Marvin Horne v. Agri

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

MARVIN D. HORNE and LAURA R. 

HORNE, d.b.a. RAISIN VALLEY

FARMS, a partnership, and d.b.a.

RAISIN VALLEY FARMS MARKETING

ASSOCIATION, a.k.a. RAISIN VALLEY

MARKETING, an unincorporated

No. 10-15270

association; MARVIN D. HORNE;

LAURA R. HORNE; DON DURBAHN, D.C. No.

and the ESTATE OF RENA DURBAHN,  1:08-cv-01549-LJO-

d.b.a. LASSEN VINEYARDS, a SMS

partnership, OPINION

Plaintiffs-Appellants,

v.

UNITED STATES DEPARTMENT OF

AGRICULTURE,

Defendant-Appellee.



Appeal from the United States District Court

for the Eastern District of California

Lawrence J. O’Neill, District Judge, Presiding

Argued and Submitted

April 14, 2011—Pasadena, California

Filed July 25, 2011

Before: Stephen Reinhardt, Michael Daly Hawkins, and

Ronald M. Gould, Circuit Judges.

Opinion by Judge Hawkins

9453

HORNE v. USDA 9457

COUNSEL

Brian C. Leighton, Clovis, California, for the plaintiffs-

appellants.

Benjamin B. Wagner, United States Attorney, and Benjamin

E. Hall, Assistant United States Attorney, Fresno, California,

for the defendant-appellee.

OPINION

HAWKINS, Senior Circuit Judge:

This appeal of a United States Department of Agriculture

(“USDA”) administrative decision asks us to interpret and

pass on the constitutionality of a food product reserve pro-

gram authorized by the Agricultural Marketing Agreement

Act of 1937, as amended, 7 U.S.C. § 601 et seq. (“AMAA”),

and implemented by the Marketing Order Regulating the Han-

9458 HORNE v. USDA

dling of Raisins Produced from Grapes Grown in California,

7 C.F.R. Part 989 (“Raisin Marketing Order” or “the Order”),

first adopted in 1949. Farmers Marvin and Laura Horne (“the

Hornes”1) protest the USDA Judicial Officer’s (“JO”) imposi-

tion of civil penalties and assessments for their failure to com-

ply with the reserve requirements, among other regulatory

infractions, contending: (1) they are producers not subject to

the Raisin Marketing Order’s provisions; (2) even if subject

to those provisions, the requirement that they contribute a

specified percentage of their annual raisin crop to the

government-controlled reserve pool constitutes an uncompen-

sated per se taking in violation of the Fifth Amendment; and

(3) the penalties imposed for their “self-help” noncompliance

with the Raisin Marketing Order violate the Eighth Amend-

ment Excessive Fines Clause. We affirm.

BACKGROUND

I. Regulatory Framework

Raisins and other agricultural commodities are heavily reg-

ulated under federal marketing orders adopted pursuant to the

AMAA, a Depression-era statute enacted in response to plum-

meting commodity prices, market disequilibrium, and the

accompanying threat to the nation’s credit system. 7 U.S.C.

§ 601 et seq.; see Zuber v. Allen, 396 U.S. 168, 174-76

(1969); see generally Daniel Bensing, “The Promulgation and

Implementation of Federal Marketing Orders Regulating Fruit

and Vegetable Crops Under the Agricultural Marketing

Agreement Act of 1937,” 5 San Joaquin Agric. L. Rev. 3

(1995). The declared purposes of the AMAA are, inter alia,

1

Collectively referred to as “the Hornes,” the Plaintiffs-Appellants are

Marvin and Laura Horne, d/b/a Raisin Valley Farms (a California general

partnership), and d/b/a Raisin Valley Farms Marketing Association (a Cal-

ifornia unincorporated association), together with their business partners

Don Durbahn and the Estate of Rena Durbahn, collectively d/b/a Lassen

Vineyards (a California general partnership).

HORNE v. USDA 9459

to help farmers achieve and maintain price parity for their

agricultural goods and to protect producers and consumers

alike from “unreasonable fluctuations in supplies and prices”

by establishing orderly marketing conditions. 7 U.S.C. § 602;

see Fla. Lime & Avocado Growers, Inc. v. Paul, 373 U.S.

132, 138 (1963); Pescosolido v. Block, 765 F.2d 827, 830 (9th

Cir. 1985).

[1] To achieve these goals, the AMAA delegates authority

to the Secretary of Agriculture (“Secretary”) to issue market-

ing orders2 regulating the sale and delivery of agricultural

goods, 7 U.S.C. § 608c, principally by imposing production

quotas or by restricting the supply of a commodity for sale on

the open market, either through marketing allotments or

reserve pools, see id. § 608c(6).3 The Secretary, in turn, is

authorized to delegate to industry committees the power to

administer marketing orders. 7 U.S.C. § 608c(7)(C); see 7

C.F.R. § 989.35 (2006). Marketing orders under the AMAA

2

According to the specific promulgation procedures mandated by the

AMAA, the Secretary may only issue a marketing order if, after providing

notice and opportunity for hearing, he finds that “the issuance of such

order . . . will tend to effectuate the declared policy” of the Act. 7 U.S.C.

§ 608c(3)-(4). Such order will not become effective until approved by both

(1) the handlers of at least 50 percent of the volume of the commodity

covered by the proposed order and (2) either (a) two-thirds of producers

of that commodity during a representative period or (b) producers of two-

thirds of the volume of that commodity during said period. Id. § 608c(8);

see id. § 608b. The Secretary may terminate or suspend any marketing

order upon finding it “obstructs or does not tend to effectuate the declared

policy” of the Act, or upon request of a majority of active producers dur-

ing a representative time period. Id. § 608c(16).

