Source: https://www.jdsupra.com/post/documentViewer.aspx?fid=45d5cc67-de11-4d3d-b5af-e42ecfda7a63
Timestamp: 2018-01-22 11:21:54
Document Index: 149248597

Matched Legal Cases: ['§ 61801', '§ 62700', '§ 1983', '§ 1331', '§ 1983', '§ 1367', '§ 1391', '§ 110810', '§ 46000', '§ 6501', '§ 6517', '§ 61802', '§ 62062', '§ 61805', '§ 62062', '§ 110820', '§ 110815', '§ 110850', '§ 110820', 'Art. 1', 'Art. 1', '§ 61805', 'Art. 1', '§ 62717', '§ 1988', '§ 1021']

Complaint for Declaratory and Injunctive Relief | Straus Family Creamery, Inc. v. California Dept. of Food and Agriculture | Aviva Cuyler - JDSupra
This complaint for declaratory and injunctive relief against the California Department of Food and Agriculture alleges that California's Milk Pooling System violates the due process and equal protection rights of organic milk processors.
____________________________________________________________ 1 COMPLAINT 123456789 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ROBERT M. CHILVERS, Calif. Bar No. 65442 AVIVA CUYLER, Calif. Bar No. 185284 CHILVERS & TAYLOR PC 83 Vista Marin Drive San Rafael, California 94903 Telephone: (415) 444-0875 Facsimile: (415) 444-0578 Attorneys for Plaintiffs Straus Family Creamery, Inc. and Horizon Organic Holding Corporation UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION STRAUS FAMILY CREAMERY, INC. and HORIZON ORGANIC HOLDING CORPORATION. Plaintiffs, vs. WILLIAM B. LYONS, JR., Secretary, California Department of Food and Agriculture, Defendant. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No.: COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=45d5cc67-de11-4d3d-b5af-e42ecfda7a63____________________________________________________________ 2 COMPLAINT 123456789 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTRODUCTION 1. In this action, plaintiffs seek a declaration that the California Milk Stabilization Act, California Food & Agriculture Code §§ 61801 et seq., as implemented by defendant in the Stabilization Plan, and the California Milk Pooling Act, California Food & Agriculture Code §§ 62700 et seq., as implemented by defendant in the Milk Pooling Plan (collectively referred to herein as the Plan), as applied to plaintiffsorganic dairy operations, violate plaintiffsstate and federal constitutional rights to equal protection, substantive due process and procedural due process. Plaintiffs also seek an injunction to prohibit the continued application of the Plan to their organic dairy operations in the unconstitutional and illegal manner described herein. 2. Plaintiffs bring this action pursuant to the Fifth and Fourteenth Amendments to the United States Constitution, Title VI of the Civil Rights Act of 1964 (42 U.S.C. § 1983), and Article 1, Section 7(a) of the Constitution of the State of California. JURISDICTION 3. This court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331and 1343, and 42 U.S.C § 1983. The Court has pendent jurisdiction and supplemental jurisdiction over the state law claims alleged in this Complaint pursuant to 28 U.S.C. § 1367. VENUE 4. A substantial part of the events giving rise to the claims alleged in this Complaint arose in Marin County, California. Venue therefore lies in the United States District Court for the Northern District of California pursuant to 28 U.S.C. § 1391(b)(2). Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=45d5cc67-de11-4d3d-b5af-e42ecfda7a63____________________________________________________________ 3 COMPLAINT 123456789 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTRADISTRICT ASSIGNMENT 5. Assignment in the San Francisco division of the United States District Court for the Northern District of California is proper pursuant to Rule 3-2(d) of the Civil Local Rules because a substantial part of the events giving rise to the claims alleged arose in Marin County, California. PARTIES 6. Plaintiff Straus Family Creamery, Inc. (Straus) is a California corporation organized and existing under the laws of the State of California with its principal place of business in Marshall, California. Straus is a licensed processor of organic dairy products. 7. Plaintiff Horizon Organic Holding Corporation (Horizon) is a corporation organized and existing under the laws of the State of Delaware with its principal place of business in Longmont, Colorado. Horizon is a licensed processor of organic dairy products that purchases certified organic milk from dairy producers (farmers) located in the State of California and processes certified organic dairy products with co-packers located in the State of California. 