Source: https://www.jdsupra.com/post/documentViewer.aspx?fid=68a7fb19-8ea4-488c-b196-264c74cf7eee
Timestamp: 2018-01-20 19:48:07
Document Index: 590396105

Matched Legal Cases: ['§ 38', '§ 62717', '§ 62701', '§ 62704', '§ 62716', '§ 62717', '§ 62717', '§ 601', '§ 58991', '§ 62701', '§ 62717', '§ 62717', '§ 62717', '§ 62717']

Memorandum of Points and Authorities in Support of Motion for Judgment on the Pleadings | Straus Family Creamery, Inc. v. California Dept. of Food and Agriculture | Aviva Cuyler - JDSupra
This brief argues that the referendum provisions that apply to the Milk Pooling regulations are not unconstitutional as a matter of law.
123456789 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1. All statutory references will be to the California Food and Agricultural Code unless otherwise indicated. 1 Straus Family Creamery v. Lyons, Case No.C021996 BZ; Points and Authorities in Support of Motion BILL LOCKYER Attorney General of the State of California MARY E. HACKENBRACHT Senior Assistant Attorney General LINDA L. BERG Deputy Attorney General State Bar No. 194667 1300 I Street P.O. Box 944255 Sacramento, CA 94244-2550 Telephone: (916) 327-5484 Fax: (916) 327-2319 Attorneys for Defendant, Secretary of the California Department Food and Agriculture UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION STRAUS FAMILY CREAMERY, INC. and HORIZON ORGANIC HOLDING CORPORATION, Plaintiffs, v. WILLIAM LYONS, JR., in his official capacity as Secretary of the California Department of Food and Agriculture, Defendant Case No.: C 02 1996 BZ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR JUDGMENT ON THE PLEADINGS [Fed. R. Civ. P. 12(c)] Date: January 22, 2003 Time: 10 a.m. Department: G Judge: Magistrate Judge Bernard Zimmerman I. INTRODUCTION This motion challenges Plaintiffs Straus Family Creamery, Inc., and Horizon Organic Holding Corporation’s third claim for relief in their Complaint for Declaratory and Injunctive Relief (Complaint). In this claim, Plaintiffs challenge California Food and Agricultural Code section 62717,1/which provides Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=68a7fb19-8ea4-488c-b196-264c74cf7eee123456789 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 Straus Family Creamery v. Lyons, Case No.C021996 BZ; Points and Authorities in Support of Motion that any substantive amendments to the Pooling Plan are effective only after a referendum of affected dairy farmers (producers). Plaintiffs allege that this referendum provision is an unconstitutional delegation of decision-making authority to decision-makers with adverse financial interests. (Complaint, § 38.) Plaintiffs’ allegations are contrary to a long line of authority, culminating with a recent Ninth Circuit decision that is directly on point. Sequoia Orange Co. v. Yeutter, 973 F.2d 752 (9th Cir. 1992). Since the 1930s, laws regulating agriculture have contained analogous referendum provisions. These referendum provisions have been challenged repeatedly on the ground that they constitute unlawful delegations of legislative authority. Courts have consistently rejected these challenges, finding that the referendum provisions are not invalid delegations, but are instead legitimate conditions precedent to the exercise of legislative authority. Similarly, the referendum provision in § 62717 is not an invalid delegation, but is instead a lawful condition on the effectiveness of the Pooling Plan. As such, Plaintiffs’ third claim fails to state a viable claim for violation of procedural due process, and the Secretary is entitled to judgment as a matter of law. II. BACKGROUND A. The Regulatory Program The Legislature and the courts have long recognized the importance of an adequate and continuous supply of wholesome fluid milk. See, e.g., Nebbia v. New York, 291 U.S. 502, 516 (1934). Milk is a necessary article of food for human consumption. § 62701. However, conditions inherent in milk production create market instability that could disrupt the supply of milk available to the consumer. Historically, when the market has produced sufficient milk to furnish an adequate supply for periods of peak consumption, there would be “an excess of production during the troughs of demand.” United States v. Royal Rock Co-Op, Inc., 307 U.S. 533, 549 (1939) (Rock Royal); see also Nebbia, 291 U.S. at 516. Further, milk is a highly perishable product. Nebbia, 291 U.S. at 516. The net result was widely fluctuating prices, creating instability in the market. Rock Royal, 307 U.S. at 549. To combat these conditions, the government has long imposed price controls on raw milk. See, e.g., Nebbia, 291 U.S. at 520-521. Additionally, milk that is used as fluid milk historically brings a higher price than milk used in manufactured products, such as butter and cheese. Rock Royal, 307 U.S. at 550. These differences have Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=68a7fb19-8ea4-488c-b196-264c74cf7eee123456789 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2. Section 62717 