Summary of a Recent
Judicial Development in
Marketing Orders

Dairy Advisory Board Not a "Person"
Under California Law

Steven White
National AgLaw Center Graduate Assistant

Summary of Decision

In People for the Ethical Treatment of Animals, Inc. v. California Milk Producers Advisory Board, 22 Cal. Rptr. 3d 900 (Cal. Ct. App. 2005), the California Court of Appeals held that the California Milk Producers Advisory Board was not a "person" under the California Unfair Competition Law (Act) and therefore could not be sued under the Act.

Background

The California Milk Producers Advisory Board (CMAB) was an administrative group created by the California Department of Food and Agriculture through the issuance of a marketing order. See id. at 902. One power of the board was to recommend promotional programs. See id. The CMAB has been involved in promotion of milk and dairy products and spends most of its annual budget on promotion of these goods. Id. A promotional campaign recently used by the CMAB has been the "Happy Cows" campaign which depict dairy cattle enjoying life in California with the tagline "'Great Cheese comes from Happy Cows.'" Id.

People for the Ethical Treatment of Animals (PETA) sued the CMAB claiming the "Happy Cows" promotional campaign violated California's Unfair Business Practices Act. See id. at 901. The trial court concluded that the CMAD could not be sued under the Act and dismissed the suit. See id. PETA appealed the trial court's decision to the California Court of Appeals.

Arguments

PETA sought a permanent injunction preventing the continuation of the "Happy Cows" campaign. See id. at 902. They claimed the advertisements were deceptive and misleading because California dairy cows do not live their life in the same manner as portrayed by the commercials and that such deceptive advertisements were prohibited under the Act. See id. PETA also argued that CMAB could only be excluded from the definition of "person" if the action sought to "interfere with 'a valid exercise of the state's sovereign powers.'" Id. at 905. PETA asserted that because the advertising could not be considered a government action, CMAB should be considered a person under the Act. See id.

Analysis and Holding

The false advertising section of the Act is at § 17500 and "prohibits 'any person, firm, corporation or association, or any employee thereof' from falsely advertising goods or services." Id. at 904 (italics added). The term "person" is defined within the statute as "mean[ing] and includ[ing] natural persons, corporations, firms, partnerships, joint stock companies, associations, and other organizations of persons." Id. (citation omitted).

Citing previous cases dealing with the Act's definition of a "person", the court agreed with the holdings that a public entity was not included within the definition and that there was no other evidence of intent to impose liability on a government entity. See id. at 905. The court also agreed with the CMAB in stating that if the Legislature wanted governmental entities to be included in the definition they would have used specific language to show that intent. See id. The court concluded that, by definition, the CMAB could not "be considered a person under the UCL." Id.

Turning to PETA's infringement of sovereign immunity claim, the court found that allowing the CMAB to be sued "would infringe that body's, and therefore the state's sovereign power." Id. at 907. The court explained that the creation of the CMAB could be traced to the California Marketing Act of 1937, which was a program designed to advance the interests of the state's citizens. See id. The court also discussed the Legislature's opinion that boards such as the CMAB advance the interest of the state and how the Legislature had "linked the work of CMAB in promoting California's agricultural economy through promotional campaigns to important public interests of the state." Id. at 908. The court concluded there would be an infringement of sovereign power to let the CMAB be subject to lawsuits under the Act. See id.

The case was decided on January 11, 2005; this summary was posted Mar. 24, 2005.