Supreme Court chews over case pitting raisin farmers against USDA

03/20/2013 4:20 PM

08/11/2014 12:36 PM

Nearly a dozen burly California raisin growers watched intently Wednesday as Supreme Court justices struggled to figure out how their industry works.

During an hour-long oral argument, the justices peppered lawyers with questions that increasingly suggested some sympathy for the growers, who are protesting a big Agriculture Department penalty.

The federal government fined Fresno County grower Marvin Horne and others hundreds of thousands of dollars for refusing to turn over raisins as part of a New Deal-era supply control program.

“Part of that penalty was, you know, ‘Your raisins or your life,’” Justice Antonin Scalia said, producing courtroom chuckles.

At issue is a federal order that requires “handlers” who process and pack raisins to place part of their product in reserve during certain years, with the industry-run Raisin Administrative Committee deciding how much handlers will be paid for this set-aside tonnage. Raisin handlers set aside 47 percent of their crop during the 2002-03 season and 30 percent for 2003-04, but they were paid for only part of what they surrendered.

The Hornes didn’t like the program and helped organize growers into the Raisin Valley Farms Marketing Association, which took care of the packing. By identifying themselves as producers rather than as handlers, the group’s members reasoned that they were exempt from the set-aside requirement imposed on handlers.

The Obama administration, however, termed this a “scheme” designed to avoid legal requirements. The USDA subsequently ordered the Hornes and their coalition to pay more than $650,000 in fees and penalties.

“They adopted a business model that was an intentional, willful attempt to evade regulatory requirements in order to secure an unfair competitive advantage,” said Assistant Solicitor General Joseph R. Palmore.

The dissident growers, in turn, call the raisin set-aside, as well as the fees and penalties, a “taking,” or seizure, of property. Under the Fifth Amendment, takings require just compensation by the government.

The technicalities of the case seemed to fog the court for a while Wednesday, with farmers’ attorney Michael W. McConnell joking sardonically at one point about the “jurisdictional holding that is producing so much enjoyment for us this morning.”

The case, called Horne v. Department of Agriculture, could prove important in the long run, though, as a stepping stone for dissident farmers to avoid and potentially undermine at least parts of the so-called raisin “marketing order” established to smooth out prices and supplies.

Several justices sounded inclined to order the San Francisco-based 9th U.S. Circuit Court of Appeals to at least revisit the dissident farmers’ underlying argument that the Agriculture Department’s fine was a taking of property that violated the Constitution.

“And now the 9th Circuit can go and try and figure out whether this marketing order is a taking or it’s just the world’s most outdated law,” Justice Elena Kagan said, prompting further courtroom laughter.

Justice Steven Breyer, in a similar vein, added that “either this program is valid or it isn’t, and if it isn’t, some authoritative set of courts should tell us that,” while Chief Justice John Roberts Jr. pointedly focused on how the Justice Department has flip-flopped in its position on how the case should be resolved.

Horne said on the Supreme Court steps afterward that the justices’ quips and questions indicated “they did their homework” on the case that has its roots in farmers’ actions taken during the 2002-2003 crop year.

“It looked sort of favorable to me,” agreed Mike Jerkovich, a third-generation raisin farmer from the Fresno County town of Kerman.

The hearing over, the growers made plans to return to their California farms.

“The grapes are starting to turn green,” Horne said. “It’s time to start farming.”

Horne, Jerkovich and other farmers flew out for the argument, along with Clovis, Calif.-based attorney Brian C. Leighton, a longtime marketing order skeptic who joined McConnell at the lawyers’ table. McConnell is a former federal judge who teaches at Stanford Law School, in addition to working in private practice.

The Justice Department previously argued that the farmers should have taken their complaint to the U.S. Court of Federal Claims. The 9th U.S. Circuit Court of Appeals agreed. That argument about jurisdiction, though, has since been abandoned, suggesting that the Supreme Court could now essentially kick the dispute back to the appellate court for a substantive decision on the taking claim itself.

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