemptive language, the federal action must
touch a field where federal regulation is dominant, or there must be
an actual conflict with federal law.  Fidelity Federal Savings & Loan
Ass'n v. de la Cuesta, 458 U.S. 141, 153 (1982).  Here there is no
explicit preemptive language.  The federal Act states that it "shall
not be construed to change or modify existing State law" (7 U.S.C.
2305(d)).  /3/ Nor, as appellants admit, is the federal interest so
dominant that the field of regulation has been entirely occupied (J.S.
8).  This Court has recognized that "the supervision of the readying
of foodstuffs for market has always been deemed a matter of peculiarly
local concern." Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S.
132, 144 (1963).
   The question, therefore, is whether the state and federal Acts are
in conflict -- that is, whether compliance with both is "a physical
impossibility" (373 U.S. at 142-143), or whether state law "stands as
an obstacle to the accomplishment and execution of the full purposes
and objectives of Congress." Hines v. Davidowitz, 312 U.S. 52, 67
(1941);  Fidelity Federal Savings & Loan Ass'n v. de la Cuesta, 458
U.S. at 154-159.  This in turn depends upon "Congress' intent in
enacting the federal statute at issue." Shaw v. Delta Air Lines, Inc.,
No. 81-1578 (June 24, 1983), slip op. 9.
   1. We believe that insofar as the Michigan Act requires all
producers in a bargaining unit to pay a service fee and adhere to the
terms of the contract negotiated by the association, it frustrates the
"purposes and objectives" of the AFPA.  That conclusion is not
compelled by the principal thrust of the federal Act, which in general
is designed to prevent handlers from interfering with the formation of
cooperative associations by exerting pressure on individual farmers.
Nor does the federal Act attempt to address in a comprehensive way --
as the Michigan Act does -- the collective bargaining rights of
producers and handlers.  See 114 Cong. Rec. 7453-7454 (1968) (remarks
of Rep. Poage);  id. at 7456 (remarks of Rep. May).  /4/ Nevertheless,
both the explicit terms of the Federal Act and its legislative history
indicate that Congress intended to protect individual producers
against any sort of compulsion to join (or be effectively controlled
by) cooperative associations.  The Michigan Act stands as an obstacle
to that purpose.
   a. The congressional findings and declaration of policy with which
the AFPA begins state that (7 U.S.C. 2301 (emphasis added)):
      the marketing and bargaining position of individual farmers will
      be adversely affected unless they are free to join together
      voluntarily in cooperative organizations as authorized by law.
   The succeeding sections of the Act make clear the significance of
the word "voluntarily." It signifies freedom from pressure either by
processors (to stay out of an association) or by associations (to join
or contract with an association).  /5/
   7 U.S.C. 2303, the prohibited practices section, provides that:
         It shall be unlawful for any handler knowingly to * * *
      engage in the following practices:
         (a) To coerce any producer in the exercise of his right to
      join and belong to or to refrain from joining or belonging to an
      association of producers;  or
                      * * * * *
         (c) To coerce or intimidate any producer to enter into,
      maintain, breach, cancel, or terminate a membership agreement or
      marketing contract with an association of producers or a
      contract with a handler * * *
   The term "handler" is defined in 7 U.S.C. 2302(a) (emphasis
   added):
         The term "handler" means any person engaged in the business
      or practice of * * * (3) contracting or negotiating contracts or
      other arrangements * * * on behalf of producers * * * with
      respect to the production or marketing of any agricultural
      product * * *.
   And "(t)he term 'person' includes * * * associations." 7 U.S.C.
2302(d).  In short, the federal Act forbids an association of
producers (which negotiates marketing contracts and other arrangements
on behalf of producers) to coerce individual producers into joining
the association, staying in the association, or making or maintaining
a marketing contract with the association.  See Butz v. Lawson Milk
Co., 386 F. Supp. 227, 235 (N.D. Ohio 1974) (an association of
producers is a "handler" within the meaning of the AFPA);  Marketing
Assistance Plan, Inc. v. Associated Milk Producers, Inc., 338 F. Supp.
1019, 1024 (S.D. Tex. 1972) (same).
   The disclaimer section of the Act also emphasizes that Congress
envisioned a market in which individual producers would choose to
remain apart from associations and negotiate their own terms with
handlers.  7 U.S.C. 2304:
         Nothing in this chapter shall prevent handlers and producers
      from selecting their customers and suppliers for any reason
      other than a producer's membership in or contract with an
      association of producers, nor require a handler to deal with an
      association of producers.
   b. The legislative history of the AFPA shows, even more plainly
than the language of the Act itself, that Congress intended to shield
producers from compulsory membership in an association.  The bill
originally introduced in the Senate, S. 109, 89th Cong., 1st Sess.
