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Supreme Court sides with grower against raisin marketing order; widespread implications unclear

In a rare case of unanimity, the U.S. Supreme Court sided with a California raisin grower in his battle against the federal raisin marketing order, ruling that the grower can have his day in court against the U.S. Department of Agriculture, which administers the order.

The case was not a direct challenge to the order itself but rather gives the grower, Marvin Horne of Kerman, CA, the right to have his case heard by the 9th U.S. Circuit Court of Appeals.

Because there are very few marketing orders left that mirror the federal California Raisin Marketing Order, the widespread implications of this case are unclear.

However, Brian Leighton, an attorney for Horne who has a long history fighting the constitutionality of marketing orders, commissions and promotion orders, said this case does give opponents "one more tool" to challenge the constitutionality of these types of cases in court rather than go through the laborious administrative procedures inherent in the USDA regulations authorizing marketing orders.

In addition, Jim Moody, another lawyer with a long history of fighting these Depression-era marketing orders, said the comments from the Supreme Court Justices during oral arguments, along with their 9-0 vote, indicated that the tide has shifted with regard to these types of orders.

"Justice (Elena) Kagan called it the 'silliest program ever invented,'" he said.

Moody said both liberal and conservative justices are in agreement.

The case stems from a provision in the Raisin Marketing Order that allows the Raisin Administrative Committee, an industry-elected group that manages the order, to set aside some of the crop each year in an effort to balance supply and demand. In 2002-03 and 2003-04, the amount set aside was significant, equaling as much as 47 percent of the crop.

Horne and some other growers established their own handler organization and attempted to bypass the restrictions. Ultimately, they were fined by the USDA an amount totaling more than $650,000, including fees.

Horne tried to challenge the constitutionality of the fines in court, but the USDA said the provisions of the marketing order law required him to pay the fines and then go through the U.S. Court of Federal Claims to recoup the money he claims was unfairly taken from him.

The Supreme Court ruling allows Horne to challenge the fees and fines in the Circuit Court and argue that they are a violation of the "takings" provision of the U.S. Constitution.

Leighton said that provision is fairly straightforward as it states that the government cannot take the property of its citizens without just compensation.

In this case, Horne is arguing that the set-aside of a portion of his raisins amounts to the government taking them without paying for them. In past cases, the government has argued that the higher prices that result from setting aside part of the crop is the just compensation.

Moody said that there are only one or two marketing orders that still use volume controls, so the exact nature of this case will not have far-reaching implications on other court cases.

However, he said growers opposed to these provisions are winning the battle on the ground as well as the courts. He said the raisin industry has not used the set-aside provision in the last several years. Of course, the largest set-aside program was the one dealing with California oranges called prorate, which Moody helped get thrown out two decades ago.

But the Supreme Court decision in this raisin case could be cited by others fighting the constitutionality of marketing orders on other grounds.

Associate Justice Clarence Thomas wrote the decision for the court stating, "In the case of an administrative enforcement proceeding, when a party raises a constitutional defense to an assessed fine, 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."

Leighton said this suggests that USDA needs to stop delaying challenges to marketing orders through its administrative procedures. He said as a point of fact, when growers challenge the constitutionality of these orders they are sent through a maze of regulations that take years to exhaust before they can get into the courts to fight the real battle.

As a matter of course, Moody said the administrative hearings never resulted in a victory for the challenger. He has been fighting these marketing orders for 30 years since he joined the fray against the citrus prorate order in 1982.

Moody said the battle continues with challenges against many marketing orders as well as commissions on both the state and federal level. He said the worst offenders of the U.S. Constitution are the orders with volume controls. He said those imposing quality and grade standards are a bit less offensive.

He also opposes the promotion boards that impose what he calls "speech tax," which are mandatory assessments for promotion and advertising. But he admits that some of these programs can be run fairly in which case "growers don't get pissed off and hire lawyers to fight them."

He believes history is on his side as he says in cases where the marketing orders have been abolished, such as with California tree fruit and oranges and Washington apples, growers are doing much better without the orders than they ever did with them.