provides, in pertinent part: If the director finds that producers on a statewide basis have assented in writing to the proposed pooling plan submitted to them for assent, the director shall place the proposed pooling plan into effect. The director shall find that producers have assented to the plan if he finds on a statewide basis that not less than 51 percent of the total number of eligible producers in the state shall have voted in the referendum and finds one of the following: (a) Sixty-five percent or more of the total number of eligible producers who voted in the referendum who produced 51 percent or more of the total amount of fluid milk produced in the state during the calendar month next preceding the month of the 3 Straus Family Creamery v. Lyons, Case No.C021996 BZ; Points and Authorities in Support of Motion long been reflected in minimum prices of milk set by the government, resulting in different pricing structures for different classes of milk. Id. at 571; Jersey Maid Milk Products Co. v. Brock, 13 Cal.2d 620, 653-654 (1939). These differences have tended to create destabilizing competition for the more lucrative fluid milk contracts. Rock Royal, 307 U.S. at 550. Therefore, equalization pools have been used as tools to prevent destructive competition between producers for the more lucrative contracts with fluid milk processors. Royal Rock, 307 U.S. 449-550. These pools are “ancillary to the price regulation, designed, as is the price provision, to foster, protect and encourage interstate commerce by smoothing out the difficulties of the surplus and cut-throat competition which burdened this marketing.” Rock Royal, 307 U.S. at 571. In California, minimum pricing and equalization pools are governed by two acts, the Milk Stabilization Act, which governs minimum pricing, and the Gonsalves Milk Pooling Act of 1967, which governs the equalization pool. The operation of these Acts, and the plans and regulations issued under these Acts, are discussed in detail in the Secretary’s Motion to Transfer, filed on July 15, 2002. While these Acts set out the parameters of the milk stabilization and equalization programs, the Secretary is charged with filling in the details of these acts. With regard to the Gonsalves Milk Pooling Act, the Secretary is charged with issuing a Pooling Plan, which is necessary to implement the Act. §§ 62704, 62707. As is common in the area of agricultural regulations, after the Pooling Plan is issued, it is subject to a producer referendum. The Pooling Plan will only go into effect if approved by a supermajority of producers.2/§§ 62716, 62717. This procedure also applies to substantive amendments to the Pooling Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=68a7fb19-8ea4-488c-b196-264c74cf7eee123456789 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 commencement of the referendum period by all producers who voted in the referendum approve the plan. (b) Fifty-one percent or more of the total number of eligible producers who voted in the referendum who produced 65 percent or more of the total amount of fluid milk produced in the state during the calendar month next preceding the month of the commencement of the referendum period by all producers who voted in the referendum, approve the plan. . . . . . . The director may make substantive amendments to the plan only if producers assent to the proposed amendments at a referendum conducted in the same manner and in the same number as provided for the referendum approving the pooling plan. 3. In making this motion, the Secretary does not concede that he had the authority to make the amendment requested by Plaintiffs in their petition for amendment of the Pooling Plan, submitted to the Department on October 23, 2000. 4 Straus Family Creamery v. Lyons, Case No.C021996 BZ; Points and Authorities in Support of Motion Plan. If the Secretary finds that amendment is necessary to effectuate the purposes of the Milk Pooling Act, the Secretary may make non-substantive amendments to the Pooling Plan. § 62717(b). However, if the proposed amendment is substantive, the Secretary may only make the amendment if it is approved by referendum3/. Id. B. Procedural Background This motion relates to Plaintiffs’ third claim for violation of procedural due process. In this claim, Plaintiffs challenge § 62717, which subjects substantive amendments to the Pooling Plan to a producer referendum. Plaintiffs allege that the referendum provision is unconstitutional as applied, because it constitutes an unlawful delegation of decision making authority to interested parties. (Complaint ¶ 38.) III. ANALYSIS A. Standard The applicable standard on a motion for judgment on the pleadings is essentially the same as that applied to a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). William W. Schwarzer, et al., Cal. Practice Guide: Federal Civil Procedure Before Trial (2002) ¶ 9:335, at 9-86. A motion for judgment on the pleadings is properly granted when, even if all of the material facts