(1965), made no reference to producers' rights to refrain from joining
or dealing with associations.  Those rights may have been presumed to
exist, since S. 109 was first drafted as an amendment to the
Capper-Volstead Act (7 U.S.C. 291-292), /6/ and producers could not be
compelled to join cooperatives authorized by that Act.  See Alexander
v. National Farmers Organization, 687 F.2d 1173, 1182 (8th Cir. 1982),
cert. denied, No. 82-1586 (May 16, 1983);  Otto Milk Co. v. United
Dairy Farmers Coop. Ass'n, 388 F.2d 789 (3d Cir. 1967);  Gulf Coast
Shrimpers & Oystermans Ass'n v. United States, 236 F.2d 658, 665 (5th
Cir.), cert. denied, 352 U.S. 927 (1956).  Cf. Maryland & Virginia
Milk Producers Ass'n v. United States, 362 U.S. 458, 467 (1960);
Columbia River Packers Ass'n v. Hinton, 315 U.S. 143 (1942).  The
right to remain independent was not made explicit, however, and that
aspect of the bill was the focal point for criticism in the Senate
hearings.
   Two major, and related, concerns were expressed by those testifying
against the original version of S. 109.  The first was that, because
the bill did not recognize the right of producers to remain
independent, farmers and ranchers could be forced to join marketing
and bargaining associations.  The second was that that fact (coupled
with the kinds of practices prohibited by the bill) would make it
impossible for handlers to deal individually with the producers of
their choice.
   A number of reasons underlay these concerns.  One was that, in the
case of some commodities, cooperative associations were actually in
competition with handlers, and compulsory membership in an association
would have the effect of driving competing handlers out of business.
This would be true, for example, where a cooperative provided
facilities for ginning cotton for its members.  /7/ A related concern
was that the emphasis on producer bargaining power and the possibility
of compulsory membership were out of place where producers did not
contract directly with handlers because there were open markets where
their commodities could be sold.  /8/ A third reason for the concern
about forced membership in an association was that handlers feared
losing control over the quality of the product they purchased, not to
mention whatever price advantages they enjoyed in dealing directly
with independent producers.  /9/ Similar fears were expressed by at
least some producers, who felt that the quality of their products
would bring a better return if they were able to remain independent.
/10/ A fourth reason, frequently voiced, was that the policies of the
federal antitrust laws -- already modified by allowing producers to
combine for purposes of marketing and bargaining, see 7 U.S.C.
291-292, 15 U.S.C. 17 -- would be undermined altogether if membership
in cooperative associations were not voluntary.  /11/ Such a result
would, of course, work to the detriment of consumers as well as
handlers.  Still a fifth reason, expressed among others by the
Department of Agriculture, was that any suggestion that producers
could be compelled to join cooperative associations could frustrate a
desirable competition among cooperatives.  /12/ Finally, a number of
witnesses simply indicated a feeling that the freedom to remain
independent of an association was "a basic American right" that should
not be restricted in the otherwise desirable effort to promote
producer bargaining power.  /13/
   The solution to the concerns about compulsory association
membership and prevention of direct dealing between handlers and
producers took two forms in the bill passed by the Senate.  The first
was the creation of a statutory right for producers to refrain from
joining or contracting with an association.  The second was a
disclaimer of intent to prevent individual dealing between handlers
and producers.
   The final Senate bill opened with a legislative finding and
declaration of policy that (113 Cong. Rec. 21410 (1967)):
      SEC. 2 * * * (T)he marketing and bargaining position of
      individual farmers will be adversely affected unless they are
      free to join together or not to join together in cooperative
      organizations as authorized by law.
   It then went on to state, in the prohibited practices section
(ibid. (emphasis added)):
      SEC. 4 It shall be unlawful for any handler or association of
      producers knowingly to engage * * * in the following practices:
         (a) To coerce any producer in the exercise of his right to
      join and belong to or to refrain from joining or belonging to an
      association of producers(;)
                      * * * * *
         (c) To coerce or intimidate any producer or other person to
      enter into (or) maintain * * * a membership agreement or
      marketing contract with an association of producers * * *.
   The Senate report concerning that section stated:
         The objective of the bill is to protect the producer in the
      exercise of a free choice.  Many witnesses suggested that the
      bill did not fully accomplish this purpose, because it protected
      the producer only from improper pressure not to join an
      association.  To protect his free choice he should also be
      protected from improper pressure in the other direction, that
      is, improper pressure to join an association.  The committee * *
      * was convinced by the logic of the situation that if the
      objective is to protect the producer and afford him a free
      choice, the bill should protect him from pressure in either
      direction.
