Opinion ID: 774364
Heading Depth: 2
Heading Rank: 1

Heading: Shamrock Precludes Commerce Clause Claims.

Text: 16 Reviewing the district court's grant of summary judgment de novo and viewing the evidence in the light most favorable to Ponderosa and Hillside, see Balint v. Carson City, 180 F.3d 1047, 1050 (9th Cir. 1999)(en banc), we find that there were no genuine issues of material fact and the district court correctly applied the relevant substantive law. Shamrock forecloses Ponderosa and Hillside's Commerce Clause claims. 17 Shamrock involved Commerce Clause and Fourteenth Amendment challenges to California's milk laws. The Shamrock plaintiffs were an Arizona dairy and processor who regularly distributed packaged fluid milk in California. Their complaint alleged that California's milk composition requirements, which mandate minimum identity standards for the solids-not-fat content of fluid milk, effectively precluded them from distributing whole and skim milk in California during certain seasons of the year and from distributing low-fat milk in California during the whole year. The Shamrock plaintiffs could not meet the minimum identity standards because they did not fortify, standardize or otherwise alter the solids-not-fat content of the milk they distributed. Also at issue were fortification allowances which, according to the Shamrock plaintiffs, provided an unfair competitive advantage to in-state processors. The district court granted California's motion to dismiss and this court affirmed. Both courts found that Congress, in enacting §§ 144 of the Farm Bill, intended to protect the milk composition requirements from Commerce Clause limitations. See Shamrock, 146 F.3d at 1178, 1180. 18 The appellate court premised its decision on the langauge of §§ 144. Section 144 provides, 19 Nothing in this Act or any other provision of law shall be construed to preempt, prohibit, or otherwise limit the authority of the State of California, directly or indirectly, to establish or continue to effect any law, regulation, or requirement regarding: (1) the percentage of milk solids or solid not fat in fluid milk products sold at retail or marketed in the State of California; or (2) the labeling of such fluid milk products with regard to milk solids or solids not fats. 20 7 U.S.C. §§ 7254. The unanimous panel found theany other provision of law language persuasive and indicative of Congress' intent to create a blanket exclusion for California's composition requirements. See id. at 1180-81. With respect to the pricing and pooling laws, the appellate court analyzed the connection between those laws and composition requirements and found them to be interrelated and mutually interdependent. Id. at 1182. Because of this connection, the court stated that the pricing and pooling laws fall under the ambit of the prohibition against indirect limitations on laws, regulations, or requirements regarding milk standards that is stated in §§ 144. Id. at 1182. As a result, the court concluded that the pricing and pooling laws were also exempt from Commerce Clause challenge. See id. 21 The district court applied Shamrock to this case and held that §§ 144 of the Farm Bill insulates all of California's milk pricing and pooling laws from Commerce Clause challenges, including the 1997 amendments challenged by Ponderosa and Hillside. Ponderosa and Hillside argue that Shamrock should be read narrowly and interpreted only to exempt California's fortification allowances from Commerce Clause scrutiny. It is their position that the Shamrock court borrowed imprecise terminology when it referred to the fortification allowances as the `pricing and pooling provisions' and did not mean to hold that all of the pricing and pooling laws were indirectly necessary to the composition standards and within the reach of §§ 144. 22 Ponderosa and Hillside invite us to dissect Shamrock even though that the language in Shamrock is clear. Shamrock broadly refers to the pricing and pooling laws and finds them to be closely related to California's composition requirements and protected from Commerce Clause challenges. Moreover, §§ 144 insulates the 1997 amendments despite the fact that the amendments went into effect after §§ 144 was enacted. Once Congress has exercised its Commerce Clause power and held that certain state laws are immunized from challenge, later enacted state laws are also exempt so long as the laws are consistent with the protection provided. Western & Southern Life Ins. Co. v. State Bd. of Equalization, 451 U.S. 648, 652-53, 101 S. Ct. 2070, 2075, 68 L.Ed.2d 514 (1981). 23 Ample evidence demonstrates that the pooling laws in general, and the 1997 amendments in particular, bolster California's composition requirements and are consistent with the protection provided by §§ 144. As observed in Shamrock, the legislative history of §§ 144 and the language of the pricing and pooling laws themselves demonstrate that California's pricing and pooling laws were considered to be an important element of California's milk regulatory scheme and necessary to maintain the standards of content and purity  for milk. See Shamrock, 146 F.3d at 1182 (citing Hearing Testimony Before the Subcomm. on Livestock, Dairy and Poultry, 104th Cong., Apr. 20, 1995, and Cal. Food & Agr. Code §§ 61802(c)). Accordingly, Shamrock found that §§ 144 broadly protected California's pricing and pooling laws. See id . Nothing in the 1997 amendments requires a different conclusion in this case. In adopting the 1997 amendments, the California Department of Food and Agriculture's explained, 24 Moreover, the existing regulatory distortion fosters the inefficient movement of milk by moving such milk over great distances at increased costs. Milk, which would have otherwise served its local markets, is now being moved hundreds of miles in each direction with significant increases in transportation and labor costs, expanded environmental costs and introduced a speculation factor that overrides existing practices of milk marketing. 25 This is directly contrary to the public policies underlying the administration of the pooling program as set forth in the governing statues to promote, foster, and encourage the intelligent production and orderly marketing of fluid milk to eliminate speculation, waste, improper marketing, unfair and destructive trade practices, and improper accounting for milk purchased from producers. Competitive market conditions should determine the movement of milk, not inappropriate regulatory pool provision which otherwise distort the economic signals of the marketplace. 26 Statement of Determination and Order of the Secretary of Food and Agriculture Regarding the Proposed Amendments to the Pooling Plan For Milk Based Upon Public hearings Held On December 6, 1996 and February 4, 1997, A.J. Yates, Undersecretary, California Department of Food and Agriculture, March 21, 1997. This explanation fits the 1997 amendments into the context and purpose of the pricing and pooling laws as a whole. It follows that §§ 144 must also insulate the 1997 amendments from Commerce Clause challenges. 27 Ponderosa and Hillside also contend that Shamrock is inapposite because §§ 144 only affects California's ability to regulate standards for fluid milk products sold at retail or marketed in the State of California, as opposed to raw milk which is the focus of the present challenge. Ponderosa and Hillside's argument is unpersuasive because §§ 144 applies to any provision of law that directly or indirectly has an effect on fluid milk. Raw milk and fluid milk are closely related. It follows that the 1997 amendments which directly affect raw milk, indirectly affect fluid milk. 28 To the extent that Shamrock reaches pooling regulations beyond the fortification allowances, Ponderosa and Hillside argue that the holding is dictum and need not be followed. This argument is unpersuasive. Shamrock's holding with respect to the pricing and pooling regulations cannot be dictum because at least some of the pricing and pooling regulations were directly at issue. See United States v. Crawley, 837 F.2d 291, 292-93 (7th Cir. 1988) (citation omitted) (defines dictum as [a] statement in a judicial opinion that could have been deleted without seriously impairing the analytical foundations of the holding -that, being peripheral, may not have received the full and careful consideration of the court that uttered it.); see also Batjac Productions Inc. v. Goodtimes Home Video Corp., 160 F.3d 1223, 1232 (9th Cir. 1998). In sum, Ponderosa and Hillside's Commerce Clause arguments are generally inconsistent with our reading of Shamrock. We therefore reject the arguments. Only an en banc panel may overturn existing Ninth Circuit precedent. Jeffries v. Wood, 114 F.3d 1484, 1492 (9th Cir. 1997).