UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF COLUMBIA 

_________________________________________ 

 ) 

NICK KORETOFF, d/b/a ) 

NICK KORETOFF RANCHES, et al., ) 

 ) 

 Plaintiffs, ) 

 ) 

v. ) Civil Action No. 08-1558 (ESH) 

 ) 

THOMAS VILSACK, Secretary,1

 ) 

United States Department of Agriculture, ) 

 ) 

 Defendant. ) 

_________________________________________ )

MEMORANDUM OPINION

 Plaintiff almond growers, handlers, and grower-handlers in the State of California bring 

this action pursuant to the Agricultural Marketing Agreement Act of 1937 (“AMAA”), 7 U.S.C. 

§ 601 et seq., and the Administrative Procedure Act (“APA”), 5 U.S.C. § 706, against the 

Secretary of the United States Department of Agriculture (“USDA”) to challenge a USDA 

regulation requiring almond handlers to treat raw almonds in order to reduce the risk of 

Salmonella bacteria contamination. This matter is before the Court on defendant’s motion to 

dismiss the complaint. For the reasons set forth below, the Court will grant the motion. 

BACKGROUND 

 The AMAA authorizes the Secretary of Agriculture to promulgate marketing orders 

designed to establish and maintain orderly marketing conditions for agricultural commodities. 

See 7 U.S.C. §§ 602, 608c. Marketing orders regulate the activities of processors, associations of 

 

1

 Thomas Vilsack, current Secretary of the United States Department of Agriculture, is 

substituted for his predecessor, former Secretary Edward Schafer. Fed. R. Civ. P. 25(d). 
- 2 - 

producers, and others engaged in the handling of certain agricultural commodities, known under 

the Act as “handlers.” Id. § 608c(1), see also 7 C.F.R. §§ 981.13, 981.16 (defining “handler” 

and “to handle” for purposes of the California almond market). They do not regulate farmers in 

their capacity as producers (or growers). See id. § 608c(13)(B). The AMAA specifies the terms 

and conditions that a marketing order may contain, including provisions “[l]imiting, or providing 

methods for the limitation of, the total quantity of any such commodity or product, or of any 

grade, size, or quality thereof . . . .” Id. § 608c(6)(A). Before issuing or amending a marketing 

order, the Secretary must conduct a formal rulemaking proceeding with prior notice and hearing. 

Id. § 608c(3). In addition, before a marketing order or amendment may become effective, its 

provisions must be adopted in a marketing agreement by handlers of not less than 50% of the 

volume of the commodity covered by the proposed order or amendment and approved by at least 

two-thirds of affected growers,2

 or it may be adopted by the Secretary without consent of a 

handler majority subject to certain findings by the Secretary and grower approval. See id. §§ 

608c(8), (9). 

 The almond marketing order, 7 C.F.R. § 981.1 et seq., regulates the handling of almonds 

grown in California and is administered locally by the Almond Board of California (the 

“Board”), a ten-member board composed of growers and handlers nominated by the industry and 

selected by the Secretary. 7 C.F.R. §§ 981.22, 981.30- 981.33. The Board has the power to 

“make rules and regulations to effectuate the terms and provisions” of the almond marketing 

order, id. § 981.38(b); see also 7 U.S.C. § 608c(7)(C), and “to establish, with the approval of the 

Secretary, such minimum quality and inspection requirements . . . as will contribute to orderly 

 

2

 In the case of certain citrus fruits, the approval percentages are higher. 
- 3 - 

marketing or be in the public interest.” 7 C.F.R. § 981.42(b). The administrative rules and 

regulations implementing the order are codified at 7 C.F.R. §§ 981.401-981.481. 

 In August 2006, in response to Salmonella outbreaks in 2001 and 2004 and pursuant to its 

authority under the almond marketing order to set outgoing quality control requirements, the 

Board recommended a mandatory treatment program to reduce the potential for Salmonella

bacteria in almonds. See Outgoing Quality Control Requirements, 72 Fed. Reg. 15,021, 15,022 

(Mar. 30, 2007). Specifically, the Board recommended, with certain exceptions, that handlers 

subject their almonds to a process that would achieve a minimum 4-log reduction in Salmonella

bacteria prior to shipment.3

 Id. In December 2006, the Secretary published the Board’s 

recommendation as a proposed rule, 71 Fed. Reg. 70,683 (proposed Dec. 6, 2006), and following 

a 45-day comment period, adopted the final rule without substantial change on March 30, 2007. 

