Supreme Court: California raisin growers can challenge marketing rules

McClatchy Washington BureauJune 10, 2013 

MBR

Sun-Maid is involved in the raisin dispute.

HANDOUT — KRT

— Dissident California raisin farmers harvested a Supreme Court win Monday, easing future legal challenges to the decades-old program that regulates the raisin marketplace.

In a 9-0 decision that’s both technical and important, the court effectively empowered Fresno County farmer Marvin D. Horne and his allies to claim that the industry program takes their property in violation of the Fifth Amendment.

The Fifth Amendment specifies that private property can’t “be taken for public use, without just compensation.”

“I’m very happy that we got a fair and just decision,” Horne said in a telephone interview Monday. “Our Constitution is alive and well.”

The decision Monday doesn’t eliminate or even directly challenge the California Raisin Marketing Order or the other federal marketing orders that regulate crops, ranging from California almonds to Florida tomatoes to Texas citrus. These orders, authorized by the Agriculture Department but run by farmers, may continue to assess industry fees and set standards, among other activities.

But the 15-page decision authored by Justice Clarence Thomas gives a new tool to farmers who are unhappy about how the marketing orders operate. In particular, Horne and other raisin farmers now may argue in federal court that the marketing order’s mandatory setting-aside of a certain portion of the raisin crop is a Fifth Amendment taking.

“It means they won’t take farmers’ raisins and not pay for them,” Horne said.

Clovis, Calif., lawyer Brian Leighton has been representing Horne, as well as other farmers who are unhappy about various marketing orders and promotion programs. Former federal appellate Judge Michael McConnell, who’s now a professor at Stanford Law School, argued the case for Horne before the Supreme Court in March.

A federal marketing order has governed the raisin industry since 1949. Concentrated in California’s sunny San Joaquin Valley, raisin production spanned more than 200,000 acres and reached a value of over $725 million last year.

The marketing order regulates handlers, who pack and process the raisins. Among other provisions, the order requires that handlers withhold a certain percentage of their crop for a “reserve tonnage” managed by the Fresno-based Raisin Administrative Committee. The set-aside raisins may be sold for purposes such as the federal school-lunch program

Raisin handlers set aside 47 percent of their crop during the 2002-03 season and 30 percent for 2003-04, but they were paid for only part of what they surrendered.

“The purpose of the raisin marketing order is, in essence, to help maintain orderly marketing conditions through the regulation of the handling of raisin supplies,” Sun-Maid Growers of California said in a legal brief. “That system benefits the entire raisin industry, including (Horne), by avoiding price volatility that was endemic prior to promulgation of the raisin marketing order.”

An agricultural cooperative whose 750 farmer members account for nearly one-third of California’s raisin crop, Sun-Maid sided with the raisin marketing order.

Horne, though, grew disillusioned and helped organize about 60 other growers into the Raisin Valley Farms Marketing Association, which took care of the packing. By identifying themselves as producers rather than handlers, the group’s members reasoned, they were exempt from the set-aside requirement.

The Obama administration termed this a “scheme” designed to avoid legal requirements, and the Agriculture Department subsequently ordered Horne and his coalition to pay more than $650,000 in fees and penalties.

The Agriculture Department further insisted that Horne raise his Fifth Amendment takings argument in the specialized U.S. Court of Federal Claims, after first paying a fine or turning over the required portion of his crop. In its decision Monday, the Supreme Court said Horne’s takings defense against the raisin marketing order’s action could be ruled on by a conventional trial court instead and, in time, the 9th U.S. Circuit Court of Appeals.

A raisin handler “who refuses to comply with a marketing order and waits for an enforcement action will be liable for significant monetary penalties if his constitutional challenge fails,” Thomas noted. “It would make little sense to require the party to pay the fine in one proceeding and then turn around and sue for recovery of that same money in another proceeding.”

Email: mdoyle@mcclatchydc.com; Twitter: @MichaelDoyle10

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