Source: http://openjurist.org/544/f2d/312/borden-inc-v-l-butz
Timestamp: 2017-06-23 02:35:37
Document Index: 480713907

Matched Legal Cases: ['§ 608', '§ 1063', '§ 1063', '§ 1063', '§ 1063', '§ 1063', '§ 1063', '§ 1063', '§ 608', '§ 608', '§ 608', '§ 608', '§ 608', '§ 608', '§ 1063', '§ 1063', '§ 608']

544 F2d 312 Borden Inc v. L Butz | OpenJurist
544 F. 2d 312 - Borden Inc v. L Butz HomeFederal Reporter, Second Series 544 F.2d.
544 F2d 312 Borden Inc v. L Butz 544 F.2d 312
BORDEN, INC., Plaintiff-Appellant,v.Earl L. BUTZ, Secretary of Agriculture, Defendant-Appellee.
Argued Sept. 24, 1976.Decided Nov. 1, 1976.
This appeal concerns the validity of certain amendments to milk marketing orders by the Secretary of Agriculture under a provision of the Agricultural Marketing Agreement Act of 1937, 7 U.S.C. § 608c(5)(A).
7 C.F.R. § 1063.52(a)(2) (1970).
1. October 1, 1970, order. On September 12, 1970, the Department of Agriculture caused to be published in the Federal Register a notice of proposed suspension of 7 C.F.R. § 1063.52(a)(2) of the Quad Cities Dubuque Order for the months of September and October 1970. The notice did not provide an opportunity for a hearing, and no hearing was held. Borden submitted its exceptions to the proposed suspension, noting that it would only affect Borden and none of its competitors. On October 1, 1970, the Secretary issued an order suspending 7 C.F.R. § 1063.52(a)(2) for the month of October only. The order is worded in such a manner as to apply only to Borden.
2. October 29, 1970 order. On September 30, 1970, notice was issued, and on October 3 it was published, of a hearing to be held on October 8 on five proposed amendments to the Quad Cities Dubuque, Cedar Rapids Iowa City and Des Moines marketing orders. An order was issued on October 29, effective November 1, 1970, amending the Quad Cities Dubuque Order No. 63 by permanently eliminating the 19 cents minus location adjustment applicable to Borden's Des Moines plant and for a six-month period through April 1971, providing for a 15 cent plus location adjustment applicable to plants located within the Des Moines marketing area. The order increased Borden's price for Class I milk by 34 cents per hundredweight by amending 7 C.F.R. § 1063.52(a)(2), as follows (added language emphasized):
The October 29, 1970 order also added a new § 1063.52(a)(3) as follows:
3. April 28, 1971 order. Pursuant to notices published on April 7 and 9, 1971, hearing was held on April 13, resulting in the issuance on April 28, 1971 of an order removing the April 1971 expiration date from § 1063.52(a)(3), so as to retain the plus 15 cents location differential.
On July 31, 1971, Borden closed its Des Moines plant and discontinued operations in the Des Moines area. Thereafter, on October 8, 1971, § 1063.52(a)(2) and (3) were again amended to change the language which had applied solely to Borden.1
In accordance with 7 U.S.C. § 608c(15)(A), Borden filed petitions with the Secretary of Agriculture challenging the three orders as "not in accordance with law and praying for a modification thereof." The orders were upheld in an Initial Decision filed by an Administrative Law Judge (ALJ) on March 13, 1974. Borden appealed to the Judicial Officer inasmuch as final administrative authority to decide cases under the Agricultural Marketing Agreement Act of 1937, has been delegated to the Judicial Officer. 37 Fed.Reg. 18475; 38 Fed.Reg. 10795. The Judicial Officer on August 15, 1974, adopted the Initial Decision, added some conclusions, denied the relief requested by Borden and dismissed the petitions.
In accordance with 7 U.S.C. § 608c(15)(B), Borden sought review in the district court, which on February 11, 1976, entered summary judgment on behalf of the Secretary of Agriculture. Borden has appealed that decision.
The Agricultural Marketing Agreement Act of 1937 as amended provides that the Secretary of Agriculture may fix minimum prices for each use classification which all handlers shall pay for milk purchased from producers or associations of producers, but "prices shall be uniform as to all handlers, subject only to adjustments for: (1) volume, market, and production differentials customarily applied by the handlers subject to such order; (2) the grade or quality of the milk purchased; and (3) the locations at which delivery of such milk, or any use classification thereof, is made to such handlers." 7 U.S.C. § 608c(5)(A).