in the pleading are true, the moving party is entitled to judgment as a matter of law. Hal Roach Studios, Inc. v. Richard Feiner Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=68a7fb19-8ea4-488c-b196-264c74cf7eee123456789 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 Straus Family Creamery v. Lyons, Case No.C021996 BZ; Points and Authorities in Support of Motion & Co., 896 F.2d 1542, 1550. Although the facts alleged in the complaint are presumed to be true, the court need not accept as true conclusory allegations or legal characterizations, or any unreasonable inferences or unwarranted deductions of fact. Schwarzer, supra, ¶ 9:221, at 9-59 to 9-60. In particular, because it is the function of the court to interpret the language of a statute, it need not accept as true the plaintiff’s characterization of the meaning of a statute. Western Mining Council v. Watt, 643 F.2d 618, 630 (9th Cir. 1981). Although Rule 12(c) does not specifically authorize a motion directed to less than all of the claims in a complaint, the court may, in its discretion, grant such a motion. Schwarzer, supra, ¶ 9:340. Consideration of the viability of Plaintiffs’ third claim for relief is appropriate at this stage of the proceedings, because a ruling on this motion would promote judicial economy by narrowing the issues to be raised on summary judgment or at trial. B. The Referendum Provision Is Not an Unlawful Delegation of Legislative Power The third claim for relief in Plaintiffs’ Complaint challenges the referendum provision in the Gonsalves Milk Pooling Act on the ground that it is an unlawful delegation of authority to industry members with adverse interests. (Complaint, ¶ 38.) This argument fails because the referendum provision at issue is not an invalid delegation of authority, but is instead a lawful condition on that law going into effect. Indeed, in Sequoia Orange Co., the Ninth Circuit recently affirmed that requiring producer approval of an amendment to a regulation is not an unconstitutional delegation of power. Sequoia Orange Co., 973 F.2d at 759. The Ninth Circuit’s holding in Sequoia Orange Co. is compelled by a long line of authority that confirms that referendum provisions in agricultural regulations are constitutional. At both the state and federal levels, it is common for the legislature to subject agricultural regulations to referendum provisions. See, e.g., the Agricultural Marketing Agreement Act of 1983 (AMAA) 7 U.S.C.A. §§ 601, 608c; the California Marketing Act, §§ 58991-58993, 58997. While these referendum provisions have repeatedly been challenged on the ground that they constitute unlawful delegations of authority to private interests, courts have consistently rejected these challenges and have found that referendum provisions are constitutional. See, e.g., Currin v. Wallace, 306 U.S. 1, 15 (1939), Rock Royal, 307 U.S. at 577-578; United States v. Frame, 885 F.2d 1119, 1127-1128 (3d Cir. 1989); Sequoia Orange Co., 973 F.2d Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=68a7fb19-8ea4-488c-b196-264c74cf7eee123456789 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6 Straus Family Creamery v. Lyons, Case No.C021996 BZ; Points and Authorities in Support of Motion at 752; Brock v. Superior Court, 9 Cal.2d 291 (1937). For example, in Rock Royal, the United States Supreme Court approved a referendum provision in a federal milk marketing order that set minimum milk prices and created a pool to equalize the prices received by producers. Rock Royal, 307 U.S. at 554 n.14, 555, 571. This marketing order became effective only upon approval of 50 percent of the handlers or, if there was no agreement by the handlers, upon the approval of a supermajority of the interested producers. Id. at 577. This order was challenged, in part, on the ground that this referendum provision unconstitutionally delegated legislative authority to the producers. Relying onCurrin v. Wallace, the Rock Royal Court found that the referendum provision was not an invalid delegation. Rock Royal, 307 U.S. at 578 & n.65 (citing Currin, 306 U.S. 1 at 15). The Currin Court had explained that, in exercising its law-making power, the Legislature is free to prescribe the conditions of the law’s application, including subjecting the law to a referendum. Currin, 306 U.S. at 16. Such a condition does not constitute a delegation of legislative power “because the power has already been exercised legislatively by the body vested with that power under the Constitution,” and the referendum is merely a condition of that legislation going into effect. Id.; see also United States v. Frame, 885 F.2d at 1127-1128. Similarly, in Brock v. Superior Court, the California Supreme Court held that a referendum provision in an agricultural regulation does not constitute an unlawful delegation of authority. Brock, 9 Cal.2d at 291. The Brock Court considered a challenge to California’s Agricultural Marketing Act of 1935 (AMA). The AMA authorized the State Director of Agriculture (now the