3

Section 8c of the AMAA, 7 U.S.C. § 608c, the key statutory provision

dealing with the marketing orders, originated in a 1935 amendment to the

Agricultural Adjustment Act of 1933, Pub. L. No. 73-10, 48 Stat. 31

(“AAA”). The Supreme Court invalidated parts of the AAA in 1936, see

United States v. Butler, 297 U.S. 1, 77 (1936), but Congress quickly reen-

acted most of the AAA’s production-control measures in the AMAA,

which the Supreme Court subsequently upheld against various constitu-

tional challenges, see United States v. Rock Royal Co-op, Inc., 307 U.S.

533 (1939).

9460 HORNE v. USDA

apply only to “handlers,” i.e., those who process and pack

agricultural goods for distribution,4 and do not apply to any

producer “in his capacity as a producer.”5 7 U.S.C.

§§ 608c(1), 608c(13)(B).6 Any handler who fails to comply

with the terms of a marketing order is subject to civil forfei-

ture, as well as possible civil and criminal penalties. 7 U.S.C.

§§ 608a(5), 608a(6), 608c(14) (authorizing civil penalties up

to $1,000 for each violation, with each day constituting a sep-

arate violation).

4

A “handler” under the Raisin Marketing Order is

(a) [a]ny processor or packer; (b) any person who places, ships,

or continues natural raisins in the current of commerce from

within [California] to any point outside thereof; (c) any person

who delivers off-grade raisins, other failing raisins or raisin resid-

ual material to other than a packer or other than into any eligible

non-normal outlet; or (d) any person who blends raisins [subject

to certain exceptions].

7 C.F.R. § 989.15. A “packer,” in turn, is “any person who, within [Cali-

fornia], stems, sorts, cleans, or seeds raisins, grades stemmed raisins, or

packages raisins for market as raisins,” but does not include a producer

who sorts and cleans his own raisins in their unstemmed form. Id.

§ 989.14.

5

A “producer” under the Raisin Marketing Order is “any person

engaged in a proprietary capacity in the production of grapes which are

sun-dried or dehydrated by artificial means until they become raisins.” 7

C.F.R. § 989.11.

6

The regulation of handlers, as opposed to growers, appears to be a ves-

tige of the historical context in which the AMAA was enacted, “an era

when small, independent growers were frequently left to the mercy of

large handlers who could benefit from their market power and position.”

Bensing, supra, at 8. In the raisin industry, producers generally own the

land on which the grapevines are located, and they typically pick the

grapes and dry them on trays before selling the unstemmed raisins to pack-

ers, or “handlers.” Packers then prepare the raisins for commercial sale

and distribution by cleaning, stemming, seeding, grading, sorting, and

packaging the raisins into containers. Packers then typically sell the

packed raisins to wholesalers, distributors, and other dealers for resale and

distribution to the public. Brown v. Parker, 39 F. Supp. 895, 896-97 (S.D.

Cal. 1941), rev’d on other grounds by Parker v. Brown, 317 U.S. 341

(1943).

HORNE v. USDA 9461

The Raisin Marketing Order was originally enacted in

1949, see 14 Fed. Reg. 5136 (Aug. 18, 1949) (codified, as

amended, at 7 C.F.R. Part 989), in an effort to stabilize raisin

prices by controlling production surpluses, which since 1920

had consistently been thirty to fifty percent of each year’s

crop. See Parker, 317 U.S. at 363-64.7 Like many other fruit

and vegetable orders issued under the AMAA,8 the Order pro-

vides for the establishment of annual reserve pools, as deter-

mined by each year’s crop yield, thereby removing surplus

raisins from sale on the open domestic market and indirectly

controlling prices. See 7 U.S.C. § 608c(6)(E); 7 C.F.R.

§§ 989.54(d), 989.65. By February 15 of each year, the Raisin

Administrative Committee (“RAC”)—an industry committee

charged with administration of the Raisin Marketing Order,9

7

The raisin industry has long been an important one in California, where

99.5 percent of the U.S. crop and 40 percent of the world’s crop are pro-

duced. See The California Raisin Industry, http://www.calraisins.org/

about/the-raisin-industry/ (last visited July 6, 2011). Raisin prices rose

rapidly between 1914 and 1920, peaking in 1921 at $235 per ton. This

price increase spurred increased production, which in turn caused prices

to plummet back down to between $40 and $60 per ton, even while pro-

duction continued to expand. As a result of this growing disparity between

increasing production and decreasing prices, the industry became “com-

pelled to sell at less than parity prices and in some years at prices regarded

by students of the industry as less than the cost of production,” finally

prompting federal government intervention with the Raisin Marketing

Order in 1949. See Parker, 317 U.S. at 363-64 & nn.9-10.

8

For a comparison of the Raisin Marketing Order and marketing orders

for other agricultural products, such as walnuts, almonds, prunes, tart cher-

ries, and spearmint, see Evans v. United States, 74 Fed. Cl. 554, 558

(2006), aff’d, 250 Fed. Appx. 321 (Fed. Cir. 2007).

9

The RAC is currently comprised of forty-seven industry-nominated

representatives appointed by the Secretary, of whom thirty-five represent

producers, ten represent handlers, one represents the cooperative bargain-

ing association, and one represents the public. See 7 C.F.R. §§ 989.26,

989.29, 989.30. The RAC is an agent of the federal government but

receives no federal appropriations. Instead, it is funded by assessments

levied on handlers per ton of raisins sold on the open market and by pro-

ceeds from the sale of reserve-tonnage raisins. See 7 C.F.R. §§ 989.53,

989.79, 989.80(a), 989.82.

9462 HORNE v. USDA

see 7 C.F.R. §§ 989.35, 989.36—recommends the “reserve-

tonnage” and “free-tonnage” percentages for that year, which

the Secretary then promulgates. See id. §§ 989.54(d), 989.55.

