Summary of a Recent
Judicial Development in
Checkoff Decisions

Dairy Checkoff Assessment Does Not
Violate the First Amendment

John D. Mead
National AgLaw Center Graduate Assistant

In an action brought by two dairy farmers challenging the constitutionality of the dairy checkoff assessment authorized under the Dairy Promotion and Research Program, the United States District Court for the Middle District of Pennsylvania has ruled that the dairy checkoff assessment was not an unconstitutional restraint of the dairy farmers' right to free speech under the First Amendment. Cochran v. Veneman, No. 4:CV-02-0529, 2003 WL 1555085 (M.D. Pa. March 24, 2003).

Congress created the Dairy Promotion and Research Program ("Dairy Program") in 1983. See id. at *3. Congress stated that

[I]t is in the public interest to authorize the establishment, through the exercise of the powers provided herein, of an orderly procedure for financing (through assessments on all milk produced in the United States for commercial use and on imported dairy products) and carrying out a coordinated program of promotion designed to strengthen the dairy industry's position in the marketplace and to maintain and expand domestic and foreign markets and uses for fluid milk and dairy products.

Id. (quoting 7 U.S.C. § 4501(b)).

Congress authorized that a Dairy Board be established to help implement the Dairy Program. See id. The Dairy Board was required to "'provide for the establishment and administration of appropriate plans or projects for advertisement and promotion of the sale and consumption of dairy products, for research projects related thereto, for nutrition education projects, and for the disbursement of necessary funds for such purposes.'" Id. (quoting 7 U.S.C. § 4505(a)). Under the Dairy Program, dairy producers are required to pay an assessment of fifteen cents to the Dairy Board for each hundredweight of milk that the producer markets commercially. See id. (citing 7 C.F.R. § 1150.152(a), (b)).

Joseph and Brenda Cochran, plaintiffs, were dairy producers who produced milk on their Pennsylvania farm for commercial use. See id. at *1. The Cochrans operated their farm using traditional sustainable farming methods that they believed provided a healthier dairy product than the intensive herd management and grazing system utilized by other commercial dairy farmers. See id. Based upon the Cochrans' perceived differences between the farming methods that they used and the methods used by dairy producers at-large, the Cochrans "object[ed] to the promotion of milk generically as 'speech that denies there is any difference in milk.'" Id. (citations omitted).

On April 2, 2002, they brought an action seeking a declaratory judgment that the Dairy Program was "an unconstitutional restriction on their right to free speech." Id. They also sought to enjoin the USDA Secretary and the National Dairy Promotion and Research Board from collecting the dairy checkoff assessment. See id. On June 14, 2002, several dairy producers ("the intervenors") filed a motion to intervene as defendants. See id. The district court granted the motion to intervene on January 13, 2003. See id. The intervenors supported the dairy checkoff assessment and argued that the assessment was constitutional. See id. The district court stated that its determination of whether the Dairy Program is constitutional "hinges upon a determination of whether the facts in this case more closely parallel those in Glickman v. Wileman Bros. & Elliot, [521 U.S. 457 (1997)], or in United States v. United Foods, Inc., [533 U.S. 405 (2001)]." Id.

In Wileman, several producers of California tree fruits "challenged the constitutionality of marketing orders which required that assessments be imposed on producers to fund costs associated with the orders, including generic advertising." Id. (citation omitted). The Supreme Court noted that the marketing orders at issue in Wileman (1) did not impose a restraint on the freedom of any producer to communicate any message to any audience"; (2) did not "compel any person to engage in any actual or symbolic speech"; and (3) did not "compel the producers to endorse or to finance any political or ideological views." Id. (citation omitted). Based on these three findings, the Court determined that "the regulation at issue would properly be judged under the standard of review appropriate for economic regulations rather than under the heightened scrutiny applicable to First Amendment issues." Id. (citation omitted).

In United Foods, the Supreme Court "considered a challenge to the constitutionality of a statute mandating the issuance of assessments on handlers of fresh mushrooms in order to fund advertising for their products." Id. at *6 (citation omitted). In United Foods, unlike Wileman, the Court ruled that the assessments at issue violated the First Amendment. See id. The Court stated that the "fundamental difference between the facts before it in United Foods and those before it in Wileman" was that in Wileman "'the mandated assessments for speech were ancillary to a more comprehensive program restricting marketing autonomy. Here, for all practical purposes, the advertising itself, far from being ancillary, is the principal object of the regulatory scheme.'" Id. (citation omitted). The Court also stated that the holding in Wileman was based on the fact that the producers "'were bound together and required by the statute to market their products according to cooperative rules,' and that 'their mandated participation in an advertising program with a particular message was the logical concomitant of a valid scheme of economic regulation.'" Id. (citation omitted).

In United Foods the Court found that there was not a regulatory scheme comparable to that in Wileman. See id. For example, there "were no marketing orders in place regulating the production and sale of mushrooms, no exemption existed for mushroom producers from antitrust laws, and no encroachments existed upon the ability [of] individual mushroom producers to make their own marketing decisions." Id. (citation omitted). The Court noted that the only regulations that affected the mushroom producers were the mandatory assessments that were used only for creating and funding generic advertising for mushrooms. See id. Thus, in United Foods the Court determined that "there was no support for the proposition that the compelled contributions for advertising were part of a broader regulatory scheme whereby the statute would be appropriately relegated to the standard of review applicable to economic regulations as applied in Wileman." Id. (citation omitted). Rather, the Court applied the standard of review appropriate for First Amendment issues and determined that the assessments violated the producers' First Amendment rights. See id.

Based upon its review of Wileman and United Foods, the district court stated that the Dairy Program was "part of a larger regulatory scheme affecting the sale and production of milk." Id. at *7. It also stated that "[o]n this basis, we find that milk producers are regulated to a similar degree as were the tree fruit growers in Wileman and that 'the mandated assessments for speech [are] ancillary to a more comprehensive program restricting marketing autonomy.'" Id. (citation omitted).

Having made this determination, the district court examined whether the Dairy Program satisfied the three findings set out in Wileman. See id. (citation omitted). The district court ruled that the Dairy Program did not 1) impose a restraint on the Cochrans' freedom to communicate; 2) did not compel the Cochrans to engage in any actual or symbolic speech; and 3) did not compel the Cochrans to endorse any political or ideological views. See id. at *7. The court therefore concluded that the Dairy Program and the dairy checkoff assessment was "a species of economic regulation that does not infringe upon the First Amendment rights of the Cochrans." Id. at *8.

The case was decided on March 24, 2003; this summary was posted April, 2003