8. Defendant William B. Lyons, Jr. is the Secretary of the California Department of Food and Agriculture (CDFA). Mr. Lyons is sued herein in his official capacity. Mr. Lyons took all actions alleged herein under color of state law. STATEMENT OF FACTS 9. As licensed processors of organic dairy products, plaintiffs are subject to the requirements of the California Organic Foods Act of 1990, California Health & Saf. Code §§ 110810 et seq. and California Food & Agr. Code §§ 46000 et seq. (the Organic Foods Act), and the federal Organic Food Production Act of 1990, 7 U.S.C. § 6501 et seq. (the Organic Food Production Act). Beginning in October, 2002, the plaintiffs will be subject to the more stringent requirements of the National Organic Program, 7 U.S.C. Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=45d5cc67-de11-4d3d-b5af-e42ecfda7a63____________________________________________________________ 4 COMPLAINT 123456789 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 § 6517, which sets forth national standards for the production and handling of organically produced products, established by the Agricultural Marketing Service (AMS), an arm of the United States Department of Agriculture. (Collectively referred to herein as the Organic Food Laws.) 10. Pursuant to the Plan, each month, defendant sets a minimum price that dairy processors, including plaintiffs, must pay to dairy producers for the milk they purchase (the Minimum Price). 11. One of the primary purposes of the Plan is to establish minimum producer prices at fair and reasonable levels so as to generate reasonable producer incomes,(Agr. Code § 61802(h)) and to insure an adequate and continuous supply, in relation to demand, of pure, fresh, wholesome market milk for all purposes, including manufacturing purposes, at prices to consumers which, when considered with relevant economic criteria, are fair and reasonable.(Agr. Code § 62062(b)). 12. Toward this end, the defendant must take into consideration the varying costs of production, health regulations, transportation, and other factors(Agr. Code § 61805) including the reasonable and economic soundness of market milk prices for all classes, giving consideration to the combined income from those class prices, in relation to the cost of producing and marketing market milk for all purposes, including manufacturing purposes(Agr. Code § 62062(a)), and the cost of management and a reasonable return on necessary capital investmentin establishing the Minimum Price each month. (Id.) 13. The Minimum Price that defendant sets each month is based on the nonorganic (conventional) value of milk and milk products and is designed to reflect the cost of producing conventional milk. The Minimum Price does not reflect the cost of producing organic milk and is, on average, substantially lower than the cost of producing Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=45d5cc67-de11-4d3d-b5af-e42ecfda7a63____________________________________________________________ 5 COMPLAINT 123456789 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 organic milk. The cost of producing organic milk is higher than the cost of producing conventional milk because producers of organic milk are subject to the Organic Foods Act, which provides, among other things, that: a. All feeds administered to livestock within one year of the taking of milk must be 100 percent certified organic. (During the first 10 months of the first [i.e., transition] year, 80 percent of any feed must be organic; during the final two months of the transition year, and thereafter, 100 percent of the feed must be organic). Cal. Health & Saf. Code § 110820(d)(2); b. The use of any drug, medication, hormone or growth regulator synthetic or otherwise and any synthetic substance including growth or milk stimulants and antibiotics is prohibited. (The exception is that if a licensed veterinarian prescribes a drug or medication for a sick cow, that cow may be treated, but must be withdrawn from production for a period of 30 days after the medication ceases, or twice the FDA specified time, whichever is the longer). Id., § 110815(p)(2); c. Artificial rumen stimulants, such as plastic pellets and any fed or refed manure are prohibited. Id. d. An authorized certifying agent must certify all organic milk producers. Id., § 110850. e. All feeds grown for the purposes of feeding cows in the production of organic milk (including pastures) must also meet all the stringent criteria stipulated by the California Food and Agricultural Code for organic production. Id., § 110820(d). Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=45d5cc67-de11-4d3d-b5af-e42ecfda7a63____________________________________________________________ 6 COMPLAINT 123456789 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 14. As a direct result of the requirements of the Organic Foods Act, the cost of producing organic milk is substantially higher than the cost of producing conventional milk. Additionally, as a direct result of the requirements and limitations of the Organic Foods Act, the financial risks associated with organic dairying are higher than those associated with conventional dairying. These costs and risks will be even higher when the National Organic Program takes effect in October 2002. 