                      * * * * *
         Many witnesses, including individual producers, testified
      that as well as being free from interference in electing to join
      or not join an association, the producer should be free from
      improper pressure to interfere with his arrangements and
      dealings with handlers;  and the committee substitute would
      provide him with this protection.
   S. Rep. 474, supra, at 5-6.
   The report went on to note (id. at 6) that although "section 4(a)
prohibits coercion on the part of both the handler and the association
of producers," Section 4(d), which dealt with inducements or rewards
(cf. 7 U.S.C. 2303(d)), should only apply to the former.  "(T)he
association of producers should not be prohibited from offering
inducements to producers to belong to an association, since it is
quite proper for the association to pursue vigorously the voluntary
organization of farmers in its attempt to secure a better bargaining
position for farmers." S. Rep. 474, supra, at 6 (emphasis added).
/14/
   The explanation of the disclaimer section (113 Cong. Rec. 21410
(1967)) emphasizes that, rather than creating rights not mentioned
elsewhere, that section was intended to reemphasize two points
implicit in the bill.  The first was that where both producer and
handler are willing, they may deal individually rather than through an
association.  The second was that where a producer chose to join an
association the handler could refuse to bargain with the association
on his behalf for "good, sound economic reasons," though it could not
refuse to do so simply because of his association membership.  S. Rep.
474, supra, at 7.
   S. 109 was passed by the Senate in the form reported out by the
Committee on Agriculture and Forestry (113 Cong. Rec. 21411 (1967)).
Senator Aiken, the bill's sponsor, briefly summarized it by saying
(ibid.):  "This bill * * * is designed to protect the agricultural
producer's right to decide, free from improper pressures, whether or
not he wishes to belong to a marketing or bargaining association."
   The bill was referred to the House Committee on Agriculture (113
Cong. Rec. 21582 (1967)), which conducted its own hearings the
following month.  Agricultural Fair Trade Practices:  Hearings on S.
109 Before the House Comm. on Agriculture, 90th Cong., 1st Sess.
(1967) (hereinafter cited as 1967 House Hearings).  At those hearings
it seemed, in the words of one participant, "that the passengers (had)
changed trains.  The proponents of the original bill (were), to a very
large degree, opponents of the amended bill.  The opponents of the
original bill (were) proponents of the present bill" (id. at 173)
(statement of Walter R. Collett, Oregon-Washington Vegetable & Fruit
Growers Association).  Representatives of producers' associations
objected repeatedly to the provisions granting producers a right to
refrain from joining associations.  /15/ By contrast, a number of
different groups that had urged inclusion of that right in the Senate
bill expressed their satisfaction with the bill and reiterated their
concerns with the original version.  /16/
   As a result of its hearings the House Committee made a number of
minor changes not relevant here.  But it specifically rejected a
proposal "to delete the application of any prohibited practices or
sanctions to associations of producers * * *.  The committee felt that
in those limited instances where cooperative associations are covered,
the application of the bill is both justified and in the interest of
producers themselves." H.R. Rep. 824, 90th Cong., 1st Sess. 4-5
(1967).  It also declined the invitation to delete the disclaimer
provision, "since the scope of the bill embraced only the prohibited
acts in section 4" (id. at 5).
   After a compromise in the Committee on Rules, however, the House
deleted the phrase "or association of producers" from the prohibited
practices section of the bill.  See 114 Cong. Rec. 7449 (1968).
Representative Sisk, on behalf of the Rules Committee, explained the
change (id. at 7464):
      Since the bill already makes clear that associations of
      producers are not excluded from the term "handler," this phrase
      is redundant and could be misconstrued as unfairly pointing the
      finger of accusation to associations of producers.  This is not
      the intent;  and while my amendments do not change the purpose
      or basic meaning of the bill, they make misinterpretation more
      difficult.
   Representative Poage, Chairman of the House Committee on
Agriculture, expressed a similar understanding of what the bill would
do (114 Cong. Rec. 7451, 7452 (1968)):
      (W)e wanted to make this bill apply in both directions -- to
      make of it a two-way street -- to make of it a protector of the
      right of the producer to determine for himself whether he cared
      to or did not care to become a member of a cooperative.
         We * * * would actually assure to any producer the right to
      belong or not to belong to a cooperative.
                      * * * * *
      The only thing which the co-ops cannot do is to go out and
      coerce a nonmember into becoming a member of the co-op and
      thereby come under the legislation.  That is the only thing
      which this bill does not permit.