72 Fed. Reg. 15,021. 

 Plaintiffs allege that the almond treatment regulation (1) exceeds the authority granted by 

7 C.F.R. § 981.42 to establish quality control requirements; (2) creates a substantive rule adopted 

without the use of a formal rulemaking process and grower approval as required by the AMAA 

and by USDA Rules of Practice; (3) regulates food safety, an area beyond the limited authority 

granted to the Secretary under the AMAA; (4) is arbitrary, capricious, and not in accordance 

with law, in violation of the APA; (5) depends upon the lapsed authority of 7 C.F.R. § 981.42 

and is therefore void; and (6) improperly regulates the retail market for almonds in violation of 

the AMAA. (See Am. Compl. ¶¶ 4-5, 74-93.) 

 

3

 A 4-log reduction decreases bacteria by a factor of 10,000. Id. at 15,022. 
- 4 - 

ANALYSIS

I. The Claims of Almond Handlers Must be Dismissed for Lack of Subject Matter 

Jurisdiction 

Defendant argues that plaintiff almond handlers’ claims must be dismissed for failure to 

exhaust their administrative remedies. The AMAA authorizes an aggrieved handler to file a 

petition with the Secretary “stating that any [marketing] order or any provision of any such order 

or any obligation imposed in connection therewith is not in accordance with law and praying for 

a modification thereof or to be exempted therefrom.” 7 U.S.C. § 608c(15)(A). After a hearing, 

the Secretary will rule on the petition, which ruling “shall be final, if in accordance with law.” 

Id. If unsatisfied with the Secretary’s decision, the handler may seek judicial review in federal 

district court. Id. § 608c(15)(B). 

These provisions have been interpreted by the Supreme Court to require handlers to 

exhaust their administrative remedies prior to seeking judicial review. See United States v. 

Ruzicka, 329 U.S. 287, 294 (1946) (“Congress has provided that the remedy in the first instance 

must be sought from the Secretary of Agriculture. It is on the basis of his ruling, and of the 

elucidation which he would presumably give to his ruling, that resort may be had to the courts.”). 

Consistent with Ruzicka, the D.C. Circuit has unequivocally held that “the AMAA’s 

administrative appeal process is a mandatory procedure that handlers must follow prior to 

seeking judicial review” and from which they “may not be excused from complying.” Edaleen 

Dairy, LLC v. Johanns, 467 F.3d 778, 784-85 (D.C. Cir. 2006) (emphasis in original); see also 

Block v. Community Nutrition Institute, 467 U.S. 340, 346 (1984) (noting in the context of a 

consumer suit that “Section 608c(15) requires handlers first to exhaust the administrative 

remedies made available by the Secretary” prior to seeking judicial review); Hershey Foods 

Corp. v. Dep’t of Agric., 293 F.3d 520, 526 (D.C. Cir. 2002) (stating that pursuant to § 608c(15), 
- 5 - 

“the remedy in the first instance must be sought from the Secretary”); Saulsbury Orchards & 

Almond Processing, Inc. v. Yeutter, 917 F.2d 1190 (9th Cir. 1990) (affirming dismissal of suit by 

almond handlers for failure to exhaust). 

Faced with this clear precedent, plaintiffs turn to Avocados Plus, Inc. v. Veneman, 370 

F.3d 1243 (D.C. Cir. 2004), which they claim mandates the conclusion that the AMAA’s 

exhaustion requirement is nonjurisdictional. In that case, plaintiff importers of avocados and 

avocado products sued alleging that the Hass Avocado Promotion, Research, and Information 

Act, 7 U.S.C. § 7801 et seq., violated their First Amendment right to be free of compelled 

speech. The district court, relying on the Act’s exhaustion requirement, which was virtually 

identical to the AMAA’s exhaustion provision, dismissed the complaint because plaintiffs had 

not exhausted their administrative remedies. The D.C. Circuit reversed. In doing so, the Court 

distinguished between judicially-created nonjurisdictional exhaustion, which may be excused by 

a court, and statutorily mandated jurisdictional exhaustion, which cannot be excused. 370 F.3d 

at 1247. The Court concluded that the statutory provision at issue did not mandate exhaustion 

because it failed to contain “sweeping and direct statutory language indicating that there is no 

federal jurisdiction prior to exhaustion.” Id. at 1248 (quoting Weinberger v. Salfi, 422 U.S. 749, 

757 (1975)). The Court therefore remanded the case to the district court to determine whether 

exhaustion should be excused. 