15. Thus, in order to maintain sources of organic milk for their organic dairy products, plaintiffs must pay organic dairy producers an amount that is substantially higher than the Minimum Price. 16. Nevertheless, pursuant to the Plan, each month, defendant requires plaintiffs to contribute to a pool equalization fund.17. Defendant calculates plaintiffsrequired contribution to the pool equalization fund(Pool Obligation) based primarily upon the difference between the Minimum Price and the conventional value of the dairy products that plaintiffs process that month. 18. Defendant uses plaintiffsmonthly Pool Obligations to subsidize the Minimum Price and to compensate dairy processors who process milk into dairy products that have a value below the Minimum Price. Defendant thus effectively uses plaintiffsPool Obligation payments to subsidize the conventional dairy industry in that: (a) the Minimum Price is only sufficient to support conventional dairy producers, who have a lower cost of production than organic producers; and (b) virtually all recipients of the Pool Obligation payments are conventional dairy processors. 19. However, as processors of certified organic dairy products, plaintiffs are subject to the Organic Food Laws, which provide, among other things, that they may only purchase milk from certified organic dairy producers who are in compliance with those Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=45d5cc67-de11-4d3d-b5af-e42ecfda7a63____________________________________________________________ 7 COMPLAINT 123456789 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 laws. Organic dairy processors, including plaintiffs, cannot purchase milk from conventional dairy producers. 20. On or about October 23, 2000, plaintiffs submitted a petition to defendant in which they requested that defendant amend the Plan to account for the additional costs of production that organic producers incur and the resulting higher price that organic processors must pay to organic producers. 21. Defendant denied plaintiffspetition despite finding that standards governing organic milk production result in higher production costsand that organic processors are paying organic producers a correspondingly higher price. Statement of Determination and Order of the Secretary of the of Food and Agriculture, dated May 21, 2001, at p.9. 22. Defendant based the denial primarily on the conclusion that (a) plaintiffs failed to satisfactorily demonstrate that the Food and Agricultural Code provides authority for processors of a particular type of milk or milk product to be granted special status or treatment in the Pooling Plan;(b) Only organic processors would benefit directly from the proposal; and (c) The proposal made by the petitioners would significantly reduce the obligation of organic processors to the pool. The Department would not make such a change effective without first issuing the proposed change to a referendum vote of market milk producers. Given testimony presented at the hearing, the proposed change would be defeated overwhelmingly by producers in a statewide referendum.Notice of Decision, dated May 21, 2001 at p.2. This is because the vast majority of the milk producers in California produce conventional milk and currently Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=45d5cc67-de11-4d3d-b5af-e42ecfda7a63____________________________________________________________ 8 COMPLAINT 123456789 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 economically benefit from organic milk being pooled with conventional milk. FIRST CLAIM (Violation of Equal Protection, U.S. Const. Amends. 5, 14; Cal. Const. Art. 1, Sec. 7(a)) 23. Plaintiffs repeat and reallege paragraph 1 through 22 above as though fully set forth in this claim. 24. Defendant, in applying the Plan to plaintiffsorganic dairies, unfairly discriminates against plaintiffs in violation of their constitutional right to equal protection in that defendant: a. Establishes a monthly Minimum Price that reflects only the costs incurred by conventional dairy producers who are not required to comply with the Organic Food Laws and fails to account for the higher cost of production incurred by organic producers as a direct and proximate result of complying with the Organic Food Laws; b. Calculates the Pool Obligation of conventional processors based on the minimum cost of purchasing conventional milk, and fails to calculate the Pool Obligation of organic processors based on the minimum cost of purchasing organic milk; c. Calculates the Pool Obligation of conventional processors based on the market values of conventional dairy products and the volume of the various consumer products produced by the conventional dairy industry each month, and fails to calculate the Pool Obligation of organic processors based on the market values of organic dairy products and the volume of the various consumer products produced by the organic dairy industry each month.; and Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=45d5cc67-de11-4d3d-b5af-e42ecfda7a63____________________________________________________________ 9 COMPLAINT 123456789 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 d. Requires plaintiffs to pool their revenues with, and thereby subsidize, the conventional dairy industry, despite the fact that plaintiffs cannot participate in that industry in any significant manner as a matter of law and economic reality. 