   See also id. at 7450 (remarks of Rep. Latta) ("the farmers of this
Nation will still have the right * * * to say to an association, 'I do
not want to join your association and you cannot force me into it'").
Among the reasons for preserving the producer's right not to join an
association, according to Representative Latta, was that "(t)he fees
being charged by these associations are no small matter to the farmer.
 * * * Some of these associations are assessing members 1 percent of
(their) gross.  That is $250 out of that farmer's pocket to belong to
the association" (ibid.).
   2.a. The Michigan Supreme Court believed that "(w)hile Section 2303
makes it unlawful for a handler to coerce a producer to 'join or
belong to' an association, it does not forbid a state from requiring
exclusive representation of individual producers where a producer
majority sees fit" (J.S. App. A10 (emphasis in original;  footnote
omitted)).  /17/ But all that the Michigan Act does is empower an
association of producers -- once it has attained the requisite size --
to do what the federal Act forbids.  A state may no more do this than
it may empower other "handlers" to violate the terms of the federal
Act.  Michigan could not, for example, authorize food processors to
make loans to farmers as an inducement for rejecting association
membership (see 7 U.S.C. 2303(d)), even if most processors -- and for
that matter most farmers -- found that course of action desirable.
   One may find a useful analogy to Michigan's Act in the Louisiana
"nonsigner" statute held to be preempted in Schwegmann Bros. v.
Calvert Corp., 341 U.S. 384 (1951).  The Miller-Tydings Act (ch. 690,
50 Stat. 693) interpreted in Schwegmann Bros. amended Section 1 of the
Sherman Act, 15 U.S.C. 1, to provide that "nothing herein contained
shall render illegal, contracts or agreements prescribing minimum
prices for the resale" of specified commodities, if state law permits
such agreements.  /18/ Louisiana went futher.  Its statute provided
that once a distributor and retailer contracted to fix the resale
price, other retailers of the same commodity who were "nonsigners" of
the contract were also bound by the agreed-upon price.  341 U.S. at
386-387.  This Court concluded that the state's law went beyond the
voluntary price-fixing by contract or agreement permitted by the
Miller-Tydings Act:  "when a state compels retailers to follow a
parallel price policy, it demands private conduct which the Shermans
Act forbids" (341 U.S. at 389).
   In this case the issue is whether the private conduct demanded by
Michigan is forbidden by the AFPA, rather than by the Sherman Act.
But the legislative history of the AFPA demonstrates that one of the
reasons frequently advanced for making association membership
voluntary was that compulsion could frustrate the policies expressed
in the Sherman Act.  See page 13 & note 11, supra.  See generally,
Note, Trust Busting Down on the Farm:  Narrowing the Scope of the
Antitrust Exemptions for Agricultural Cooperatives, 61 Va. L. Rev. 341
(1975).  In this case Michigan's Act provides that if a sufficient
number of producers join together and come to an agreement with
handlers on the price (and other terms) at which their commodity will
be sold, then producers who are nonsigners of the agreement are also
bound.  Mich. Comp. Laws Section 290.713(1).  /19/ That is similar to
Louisiana's requirement that once a retailer and a distributor come to
an agreement on the resale price for their commodity, nonsigning
retailers are bound to market at the same price.  But as a number of
witnesses pointed out during the passage of the AFPA:
      "(The) justification for the agricultural cooperative exemption
      (from the antitrust laws) is to allow the farmers to overcome
      exploitation and earn a reasonably competitive profit.  Its
      purpose is not to allow a monopoly profit.
         This also explains why it is important that membership in
      cooperatives be voluntary, that cooperatives not be permitted to
      coerce outsiders by shutting off their access to markets.  This
      requirement not only protects the farmers' basic interest in
      freedom of association, but it also increases the likelihood
      that cooperatives will be able to earn competitive profits but
      unable to achieve monopoly profits."
   1967 Senate Hearings 110 (statement of W.W. Holding III, American
Cotton Shippers Association (quoting an address by Donald F. Turner,
Assistant Attorney General, to the National Council of Fruit and
Bargaining Cooperatives));  see also id. at 70 (statement of Edward
Brown Williams, National Association of Frozen Food Packers);  1966
Senate Hearings 136 (statement of A. Starke Taylor, Jr., Independent
Cotton Industries Association).
   Concern about frustrating the policies of the antitrust laws was
only one of a number of reasons advanced for securing to producers the
right to negotiate individually with handlers.  But Michigan's law
could undermine other justifications for that right as well.  For
example, Section 13 of the Michigan Act (Mich. Comp. Laws Section
270.713(1)) binds nonmember producers not only to the price negotiated
by an accredited association, but also to its "(q)uality
specifications," in the nonmember's dealings with handlers.  One of
the concerns frequently voiced by handlers about forced membership in
an association, however, was that they would lose control over the
quality of the product they purchased.  A similar fear was expressed
by some producers who felt that the quality of their products would
bring a better return if they were able to remain independent.  See
pages 12-13 & notes 9-10, supra.