The reserve-tonnage requirement varies from year to year; for

example, in the 2002-03 and 2003-04 crop years at issue here,

the reserve percentages were set at forty-seven percent and

thirty percent of a producer’s crop, respectively.

As a result of the Order’s reserve program requirements, a

producer receives payment (at a pre-negotiated field market

price) upon delivery of raisins to a handler only for the free-

tonnage raisins, which the handler is then free to sell on the

domestic market without restrictions. See id. § 989.65. The

reserve-tonnage raisins, on the other hand, must be held by

the handler in segregated bins “for the account” of the RAC

until the RAC sells them to handlers for resale in export mar-

kets or directs that they be sold or disposed of in secondary,

non-competitive markets, such as school lunch programs,

either by direct sale or gift to U.S. agencies or foreign govern-

ments. Id. §§ 989.54, 989.56, 989.65, 989.67, 989.166,

989.167. The reserve pool sales are used to finance the RAC’s

administration, and any remaining net proceeds must then be

equitably distributed to the producers on a pro rata basis. See

7 U.S.C. § 608c(6)(E) (providing for “the equitable distribu-

tion of the net return derived from the sale [of reserve-pool

raisins] among the persons beneficially interested therein”); 7

C.F.R. § 989.66(h). Thus, although producers do not receive

payment for reserve-tonnage raisins at the time of delivery to

a handler, they retain a limited equity interest in the net pro-

ceeds of the RAC’s disposition of the reserve, to be paid at

a later time.

The RAC is tasked with selling the reserve raisins in a

manner “intended to maxim[ize] producer returns and achieve

maximum disposition of such raisins by the time reserve ton-

nage raisins from the subsequent crop year are available,” 7

C.F.R. § 989.67(d)(1), but the Hornes complain that they have

not received any reserve sale proceeds since the mid-1990s.

HORNE v. USDA 9463

For example the RAC designated forty-seven percent of the

2002-03 crop as reserve tonnage, which it then sold for $970

per ton, but none of the money the RAC received was paid

back to the raisin producers.

In addition to the reserve pool requirement, the Raisin Mar-

keting Order obliges handlers to, inter alia: file reports with

the RAC, pay assessments to the RAC, and grant the RAC

access to records for auditing purposes. See id. §§ 989.58,

989.59, 989.73, 989.77, 989.80.

II. The Hornes’ Raisin Enterprises

Marvin and Laura Horne have been producing raisins in

Fresno and Madera Counties in California since 1969 and in

1999 registered as a California general partnership under the

name Raisin Valley Farms. They also own and operate Lassen

Vineyards, another registered California general partnership,

in partnership with Laura’s parents, Don and Rena Durbahn.

Disillusioned with a regulatory scheme they deemed “outdat-

ed” and exploitive of farmers, the Hornes looked for ways to

avoid the Raisin Marketing Order’s requirements, particularly

its mandatory raisin reserve program. Because those require-

ments apply only to handlers, the Hornes implemented a plan

to bring their raisins to market without going through a tradi-

tional middle-man packer. As part of their plan, the Hornes

purchased their own equipment and facilities to clean, stem,

sort, and package raisins, which they installed on Lassen

Vineyards property in 2001. Not only did this facility handle

the raisins from Raisin Valley Farms and Lassen Vineyards,

it also contracted with more than sixty other raisin growers to

clean, stem, sort, and in some cases box and stack their raisins

for a per-pound fee, typically twelve cents per pound.10 USDA

records reflect that Lassen Vineyards packed out more than

10

This type of arrangement is known as “toll packing.” Toll packers do

not acquire ownership of the commodity but instead provide a packing

service for a fee.

9464 HORNE v. USDA

1.2 million pounds of raisins during the 2002-03 crop year

and more than 1.9 million pounds during the 2003-04 crop

year.

Meanwhile, the Hornes also organized these sixty-some

growers into the Raisin Valley Marketing Association, an

unincorporated association that marketed and sold raisins to

wholesale customers on its members’ behalf, while the grow-

ers maintained ownership over their own raisins. Raisin Val-

ley Marketing then held the sales funds on the growers’ behalf

in a trust account, from which it paid Lassen Vineyards its

packing fees, paid a third-party broker fee, and distributed the

net proceeds to the growers.

III. Proceedings Below

The Administrator of the Agricultural Marketing Service

initiated an enforcement action against the Hornes, alleging

violations of the AMAA and failure to comply with the Raisin

Marketing Order’s various requirements. On appeal from an

Administrative Law Judge’s decision following an on-the-

record hearing, the USDA JO found both Raisin Valley Farms

and Lassen Vineyards liable for: (1) twenty violations of 7

C.F.R. § 989.73 (filing of inaccurate reports); (2) fifty-eight

violations of 7 C.F.R. § 989.58(d) (failing to obtain incoming

inspections); (3) 592 violations of 7 C.F.R. § 989.66 and 7

C.F.R. § 989.166 (failing to hold reserve raisins for the 2002-

03 and 2003-04 crop years); (4) two violations of 7 C.F.R.

§ 989.80 (failing to pay assessments to the RAC); and (5) one

violation of 7 C.F.R. § 989.77 (failing to allow the Agricul-

tural Marketing Service access to records). The JO accord-

ingly ordered the Hornes to pay (1) $8,783.39 in unpaid

assessments for the 2002-03 and 2003-04 crop years, pursuant

to 7 C.F.R. § 989.80(a); (2) $483,843.53, the alleged dollar

equivalent of the withheld raisin reserve contributions for the

2002-03 (632,427 pounds) and 2003-04 (611,159 pounds11)

11

The Hornes do not challenge the JO’s calculation of these figures.

HORNE v. USDA 9465

crop years, pursuant to 7 C.F.R. § 989.166(c); and (3)

$202,600 in civil penalties, pursuant to 7 U.S.C.

§ 608c(14)(B).

The Hornes filed this action in district court seeking judi-

cial review of a final agency decision pursuant to 7 U.S.C.

