Koretoff v. VilsackKoretoff v. Vilsack
Lead Opinion
Oрinion for the Court filed by Circuit Judge KAVANAUGH, with whom Circuit Judge GRIFFITH joins.
Opinion dissenting in part filed by Circuit Judge HENDERSON.
A 2007 Department of Agriculture rule mandates that almonds produced in the United States be pasteurized or chemically treated to prevent salmonella outbreaks. That requirement largely eliminates the ability of California almond producers to sell raw almonds — and therefore harms those producers’ economic well-being. At the same time, because of what the Cali
The Government responds not on the merits, but by contending that the California producers should not even be allowed into court to advance their claims. The Government does not deny that the producers suffered an injury-in-fact and have standing under Article III of the Constitution. Rather, according to the Government, the Agricultural Marketing Agreement Act of 1937 precludes almond producers from obtaining judicial review of the 2007 rule. We disagree with the Government. The AMAA does not expressly bar producers’ suits. And in light of the decisions оf the Supreme Court and this Court, we conclude that the AMAA does not implicitly bar the producers’ claims. See Block v. Community Nutrition Institute,
Three of the 10 California almond producers involved in this appeal are also retailers who sell their own almonds directly to consumers. Those three plaintiffs mount an additional legal challenge to separate Department of Agriculture regulations that restrict retail sales by such producers. We agree with the District Court that the AMAA does not preclude plaintiffs from raising such claims but does require plaintiffs to exhaust their administrative remedies with the Department of Agriculture before bringing the claims to court. We therefore affirm the District Court’s judgment as to those claims.
I
A
This case is about the almond market. That market consists of growers (whom we will refer to as “producers”), handlers, retailers, and consumers of almonds. Producers grow the almonds and sell them to handlers. Handlers buy the almonds from the producers, process and package the almonds, and then sell them to retailers. Retailers sell almonds to consumers. Some producers also sell directly to consumers, bypassing the intermediaries.
This case involves the Agricultural Marketing Agreement Act of 1937, a landmark piece of legislation that arose out of the farming catastrophe during the Great Depression. The AMAA authorizes the Secretary of Agriculture to promulgate marketing orders that regulate the production and sale of agricultural commodities.
Before promulgating a marketing order under the AMAA, the Secretary of Agriculture must consult with producers and handlers of the commodity in question. The AMAA requires that a marketing order receive the approval of two-thirds of
The AMAA expressly allows handlers to sue and obtain judicial review of marketing orders, but requires them first to exhaust specified administrative remedies. Id. at § 608c(15)(A). The AMAA is silent about a right to sue or about exhaustion of administrative remediеs for producers, retailers, or consumers.
B
In 1950, acting pursuant to the AMAA, the Secretary of Agriculture promulgated the California Almond Marketing Order, 7 C.F.R. pt. 981. The Almond Order has been amended often in the 60 years since. Among other things, the Order sets quality standards for commercially sold almonds and regulates the quantity of almonds that may be sold in a given year.
In the wake of two salmonella outbreaks in 2001 and 2004, the Secretary in 2007 issued a new almond rule under the Almond Order. Almonds Grown in California; Outgoing Quality Control Requirements, 72 Fed.Reg. 15,021, 15,034 (Mar. 30, 2007). This rule is now codified at
The new rule required the use of one of several approved methods for reducing salmonella bacteria in almonds, all involving either pasteurization or chemical treatment of nearly all almonds sold.
C
The current dispute arises primarily because the 2007 rule had the effect of largely eliminating the domestic raw almond market. The 10 plaintiffs still involved in the case are California almond producers who grew raw almonds for domestic U.S. consumption. Because the 2007 rule devastated the market for domestic raw almonds, those producers allege that they lost both their expected profits from the premium price paid for raw almonds and the return on investments they had made in production equipment. At the same time, the 2007 rule had no impact on foreign almond producers, who are not subject to Department of Agriculture regulation and are still permitted to import raw almonds into the United States.
Three of the 10 producers are also retailers who sell almonds directly to consumers. These producer-retailers also challenged separate Department of Agriculture restrictions on how and where they could sell almonds at retail. Those restrictions date back to 1985. See 50 Fed.Reg. 30,264 (July 25, 1985) (codified at
A group of California almond producers sued in U.S. District Court, arguing that various aspects of the Secretary’s 2007 rule were arbitrary and capricious under the APA, exceeded statutory authority, and violated certain APA procedural requirements. The District Court dismissed plaintiffs’ suit. See Koretoff v. Vilsack,
Plaintiffs appeal on both issues. Our review of the legal questions is de novo. In resolving the question of AMAA preclusion, it bears mention that the District Court rendered its decision before Arkansas Dairy Cooperative Association v. U.S. Department of Agriculture,
A
The Administrative Procedure Act establishes a cause of action for those “suffering legаl wrong because of agency-action, or adversely affected or aggrieved by agency action.”