   Another justification for stipulating that membership must be
voluntary was the fear that compulsory membership could frustrate a
desirable competition among cooperatives.  See page 13 & note 12,
supra.  What effect the Michigan Act will have on such competition is
difficult to predict, though it may not be negligible.  In large part
it will depend on how the state defines the appropriate bargaining
units.  That matter is addressed in Section 6 of the Act (Mich. Comp.
Laws Section 290.706);  it directs the state Agricultural Marketing
and Bargaining Board to define "the largest bargaining unit" possible
consistent with seven criteria, only one of which is "(t)he wishes of
the producers." Mich. Comp. Laws Section 290.706(2)(f).  See also id.
Section 290.712 (revocation of accreditation).
   b. Appellees have also suggested that the Michigan Act does not
frustrate the purposes of the AFPA because, while it requires
exclusive representation and payment of dues, it does not insist that
producers actually become members of an accredited association.
Motion to Dismiss 4-6.  But the AFPA does not simply forbid compelling
producers to join an association (see 7 U.S.C. 2303(a)).  It also
prohibits an association (7 U.S.C. 2303(c)):
      To coerce or intimidate any producer to enter into, maintain,
      breach, cancel, or terminate a membership agreement or marketing
      contract with an association of producers or a contract with a
      handler * * *.
As the Senate report noted, the federal Act intended to leave an
individual producer "free from improper pressure to interfere with his
arrangements and dealings with handlers" (S. Rep. 474, supra, at 6).
Whether or not a producer in the bargaining unit joins the
association, he is bound under the Michigan Act -- when dealing
separately and individually with a handler -- by the terms and
conditions of the contract negotiated by the association with handlers
(J.S. App. A6).
   The requirement that nonmember producers also pay dues to an
accredited association fares no better.  As Representative Latta
stated in the course of the House debates, one of the reasons for
protecting producers' freedom to refrain from joining an association
was to avoid imposing on the unwilling the obligation of paying fees
that could amount to "1 percent of (a producer's) gross" (114 Cong.
Rec. 7450 (1968)).  With respect to the aims of the federal Act, it is
difficult to avoid the conclusion that the requirements imposed by the
State of Michigan are the "practical equivalent" of a requirement of
formal membership.  Cf. NLRB v. General Motors Corp., 373 U.S. 734,
743 (1963);  Abood v. Detroit Board of Education, 431 U.S. 209, 217
n.10 (1977).  The only effective difference between members and
nonmembers is that the latter do not participate in the association's
decision-making process.
   3. Appellants also argue that Congress in the federal Act intended
"to protect a processor's right to deal individually with farmers"
(J.S. 18), and that the Michigan Act conflicts with that right.  It is
true that Mich. Comp. Laws Section 290.713(1) makes "(a)n accredited
association * * * the exclusive representative of all producers in the
bargaining unit for the purpose of bargaining with all handlers that
purchase the agricultural commodity produced in the bargaining unit."
And, as noted above, even producers who have not joined the
association are bound "by all terms and conditions of the contract
negotiated with handlers" (J.S. App. A6).  Appellants contend that
that requirement runs afoul of 7 U.S.C. 2304, which states:
         Disclaimer of intention to prohibit formal dealing
         Nothing in this chapter shall prevent handlers and producers
      from selecting their customers and suppliers for any reason
      other than a producer's membership in or contract with an
      association of producers, nor require a handler to deal with an
      association of producers.
   The Michigan Supreme Court, by contrast, found that Section 2304
was nothing more than its caption suggests:  a "(d)isclaimer of
intention to prohibit normal dealing" (J.S. App. A8).  "There is no
logical nexus," the court said, "between a provision declaring 'this
is what we did not do' and the conclusion that 'what we did not do,
cannot therefore be done'" (id. at A7).  It found this interpretation
to be supported both by the prohibited practices section of the Act (7
U.S.C. 2303) and by the legislative history (J.S. App. A9-A14).
   We doubt that the AFPA was intended, as appellants have argued
(J.S. App. A7 (emphasis in original)), to strike "a careful balance"
among "the conflicting interests of individual producers, processors,
and associations(,)" and to create or protect "a processor's right to
deal with the individual farmer of his choice." In addressing the
matter of handler dealings with producers or associations, the Senate
report simply stated (S. Rep. 474, supra, at 7):
      The bill does not prevent or require these actions and is not
      intended to do so.  * * * (T)he proponents of the bill stated in
      their testimony that this was not the purpose * * *.