§ 608c(14)(B).12 On cross-motions for summary judgment, the

district court granted summary judgment for the USDA, and

the Hornes timely appealed.

STANDARDS OF REVIEW

A district court’s grant of summary judgment is reviewed

de novo. Ariz. Life Coal., Inc. v. Stanton, 515 F.3d 956, 962

(9th Cir. 2008). Viewing the evidence in the light most favor-

able to the non-moving party, we must determine whether any

genuine issues of material fact remain and whether the district

court correctly applied the relevant substantive law. Lopez v.

Smith, 203 F.3d 1122, 1131 (9th Cir. 2000) (en banc). We

review de novo a constitutional challenge to a federal regula-

tion. Doe v. Rumsfeld, 435 F.3d 980, 984 (9th Cir. 2006) (cit-

ing Gonzales v. Metro. Transp. Auth., 174 F.3d 1016, 1018

(9th Cir. 1999)). We also review de novo whether a fine is

unconstitutionally excessive. United States v. Mackby, 339

F.3d 1013, 1016 (9th Cir. 2003) (citing United States v.

Bajakajian, 524 U.S. 321, 337 n.10 (1998)).

12

In a separate action not the subject of this appeal, the Hornes filed an

administrative petition before the Secretary of Agriculture in March 2007

pursuant to 7 U.S.C. § 608c(15)(A) challenging the Raisin Marketing

Order and its application to them. The JO granted the USDA’s motion to

dismiss for lack of standing. The Hornes filed a complaint in district court,

but the district court dismissed it for lack of subject matter jurisdiction

because it was not timely filed, and we affirmed. See Horne v. U.S. Dep’t

of Agric., 395 Fed. Appx. 486 (9th Cir. Sep. 27, 2010) (unpublished).

9466 HORNE v. USDA

DISCUSSION

I. Application of the Raisin Marketing Order to the

Hornes

For the reasons discussed in the district court’s opinion

below, we conclude that the Hornes, who admit that their toll-

packing business “stems, sorts, cleans,” and “packages raisins

for market as raisins,” 7 C.F.R. § 989.14, satisfy the regula-

tory definition of a “packer” and are thus “handlers” subject

to the Raisin Marketing Order’s provisions, see 7 C.F.R.

§ 989.15. See Horne v. U.S. Dep’t of Agric., 2009 U.S. Dist.

LEXIS 115464, at *20-49 (E.D. Cal. Dec. 11, 2009). The

USDA’s interpretation of its own regulation is not “plainly

erroneous or inconsistent with the regulation” and thus must

be given “controlling weight.” See Bowles v. Seminole Rock

& Sand Co., 325 U.S. 410, 414 (1945); accord Auer v. Rob-

bins, 519 U.S. 452, 461 (1997); Miller v. Cal. Speedway

Corp., 536 F.3d 1020, 1028 (9th Cir. 2008). Furthermore, its

findings regarding the Hornes’ handler operations are sup-

ported by substantial evidence and are neither arbitrary nor

capricious. See 5 U.S.C. § 706(2)(A), (E).

[2] The Hornes argue they are statutorily exempt from reg-

ulation because they also satisfy the regulatory definition of

a “producer,” and the AMAA provides that “[n]o order issued

under this chapter shall be applicable to any producer in his

capacity as a producer.” 7 U.S.C. § 608c(13)(B). However, by

expressly limiting the exemption from regulation only to a

producer “in his capacity as a producer,” the AMAA contem-

plates that an individual who performs both producer and han-

dler functions may still be regulated in his capacity as a

handler. Even if the AMAA is considered “silent or ambigu-

ous” on the regulation of individuals who perform both pro-

ducer and handler functions, we must give Chevron deference

to the permissible interpretation of the Secretary of Agricul-

ture, who is charged with administering the statute. Chevron,

USA, Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837,

HORNE v. USDA 9467

842-43 (1984); see 7 U.S.C. § 608c(1); see also Morales-

Izquierdo v. Dep’t of Homeland Sec., 600 F.3d 1076, 1086-87

(9th Cir. 2010); Midway Farms v. U.S. Dep’t of Agric., 188

F.3d 1136, 1140 n.5 (9th Cir. 1999). Other courts have simi-

larly rejected the Hornes’ argument that a producer who han-

dles his own product for market is statutorily exempt from

regulation under the AMAA. See, e.g., Freeman v. Vance, 319

F.2d 841, 842 (5th Cir. 1963) (per curiam); Ideal Farms, Inc.

v. Benson, 288 F.2d 608, 614 (3d Cir. 1961), cert. denied, 372

U.S. 965 (1963); Evans, 74 Fed. Cl. at 557-58. Deferring to

the agency’s permissible interpretation of the statute, as we

must, we conclude that applying the Raisin Marketing Order

to the Hornes in their capacity as handlers was not contrary

to the AMAA.

II. Takings Claim

Does the Raisin Marketing Order’s reserve requirement

program constitute a physical, per se taking of the Hornes’

personal property without just compensation, in violation of

the Fifth Amendment? See U.S. Const. amend. V (“[N]or

shall private property be taken for public use, without just

compensation.”). We join the Court of Federal Claims, which

not long ago decided this exact question, in holding it does

not. See Evans, 74 Fed. Cl. at 562-64; cf. Cal-Almond, Inc. v.

United States, 30 Fed. Cl. 244, 246-47 (1994) (rejecting a tak-

ings claim against a similar reserve program under the almond

marketing order).

The Fifth Amendment Takings Clause does not itself

authorize the taking of private property, nor does it prohibit

the government from doing so. Instead, it imposes conditions

on the government’s authority to act, providing that when

government takes private property, pursuant to the lawful

exercise of its constitutional powers, (1) it must take for pub-

lic rather than private use, and (2) it must provide owners with

just compensation, as measured by the property owner’s loss.