25. As a result of the foregoing, defendant is unfairly discriminating against plaintiffs and perpetuating a virtual monopoly on the part of the conventional dairy industry at the expense of the organic dairy industry. 26. The Plan, as applied to plaintiffs, is arbitrary and capricious and bears no rational relationship to any legitimate state purpose or policy and, indeed, contravenes the purposes of the enabling statutes in that: a. The Minimum Price bears no rational relationship to the cost of producing organic milk and does not account for the varying costs of production, health regulations, transportation, and other factorsassociated with organic milk including the cost of management and a reasonable return on necessary capital investment; and, as a result, b. The Plan does not establish minimum producer prices at fair and reasonable levels so as to generate reasonable producer incomesfor organic producers or insure an adequate and continuous supply, in relation to demand, of pure, fresh, wholesome market milk for all purposes, includingorganic dairy manufacturing purposes, at prices to consumers which, when considered with relevant economic criteria, are fair and reasonable.27. As a direct and proximate result of defendants conduct, plaintiffs have been denied their constitutional right to equal protection. Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=45d5cc67-de11-4d3d-b5af-e42ecfda7a63____________________________________________________________ 10 COMPLAINT 123456789 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 28. Defendants application of the Plan, as described herein, has resulted in, and will continue to result in, irreparable injury to plaintiffs, including but not limited to further violations of their constitutional rights. Plaintiffs have no plain, adequate or complete remedy at law to address the wrongs described herein. Plaintiffs therefore seek injunctive relief restraining defendant from continuing to enforce the Plan in the unconstitutional manner described herein. SECOND CLAIM (Violation of Substantive Due Process U.S. Const. Amends. 5, 14; Cal. Const. Art. 1, Sec. 7(a)) 29. Plaintiffs repeat and reallege paragraph 1 through 28 above as though fully set forth in this claim. 30. Plaintiffs have a constitutionally protected interest both in the money that defendant requires them to contribute to the pool equalization fund and in pursuing their chosen profession as organic dairy processors. 31. Plaintiffs also have a constitutionally protected property interest in the establishment of Minimum Prices at fair and reasonable levels so as to generate reasonable producer incomes,as well as in the determination of Minimum Prices which are necessary due to varying costs of production, health regulations, transportation, and other factorsin that these Minimum Prices form the basis for the calculation of plaintiffsPool Obligations. Food & Agr. Code § 61805(b). 32. The Plan, as applied to plaintiffs, is irrational, arbitrary and capricious and violates plaintiffsconstitutional right to substantive due process by: a. Failing to account for the increased cost of production incurred by organic producers as a direct and proximate result of complying with the Organic Food Laws; Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=45d5cc67-de11-4d3d-b5af-e42ecfda7a63____________________________________________________________ 11 COMPLAINT 123456789 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 b. Failing to account for the minimum cost of purchasing organic milk incurred by plaintiffs in calculating plaintiffsPool Obligation; c. Calculating plaintiffsPool Obligation based on the market values and the volume of the various consumer products produced by the conventional dairy industry each month; and d. Requiring plaintiffs to pool their revenues with, and thereby subsidize, the conventional dairy industry, in which plaintiffs cannot participate in any significant manner as a matter of law and economic reality. 33. The Plan, as applied to plaintiffs, bears no rational relationship to any legitimate state purpose or policy and, indeed, contravenes the purposes of the enabling statutes. 