                      * * * * *
      While the bill does not require a handler to deal with an
      association of producers, it certainly makes clear that farmers
      have a right to form such associations and should be protected
      in the exercise of this right.  The fact is clear tha(t) an
      association of producers, which has obtained the voluntary
      membership of a large number of farmers(,) deserves respect and
      recognition by the handler of agricultural products.
   If handlers can insist on dealing directly even with producers who
have voluntarily appointed an association as their designated agent,
it may be doubted whether the protections of the AFPA are in fact
meaningful.
   Moreover, the only portion of the federal Act clearly creating
duties -- and corresponding rights -- is 7 U.S.C. 2303, which does
nothing more than prohibit certain handler practices.  As the House
report stated, "the scope of the bill embrace(s) only the prohibited
acts in section 4" (H.R. Rep. 824, supra, at 5).  See also 114 Cong.
Rec. 7464 (1968) (remarks of Rep. Sisk) ("Certainly we want to avoid
the interpretation that the legislation intends to encourage the
circumvention of properly constituted marketing or bargaining
associations.").  /20/
   In any event, this issue does not seem to present an independent
ground for reversal of the Michigan Supreme Court's judgment.  If
nonmember producers may (consistently with the AFPA) be bound by the
terms of contracts negotiated by an association, it is highly unlikely
that the federal Act intended to grant handlers the right to insist
that such terms be ignored.  If, on the other hand, the AFPA permits
any willing producer to remain aloof from an association and negotiate
individually, the handlers' right invoked by appellants does not, as a
practical matter, enlarge the class of suppliers with whom handlers
may deal.
                              CONCLUSION
   The judgment of the Michigan Supreme Court should be reversed.
   Respectfully submitted.
   REX E. LEE
      Solicitor General
   KENNETH S. GELLER
      Deputy Solicitor General
   JOHN H. GARVEY
      Assistant to the Solicitor General
   NOVEMBER 1983
   /1/ 7 U.S.C. 2302(b) provides:
         The term "producer" means a person engaged in the production
      of agricultural products as a farmer, planter, rancher,
      dairyman, fruit, vegetable, or nut grower.
   /2/ 7 U.S.C. 2302(a) provides:
         The term "handler" means any person engaged in the business
      or practice of (1) acquiring agricultural products from
      producers or associations of producers for processing or sale;
      or (2) grading, packaging, handling, storing, or processing
      agricultural products received from producers or associations of
      producers;  or (3) contracting or negotiating contracts or other
      arrangements, written or oral, with or on behalf of producers or
      associations of producers with respect to the production or
      marketing of any agricultural product;  or (4) acting as an
      agent or broker for a handler in the performance of any function
      or act specified in clause (1), (2), or (3) of this paragraph.
   /3/ The intent of Section 2305(d), however, is somewhat more
restricted than its language might suggest.  It was not intended to
give an imprimatur to all state laws regardless of how they might
conflict with the AFPA.  In fact, the version of that provision passed
by the Senate provided simply that "(t)he foregoing provisions shall
not be construed to deprive the proper State courts of jurisdiction."
113 Cong. Rec. 21410 (1967).  That was modified to its current form by
the House Committee on Agriculture, which stated by way of explanation
(H.R. Rep. 824, supra, at 4, 6:
         This amendment was adopted to clarify the committee's intent
      that no State law should be superseded or preempted by this
      legislation which is supplementary to and not in replacement of
      all other existing legal remedies.
                      * * * * *
      The last sentence of section 6 specifically retains all existing
      legal remedies available under State law.
   Such remedies might include, for example, damages or an injunction
for malicious interference with contractual relationships.  See, e.g.,
Pure Milk Products Co-op. v. National Farmers Organization, 332 F.
Supp. 866, 868 (E.D. Wis. 1971).
   /4/ Moreover, this Court has recognized that the states retain
authority to regulate directly the marketing of agricultural products
-- including such matters as the price and quantity of commodities
sold.  Parker v. Brown, 317 U.S. 341 (1943).  And it might be argued
that direct state control of agricultural marketing interferes no less
with the freedom of individual producers than the exercise of similar
power by cooperative associations.  But as this Court has noted in
other contexts, there often are substantial differences between direct
state control of prices, for example, and delegation of the same
control to private parties.  Compare Parker v. Brown, supra, with
California Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc., 445
U.S. 97 (1980).  Cf. Larkin v. Grendel's Den, Inc., No. 81-878 (Dec.
13, 1982), slip op. 6.