See Brown v. Legal Found. of Wash., 538 U.S. 216, 231-32,

9468 HORNE v. USDA

235-36 (2003); First English Evangelical Lutheran Church of

Glendale v. Cnty. of L.A., 482 U.S. 304, 314 (1987). The for-

mer condition ensures that government does not abuse its

powers by taking private property for another’s private gain,

see, e.g., Penn. Coal Co. v. Mahon, 260 U.S. 393, 413 (1922);

the latter ensures that even when government acts in the pub-

lic interest, it does not “forc[e] some people alone to bear

public burdens which, in all fairness and justice, should be

borne by the public as a whole,” Armstrong v. United States,

364 U.S. 40, 49 (1960).

[3] In its earliest days, the Takings Clause was thought to

apply only to “direct appropriation of property, or the func-

tional equivalent of a practical ouster of the owner’s posses-

sion,” Lingle v. Chevron U.S.A., Inc., 544 U.S. 528, 537

(2005) (internal quotation marks and brackets omitted), i.e.,

“physical takings.” See Lucas v. S.C. Coastal Council, 505

U.S. 1003, 1028 n.15 (1992). Over the years, its reach has

extended to accommodate the modern reality that “govern-

ment regulation of private property may, in some instances,

be so onerous that its effect is tantamount to a direct appropri-

ation or ouster.” Lingle, 544 U.S. at 537; see also Loretto v.

Teleprompter Manhattan CATV Corp., 458 U.S. 419, 427-38

(1982) (surveying evolution of the takings doctrine). Most

takings challenges to governmental regulations must undergo

an ad hoc, fact-intensive inquiry focusing on (1) the economic

impact of the regulation on the claimant; (2) the extent to

which the regulation interferes with reasonable investment-

backed expectations; and (3) the character of the governmen-

tal action. Penn Cent. Transp. Co. v. N.Y.C., 438 U.S. 104,

124 (1978). Only in two situations does the Supreme Court

recognize that regulatory action per se “goes too far” in frus-

trating property rights, Mahon, 260 U.S. at 415: first, “where

government requires an owner to suffer a permanent physical

invasion of her property[,] however minor,” Lingle, 544 U.S.

at 538; see, e.g., Loretto, 458 U.S. at 438 (compensation

required where state law forced landlords to permit cable

companies to install cable facilities occupying one and one-

HORNE v. USDA 9469

half square feet of rooftops); Kaiser Aetna v. United States,

444 U.S. 164, 179-80 (1979) (same for imposition of naviga-

tional servitude upon private marina); United States v.

Causby, 328 U.S. 256, 265 & n.10 (1946) (same for physical

invasions of airspace); and second, where government regula-

tion “denies all economically beneficial or productive use of

land,” Lucas, 505 U.S. at 1015 (emphasis added) (compensa-

tion required where state law barring construction of any per-

manent habitable structures on beachfront property rendered

land parcels “valueless”). When government action results in

such a “total regulatory taking[ ],” id. at 1026, as opposed to

a mere “partial regulatory taking[ ],” Tahoe-Sierra Pres.

Council v. Tahoe Reg’l Planning Agency, 535 U.S. 302, 326

(2002), a property owner is categorically entitled to compen-

sation, without resort to the usual case-specific inquiry.

[4] The Hornes, however, do not claim that the Raisin

Marketing Order effects a regulatory taking, partial or total.

Instead, they insist we need look no further than the RAC’s

annual “direct appropriation” of their reserve-tonnage raisins

to conclude this is a classic physical taking. Though the sim-

plicity of their logic has some understandable appeal—their

raisins are personal property, personal property is protected

by the Fifth Amendment, and each year the RAC “takes”

some of their raisins, at least in the colloquial sense—their

argument rests on a fundamental misunderstanding of the

nature of property rights and instead clings to a phrase

divorced from context.

It is undisputed that the Fifth Amendment guarantees com-

pensation for the taking not only of real property but also of

personal property and even intangible property. See Phillips

v. Wash. Legal Found., 524 U.S. 156, 172 (1998) (interest

earned on lawyers’ trust account is a protected private prop-

erty); Brown, 538 U.S. at 235 (same); Ruckelshaus v. Mon-

santo Co., 467 U.S. 986, 1001-04 (1984) (same for trade

secrets). No one suggests the government could come onto the

Hornes’ farm uninvited and walk off with forty-seven percent

9470 HORNE v. USDA

of their crops without offering just compensation, even if the

seizure itself were justified (for example, as a wartime mea-

sure). See Dolan v. City of Tigard, 512 U.S. 374, 384 (1994);

Nollan v. Cal. Coastal Comm’n, 483 U.S. 825, 831 (1987);

United States v. Pewee Coal Co., 341 U.S. 114, 115-17

(1951) (government’s wartime seizure and operation of a coal

mine to prevent a national coal miners’ strike constituted a

compensable taking). Certainly, that government action is

authorized does not immunize it from a takings claim; indeed,

the Takings Clause presupposes that the government has

taken lawfully. Lingle, 544 U.S. at 543; see Kaiser Aetna, 444

U.S. at 172 (no “blanket exception” to the Takings Clause

simply because Congress has acted under lawful authority). If

the Raisin Marketing Order authorized an uninvited, forcible

taking of the Hornes’ crops, there is no question that the gov-

ernment would have “a categorical duty to compensate the

[Hornes], regardless of whether the interest that is taken con-

stitutes an entire parcel [i.e., all their crops,] or merely a part

thereof.” Tahoe-Sierra, 535 U.S. at 322 (internal citation

omitted).

[5] But a forcible taking is not what the Raisin Marketing

Order accomplishes. Far from compelling a physical taking of

the Hornes’ tangible property, the Raisin Marketing Order

applies to the Hornes only insofar as they voluntarily choose

to send their raisins into the stream of interstate commerce.