34. As a direct and proximate result of defendants conduct, plaintiffs have been denied their constitutional right to substantive due process. 35. Defendants application of the Plan, as described herein, has resulted in, and will continue to result in, irreparable injury to plaintiffs, including but not limited to further violations of their constitutional rights. Plaintiffs have no plain, adequate or complete remedy at law to address the wrongs described herein. Plaintiffs therefore seek injunctive relief restraining defendant from continuing to enforce the Plan in the unconstitutional and illegal manner described herein. Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=45d5cc67-de11-4d3d-b5af-e42ecfda7a63____________________________________________________________ 12 COMPLAINT 123456789 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THIRD CLAIM (Violation of Procedural Due Process U.S. Const. Amends. 5, 14; Cal. Const. Art. 1, Sec. 7(a)) 36. Plaintiffs repeat and reallege paragraphs 1 through 35 above as though fully set forth in this claim. 37. Plaintiffs have a constitutionally protected interest both in the money that defendant requires them to contribute to the pool equalization fund and in pursuing their chosen profession as organic dairy processors. 38. California Food and Agriculture Code § 62717, as applied to plaintiffs by defendant in denying the plaintiffspetition for relief violates the plaintiffsright to procedural due process in that it delegates ultimate decision making authority regarding plaintiffsproperty rights to (a) decision-makers who gain personal financial benefits from their decisions; and (b) decision-makers who have an institutional financial interest that may lead them to make biased decisions. 39. As a direct and proximate result of defendants conduct, plaintiffs have been denied their constitutional right to procedural due process. 40. Defendants application of the Plan, as described herein, has resulted in, and will continue to result in, irreparable injury to plaintiffs, including but not limited to further violations of their constitutional rights. Plaintiffs have no plain, adequate or complete remedy at law to address the wrongs described herein. Plaintiffs therefore seek injunctive relief restraining defendant from continuing to enforce the Plan in the unconstitutional and illegal manner described herein. Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=45d5cc67-de11-4d3d-b5af-e42ecfda7a63____________________________________________________________ 13 COMPLAINT 123456789 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 FOURTH CLAIM (Declaratory Judgment) 41. Plaintiffs repeat and reallege paragraphs 1 through 40 above as though fully set forth in this claim. 42. There is a real and actual controversy between plaintiffs and defendant regarding whether defendant may apply the Plan as described herein. Plaintiffs contend that defendants conduct violates the United States and California Constitutions. Defendant denies that his conduct violates the United States or California Constitutions. Plaintiffs are currently subjected to the unlawful and unconstitutional actions alleged herein, and seek a judicial declaration that defendants conduct is depriving plaintiffs of their rights under the United States and California Constitutions. PRAYER FOR RELIEF WHEREFORE, plaintiffs pray that the Court: 1. Issue a declaratory judgment that defendants conduct, as complained herein, violates plaintiffsrights under the United States and California Constitutions; 2. Issue an injunction prohibiting defendant from enforcing the Plan in the unconstitutional and illegal manner described herein; 3. Award plaintiffs their costs, expenses and reasonable attorneys’ fees pursuant to 42 U.S.C. § 1988 and California Code of Civil Procedure § 1021.5; and Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=45d5cc67-de11-4d3d-b5af-e42ecfda7a63____________________________________________________________ 14 COMPLAINT 123456789 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 4. Grant such other and further relief as the Court may deem just and proper. Dated: April 23, 2002 CHILVERS & TAYLOR PC By: Aviva Cuyler Attorneys for Plaintiffs Straus Family Creamery, Inc. and Horizon Organic Holding Corporation Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=45d5cc67-de11-4d3d-b5af-e42ecfda7a63____________________________________________________________ 15 COMPLAINT 123456789 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Certification of Interested Entities or Persons Pursuant to Civil L.R. 3-16, the undersigned certifies that as of this date, other than the named parties, there is no such interest to report. Dated: April 23, 2002 CHILVERS & TAYLOR PC By: Aviva Cuyler Attorneys for Plaintiffs Straus Family Creamery, Inc. and Horizon Organic Holding Corporation Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=45d5cc67-de11-4d3d-b5af-e42ecfda7a63