In assessing whether a plaintiffs suit is precluded by statute, we must determine not only whether “Cоngress precluded all judicial review” of the agency action but also whether Congress “foreclosed review to the class to which the [plaintiff] belong[s].” Block,
B
The Supreme Court and this Court have applied those preclusion principles in three important cases arising under the Agricultural Marketing Agreement Act: Stark v. Wickard,
In Stark v. Wickard, the Supreme Court held that milk producers could sue to challenge a milk marketing order.
The Supreme Court decided Stark in 1944 — before the 1946 passage of the Administrative Procedure Act. Pub.L. No. 79-404, 60 Stat. 237 (codified at
The Supreme Court next addressed AMAA preclusion some 40 years later in Block v. Community Nutrition Institute. There, the Court held that the AMAA
Importantly, in barring consumer suits, the Block Court expressly reaffirmed Stark’s holding with respect to producer suits. It found that “preclusion of consumer suits is perfectly consistent” with the Court’s “conclusion concerning producer challenges in Stark v. Wickard.” Id. at 352,
Notably, in distinguishing Stark, the Block Court largely followed the approach that the Governmеnt had advocated to the Court. The Government argued that “producers and consumers stand on very different ground” and have “generally antagonistic” interests. Gov’t Br. at 31, Block,
As our Court has recently explained, Stark and Block together indicate that producers can sue to challenge agricultural marketing orders, but consumers cannot. See Arkansas Dairy,
The Government seems to suggest that the statutorily required approval of two-thirds of producers for a marketing order evinces a congressional intent to bar all producers’ suits. In light of Arkansas Dairy and the relevant Supreme Court precedents, the Government’s intimation is incorrect. As we explained in Arkansas Dairy, some minority of producers — by definition, up to one-third of all producers in a region — could vоte against the promulgation of a marketing order but nonetheless would be unable to prevent the Secretary from promulgating the order. We therefore rejected the argument that the opportunity to participate precludes suit. In so ruling, we quoted Stark, which had stated: “a mere hearing or opportunity to vote cannot protect minority producers against unlawful exactions which might be voted upon them by majorities.” Id. at 825 (majority opinion) (quoting Stark,
To the extent legislative history is relevant here, the legislative debates during passage of the AMAA’s precursor аlso support our analysis in Arkansas Dairy. Representative Andresen of Minnesota, a member of the House Committee on Agriculture, pointed to judicial review as the remedy for the vindication of minority producer interests: “Mr. DONDERO. The point I make is whether or not the minority in that kind of a case would have any voice of protest in order to get them from under the agreement in which they did not
It also bears mention that the two-thirds of producers needed for approval of almond orders may be measured either by number of producers or by volume of almonds sold.
In sum, the precedents of the Supreme Court and this Court indicate that the AMAA does not preclude producer suits challenging rules and orders issued under the AMAA. As we also noted in Arkansas Dairy, moreover, our Court is not alone in reading Stark and Block to allow producers — but not consumers' — tо challenge such agency actions. Three of the four other circuits to consider the question have reached the same conclusion, finding that adopting the Government’s “radical interpretation” of Block as precluding producers’ suits “would effectively undermine the presumption in favor of judicial review that the Supreme Court has consistently reaffirmed.” Farmers Union Milk Marketing Coop. v. Yeutter,
C
The Government tries to get around the precedents by contending that Stark, Block, and Arkansas Dairy dealt with milk, rather than almonds, and that the almond industry raises different issues.
The Government’s attempted distinction of the precedents goes as follows: In the almond industry, unlike in the milk industry, handlers’ intеrests are identical to producers’ interests. Therefore, according to the Government, almond handlers — who possess a statutory right to judicial review under the AMAA — can adequately represent the interests of almond producers in court.
The Government’s argument finds no support in precedent and is flawed at a very basic conceptual level. The usual rule of administrative law is that an aggrieved party can sue to challenge agency action regardless of whether there might be some other aggrieved party who might raise the same challenge or seek the same relief. The Government’s argument — handlers can sue and that’s good enough fоr
In any event, the Government’s argument is also flawed on the facts. The Government makes too much of the distinction between the almond and milk industries. Even a cursory examination of the Almond Marketing Order shows how the interests of almond producers and handlers can diverge. The Almond Order requires, for example, that handlers maintain a certain quantity of almonds on hand as “reserves” at all times. See
True, there will be some cases where the interests of almond producers and almond handlers overlap. But in others, they won’t. And the Government has provided us with no workable way to determine when interests diverge in such a manner as to draw the line in precluding suit. The Government’s theory — almond producers sometimes can sue and sometimes cannot — would produce a chaotic case-by-case determination of whether producers’ and handlers’ interests are aligned. This is a recipe for endless satellite litigation. We declined to embark on such an endeavor in Arkansas Dairy, and we must do so again here.