Simply put, it is a use restriction, not a direct appropriation.

The Secretary of Agriculture did not authorize a forced sei-

zure of forty-seven percent of the Hornes’ 2002-03 crops and

thirty percent of their 2003-04 crops, but rather imposed a

condition on the Hornes’ use of their crops by regulating their

sale. As we explained in a similar context over seventy years

ago, the Raisin Marketing Order “contains no absolute

requirement of the delivery of [reserve-tonnage raisins] to the

[RAC]” but rather only “a conditional one.” Wallace v.

Hudson-Duncan & Co., 98 F.2d 985, 989 (9th Cir. 1938)

(rejecting a takings challenge to a reserve requirement under

the walnut marketing order).

HORNE v. USDA 9471

In rejecting a claim that a local mobile home rent control

ordinance amounted to a physical taking of park owners’

property interest, the Supreme Court similarly explained that

“[t]he government effects a physical taking only where it

requires the landowner to submit to the physical occupation

of his land.” Yee v. City of Escondido, 503 U.S. 519, 527

(1992) (emphasis in original). Emphasizing that the “ ‘ele-

ment of required acquiescence is at the heart of the concept

of occupation,’ ” id. (quoting FCC v. Fla. Power Corp., 480

U.S. 245, 252 (1987)), the Court explained that the mobile

park owners had no physical takings claim because they vol-

untarily rented their land to mobile home owners and thus

acquiesced in the regulation not under government compul-

sion but of their own accord, id. at 527-28. This same logic

was used to defeat a takings challenge to a statute authorizing

the public disclosure of private data submitted by applicants

as a condition on registering their pesticides. See Ruckelshaus,

467 U.S. at 1007. Even though the applicants had a recog-

nized interest in their intellectual property, the Supreme Court

reasoned that “a voluntary submission of data by an applicant

in exchange for the economic advantages of a registration can

hardly be called a taking,” so long as the disclosure condition

was rationally related to a legitimate government interest and

the applicant was made aware of the condition in advance. Id.

[6] There are, of course, limits to what conditions the gov-

ernment can constitutionally impose. The government “may

not require a person to give up a constitutional right—[for

example,] the right to receive just compensation when prop-

erty is taken for a public use—in exchange for a discretionary

benefit conferred by the government where the benefit has lit-

tle or no relationship to the property.” Dolan, 512 U.S. at 385.

Thus, where the government conditioned the grant of a coastal

development permit on the granting of a public easement

bearing no nexus to the original purpose of the building

restriction, the Supreme Court held that the government could

not avoid paying compensation simply by shoehorning a tak-

ing into an unrelated exercise of its police powers. Nollan,

9472 HORNE v. USDA

483 U.S. at 837; see also Dolan, 512 U.S. at 395 (holding that

city could not require development permit applicant to grant

a public pathway easement where there was no reasonable

relationship between the proposed development and the con-

dition imposed). Here, however, the condition imposed is

rationally related to the government’s legitimate interest in

controlling the supply of raisins on the domestic market so as

to prevent price destabilization and corollary effects on the

economy, and the Hornes had ample prior notice of the condi-

tion before they voluntarily decided to enter the raisin market.

Nevertheless, the Hornes insist their so-called “voluntary”

subjection to the Raisin Marketing Order is in fact the product

of a Hobson’s choice, for they have no economically viable

alternative to selling their raisins and therefore must suffer the

complete and total taking of a designated percentage of their

raisins under compulsion. Their argument is founded on an

erroneous belief that they have a property right to “market

their [raisins] free of regulatory controls,” Cal-Almond, 30

Fed. Cl. at 246, and is unavailing.

Admittedly, the Raisin Marketing Order’s expansive defini-

tion of “handler,” which includes anyone who “packs” raisins

for sale even if the raisins are sold exclusively within the state

of California, renders its regulatory reach less escapable than

the marketing order at issue in Wallace, which did not apply

to walnuts sold within the state of production. See Wallace, 98

F.2d at 989. Nonetheless, we noted in Wallace a “distinction

between the direct appropriation of property and the destruc-

tion of property values in the exercise of governmental

power,” id., observing that the regulation would remain valid

“[e]ven if the [c]ompany were able to show . . . that the only

alternative to making delivery to the [government] of surplus

walnuts or their ‘credit value’ would be to go out of busi-

ness,” id. at 990.

[7] This seemingly draconian result flows from the long-

standing notion that “some [property] values are enjoyed

HORNE v. USDA 9473

under an implied limitation and must yield” to the govern-

ment’s regulatory powers. Mahon, 260 U.S. at 413. The

implied restrictions on our property rights “are the burdens we

all must bear in exchange for the advantage of living and

doing business in a civilized community,” Ruckelshaus, 467

U.S. at 1007 (internal quotation marks and citations omitted).

Our takings jurisprudence is “guided by the understandings of

our citizens regarding the content of, and the State’s power

over, the ‘bundle of rights’ that they acquire when they obtain

title to property,” Lucas, 505 U.S. at 1027, and not every

restriction on our use of property amounts to a compensable

taking.

Although the Fifth Amendment, as previously discussed,

protects real and personal property alike, the personal prop-

erty “bundle of rights” is not coextensive with the bundle

comprising real property, as they are informed by different

background principles. See id. at 1027-30. Consequently, the

same government action may effect a taking when applied to

one type of property but not the other. Whereas a regulation

depriving a landowner of “all economically beneficial uses”

of his land effects a categorical taking, see Lucas, 505 U.S.

at 1019 (emphasis in original), the same may not necessarily

be true of a regulation banning the sale of a commercial prod-

uct, see, e.g., Andrus v. Allard, 444 U.S. 51, 66-67 (1979)

(holding that prohibition on sale of eagle feathers was not a

taking); Ruppert v. Caffey, 251 U.S. 264 (1920) (upholding

sales ban on nonintoxicating alcoholic beverages against tak-

ings challenge); James Everard’s Breweries v. Day, 265 U.S.

