Summary of a Recent
Judicial Development in
Marketing Orders

California Table Growers' Commission-Compelled Speech
Germane to the Overall Legitimate Goal of the State Government

Craig Raysor
National Agricultural Law Center Contributor

Summary of Decision

In Delano Farms Co. v. California Table Grape Commission, 546 F. Supp 2d 859 (E.D. Cal. 2008), the United States District Court for the Eastern District of California dismissed the plaintiffs' claim regarding the First Amendment and found that the checkoff program under the Ketchum Act which allowed a compelled assessment for generic advertising for California table grapes was furthering the economic enhancement of the state's interest in promoting the specified industry.

Background

The Ninth Circuit Court of Appeals overturned an earlier dismissal of the plaintiffs' claims that the advertising assessments violated the plaintiffs' First Amendment rights and were therefore unconstitutional. Delano Farms Co. v. Cal. Table Grape Comm'n, 318 F.3d 895, 899-900 (9th Cir. 2003). After the Ninth Circuit decision, both parties amended their pleadings, and plaintiffs sought a ruling on the pleadings, which was denied. Delano Farms, 546 F. Supp. 2d at 862. At this juncture, the parties had filed cross-motions for summary judgment on a variety of issues. Id. at 861.

Arguments

There are multiple holdings in this case pertaining to similar issues that were adjudicated in Johanns v. Livestock Marketing Association. See Delano Farms Co. v. Cal. Table Grape Comm'n, Nos. CV-F-96-6053 OWW DLB and CV F-96-6198 OWW DLB, 2008 U.S. Dist. LEXIS 31645, *2-4 (E.D. Cal. Apr. 16, 2008) (order derived from the 105 page Memorandum Opinion filed on March 31, 2008). Specifically, the Central Hudson test does not apply to the compelled subsidy claims, but the Abood germaneness test is to be applied as it is part of a broader general regulatory scheme with a collective action basis. See Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm'n of N.Y., 447 U.S. 557 (1980). Additionally, the court found that the Ketchum Act is constitutional under the "germaneness" test because the Commission's "advertising is germane to a broader program that serves important governmental interests and that is not related solely to speech." Id. at 944.

Analysis and Holdings

The court analyzed the U.S. Supreme Court opinion in Glickman v. Wileman Brothers and Elliott, 521 U.S. 457 (1997), to determine the appropriateness of the use of the intermediate scrutiny test regarding commercial speech in Central Hudson. Id. at 927-32. Under Central Hudson, restrictions on lawful, non-misleading commercial speech are evaluated under a three-part test: 1) the asserted government interest behind the restrictions must be substantial, 2) the restrictions must directly advance that interest, and 3) the program must not be more extensive than necessary to serve that interest. Id. at 931. In Glickman, the Court held that the contended Marketing Order requiring an assessment did not tie the hands of the producers in expressing their own ideals to any particular audience, nor require them to embrace any particular political or ideological view, therefore there were no First Amendment concerns. See Id. at 930.

The U.S. Supreme Court distinguished Glickman in United States v. United Foods, Inc., 533 U.S. 405 (2001), finding that Glickman did not apply to a case where the assessments for compelled speech were not part of a larger statutory marketing program that created collective action. See Id. at 932-33. Therefore, if there is a collectivized regulatory program that is not solely for the purpose of speech, then the Abood test must apply. Delano Farms, 546 F. Supp. 2d at 943-44. The Ketchum Act created a collectivized regulatory program that dealt with economic enhancement through advertising, broadening the market, and creating more opportunities for research into new varieties. See Id. at 944-50.

As a group that benefits from the advantages of cooperative association, individual producers can be compelled to share in the costs of that association. See Id. at 943-44; see also Abood v. Detroit Bd. of Educ., 431 U.S. 209, 209 (1977). The court found that the program concerning table grapes was germane to a broader program to promote California table grape marketing and was not related solely to speech in alignment with Abood. Delano Farms, 546 F. Supp 2d at 950.

The case was decided on March 31, 2008.