Secretary of the Department of Food and Agriculture) to issue marketing orders regulating California agricultural commodities. Id. at 294. However, the AMA also provided that the Director cannot enter into a marketing agreement without the consent of eighty percent of the affected industry members. Id. at 298. The AMA was challenged, in part, based on the consent provision. The California Supreme Court rejected this challenge, explaining that “a statute is not invalid merely because it provides for the consent of interested persons to the contemplated regulation.” Id. at 299. This rule applies equally when amendments to agricultural regulations are contingent on the approval of those affected by the order. Sequoia Orange Co., 973 F.2d at 759. In Sequoia Orange Co., the Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=68a7fb19-8ea4-488c-b196-264c74cf7eee123456789 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7 Straus Family Creamery v. Lyons, Case No.C021996 BZ; Points and Authorities in Support of Motion Ninth Circuit considered a federal marketing order regulating the sale of oranges. The regulatory program authorizing the order required that any amendments to the marketing order “be favored by at least 75% of the growers or by growers producing at least two-thirds of the total volume of oranges.” Id. at 754. Sequoia Orange Company challenged an amendment to the marketing order, arguing that this “voting scheme unconstitutionally delegated law-making to a minority of growers.” Id. at 759. The Sequoia Orange Co. court rejected this argument, explaining: This argument is untenable. In United States v. Rock Royal Co-op., 307 U.S. 533, 577-78, 59 S.Ct. 993, 1014-15, 83 L.Ed. 1446 (1939), the Court upheld the AMAA's requirement of producer approval of marketing orders. The Court cited Currin v. Wallace, 306 U.S. 1, 16, 59 S.Ct. 379, 387, 83 L.Ed. 441 (1939), which stated that requiring producer approval of a regulation was not an unconstitutional delegation of power but a legitimate condition precedent to the exercise of authority. The Secretary's determination that amendments were necessary to the marketing order, and his implicit determination to implement an order with only those amendments approved by 75% of the growers (or growers growing two-thirds of the total crop) was not an unconstitutional delegation of power. Cf. Riverbend Farms, Inc. v. Madigan, 958 F.2d 1479, 1488 (9th Cir.1992) ( "the Secretary is free to seek advice from whatever sources he deems appropriate, so long as he or his delegate ... retains ultimate authority") (citation omitted). Id. In the present case, the Legislature has set forth, in detail, the purposes of the Pooling Plan and the items to be included that plan, and has directed the Secretary to draft the regulations that will constitute the Pooling Plan. §§ 62701-62702.1, 62707. The Secretary is also authorized to amend the Pooling Plan. § 62717(b). However, the Pooling Plan, and any substantive amendments to the Plan, are subject to a referendum and will only be implemented if approved by a supermajority of producers. § 62717. As explained in Rock Royal, Brock, and Sequoia Orange Company, this referendum provision is not an invalid delegation of authority to interested parties. Instead, it is a permissible condition that the Legislature may impose on the effectiveness of a regulatory program. Rock Royal Co-op, 307 U.S. at 577-578; Frame, 885 F.2d at 1127-1128; Sequoia Orange Co., 973 F.2d at 759; Brock, 9 Cal.2d at 299. Therefore, Plaintiffs’ third claim for relief, based on allegations that the referendum procedure is an unconstitutional delegation of authority, fails to state a claim on which relief can be granted, and the Secretary is entitled to judgment on this claim as a matter of law. IV. CONCLUSION Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=68a7fb19-8ea4-488c-b196-264c74cf7eee123456789 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8 Straus Family Creamery v. Lyons, Case No.C021996 BZ; Points and Authorities in Support of Motion Plaintiffs’ third claim for relief alleges that the referendum provisions in § 62717 unconstitutionally delegates authority to private parties. However, controlling authority establishes that the referendum provision in § 62717 is not an invalid delegation of decision-making authority. Instead, it is a permissible condition that the Legislature may place on the regulation’s effectiveness. As such, the Secretary respectfully requests that judgment on the pleadings be granted, with prejudice, with regard to Plaintiffs’ third claim for relief. Dated: November 22, 2002 Respectfully submitted, BILL LOCKYER Attorney General of the State of California MARY E. HACKENBRACHT Senior Assistant Attorney General LINDA L. BERG Deputy Attorney General Attorneys for Defendant William Lyons, Jr., in his official capacity as Secretary of the California Department of Food and Agriculture Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=68a7fb19-8ea4-488c-b196-264c74cf7eee