Despite the similarities between the exhaustion provision at issue in Avocados Plus and 

the one at issue here, it is Edaleen Dairy that controls this case. In Edaleen Dairy, the D.C. 

Circuit specifically rejected plaintiff’s argument that the AMAA exhaustion requirement should 

be excused because the issue presented had been “fully framed” in the rulemaking process, the 

Secretary’s “full expertise” had already been brought to bear, and it would be “utterly 
- 6 - 

duplicative” to require administrative review prior to suit. 467 F.3d at 784. The Court 

concluded that “[t]here is no need to address these arguments . . . because courts have held on 

numerous occasions that the AMAA’s exhaustion requirement is mandatory. Thus, we hold that 

Edaleen may not be excused from complying with this requirement.” Id. (emphasis added); see 

also Hettinga v. United States, 518 F. Supp. 2d 58, 62 (D.D.C. 2007) (dismissing producerhandler claims for lack of subject matter jurisdiction based on their failure to exhaust 

administrative remedies), appeal docketed, No. 07-5403 (D.C. Cir. Dec. 19, 2007); Nw. Indep. 

Producers Ass’n v. Veneman, 312 F. Supp. 2d 23, 25 (D.D.C. 2004) (dismissing handler claims 

for same reason). “[A] mandatory [but nonjurisdictional] exhaustion requirement may be 

excused in appropriate circumstances, whereas a jurisdictional exhaustion requirement never 

may be excused by a court.” Munsell v. USDA, 509 F.3d 572, 579 (D.C. Cir. 2007).4

 Thus, 

while the Court in Edaleen Dairy did not explicitly state that the exhaustion requirement was 

jurisdictional, it did refuse to consider plaintiff’s reasons why exhaustion should be waived, 

instead finding that the requirement could not be excused. This Court is bound by Edaleen 

Dairy. 

Moreover, although the D.C. Circuit in Avocados Plus rejected the argument that Ruzicka

compelled the conclusion in that case that exhaustion was jurisdictional, the Court recognized 

that Avocados Plus dealt with a statutory enforcement scheme that “[u]nlike the AMAA . . . does 

not provide for comprehensive market regulation that could be disrupted by ill-timed judicial 

 

4

 Although Munsell, unlike Avocados Plus, came after Edaleen Dairy, that case did not involve 

the AMAA, and it is axiomatic that “one panel [of the D.C. Circuit] cannot overrule another.” 

Brown v. Brody, 199 F.3d 446, 453 (D.C. Cir. 1999) (citation omitted). Likewise, plaintiffs’ 

reliance on Arbaugh v. Y&H Corp., 546 U.S. 500 (2006), is misplaced, as that case did not 

discuss the AMAA or make any attempt to distinguish the Supreme Court’s decisions in Ruzicka

or Community Nutrition. 
- 7 - 

interference.” 467 F.3d at 1249. In addition, although the Court also opined that under 

precedents more modern than Ruzicka, the AMAA’s exhaustion requirement would be 

considered nonjurisdictional, it ultimately relied on the Ruzicka Court’s own limitation of its 

holding to “the precise problem before us in relation to the provisions of the particular Act 

immediately relevant.” Id. at 1250 (quoting Ruzicka, 329 U.S. at 295). As in Ruzicka, this case 

involves the issue of whether handlers under the AMAA must exhaust administrative remedies; 

thus, the Supreme Court’s holding in that case controls here. 

II. The Claims of Grower-Handlers and Retailers Must be Dismissed for Lack of 

Subject Matter Jurisdiction 

Moreover, grower-handlers and retailers in this case must also exhaust their 

administrative remedies prior to bringing suit. Because growers may in some circumstances be 

able to seek judicial review without being subject to the exhaustion requirement, the crucial 

question with respect to grower-handlers is whether they are bringing suit as growers or as 

handlers. Edaleen Dairy, 467 F.3d at 783. Because the almond treatment regulation imposes the 

treatment obligation only on handlers, it necessarily follows that plaintiff grower-handlers have 

to be suing in their capacity as handlers.5

 See id. at 783 (“If a producer-handler asserts an injury 

in its capacity as a handler, then it is bound by the administrative exhaustion requirements of the 

AMAA.”). 