   We note that within the State of Michigan, federal marketing orders
under the Agricultural Marketing Agreement Act of 1937 (7 U.S.C. 601
et seq.) are in effect only for cranberries and cherries.  See 7
C.F.R. Pts. 929-930.  Except for milk marketing orders, federal
marketing orders generally do not establish a price for the regulated
commodity, but instead regulate the flow of commodities to market.
See 7 U.S.C. 608c(6).
   /5/ In fact the word "voluntarily" was substituted by the House
Committee on Agriculture for the phrase "free to join or not to join
together," which appeared in the version of the bill passed by the
Senate.  H.R. Rep. 824, supra, at 3.
   /6/ S. 109 was later modified to "stand() on its own base, rather
than amend() the Capper-Volstead Act." Discrimination Against Members
of Farmer Cooperatives:  Hearings on S. 109 Before the Subcomm. of the
Senate Comm. on Agriculture and Forestry, 89th Cong., 2d Sess. 177
(1966) (hereinafter cited as 1966 Senate Hearings).
   /7/ See, e.g., 1966 Senate Hearings 135 (statement of A. Starke
Taylor, Jr., Independent Cotton Industries Association), 138-140
(statement of Paul L. Courtney, National Association of Wholesalers),
206 (statement of Donald G. Smith, Texas Independent Ginners
Association);  Agricultural Producers Marketing Act:  Hearings on S.
109 Before the Subcomm. of the Senate Comm. on Agriculture and
Forestry, 90th Cong., 1st Sess. 122-123 (1967) (hereinafter cited as
1967 Senate Hearings) (statement of Herman Eubank, Texas Independent
Ginners Association).  In the version of the AFPA ultimately enacted,
cotton was exempted from the definition of "agricultural products." 7
U.S.C. 2302(e).
   The Michigan Agricultural Marketing and Bargaining Act provides
that to be accredited, an association must have contracts covering
more than 50% of the quantity of a commodity produced in the
bargaining unit.  In computing that quantity, there is excluded "any
quantity * * * contracted by producers with producer owned and
controlled processing cooperatives * * *." Mich. Comp. Laws Section
290.707(c).
   /8/ Compare 1966 Senate Hearings 82 (statement of Dal Ferry, United
States Poultry & Egg Producers Association) with id. at 41 (statement
of Don F. Magdanz, National Livestock Feeders Association), 101-102
(statement of Charles E. Connor, Independent Livestock Marketing
Association), and 1967 Senate Hearings 198 (statement of Don F.
Magdanz).
   /9/ See, e.g., 1966 Senate Hearings 124 (statement of Edward
Dunkelberger, National Canners Association), 195-196 (statement of
Edward Dunkelberger);  1967 Senate Hearings 21 (statement of Orville
L. Freeman, Secretary of Agriculture), 24 (statement of Charles B.
Shuman, American Farm Bureau Federation), 69 (statement of Edward
Brown Williams, National Association of Frozen Food Packers), 84-86
(statement of Edward Dunkelberger), 91-92, 94 (statement of G. Ted
Cameron, National Broiler Council), 207-208 (statement of John D.
Snow, Potato Processors of Idaho Association), 210 (statement of Bert
Tollefson, Jr., American Corn Millers Federation), 211 (statement of
Don M. Turnbull, American Poultry and Hatchery Federation).
   /10/ See, e.g., 1967 Senate Hearings 32 (statement of Ralph B.
Bunje, California Canning Peach Association), 173-183 (statement of
Paul L. Phillips).
   /11/ See, e.g., 1966 Senate Hearings 135-136 (statement of A.
Starke Taylor, Jr., Independent Cotton Industries Association);  1967
Senate Hearings 70 (statement of Edward Brown Williams, National
Association of Frozen Food Packers), 104-105, 110, 112-114 (statement
of W. W. Holding III, American Cotton Shippers Association), 144 &
n.2, 151 (statement of Earl W. Kintner, National Tax Equality
Association), 196 (statement of Irving Isaacson, Maine Poultry
Associates).
   /12/ See, e.g., 1966 Senate Hearings 181 (statement of David W.
Angevine, USDA Farmer Cooperative Service), 187 (statement of Sen.
Aiken), 189-190 (statement of Harry L. Graham, National Grange).
   /13/ See, e.g., 1967 Senate Hearings 10-11 (statement of Sen.
Williams);  1966 Senate Hearings 146 (statement of Donald G. Smith,
Texas Independent Ginners Association).  Cf. 1967 Senate Hearings
13-14 (statement of Sen. Lausche).