Ill
Three of the 10 plaintiffs still involved in this case not only produce almonds, but also sell them directly to consumers. These producer-retailer plaintiffs argue that the AMAA does not authorize the Secretary of Agriculture to regulate retail sales. The statute and regulation together require these plaintiffs to exhaust their administrative remedies before bringing their claims to court. That is because the statute requires handlers to exhaust, and the regulations in turn define these producer-retailers as handlers because of where and how they sell almonds.
We therefore agree with the District Court’s conclusion dismissing the claims of the thrеe producer-retailer plaintiffs for failure to exhaust their administrative remedies with respect to their challenge to the Department’s retail restrictions.
We reverse the judgment of the District Court with respect to the suit of the ten producers. Their claims can go forward. We affirm the District Court’s judgment dismissing the claims of the three producer-retailers; those claims must be raised first to the Department of Agriculture.
So ordered.
Notes
. Judge Henderson's dissent highlights a sentence in Block where the Court said that judicial review would “ordinarily be confined to suits brought by handlers.” Dissenting Op. at 541, 542 (quoting Block,
. We note that the Government’s suggestion here is contrary to its argument to the Supreme Court in Block. In explaining why producer suits were allowed, the Government there stated that "[n]ot every producer is always going to be happy,” acknowledging that this group would include "[a]ny one of the third who didn't vote for it.” Tr. of Oral Arg. at 13, Block,
. In this case, moreover, producers did not vote on promulgation of
Dissenting Opinion
Circuit Judge, dissenting in part:
The Agricultural Marketing Agreement Act (Act or AMAA),
As the district court observed, Stark carved out a “a narrow exception” to the general rule, noted in Block, that ordinarily only handlers (and not producers) may seek review of a marketing order. Koretoff v. Vilsack,
In Block, as noted supra, the Court made clear that judicial review is “ordinarily ... confined to suits brought by handlers in accordance with
In this Circuit’s decisions permitting producers to challenge a marketing order, the injury to the producers was, as in Stark, an impairment of their statutory right to full payment, through the settlement fund, of the minimum price fixed by the Secretаry for milk products. In Blair v. Freeman,
Most recently, in Arkansas Dairy Cooperative Ass’n v. United States Department of Agriculture,
For the foregoing reasons, I respectfully dissent.
. Under the milk marketing regime, the Secretary fixes different minimum raw milk prices depending on the end-use to which a handler puts it (e.g., fluid milk, cream, ice cream). The payments are pooled in a settlement fund and, after certain administrative expenses are deducted, an average “blend price” is calculated which is the price each producer actually receives. See Edaleen Dairy, LLC v. Johanns,
. The Court indicated that the availability of review for marketing orders is limited:
It is suggested that such a ruling puts the agency at the mercy of objectors, since any provisions of the Order may be attacked as unauthorized by each producer. To this objection there are adequate answers. The terms of the Order are largely matters of administrative discretion as to which there is no justiciable right or are clearly authorized by a valid act. United States v. Rock Royal Co-op.,
. The majority asserts that considering whether the producers' and the handlers' interests coincide in a particular case "would produce a chaotic case-by-case determination.” Maj. Op. at 540. But case-by-case determinations are the hallmark of administrative and judicial adjudications and the Supreme Court advocated just such an inquiiy in Bloch In this case the interests of untreated almond producers and of untreated almond handlers — both of whom will lose the profits they would otherwise earn from the sale of raw almonds — are indeed aligned.
. It was on this basis, in part, that Arkansas Daily distinguished our earlier decision in Benson v. Schofield,
[A]ppellees claim standing to vindicate a “legal wrong” because of language to be found in Stark v. Wickard. But there the Court pointed out: "It is because every dollar of deduction comes from the producer that he may challenge the use of the fund. Thе petitioners’ complaint is not that their blended price is too low, but that the blended price has been reduced by a misapplication of money deducted from the producers' minimum price.” We still come back to the proposition, as the Stark case points out, that absent “justiciable individual rights," (italics ours) the detriment complained of is damnum absque injuria.
. Milk is far more extensively regulated under the Act than the other covered commodities. Compare
. All of the extra-Circuit cases the majority cites to support its position involved milk prices. See Maj. Op. at 539 (citing Farmers Union Milk Marketing Coop. v. Yeutter,
. I concur in the majority's affirmance of the district court's dismissal of the three producer-retailers’ claims for failure to exhaust administrative remedies.