For the same reason, plaintiffs’ retailer claims must also be dismissed for failure to 

exhaust. A number of plaintiffs who sell almonds on the retail market claim that the almond 

marketing order unlawfully classifies them as handlers. See 7 C.F.R. §§ 981.13, 981.16 

(defining terms “handler” and “to handle”); 7 U.S.C. § 608c(13) (prohibiting regulation by 

 

5

 While all plaintiffs, whether growers, handlers or both, claim that the almond treatment 

regulation reduces the marketability of their almonds (see Am. Compl. ¶¶ 31-35), the regulation 

imposes direct burdens on handlers only. 
- 8 - 

marketing order of producers in their capacity as producers and, in the case of marketing orders 

adopted without the consent of a handler majority, of retailers in their capacity retailers). By 

their own admission, however, plaintiffs are only subject to the marketing order because they fit 

within the order’s definition of handler. Accordingly, plaintiffs are clearly bringing this 

challenge in their capacity as handlers and must therefore first exhaust their administrative 

remedies.6 See United States v. Lamars Dairy, Inc., 500 F.2d 84, 85 (7th Cir. 1974) (exhaustion 

required where defendants claim to have been incorrectly classified as handlers). 

III. The Claims of Growers Must be Dismissed Because They Have No Right to Judicial 

Review Under the Circumstances of this Case 

Defendant also contends that the AMAA by implication “preclude[s] judicial review” of 

grower claims, thereby withdrawing a cause of action under the APA, 5 U.S.C. § 701(a)(1). 

(Mot. to Dismiss at 6-7.) The Supreme Court’s decision in Block v. Community Nutrition

Institute, 467 U.S. 340 (1984), supports this claim. There, the Court rejected a suit by consumers 

challenging milk marketing orders. In doing so, the Court noted that (1) Congress channeled 

disputes regarding marketing orders to the Secretary in the first instance because of its belief that 

he had the necessary expertise to resolve them; and (2) it would provide handlers with a 

convenient way to evade the statutory exhaustion requirement should consumers be permitted to 

bring suit. 467 U.S. at 347-48. Therefore, the Court concluded that “Congress intended that 

judicial review of market orders issued under the [AMAA] ordinarily be confined to suits 

brought by handlers in accordance with 7 U.S.C. § 608c(15).” Id. at 348. Moreover, the Court 

held that the presumption favoring judicial review of administrative action had been “overcome 

 

6

 Notably, the existing definition of “to handle” was adopted in 1996. See Order Amending 

Almond Marketing Order, 61 Fed. Reg. 32,917 (June 26, 1996). However, plaintiffs apparently 

had little concern with the applicability of the definition to their activities prior to the adoption of 

the almond treatment regulation in 2007. 
- 9 - 

by inferences of intent drawn from the statutory scheme as a whole.” Id. at 349 (citations 

omitted). Specifically, the Court noted that “when a statute provides a detailed mechanism for 

judicial consideration of particular issues at the behest of particular persons, judicial review of 

those issues at the behest of other persons may be found to be impliedly precluded.”7 Id.; see 

also Benson v. Schofield, 236 F.2d 719, 722 (D.C. Cir. 1956) (finding that producers are to be 

given no greater status by the AMAA than handlers who must exhaust); Nw. Indep. Producers 

Ass’n v. Veneman, 312 F. Supp. 2d 23, 26 (D.D.C. 2004) (“[T]he inclusion of producers in the 

administrative process but their exclusion from the provisions enabling judicial review is the 

type of omissions that indicate a specific Congressional intent to omit.”). The Court’s statements 

apply equally to growers. Should they be allowed to bring a direct action in federal court, 

handlers could easily circumvent the mandatory exhaustion requirement merely by finding a 

grower who would be willing to join in or initiate suit. 