545 (1924) (upholding ban on sale of all liquor, including

liquor lawfully manufactured before passage of the statute).

While the total deprivation of beneficial use of land carries a

“heightened risk that private property is being pressed into

some form of public service under the guise of mitigating

serious public harm,” Lucas, 505 U.S. at 1018, when it comes

to personal property, “the State’s traditionally high degree of

control over commercial dealings” ought to put a property

owner on notice “of the possibility that new regulation might

9474 HORNE v. USDA

even render his property economically worthless (at least if

the property’s only economically productive use is sale or

manufacture for sale),” id. at 1027-28. Thus, although the

right to sell their raisins is a significant one, it is but one

“strand” in the Hornes’ bundle, and even the destruction of

that single strand would not amount to a taking without under-

going Penn Central ad hoc review. See Andrus, 444 U.S. at

65-66 (“significant restriction . . . imposed on one means of

disposing of the artifacts” does not amount to a taking); see

also Rock Royal, 307 U.S. at 572 (“As the Congress would

have, clearly, the right to permit only limited amounts of milk

to move in interstate commerce, . . . it might permit the move-

ment on terms of pool settlement . . . .”).

[8] In any event, the Raisin Marketing Order does not

destroy that strand and does not deny raisin farmers all eco-

nomically beneficial use of their raisins, for the regulation

does not ban the sale of raisins altogether but only requires

the delivery to the RAC of a certain percentage of raisins pre-

pared for market. The Hornes insist the regulation effects a

total taking of those reserve-tonnage raisins, but they ignore

the Supreme Court’s repeated admonition that we must con-

sider the regulation’s impact on “the parcel as a whole” rather

than “divide a single parcel into discrete segments and

attempt to determine whether rights in a particular segment

have been entirely abrogated.” Penn Cent., 438 U.S. at 130-

131 & n.27; accord Tahoe-Sierra, 535 U.S. at 327. For exam-

ple, where a statute required coal companies to leave unmined

fifty percent of their coal beneath certain structures to prevent

land subsidence, the Supreme Court found no taking, reason-

ing that “[t]he 27 million tons of coal do not constitute a sepa-

rate segment of property for takings law purposes.” Keystone

Bituminous Coal Ass’n v. DeBenedictis, 480 U.S. 470, 498

(1987).

[9] Accordingly, the Hornes’ argument that they have suf-

fered a complete and total taking of their reserve-tonnage rai-

sins is squarely foreclosed by case law, for the relevant parcel

HORNE v. USDA 9475

here is the entirety of their annual crop, not the individual rai-

sins destined for the reserve pool. Even if in absolute terms

they number in the billions, the reserve-tonnage raisins are but

a designated percentage of a producer’s total annual crop han-

dled for sale in the domestic market. Furthermore, the Hornes

have put forth no evidence that the Raisin Marketing Order

“makes it impossible for [them] to profitably engage in their

business.” Id. at 485. We imagine it would be difficult for the

Hornes to gather such evidence, given that the reserve-pool

restrictions on the market supply of raisins serve to raise

prices for the Hornes’ free-tonnage raisins, ostensibly making

their business more profitable than it would be in an unregu-

lated free market.

[10] The Hornes have suffered no compensable physical

taking of any portion of their crops, and thus the Fifth

Amendment poses no obstacle to the Secretary’s enforcement

of the Raisin Marketing Order against them. Because the

Hornes do not advance the alternative theory that the Raisin

Marketing Order effects a regulatory taking, we leave that

question for another day.

III. Excessive Fines Claim

Finally, in connection with their takings argument, the

Hornes protest the JO’s imposition of nearly $700,000 in

combined assessments and fines, which they believe exces-

sively penalizes them, in violation of the Eighth Amendment,

for their justified refusal to deliver their own private property

into the hands of the government. See U.S. Const. amend.

VIII (“Excessive bail shall not be required, nor excessive

fines imposed, nor cruel and unusual punishments inflicted.”).

[11] To prevail on an excessive fines claim, a plaintiff

must establish (1) the assessment is imposed, at least in part,

for punitive and not merely remedial purposes, and (2) the

fine is excessive, or “grossly disproportional to the gravity of

[the] offense” for which it is imposed. Bajakajian, 524 U.S.

9476 HORNE v. USDA

at 334; see Engquist v. Or. Dep’t of Agric., 478 F.3d 985,

1006 (9th Cir. 2007); Mackby, 339 F.3d at 1016. Although an

excessive punitive civil fine is not beyond the Eighth Amend-

ment’s reach, Hudson v. United States, 522 U.S. 93, 103

(1997), civil forfeiture that merely “provides a reasonable

form of liquidated damages” as compensation for government

losses resulting from the unlawful activity is remedial, not

punitive, and accordingly does not implicate the Eighth

Amendment, One Lot Emerald Cut Stones & One Ring v.

United States, 409 U.S. 232, 237 (1972); see United States v.

$273,969.04 U.S. Currency, 164 F.3d 462, 466 (9th Cir.

1999); Austin v. United States, 509 U.S. 602, 622 n.14 (1993)

(“[A] fine that serves purely remedial purposes cannot be con-

sidered ‘excessive’ in any event.”).

[12] Here, the district court correctly determined that the

$8,783.39 in unpaid assessments imposed pursuant to 7

C.F.R. § 989.80(a) and the $483,843.53 in compensation for

the withheld reserve-tonnage raisins imposed pursuant to 7

C.F.R. § 989.166(c) amounted to remedial rather than puni-

tive forfeitures and that the Excessive Fines Clause therefore

is inapplicable to those penalties. The JO’s order that the

Hornes pay assessments to the RAC was calculated solely to

compensate the RAC for the mandatory assessments not paid.