   /14/ 7 U.S.C. 2303(d), like the original Senate version, still only
applies to prohibit handlers from offering "any * * * inducement or
reward to a producer for refusing to or ceasing to belong to an
association of producers" (emphasis added).
   /15/ See, e.g., 1967 House Housings 66-67 (statement of Harry L.
Graham, National Grange), 79 (statement of Tony T. Dechant, National
Farmers Union), 89-90 (statement of Robert N. Hampton, National
Council of Farmer Cooperatives), 109-110, 115-116 (statement of Ralph
B. Bunje, California Canning Peach Association).  See also id. at 125
(statement of Rep. Matsunaga).  The Department of Agriculture, which
had played a large part in incorporating those provisions in the
Senate bill, changed its position and attacked them in the House.  Id.
at 8-10, 15-17, 26-28 (statements of John A. Baker and John C.
Bagwell, USDA).  See R. Torgerson, Producer Power at the Bargaining
Table:  A Case Study of the Legislative Life of S. 109, at 81-84, 156
(1970).
   The American Farm Bureau, while noting the amendments made in the
Senate, continued to support the bill nonetheless.  1967 House
Hearings, 39, 41-42 (statement of Allen A. Lauterbach).  It suggested,
however, that the phrase "free to join together or not to join
together in cooperative associations" appearing in the findings and
declaration of policy be changed to read "free to join together
voluntarily in cooperative associations" (id. at 42).  That suggestion
was accepted by the House.  See note 5, supra, and 7 U.S.C. 2301.
   /16/ See, e.g., 1967 House Hearings 36 (statement of Rep.
Schwengel), 91-92 (statement of E. Clinton Stokes, Chamber of Commerce
of the United States), 128 (statement of C.E. Connor, Independent
Livestock Marketing Association), 135, 137 (statement of Edward
Dunkelberger, National Canners Association), 148-149 (statement of
Edward Brown Williams, National Association of Frozen Food Packers),
154-158 (statement of G. Ted Cameron, National Broiler Council),
168-169 (statement of Donald Wilber), 169-170 (statement of James A.
Steele), 170-172 (statement of Paul L. Phillips, Tri-County Poultry
Association).
   /17/ We assume that, in using the term "handler," the court meant
to include an association.  See 7 U.S.C. 2302(a);  J.S. App. A5 n.7.
Nothing on the face of the court's opinion expressly so indicates,
however.  See J.S. 16.
   /18/ The Miller-Tydings Act was amended after the decision in
Schwegmann Bros. by the McGuire Act (ch. 745, Sections 1-2, 66 Stat.
631-632) to permit fair trade pricing of articles for retail sale.
The McGuire Act in turn was repealed by the Consumer Goods Pricing Act
of 1975, Pub. L. No. 94-145, 89 Stat. 801.
   /19/ We note that the Michigan Act, though it requires all
producers in the bargaining unit to adhere to the price and other
terms negotiated by an accredited association, neither requires that
prices be fixed in all cases (rather, only when 50% of the producers,
responsible for 50% of the quantity, agree among themselves), nor
provides for any supervision of the prices agreed upon.  Thus, it does
not resemble those cases that fall within the state action exemption
to the Sherman Act.  Rather, it envisions a system of restraints on
competition imposed by private parties with "state authorization,
approval, encouragement, (or) participation." Cantor v. Detroit Edison
Co., 428 U.S. 579, 592-593 (1976) (footnotes omitted).  Cf. California
Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc., 445 U.S. 97
(1980) (price-fixing compelled by state law;  prices set by private
parties not supervised by the state);  United States v. Southern Motor
Carriers Rate Conference, Inc., 702 F.2d 532 (5th Cir. 1983) (en
banc), petition for cert. pending, No. 82-1922 (price-fixing
authorized but not compelled by state law);  United States v. Title
Insurance Rating Bureau, Inc., 700 F.2d 1247, 1253 (9th Cir. 1983),
petition for cert. pending, No. 83-154.
   Of course, unlike those cases, here federal law permits
agricultural producers to join together voluntarily to set prices for
marketing and bargaining quite apart from any provision in state law.
See 7 U.S.C. 2301 et seq. (AFPA);  7 U.S.C. 291-292 (Capper-Volstead
Act);  15 U.S.C. 17 (Clayton Act).  Federal law does not, however,
permit associations to bind nonmembers to the terms of their
agreements.
   /20/ It may be that a different question is presented in cases
where a handler has a preexisting contract with a producer, and the
contract contemplates direct dealings between the handler and
producer.  See Butz v. Lawson Milk Co., 386 F. Supp. at 238-240.  The
AFPA need not be understood to require a handler in such a case to
deal under the contract with an association that the producer has
unilaterally appointed as his agent.