Nevertheless, while growers normally have no right to sue, the Supreme Court has 

recognized a narrow exception to this rule. In Stark v. Wickard, 321 U.S. 288 (1944), the Court 

held that milk producers had standing to challenge certain deductions by the Secretary from the 

producer settlement fund. Because producers were guaranteed by statute and by marketing order 

minimum prices and the “challenged deduction[s] reduce[d] pro tanto the amount actually 

received by the producers for their milk,” the Court found that the producers were alleging injury 

to their “definite personal rights” that were “not possessed by the people generally.” Id. at 302, 

304, 309. Therefore, the producers had standing to object to the administration of the settlement 

fund. Moreover, no other forum existed to challenge the Secretary’s actions since handlers, who 

 

7

 For this reason, plaintiffs’ reliance (see Opp’n at 13) on Aid Ass’n for Lutherans v. U.S. Postal 

Service, 321 F.3d 1166 (D.C. Cir. 2003), a case that did not involve the AMAA, for the 

proposition that a strong presumption exists in favor of judicial review under the APA is 

misplaced.
- 10 - 

had no financial interest in the fund or its use, had no standing to sue. Id. at 308. Thus, the 

Court concluded that the statutory scheme as a whole implicitly authorized producer suits to 

enforce these rights. See id. at 306-09; see also Edaleen Dairy, LLC v. Johanns, 467 F.3d 778, 

783 (D.C. Cir. 2006) (noting that Stark turned on “two key factors:” that producers (1) were not 

merely objecting to a regulation, but were suing to protect their definite personal rights and (2) 

did not have access to an administrative remedy). 

In this case, grower plaintiffs challenge the USDA’s authority to mandate treatment of 

almonds. In doing so, their fundamental concern is with the impact of the treatment regulation 

on their ability to sell their almonds in a niche organic market at a premium. (See Am. Compl. 

¶¶ 29-33.) Thus, plaintiffs are merely objecting to a regulation rather than asserting a definite 

personal right granted by the AMAA.8

 In Stark, the Supreme Court specifically recognized that 

not every loss would qualify as a deprivation of a definite personal right of the producer. As the 

Court noted, “[t]he petitioners’ complaint is not that their blended price [i.e., the uniform 

minimum price less administrative deductions] is too low, but that the blended price has been 

reduced by a misapplication of money deducted from the producers’ minimum price.” 321 U.S. 

at 308-09; see also Benson v. Schofield, 236 F.2d 719, 722 (D.C. Cir. 1956) (“[A]ppellees to 

have standing in court, must show an injury or threat to a particular right of their own . . . . Mere 

loss of income in consequence of the action of Government or economic disadvantage, by itself, 

constitutes damnum absque injuria which does not confer standing.” (citation and internal 

quotation marks omitted)); Ark. Dairy Coop., Inc. v. USDA, 576 F. Supp. 2d 147, 155-56 

 

8

 As defendant points out, plaintiffs’ claim (Opp’n at 8) that they have a definite personal right to 

“approve or veto marketing order provisions” is, in reality, a challenge to the Secretary’s 

authority to issue the treatment regulation as an administrative regulation rather than as an 

amendment to the almond marketing order, which would trigger the AMAA’s producer approval 

and public hearing requirements. (Reply at 11-12.) This challenge is not a uniquely producer 

claim. 
- 11 - 

(D.D.C. 2008) (holding that producers challenging an order that reduced the minimum prices 

dairy farmers receive under milk marketing orders were objecting to a regulation rather than 

asserting a definite personal right and therefore lacked standing), appeal docketed, No. 08-5406 

(D.C. Cir. Sept. 19, 2008). 

Moreover, unlike Stark, an administrative remedy exists in this case since handlers can be 

expected to challenge the allegedly unlawful agency action. Handlers, like growers, have an 

interest in receiving the highest price for their almonds.9

 In fact, the almond treatment 

regulation, which plaintiffs allege is costly and lowers the value of their almonds in the organic 

market (see Am. Compl. ¶¶ 29-35), imposes direct costs only on handlers. “[T]he very presence 

of handlers as plaintiffs in the suit leads inexorably to the conclusion that a suit by a producer is 

not necessary to ‘ensure the statute’s objectives will not be frustrated.’” Nw. Indep. Producers 

Ass’n, 312 F. Supp. 2d at 27 (citing Community Nutrition, 467 U.S. at 352). 

CONCLUSION 

For the foregoing reasons, defendant’s motion to dismiss will be granted. A separate 

order accompanies this Memorandum Opinion. 

 /s/ 

 ELLEN SEGAL HUVELLE 

 United States District Judge 

Date: March 9, 2009 

 

9

 While, as plaintiffs assert, handler and grower interests can sometimes be antagonistic (see

Opp’n at 32) since handlers have an interest in paying the lowest price possible for almonds, 

both handlers and growers have the same interest in selling at the highest price.