See 7 C.F.R. § 989.80(a) (“Each handler shall, with respect to

free tonnage acquired by him . . . pay to the committee, upon

demand, his pro rata share of the expenses . . . which the Sec-

retary finds will be incurred, as aforesaid, by the committee

during each crop year . . . .”). Similarly, the JO’s order that

the Hornes compensate the RAC for the withheld reserve-

tonnage raisins flowed inexorably from another remedial,

non-punitive provision of the regulations. See id. § 989.166(c)

(“A handler who fails to deliver to the Committee, upon

request, any reserve tonnage raisins in the quantity and quality

for which he has become obligated . . . shall compensate the

Committee for the amount of the loss resulting from his fail-

ure to so deliver,” as determined by a fixed formula.). Calcu-

lation of the compensation amount is nondiscretionary and is

HORNE v. USDA 9477

limited by the extent of the government’s loss. Cf.

$273,969.04, 164 F.3d at 466 (inferring punitive nature of a

sanction where it was not limited by the extent of the govern-

ment’s loss and was tied to commission of a crime). The JO’s

use of the “field price” to calculate the compensatory amount

the Hornes owed the RAC for their withheld reserve-tonnage

raisins was consistent with the regulations. See 7 C.F.R.

§ 989.166(c).

[13] The only sanction that implicates the Excessive Fines

Clause is the $202,600 fine imposed pursuant to 7 U.S.C.

§ 608c(14)(B), but we again agree with the district court that

this civil penalty, less than one-third the authorized statutory

amount, is not “grossly disproportional to the gravity of [the

Hornes’] offense.” Bajakajian, 524 U.S. at 334. Although we

have no set formula for determining the proportionality of a

given penalty, relevant factors include the severity of the

offense, the statutory maximum penalty available, and the

harm caused by the offense. Mackby, 339 F.3d at 1016; see

also United States v. 3814 NW Thurman St., 164 F.3d 1191,

1197-98 (9th Cir. 1999).

We have previously recognized that noncompliance with a

marketing order’s reporting and reserve requirements are seri-

ous offenses that threaten the Secretary’s ability to regulate a

given market and prevent price destabilization, while also

unjustly enriching the offenders who profit from selling their

reserve-tonnage goods on the open market. See Balice v. U.S.

Dep’t of Agric., 203 F.3d 684, 693, 695, 698-99 (9th Cir.

2000) (upholding a fine of $225,500 imposed on an almond

handler subject to up to $528,000 in fines for violations of

various reporting and reserve requirements). Furthermore, that

Congress authorized a much steeper fine ($1,000 for each of

the Hornes’ 673 separate offenses spanning a two-year period,

for a total of $673,000) than what the JO actually imposed,

while not dispositive, weighs heavily against finding the fine

grossly disproportional to the Hornes’ offense, for “judgments

about the appropriate punishment for an offense belong in the

9478 HORNE v. USDA

first instance to the legislature.” Bajakajian, 524 U.S. at 336,

339 n.14; accord Balice, 203 F.3d at 699.13 In light of these

factors, we cannot say the district court erred in finding the

penalties consistent with the Eighth Amendment.14

CONCLUSION

The Hornes are clearly dissatisfied and frustrated with a

regulatory scheme they believe no longer serves the interests

of the farmers it was designed, in large part, to protect. That

being the case, the Hornes may wish to “take their case to the

Secretary for a reevaluation of the [Raisin Marketing] Order

and the regulations, for although the [Raisin Marketing] Order

and the regulations are lawful, plaintiffs and other producers

may prevail upon the Secretary to change them in order to

better achieve the purpose behind the [AMAA].” Prune Bar-

gaining Ass’n v. Butz, 444 F. Supp. 785, 793 (N.D. Cal.

13

Although in Balice it appears the JO imposed penalties under only 7

U.S.C. § 608c(14) and not under the regulation’s forfeiture provisions,

whereas here the JO imposed both, nothing in the statutory or regulatory

language seems to preclude simultaneous imposition of remedial and puni-

tive sanctions under the respective provisions. To the contrary, 7 C.F.R.

§ 989.166(c) expressly provides that compensation for failure to deliver

reserve-tonnage raisins “shall be in addition to, and not exclusive of, any

or all of the remedies or penalties prescribed in the act” for noncompliance

with the act or regulation’s requirements, and the Hornes do not challenge

the legitimacy of this provision.

14

We also reject the Hornes’ contention that 7 U.S.C. § 608c(14)(B)

exempts them from liability for their Raisin Marketing Order violations

because in 2007 they filed an administrative petition pursuant to 7 U.S.C.

§ 608c(15)(A). See 7 U.S.C. § 608c(14)(B) (immunizing from civil pen-

alty any handler who “in good faith and not for delay” files and prosecutes

a qualifying administrative petition). First, this argument was already dis-

posed of in one of our earlier decisions, see Horne, 397 Fed. Appx. at 486,

and is not properly before us now. Moreover, even if the matter were

properly before us, it is without merit. Section 608c(14)(B) only immu-

nizes handlers from penalties otherwise incurred during the pendency of

their administrative petition; it does not apply retroactively. Therefore, an

administrative petition not filed until 2007 cannot immunize the Hornes

from fines relating to their conduct in 2002-04.

HORNE v. USDA 9479

1975), aff’d sub nom. Prune Bargaining Ass’n v. Bergland,

571 F.2d 1132 (9th Cir. 1978) (per curiam); see 7 U.S.C.

§ 608c(16) (prescribing mechanism for termination or suspen-

sion of marketing orders). Our role, however, is limited to

reviewing the constitutionality and not the wisdom of the cur-

rent regulation. Finding no constitutional infirmity in either

the Raisin Marketing Order or the Secretary’s application of

it to the Hornes, the summary judgment of the district court

is AFFIRMED.