" The statute before us does not contain a mandate phrased in broad and permissive terms." Zuber v. Allen, 396 U.S. 168, 183, 90 S.Ct. 314, 323, 24 L.Ed.2d 345 (1969). The Second Circuit has noted in Fairmont Foods Co. v. Hardin, 143 U.S.App.D.C. 40, 442 F.2d 762, 766 (1971):
The Secretary is authorized to make only certain adjustments and these are to "compensate or reward the producer for providing an economic service of benefit to the handler." Zuber, supra, 396 U.S. at 184, 90 S.Ct. at 323. And "the permissible adjustments are limited to compensation for rendering an economic service." Zuber, supra, at 188, 90 S.Ct. at 325. Fairmont, supra, at 767. "The court must invalidate orders resting on any basis other than such economic reasons, whether the orders are ascribable to whim, which seems unlikely; or to the response of major farm interests, which may be more likely; or merely bureaucratic error in supposing that the wisdom of experts as to what is needed in the public interest must be given dominance over the constraint of Congress." Fairmont, supra, at 766.
7 U.S.C. § 608c(4) requires that the Secretary issue a marketing order based upon the evidence adduced at a hearing, which in turn requires that an order be supported by substantial evidence. Fairmont, supra, at 767; Lewes Dairy, Inc. v. Freeman, 401 F.2d 308, 317 (3d Cir. 1968), cert. denied, 394 U.S. 929, 89 S.Ct. 1187, 22 L.Ed.2d 455 (1969). The evidence in the record here consists of that introduced in two hearings on October 8, 1970 and on April 13, 1971. Borden has challenged the sufficiency of the evidence at every stage of these proceedings (Judicial Officer's Decision and Order, at 63; district court complaint, paras. 35(b), 36(f) and 37(g); Borden Brief on Appeal at 20, 26).
We agree with the Fairmont court that "(w)hile normally the court defers to administrative expertise, the record is so devoid of support for the Secretary's finding(s) . . . that the finding(s) cannot be allowed to stand," 442 F.2d at 770, particularly in view of the narrow construction of the Agricultural Marketing Agreement Act of 1937 mandated by Zuber, supra, 396 U.S. at 183-85, 90 S.Ct. 314.4
It is unnecessary for us to consider the many procedural issues which consumed most of the attention of the Administrative Law Judge, the Judicial Officer and the court below, or to consider Borden's argument that the penalties imposed upon it by the three orders were similar to the subsidies declared illegal by the Supreme Court in Lehigh Valley Cooperative Farmers, Inc., v. United States, 370 U.S. 76, 82 S.Ct. 1168, 8 L.Ed.2d 345 (1962), as trade barriers prohibited by 7 U.S.C. § 608c(5)(G).
In regard to remedy, the three orders found invalid here have since been replaced by a new order and Borden has ceased doing business in Des Moines so there is no need for injunctive or declaratory relief. As to damages, Borden is entitled to recover overpayments which it made pursuant to the invalid orders. Inasmuch as the Quad Cities Dubuque marketing order provides for payment by the market administrator to handlers out of the producer-settlement fund where claims are made pursuant to 7 U.S.C. § 608c(15)(A), 7 C.F.R. § 1063.89(d), we remand to the district court on the issue of damages, with direction to enter judgment for Borden in the amount ascertained after appropriate proceedings. Fairmont, supra, at 773.
7 C.F.R. § 1063.52(a)(2) and (3) (Jan. 1, 1972):
The Initial Decision of the Administrative Law Judge, adopted by the Judicial Officer, concluded that another "factor to be considered is the requisite producer approval of such an order or amendment" in accordance with 7 U.S.C. § 608c(9) and (19). Ex. 35 at 70. In the Zuber case the Supreme Court noted that "(i)t is the Secretary, not the farmers, who is responsible for administering the statute and initiating orders." 396 U.S. at 196, 90 S.Ct. at 329. In the context of the present case, although the amending order of October 29, 1970 was approved by two-thirds of the milk producers in the marketing area, such approval does not constitute evidence that the order or any of the three orders was justified